Identify the preventive control below.
A) reconciling the bank statement to the cash control account
B) approving customer credit prior to approving a sales order
C) maintaining frequent backup records to prevent loss of data
D) counting inventory on hand and comparing counts to the perpetual inventory records

Question

Quizplus · Accepted Answer

Preventive control B (approving customer credit prior to approving a sales order) is the best choice as it helps prevent potential losses due to uncollectible accounts. Reconciling the bank statement to the cash control account (A) and counting inventory on hand and comparing counts to the perpetual inventory records (D) are detective controls that are designed to identify errors or problems after they have occurred. Maintaining frequent backup records to prevent loss of data (C) is a corrective control that is designed to restore data after a problem or error has already occurred.

Identify the Preventive Control Below