Explain internal control procedures for merchandise sales.

- Since sales revenues have a significant effect on a company's net income, internal control procedures must be established to ensure that the amounts reported are correct.

- Typically, sales are not recorded by businesses until a three-way match is performed between:

- the customer purchase order (which indicates that the customer ordered the goods)
- the shipping document (which indicates that the goods ordered have been shipped to the customer)
- the invoice (which indicates that the customer has been billed for the goods shipped at the agreed price.)