AIS - Chapter 13 Quiz

For good internal control, who should sign checks? a. Cashier b. Accounts payable c. Purchasing agent d. Controller

a. Cashier The cashier is responsible for managing cash and reports to the treasurer

Which of the following expenditure cycle activities can be eliminated through the use of IT or re-engineering? a. Ordering goods b. Approving vendor invoices c. Receiving goods d. Cash disbursements

b. Approving vendor invoices (Evaluated Receipt Settlements) ERS systems eliminate vendor invoices.

Which of the following procedures is designed to prevent the purchasing agent from receiving kick backs? a. Maintaining a list of approved suppliers and requiring all purchases to be made from suppliers on the list. b. Requiring purchasing agents to disclose any financial investments in potential suppliers. c. Requiring approval of all purchase orders. d. Prenumbering and periodically accounting for all purchase orders.

b. Requiring purchasing agents to disclose any financial investments in potential suppliers. The purpose of such disclosure is to minimize the risk of conflicts of interest that could result in kickbacks.

Which of the following is true? a. It is easier to verify the accuracy of invoices for purchases or services than invoiced for purchases of raw materials. b. Setting up petty cash as an imprest fund violates segregation of duties. c. The EOQ formula is used to identify when to reorder inventory. d. A voucher package usually includes a debit memo.

b. Setting up petty cash as an imprest fund violates segregation of duties. Technically, setting up a petty cash as an imprest fund violates segregation of duties because the same person has custody of the asset - cash - authorized its disbursement, and maintains records.

Which of the following matches is performed in evaluated receipt settlements (ERS)? a. The vendor invoice with the receiving report b. The purchase order with the receiving report c. The vendor invoice with the purchase order d. The vendor invoice, the receiving report, and the purchase order

b. The purchase order with the receiving report. Evaluated receipt settlements (ERS) eliminates the vendor invoice and schedules payments based on matching the purchase order and receiving report.

Which document is used to record adjustments to accounts payable based on the return of unacceptable inventory to the supplier? a. Receiving report b. Credit memo c. Debit memo d. Purchase order

c. Debit memo The document is used to adjust accounts payable.

Which of the following inventory control methods is most likely to be used for a product for which sales can be reliably forecast? a. JIT b. EOQ c. MRP d. ABC

c. MRP MRP forecasts sales and uses that information to purchase inventory to meet anticipated needs.

Which method would provide the greatest efficiency improvements for the purchase of non-inventory items such as miscellaneous office supplies? a. Bar-coding b. EDI c. Procurement cards d. EFT

c. Procurement cards Procurement cards were designed specifically for purchase of non-inventory items.

Which document is used to establish a contract for the purchase of goods and services from a supplier? a. Vendor invoice b. Purchase requisition c. Purchase order d. Disbursement voucher

c. Purchase order A purchase order is an offer to buy goods.

What is the best control procedure to prevent paying the same invoice twice? a. Segregate check preparation and check-signing function. b. Prepare check only for invoices that have been matched to receiving reports and purchase orders. c. Require two signatures on all checks above a certain limit. d. Cancel all supporting documents when the check is signed.

d. Cancel all supporting documents when the check is signed. This ensures that the supporting documents cannot be resubmitted to pay the same invoice again.