Which of the following would detect the understatement of a purchase discount?
A)Verify the arithmetic accuracy of the purchases journal
B)Compare purchase disbursement records and checks with invoice terms
C)Compare approved purchase orders to receiving reports
D)Verify the receipt of items ordered and invoiced

Question

Quizplus · Accepted Answer

The understatement of a purchase discount would occur if the company did not take the full discount allowed by the vendor for early payment. To detect this, one would need to compare the purchase disbursement records and checks with the invoice terms to make sure that the full discount was taken. The other options listed would not directly detect an understatement of a purchase discount.

Which of the Following Would Detect the Understatement of a Purchase