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Accounting Information Systems > Topic 6 - Expenditure Cycle > Flashcards

Topic 6 - Expenditure Cycle Flashcards

0
Q

What actions do we take in the receiving process?

A
  1. Goods arrive (source document: receiving report)
    a) Verify good ordered against purchase order
    b) The good received are what was ordered and in the correct quantity
    c) The goods are of good quality
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1
Q

What are the basic expenditure cycle activities?

A
  1. Order materials, supplies, and services
  2. Receive materials, supplies, and services
  3. Approve supplier (vendor) invoice
  4. Cash disbursement
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2
Q

What are the threats for receiving goods or services?

A
  1. Accepting unordered items
  2. Mistakes in counting
  3. Verifying receipt of services
  4. Inventory theft
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3
Q

What are the controls for accepting unordered items (receiving goods or services)?

A
  1. Authorized purchase orders needed before receiving goods
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4
Q

What are the controls for mistakes in counting (receiving good or services)?

A
  1. Bar codes or RFID
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5
Q

What are controls for verifying receipt of services (receiving goods or services)?

A
  1. Budget controls and audits
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6
Q

What are controls for inventory theft (receiving goods or services)?

A
  1. Restrict physical access to inventory
  2. Document all inventory transfers
  3. Segregate custody vs. receiving of inventory
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7
Q

What are the steps in approving the supplier invoice and cash disbursements?

A
  1. Match the supplier invoice to purchase order and receiving report
    (supplier invoice + purchase order + receiving report = voucher)
  2. Approve supplier invoice for payment (source document: disbursement voucher)
  3. Pay vendor
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8
Q

What are the threats in approving supplier invoice?

A
  1. Errors in supplier invoice

2. Mistakes in posting to accounts payable

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9
Q

What are the controls for errors in supplier invoice (approving supplier invoice)?

A
  1. Verify invoice accuracy
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10
Q

What are the controls for mistakes in posting to accounts payable (approving supplier invoice)?

A
  1. Data entry edit controls

2. Reconcile detailed accounts payable records to the general ledger accounts payable account

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11
Q

What are the threats in cash disbursements?

A
  1. Failure to take discounts
  2. Pay for items not received
  3. Duplicate payments
  4. Theft of cash
  5. Check alteration
  6. Cash flow problems
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12
Q

What are the controls for failure to take discounts (cash disbursements)?

A
  1. File invoices by due date to take advantage of discounts
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13
Q

What are the controls for paying for items not received (cash disbursements)?

A
  1. Match supplier invoice to supporting documents (purchase order, receiving report)
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14
Q

What are the controls for duplicate payments (cash disbursements)?

A
  1. Pay only original invoices

2. Cancel supporting document when payment is made

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15
Q

What are the controls for theft of cash (cash disbursements)?

A
  1. Physical security of checks
  2. Separation of duties
  3. Reconcile bank accounts
16
Q

What are the controls for check alteration (cash disbursements)?

A
  1. Check Protection machines
17
Q

What are the controls for cash flow problems (cash disbursements)?

A
  1. Cash flow budget
18
Q

What is economic order quantity?

A

The traditional approach to inventory management to ensure sufficient quantity on hand to maintain production.

19
Q

What does just-in-time inventory attempt to do?

A

Minimize or eliminate carrying and stockout costs.

20
Q

What expenditure cycle activity can be eliminated through the use of IT or reengineering?

A

approving vendor invoices

21
Q

For good internal control, who should sign checks?

A

cashier

22
Q

What is material requirements planning (MRP)?

A

An inventory control system that triggers production based on forecasted sales.

23
Q

What is the just-in-time (JIT) inventory system?

A

An inventory control system that triggers production based upon actual sales.

24
Q

What is a purchase requisition?

A

A document used only internally to initiate the purchase of materials, supplies, or services.

25
Q

What is the imprest fund?

A

The method used to maintain the cash balance in a petty cash account.

26
Q

What is a purchase order?

A

A document that creates a legal obligation to buy and pay for goods or services.

27
Q

What are kickbacks?

A

A fraud in which a supplier pays a buyer or purchasing agent in order to sell its products or services.

28
Q

What is a procurement card?

A

A special-purpose credit card used to purchase supplies.

29
Q

What is a blanket purchase order?

A

An agreement to purchase set quantities at specified intervals from a specific supplier.

30
Q

What is an evaluated receipts settlement (ERS)?

A

A process for approving supplier invoices based on a two-way match of the receiving report and purchase order.

31
Q

What is a disbursement voucher?

A

A document used to list each invoice being paid by a check.

32
Q

What is a receiving report?

A

A document used to record the quantities and condition of items delivered by a supplier.

33
Q

What is a debit memo?

A

A document used to authorize a reduction in accounts payable because merchandise has been returned to a supplier.

34
Q

What is vendor-managed inventory?

A

A system whereby suppliers are granted access to point-of-sale (POS) and inventory data in order to automatically replenish inventory levels.

35
Q

What is a voucher package?

A

Combination of a purchase order, receiving report, and supplier invoice that all relate to the same transaction.

36
Q

What is a non voucher system?

A

A method of maintaining accounts payable in which each supplier invoice is tracked and paid for separately.

37
Q

What is a voucher system?

A

A method of maintaining accounts payable that generates one check to pay for a set of invoices from the same supplier.

Accounting Information Systems (8 decks)

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