Chapter 5- Self Test

1. Processes in the Purchase System

a. Monitor inventory records
b. Prepare PO
c. Receive goods
d. Update inventory records
e. Set up AP
f. Post to GL
2. AP Department- prepares the cash disbursements voucher containing the total amount of the
payroll
a. CD Department- reviews and signs the paychecks, and forwards them to paymaster for
distribution to employees
3. Purchase Order Number- information in the face of the supplier's invoice used by the AP clerk
when encoding the supplier's invoice in the system (that adds a record in the vendor invoice file)
to ensure that the invoice is related to the appropriate purchase previously made
4. Controls that will address the risk of receiving incorrect items, incorrect quantities and damaged
good:
a. Segregation of duties between the goods receiving function and purchase order
preparation function
b. Supervision over inspection of goods received and check against approved PO
c. Use of Blind PO to enforce counting
5. In relation to the systems flowchart of the basic technology purchase processing system, NOT all
documents are in digital form.
6. Electronic Data Interchange- type of technology in the expenditure cycle which involves
complete automation wherein the computer of the company is connected with the computer of
the supplier or vendor
7. AP Department- involved both in the purchase processing and cash disbursement systems
8. An aspect of the objective of the cash disbursement system on the timely payment to vendors is
very important because early payments may lead to lost interest income on investments while
late payments may lead lost cash discounts and damaged credit standing with
suppliers/vendors.
9. Cash Disbursement Journal- Disbursements recorded do not only pertain to payments to
vendors.
10. Documents needed by the payroll department to prepare the payroll
a. Personnel action forms from the Personnel Department
b. Timecards from the Production Department
11. Automated recording of purchases or payable upon the receipt of goods, based on the actual
quantity received and purchase price in the PO- IT control which can best address the risk of
accounts payable going unrecorded or are recorded in the wrong period
12. There is a lag time in recoding the liability when the goods are received at period end and the
supplier's invoice is received on the succeeding period.
13. Check- document or record that is still in hard copy form and not in digital form in the
integrated cash disbursement system
14. In the voucher's payable system, transactions recorded in the voucher register with details
already of the date of the check and check number pertain to the outstanding liability or liability
ALREADY PAID.
15. Re-engineering thru Electronic Data Interchange (EDI) in the purchase and cash disbursement
system may involve elimination of the receiving function in the supply chain management and
strengthening of the relationship with suppliers resulting to systematic synergy.