AIS chapter 15

Supplier invoices are sent to which function? A. Approve Supplier Invoices B. Receiving C. Cash Disbursements D. Ordering

A. Approve Supplier Invoices

Which document is used to reduce the balance owed to a supplier? A. Debit memo B. Credit memo C. Supplier invoice D. Purchase order

A. Debit memo

Which controls are designed to reduce the risk of unauthorized disclosure of sensitive data about a company's purchases? A. Encryption B. Data processing integrity controls C. Access controls D. Review of all changes to master data

A. Encryption C. Access controls

Restricting access to master data reduces the risk of which threat(s)? A. Inaccurate or invalid master data B. Unauthorized disclosure of sensitive information C. Loss or destruction of data D. Poor performance

A. Inaccurate or invalid master data B. Unauthorized disclosure of sensitive information

The source of back orders for inventory items is A. Revenue cycle B. Inventory control C. Production cycle D. Suppliers

A. Revenue cycle

Identify all the controls that mitigate the threat of the theft of inventory. A. Segregation of duties of inventory custody and receiving B. Use of bar codes and RFID tags C. Documentation of all transfers of inventory D. Restriction of physical access to inventory E. Budgetary controls

A. Segregation of duties of inventory custody and receiving C. Documentation of all transfers of inventory D. Restriction of physical access to inventory

What are the benefits of procurement cards? A. Spending limits reduce risk of purchasing too much supplies B. Improve efficiency of accounts payable by reducing the number of payments made for purchase of supplies C. Account numbers can be linked to general ledger accounts for different supplies D. None of these are benefits E. Simplify accounts payable because receive only one monthly statement

A. Spending limits reduce risk of purchasing too much supplies B. Improve efficiency of accounts payable by reducing the number of payments made for purchase of supplies C. Account numbers can be linked to general ledger accounts for different supplies E. Simplify accounts payable because receive only one monthly statement

Which of the following control procedures is designed to mitigate the threat of the theft of cash? A. Use of a dedicated computer and browser for online banking B. Physical security of blank checks C. Requiring that all supplier invoices be matched to supporting documents D. Filing invoices by discount due date E. Restriction of access to the supplier master file

A. Use of a dedicated computer and browser for online banking B. Physical security of blank checks E. Restriction of access to the supplier master file

The _____, who reports to the treasurer, is responsible for paying suppliers. A. cashier B. chief executive officer C. chief financial officer D. controller

A. cashier

The set of activities involved in ordering inventory, receiving it, and paying for it is referred to as the ____ A. purchase-to-pay (or cash disbursement) process B. expenditure cycle C. revenue cycle D. order-to-pay process

A. purchase-to-pay (or cash disbursement) process B. expenditure cycle

The control procedure of requiring competitive bidding is primarily designed to mitigate the risk of A. purchasing at inflated prices. B. stockouts and excess inventory. C. purchasing items not needed. D. purchasing goods of inferior quality. E. unreliable suppliers.

A. purchasing at inflated prices.

The external entity from whom an organization purchases inventory and raw materials is called a _____ A. supplier B. vendor C. distributor D. common carrier

A. supplier B. vendor

Which process directly updates the Accounts Payable file? A. Ordering B. Approve Supplier Invoices C. Receiving

B. Approve Supplier Invoices

Which of the following control procedures are most effective to reduce the threat of paying for services (e.g., painting, janitorial, landscape, etc.) that were not performed? A. Job rotation and mandatory vacations B. Audits C. Budgetary controls D. Competitive bidding E. Use of bar codes or RFID tags

B. Audits C. Budgetary controls

Which of the following controls is designed to mitigate the risk of purchasing goods of inferior quality? A. Price lists B. Holding purchasing managers responsible for the costs associated with rework and scrap C. Periodic physical counts of the inventory D. Collecting and monitoring supplier delivery performance data

B. Holding purchasing managers responsible for the costs associated with rework and scrap

Which of the following controls could be used to mitigate the threat of kickbacks? A. Competitive bidding B. Job rotation and mandatory vacations C. Centralized purchasing function D. Review and approval of purchase requisitions

B. Job rotation and mandatory vacations

Which documents are used to create a three-way match when approving the payment of a supplier invoice? A. Credit memo B. Purchase order C. Supplier invoice D. Receiving report

B. Purchase order C. Supplier invoice D. Receiving report

Which of the following specifies when to reorder supplies and inventory? A. Purchase requisition B. Reorder point C. Purchase order D. EOQ formula

B. Reorder point

Which controls are designed to minimize the risk of making duplicate payments? A. Restrict access to blank checks B. Require a complete voucher package before issuing payment C. Pay only from original copies of supplier invoices D. Regularly reconcile the bank account E. Use "Positive Pay" arrangements with banks

B. Require a complete voucher package before issuing payment C. Pay only from original copies of supplier invoices

Identify all the controls that mitigate the threat of mistakes when counting deliveries from suppliers A. Requiring the existence of an approached purchase order prior to accepting any delivery B. Use of bar codes and RFID tags C. Not informing receiving employees about the quantities ordered D. Requiring receiving employees to sign the receiving report E. Documentation of all transfers of inventory

B. Use of bar codes and RFID tags C. Not informing receiving employees about the quantities ordered D. Requiring receiving employees to sign the receiving report

An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs is called A. reorder point. B. materials requirements planning. C. economic order quantity. D. just-in-time inventory system.

B. materials requirements planning.

Which of the following purposes does a receiving report fulfill? A. Document the need to back order items B. Document the need to order items C. Document the quantity received D. Document the quality of items received

C. Document the quantity received D. Document the quality of items received

Cash flow budgets minimize the risk of which threat? A. Paying for items not received B. Theft of cash C. Failure to take advantage of discounts for prompt payment D. Duplicate payments

C. Failure to take advantage of discounts for prompt payment

Which of the following controls is designed to reduce the risk of errors in counting inventory delivered by suppliers? A. All three controls are designed to reduce the risk of errors in counting inventory. B. Requiring the existence of approved purchase orders prior to accepting any delivery C. Not informing receiving employees about the expected quantities D. Periodic physical counts of inventory and reconciliation to of the counts with recorded quantities in the system

C. Not informing receiving employees about the expected quantities

Which of the following is the proper sequence of activities for transactions when an organization acquires inventory or raw materials? A. Receive, order, pay B. Pay, receive, order C. Order, receive, pay D. Pay, order, receive E. Order, pay, receive

C. Order, receive, pay

Sending the receiving report to the inventory control department first, before it is then sent on to accounts payable, is a control procedure designed to minimize the risks of which threats? A. Duplicate payments B. Theft of cash C. Paying for items not received D. Cash flow problems

C. Paying for items not received

Which document is sent to suppliers in order to acquire inventory? A. Purchase requisition B. Packing slip C. Purchase order D. Receiving report

C. Purchase order

Which of the following controls could be used to mitigate the threat of accepting unordered items? A. Supplier audits B. Use of bar codes and RFID tags C. Requiring existence of approved purchase order prior to accepting any delivery D. Configuration of the ERP system to flag discrepancies between received and ordered quantities that exceed tolerance threshold for investigation

C. Requiring existence of approved purchase order prior to accepting any delivery

Which document is no longer used to approve a supplier payment when a company is using ERS? A. Receiving report B. Credit memo C. Supplier invoice D. Purchase order

C. Supplier invoice

Separation of the check-writing and accounts payable functions is designed to mitigate the threat of: A. Failure to take advantage of discounts for prompt payment B. Paying for items not received C. Theft of cash D. Duplicate payments

C. Theft of cash

The control procedure of supplier audits is designed to mitigate the risk of A. purchasing at inflated prices. B. purchasing items not needed. C. kickbacks. D. stockouts and excess inventory. E. purchasing goods of inferior quality.

C. kickbacks.

A method for processing accounts payable in which each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open invoice file is called A. voucher package. B. disbursement voucher. C. nonvoucher system. D. voucher system.

C. nonvoucher system.

To minimize the risk of the theft of cash, the person who makes cash disbursements should not also have the duties of: A. receiving goods. B. ordering goods. C. reconciling the bank account. D. approving supplier invoices.

C. reconciling the bank account. D. approving supplier invoices.

The process of ordering inventory can be initiated by communication from A. Inventory control B. The revenue cycle C. The production cycle D. All of these are correct

D. All of these are correct

Cancelling all supporting documents when payment is made to a supplier is a control procedure designed to mitigate the threat of: A. Paying for items not received B. Failure to take advantage of discounts for prompt payment C. Cash flow problems D. Duplicate payments

D. Duplicate payments

Which of the following controls could be used to mitigate the threat of unauthorized disclosure of sensitive information in the expenditure cycle? A. Review and approval of purchases from new suppliers B. Tracking and monitoring product quality by supplier C. Competitive bidding D. Encryption

D. Encryption

Evaluated Receipt Settlement reduces the threat of: A. Theft of inventory B. Mistakes in posting to accounts payable C. Accepting unordered items D. Errors in supplier invoices

D. Errors in supplier invoices

Which of the following threat(s) are data processing integrity controls designed to reduce? A. Failure to take advantage of discounts for prompt payment B. Paying for items not received C. Errors in supplier invoices D. Mistakes in posting to accounts payable

D. Mistakes in posting to accounts payable

Which document is sent to a supplier when an organization wants to buy something? A. Purchase requisition B. Sales invoice C. Sales order D. Purchase order

D. Purchase order

Which approach is an organization following if it posts each individual supplier invoice in accounts payable and stores the invoices in an open-invoice file until they are paid? A. Voucher system B. Procurement card C. Disbursement voucher D. ERS E. Nonvoucher system

E. Nonvoucher system