Question ID: CIA 596 2.14 & Question ID: CIA 598 2.38
- This topic has 1 reply, 2 voices, and was last updated 6 months, 4 weeks ago by Brian Hock.
Which of the following documents would provide the best evidence that a purchase transaction has actually occurred?
- A. Cancelled check issued in payment of the procured goods.
- B. Ordering department’s original requisition for the goods.
- C. Receiving memorandum documenting the receipt of the goods.
- D. Supplier’s invoice for the procured goods.
I understand why option C is the right answer. But A. option’s Explanation says “The canceled check indicates that the goods have been paid for, not received.”
My point is good is paid for means a purchase has happened! Receiving report also means purchase has happened but cancelled check is better evidence (externally generated) than receiving report (internally generated). Now wait here lets look at another question..
2nd question (Question ID: CIA 598 2.38)
Which of the following represents the most competent evidence that trade receivables actually exist?
- A. Positive confirmations. correct
- B. Receiving reports.
- C. Bills of lading. wrong
- D. Sales invoices.
Option C says that bill of lading is not as reliable as a confirmation and it does not confirm the continued existence of the receivable.
Then how does Receiving report (1st question) verify the continued purchase. At any time the purchase can be returned also. Ans receiving report does not mean payment is done. It goes through to AP team afterwards etc etc.
So basically my question is on the first question (CIA 596 2.14) where i believe Cancelled checks is the best evidence. I am quoting the 2nd questions just for logic sake. Please guide.
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