Question 1

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

Accepted Answer

A) Three-way match 
B) Document matching 
C) Automated matching 
D) Disbursement authorization

Question 2

Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be:

Accepted Answer

A) Supported by a receiving report 
B) Stamped "paid" by the check signer 
C) Prenumbered and accounted for 
D) Approved for authorized purchases

Question 3

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:

Accepted Answer

A) Incorrect amounts 
B) Fictitious returns 
C) Timing issues 
D) Duplicate returns

Question 4

Internal controls related to the purchase returns would include all of the following, except:

Accepted Answer

A) The accounts payable employee who prepares the debit memo should also be responsible for handling the inventory and approving the return. 
B) Special authorization should be required to officially reject and return the items. 
C) Debit memos should be issued on pre-numbered forms in numerical sequence. 
D) Accounts payable records and data files should be restricted to those who are specifically authorized to approve or record the related purchase return.

Question 5

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:

Accepted Answer

A) General Ledger Systems 
B) Integrated Accounting Systems 
C) Journal Application Systems 
D) Transaction Processing Systems

Question 6

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 7

This control requires the approval and signature of two authorized persons, on checks over the predetermined threshold amount, which reduces the risk of significant fraud or error.

Accepted Answer

A) Double Remittance 
B) Duo-Authorization 
C) Bi-Sign 
D) Dual Signature

Question 8

The internal control process that requires the approval of the purchase return transaction take place before the preparation of the debit memo, will help to minimize the risk of:

Accepted Answer

A) Fictitious returns 
B) Omitted returns 
C) Invalid returns 
D) Wrong vendor

Question 9

Credit cards given to employees by the organization in order for the employees to make designated purchases are called:

Accepted Answer

A) Employee Debit Cards 
B) Organization Purchase Cards 
C) Expenditure Cards 
D) Procurement Cards

Question 10

Which of the following is the correct chronological order of events in the purchase return process?

Accepted Answer

A) 1 = receive return authorization; 2 = prepare debit memo; 3 = receive credit or check; 4 = goods returned 
B) 1 = prepare debit memo; 2 = receive credit or check; 3 = goods returned; 4 = receive return authorization 
C) 1 = receive return authorization; 2 = prepare debit memo; 3 = goods returned; 4 = receive credit or check 
D) 1 = receive return authorization; 2 = goods returned ; 3 = prepare debit memo; 4 = receive credit or check

Question 11

When goods are received at the end of the accounting period, and the invoice is not received until after the start of the following period, a problem may arise as to when to record the liability.This is referred to as a(n):

Accepted Answer

A) Obligation referral 
B) Cutoff issue 
C) Liability deferral 
D) Channel stuffing

Question 12

The internal control process that requires purchase return records be matched with the original purchase documentation and verified for item descriptions, quantities, dates, and prices, will help to minimize the risk of:

Accepted Answer

A) Incorrect amounts 
B) Omitted returns 
C) Fictitious returns 
D) Invalid vendors

Question 13

In order to help safeguard the security and confidentiality in an electronic business environment, a company should implement controls such as user ID, password, log-in procedures, access levels, and authority tables in order to reduce the risk of:

Accepted Answer

A) Unauthorized access 
B) Incomplete audit trail 
C) Virus and worm attacks 
D) Repudiation of purchase transactions

Question 14

The examination of the system to determine the adequacy of security measures and to identify security deficiencies is called:

Accepted Answer

A) Intrusion detection 
B) Penetration testing 
C) Vulnerability testing 
D) Integrity testing

Question 15

Personnel who work in the receiving area should complete all of the following processes, except:

Accepted Answer

A) Counting the goods received 
B) Inspecting goods received for damage 
C) Preparing a receiving report 
D) Preparing an invoice

Question 16

Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system?

Accepted Answer

A) Computer-based matching system 
B) Electronic data interchange 
C) Evaluated receipt settlement 
D) Microsoft Dynamics

Question 17

Immediate preparation of receiving reports for all actual receipts of goods helps to minimize the risk of:

Accepted Answer

A) Timing issues 
B) Omitted transactions 
C) Invalid purchases 
D) All of the above

Question 18

For proper segregation of duties in cash disbursements, the person who signs checks also:

Accepted Answer

A) Reviews the monthly bank reconciliation 
B) Returns the checks to accounts payable 
C) Is denied access to the supporting documents 
D) Is responsible for mailing the checks

Question 19

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

Accepted Answer

A) An accounts payable subsidiary ledger and a cash disbursement journal are fundamental records in the cash disbursement process. 
B) The practice of issuing checks on prenumbered forms creates a record of the sequence of transactions. 
C) The orderly maintenance of accounts payable records facilitates effective cash management techniques. 
D) Physical controls should be in place in the areas where cash is retained and disbursed.

Question 20

Which of the following would be referred to as a common carrier?

Accepted Answer

A) Taxi-cab 
B) Trucking company 
C) City bus 
D) Fire department vehicle

Exam 9: Expenditures Processes and Controlspurchases