Question 1

When a legacy system is replaced with an integrated Enterprise Resource Planning (ERP) system,many benefits are realized for the organization.What is a key improvement in the record keeping function?

Accepted Answer

A)  Any department can now submit a request to purchase items.
B)  The system tracks the exact time of delivery.
C)  Major suppliers send electronic notification of incoming deliveries.
D)  Inventory records are more accurate and timely.

Question 2

In the expenditure cycle,evaluated receipt settlement increases efficiency by

Accepted Answer

A)  eliminating the need for receiving reports.
B)  eliminating the need for vendor invoices.
C)  eliminating the need for purchase orders.
D)  eliminating the need to prepare and mail checks.

Question 3

The major advantage of an MRP inventory system is that it reduces inventory levels.This is because

Accepted Answer

A)  the uncertainty about when materials are needed is reduced,thus reducing the need to carry large levels of inventory.
B)  the system is able to compute exactly the cost of purchasing by taking into account all costs associated with inventory carrying.
C)  inventory is brought to the production site exactly when needed and in the correct quantities by the vendor.
D)  None of the above are correct.

Question 4

From a legal standpoint,when does the obligation to pay a vendor arise?

Accepted Answer

A)  when the goods are requisitioned
B)  when the goods are ordered
C)  when the goods are received by the purchaser
D)  when the goods are billed

Question 5

Duties in the expenditure cycle should be properly segregated to promote internal control.This means that the authorization function is performed by __________,the recording function is performed by __________,and the cash disbursement function is performed by the __________.

Accepted Answer

A)  accounts payable; purchasing; cashier
B)  purchasing; accounts payable; cashier
C)  purchasing; cashier; accounts payable
D)  purchasing; accounts payable; treasurer

Question 6

There are several threats that are associated with the process and activity of receiving and storing goods.Identify one of these threats below.

Accepted Answer

A)  errors in counting
B)  kickbacks
C)  requests for unnecessary items
D)  errors in vendor invoices

Question 7

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned.That required the purchasing manager to request a _______ from the supplier.

Accepted Answer

A)  purchase order
B)  blanket purchase order
C)  receiving report
D)  debit memo
E)  credit memo

Question 8

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned.That required the purchasing manager to send a _______ to the supplier.

Accepted Answer

A)  purchase order
B)  blanket purchase order
C)  receiving report
D)  debit memo
E)  credit memo

Question 9

The paper document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices is called

Accepted Answer

A)  a purchase order.
B)  a materials requisition.
C)  a sales invoice.
D)  a receiving report.

Question 10

Identify which of the following scenarios the buyer could adjust by using a debit memo document.

Accepted Answer

A)  quantity different from that ordered
B)  damage to the goods
C)  goods that fail inspection for quality
D)  All of the above are possible scenarios.

Question 11

A major cost in the purchasing function is the number of purchase orders processed.One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest price.This name of this technique is

Accepted Answer

A)  an EDI auction.
B)  a trading exchange.
C)  a reverse auction.
D)  a supplier consortium.

Question 12

The threat of paying prices that are too high for goods ordered can pose a problem in the expenditure cycle.What is an appropriate control that would be applicable to help mitigate this threat?

Accepted Answer

A)  require the receiving department to verify the existence of a valid purchase order
B)  use only approved suppliers and solicit competitive bids
C)  only pay invoices that are supported by the original voucher package
D)  use bar-code technology

Question 13

Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?

Accepted Answer

A)  control of physical access to the inventory storage areas
B)  transfers of inventory with proper documentation
C)  sending "blind" copies of purchase orders to inventory control for data entry
D)  making physical counts of inventory at least once per year

Question 14

Once a vendor is selected for a product,the company's identity is recorded in the

Accepted Answer

A)  general ledger.
B)  purchase requisition file.
C)  product inventory transaction file.
D)  product inventory master record.

Question 15

Name and describe the two common systems for approving vendor payments.

Accepted Answer

Non-voucher (open invoice)system - appro...

Question 16

In the expenditure cycle,financial data electronic interchange increases efficiency by

Accepted Answer

A)  eliminating the need for receiving reports.
B)  eliminating the need for vendor invoices.
C)  eliminating the need for purchase orders.
D)  eliminating the need to prepare and mail checks.

Question 17

A voucher package should include

Accepted Answer

A)  a purchase requisition,vendor invoice,and receiving report.
B)  a purchase order,vendor invoice,and receiving report.
C)  a purchase requisition,purchase order,and receiving report.
D)  a bill of lading and vendor invoice.

Question 18

What is probably the most effective control for the prevention of kickbacks to purchasing agents?

Accepted Answer

A)  purchasing from approved vendors
B)  good supervision in the purchasing area
C)  a corporate policy to prohibit purchasing agents from accepting kickbacks
D)  reviews of vendor performance

Question 19

One alternative approach to managing inventory is materials requirements planning (MRP) .What is a key feature of this approach?

Accepted Answer

A)  to minimize or entirely eliminate carrying and stockout costs
B)  to reduce required inventory levels by scheduling production rather than estimating needs
C)  to determine the optimal reorder point
D)  to determine the optimal order size

Question 20

The receiving clerk at Folding Squid Technologies examines incoming shipments and checks their purchase order numbers.A receiving report is then sent to accounts payable,where it is reconciled with the relevant purchase orders and invoices and payment is authorized.Which of the following would correct control weaknesses,if any,related to these activities?

Accepted Answer

A)  Vendor invoices should be approved for payment by the shipping clerk after the purchase order and receiving report are reconciled.
B)  Vendor invoices should be approved for payment by the purchasing manager.
C)  Purchase orders and receiving reports should be reconciled by the purchasing manager.
D)  Controls are adequate under the current system.

Exam 11: The Expenditure Cycle: Purchasing and Cash Disbursements

Duties in the expenditure cycle should be properly segregated to promote internal control.This means that the authorization function is performed by ,the recording function is performed by ,and the cash disbursement function is performed by the __.

Correct Answer
verified

When a legacy system is replaced with an integrated Enterprise Resource Planning (ERP) system,many benefits are realized for the organization.What is a key improvement in the record keeping function?

Correct Answer
verified

One alternative approach to managing inventory is materials requirements planning (MRP) .What is a key feature of this approach?

Correct Answer
verified

A major cost in the purchasing function is the number of purchase orders processed.One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest price.This name of this technique is

Correct Answer
verified

Once a vendor is selected for a product,the company's identity is recorded in the

Correct Answer
verified

A voucher package should include

Correct Answer
verified

The paper document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices is called

Correct Answer
verified

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned.That required the purchasing manager to request a _______ from the supplier.

Correct Answer
verified

Correct Answer
verified

The threat of paying prices that are too high for goods ordered can pose a problem in the expenditure cycle.What is an appropriate control that would be applicable to help mitigate this threat?

Correct Answer
verified

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned.That required the purchasing manager to send a _______ to the supplier.

Correct Answer
verified

What is probably the most effective control for the prevention of kickbacks to purchasing agents?

Correct Answer
verified

From a legal standpoint,when does the obligation to pay a vendor arise?

Correct Answer
verified

Identify which of the following scenarios the buyer could adjust by using a debit memo document.

Correct Answer
verified

The major advantage of an MRP inventory system is that it reduces inventory levels.This is because

Correct Answer
verified

Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?

Correct Answer
verified

There are several threats that are associated with the process and activity of receiving and storing goods.Identify one of these threats below.

Correct Answer
verified

In the expenditure cycle,evaluated receipt settlement increases efficiency by

Correct Answer
verified

Name and describe the two common systems for approving vendor payments.

Correct Answer
verified
Non-voucher (open invoice)system - appro...
View Answer

In the expenditure cycle,financial data electronic interchange increases efficiency by

Correct Answer
verified

Exam 11: The Expenditure Cycle: Purchasing and Cash Disbursements

Duties in the expenditure cycle should be properly segregated to promote internal control.This means that the authorization function is performed by __________,the recording function is performed by __________,and the cash disbursement function is performed by the __________.

Correct AnswerverifiedShow Answer

When a legacy system is replaced with an integrated Enterprise Resource Planning (ERP) system,many benefits are realized for the organization.What is a key improvement in the record keeping function?

Correct AnswerverifiedShow Answer

One alternative approach to managing inventory is materials requirements planning (MRP) .What is a key feature of this approach?

Correct AnswerverifiedShow Answer

A major cost in the purchasing function is the number of purchase orders processed.One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest price.This name of this technique is

Correct AnswerverifiedShow Answer

Once a vendor is selected for a product,the company's identity is recorded in the

Correct AnswerverifiedShow Answer

A voucher package should include

Correct AnswerverifiedShow Answer

The paper document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices is called

Correct AnswerverifiedShow Answer

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned.That required the purchasing manager to request a _______ from the supplier.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The threat of paying prices that are too high for goods ordered can pose a problem in the expenditure cycle.What is an appropriate control that would be applicable to help mitigate this threat?

Correct AnswerverifiedShow Answer

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned.That required the purchasing manager to send a _______ to the supplier.

Correct AnswerverifiedShow Answer

What is probably the most effective control for the prevention of kickbacks to purchasing agents?

Correct AnswerverifiedShow Answer

From a legal standpoint,when does the obligation to pay a vendor arise?

Correct AnswerverifiedShow Answer

Identify which of the following scenarios the buyer could adjust by using a debit memo document.

Correct AnswerverifiedShow Answer

The major advantage of an MRP inventory system is that it reduces inventory levels.This is because

Correct AnswerverifiedShow Answer

Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?

Correct AnswerverifiedShow Answer

There are several threats that are associated with the process and activity of receiving and storing goods.Identify one of these threats below.

Correct AnswerverifiedShow Answer

In the expenditure cycle,evaluated receipt settlement increases efficiency by

Correct AnswerverifiedShow Answer

Name and describe the two common systems for approving vendor payments.

Correct AnswerverifiedNon-voucher (open invoice)system - appro...View AnswerShow Answer

In the expenditure cycle,financial data electronic interchange increases efficiency by

Correct AnswerverifiedShow Answer

Duties in the expenditure cycle should be properly segregated to promote internal control.This means that the authorization function is performed by ,the recording function is performed by ,and the cash disbursement function is performed by the __.

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Non-voucher (open invoice)system - appro...
View Answer

Correct Answer
verified