Midterm Review Flashcards
The adjustment to accounting records to reflect the decrease in inventory due to a sale occurs in the
A. warehouse
B. shipping department
C. billing department
D. Inventory control department
D. Inventory control department
The revenue cycle consists of
A. one subsystem-order entry
B. two subsystems-sales order processing and cash receipts
C. two subsystems-order entry and inventory control
D. three subsystems-sales order processing, credit authorization, and cash recelpis
B. two subsystems-sales order processing and cash receipts
- The reconciliation that occurs in the shipping department is intended to ensure that
A, credit has been approved
B. the customer is billed for the exact quantity shipped
C. the goods shipped match the goods ordered
D. inventory records are reduced for the goods shipped
C. the goods shipped match the goods ordered
Which document triggers the revenue cycle?
A. the sales order
B. the customer purchase order
C. the sales invoice
D. the journal voucher
B. the customer purchase order
Copies of the sales order can be used for all of the following except
A. purchase order
B. credit authorization
C. shipping notice
D. packing slip
A. purchase order
The purpose of the sales invoice is to
A. record reduction of inventory
B. transfer goods from seller to shipper
C. bill the customer
D. select Items from inventory for shipment
C. bill the customer
Which control does not help to ensure that accurate records are kept of customer accounts and inventory?
A. reconcile accounts receivable control to accounts receivable subsidiary
B. authorize credit
C. segregate custody.of inventory from.record keeping
D. segregate record keeping duties of general ledger from accounts recelvable
B. authorize credit
The customer open order file is used to
A. respond to customer queries
B. fill the customer order
C. ship the customer order
D. authorize customer credit
A. respond to customer queri
The stock release copy of the sales order is not used to
A. locate and pick the items from the warehouse shelves
B. record any out-of-stock items
C. authorize the warehouse clerk to release custody of the Inventory to shipping
D. record the reduction of inventory
D. record the reduction of inventory
The shipping notice
A. Is mailed to the customer
B. Is a formal contract between the seller and the shipping company
C. Is always prepared by the shipping clerk
D. Informs the billing department of the quantities shipped
D. Informs the billing department of the quantities shipped
The biling department Is not responsible for
A. updating the inventory subsidiary records
B. recording the sale in the sales journal
C. notifying accounts recelvable of the sale
D. sending the Invoice to the customer
A. updating the inventory subsidiary records
Customers should be billed for backorders when
A. customer purchase order is received
B. the backordered goods are shipped
c. the original goods are shipped
D. customers are not billed for beckorders because a backorder is a lost sale
B. the backordered goods are shipped
Usually specific authorization is required for all of the following except
A. sales on account which exceed the credit limit
B. sales of goods at the list price
C, cash refund for goods returned without a recept
D. write off of an uncollectible account recelvable
B. sales of goods at the list price
Which department is least likely to be involved in the revenue cycle?
A. Credit
B. accounts payable
C. billing
D. Shipping
B. accounts payabl
Which of following functions should be segregated?
A. opening the mall and making the journal entry to record cash receipts
B. authorizing credit and determining reorder quantities
c. maintaining the subsidiary ledgers and handling customer queries
D. providing information on inventory levels and reconciling the bank statement
A. opening the mall and making the journal entry to record cash receipts
Which situation indicates a weak intemal control structure?
A. mailroom clerk authorizes credit memos
B. the record keeping clerk maintains both accounts receivable and accounts payable subsidiary ledgers
C. the warehouse clerk obtains a signature before releasing goods for shipment
D: the accounts receivable clerk prepares customer statements every month
A. mailroom clerk authorizes credit memos
- The most effective internal control procedure to prevent or detect the creation of fictitious credit memoranda for sales returns is to
A. supervise the accounts receivable department
B.
limit access to credit memoranda
C. prenumber and sequence check all credit memoranda
D. require management approval for all credit memoranda
The accounts receivable clerk destroys all invoices for sales made to members of her family and does not record the sale in the accounts receivable subsidiary ledger. Which procedure will not detect this fraud?
A. prenumber and sequence check all invoices
B. reconcile the accounts receivable control to the accounts receivable subsidiary ledger
C. prepare monthly customer statements
D. reconcile total sales on account to the debits in the accounts receivable subsidiary ledger
C. prepare monthly customer statements
Which document is included with a shipment sent to a customer?
A. sales invoice
В. stock release form
C. packing slip
D. shipping notice
C. packing slip
Good Internal controls in the revenue cycle should ensure all of the following except
A. all sales are profitable
B. all sales are recorded
C. credit is authorized
D. Inventory to be shipped is not stolen
A. all sales are profitable
Internal controls for handling sales returns and allowances do not Include
A. computing bad debt expense using the percentage of credit sales
B. verifying that the goods have been returned
C. authorizing the credit memo by management
D. using the original sales invoice to prepare the sales returns slip
A. computing bad debt expense using the percentage of credit sales
Internal controls for handling sales returns and allowances do not Include
A. computing bad debt expense using the percentage of credit sales
B. verifying that the goods have been returned
C. authorizing the credit memo by management
D. using the original sales invoice to prepare the sales returns slip
A. computing bad debt expense using the percentage of credit sales
The printer ran ouf of preprinted sales invoice foms and several sales invoices were not printed. The best internal control to detect this error is
A. a batch total of sales invoices to be prepared compared to the actual number of sales invoices prepared
B. sequentially numbered sales invoices
C. visual verification that all sales involces were prepared
D. none of the above will detect this error
A. a batch total of sales invoices to be prepared compared to the actual number of sales invoices prepared
Which department prepares the bill of lading?
A. sales
B.warehouse
C. shipping
D. Credit
C. Shipping
- A remittance advice Is
A. used to increase (debil) an account recelvable by the cash received
B. Is a tum-around document
C. Is retained by the customer to show proof of payment
D. none of the above
B. Is a tum-around document
At which point is supervision most critical in the cash receipts system?
A. accounts recelvable
B. general ledger
C. mall room
D. cash recelpts
C. mall room
EDI trading partner agreements specity all of the following except
A. selling price
B. quantities to be sold
C. payment terms
D. person to authorize transactions
D. person to authorize transactions
A cash prelist is
A, a document that records sales returns and allowances
B. a document returned by customers with their payments
C. the source of information used to prepare monthly statements
D. none of the above
D. none of the above
An advantage of real-time processing of sales is
A. the cash cycle is lengthened
B. current Inventory Information is available
C. hard copy documents provide a permanent record of the transaction
D. data entry errors are corrected at the end of each batch
B. current Inventory Information is available
Commercial accounting systems have fully integrated modules. The word
“Integrated” means that
A. segregation of duties is not possible
B. transter of information among modules occurs automatically
C. batch processing is not an option
D. separate entries are made in the general ledger accounts and the subsidiary ledgers
B. transter of information among modules occurs automatically
The data processing method that can shorten the cash cycle Is
A. batch, sequential file processing
B. batch, direct access file processing
C. real-time file processing
C. real-time file processing
Which of the following is not a risk exposure in a microcomputer accounting system?
A. rellance on paper documentation is increased
B. functions that are segregated in a manual environment may be combined in
C.
a microcomputer accounting syste backup procedures require human intervention
D. data are easily accessible
A. rellance on paper documentation is increased
Which journal is not used in the revenue cycle?
A. cash receipts journal
B. sales journal
C. purchases journal
D. general journal
C. purchases journal
Periodically, the general ledger department receives all of the following except
A. total increases to accounts receivable
B. total of all sales backorders
C. total of all sales
D. total decreases in inventory
B. total of all sales backorders
The credit department
A. prepares credit memos when goods are refurned
B. approves credits to accounts recelvable when payments are received
C. authorizes the granting of credit to customers
D. none of the above
C. authorizes the granting of credit to customers
Adjustments to accounts receivable for payments received from customers is based upon
A. the customer’s check
B. the cash prelist
C. the remittance advice that accompanies payment
D. a memo prepared in the mailroom
C. the remittance advice that accompanies payment
All of the following are advantages of real-time processing of sales except
A. The cash cycle is shortened
B. Paper work Is reduced
C. Incorrect data entry is difficult to detect
D. Up-to-date Information can provide a competitive advantage in the marketplace
C. Incorrect data entry is difficult to detect
The purpose of the purchase requisition is to
A. order goods from vendors
B. record receipt of goods from vendors
C. authorize the purchasing department to order goods
C. authorize the purchasing department to order goods
All of the following depariments have a copy of the purchase order except
A. the purchasing department
B. the receiving department
C. accounts payable
D. general ledger
D. general ledger
The purpose of the purchase order is to
A. order goods from vendors
B. record receipt of goods from vendors
C. authorize the purchasing department to order goods
D. approve payment for goods received
A. order goods from vendo
A weekly reconciliation of cash receipts would include comparing
A. the cash prelist with bank deposit slips the cash prelist with remittance advices
C. bank deposit slips with remittance advices
D: Journal vouchers from accounts recelvable and general ledger
A. the cash prelist with bank deposit slips the cash prelist with remittance advices
A weekly reconciliation of cash receipts would include comparing
A. the cash prelist with bank deposit slips the cash prelist with remittance advices
C. bank deposit slips with remittance advices
D: Journal vouchers from accounts recelvable and general ledger
A. the cash prelist with bank deposit slips the cash prelist with remittance advices
The open purchase order file in the purchasing department is used to determine
A. the quality of items a vendor ships
B. the best vendor for a specific item
C. the orders that have not been received
D. the quantity of Items received
C. the orders that have not been receive
The purchase order
A. Is the source document to make an entry into the accounting records
B. Indicates Item description, quantity, and price
C. Is prepared by the inventory control department
D. Is approved by the end-user department
B. Indicates Item description, quantity, and price
The reason that a blind copy of the purchase order is sent to recelving is to
A. Inform recelving when a shipment is due
В. force a count of the items delivered
C. Inform recelving of the type, quantity, and price of items to be delivered
•. require that the goods delivered are inspected
В. force a count of the items delivered
The receiving report is used to
A. accompany physical inventories to the storeroom or warehouse
B. advise the purchasing department of the dollar value of the goods delivered
C. advise general ledger of the accounting entry to be made
D. advise the vendor that the goods arrived safely
A. accompany physical inventories to the storeroom or warehouse
The financial value of a purchase is determined by reviewing the
A. packing slip
B. purchase requisition
C. receiving report
D. Supplier input
D. Supplier input
Which document is least important in determining the financial value of a purchase?
A. purchase requisition
B. purchase order
C. receiving report
D. supplier’s invoice
A. purchase requisition
In a merchandising firm, authorization for the payment of inventory is the responsibility.of
A. Inventory control
B. purchasing
C. Accounts payable
D. cash disburements
C. Accounts payable
In a merchandising firm, authorization for the payment of inventory is the responsibility.of
A. Inventory control
B. purchasing
C. Accounts payable
D. cash disburements
C. Accounts payable
In a merchandising firm, authorization for the purchase of inventory is the responsibility.of
A. Inventory control
B. purchasing
D. cash disbursement
A. Inventory control
When purchasing Inventory, which document usually triggers the recording of a liability?
A, purchase requisition
B. purchase order
C. recelving report
D. supplier invoice
D. supplier invoice
Because of time delays between receiving inventory and making the joumal entry
A. liabilities are usually understated
B. liabilities are usually overstated
C. liabilities are usually correctly stated
D. none of the above
A. liabilities are usually understated
Which of the following statements is not correct?
A. the voucher system is used to improve control over cash disbursements
B. the sum of the paid vouchers represents the voucher payable lability of the firm
C. the voucher system permits the firm to consolidate payments of several
Involces on onevoucher
D. many firms replace accounts payable with a voucher payable system
B. the sum of the paid vouchers represents the voucher payable lability of the firm
In the expenditure cycle, general ledger does not
A, post the journal voucher from the accounts payable department
B. post the account summary from inventory control
C. post the journal voucher from the purchasing department
D. reconcile the inventory control account with the inventory subsidiary summary
C. post the journal voucher from the purchasing department
The documents in a voucher packet include all of the following except
A. a check
B. a purchase order
C. a receiving report
A. a check
To maintain a good credit rating and to optimize cash management. cash disbursements should arrive at the vendor’s place of business
A. as soon as possibie on the due date
C. on the discount date
D. by the end of the month
C. on the discount date
The cash disbursement clerk performs all of the following tasks except
A. reviews the supporting documents for completeness and accuracy
B. prepares checks
C. signs checks
D. marks the supporting documents paid
C. signs check
When a cash disbursement in payment of an accounts payable is recorded
A. the liability account is increased
B, the Income statement is changed
C. the cash account is unchanged
D. the liability account is decreased
D. the liability account is decreased
When a trading partner agreement is in place, the traditional three way match may be eliminated.
A. True
B. False
A. True
Authorization of purchases in a merchandising firm occurs in the inventory control department.
A. True
B. False
True
In a voucher system, the sum of all unpaid vouchers in the voucher register equals the firm’s total voucher payable balance.
A. True
B. False
True
The accounts payable department reconciles the accounts payable subsidlary ledger to the control account.
A. True
B. False
False
The use of inventory reorder points suggests the need to obtain specific
authorization.
A. True
B. False
False
Firms that wish to improve control over cash disbursements use a voucher system.
A. True
B. False
True
The blind copy of the purchase order that goes to the receiving department
contains no item descriptions.
A. True
B. False
False
Proper segregation of duties requires that the responsibility approving a payment be separated from posting to the cash disbursements journal.
A. True
B. False
True
