CHAPTER 8

Question 1

Controls over payment

Answer 1

• Documentation
• Authorisation of the expenditure of item
• Authorised signature for cheques & payment instructions to bank
• Secure controls over electronic payments

Question 2

Authorisation of payment

Answer 2

• Which individual can authorise
• Maximum amount they can authorise
• when authorising, put signature or initials
• no signature/initials = payment refused

Question 3

Cheque requisition form

Answer 3

When primary documentation such as an invoice has not been received

• A form requesting that a cheque should be drawn

Question 4

Expense claim form

Answer 4

Employees want to claim back the money from their organisations after making payments using their own money for items of business expense

Question 5

Payment method : Cash

Answer 5

• Small payments

Question 6

Payment method : Cheque

Answer 6

• One-off transaction
• Not appropriate for monthly deductions

Question 7

Payment method : Automated payments (BACS)

Answer 7

• Salaries & wages

Question 8

Signatures on business cheque

Answer 8

• Names & Signature of the person sign the cheque must be :
  → supplied to the bank
  → on a Bank Mandate Form

Question 9

Crossed cheque

Answer 9

Two lines drawn across and “A/C Payee” printed between the lines
⦿ can only be paid into the account whose name appears on the cheque
⦿ can’t be cashed

Question 10

Cheque sent to payee with remittance advice or??

Answer 10

Covering letter

Question 11

Stopping cheque

Answer 11

1) Telephone bank
2) Written instruction

Question 12

Bank giro credits

Answer 12

• Credit transfer
• Usually received from customer
• Can also for electricity, telephone and water companies bill

1) Fill in bank giro credit transfer from
2) Handing the form together with payment (cash/cheque) at bank

Question 13

Who use bank giro credits?

Answer 13

Suppliers like :

• Telephone companies
• Water companies
• Electricity companies
• Small companies pay wages

Question 14

Banker’s draft

Answer 14

• Cannot be stopped/cancelled
• Large payments involved

Question 15

Standing order

Answer 15

• Paying business set up the arrangement
• Regular payments
• Fixed amount
• Standing order mandate

Question 16

Direct debit

Answer 16

• Person RECEIVING the payment initiates each payment
• Regular payment
• Variable/fixed amount
• Telephone/gas/electricity/water bills
• company being paid will inform payer of amount & date each payment

• Direct Debit Instruction

1) Paying company fill in
2) Sent to supplier
3) Supplier sent to bank

Question 17

Explanatory document to go with payments

Answer 17

• Remittance advice
• Order form (payment sent with order)
• Pro-forma invoice (payment with order,, sale/return transaction)
• Bank giro credit form
• Covering letter (when other documents takde)

Question 18

There might be 2 remittance advices ?

Answer 18

Yes.

1st : Sent with supplier statement

2nd : Prepared by customer’s account department –> sent to supplier with payments