Question 1

Which of the following departments is not a part of the purchasing process?
A)Receiving
B)Warehouse
C)Cash Disbursements
D)Accounts Payable

Accepted Answer

Receiving, Warehouse, and Accounts Payable are all involved in the purchasing process as they receive, store, and process payments for the purchased goods or services. Cash Disbursements, on the other hand, is responsible for issuing payments and recording transactions, but not directly involved in the purchasing process.

Question 2

This form is prepared to document the need to make a purchase and requests that the specific items and quantities be purchased.
A)Purchase order
B)Purchase requisition
C)Purchase invoice
D)Purchase journal

Accepted Answer

A purchase requisition is used to document the need for a purchase and request specific items and quantities. It is usually created by an employee or department requesting the purchase and is then sent to a purchasing department to create a purchase order. A purchase invoice is a document received after the purchase has been made, and a purchase journal is a record of all purchases made by a company.

Question 3

The expenditure and return process is similar to the _______ process, except that goods and cash flow in the opposite direction.
A)Procurement
B)Conversion
C)Revenue
D)Systems and control

Accepted Answer

The expenditure and return process is similar to the revenue process because in both cases, there is an exchange of goods and cash. However, in the expenditure and return process, the company spends cash to acquire goods or services, whereas in the revenue process, the company earns cash by selling goods or services. The direction of cash and goods flow is opposite in these two processes.

Question 4

All of the following are external reports except:
A)Balance Sheet
B)Income Statement
C)Cash Flows Statement
D)Aged Accounts Receivable Schedule

Accepted Answer

The Balance Sheet, Income Statement, and Cash Flows Statement are all external financial reports that are typically prepared for stakeholders such as investors, lenders, and regulators. The Aged Accounts Receivable Schedule, on the other hand, is an internal report that is used to manage and monitor outstanding customer balances.

Question 5

This document, prepared by the vendor, provides details of the items included in the delivery and is normally signed by the receiving clerk as verification of receipt.
A)Packing slip
B)Receiving report
C)Bill of lading
D)Purchase order

Accepted Answer

The answer of This document, prepared by the vendor, provides...

Question 6

This document, prepared and maintained by the receiving department, is a sequential listing of all receipts.
A)Receiving report
B)Packing slip
C)Bill of lading
D)Receiving log

Accepted Answer

A receiving log is a sequential record of all receipts received by the department.

Question 7

Which of the following events would not constitute the start of the purchasing process?
A)A warehouse attendant notices a particularly low stock level.
B)An operations manager becomes aware of additional quantities of material that will be needed to fulfill sales orders.
C)An accountant detects potential shortages in documented inventory quantities.
D)The purchasing manager receives a shipment of raw materials that she had ordered.

Accepted Answer

Receiving a shipment of raw materials that had already been ordered would not be the start of the purchasing process as it implies that the purchasing manager had already initiated the process by placing the order. The other options all suggest that there is a need for additional inventory or materials, which would require the purchasing process to begin.

Question 8

Common expenditure processes would include all of the following, except:
A)Preparation of a purchase requisition
B)Receipt of the goods or services
C)Recording the liability
D)Payment received on account

Accepted Answer

Common expenditure processes would include preparation of a purchase requisition, receipt of the goods or services, and recording the liability. Payment received on account is a revenue process, not an expenditure process.

Question 9

The acquisition of materials and supplies and the related cash disbursements is referred to as:
A)The Procurement Process
B)Systems and Control Process
C)Expenditure and Return Process
D)Conversion Process

Accepted Answer

The acquisition of materials and supplies and the related cash disbursements is referred to as the procurement process. This process involves identifying the requirements, selecting suppliers, negotiating contracts, placing orders, and receiving and paying for the goods or services.

Question 10

This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer.Information included on this form would be: products, quantities, and agreed-upon prices.
A)Purchase order
B)Purchase requisition
C)Purchase invoice
D)Purchase journal

Accepted Answer

A purchase order is a document issued by the buyer to the seller, outlining the product or service specifications, quantities, and prices that the seller has agreed to provide to the buyer. The purchase order is an important step in the purchasing process, as it serves as a legally binding contract between the buyer and the seller.

Question 11

The information from a purchase must flow into the purchase recording systems, the accounts payable and cash disbursement systems, and the inventory tracking systems.In an IT accounting system, these recording and processing systems are called:
A)General Ledger Systems
B)Integrated Accounting Systems
C)Journal Application Systems
D)Transaction Processing Systems

Accepted Answer

Transaction Processing Systems are designed to handle and process business transactions, including purchases, accounts payable, cash disbursements, and inventory tracking.

Question 12

Which of the following would be referred to as a common carrier?
A)Taxi-cab
B)Trucking company
C)City bus
D)Fire department vehicle

Accepted Answer

Trucking companies are considered common carriers because they offer transportation services to the general public for goods under a regulatory or authorized domain, typically for a set fee.

Question 13

Immediate preparation of receiving reports for all actual receipts of goods helps to minimize the risk of:
A)Timing issues
B)Omitted transactions
C)Invalid purchases
D)All of the above

Accepted Answer

Immediate preparation of receiving reports for all actual receipts of goods helps to minimize the risk of timing issues, omitted transactions, and invalid purchases. By having an accurate record of all goods received, a company can ensure that purchases are valid, transactions are not omitted, and timing issues like delays or incorrect dates can be addressed in a timely manner. Therefore, D is the best choice.

Question 14

There are different ways to issue a purchase order to a vendor.Which of the following is not one of the ways?
A)Hard copy via fax or mail
B)Hard copy by hand
C)Electronically via e-mail
D)Directly through the computer network

Accepted Answer

Hard copy by hand is not a common way to issue a purchase order to a vendor as it requires physical delivery and may result in delays or loss of the purchase order. The other three options (A, C, and D) are common and efficient ways to issue purchase orders to vendors.

Question 15

The main reason that receiving clerks are denied access to purchase order quantities and prices is to:
A)Ensure that the receiving clerk actually takes the time to verify the accuracy of a delivery before accepting it
B)Prevent the receiving clerk from stealing delivered goods and manipulating the quantities and prices of received goods
C)Prevent fraudulent collusion between the common carrier and the receiving clerk
D)N/A: the receiving clerk is NOT denied access to purchase order quantities and prices

Accepted Answer

The main reason for denying access to purchase order quantities and prices is to ensure that the receiving clerk verifies the accuracy of a delivery by actually counting and inspecting the items received, rather than relying on the purchase order information. This helps in maintaining accurate inventory records and prevents acceptance of incorrect shipments.

Question 16

A record keeping tool used to record purchases in a manual accounting system.This "tool" would consist of recording all of the purchased orders issued to vendors in a chronological order.
A)Purchase order
B)Purchase requisition
C)Purchase invoice
D)Purchase journal

Accepted Answer

A purchase journal is a record keeping tool used to record purchases in a manual accounting system. It consists of recording all of the purchased orders issued to vendors in a chronological order. Purchase orders (A) are the actual orders issued to vendors for goods or services, purchase requisitions (B) are internal documents used to request purchases from other departments, and purchase invoices (C) are documents received from vendors to indicate the amount owed for goods or services purchased.

Question 17

The textbook referred to the three primary categories of processes in the typical purchasing system.Which of the following is not one of those categories?
A)Purchase Processes
B)Cash Disbursement Processes
C)Receiving Processes
D)Purchase Return Processes

Accepted Answer

The answer of The textbook referred to the three primary...

Question 18

This document, prepared by the purchasing department, for use by the receiving department, is copy of the purchase order that eliminates all data about the price and quantity of the items ordered.
A)Packing slip
B)Blind purchase order
C)Empty purchase order
D)Receiving report

Accepted Answer

A blind purchase order is a purchase order where the price and quantity of the items ordered are "blinded" or removed before being sent to the receiving department. This is done to prevent bias or favoritism from affecting the receiving process and to ensure that the receiving department is only focused on verifying the quality and condition of the items received. A packing slip is a document that accompanies the shipment and lists the contents of the package, while a receiving report is a document that the receiving department prepares to acknowledge the receipt of the goods and confirm that they are in good condition. An empty purchase order does not contain any information and would not be useful for the receiving department.

Question 19

Each category of processes in the typical purchasing system would include controls and risks.For each of the categories, the goal of the internal controls system is to reduce specific types of business risks.Which of the following is not one of those risks?
A)Recording invalid transactions
B)Recording transactions at the wrong amounts
C)Omitting actual transactions from the accounting records
D)Transactions properly accumulated or transferred to the correct accounting records

Accepted Answer

Transactions properly accumulated or transferred to the correct accounting records is not a risk that the internal controls system aims to reduce. It is actually the desired outcome of the system. The other options (A, B, and C) are all risks that the internal controls system aims to reduce by ensuring that all transactions are recorded correctly and accurately.

Question 20

Which department maintains copies of purchase orders and receiving reports so that the documents can be compared before the accounting records are updated?
A)Receiving
B)Accounts Payable
C)Cash Disbursements
D)Warehouse

Accepted Answer

Accounts Payable is responsible for maintaining copies of purchase orders and receiving reports in order to ensure that the accounting records are accurate and up to date. By comparing these documents, they can verify that the goods or services were received as ordered and that the appropriate payments are being made. The other departments listed (Receiving, Cash Disbursements, and Warehouse) may be involved in the purchasing process, but they do not typically maintain these records.

Quiz 9: Expenditures Processes and Controlspurchases

Which of the following departments is not a part of the purchasing process?

This form is prepared to document the need to make a purchase and requests that the specific items and quantities be purchased.

The expenditure and return process is similar to the _______ process, except that goods and cash flow in the opposite direction.

All of the following are external reports except:

This document, prepared by the vendor, provides details of the items included in the delivery and is normally signed by the receiving clerk as verification of receipt.

This document, prepared and maintained by the receiving department, is a sequential listing of all receipts.

Which of the following events would not constitute the start of the purchasing process?

Common expenditure processes would include all of the following, except:

The acquisition of materials and supplies and the related cash disbursements is referred to as:

This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer.Information included on this form would be: products, quantities, and agreed-upon prices.

The information from a purchase must flow into the purchase recording systems, the accounts payable and cash disbursement systems, and the inventory tracking systems.In an IT accounting system, these recording and processing systems are called:

Which of the following would be referred to as a common carrier?

Immediate preparation of receiving reports for all actual receipts of goods helps to minimize the risk of:

There are different ways to issue a purchase order to a vendor.Which of the following is not one of the ways?

The main reason that receiving clerks are denied access to purchase order quantities and prices is to:

A record keeping tool used to record purchases in a manual accounting system.This "tool" would consist of recording all of the purchased orders issued to vendors in a chronological order.

The textbook referred to the three primary categories of processes in the typical purchasing system.Which of the following is not one of those categories?

This document, prepared by the purchasing department, for use by the receiving department, is copy of the purchase order that eliminates all data about the price and quantity of the items ordered.

Each category of processes in the typical purchasing system would include controls and risks.For each of the categories, the goal of the internal controls system is to reduce specific types of business risks.Which of the following is not one of those risks?

Which department maintains copies of purchase orders and receiving reports so that the documents can be compared before the accounting records are updated?