Question 1

All of the following are external reports except:

Accepted Answer

A) Balance Sheet 
B) Income Statement 
C) Cash Flows Statement 
D) Aged Accounts Receivable Schedule

Question 2

The internal control process that requires vendor statements to be reviewed monthly and reconciled with accounts payable records, will help to minimize the risk of:

Accepted Answer

A) Invalid returns 
B) Stolen goods 
C) Wrong account numbers 
D) Omitted returns

Question 3

The accounts payable department keeps copies of purchase orders and receiving reports, that will be compared to the related invoice, to be sure that the invoices represent goods that were ordered and received.

Accepted Answer

A) True 
 B)False

Question 4

A purchase requisition is essentially an internal document, one that does not go outside the company, whereas a purchase order is an external document, which will be presented to an entity outside the company.

Accepted Answer

A) True 
 B)False

Question 5

Corporate governance policies and procedures must be in place to assure that funds are expended only to the benefit the organization and its owners.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchasing transactions?

Accepted Answer

A) Is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? 
B) Are prenumbered purchase requisitions used and are they subsequently matched with vendor invoices? 
C) Is there a regular reconciliation of the inventory records with the file of unpaid vouchers? 
D) Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?

Question 7

The date that is the end of the accounting period is referred to as the:

Accepted Answer

A) Fiscal date 
B) Change off 
C) Accounting cut 
D) Cutoff

Question 8

A company may reject goods received due to a number of reasons.The process related to this is referred to as:

Accepted Answer

A) Purchases 
B) Purchase Returns 
C) Accounts Payable 
D) Receiving

Question 9

A purchase order is essentially an internal document, one that does not go outside the company, whereas a purchase requisition is an external document, which will be presented to an entity outside the company.

Accepted Answer

A) True 
 B)False

Question 10

A computer software technique in which the computer software matches a Purchase Order to its related receiving report and invoice is called an):

Accepted Answer

A) Three way matching 
B) Document matching 
C) Disbursement approval 
D) Automated matching

Question 11

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 12

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 13

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 14

Because the evaluated receipts settlement process relies heavily on an IT system that can quickly access online purchase-order files, a system slowdown could halt all receiving activity.

Accepted Answer

A) True 
 B)False

Question 15

The security of assets and documents related to cash disbursements would include all of the following, except:

Accepted Answer

A) Access to cash should be limited to the authorized check signers. 
B) Physical controls should be in place where the cash is retained and disbursed. 
C) Access to records should be limited to persons with the authority to sign checks. 
D) The company's stock of unused checks should be protected and controlled.

Question 16

Advantages of an automated system includes all of the following, except:

Accepted Answer

A) Reduce time, costs, errors, and duplicate payments. 
B) Increased cost of the system. 
C) Provides management more timely information to forecast future cash outflows for payment of invoices. 
D) Summarized detailed transactions into summary amounts that are posted to the general ledger accounts.

Question 17

A record keeping tool used to record purchases in a manual accounting system.This "tool" would consist of recording all of the purchased orders issued to vendors in a chronological order.

Accepted Answer

A) Purchase order 
B) Purchase requisition 
C) Purchase invoice 
D) Purchase journal

Question 18

Cash should be periodically verified by comparing the balance in the check book with the balance in the cash account in the general ledger.

Accepted Answer

A) True 
 B)False

Question 19

In order to institute an automated matching system, all of the relevant files must exist in the same physical room.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 9: Expenditures Processes and Controls - Purchases

All of the following are external reports except:

The internal control process that requires vendor statements to be reviewed monthly and reconciled with accounts payable records, will help to minimize the risk of:

The accounts payable department keeps copies of purchase orders and receiving reports, that will be compared to the related invoice, to be sure that the invoices represent goods that were ordered and received.

A purchase requisition is essentially an internal document, one that does not go outside the company, whereas a purchase order is an external document, which will be presented to an entity outside the company.

Corporate governance policies and procedures must be in place to assure that funds are expended only to the benefit the organization and its owners.

Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchasing transactions?

The date that is the end of the accounting period is referred to as the:

A company may reject goods received due to a number of reasons.The process related to this is referred to as:

A purchase order is essentially an internal document, one that does not go outside the company, whereas a purchase requisition is an external document, which will be presented to an entity outside the company.

A computer software technique in which the computer software matches a Purchase Order to its related receiving report and invoice is called an) :

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:

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:

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.

Because the evaluated receipts settlement process relies heavily on an IT system that can quickly access online purchase-order files, a system slowdown could halt all receiving activity.

The security of assets and documents related to cash disbursements would include all of the following, except:

Advantages of an automated system includes all of the following, except:

A record keeping tool used to record purchases in a manual accounting system.This "tool" would consist of recording all of the purchased orders issued to vendors in a chronological order.

Cash should be periodically verified by comparing the balance in the check book with the balance in the cash account in the general ledger.

In order to institute an automated matching system, all of the relevant files must exist in the same physical room.

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: