Exam 10: Purchasing and Payments Process

There are four departments in a company that are directly involved in the purchasing processes. Which department receives the purchase requisitions and transforms them into purchase orders?

Choose from the list below the best control activity to prevent purchases from unapproved vendors which are conflicts of interest or unauthorized related-party transactions that may result in regulatory or reputational damage.

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below.

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

Choose from the list below the best control activity to prevent unauthorized purchase requisitions that may result in unauthorized or fraudulent purchases.

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. RAM Manufacturing uses an approved vendor table. Senior management of RAM Manufacturing wants to ensure that only approved vendors are used. Discuss some of the general control activities RAM Manufacturing may want to implement for the approved vendor table.

The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic compares vendor telephone numbers, addresses, emails, and bank accounts to the employee master table?

The traditional three-way match matches the receiving report, vendor invoice and what other document?

Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction.

RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. RAM Manufacturing recently purchased a new warehouse building for $350,000, paid $3,000 in legal fees, $10,000 in agent commissions and $150,000 to remodel the warehouse. The land on which the warehouse sits cost $170,000. RAM Manufacturing took out a mortgage for $500,000 and paid the remainder in cash. Record the journal entry.

Review the diagram below: What business activity does B represent?

The use of cash not being optimized may result in loss of assets and poor cash management. Choose the best control activity to address this risk.

RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. Senior management of RAM Manufacturing wants to ensure that appropriate controls are used in the purchasing department. Discuss some of the general control activities RAM Manufacturing may want to implement for purchase orders.

There are four departments in a company that are directly involved in the purchasing processes. Which department receives the orders along with a supplier-generated packing slip, checks the condition of the shipment and counts the quantities?

The traditional three-way match matches the purchase order, vendor invoice and what other document?

The traditional three-way match matches the purchase order, receiving report and what other document?

The data collected during the accounts payable process can be converted into several accounts payable reports. Below is a list of some of those reports. Which report summarizes outstanding accounts payable by vendor and separates them into buckets based on the number of days outstanding?

Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.