Question 1

What function or department typically initiates a purchase in a merchandising business?

Accepted Answer

The inventory contro...

Question 2

To provide proper authorization control for inventory, what two departments should be segregated?

Accepted Answer

The inventory control departme...

Question 3

The major risk exposures associated with the receiving department include all of the following except

Accepted Answer

A)   goods are accepted without a physical count
B)   there is no inspection for goods damaged in shipment
C)   inventories are not secured on the receiving dock
D)   the audit trail is destroyedE) A) and C)
F) None of the above

Question 4

Describe how the IT controls of automated purchase approval and automated postings to subsidiary and general ledger accounts help reduce risk. What is necessary to ensure these controls function properly?

Accepted Answer

The objective of automated purchase appr...

Question 5

The receiving report is prepared by the vendor to provide evidence that the purchase order was received.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the edits that are programmed into a system to minimize the risk for data input errors.

Accepted Answer

Controls, including checks for missing d...

Question 7

What are the key authorization issues in purchasing and cash disbursements?

Accepted Answer

Inventory control monitors inventory and...

Question 8

The documents in a voucher packet include all of the following except

Accepted Answer

A)   a check
B)   a purchase order
C)   a receiving report
D)   a supplier's invoiceE) A) and C)
F) None of the above

Question 9

Because of time delays between receiving inventory and making the journal entry

Accepted Answer

A)   liabilities are usually understated
B)   liabilities are usually overstated
C)   liabilities are usually correctly stated
D)   none of the aboveE) None of the above
F) A) and D)

Question 10

List specific jobs that should be segregated to prevent misappropriation of cash and inventory.

Accepted Answer

cash disbursements, ...

Question 11

When purchasing inventory, which document usually triggers the recording of a liability?

Accepted Answer

A)   purchase requisition
B)   purchase order
C)   receiving report
D)   supplier's invoiceE) A) and B)
F) A) and C)

Question 12

A purchasing system that employs electronic data interchange does not use a purchase order.

Accepted Answer

A) True 
 B)False

Question 13

Why do companies devote resources to a purchasing department? Could not individual departments make their own purchases more efficiently?

Accepted Answer

The purchasing function is extremely imp...

Question 14

Which of the following statements is NOT correct?

Accepted Answer

A)   The voucher system is used to improve control over cash disbursements.
B)   The sum of the paid vouchers represents the voucher payable liability of the firm.
C)   The voucher system permits the firm to consolidate payments of several invoices on one voucher.
D)   Many firms replace accounts payable with a voucher payable system.E) A) and D)
F) All of the above

Question 15

In the expenditure cycle, general ledger does not

Accepted Answer

A)   post the journal voucher from the accounts payable department
B)   post the account summary from inventory control
C)   post the journal voucher from the purchasing department
D)   reconcile the inventory control account with the inventory subsidiary summaryE) A) and C)
F) All of the above

Question 16

An objective of segregation of duties is to structure the organization so that the perpetration of a fraud requires collusion between two or more individuals. What must a company do to achieve this objective? Why?

Accepted Answer

Certain record-keeping tasks - subsidiar...

Question 17

Inspection of shipments in the receiving department would be improved if the documentation showed the value of the inventory.

Accepted Answer

A) True 
 B)False

Question 18

Why should the copy of a purchase order, which is sent to receiving, be a "blind" copy?

Accepted Answer

to force workers in ...

Question 19

Explain the role that the GL plays in reducing the risk of inaccurately recording transactions in journals and ledgers.

Accepted Answer

The GL function provides an important in...

Question 20

One reason for authorizing purchases is to enable efficient inventory management.

Accepted Answer

A) True 
 B)False

Exam 5: The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures

Describe how the IT controls of automated purchase approval and automated postings to subsidiary and general ledger accounts help reduce risk. What is necessary to ensure these controls function properly?

Correct AnswerverifiedThe objective of automated purchase appr...View AnswerShow Answer

A purchasing system that employs electronic data interchange does not use a purchase order.

Correct AnswerverifiedShow Answer

Why do companies devote resources to a purchasing department? Could not individual departments make their own purchases more efficiently?

Correct AnswerverifiedThe purchasing function is extremely imp...View AnswerShow Answer

What function or department typically initiates a purchase in a merchandising business?

Correct AnswerverifiedThe inventory contro...View AnswerShow Answer

An objective of segregation of duties is to structure the organization so that the perpetration of a fraud requires collusion between two or more individuals. What must a company do to achieve this objective? Why?

Correct AnswerverifiedCertain record-keeping tasks - subsidiar...View AnswerShow Answer

List specific jobs that should be segregated to prevent misappropriation of cash and inventory.

Correct Answerverifiedcash disbursements, ...View AnswerShow Answer

The major risk exposures associated with the receiving department include all of the following except

Correct AnswerverifiedShow Answer

In the expenditure cycle, general ledger does not

Correct AnswerverifiedShow Answer

The documents in a voucher packet include all of the following except

Correct AnswerverifiedShow Answer

Inspection of shipments in the receiving department would be improved if the documentation showed the value of the inventory.

Correct AnswerverifiedShow Answer

To provide proper authorization control for inventory, what two departments should be segregated?

Correct AnswerverifiedThe inventory control departme...View AnswerShow Answer

Discuss the edits that are programmed into a system to minimize the risk for data input errors.

Correct AnswerverifiedControls, including checks for missing d...View AnswerShow Answer

The receiving report is prepared by the vendor to provide evidence that the purchase order was received.

Correct AnswerverifiedShow Answer

Which of the following statements is NOT correct?

Correct AnswerverifiedShow Answer

When purchasing inventory, which document usually triggers the recording of a liability?

Correct AnswerverifiedShow Answer

Explain the role that the GL plays in reducing the risk of inaccurately recording transactions in journals and ledgers.

Correct AnswerverifiedThe GL function provides an important in...View AnswerShow Answer

One reason for authorizing purchases is to enable efficient inventory management.

Correct AnswerverifiedShow Answer

Because of time delays between receiving inventory and making the journal entry

Correct AnswerverifiedShow Answer

Why should the copy of a purchase order, which is sent to receiving, be a "blind" copy?

Correct Answerverifiedto force workers in ...View AnswerShow Answer

What are the key authorization issues in purchasing and cash disbursements?

Correct AnswerverifiedInventory control monitors inventory and...View AnswerShow Answer

Correct Answer
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The objective of automated purchase appr...
View Answer

Correct Answer
verified

Correct Answer
verified
The purchasing function is extremely imp...
View Answer

Correct Answer
verified
The inventory contro...
View Answer

Correct Answer
verified
Certain record-keeping tasks - subsidiar...
View Answer

Correct Answer
verified
cash disbursements, ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The inventory control departme...
View Answer

Correct Answer
verified
Controls, including checks for missing d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The GL function provides an important in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
to force workers in ...
View Answer

Correct Answer
verified
Inventory control monitors inventory and...
View Answer