Question 1

It is necessary for the purchasing department to set up the proper procedures to avoid problems related to cutoff issues.

Accepted Answer

The answer of It is necessary for the purchasing department...

Question 2

Most companies conduct business transactions with checks so that a written record is established for cash disbursements.

Accepted Answer

Checks provide a written record of cash disbursements, making it a popular method of conducting business transactions.

Question 3

The authorization of a cash disbursement occurs when the accounts payable department matches the purchase order, receiving report, and the invoice, and then forwards the matched documents to the cash disbursements department.

Accepted Answer

This process is known as the three-way match and is a common method for authorizing cash disbursements. Once the documents are matched, the cash disbursement department can proceed with processing the payment.

Question 4

Copies of invoices should be filed in the account in alphabetic order by name of the vendors.

Accepted Answer

The answer of Copies of invoices should be filed in...

Question 5

Independent reconciliation of the accounts payable subsidiary ledger to the general ledger control account will help to assure that all inventory has been properly recorded.

Accepted Answer

Reconciliation of accounts payable ensures that liabilities are accurately recorded, but it does not directly verify the recording of inventory.

Question 6

The accounting department is responsible for implementing internal controls over each business process.

Accepted Answer

The answer of The accounting department is responsible for implementing...

Question 7

Designated members of management should be given the responsibility for authorizing the actual payments and sign their signatures on the face of the check.

Accepted Answer

This is a best practice in internal control for ensuring proper authorization of payments and reducing the risk of fraud.

Question 8

If the purchasing, receiving, accounts payable, and cash disbursements processes are completed by the same individuals, the internal controls will be stronger because someone in the company will have an overall view of company activities.

Accepted Answer

When one person is responsible for multiple processes, there is a higher risk of fraud and errors going undetected. It is important to have segregation of duties and different individuals responsible for each process to ensure internal controls are effective.

Question 9

Independent reconciliation of the periodic inventory counts and the inventory ledger and the general ledger will help to assure that inventory is being properly accounted for.

Accepted Answer

Independent reconciliation of the periodic inventory counts and the inventory ledger and the general ledger can help to identify any discrepancies and ensure that the inventory is properly accounted for. This can help to improve the accuracy and reliability of the financial statements, as inventory is often a significant asset for many businesses.

Question 10

For a number of different reasons, a company may find it necessary to reject goods received which will start the purchase returns process.

Accepted Answer

This is true as there may be various reasons for a company to reject goods received, such as incorrect or damaged items, late delivery, or not meeting the specified requirements. This will initiate the purchase returns process.

Question 11

Cash should be periodically verified by comparing the cash balance with the bank statement.

Accepted Answer

It is important to regularly compare the cash balance in the accounting records with the bank statement to ensure that all transactions have been recorded accurately and that there are no discrepancies. This process is known as bank reconciliation and helps to detect errors or fraudulent activity.

Question 12

The accounts payable department keeps copies of purchase orders and receiving reports, that will be compared to the related invoice, to be sure that the invoices represent goods that were ordered and received.

Accepted Answer

This statement is true. The accounts payable department uses these documents to verify the accuracy of the invoice and ensure that payment is made only for goods that were actually received.

Question 13

A user who logs in to the computer-based accounting system to enter invoices should also have access to the portion of the system that would allow her / him to order goods.

Accepted Answer

Segregation of duties is a key control in accounting systems to prevent fraud and errors; users should only have access to functions necessary for their specific role.

Question 14

The cash disbursement process must be designed to ensure that the company appropriately records all accounts payable transactions.

Accepted Answer

The answer of The cash disbursement process must be designed...

Question 15

When an invoice is paid, it should be canceled to indicate that it has been paid.

Accepted Answer

When an invoice is paid, it should be marked as paid and canceled or closed to avoid any confusion or duplicate payments.

Question 16

When preparing the cash disbursement journals, it is important that the records have the actual date of cash disbursement, as is shown on the check.

Accepted Answer

It is important to accurately record the date of cash disbursement in order to properly track cash flow and ensure accurate financial statements. The date on the check is the actual date of disbursement and should be used in the cash disbursement journal.

Question 17

When an automated matching system is used, all of the relevant files must be online or in databases).The system can then access the online purchase order and receiving files and check the match of items, quantities, and prices.

Accepted Answer

This statement is correct. For an automated matching system to work, all relevant files must be online or in databases so that the system can access them and check the match of items, quantities, and prices.

Question 18

Only the purchasing department should authorize the processing of a cash disbursement transaction.

Accepted Answer

While the purchasing department may be involved in authorizing certain types of expenditures, ultimately the responsibility for approving cash disbursement transactions should be shared among multiple departments and individuals to ensure proper oversight and prevent fraud or errors.

Question 19

Cash should be periodically verified by comparing the balance in the check book with the balance in the cash account in the general ledger.

Accepted Answer

The answer of Cash should be periodically verified by comparing...

Question 20

In order to institute an automated matching system, all of the relevant files must exist in the same physical room.

Accepted Answer

An automated matching system can utilize cloud-based storage and databases, meaning that all relevant files do not need to exist in the same physical room.

Quiz 9: Expenditures Processes and Controls - Purchases