Question 1

Copies of invoices should be filed in the account in alphabetic order by name of the vendors.

Accepted Answer

A) True 
 B)False

Question 2

Goods received are unacceptable due to may different situations.Which of the following is not one of those situations?

Accepted Answer

A) Damage or defects 
B) Changes in the company needs regarding future sales or production 
C) Errors in the type of goods delivered or ordered 
D) Timing issues

Question 3

In order to help safeguard the availability in an electronic business environment, a company should implement controls such as business continuity planning, backup data and systems, in order to reduce the risk of:

Accepted Answer

A) Unauthorized access 
B) System failures 
C) Repudiation of purchase transactions 
D) Invalid data entry

Question 4

This document, prepared by the vendor, provides details of the items included in the delivery; and is normally signed by the receiving clerk as verification of receipt.

Accepted Answer

A) Packing slip 
B) Receiving report 
C) Bill of lading 
D) Purchase order

Question 5

The internal control activities within the purchasing process, related to authorization of transactions, would include which of the following?

Accepted Answer

A) The accounting duties related to requisitioning, ordering, and receiving goods should be performed by different individuals. 
B) The custody of inventory and the recording of inventory transactions are required to be maintained. 
C) Specific individuals should be given authoritative responsibility for preparing purchase requisitions and purchase orders which would include which items to purchase, how many items, and which vendor. 
D) Periodic physical inventory counts are to be reconciled with the inventory ledger and general ledger.

Question 6

The accounting record that includes the details of amounts owed to each vendor is called the:

Accepted Answer

A) Accounts payable subsidiary ledger 
B) Purchases journal 
C) Accounts receivable subsidiary ledger 
D) Receiving log

Question 7

Within the cash disbursement process, specific steps should be taken to enhance the effectiveness and efficiency of making payments to vendors.Which of the following is NOT one of those steps?

Accepted Answer

A) Vendor account reconciliation 
B) Maintenance of the general ledger 
C) Cash management techniques 
D) Payment authorization

Question 8

It is likely that expenditure fraud and ethics violations could be eliminated by a strong, ethical "tone at the top" along with encouragement of ethical behavior by all employees, and strong internal controls.

Accepted Answer

A) True 
 B)False

Question 9

This type of system matching takes place without invoices.The receipt of goods is carefully evaluated an, if it matches the purchase order, settlement of the obligation occurs through the system.

Accepted Answer

A) Business Process Engineering 
B) Controlled Access Invoicing 
C) Evaluated Receipt Settlement 
D) Double Matching System

Question 10

A tear-off part of a check that has a simple explanation of the reasons for the payment is called:

Accepted Answer

A) Remittance advice 
B) Disbursement journal 
C) Transaction description 
D) Cash register

Question 11

A company is not obligated to pay for goods until 30 days after the goods are received.

Accepted Answer

A) True 
 B)False

Question 12

Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor?

Accepted Answer

A) Purchasing 
B) Receiving 
C) Accounts Payable 
D) Shipping

Question 13

Which of the following is most likely to be effective in deterring fraud by upper level managers?

Accepted Answer

A) Internal controls 
B) An enforced code of ethics 
C) Matching documents prior to payment 
D) Segregating custody of inventory from inventory record keeping
TEST BANK - CHAPTER 9 - MULTIPLE CHOICE

Question 14

It is necessary for the purchasing department to set up the proper procedures to avoid problems related to cutoff issues.

Accepted Answer

A) True 
 B)False

Question 15

The internal control process of having the receiving reports prepared on pre-numbered forms so that the sequence of receipts can be reviewed for proper recording will help to minimize the related risk of:

Accepted Answer

A) Invalid vendors 
B) Omitted purchases 
C) Fictitious purchases 
D) Timing issues

Question 16

When an invoice is paid, it should be canceled to indicate that it has been paid.

Accepted Answer

A) True 
 B)False

Question 17

In order to help safeguard the processing integrity in an electronic business environment, a company should implement input controls such as field check, validity check, limit check, reasonableness check, and computer logs in order to reduce the risk of:

Accepted Answer

A) Worm attacks 
B) Hackers 
C) Unauthorized access 
D) Invalid data entry

Question 18

Internal control activities within the purchasing process, identified as segregation of duties, would include all of the following, except:

Accepted Answer

A) Responsibility for authorization, custody, and record keeping are to be assigned to different individuals. 
B) Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals. 
C) Complete separation of inventory custody from inventory accounting. 
D) Purchasing records and programs must be protected from unauthorized access.

Question 19

The main reason that receiving clerks are denied access to purchase order quantities and prices is to:

Accepted Answer

A) Ensure that the receiving clerk actually takes the time to verify the accuracy of a delivery before accepting it. 
B) Prevent the receiving clerk from stealing delivered goods and manipulating the quantities and prices of received goods. 
C) Prevent fraudulent collusion between the common carrier and the receiving clerk. 
D) N/A - the receiving clerk is NOT denied access to purchase order quantities and prices.

Question 20

The document prepared when purchased items are returned is an):

Accepted Answer

A) Debit memo 
B) Invoice 
C) Receiving report 
D) Shipping notice

Exam 9: Expenditures Processes and Controls - Purchases

Copies of invoices should be filed in the account in alphabetic order by name of the vendors.

Goods received are unacceptable due to may different situations.Which of the following is not one of those situations?

In order to help safeguard the availability in an electronic business environment, a company should implement controls such as business continuity planning, backup data and systems, in order to reduce the risk of:

This document, prepared by the vendor, provides details of the items included in the delivery; and is normally signed by the receiving clerk as verification of receipt.

The internal control activities within the purchasing process, related to authorization of transactions, would include which of the following?

The accounting record that includes the details of amounts owed to each vendor is called the:

Within the cash disbursement process, specific steps should be taken to enhance the effectiveness and efficiency of making payments to vendors.Which of the following is NOT one of those steps?

It is likely that expenditure fraud and ethics violations could be eliminated by a strong, ethical "tone at the top" along with encouragement of ethical behavior by all employees, and strong internal controls.

This type of system matching takes place without invoices.The receipt of goods is carefully evaluated an, if it matches the purchase order, settlement of the obligation occurs through the system.

A tear-off part of a check that has a simple explanation of the reasons for the payment is called:

A company is not obligated to pay for goods until 30 days after the goods are received.

Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor?

Which of the following is most likely to be effective in deterring fraud by upper level managers?

It is necessary for the purchasing department to set up the proper procedures to avoid problems related to cutoff issues.

The internal control process of having the receiving reports prepared on pre-numbered forms so that the sequence of receipts can be reviewed for proper recording will help to minimize the related risk of:

When an invoice is paid, it should be canceled to indicate that it has been paid.

In order to help safeguard the processing integrity in an electronic business environment, a company should implement input controls such as field check, validity check, limit check, reasonableness check, and computer logs in order to reduce the risk of:

Internal control activities within the purchasing process, identified as segregation of duties, would include all of the following, except:

The main reason that receiving clerks are denied access to purchase order quantities and prices is to:

The document prepared when purchased items are returned is an) :