Exam 11: The Expenditure Cycle: Purchasing and Cash Disbursements

Special care should be taken when EFT payments are made to vendors.What control should be put in place that assigns responsibility for EFT payments?

A key decision in ordering is selecting a suitable vendor.Which of the following would not be a major criterion in vendor selection?

Within the expenditure cycle,internal information flows

Identify ten threats and applicable control procedures for each process/activity in the expenditure cycle.

The evaluated receipt settlement (ERS)replaces the more traditional 3-way matching process with a 2-way match of the purchase order and the

The management at Sad Clown Pajamas,an Internet-based wholesaler,is considering a new inventory control system.The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs.The new system,which will focus on ensuring that the amounts purchased minimize these costs,will employ

When goods are being ordered from a vendor,which electronic files are either read or updated?

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

Bob Chum is the sales manager at Folding Squid Technologies.At lunch with the company CEO,he proudly announced that he had negotiated a ______ with a client that defined a long-term commitment to buy components from Folding Squid.

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

A __________ system is a system in which an approved invoice is posted to the vendor account and is stored in an open invoice file until payment is made by check.

The receiving clerk at Folding Squid 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,if any,related to these activities?

a)Define expenditure cycle. b)What are the basic expenditure cycle activities?

How is the expenditure cycle a "mirror image" of the revenue cycle?

What is not an advantage to using disbursement vouchers?

There is a threat of paying an invoice twice.What is an applicable control that may help mitigate this threat?

What is one of the best ways to improve the overall efficiency and effectiveness of the receipt and storage of ordered items?

The inventory management approach that attempts to minimize,if not eliminate,carrying and stockout costs is

How can information technology be used to improve the vendor invoice approval process?

The receiving department has two major responsibilities in connection with the expenditure cycle.Identify one of these responsibilities.