Deck 9: The Acquisitio/Payment Business Process

Question 1

The acquisition/payment transaction cycle may also be called the expenditures cycle.

Answer 1

True

Question 2

The acquisition/payment process includes the activities associated with buying maintaining and paying for goods and services needed by enterprises.

Answer 2

True

Question 3

Many activities in the acquisition/payment process are the same activities as in the sales/collection process, only viewed from the buyer's perspective instead of from the seller's view.

Answer 3

True

Question 4

Because the acquisition/payment process involves no resource exchanges with external business partners, it falls entirely within the enterprise circle of the value system level diagram.

Question 5

In a value chain model, cash is typically made available to the acquisition/payment process by the financing process.

Question 6

Most enterprises explicitly track labor operations of purchasing agents and thereby match the use of their labor to the corresponding acquisition event that increases goods in the acquisition/payment process.

Question 7

In the acquisition/payment process, purchase requisitions are instigation events.

Question 8

In the acquisition/payment business process, a mutual commitment event does not always happen at a discrete point in time; often it involves a series of activities.

Question 9

In the acquisition/payment process, information captured on a purchase order document is usually identical (i.e., each contains exactly the same information, no more, no less) to the information captured in the purchase order table in a REA based relational database.

Question 10

In the acquisition/payment process, a rental contract is an economic decrement event.

Question 11

In the acquisition/payment process, a rental acquisition begins when the right to temporary possession of the rented goods transfers from the supplier to the enterprise and ends when possession of the goods transfers back from the enterprise to the supplier.

Question 12

The receiving report document is the document that most closely corresponds to the purchase economic increment event in the acquisition/payment process.

Question 13

In the acquisition/payment process, a request to return goods notifies a supplier of the enterprise's dissatisfaction with goods and asks permission to return those goods instead of paying for them or in exchange for a refund.

Question 14

A cash refund in exchange for the return of defective goods is the most common economic increment event in the acquisition/payment process.

Question 15

The resources and resource types most commonly present in the acquisition/payment process are inventory, cash, and operating assets such as suppliers, property, plant, and equipment.

Question 16

An example of a resource-related information need in the acquisition/payment process is the average age of an enterprise's machinery on a specified date.

Question 17

To generate a list of all purchase agents and their telephone numbers, a query developer should focus on the resource entities in the acquisition/payment process.

Question 18

If a purchase occurs without corresponding cash disbursements or purchase returns that total the purchase amount, a claim exists that is typically called accounts payable.

Question 19

To determine which tables contain cash disbursements that applied to acquisitions and calculate the applicable cash disbursement total, one should examine the duality relationship in the acquisition/payment process.

Question 20

A query to calculate the average number of days to fulfill purchase requisitions should focus on the fulfillment relationship between purchase order and acquisition in the acquisition/payment process.

Question 21

Buyers for Payton Corporation may make purchases from any available vendor. If a vendor may combine orders received from different buyers at Payton Corporation into a single shipment to Payton, the participation cardinalities for the relationship between Purchase and Buyer for Payton Corporation must be

A) (1,1) Purchase - (0,1) Buyer
B) (1,N) Purchase - (0,N) Buyer
C) (1,1) Purchase - (0,N) Buyer
D) (1,N) Purchase -(0,1) Buyer
E) (N,1) Purchase - (0,1) Buyer

Question 22

Which of the following events is not part of the Acquisition/Payment business process?

A) Cashier processes a customer's payment for merchandise inventory
B) Purchasing department orders merchandise inventory from a vendor
C) Manufacturing department requisitions merchandise inventory from purchasing department
D) Warehouse receives merchandise inventory from a vendor
E) Shipping department returns unwanted merchandise to a vendor

Question 23

Regardless of the type of good or service being acquired, the following are typical operating events in the acquisition/payment business process

A) Pay a supplier for goods or services
B) Receive a customer order for goods or services
C) Accept customer returns of goods
D) Distributing goods or services to customers
E) Receive a customer's payment for goods or services

Question 24

Given the G&A Service Acquisition, Cash Disbursement and CashDisbforG&A Service Acquisition tables below, which of the following approaches would be the most valid one to create a query for accounts payable for G&A services as of July 15, 2003?

A) Query 1: Sum the G&A Service Amount in the G&A Service Acquisition table as GAamount
Query 2: Sum the Amount in the Cash Disbursement table as CDAmount
Query 3: Calculate GAamount - Nz(CDAmount) as Accounts Payable for G&A Services
B) Query 1: In G&A Service Acquisition table, constrain G&A service acquisition date <=7/15/2003 and sum Amount as GAAmount
Query 2: Join the Cash Disbursement table to the CashDisbfor G&A Service Acquisition table on Voucher and Check; constrain cash disbursement date <=7/15/2003 and sum Amount Applied as CDAmount
Query 3: Join Query 1 and Query 2 using an outer join and calculate GAAmount - Nz(CDAmount) as AP
C) Query 1: Sum G&A Service Amount in the G&A Service Acquisition table, while constraining the date field in the G&A Service Acquisition table <=7/15/2003 as GAamount
Query 2: Sum Amount in Cash Disbursement while constraining date field in Cash Disbursement table <=7/15/2003 and constraining Vendor Number to be Not Null as CDAmount
Query 3: Calculate GAamount - Nz(CDAmount) as Accounts Payable for G&A Services
D) Query 1: In G&A Service Acquisition table, group by G&A Acq and Amount, while constraining the date field in the G&A Service Acquisition table <=7/15/2003 as GAAmount
Query 2: Join the Cash Disbursement table to the CashDisbfor G&A Service Acquisition table on Voucher and Check; constrain cash disbursement date <=7/15/2003,group by G&A Acq and sum Amount Applied as CDAmount
Query 3: Join Query 1 and Query 2 on G&A Acq; calculate GAamount - Nz(CDAmount) as ApbyAcqQuery 4: Sum Query 3's APbyAcq field
E) Query 1: Sum G&A Service Amount in the G&A Service Acquisition table, while constraining the date field in the G&A Service Acquisition table <=7/15/03 as GAamount
Query 2: Sum Amount in Cash Disbursement while constraining date field in Cash Disbursement table <=7/15/03 as CDAmount
Query 3: Calculate GAamount - Nz(CDAmount) as Accounts Payable for G&A Services

Question 25

Given the Inventory-Purchase table, a query design, and five possible query results below, which of the query results represents the answer you would obtain if you applied the query design to the Inventory-Purchase table?

A) Answer choice 1
B) Answer choice 2
C) Answer choice 3
D) Answer choice 4
E) Answer choice 5

Question 26

The following conceptual model representation is consistent with which statement below?

A) Information about a vendor cannot be entered into the database until a vendor has been listed as the requested supplier on a purchase requisition
B) A vendor can be listed as the requested supplier on only one purchase requisition
C) A purchase requisition must include a requested vendor
D) A purchase requisition may include no more than one suggested vendor
E) A purchase requisition must include multiple vendors

Question 27

Which of the following financial statement balances is NOT affected by events that occurred in the acquisition/payment business process?

A) Cash
B) Raw materials inventory
C) Supplies inventory
D) Cost of goods sold
E) All of the above are affected by events that occurred in the acquisition/payment business process

Question 28

Which of the following sentences best describes the depicted minimum participation of

A) A G&A Service Acquisition must involve at least one G&A Service Type
B) A G&A Service Type can be acquired without being recorded
C) The same G&A Service Type can be acquired multiple times
D) A G&A Service Type cannot exist without a related G&A Service Acquisition
E) A G&A Service Acquisition can involve multiple types of services

Question 29

The document that initiates activities in the Acquisition/Payment process and is used solely within an enterprise is the

A) Credit memo
B) Vendor invoice
C) Receiving report
D) Purchase order
E) Purchase requisition

Question 30

Which of the following attributes is NOT typically assigned to the entity that represents a mutual commitment in the acquisition/payment process?

A) Delivery method to be used to accomplish the economic increment event
B) Date of the mutual commitment event
C) Dollar amount of the mutual commitment event
D) Expected delivery date for the economic increment event
E) Dollar amount paid for the goods or services for which the commitment was made

Question 31

Wildwood Enterprises has a Purchases table in its database as follows: When a purchase is entered upon the receipt of goods, values for some of these attributes are typically left blank, at least temporarily. Which attributes are they?

A) PurchaseID
B) PurchaseDollarAmount and CashDisbID
C) VendorInvoiceNo.
D) VendorInvoiceNo., InvoiceAmount, and CashDisbID
E) CashDisb ID

Question 32

In the acquisition/payment business process, what underlying real activity does the acquisition event represent?

A) The act of a department supervisor requesting the purchasing agent to purchase a type of good or service
B) The act of a purchasing agent placing an order with a vendor for goods or services
C) The act of a receiving clerk receiving goods or the act of an enterprise receiving services from a vendor
D) The act of an accounts payable clerk receiving a vendor invoice that summarizes the information about the goods or services the vendor claims to have sent
E) The act of a shipping clerk shipping goods to a supplier

Question 33

In the REA enterprise ontology, the act of a shipping clerk sending defective or unwanted goods back to a supplier is a(an)

A) Instigation event
B) Commitment event
C) Economic Increment event
D) Economic decrement event
E) Economic increment reversal event

Question 34

In the REA enterprise ontology, the act of an accounts payable clerk receiving a vendor invoice that summarizes information regarding the transfer of goods or services from the vendor to the enterprise is a(an)

A) Instigation event
B) Commitment event
C) Economic Increment event
D) Economic decrement event
E) Information event that further describes the economic increment event

Question 35

Which of the following entities are usually paired in a reservation relationship in the acquisition/payment business process?

A) Purchase Requisition and Inventory Type
B) Purchase Requisition and Purchase Order
C) Purchase Order and Inventory Type
D) Purchase Order and Purchase
E) Purchase and Inventory

Question 36

What entities and relationships from the acquisition/payment business process are likely needed for a query to identify the receiving clerk name and date associated with a specific purchase?

A) Purchase entity
B) Receiving Clerk entity
C) Purchase entity, Receiving Clerk entity, and Participation relationship between them
D) Purchasing entity and Date relationship
E) Participation entity and Purchase relationship

Question 37

What claim accrues if a cash disbursement occurs without corresponding purchases that total the cash disbursement amount?

A) Accounts payable
B) Accounts receivable
C) Duality
D) Wages payable
E) Prepaid expense

Question 38

Which entities and relationships are typically needed to determine weighted average unit costs for purchased inventory items?

A) Purchase
B) Purchase and Stockflow
C) Purchase and Inventory
D) Inventory and Stockflow
E) Stockflow

Question 39

Which of the following entities and relationships are typically needed to fully specify a set of queries to identify unfilled (including partially filled) inventory purchase orders?

A) Entities: Purchase Order and Purchase
Relationships: None
B) Entities: Purchase Order and Purchase
Relationships: Fulfillment relationship between Purchase Order and Purchase
C) Entities: Purchase Order and Purchase
Relationships: Fulfillment between Purchase Order and Purchase; Reservation between
Purchase Order and Inventory, and Stockflow between Purchase and Inventory.
D) Entities: Inventory, Purchase Order, and Purchase
Relationships: None
E) Entities: Inventory, Purchase Order, and Purchase
Relationships: Fulfillment between Purchase Order and Purchase

Question 40

Which of the following information needs focuses on a reservation relationship in the acquisition/payment business process?

A) Calculation of the average dollar value of purchase orders of a specific inventory type for a specific time period.
B) Count of how many times a specific inventory type has been requisitioned for purchase during a specific time period.
C) Creation of an open purchase order file.
D) Calculation of the quantity of each inventory type, decreased by purchase returns during a specified time period.
E) Calculation of accounts payable for purchases.

Question 41

Using the following tables, what is the name of the vendor to whom the enterprise has paid the most money, and what is the type of business in which that vendor engages?

Question 42

What attributes (if any) of a typical enterprise's purchase entity table need to be included in a query to calculate weighted average unit costs for purchased inventory items? Explain.

Question 43

In the acquisition/payment business process, in which events do receiving clerks typically participate?

Question 44

The expression displayed below contains Nz three times.
Explain the purpose of the Nz function.

Question 45

What effect do cash disbursements in the acquisition/payment cycle have on enterprise resources, and what type of entity are cash disbursements in the REA enterprise ontology?

Question 46

Examine the following value system level model for a wholesale distributor. What part(s) of this diagram encompass the acquisition/payment business process?

Question 47

In a typical REA value chain for a manufacturer, what resource is used up in the acquisition/payment process and what event uses up that resource?

Question 48

GymForceful ordered new equipment on June 1. The supplier confirmed the order on June 2 and promised delivery by June 10. GymForceful received the equipment on June 8. On June 12, GymForceful received an invoice from the supplier requesting payment in full by July 9, and offering a discount of 2% if payment is received in full by June 20. GymForceful sent payment for the discounted invoice amount on June 18.
Which of these events or activities is the Acquisition event and on which date did it occur?

Question 49

List the resource, internal agent, external agent, and any other events typically associated with the purchase order event in the acquisition/payment cycle for a manufacturer.

Question 50

What document is often used to capture information regarding the acquisition event in the acquisition/payment process?

Question 51

Explain the two entities Inventory and Inventory Type. What do they represent, and under what conditions does each of them participate in various relationships in the acquisition/payment process? Use specific examples in your explanation

Question 52

Given the following narrative description for Do-We, Cheat-Um & Howe (DCH):
a. Create a business process level REA model in either grammar or diagram format, for the following DCH business process. Be sure to include all relevant entities, relationships, attributes, and cardinalities (minimum and maximum).
b. Convert your business process level model into a set of minimal relational database tables. Be sure to identify primary and foreign keys in the relational tables.
DCH has a few procurement employees that are responsible for making sure that there are enough office supplies (e.g., copy machine paper, toner cartridges, legal pads, ink pads, computer disks, etc.) on hand. When a procurement employee notices that there is a need for more supplies, he or she purchases the needed items from a supplier. Purchases of office supplies cannot occur without a procurement employee and a supplier. Purchases can never involve more than one procurement employee and one supplier. Most purchases involve many different types of supplies. Most suppliers provide DCH with many different types of supplies. Some types of supplies, for example copy machine paper, are available from many suppliers. The different suppliers offer different list prices (i.e., costs to DCH) for the same type of supply, so DCH wants to track specific list prices for each supplier. The list prices must be entered into the database before a supply purchase can occur.
Purchases are usually made on account. Purchases are always paid in full at the end of the following month (at that time, one check per vendor is written to cover all purchases in the prior month). Checks can only be written by one of DCH's three accountants. A check can never be issued to more than one supplier at a time. There are cash disbursements made (always by one of the accountants) for other transactions such as payroll, court fees, legal association dues, etc. These cash disbursements must be included in the database. Each cash disbursement draws on one specific bank account; each account used for cash disbursements typically has 10 checks written from it per week. Only a very small proportion (around 10%) of cash disbursements are related to supply purchases. Finally, all supplies must be assigned to a specific department (although the same type of supply is usually assigned to more than one department) and tracked in the database. Departments can exist, and be in the database, without having any related supplies. A department can have many assigned supplies.
DCH wants to be able to immediately enter all agents into the database before they are involved in any transactions. However, when a supplier is entered into the database there is always at least one supply that they are known to sell. Additionally, each type of supply must be associated with at least one specific supplier.
Attributes (do not add any, do not delete any, and use each only one time)
At the end of your solution, write any ambiguities you found in the narrative (if any) and assumptions you made to resolve those ambiguities for the Do-We, Cheatum, and Howe problem.

Question 53

Given the following narrative description for Tina's Toy Factory (TTF):
a. Create a business process level REA model in either grammar or diagram format, for the following TTF business process. Be sure to include all relevant entities, relationships, attributes, and cardinalities (minimum and maximum).
b. Convert your business process level model into a set of minimal relational database tables. Be sure to identify primary and foreign keys in the relational tables.
Tina's Toy Factory (TTF) is a very busy company where employees work very hard to make enough toys to satisfy consumer demand. Tina, the CEO, has asked you to design a conceptual model from which a database may be implemented using the REA ontology.
In order to build many different toys, TTF's employees determine the different raw material types that are required. For example, paper is needed for sports cards and plastic is needed for Barbie Dolls and Wrestle Mania toys. When an employee determines a need for new raw materials he or she initiates a requisition. A requisition cannot occur without an employee. During "busy season" (typically mid-August through mid-November because of additional volume needed for Christmas) TTF processes thousands of requisitions. Each requisition involves at least one type of raw material, but only one vendor. When an employee fills out a requisition, one intended vendor must be listed. At any time only one employee can be responsible for a requisition. An order can only be placed after the requisition has been approved by Tina and entered into the database (note: Tina is not considered to be an employee). Each requisition relates to only one order, however an order can encompass many requisitions. Orders for raw materials (obviously an order can be made for different raw material types) are made by an employee and for control purposes, Tina never approves the order (since she approves the requisition). All orders must specify the vendor. Multiple deliveries can relate to any order. When a delivery of raw materials occurs, a receiving report is filled out. A receiving report has to relate to at least one order.
With all of the manufacturing activity taking place at TTF, there is great demand for fixed assets. Tina is the only one allowed to order fixed assets (therefore she does not need to fill out a requisition - however, she does fill out an order). An order cannot involve both raw materials and fixed assets. Tina can order many different fixed assets at a time, and each individual fixed asset will be identified with a unique fixed asset number. Fixed assets are only entered into the database after they have been ordered. Usually it takes about two weeks after the order date for the fixed assets to be delivered. When the fixed assets are delivered they are recorded on a receiving report. However, a particular receiving report can only relate to raw materials or fixed assets, but not both. Exactly one employee and one vendor relate to each receiving report.
Most vendors allow for payments on account and for installment payments. Sometimes a payment will be made for all raw materials or fixed assets received in the prior month from the same vendor. TTF wants to allow for payments for other expenses such as payroll. A payment cannot be made to more than one vendor at a time. Tina makes all of the payments, and each payment is drafted on one cash account.
Tina, employees, vendors, cash accounts, and raw material types are entered into the database before any events involving them occur. However, instances of the mentioned agents and resources can relate to many events.
Be sure to incorporate each and every attribute from the following list once and only once in your solution. Do not add any attributes to your solution. You may use the abbreviations indicated in the parentheses.
Employee ID # (Emp-ID)
Tina's ID # (Tina-ID)
Receiving Report Date (RR-Date)
Cash Account Type (CA-Type)
Fixed Asset Description (FA-Desc)
Requisition Date (Req-Date)
Raw Material Type # (RM-Type #)
Vendor Name (V-Name)
Tina's Cell Phone # (T-Ph#)
Purchase Order # (PO#)
Raw Material Type Description (RM-Type-Desc)
Quantity of a Raw Material Type Requisitioned (Qty-Req)
Quantity of a Raw Material Type Ordered (Qty-Ord)
Purchase Order Date (PO-Date)
Vendor # (V-#)
Cash Account # (CA-#)
Cash Disbursement # (CD-#)
Dollar Amount of a Disbursement Applied to a Purchase (Amt-Applied)
Fixed Asset Acquisition Cost (FA-Cost)
Unit Cost of a Raw Material Type on an Order (Ord-Cost)
Quantity of a Raw Material Received in a Delivery (Qty-Recv)
Requisition # (Req-#)
Cash Disbursement Date (CD-Date)
Vendor Address (V-Addr)
Cash Disbursement Total Dollar Amount (CD-Amt)
Employee Name (E-Name)
Receiving Report # (RR#)
Fixed Asset # (FA#)
Estimated Cost of RM Type per Requisition (Est-Cost)
At the end of your solution, write any ambiguities you found in the narrative (if any) and assumptions you made to resolve those ambiguities for the Tina's Toy Factory problem.

Question 54

Create a "generic" REA business process level model (without cardinalities) in either grammar or diagram format to represent the acquisition/payment business process for a company that acquires merchandise via mail order using a requisition process. Your model should encompass the entire acquisition/payment, from the requisitioning of merchandise to the payment of cash, and allow for the possibility of purchase returns (for account credit only).

Question 55

Given the following narrative description for Primarily Pineapples:
a. Create a business process level REA model in either grammar or diagram format, for the following Primarily Pineapples business process. Be sure to include all relevant entities, relationships, attributes, and cardinalities (minimum and maximum).
b. Convert your business process level model into a set of minimal relational database tables. Be sure to identify primary and foreign keys in the relational tables.
Primarily Pineapples is a closely held, debt-financed, wholesale distributor that, as the name implies, specializes in pineapple products. Primarily Pineapples buys bulk quantities of pineapples and pineapple products such as candy and syrup from pineapple growers and producers of pineapple products, and sells the products to grocery stores.
Several buyers handle procurement for Primarily Pineapples. Each buyer is assigned to specific pineapple growers or producers of the specialty products. Each supplier is assigned to one and only one buyer. Each order is the responsibility of at most one buyer. If multiple item types are needed and are available from a single supplier, those items are all included on a single order. Each item Primarily Pineapples purchases may be available from multiple vendors. Primarily Pineapples has one or two preferred vendors for some types of pineapple products, and wants to track those preferences. Primary Pineapples does purchase products from vendors who are not preferred for any specific product.
One of several Primarily Pineapples receiving clerks counts the products received from vendors and enters the quantities on a receiving report for entry into the system. Each shipment received contains products ordered on a single purchase order, and each purchase order results in a single receipt of products.
One of several Primarily Pineapples accounts payable clerks prepares a check drawn on one of the enterprise's checking accounts to pay vendors for purchases. One check is prepared for all purchases made from a vendor during the previous week. Partial payments are never made. Primarily Pineapples has checking accounts at several different banks.
Employees, vendors, products, cash accounts, and banks can be added to the database before any transactions involving them occur.
Primarily Pineapples' owner (Penelope) has provided you with the following list of attributes that must be included in the database. Do not add or subtract any attributes. You may abbreviate the attributes as illustrated in boldface.
At the end of your solution, write any ambiguities you found in the narrative (if any) and assumptions you made to resolve those ambiguities for the Primarily Pineapples problem.