Chapter 5: Purchases and expenditure cycle

Question 1

Which document helps to ensure that the
receiving clerks actually count the number of
goods received?

a. packing list
b. blind copy of purchase order
c. shipping notice
d. invoice

Answer 1

b. blind copy of purchase order

Question 2

When the goods are received and the receiving
report has been prepared, which ledger may be
updated?

a. standard cost inventory ledger

b. inventory subsidiary ledger

c. general ledger

d. AP subsidiary ledger

Answer 2

a. standard cost inventory ledger

Question 3

Which statement is NOT correct for an expenditure system with proper internal controls?

a. Cash disbursements maintain the check
register.

b. AP maintains the AP subsidiary ledger.

c. AP is responsible for paying invoices.

d. AP is responsible for authorizing invoices.

Answer 3

c. AP is responsible for paying invoices.

Question 4

Which duties should be segregated?

a. matching purchase requisitions, receiving
reports, and invoices and authorizing payment

b. authorizing payment and maintaining the check register

c. writing checks and maintaining the check
register

d. authorizing payment and maintaining the
AP subsidiary ledger

Answer 4

b. authorizing payment and maintaining the check register

Question 5

Which documents would an auditor most likely
choose to examine closely to ascertain that all
expenditures incurred during the accounting
period have been recorded as a liability?

a. invoices
b. purchase orders
c. purchase requisitions
d. receiving reports

Answer 5

d. receiving reports

Question 6

Which task must still require human intervention in an automated purchases/cash disbursements system?

a. determination of inventory requirements

b. preparation of a purchase order

c. preparation of a receiving report

d. preparation of a check register

Answer 6

c. preparation of a receiving report

Question 7

Which one of the following departments does
not have a copy of the purchase order?

a. the purchasing department

b. the receiving department

c. accounts payable

d. general ledger

Answer 7

d. general ledger

Question 8

Which document typically triggers the process
of recording a liability?

a. purchase requisition
b. purchase order
c. receiving report
d. supplier’s invoice

Answer 8

d. supplier’s invoice

Question 9

Which of the following tasks should the cash
disbursement clerk NOT perform?

a. review the supporting documents for completeness and accuracy

b. prepare checks

c. approve the liability

d. mark the supporting documents paid

Answer 9

c. approve the liability

Question 10

Which of the following is true?

a. The cash disbursement function is part of
accounts payable.

b. Cash disbursements is an independent
accounting function.

c. Cash disbursements is a treasury function.

d. The cash disbursement function is part of
the general ledger department.

Answer 10

c. Cash disbursements is a treasury function.