Question 1

Which of the controls below would be least effective at preventing a company from ordering goods at a price higher than market?

Accepted Answer

A) Only place orders with vendors on an approved vendor list. 
B) Variance analysis of actual expenses to budgeted expenses 
C) For high-dollar goods, solicit competitive bids from possible vendors. 
D) Frequent review of, and update to, vendor price lists stored in the AIS 
A) Only place orders with vendors on an approved vendor list. 
B) Variance analysis of actual expenses to budgeted expenses 
C) For high-dollar goods, solicit competitive bids from possible vendors. 
D) Frequent review of, and update to, vendor price lists stored in the AIS

Question 2

Which electronic files are either read or updated when goods are ordered from a vendor?

Accepted Answer

A) inventory, vendors, and accounts payable 
B) vendors and accounts payable 
C) inventory, vendors, and open purchase orders 
D) open purchase orders and accounts payable 
A) inventory, vendors, and accounts payable 
B) vendors and accounts payable 
C) inventory, vendors, and open purchase orders 
D) open purchase orders and accounts payable

Question 3

Identify the most accurate statement below.

Accepted Answer

A) Several purchase requisitions are often created to fill one purchase order. 
B) Several purchase orders are often created to fill one purchase requisition. 
C) Every purchase requisition should lead to the creation of one purchase order. 
D) Every purchase order should lead to the creation of one purchase requisition. 
A) Several purchase requisitions are often created to fill one purchase order. 
B) Several purchase orders are often created to fill one purchase requisition. 
C) Every purchase requisition should lead to the creation of one purchase order. 
D) Every purchase order should lead to the creation of one purchase requisition.

Question 4

Which of the following threats is not specific to the purchase requisition process of the expenditure cycle?

Accepted Answer

A) stockouts 
B) purchasing from unauthorized vendors 
C) requisitioning goods not needed 
D) All of the above are threats in the purchase requisition process. 
A) stockouts 
B) purchasing from unauthorized vendors 
C) requisitioning goods not needed 
D) All of the above are threats in the purchase requisition process.

Question 5

The ________ specifies the point at which inventory is needed.

Accepted Answer

A) company inventory policies 
B) reorder point 
C) economic order quantity 
D) stockout point 
A) company inventory policies 
B) reorder point 
C) economic order quantity 
D) stockout point

Question 6

Just-In-Time (JIT)inventory is best characterized by

Accepted Answer

A) frequent deliveries of large quantities to be held at the work centers. 
B) frequent deliveries of smaller quantities of items to the work centers. 
C) less frequent deliveries of large quantities of goods to central receiving. 
D) infrequent bulk deliveries of items directly to work centers. 
A) frequent deliveries of large quantities to be held at the work centers. 
B) frequent deliveries of smaller quantities of items to the work centers. 
C) less frequent deliveries of large quantities of goods to central receiving. 
D) infrequent bulk deliveries of items directly to work centers.

Question 7

Which of the following controls can minimize the threat of errors in supplier invoices?

Accepted Answer

A) The use of positive pay. 
B) Do not inform receiving employees about quantity ordered. 
C) The use of ERS. 
D) Perpetual inventory system. 
A) The use of positive pay. 
B) Do not inform receiving employees about quantity ordered. 
C) The use of ERS. 
D) Perpetual inventory system.

Question 8

Which of the following factors is not of key importance when selecting inventory suppliers?

Accepted Answer

A) product price 
B) vendor corporate structure 
C) product quality 
D) vendor delivery dependability 
A) product price 
B) vendor corporate structure 
C) product quality 
D) vendor delivery dependability

Question 9

Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?

Accepted Answer

A) control of physical access to the inventory storage areas 
B) transfers of inventory with proper documentation 
C) sending "blind" copies of purchase orders to inventory control for data entry 
D) making physical counts of inventory at least once per year 
A) control of physical access to the inventory storage areas 
B) transfers of inventory with proper documentation 
C) sending "blind" copies of purchase orders to inventory control for data entry 
D) making physical counts of inventory at least once per year

Question 10

What is the key difference between the MRP and JIT inventory management approaches?

Accepted Answer

A) Only JIT reduces costs and improves efficiency. 
B) MRP is especially useful for products such as fashion apparel. 
C) JIT is more effectively used with products that have predictable patterns of demand. 
D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands. 
A) Only JIT reduces costs and improves efficiency. 
B) MRP is especially useful for products such as fashion apparel. 
C) JIT is more effectively used with products that have predictable patterns of demand. 
D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.

Question 11

Which of the following would probably be the least effective control to mitigate the risk of paying a phony invoice payable for inventory purchases that were never made?

Accepted Answer

A) Only pay from original invoices. 
B) Require three-way match for all inventory purchase invoices. 
C) Cancel all invoices and supporting documentation when paid. 
D) Establish strict access and authorization controls for the approved vendor master file. 
A) Only pay from original invoices. 
B) Require three-way match for all inventory purchase invoices. 
C) Cancel all invoices and supporting documentation when paid. 
D) Establish strict access and authorization controls for the approved vendor master file.

Question 12

The receiving clerk at Wattana Technologies examines incoming shipments and reconciles their contents with the relevant purchase orders.A receiving report is then sent to accounts receivable and the vendor's invoice is approved for payment.Which of the following would correct control weaknesses related to these activities?

Accepted Answer

A) Accounts payable should reconcile the purchase order and the receiving report. 
B) The invoice should be approved for payment by the shipping clerk after the purchase order and receiving report are reconciled. 
C) Invoices, purchase orders, and receiving reports should be reconciled by the receiving clerk. 
D) Controls are adequate under the current system. 
A) Accounts payable should reconcile the purchase order and the receiving report. 
B) The invoice should be approved for payment by the shipping clerk after the purchase order and receiving report are reconciled. 
C) Invoices, purchase orders, and receiving reports should be reconciled by the receiving clerk. 
D) Controls are adequate under the current system.

Question 13

Why would a firm perform ABC cost analysis?

Accepted Answer

A) to identify the best inventory supplier 
B) to reconcile accounts payable 
C) to prioritize physical inventory counts 
D) to verify production quality 
A) to identify the best inventory supplier 
B) to reconcile accounts payable 
C) to prioritize physical inventory counts 
D) to verify production quality

Question 14

Procurement cards differ from corporate credit cards in which of the following ways?

Accepted Answer

A) Credit limits can be set for procurement cards, but not corporate credit cards. 
B) Credit cards can be used to make purchases without an explicit sign off by supervisors, but procurement cards require a sign off. 
C) Procurement cards can only be used with approved vendors, but credit cards can be used anywhere. 
D) Procurement card invoices are sent separately for each card, whereas corporate credit cards are consolidated into a single invoice. 
A) Credit limits can be set for procurement cards, but not corporate credit cards. 
B) Credit cards can be used to make purchases without an explicit sign off by supervisors, but procurement cards require a sign off. 
C) Procurement cards can only be used with approved vendors, but credit cards can be used anywhere. 
D) Procurement card invoices are sent separately for each card, whereas corporate credit cards are consolidated into a single invoice.

Question 15

The operation of an imprest petty cash fund technically violates the principle of segregation of duties.

Accepted Answer

A) True 
 B)False

Question 16

Evaluated receipt settlement increases efficiency by

Accepted Answer

A) eliminating the need for receiving reports. 
B) eliminating the need for vendor invoices. 
C) eliminating the need for purchase orders. 
D) eliminating the need to prepare and mail checks. 
A) eliminating the need for receiving reports. 
B) eliminating the need for vendor invoices. 
C) eliminating the need for purchase orders. 
D) eliminating the need to prepare and mail checks.

Question 17

How can using RFID tags or bar codes on goods or products provide significant benefit in the expenditure cycle?

Accepted Answer

RFID tags and bar codes can significantl

Question 18

Ngai Nhung is the sales manager at Hung Technologies.At lunch with the company CEO,Ngai complained that a recent shipment from a vendor had been unsatisfactory and was returned.As a result,Hung's purchasing manager needed to send a ________ to the supplier.

Accepted Answer

A) debit memo 
B) purchase order 
C) blanket purchase order 
D) receiving report 
A) debit memo 
B) purchase order 
C) blanket purchase order 
D) receiving report

Question 19

A JIT inventory system would be especially useful for a company that manufactures

Accepted Answer

A) toys associated with new movie releases. 
B) toothpaste. 
C) alarm clocks. 
D) motor oil. 
A) toys associated with new movie releases. 
B) toothpaste. 
C) alarm clocks. 
D) motor oil.

Question 20

A receiving clerk notes that a delivery of 10 units has been received,but the purchase order specified 12 units.A debit memo will need to be prepared to adjust for the difference between the quantity ordered and received.Who should prepare this document?

Accepted Answer

A) the receiving clerk 
B) the controller 
C) the vendor 
D) the purchasing department manager 
A) the receiving clerk 
B) the controller 
C) the vendor 
D) the purchasing department manager

Exam 13: The Expenditure Cycle: Purchasing to Cash Disbursements

Which of the controls below would be least effective at preventing a company from ordering goods at a price higher than market?

Which electronic files are either read or updated when goods are ordered from a vendor?

Identify the most accurate statement below.

Which of the following threats is not specific to the purchase requisition process of the expenditure cycle?

The ________ specifies the point at which inventory is needed.

Just-In-Time (JIT)inventory is best characterized by

Which of the following controls can minimize the threat of errors in supplier invoices?

Which of the following factors is not of key importance when selecting inventory suppliers?

Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?

What is the key difference between the MRP and JIT inventory management approaches?

Which of the following would probably be the least effective control to mitigate the risk of paying a phony invoice payable for inventory purchases that were never made?

Why would a firm perform ABC cost analysis?

Procurement cards differ from corporate credit cards in which of the following ways?

The operation of an imprest petty cash fund technically violates the principle of segregation of duties.

Evaluated receipt settlement increases efficiency by

How can using RFID tags or bar codes on goods or products provide significant benefit in the expenditure cycle?

Ngai Nhung is the sales manager at Hung Technologies.At lunch with the company CEO,Ngai complained that a recent shipment from a vendor had been unsatisfactory and was returned.As a result,Hung's purchasing manager needed to send a ________ to the supplier.

A JIT inventory system would be especially useful for a company that manufactures

A receiving clerk notes that a delivery of 10 units has been received,but the purchase order specified 12 units.A debit memo will need to be prepared to adjust for the difference between the quantity ordered and received.Who should prepare this document?

Conceptual Foundations of Accounting Information Systems

Overview of Transaction Processing and Enterprise Resource Planning Systems

Systems Documentation Techniques

Relational Databases

Computer Fraud

Computer Fraud and Abuse Techniques

Control and Accounting Information Systems

Controls for Information Security

Confidentiality and Privacy Controls

Processing Integrity and Availability Controls

Auditing Computer-Based Information Systems

The Revenue Cycle: Sales to Cash Collections

The Production Cycle

The Human Resources Management and Payroll Cycle

General Ledger and Reporting System

Database Design Using the Rea Data Model

Implementing an Rea Model in a Relational Database

Special Topics in Rea Modeling

Introduction to Systems Development and Systems Analysis

Ais Development Strategies

Systems Design, implementation, and Operation

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