[go: up one dir, main page]

0% found this document useful (0 votes)
693 views4 pages

Chapter Test - Expenditure Cycle

This document contains a 10 question multiple choice test on the expenditure cycle from purchasing to cash disbursement. It also includes a matching exercise that matches 17 terms related to purchasing and accounts payable to their definitions, and matches 13 threats in purchasing to appropriate control procedures. The test covers topics like purchase orders, receiving reports, supplier invoices, voucher packages, accounts payable systems, inventory controls, and segregation of duties controls in the expenditure cycle.

Uploaded by

Faith Reyna Tan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
693 views4 pages

Chapter Test - Expenditure Cycle

This document contains a 10 question multiple choice test on the expenditure cycle from purchasing to cash disbursement. It also includes a matching exercise that matches 17 terms related to purchasing and accounts payable to their definitions, and matches 13 threats in purchasing to appropriate control procedures. The test covers topics like purchase orders, receiving reports, supplier invoices, voucher packages, accounts payable systems, inventory controls, and segregation of duties controls in the expenditure cycle.

Uploaded by

Faith Reyna Tan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

CHAPTER TESTS

Name: _________________________ Date: _________________

The Expenditure Cycle: Purchasing to Cash Disbursement


Part I-Multiple Choice. Read each question and answer choice carefully and choose the ONE
best answer.
1. Gifts given by suppliers to purchasing agents for the purpose of influencing their choice of
suppliers are referred to as
a. Kickbacks
b. Bribes
c. Invoices

2. Segregation of duties can help minimize the risk of inventory theft. Employees who are
responsible for controlling physical access to inventory should not be able to adjust
records without review and approval.
a. True
b. False

3. Which of the following is true?


a. It is easier to verify the accuracy of invoices for purchases of services than invoices
for purchases of raw materials.
b. Setting up petty cash as an imprest fund violates segregation of duties.
c. The EOQ formula is used to identify when to reorder inventory.
d. A voucher package usually includes a debit memo.

4. The combination of the supplier invoice and associated supporting documentation creates
a
a. Voucher package
b. Double bill
c. Nonvoucher system

5. The just-in-time inventory system attempts to minimize, if not totally eliminate, finished
goods inventory by purchasing and producing goods in response to forecast, rather than
actual sales.
a. True
b. False

6. Which of the following expenditure cycle activities can be eliminated through the use of IT
or reengineering?
a. Ordering goods
b. Approving vendor invoices
c. Receiving goods
d. Cash disbursements

7. What is the best control procedure to prevent paying the same invoice twice?
a. Segregate check-preparation and check-signing functions
b. Prepare checks only for invoices that have been matched to receiving reports and
purchase orders.
c. Require two signatures on all checks above a certain limit
d. Cancel all supporting documents when the check is signed.

8. For good internal control, who should sign checks?


a. Cashier
b. Accounts payable
c. Purchasing agent
d. Controller

9. Which of the following procedures is designed to prevent the purchasing agent from
receiving kickbacks?
a. Maintaining a list of approved suppliers and requiring all purchases to be made
from suppliers on that list
b. Requiring purchasing agents to disclose any financial investments in potential
suppliers
c. Requiring approval of all purchase orders
d. Prenumbering and periodically accounting for all purchase orders

10. Which document is used to record adjustments to accounts payable based on the return
of unacceptable inventory to the supplier?
a. Receiving
b. Credit memo
c. Debit memo
d. Purchase order

Part II- Matching Type. Match the following terms with their definitions.
A. Definition of terms

Terms Definitions
1. Economic order a. A document that creates a legal obligation to buy
quantity(EOQ) and pay for goods or services
2. Materials requirements b. The method used to maintain the cash balance in
planning(MRP) petty cash account.
3. Just-in-time inventory c. The time to reorder inventory triggered when the
system quantity on hand falls to a predetermined level.
4. Purchase requisition d. A document used to authorize a reduction in
accounts payable because merchandise has been
returned to a supplier.
5. Imprest fund e. An inventory control system that triggers
production based on forecasted sales
6. Purchase order f. An inventory control system that triggers
production based on forecasted sales
7. kickbacks g. A document used only internally to initiate the
purchase of materials, supplies, or services
8. Procurement card h. A process for approving supplier invoices based on
a two-way match of the receiving report and
purchase order
9. Blanket purchase i. A process for approving supplier invoices based on
order a three-way match of the purchase order, receiving
report, and supplier invoice.
10. Evaluated receipts j. A method of maintaining accounts payable in
settlement(ERS) which each supplier invoice is tracked and paid for
separately.
11. Disbursement voucher k. A method of maintaining accounts payable that
generates one check to pay for a set of invoices
from the same supplier.
12. Receiving report l. Combination of a purchase order, receiving report,
and supplier invoice that all relate to the same
transaction.
13. Debit memo m. A document used to list each invoice being paid by
a check.
14. Vendor-managed n. An inventory control system that seeks to minimize
inventory the sum of ordering, carrying and stockout costs.
15. Voucher package o. A system whereby suppliers are granted access to
point-of-sale(POS) and inventory data in order to
automatically replenish inventory levels
16. Nonvoucher system p. An agreement to purchase set quantities at
specified intervals from a specific supplier
17. Voucher system q. A document used to record the quantities and
condition of items delivered by a supplier
r. A special-purpose credit card used to purchase
supplies.
s. A fraud in which a supplier pays a buyer or
purchasing agent in order to sell its products or
services.

B. Match the threats in the left column to appropriate control procedures in the right column.
More than one control may be applicable.

Threat Control Procedure


1. Failing to take available a. Accept only deliveries for which an approved
purchase discounts for purchase order exists
prompt payment
2. Recording and posting b. Document all transfers of inventory
errors in accounts payable
3. Paying for items not c. Restrict physical access to inventory
received
4. Kickbacks d. File invoices by due date
5. Theft of inventory e. Maintain a cash budget
6. Paying the same invoice f. Conduct an automated comparison of total
twice change in cash to total changes in accounts
payable
7. Stock outs g. Adopt a perpetual inventory system
8. Purchasing items at inflated h. Require purchasing agents to disclose
prices financial or personal interests in suppliers
9. Misappropriation of cash i. Require purchases to be made only from
approved suppliers
10. Purchasing goods of inferior j. Restrict access to the supplier master data
quality
11. Wasted time and cost of k. Restrict access to blank checks
returning unordered
merchandise to suppliers
12. Accidental loss of l. Issue checks only for complete voucher
purchasing data packages (receiving report, supplier invoice,
and purchase order).
13. Disclosure of sensitive m. Cancel or mark “paid” supporting documents
supplier information in voucher
n. Carry out a regular backup of expenditure
cycle database
o. Train employees in how to properly respond
to gifts or incentives offered by suppliers
p. Hold purchasing managers responsible for
costs of scrap and rework
q. Ensure that someone other than the cashier
reconciles bank accounts.
Part III- Identification. Which internal control procedure would be most cost-effective in dealing
with the following expenditure cycle threats?
a. A purchasing agent orders materials from a supplier that he partially owns.

b. Receiving-dock personnel steal inventory and then claim the inventory was sent to the
warehouse.

c. An unordered supply of laser printer paper delivered to the office is accepted and paid for
because the “price is right”. After all of the laser printers are jammed, however, it becomes
obvious that the “bargain” paper is of inferior quality.

d. The company fails to take advantage of a 1% discount for promptly paying a vendor
invoice.

e. The company is late in paying a particular invoice. Consequently, a second invoice is sent,
which crosses the first invoice’s payment in the mail. The second invoice is submitted for
processing and also paid.

You might also like