Question 1

Which of the following is the first step in the purchasing and payment process?

Accepted Answer

The first step in the purchasing and payment process is for the purchaser to send a purchase order to the supplier, indicating their intention to buy goods or services from them. This initiates the process of fulfilling the order and eventually sending an invoice for payment.

Question 2

The journal entry to open a new petty cash fund includes a debit to the Petty Cash account and a credit to the Cash account.

Accepted Answer

This is correct, as the journal entry to establish a petty cash fund involves debiting the Petty Cash account (to increase its balance) and crediting the Cash account (to reduce its balance as cash is transferred out of it).

Question 3

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

Accepted Answer

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

Question 4

Which of the following statements describes a purchase order?

Accepted Answer

A purchase order is a document issued by a buyer to a supplier, indicating the type, quantity, and price of goods or services that the buyer wishes to purchase. It is a formal request to buy goods or services and serves as a contract between the buyer and the supplier.

Question 5

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

Accepted Answer

Electronic Data Interchange (EDI) is a streamlined process where computers of retailers communicate directly with the computers of suppliers to automate routine business transactions, bypassing paper documents altogether. Real Time Gross Settlement (RTGS), Electronic Fund Transfer (EFT), and Evaluated Receipts Settlement (ERS) are different types of electronic payment systems.

Question 6

Which of the following statements describes a receiving report?

Accepted Answer

A receiving report is a document used to verify that goods have been received and are in good condition, as ordered. It is typically created by the receiving department and serves as a record of the received items. It does not include information about the purchase order or payment to the supplier.

Question 7

Which of the following statements describes a voucher?

Accepted Answer

A voucher is a document authorizing payment to a supplier. It is typically created once goods or services have been received and the supplier has provided an invoice or bill. The voucher serves as a record of the transaction and ensures that payment is made accurately and in a timely manner.

Question 8

Which of the following items must be examined by the controller or treasurer before signing a check?

Accepted Answer

The treasurer or controller must examine the purchase order to ensure that the check being signed is authorized for payment and matches the goods or services received. The ledger, confirmation report, and journal entry may provide additional context or support for the payment, but they are not directly related to authorizing the check.

Question 9

Which of the following statements describes an invoice from a supplier?

Accepted Answer

An invoice from a supplier is a statement or bill provided by the supplier showing the goods or services purchased and the amount due to be paid by the buyer. It is not an order, a report on goods received, or a payment authorization.

Question 10

A company check for payment must be signed by ________.

Accepted Answer

A company check for payment must be signed by an employee specifically authorized by the company. This is usually someone within the finance or accounting department who has the authority to approve and sign off on payments. Any other employee or external auditor is not authorized to sign the company check for payment. A bank employee may not sign a company check, but may process it for payment once the authorized signature has been made.

Question 11

A document authorizing a cash payment is a(n)________.

Accepted Answer

A voucher is a document authorizing a cash payment, typically used for business expenses or reimbursement. A check is a document authorizing a transfer of funds from one account to another, but does not necessarily involve a cash payment. An invoice is a document requesting payment for goods or services already provided, but does not authorize a cash payment. A bill of lading is a document used in shipping, providing a receipt of goods and a contract of carriage, but does not involve a cash payment.

Question 12

Cash in the bank is more liquid than a petty cash fund.

Accepted Answer

Petty cash is more liquid than cash in the bank because none of the bank controls are in place.

Question 13

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

Accepted Answer

A key to strong control over petty cash is to ensure that only one person serves as custodian at a time. This helps to prevent any discrepancies or potential misuse of funds.

Question 14

For good controls over cash payments,the company officer approving a payment voucher should be the same as the person who ordered the goods,to ensure that the correct amount of cash is paid.

Accepted Answer

The answer of For good controls over cash payments,the company...

Question 15

A sequentially numbered document authorizing a cash payment is known as a ________.

Accepted Answer

A voucher is a document that authorizes a cash payment and is typically numbered sequentially for tracking purposes. A cash register is a machine used to record sales transactions, a voucher register is a log of all vouchers issued, and a ledger folio is a page in a ledger used to record a single transaction.

Question 16

Which of the following is included in a voucher?

Accepted Answer

The invoice number is typically included in a voucher as it is used to track and verify the payment being made.

Answer: D
 The company identification number may also be included in a voucher to identify the specific company or organization receiving payment.

The other options (A and B) are not typically included in a voucher.

Question 17

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account,supported by the fund,cash plus payment tickets,totaling the same amount.

Accepted Answer

The statement correctly defines an imprest system.

Question 18

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

Accepted Answer

The journal entry to replenish a petty cash fund includes a debit to the Expense account and a credit to the Petty Cash account. This is because the Petty Cash account is being reimbursed for the expenses paid out of that fund, which is an expense to the company.

Question 19

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

Accepted Answer

A proper approval of a payment to a supplier requires a receiving report to verify the goods were received, an invoice to show the amount owed, and a purchase order to ensure authorization for the purchase. Option A is missing a receiving report and a purchase order. Option C is missing a receiving report and an invoice. Option D includes documents that are not necessary for approving a payment to a supplier.

Question 20

For good controls over cash payments,the person who orders goods from a supplier should always be different from the person who approves the payment.

Accepted Answer

This separation of duties helps to prevent one person from both ordering goods and approving payments, which can lead to fraudulent activities or mistakes in financial controls. By having different individuals responsible for these tasks, there is a system of checks and balances to ensure proper use of company funds.

Quiz 7: Internal Control and Cash

Which of the following is the first step in the purchasing and payment process?

The journal entry to open a new petty cash fund includes a debit to the Petty Cash account and a credit to the Cash account.

Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures.

Which of the following statements describes a purchase order?

A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________.

Which of the following statements describes a receiving report?

Which of the following statements describes a voucher?

Which of the following items must be examined by the controller or treasurer before signing a check?

Which of the following statements describes an invoice from a supplier?

A company check for payment must be signed by ________.

A document authorizing a cash payment is a(n) ________.

Cash in the bank is more liquid than a petty cash fund.

A key to strong control over petty cash is to ensure that several persons serve as custodian at one time.

For good controls over cash payments,the company officer approving a payment voucher should be the same as the person who ordered the goods,to ensure that the correct amount of cash is paid.

A sequentially numbered document authorizing a cash payment is known as a ________.

Which of the following is included in a voucher?

An imprest system is a way to account for petty cash by maintaining a constant balance in the petty cash account,supported by the fund,cash plus payment tickets,totaling the same amount.

The journal entry to replenish a petty cash fund includes a debit to the Petty Cash account and a credit to the Expense account.

In a good internal control system,which of the following sets of documents is required for proper approval of a payment to a supplier?

For good controls over cash payments,the person who orders goods from a supplier should always be different from the person who approves the payment.