Chapter 4

Question 1

What is the expenditure cycle?

Answer 1

It is the group of functions that acquire property, goods and services; and labor; pay for the them; and classify, summarize and report what is acquired and what is paid.

Question 2

What services are covered under a monthly contract?

Answer 2

Janitorial
Security
Landscaping
Elevator/escalator
HVAC Maintenance
Pest Control
Metal Maintenance
Waste removal/recycling

Question 3

What is the formula fr determining productivity rate?

Answer 3

Productivity Rate=Rate/hours

Question 4

What factors should be considered when evaluating service contracts?

Answer 4

You should consider price, insurance levels, employee benefits, uniform costs, company reputation, etc.

Question 5

What information should be included in the vendor database?

Answer 5

Vendor legal name
Vendor remittance address
Vendor Federal Tax ID#
Minority status
Vendor entity type (corporation, partnership, sole propetership)

Question 6

What is the role of the purchase order?

Answer 6

It defines the scope of work, binds the vendor to a quoted price and provides assurance that the expenditure has been approved by the correct person.

Question 7

What is the first step in invoice coding?

Answer 7

To determine if the expense item was included in the budget.

Question 8

What is a holding file?

Answer 8

It is a computer file for all unpaid invoices.

Question 9

How are invoices posted?

Answer 9

At the end of the accounting period, paid invoices are transferred from the paid invoice file to each individual expense category in the general ledger based on the assigned expense code.

Question 10

What is petty cash?

Answer 10

A limited amount of currency and coin on hand to pay for COD type purcahses.

Question 11

What is an employee payroll?

Answer 11

The process of accumulating employee data such as claimed exemptions, wage rates, and benefits then applying this information to the ongoing hourly information and generating paychecks on a periodic basis.

Question 12

What types of taxes may be withheld from a paycheck?

Answer 12

FICA-Social security
Income taxes-Federal, state, and local
FUTA-Federal unemployment
SUTA-Stae unemployment

Question 13

List the employees on a typical buiding payroll.

Answer 13

Property Manager
Assistant Property Manager
Receptionist
Chief Engineer
Assistane Engineer
Porter (cleaning)
Security
Parking Lot Attendant
Accounts Payable Clerk
Accounts Receiveable Clerk
Project Accountant

Question 14

How is employee work time alocated for reporting purposes?

Answer 14

It is allocated by either the actual time spent working on individual projects (maintenance, painting, etc) or it is allocated by a set percentage split determined by square footage occupied or another arrangement.

Question 15

What information is needed to calculate basic wage deductions for an employee?

Answer 15

Hours worked
Gross wages
FICA
Federal and State Withholdings
Other deductions such as Health plans, etc.

Question 16

List several important factors to consider when evaluating a vendor bid.

Answer 16

Hourly rates, productivity ratios, experience, reputation, insurance, employee benefits, hidden costs.

Question 17

What information should be included on all invoices?

Answer 17

Assigned vendor code, appropriate chart of accounts code, brief description of goods or services, amount to be paid, signature of person who received the goods or services; could also include PO number, date received, vendor invoice number, and due date

Question 18

How should a petty cash fund be handled?

Answer 18

limited cash on hand, used for COD purchases only, used only when necessary,receipt submitted for all purchases, processed like any other invoice.

Question 19

Where should building employee salaries be allocated?

Answer 19

the expense accounts of projects they worked on with the amount determined by the number of hours worked on a project.

Question 20

A janitoria contract is worth $3,000 per month, with employees cleaning from six until midnight five days a week. What is the janitorial contractos productivity rate?

a) $12
b) $25
c) $120
d) $600

Answer 20

b) $25

Question 21

To avoid duplicate payments to a vendor, all apyments should be made from the:

a) original invoice
b) vendor invoice copy
c) chart of accounts code
d) vendor statement of account

Answer 21

a) original invoice

Question 22

Which information may be omitted from the invoice coding process?

a) amount to be paid
b) vendor remittance address
c) description of goods and services
d) chart of accounts code

Answer 22

b) vendor remittance address

Question 23

An engineer is paid $36.50 per hour, plus overtime at one-and-a-half times his normal pay rate. During the past two week pay period, he worked seven hours of overtime and took no vacation or sick pay. What are his gross wages for the period?

a) $365.00
b) $1,843.25
c) $2,900.00
d) $3,303.25

Answer 23

d) $3,303.25