Exam 9: Expenditures Processes and Controls - Purchases

Which of the following statements regarding the maintenance of adequate records and documentation in the cash disbursement process is NOT true?

Which department maintains copies of purchase orders and receiving reports so that the documents can be compared before the accounting records are updated?

This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer.Information included on this form would be: products, quantities, and agreed-upon prices.

Internal control activities within the purchasing process, identified as adequate records and documents, would include which of the following?

The matching of a purchase order to the related receiving report and invoice is known as:

The internal control process of separating the custody of inventory from the accounts payable record keeping will help to minimize the risk of:

If the purchasing, receiving, accounts payable, and cash disbursements processes are completed by the same individuals, the internal controls will be stronger because someone in the company will have an overall view of company activities.

Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchase to lessen which of the following risks?

There are different ways to issue a purchase order to a vendor.Which of the following is not one of the ways?

Redundancy is needed for servers, data, and networks.

A company should study risks common to its system prior to deciding the mix of controls needed.High-risk characteristics that might justify the need for extensive internal controls include all of the following, except:

Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank.This blind copy is used in which department?

Companies in the same line of business are not likely to have many differences in their purchasing habits.

The internal control process that requires the performance of end of period review to determine whether purchases are recorded in the proper period will help to minimize the risk of all of the following EXCEPT:

The internal control process that requires that the bank reconciliation be performed monthly, will help to minimize the risk of:

It is necessary that managers remember that they are stewards of funds expended by a business - that the funds are not owned by the managers.

The information from a purchase must flow into the purchase recording systems, the accounts payable and cash disbursement systems, and the inventory tracking systems.In an IT accounting system, these recording and processing systems are called:

The authorization of a cash disbursement occurs when the accounts payable department matches the purchase order, receiving report, and the invoice, and then forwards the matched documents to the cash disbursements department.

One of the most critical controls to prevent theft of inventory purchased is to:

The internal control process that requires the segregation of the authorization of purchase returns and the accounts payable record keeping and the custody of inventory, will help to minimize the risk of: