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Chapter 5 Expenditure Cycle Part 1 PDF
Chapter 5 Expenditure Cycle Part 1 PDF
TRUE/FALSE
ANS: T
2. The blind copy of the purchase order that goes to the receiving department contains no item
descriptions.
ANS: F
3. Firms that wish to improve control over cash disbursements use a voucher system.
ANS: T
4. In a voucher system, the sum of all unpaid vouchers in the voucher register equals the firm’s
total
ANS: T
5. The accounts payable department reconciles the accounts payable subsidiary ledger to the
control
account.
ANS: F
6. The use of inventory reorder points suggests the need to obtain specific authorization.
ANS: F
7. Proper segregation of duties requires that the responsibility approving a payment be separated
from
ANS: T
8. A major risk exposure in the expenditure cycle is that accounts payable may be overstated at
the end of
the accounting year.
ANS: F
9. When a trading partner agreement is in place, the traditional three way match may be
eliminated.
ANS: T
ANS: T
11. A three way match involves a purchase order, a purchase requisition, and an invoice.
12.
13.
14.
15.
16.
17.
18.
19.
20. ANS: F Authorization for a cash disbursement occurs in the cash disbursement department
upon receipt of the supplier’s invoice. ANS: F An automated cash disbursements system can
yield better cash management since payments are made on time. ANS: T Permitting warehouse
staff to maintain the only inventory records violates separation of duties. ANS: T A purchasing
system that employs electronic data interchange does not use a purchase order. ANS: F Inventory
control should be located in the warehouse. ANS: F Inspection of shipments in the receiving
department would be improved if the documentation showed the value of the inventory. ANS: F
One reason for authorizing purchases is to enable efficient inventory management. ANS: T If
accounts payable receives an invoice directly from the supplier it needs to be reconciled with the
purchase order and receiving report. ANS: T Supervision in receiving is intended to reduce the
theft of assets.
ANS: T
MULTIPLE CHOICE
ANS: C
ANS: B
3. All of the following departments have a copy of the purchase order except
c. accounts payable
d. general ledger
ANS: D
ANS: A
5. The open purchase order file in the purchasing department is used to determine
a. the quality of items a vendor ships
ANS: C
ANS: B
7. The reason that a blind copy of the purchase order is sent to receiving is to
ANS: B
b. advise the purchasing department of the dollar value of the goods delivered
ANS: A
9. When a copy of the receiving report arrives in the purchasing department, it is used to
ANS: D
a. packing slip
b. purchase requisition
c. receiving report
d. supplier’s invoice
ANS: D
11. Which document is least important in determining the financial value of a purchase?
a. purchase requisition
b. purchase order
c. receiving report
d. supplier’s invoice
ANS: A
12. In a merchandising firm, authorization for the payment of inventory is the responsibility of
a. inventory control
b. purchasing
c. accounts payable
d. cash disbursements
ANS: C
13. In a merchandising firm, authorization for the purchase of inventory is the responsibility of
a. inventory control
b. purchasing
c. accounts payable
d. cash disbursements
ANS: A
14. When purchasing inventory, which document usually triggers the recording of a liability?
a. purchase requisition
b. purchase order
c. receiving report
d. supplier’s invoice
ANS: D
15. Because of time delays between receiving inventory and making the journal entry
ANS: A
d. transaction date
ANS: B
b. the sum of the paid vouchers represents the voucher payable liability of the firm
c. the voucher system permits the firm to consolidate payments of several invoices on one
voucher
ANS: B
d. reconcile the inventory control account with the inventory subsidiary summary
ANS: C
19. The documents in a voucher packet include all of the following except
a. a check
b. a purchase order
c. a receiving report
d. a supplier’s invoice
ANS: A
20. To maintain a good credit rating and to optimize cash management, cash disbursements
should arrive
a. as soon as possible
ANS: C
21. The cash disbursement clerk performs all of the following tasks except
a. reviews the supporting documents for completeness and accuracy
b. prepares checks
c. signs checks
ANS: C
ANS: D