Which three statements are true for an expense destination transfers that does NOT require a receipt at destination inventory organization?
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A. B. C. D. E.ABE.
An expense destination transfer is a type of inter-organization transfer that is used to move items between inventory organizations without recording the items in inventory. The transfer transaction is recorded as an expense in the books of the sending organization and as a receipt in the books of the receiving organization.
The question asks for three statements that are true for an expense destination transfer that does NOT require a receipt at the destination inventory organization. The correct answers are A, B, and E.
A. There is no cost associated with the transaction: Since the item is expensed, the cost associated with the transfer is recorded as an expense in the books of the sending organization. There is no cost recorded in the books of the receiving organization since the item is not being recorded as an asset.
B. There is no put away transaction in Inventory since the item is expensed: A put away transaction is a transaction in which items are moved from a receiving area to a storage location in the inventory organization. Since the item is not being recorded in inventory, there is no put away transaction required.
C. A receipt is required on interorganization expense destination transfer orders between the from and to organizations: This statement is false. An expense destination transfer does not require a receipt at the destination inventory organization. The transfer transaction is recorded as an expense in the books of the sending organization and as a receipt in the books of the receiving organization.
D. The transfer order is considered received and delivered at the time of shipment: This statement is false. An expense destination transfer is not considered received and delivered until the transfer transaction is recorded in the books of the receiving organization.
E. The destination inventory is not incremented: This statement is true. Since the item is not being recorded in inventory, the destination inventory is not incremented. The transfer transaction is recorded as an expense in the books of the sending organization and as a receipt in the books of the receiving organization.