Question 1

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

Accepted Answer

The inventory control departme

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

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 invoice 
A)  purchase requisition 
B)  purchase order 
C)  receiving report 
D)  supplier's invoice

Question 5

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 destroyed 
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 destroyed

Question 6

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 7

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 invoice 
A)  a check 
B)  a purchase order 
C)  a receiving report 
D)  a supplier's invoice

Question 8

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 9

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 10

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

Accepted Answer

The inventory contro

Question 11

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 12

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

Accepted Answer

Inventory control monitors inventory and

Question 13

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 summary 
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 summary

Question 14

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

Accepted Answer

cash disbursements,

Question 15

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

Question 16

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. 
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.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

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

Accepted Answer

to force workers in

Question 20

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

Accepted Answer

A) True 
 B)False

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

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

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

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

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

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?

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

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

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

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

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

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

In the expenditure cycle, general ledger does not

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

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

Which of the following statements is NOT correct?

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

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?

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

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

The Information System: an Accountants Perspective

Introduction to Transaction Processing

Ethics, Fraud, and Internal Control

The Revenue Cycle

The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

Financial Reporting, and Management Reporting Systems

Database Management Systems

The Rea Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct, Deliver, and Maintain Systems Projects

IT Controls Part I: Sarbanes-Oxley and It Governance

IT Controls Part II: Security and Access

IT Controls Part III: Systems Development, Program Changes, and Application Controls

Filters

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

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

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

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

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

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

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?

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

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

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

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

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

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

In the expenditure cycle, general ledger does not

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

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

Which of the following statements is NOT correct?

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

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?

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

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

The Information System: an Accountants Perspective

Introduction to Transaction Processing

Ethics, Fraud, and Internal Control

The Revenue Cycle

The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures

The Conversion Cycle

Financial Reporting, and Management Reporting Systems

Database Management Systems

The Rea Approach to Business Process Modeling

Enterprise Resource Planning Systems

Electronic Commerce Systems

Managing the Systems Development Life Cycle

Construct, Deliver, and Maintain Systems Projects

IT Controls Part I: Sarbanes-Oxley and It Governance

IT Controls Part II: Security and Access

IT Controls Part III: Systems Development, Program Changes, and Application Controls

Filters