Controls in the inventory cycle that support proper records of units and costs cannot be effective unless the documentation and controls for purchasing, payroll, and sales are also effective.

Question

Quizplus · Accepted Answer

Proper documentation and controls for purchasing, payroll, and sales are all necessary components of effective inventory control. Without effective controls in these areas, it is difficult to ensure accurate record-keeping of inventory units and costs, which can lead to inventory errors and financial misstatements. Therefore, controls in the inventory cycle that support proper records of units and costs cannot be effective unless the documentation and controls for purchasing, payroll, and sales are also effective.

Controls in the Inventory Cycle That Support Proper Records of Units