R.

Martin ACC 304 Fall 200X Bronco #

1st EXAM -- Test A: xxx pm class No names please.

Note: There are pages and 56 points on this exam.

Please scan the entire exam before you begin. This will allow you to start with the
question with which you feel the most comfortable. GOOD LUCK!!!!!!!!!!!!!!

Part I: Multiple Choice 56 points

Please select the BEST response. Use a scantron to record your answers.

1. The file that is a repository of permanent narrative data, such as customer’s name
and address, credit information, and account balance, is best referred to as which of
the following?
a. Open invoice file
a. Customer master file
b. Open sales order file
c. Both b and c
d. None of the above

2. In a traditional system (e.g. manual system), what source document is used to post to
the sales journal?
a. Remittance advice
b. Sales invoice
c. Credit memorandum
d. Customer order

3. Which of the following departments should match shipping documents with open
sales orders and prepare daily sales summaries?
a. Billing
b. Sales order
c. Accounts receivable
d. Shipping

4. In order to provide accountability for purchasing, copies of purchase requisitions

should be sent to
a. The vendor
b. Cash disbursements
c. Accounts payable
d. Receiving

5. Which of the following procedures in the cash disbursements cycle should not be
performed by the accounts payable department?
a. Comparing the vendor’s invoice with the receiving report.
b. Canceling supporting documentation after payment.
c. Verifying the mathematical accuracy of the vendor’s invoice.
d. Signing the voucher for payment by an authorized person.
6. A document containing a list of unpaid invoices to a single vendor is called a:
a. Voucher register
b. Receiving report
c. Disbursement voucher
d. Purchase journal

7. Data from which two source documents are posted to the accounts payable
subsidiary records (via the appropriate journals)?
a. Sales invoices and checks.
b. Purchase orders and receiving reports.
c. Debit memos and customer sales orders.
d. Vendor invoices and checks.
e. Receiving reports and vendor invoices.

8. The actual disbursement of cash is a responsibility of which of the following?

a. Treasurer
b. Controller
c. Accounts payable supervisor
d. Either a or b
e. All of the above

9. To determine whether accounts payable are complete, an auditor performs a test to

verify that all merchandise received is recorded. The population of documents for this
test consists of all
a. Payment vouchers
b. Receiving reports
c. Purchase requisitions
d. Vendor’s invoices

10. For effective internal control purposes, the accounts payable department generally
should
a. Stamp, perforate, or otherwise cancel supporting documentation after
payment is mailed.
b. Ascertain that each requisition is approved as to price, quantity, and quality.
c. Obliterate the quantity ordered on the receiving department copy of the
purchase order.
d. Establish the agreement of the vendor’s invoice with the receiving report and
purchase order.

11. The internally generated document that initiates most activities in the Acquisition-
Payment process is the
a. Purchase order
b. Receiving report
c. Vendor invoice
d. Purchase requisition
e. Credit memo
12. An auditor wants to verify that for a given inventory acquisition, (1) the merchandise
was ordered by the company, (2) the merchandise was delivered to the company, and
(3) a bill for the merchandise was received. The auditor should look at which
documents?
a. Purchase requisition, bill of lading, account payable
b. Sales order, receiving report, sales invoice
c.Purchase requisition, receiving report, cancelled check
d. Purchase order, receiving report, vendor invoice
e. Purchase order, delivery notice, sales notice

13. blank

14. Which of the following errors would not cause the trial balance to be out of balance?
a. Failing to post part of a journal entry.
b. Posting a debit as a credit.
c. Incorrectly calculating the balance of an account.
d. Failing to record a transaction.
e. All of the above would cause the trial balance to be out of balance.

15. Which of the following can best be described as a master file?

a. A file with event data.
b. An income statement.
c. A trial balance.
d. An accounts payable subsidiary ledger.
e. A journal voucher file.

16. Organizations create value by

a. Subtracting costs from revenues.
b. Keeping backup copies of all source documents.
c. Providing goods and services customers want.
d. Using technology to mechanize old ways of doing business.
e. Recording data about business transactions.

17. Management activities can be broadly categorized into

a. Planning, executing, controlling, and evaluating.
b. Identifying, measuring, accumulating, and planning.
c. Controlling, measuring, identifying, and evaluating.
d. Executing, controlling, measuring, and identifying.
e. Preparing, analyzing, maintaining, and specializing.

18. Criticisms of traditional accounting information systems include all of the following
EXCEPT
a. They capture data about a subset of an organization’s business events.
b. They store and process only certain aspects of accounting transactions
c. Data are captured and processed in real-time
d. They capture and store duplicate data in a highly summarized form
e. Multiple systems are used, which are isolated from each other
 19. Operating control of the check signing machine normally should be the
responsibility of:
a. Accounts payable
b. Cash disbursements
c. Purchasing department
d. General ledger department

20. In a traditional sales/collections process, the following duties should be performed

by different people
A. Shipping, warehousing and receiving.
B. Billing, recording of accounts receivable, and posting to the general
ledger.
C. Authorizing sales orders, shipping, and recording accounts receivable.
D. Approving customers’ credit, approving customer returns, and approving
sales allowances.
E. Recording sales in the perpetual inventory records, posting inventory
adjustments to the general ledger, and recording inventory returns in
the perpetual records.

21. Which of the following statements is incorrect?

a. Transaction files are used to update master files.
b. Open files hold data about incomplete transactions.
c.Master files are used to update open files.
d. Transaction files capture detailed transaction data in chronological
order.

22. blank

23. The balances in the accounts receivable master file, the general ledger accounts
receivable record, and the open sales invoice file should be equal.
A. true B. false

24. A large university has relatively ineffective internal control. The university auditor
seeks assurance that all tuition revenue has been recorded. The auditor could best
obtain the desired assurance by
a. Confirming a sample of tuition payments with the students.
b. Observing tuition payment procedures on a surprise basis.
c. Comparing business office revenue records with the registrar’s office
records of students enrolled.
d. Preparing a year end bank reconciliation.

25. Which of the following is a risk associated with the Shipping activity?
a. Selecting a poor carrier or route.
b. Salespeople spending a lot of time with non-target customers.
c.Taking an order for a product or service that is not currently sold by
the company and can’t be made available.
d. Moving the incorrect inventory type or amount from warehousing to shipping.
e. Approving the write-off of a customer’s account with invalid justification.

26. Which of the following statements about source documents is false?

 a. In manual information processing environments, source documents
generally use paper to record data about each transaction, the
parties involved, the date, dollar amount, and other aspects of the
event.
b. Sale invoices, freight bills, and cash register receipts are examples of
source documents.
c.A separate transaction or source document signals every type of accounting
event.
d. Source documents are initially used to record accounting transactions.
e. Source documents are used to trace and verify transactions for evidence
in legal proceedings and for audits of financial statements.

Answers:
1. B 2. B 3. A 4. C 5. B 6. C 7. D 8. A 9. B 10. D 11. D 12. D 13. 14. D
15. D 16. C 17. A 18. C 19. B 20. C 21. C 23. A 24. C 25. A 26. C