Question 1

Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.
A) Sales
B) Operations
C) Marketing
D) Fixed Asset Accounting

Accepted Answer

Fixed Asset Accounting is directly involved in the processes related to the purchases and payments of fixed assets, as this department is responsible for recording, tracking, and managing the financial aspects of a company's fixed assets.

Question 2

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"The department that uses a particular fixed asset generally initiates the purchasing process with a purchase requisition."
A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Accepted Answer

The initiation of the purchasing process with a purchase requisition by the department that will use the fixed asset corresponds to Stage 1: Asset Procurement. This stage involves identifying the need for an asset and initiating its acquisition.

Question 3

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"Routine purchases of fixed assets follow a common pattern; the fixed asset is inspected, the receiving report is prepared, the fixed asset is delivered to the requesting department for installation and/or use, fixed assets are tagged for future identification purposes."
A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Accepted Answer

The description provided matches Stage 2: Receiving and Tagging, which involves inspecting the fixed asset, preparing the receiving report, delivering the asset to the requesting department, and tagging the asset for future identification.

Question 4

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"The accounting for a fixed asset occurs when the asset is recorded."
A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Accepted Answer

The description matches Stage 3: Recording Assets, as this stage involves the actual accounting process where the asset is recorded in the financial records of the organization.

Question 5

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"In addition to the purchasing and payment journal entries, the fixed asset accountant ensures the fixed asset subsidiary ledger is updated."
A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Accepted Answer

The answer of The textbook discussed four of the stages...

Question 6

Choose the best definition from the list below of bid rigging.
A) Vendors collude with one another and reach advance agreement as to the winning bidder for a particular contract. The winning bidder agrees to compensate the other vendors in some manner.
B) An external document used to request a supplier to sell and deliver the products in the quantities and for the prices specified
C) A supplier generated document, which shows quantities and descriptions of items delivered to the receiving department at the specified warehouse location
D) A document that shows the descriptions and quantities of goods received from vendors

Accepted Answer

Bid rigging is a form of fraud in which competing parties conspire to determine the winner of a bidding process ahead of time. The agreement typically involves the predetermined winner compensating the other participants in some way.

Question 7

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.
A) Tagging all fixed assets
B) Expand the list of bidders to make it more difficult for bidders to collude.
C) Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
D) Periodically checking fixed assets against the fixed asset records

Accepted Answer

Expanding the list of bidders introduces more competition into the bidding process, making it harder for any group of bidders to collude and rig bids. This directly addresses the risk of unfair and uncompetitive bidding processes.

Question 8

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.
A) Tagging all fixed assets
B) Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Periodically checking fixed assets against the fixed asset records

Accepted Answer

Requiring bidders to sign and submit non-collusion affidavits is a direct control activity aimed at preventing bid rigging and kickbacks by making bidders formally state they have not engaged in collusion, thus addressing the risk of unfair and uncompetitive bidding processes.

Question 9

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.
A) Tagging all fixed assets
B) Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger
C) Periodically checking fixed assets against the fixed asset records
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Accepted Answer

Having a code of conduct that employees must agree to and sign, along with training that emphasizes the consequences of engaging in fraud, directly addresses the risk of bid rigging and kickbacks by promoting ethical behavior and awareness of the consequences of such actions.

Question 10

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.
A) Tagging all fixed assets
B) Expand the list of bidders to make it more difficult for bidders to collude.
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Accepted Answer

Tagging all fixed assets helps in accurately tracking and managing them, ensuring that items not qualifying as fixed assets are not mistakenly capitalized, thus addressing the risk of inflated net income and assets.

Question 11

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.
A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Ensure regular management review of fixed asset accounting transactions and trends in fixed asset ratios.
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Accepted Answer

Regular management review of fixed asset accounting transactions and trends in fixed asset ratios helps in identifying and correcting any misclassification of expenses as fixed assets, thus addressing the risk of inflated net income and assets.

Question 12

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.
A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
C) Periodically checking physical fixed assets against the fixed asset records
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Accepted Answer

Periodically checking physical fixed assets against the fixed asset records helps ensure that the assets recorded in the financial statements actually exist and are properly classified, addressing the risk of inflating net income and assets through improper capitalization.

Question 13

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.
A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
C) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.
D) Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger

Accepted Answer

The best control activity to address the risk of improperly capitalizing items that are not fixed assets is to perform monthly fixed asset reconciliation and have an independent review of the subsidiary ledger with the general ledger. This ensures that the recorded fixed assets are accurate and any discrepancies or errors can be identified and corrected timely, preventing the misstatement of financial statements.

Question 14

The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.
A) Purchasing
B) Sales
C) Operations
D) Marketing

Accepted Answer

The 3-way match in accounts payable involves matching the purchase order (from Purchasing), the goods receipt note (from Operations or Warehouse), and the invoice (from the vendor). The document from the Purchasing department, which is the purchase order, is one of the key documents required for this process.

Question 15

The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.
A) Sales
B) Receiving
C) Operations
D) Marketing

Accepted Answer

The 3-way match in accounts payable involves matching the purchase order (from the purchasing department), the goods receipt note (from the receiving department), and the invoice (from the vendor) to ensure that only goods and services that are ordered and received are paid for.

Question 16

The traditional three-way match matches the purchase order, receiving report and what other document?
A) Vendor invoice
B) Sales order
C) Vendor table
D) Packing slip

Accepted Answer

The traditional three-way match in accounting and procurement involves matching the purchase order, receiving report, and the vendor invoice to ensure that only valid and accurate charges are paid.

Question 17

The traditional three-way match matches the purchase order, vendor invoice and what other document?
A) Sales order
B) Receiving report
C) Vendor table
D) Packing slip

Accepted Answer

The traditional three-way match in accounting and procurement involves matching the purchase order, the vendor invoice, and the receiving report to ensure that only goods and services that are ordered and received are paid for.

Question 18

The traditional three-way match matches the receiving report, vendor invoice and what other document?
A) Sales order
B) Vendor table
C) Purchase order
D) Packing slip

Accepted Answer

The traditional three-way match in accounting and procurement involves matching the purchase order (the document that initiates the purchase), the receiving report (document that confirms the receipt of goods), and the vendor invoice (the bill from the supplier). This process is used to ensure that only goods and services that are ordered and received are paid for.

Question 19

Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk.
A) Report missing numbers in a sequence of prenumbered checks or ETFs for investigation and resolution.
B) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher
C) A three-way match against the purchase order, receiving report, and vendor's invoice
D) Take advantage of all supplier discounts if favorable to the company.

Accepted Answer

Reporting missing numbers in a sequence of prenumbered checks or ETFs helps identify unrecorded payments, preventing duplicate payments and ensuring accurate financial statements.

Question 20

Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk.
A) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher
B) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
C) A three-way match against the purchase order, receiving report, and vendor's invoice
D) Take advantage of all supplier discounts if favorable to the company.

Accepted Answer

The answer of Unrecorded payments may result in duplicate payments...

Quiz 10: Purchasing and Payments Process

Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "The department that uses a particular fixed asset generally initiates the purchasing process with a purchase requisition."

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "The accounting for a fixed asset occurs when the asset is recorded."

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "In addition to the purchasing and payment journal entries, the fixed asset accountant ensures the fixed asset subsidiary ledger is updated."

Choose the best definition from the list below of bid rigging.

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.

The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.

The traditional three-way match matches the purchase order, receiving report and what other document?

The traditional three-way match matches the purchase order, vendor invoice and what other document?

The traditional three-way match matches the receiving report, vendor invoice and what other document?

Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk.

Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk.