Chapter 5: Expenditure Cycle Part 1 Flashcards
Illustrate the procurement cycle
Purchase Requisition - prepares copies of PR
Purchasing - prepares a purchase order
Receiving/Inspection - inspects the goods
Accounts Payable - reconciles the received PR, PO, RR, and Supplier’s invoice and posts tot he journal and ledger
Cash Disbursements - prepares the check, records, returns paid vouchers and sends a journal voucher to G/L
True or False: Real-Time Data Input requires manual transcription of information onto paper documents.
False. Real-Time Data Input eliminates much of routine manual procedures such as transcription
True or False: Real-Time Data Input and Over Batch Processing produces more errors in data entry
False. Both processes reduce data entry correction procedures
True or False: Real-Time Data Input and Over Batch Processing eliminates much of the storage and shuffling of paper documents.
True
True or False: Real-Time Data Input and Over Batch Processing does not acknowledge the problem of long time-lags in record-keeping.
False. Both shorten the time-lag in record-keeping
True or False: Real-Time Data Input and Over Batch Processing keeps more current records.
True. Since it shortens time-lags in record-keeping, the records are more current.
True or False: Computer-based Purchases automates the updating of inventory subsidiary file from the receiving report.
True
True or False: Computer-based Purchases manually closes the corresponding records in the open PO file to the closed PO file.
False. It automates this procedure.
True or False: In Computer-based Purchases, the personnel will have to calculate and count batch totals then send the report to the accounts payable department for them to record it on the general ledger.
False. Computer-based purchases automatically calculates batch totals for general ledger update.
True or False: Purchases of inventory should be authorized by the purchasing agents
False. It should be authorized by the Inventory Control Department
Who authorizes the payments of bills?
Accounts Payable
Who authorizes purchases of inventory?
Inventory Control Department
If the cash disbursements clerk does not authorize the payments of bills, what does it do?
It writes the check
In a computer-based authorization controls, can faulty inventory models still lead to over-purchasing or under-purchasing?
Yes
Should the custody of inventory by the Warehouse be the same with the recordkeeping for inventory by the Inventory Control?
No, it should be separate because these functions should be segregated.
Should the custody of cash by Cash Disbursements be kept separate from recordkeeping for the asset by the Accounts Payable?
Yes, these functions should be segregated
Within the expenditure cycle, _____________ is of highest importance in the Receiving department, where the inventory arrives and is logged in by a receiving clerk.
Supervision
True or False: Automation often leads to a collapsing of the traditional segregation of duties.
True
What is needed so that automation won’t often lead to a collapsing of the traditional segregation duties?
Greater supervision
In what form can supervision take place as?
Electronic monitoring
True or False: Supervision because easier as the workplace becomes more sophisticated.
False. It becomes more difficult since employees may have advanced IT training.
True or False: Automated systems completely get rid of paper documents.
False. Most automated systems still have a lot of paper documents.
True or False: Accountants can be assured that stored digitalized data is reliable and secured.
False. They should still be skeptical about its accuracy.
True or False: Magnetic records are vulnerable to unauthorized exposure only and should be protected.
False. It is also vulnerable to authorized exposure.
