Question 1

What documents the receipt of goods?
A) Receipt verification
B) Ticket
C) Purchase validation
D) Invoice

Accepted Answer

The answer of What documents the receipt of goods?
A) Receipt...

Question 2

Which of the following is effected through the Purchase Order module?
A) Issuance of purchase orders
B) Monitoring of outstanding purchase orders
C) Reporting on outstanding purchase orders
D) All of the above

Accepted Answer

The Purchase Order module is designed to manage the entire purchase order process, from the creation and issuance of purchase orders to the monitoring and reporting of outstanding purchase orders. Therefore, all of the options listed (A, B, and C) are effected through this module.

Question 3

Which of the following describes the best physical control(s) over cash disbursements?
A) All disbursements to vendors over $50 are made with prenumbered checks.
B) Cash can be disbursed to vendors when approved by the purchasing manager.
C) Access to inventory is limited to authorized personnel only.
D) All of the above are good physical controls over cash disbursements.

Accepted Answer

The use of prenumbered checks ensures that each payment is recorded and accounted for, reducing the risk of fraudulent or unauthorized disbursements. Option B does not provide sufficient control over cash disbursements as approval by a single individual may be insufficient to prevent fraud or errors. Option C is unrelated to cash disbursements and instead concerns inventory control.

Question 4

Which of the following is TRUE regarding the segregation of duties in the purchasing process?
A) The authority to approve disbursement vouchers should be separate from the authority to sign checks.
B) Segregation of computerized functions can be attained through the use of passwords, file/record locks, and designated terminal access.
C) The password system allows a receiving clerk to read, but not write to, an open purchase order.
D) All of the above are true regarding the segregation of duties in the purchasing process.

Accepted Answer

All the statements provided are true regarding the segregation of duties in the purchasing process. They each describe a method or principle aimed at reducing the risk of fraud or error by dividing responsibilities among different individuals or systems.

Question 5

Which of the following modules would you expect to find in the purchasing function?
A) Sales Order Processing, Accounts Payable, Vendor Invoicing, Disbursements.
B) Purchase Order Processing, Accounts Receivable, Receiving, Vendor Invoicing.
C) Purchase Order Processing, Accounts Payable, Vendor Invoicing, Disbursements.
D) Sales Order Processing, Accounts Payable, Vendor Invoicing, Receiving, Cash Receipts.

Accepted Answer

The purchasing function typically involves the creation and processing of purchase orders, management of accounts payable, receipt of goods and services ordered, and disbursement of funds to vendors. The modules listed in option C align with these functions, making it the best choice. Options A, B, and D include modules that are not typically part of the purchasing function.

Question 6

Which of the following control activities ensure that the hours worked by a contractor are valid?
A) The contractor provides a weekly printout of time charged per job from his company's system.
B) All employee time should be positive and bear a reasonable relationship to the standard 40-hour work week.
C) Claims for large hours or excessive wage rates are reviewed quarterly by the Vice President of Human Resources.
D) The contracting office provides the names and tax identification numbers of all contractors prior to the processing of payroll.

Accepted Answer

All employee time should be positive and bear a reasonable relationship to the standard 40-hour work week.

Question 7

Which of the following is false regarding the accounts payable module?
A) Single checks issued by a company are referred to as manual checks.
B) A batch of checks may be posted after a proof list is prepared.
C) Printing batches of checks is an efficient way of issuing checks.
D) Posting may be invoked several times a day.

Accepted Answer

Single checks issued by a company are not referred to as manual checks, but as individual checks. Manual checks refer to checks that are written by hand rather than printed by the computerized system.

Question 8

Which of the following represent batch controls for the processing of purchase orders?
A) Control totals.
B) Record counts.
C) Hash totals.
D) All of the above are batch controls that would be used in the processing of purchase orders.

Accepted Answer

All of the choices listed (control totals, record counts, and hash totals) are commonly used as batch controls in the processing of purchase orders. Control totals involve calculating a total value for a particular field (such as the total amount of purchases) and comparing it against a predetermined value to ensure accuracy. Record counts involve verifying the number of records in a batch. Hash totals involve calculating a value based on selected fields and validating that value to ensure that data has not been lost or altered. All of these controls are important in ensuring the accuracy and completeness of purchase order processing.

Question 9

Which of the following are the principal reports required for the effective management of the purchasing process?
A) Vendor performance.
B) Outstanding sales orders.
C) Discounts taken.
D) All of the above.

Accepted Answer

While all of the reports listed may be useful for managing the purchasing process, vendor performance is the most critical as it allows a company to evaluate the effectiveness of its suppliers and make informed decisions about future purchasing decisions. Outstanding sales orders and discounts taken may be important for inventory management and financial analysis, but they are not essential for the purchasing process itself.

Question 10

What are listings of the cash disbursements transaction file are referred to?
A) Accounts payable master file
B) Check register
C) Invoice register
D) Vendor master file

Accepted Answer

Listings of the cash disbursements transaction file are referred to as check registers. The other options are related to accounts payable and vendor information but do not specifically refer to the listing of cash disbursements.

Question 11

When do disbursement activities begin?
A) Upon receipt of goods
B) After validation of receipt of goods
C) Upon approval of the invoice
D) After data has been keyed into the open invoice file

Accepted Answer

Disbursement activities typically begin after the invoice has been approved, as this signals that the vendor is entitled to payment. Receipt of goods and validation of receipt are important steps for ensuring the accuracy of the invoice and the goods received, but do not necessarily trigger disbursement activities. Data entry is also important for processing payments, but does not initiate disbursement activities on its own.

Question 12

After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into which file?
A) Open purchase order file.
B) Open vendor invoice file.
C) Open accounts transaction file.
D) Open customer invoice file.

Accepted Answer

The invoice data would typically be keyed into the open vendor invoice file, as this is where the organization tracks and stores information related to vendor invoices. The other files listed (open purchase order file, open accounts transaction file, and open customer invoice file) would not be appropriate places to store this information.

Question 13

Which of the following is NOT a reason why a company would be motivated to use an EDI system for purchase orders?
A) With an EDI system, purchase orders can be sent through the computer to a vendor.
B) An EDI system is inexpensive to purchase and easy to implement.
C) EDI systems reduce the possibility of human data entry error.
D) With the computerized EDI system, there is less paperwork involved.

Accepted Answer

This statement is incorrect. EDI systems can be expensive to purchase and implement, but the benefits in terms of reduced manual labor and improved accuracy and efficiency often outweigh the costs.

Question 14

What are two major data entry processes (think of the processes that require the most entry items per transaction)?
A) Creation and issuance of purchase orders; recording of cash disbursements.
B) Creation and issuance of purchase orders; recording of merchandise received and services rendered.
C) Recording of merchandise received and services rendered; recording of cash disbursements.
D) Creation and issuance of purchase orders; recording of accounts payable.

Accepted Answer

The creation and issuance of purchase orders involves inputting significant amounts of data such as vendor information, item descriptions, quantities, and pricing. Recording merchandise received and services rendered also involves a large number of data entries, including item descriptions, quantities, and payment terms. Both of these processes require a high volume of input per transaction.

Question 15

Recording a payable after the invoice is matched with other documents requires which journal entry?
A) Debit to cash; credit to accounts payable
B) Debit to accounts payable; credit to unbilled payables
C) Debit to unbilled payables; credit to cash
D) Debit to unbilled payables; credit to accounts payable

Accepted Answer

Once the invoice is matched with other documents, the payable amount becomes due and should be recorded in the accounts payable account. Since it was previously recorded in the unbilled payables account, it should now be transferred with a journal entry that debits unbilled payables and credits accounts payable.

Question 16

What is a major source of purchasing errors?
A) Data entry errors
B) Not setting budgets for managers
C) Not validating the purchase order
D) EDI errors

Accepted Answer

Data entry errors are a major source of purchasing errors as they can lead to incorrect quantities, prices, and even items being ordered. This can result in wasted resources, delays in delivery, and increased costs. Not setting budgets for managers, not validating the purchase order, and EDI errors can also lead to purchasing errors but are not as common or significant as data entry errors.

Question 17

After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into what file?
A) Purchase order file
B) Open invoice file
C) Accounts payable file
D) Receiving transaction file

Accepted Answer

The open invoice file is used to track invoices that have been received but not yet paid.

Question 18

When is a cash requirements forecast prepared?
A) After invoices have been approved for payment
B) After a schedule of aged accounts payable has been prepared
C) Before a schedule of aged accounts payable has been prepared
D) At regular intervals

Accepted Answer

A cash requirements forecast is prepared at regular intervals to ensure that a company has a clear understanding of its future cash needs. This allows for better financial planning and management.

Question 19

What has replaced the traditional paper purchase order?
A) Electronic Data Exchange
B) Facsimile
C) Optical scanners
D) Graphical user interfaces

Accepted Answer

Electronic Data Exchange (EDI) has largely replaced the traditional paper purchase order. EDI is a system that allows for the electronic exchange of business documents such as purchase orders, invoices, and shipment notices between trading partners. This system eliminates the need for paper-based transactions, reduces processing time, and increases accuracy.

Question 20

Which of the following are actions that result from the receipt of a properly authorized purchase requisition?
A) Issuance of a purchase order.
B) Adding the record to the open purchase order file.
C) Both a and b.
D) Neither a nor b.

Accepted Answer

The receipt of a properly authorized purchase requisition results in the issuance of a purchase order and adding the record to the open purchase order file. Both actions are necessary for the procurement process to move forward and ensure accurate record-keeping.

Quiz 10: The Purchasing Process

What documents the receipt of goods?

Which of the following is effected through the Purchase Order module?

Which of the following describes the best physical control(s) over cash disbursements?

Which of the following is TRUE regarding the segregation of duties in the purchasing process?

Which of the following modules would you expect to find in the purchasing function?

Which of the following control activities ensure that the hours worked by a contractor are valid?

Which of the following is false regarding the accounts payable module?

Which of the following represent batch controls for the processing of purchase orders?

Which of the following are the principal reports required for the effective management of the purchasing process?

What are listings of the cash disbursements transaction file are referred to?

When do disbursement activities begin?

After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into which file?

Which of the following is NOT a reason why a company would be motivated to use an EDI system for purchase orders?

What are two major data entry processes (think of the processes that require the most entry items per transaction) ?

Recording a payable after the invoice is matched with other documents requires which journal entry?

What is a major source of purchasing errors?

After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into what file?

When is a cash requirements forecast prepared?

What has replaced the traditional paper purchase order?

Which of the following are actions that result from the receipt of a properly authorized purchase requisition?