R. Budd, the purchasing agent of 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 cash-on-delivery (COD) 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 ability to arrange for hardware to be delivered to his relative's retail store at wholesale prices likely indicates a lack of control over purchase orders. Effective control over purchase orders would prevent unauthorized purchases or the diversion of goods to unintended recipients.

R Budd, the Purchasing Agent of Lake Hardware Wholesalers, Has