When processing invoices for payment, what is the most critical step to prevent overpayment or duplicate payments?
Correct Answer
C) Matching invoice to purchase order and delivery receipt
The three-way match (invoice, purchase order, and delivery receipt) ensures that goods were ordered, received, and billed correctly, preventing overpayment and duplicate payments.
Why This Is the Correct Answer
The three-way match is the gold standard in construction accounting and prevents the most common payment errors. By matching the invoice against the original purchase order and the delivery receipt, you verify that: (1) the items were actually ordered, (2) they were received in the correct quantity and condition, and (3) the billing amounts are accurate. This systematic cross-verification catches duplicate invoices, billing errors, and unauthorized purchases before payment is made.
Why the Other Options Are Wrong
Option B: Verifying the vendor's tax ID number
Checking invoice format and letterhead helps verify vendor legitimacy but doesn't prevent payment errors - a legitimate vendor can still submit duplicate invoices or billing mistakes.
Option D: Checking the invoice format and letterhead
While verifying tax ID numbers is important for tax reporting and vendor validation, it doesn't prevent overpayment or duplicate payments - you could pay the right vendor the wrong amount multiple times.
Memory Technique
Think 'Three-Way Match = Three-Way Protection' - protecting against wrong orders, wrong deliveries, and wrong billing.
Reference Hint
Business and Finance chapter covering accounts payable procedures and internal controls
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