Chap 9 Flashcards
When a purchase occurs, the information resulting from that purchase must flow into
the purchase recording systems,
the accounts payable and cash disbursement systems, and
the inventory tracking systems.
Transaction Processing Systems (TPS)
Common expenditures processes include:
Prepare a purchase requisition and/or purchase order.
Notify vendor (supplier) of goods or services needed.
Receive goods or services.
Record the payable.
Pay the resulting invoice.
Update the records affected, such as accounts payable, cash, inventory, and expenses.
Common procedures associated with the revenue process:
Authorization of transactions Segregation of duties Adequate records and documents Security of assets and documents Independent checks and reconciliation Cost-benefit considerations
Characteristics indicating risk with purchasing processes:
Goods received difficult to differentiate, count, or inspect.
High volumes of goods are received, or goods are of high value.
Inventory pricing arrangements are complex or based on estimates.
Frequent changes occur in purchase prices or vendors.
Company depends on one or few key vendors.
Receiving and/or record keeping are performed at multiple locations.
Within the purchasing processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes?
a. The invoice
b. The receiving report
c. The purchase order
d. The purchase requisition
d. The purchase requisition
Personnel who work in the receiving area should complete all of the following processes except
counting the goods received.
inspecting goods received for damage.
preparing a receiving report.
preparing an invoice.
preparing an invoice.
Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor?
Purchasing
Receiving
Accounts payable
Shipping
Accounts payable
Cash disbursements process must be
designed to ensure that the company appropriately processes payments to satisfy its accounts payable when they are due. Terminology: Cash management Remittance advice Cash disbursements journal
Specific controls over the cash receipts process:
Authorization of transactions Segregation of duties Adequate records and documents Security of assets and documents Independent checks and reconciliation Cost-benefit considerations
Which of the following controls is not normally performed in the accounts payable department
The vendor’s invoice is matched with the related receiving report.
Vendor invoices are selected for payment.
Asset and expense accounts to be recorded are assigned.
Unused purchase orders and receiving reports are accounted for.
Unused purchase orders and receiving reports are accounted for.
In a system of proper internal controls, the same employee should not be allowed to
sign checks and cancel the supporting voucher package.
receive goods and prepare the related receiving report.
prepare voucher packages and sign checks.
initiate purchase requisitions and inspect goods received.
prepare voucher packages and sign checks.
Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be
supported by a receiving report.
stamped “paid” by the check signer.
prenumbered and accounted for.
approved for authorized purchases.
stamped “paid” by the check signer.
Three-Way Match is the
matching of a purchase order to the related receiving report and invoice.
Time consuming and expensive.
Business Process Reengineering (BPR) to improve efficiency and effectiveness.
Business Process Reengineering (BPR)
to improve efficiency and effectiveness. IT systems include:
Computer-based matching and checking of purchasing documents
Evaluated receipt settlement (ERS)
Electronic forms of purchase and payment
Automated matching
software matches an invoice to its related purchase order and receiving report.
