For each of the following types of misstatements, parts

(a) through (c), select the control that should have pre¬ vented the misstatement.

a. A manufacturing company received a substantial sales return in the last month of the year, but the credit memo¬ randum for the return was not prepared until after the auditors had completed their field work. The returned merchandise was included in the physical inventory.

(1) Receiving reports are prepared for all materials received, and such reports are numerically con¬ trolled.

(2) Aging schedules of accounts receivable are prepared periodically.

(3) Credit memoranda are prenumbered and all num¬ bers are accounted for.

(4) A reconciliation of the trial balance of customers' accounts with the general ledger control is prepared periodically.

b. The sales manager credited a salesman, Sean Boyle, with sales that were actually "house account" sales. Later, Boyle divided his excess sales commissions with the sales manager.

(1) The summary sales entries are checked periodically by persons independent of sales functions.

(2) The internal auditor compares the sales commission statements with the cash disbursements record.

(3) Customer purchase orders are reviewed and approved by persons independent of the sales department.

(4) Customer purchase orders are prenumbered, and all numbers are accounted for.

c. Copies of sales invoices show different unit prices for apparently identical items.

(1) Prices should be automatically placed on invoices from master file data.

(2) Differences reported by customers are satisfactorily investigated.

(3) All sales invoices are compared with shipping docu¬ ments.

(4) Statistical sales data are compiled and reconciled with recorded sales.