10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

Quiz - Corporate Governance,

Business Ethics, Risk Management
and Internal Control
The Expenditure Cycle - Purchases to Cash Disbursement

Points: 27/30

1. The threat of inaccurate inventory records can be mitigated by which of the

following controls? *
(1/1 Point)

Bar coding or RFID tags 

None of the above.

Option 2

Review of purchase orders

Supplier audits

Verification of invoice accuracy

2. Ordering unnecessary items can result from: *

(1/1 Point)

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

Competitive bidding.

Require receiving employees to sign the receiving report.

Option 2

None of the above.

inaccurate perpetual inventory records. 

3. What is a method that companies use to minimize the risk of inferior quality
products? *
(1/1 Point)

Providing adequate storage

Tracking and monitoring product quality by supplier. 

Option 2

Using encryption techniques

All of the above.

4. The practice of allowing kickbacks: *

(1/1 Point)

results in higher quality purchases.

provides quantity discounts.

improves the position of the company.

Option 2

impairs the objectivity of the purchaser. 

5. What is the most effective technique used to minimize the risk of an inaccurate
inventory counts? *
(1/1 Point)
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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

The use of just-in-time (JIT) accounting systems.

The use of a bar-coding or radio frequency identification tag (RFID) system 

Using the Economic Order Quantity model

Option 2

Quick visual comparison of amounts received and those indicated on the packing slip

6. An effective method of reducing the risk of theft is *

(1/1 Point)

an annual inventory count.

All of the above.

proper segregation of duties. 

Option 2

requiring the employee who maintains custody of inventory to also record inventory
transactions.

None of the above.

7. What control procedures reduce the risk of paying the same invoice twice? *
(1/1 Point)

Only the original invoice copy should be paid.

Option 2

Paid invoices should be marked "paid".

Payment should never be made on an invoice copy.

Invoices are approved for payment only when accompanied by a complete voucher
packet.

All of the above. 

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

8. Which inventory system attempts to minimize inventory costs by only purchasing

goods required for actual sales orders? *
(1/1 Point)

Material requirements planning (MRP)

Just-in-time (JIT) 

Reorder point

Economic order quantity (EOQ)

Option 2

9. What are the typical expenditure cycle functions?

 *
(1/1 Point)

Option 2

Select the appropriate vendors from whom to order

Verify the accuracy of vendor invoices

All of the above. 

Monitor cash flow needed to pay obligations

Decide if appropriate discounts have been taken

10. What is one unusual feature of an imprest petty cash fund? *

(1/1 Point)

Option 2

The account is reviewed periodically by internal auditors.

The threat of misappropriation of assets.

It has an audit trail.

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

The lack of segregation of duties involved in administering the account. 

11. The risk of receiving unordered goods is prevented most effectively by *

(1/1 Point)

All of the above.

recalculation of invoice prices.

Option 2

surprise audits.

instruct the receiving department to accept deliveries only those goods where there

is an approved copy of the purchase order.

12. The objective of approving and paying vendor invoices is to ensure:

 *
(1/1 Point)

Option 2

company pays only for goods and service received.

safeguard cash.

company pays only for goods and service ordered and received.

company pays only for goods and service ordered.

Two answers are correct. 

None of the above.

13. Which method/s the inventory control subsystem may utilize methods for
determining inventory quantities? *
(1/1 Point)

Economic order quantity 

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

Systemetic ordering

Just when needed

Automatic reordering

14. Which of the following are threats to the purchasing subsystem *

(1/1 Point)

Stock-outs and/or excess inventory 

Ordering necessary item

Purchasing goods of good quality

Purchasing goods at correct prices


15. Internal controls provide a framework for which of the following *
(0/1 Point)

Fighting fraud and errors when using information systems 

Accurate financial reporting

Management control of the work environment

All the answers are correct


16. Which of the following are threats to the general ledger subsystem: *
(0/1 Point)

Both a and b

Authorized access

Neither a or b 

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

Correct data

17. Purchasing decisions are authorized by inventory control *

(1/1 Point)

False

True 

18. The blind copy of the purchase order that goes to the receiving department
contains no item descriptions *
(1/1 Point)

True

False 

19. Firms that wish to improve control over cash disbursements use a voucher system.
*
(1/1 Point)

False

True 

20. In a voucher system, the sum of all unpaid vouchers in the voucher register equals
the firm’s

Total voucher payable balance *

(1/1 Point)

False

True 

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

21. The accounts payable department reconciles the accounts payable subsidiary
ledger to the control account. *
(1/1 Point)

True

False 

22. The use of inventory reorder points suggests the need to obtain specific
authorization. *
(1/1 Point)

True

False 

23. Proper segregation of duties requires that the responsibility approving a payment

be separated from posting to the cash disbursements journal. *
(1/1 Point)

False

True 


24. The economic order quantity approach determines: *
(0/1 Point)

the quantity to keep on hand.

the quantity to order. 

the quantity at which to give price breaks.

Option 2

none of the above.

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

all of the above.

two of the above.

25. Which of the following inventory approaches best allows for products with short
life cycles and unpredictable patterns of demand? *
(1/1 Point)

EOQ

JIT 

Two of the above

All of the above

MRP

None of the above

Option 2

26. Which of the following documents contains the departmental authorization for a
purchase? *
(1/1 Point)

None of the above

Receiving report

Option 2

Blanket purchase order

Purchase order

Purchase requisition 

27. Kickbacks *
(1/1 Point)
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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

Option 2

improve the position of the company.

impair the objectivity of the purchaser. 

provide quantity discounts.

two of the above

result in higher quality purchases.

three of the above

28. An imprest fund is *

(1/1 Point)

Option 2

Is controlled very tightly due to the potential for large losses.

Technically violates the principle of segregation of duties. 

Is money that has been set aside for impending large purchases.

Two of the above.

Three of the above

Is released to vendors, only when the voucher package is complete.

29. The receiving department prepares a receiving report indicating the receipt of
goods. One copy of the report remains in receiving. The other copy of the report *
(1/1 Point)

goes to the accounts payable department. 

goes to the purchasing department.

goes to the accounts receivable department.

Option 2

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10/23/21, 1:16 PM Quiz - Corporate Governance, Business Ethics, Risk Management and Internal Control

goes to the accounts payable department through purchasing.

goes to stores.

none of the above

30. When paying for goods, one could send a check to the vendor. Alternatively one
could use *
(1/1 Point)

EOQ.

EFT. 

none of the above

two of the above.

Option 2

OCR.

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