Budd, the purchasing agent for Lake Hardware Wholesalers, has a relative who owns a retail hardware store. Budd arranged for hardware to be delivered by manufacturers to the retail store on a C.O.D. basis, thereby enabling his relative to buy at Lake's wholesale prices. Budd was probably able to accomplish this because of Lake's poor internal control over:
A)purchase requisitions.
B)cash receipts.
C)perpetual inventory records.
D)purchase orders.

Question

Quizplus · Accepted Answer

Budd's actions suggest a lack of control over purchase orders, as he was able to arrange for hardware to be delivered to his relative's store, likely without proper authorization.

Budd, the Purchasing Agent for Lake Hardware Wholesalers, Has a Relative