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Proper internal control would require that a department manager inform the purchasing department of its needs for additional merchandise by preparing and signing a purchase requisition which lists the merchandise needed and requests that it be purchased.

Purchase allowances refer to a price reduction (allowance) granted to a buyer of defective or unacceptable merchandise.

The materiality constraint, as applied to bad debts:

A maker who dishonors a note is one who does not pay it at maturity.

A voucher system establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.

The gross margin ratio is defined as gross margin divided by net sales.

A credit memorandum on a bank statement indicates:

FOB shipping point means that the buyer accepts ownership when the goods arrive at the buyer’s place of business.

All of the following are true of the number of days’ sales uncollected ratio except:

The number of days’ sales uncollected is used to: