Term
Which of the following inventory control methods is most likely to be used by a company that purchases inventory in response to customer orders?
a. JIT
b. EOQ
c. MRP
d. ABC |
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Definition
answer:
a. JIT
JIT seeks to minimize inventory by only making purchases after sales |
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Term
Which of the following matches is performed in evaluated recept settlement?
a. the vendor invoice with the receiving report
b. the purchase order with the receiving report
c. the vendor invoice with the purchase order
d. the vendor invoice, the receiving report, and the purchase order |
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Definition
answer:
b. the purchase order with the receiving report
ERS eliminates the vendor invoice and schedules payments based on matching the purchase order and receiving report |
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Term
Which of the following is true?
a. ERS systems are disbursement vouchers
b. Setting up petty cash as an imprest fund violates segregtion of duties
c. The EOQ formula is used to identify the reorder point
d. A voucher package usually includes a debit memo |
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Definition
answer:
b. Setting up petty cash as an imprest fund violates segregtion of duties
The same person has custody of the asset (cash), authorizes its disbursement, and maintains records |
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Term
Which document is used to establish a contract for the purchase of goods or services from a supplier?
a. vendor invoice
b. purchase requisition
c. purchase order
d. disbursement voucher |
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Definition
answer:
c. purchase order
a purchase order is an offer to buy goods |
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Term
Which method would provide the greatest efficiency improvements for the purchase of noninventory items such as miscellaneous office supplies?
a. bar-coding
b. EDI
c. procurement cards
d. EFT |
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Definition
answer:
c. procurement cards
procurement cards were designed specifically for purchase of noninventory items |
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Term
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 |
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Definition
answer:
b. approving vendor invoices
ERS systems can eliminate vendor invoices |
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Term
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 |
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Definition
answer:
d. Cancel all supporting documents when the check is signed
This ensures that the supporting documents cannot be resubmitted to pay the same invoice again |
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Term
For good internal control, who should sign checks?
a. cashier
b. accounts payable
c. purchasing agent
d. controller |
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Definition
answer:
a. cashier
the cashier is respnsible for managing cash and reports to the treasurer |
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Term
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 and financial investments in potential suppliers
c. requiring approval of all purchase orders
d. prenumbering and periodically accounting for all purchase orders |
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Definition
answer:
b. requiring purchasing agents to disclose and financial investments in potential suppliers
the purpose of such a disclosure is to minimize the risk of conflicts of interst that could result in kickbacks |
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Term
Which document is used to record adjustments to accounts payable based on the return of unacceptable inventory to the supplier?
a. receiving report
b. credit memo
c. debit memo
d. purchase order |
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Definition
answer:
c. debit memo
this document is used to adjust accounts payable |
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