The credit manager reports to the __________ and the treasurer reports to the
controller; vice president of finance
marketing manager; vice president of finance
treasurer; vice president of
The revenue cycle is a recurring set of business activities and related information
processing operations associated with providing goods and services to customers and
collecting cash in payment for those sales. With whom is the primary external
exchange of information?
What is the primary objective of the revenue cycle?
to maximize revenue and minimize expense
to reduce outstanding accounts receivable balances through increased cash
to provide the right product in the right place at the right time at the right price
to sell as much product as possible and/or to maximize service billings
To accomplish the objectives set forth in the revenue cycle, a number of key
management decisions must be addressed. Which of the decisions below is
not ordinarily found as part of the revenue cycle?
What credit terms should be offered?
How often should accounts receivable be subjected to audit?
How can customer payments be processed to m
aximize cash flows?
What are the optimal prices for each product or service?
Which of the activities listed below is not part of the revenue cycle?
sales order entry
In addition to the sales order entry process there are three other processes in the
revenue cycle. Which of the following is not one of them?
One way to improve sales order entry efficiency is by allowing customers to enter
sales order data themselves. This can be accomplished for both in-store, mail order, and Web site sales. Such interactive sales order entry systems are referred to as
One way to improve sales order entry efficiency is by allowing customers to enter sales order data themselves. For example, retail stores would send their orders
directly to a sales order system in a format that would eliminate the need for data
entry. This could be achieved using
Matching customer accounts and inventory item numbers to the information in the
customer and inventory master files is an example of a
During the sales order entry process, a __________ is performed to compare the
quantity ordered with the standard amounts normally ordered
redundant data check
During the sales order entry process, a __________ is performed to verify that each
transaction record contains all appropriate data items.
redunddant data check
A number of edit checks should be performed to ensure that all of the data required to
process an order have been collected and accurately recorded. The edit check that compares a quantity being ordered to past history for that item and customer is called
a validity check
a reasonableness test
a completeness test
a limit check
In the revenue cycle, a customer places an order for a certain product. Before the
order is checked for inventory availability, what step should be taken?
The customer's credit should be checked for a sale on account.
The sales order should be created and written to a file.
Shipping should be notified of an order in process.
A picking list should be generated for the warehouse.
How is credit approval generally handled for well-established customers with a documented payment history?
specific authorization by the credit manager
routine approval is usually granted
a new credit application is taken
a formal credit check is made for each sale
The maximum allowable account balance for a given customer is called the
What is the normal procedure for new customers or customers making a purchase that
causes their credit limit to be exceeded?
routine approval is granted without authorization
specific approval must be granted by the credit manager
reject the sale in either case without question
check the credit bureau for a credit rating on the customer
Why should inventory quantities on hand be checked before a sale is actually made?
to inform the costumer about availibility and delivery times
to know which items must be back ordered
to inform inventory control of mistakes in the inventory records
A and B above
Mucho Regalia manufactures clothing items. When an inventory item that is not in
stock has been ordered by a customer, a back order is sent to the
Customer inquiries during the sales order process are best handled by
a sales order and customer service person
the credit manager
A and C Above
Responding to customer inquiries and general customer service is an important aspect
in the revenue cycle. Since customer service is so important, software programs have
been created to help manage this function. These special software packages are
Another essential part of the revenue cycle is filling customer orders and shipping
merchandise to customers. Automating warehouse systems cut costs, improve
efficiency, and enable more customer-responsive shipments. The essential element(s) required for an automated perpetual inventory system consist(s) of
conveyor belts and forklifts
conveyor belts and forklifts equipped with RFDC
Once a customer order has been approved, which document is produced next?
the sales invoice
the packing slip
the remittance advice
the purchase order
In a shipping department, a __________ is a legal contract that defines responsibility
for goods that are in transit.
bill of lading
The __________ is a legal contract that defines responsibility for the goods that are in
Two documents usually accompany goods sent from the vendor to the customer. What are these two documents?
a bill of lading and an invoice
a packing slip and a bill of lading
an invoice and a packing slip
an invoice and a sales order
For a given order, assume that goods have been picked for shipment and the items and quantities have been entered into the system. Which system update below is not triggered by these actions?
any back orders are initiated
inventory quantities are updated
the customer accounts receivable is posted
s such as the bill of lading are produced
The third basic activity in the revenue cycle involves billing customers and maintaining accounts receivable. What is the basic document created in the billing process?
the bill of lading
the packing list
A company uses an invoice method whereby customers typically pay according to
each invoice. This is the __________ method.
A type of accounts receivable system that matches specific invoices and payments from the customer is called a(n) __________ system.
A customer returns a document along with cash payment. The document identifies the source and the amount of the cash payment. It is called a
With a(n) __________ system, customers pay according to the amount showing on
their monthly statement and payments are simply applied against the total account balance.
In billing systems, the __________ is sent to the customer that summarizes all transactions occurring during a given period of time and it indicates the amount due.
When a customer pays off the balance on an invoice, the transaction is credited to the __________ file.
All of the above are correct
A type of business document in which part of the original document is returned to the source for further processing is called a __________ document.
A __________ system spreads out the monthly statements to customers over the entire month with the idea being that the processing load and cash flow will be more even.
The last step in the revenue cycle is cash collections. The accounts receivable department must know when customers pay their invoices, yet segregation of duty controls dictate that the collection and recording functions be kept separate from each other. What is a solution to this potential internal control problem?
have customers send a remittance advice with their payment
have mailroom personnel prepare a remittance list which can be forwarded to accounts receivable
establish a lockbox arrangement with a bank
all of the above
The benefits of a cash lockbox system are maximized when
the bank is located close to the company.
several banks around the country are used.
only one bank is designated.
EFT is used.
A system where the bank electronically notifies a company about customers' remittances received through the postal system is known an
electronic funds transfer (EFT).
electronic data interchange (EDI).
When customers send their remittances electronically to the company's bank, this is
to use procurement cards
an electronic lockbox
Key differences exist when an integrated Enterprise Resource Planning system (ERP)
replaces an existing AIS or legacy system. For example, __________ are more accurate and timely, enabling sales order entry staff to provide customers more accurate information about delivery dates
credit approval decisions
Automating the cash collection process is a desirable goal of the organization. A way
to incorporate the advantages of EDI with the electronic funds transfer process is
When an ERP is used, it is assumed that there will be increases in efficiency and the
effectiveness of the activities related to the revenue cycle. However, what must be inplace and functioning well to fully realize these benefits?
an effective marketing staff
all the components of the expenditure cycle
adequate system flowchart documentation
Well designed AIS controls must ensure that all transactions are authorized, valid,
and properly recorded. In addition, there are three other AIS objectives. Which is
notan AIS objective?
transactions are recorded accuratel
transactions are matched into the proper time period
assets are safeguarded from loss or theft
business activities are performed efficiently and effectively
The activities involved in soliciting and processing customer orders within the
revenue cycle are known as the __________.
sales order entry process
shipping order process
To ensure proper separation of duties the __________ makes decisions concerning
issuance of credit memos.
accounts receivable supervisor
It has been discovered that credit sales have been made to customers with a poor
credit rating. If this activity continues, the company may face uncollectible sales and
losses due to bad debts. What applicable control procedure may help the c
ompany to gain control over this situation?
separation of shipping and billing duties
credit approval by a credit manager and not marketing personnel
data entry application controls
Consider the following revenue cycle scenario: The company has been exposed to customer dissatisfaction and the suggested control procedure to be implemented is toinstall and use bar-code scanners. What is the threat?
The company may be shipping the wrong merchandise
The company may be shipping the wrong quantities of merchandise.
The company may be shipping orders to the wrong address.
All of the above threats may apply to this scenario.
Which of the following would be the least effective control to minimize the loss of
secure the storage location of inventory
release inventory only with proper documentation
periodically back up all perpetual inventory records
reconcile the physical and book inventories
One applicable control procedure is to separate the shipping and billing functions within an organization. This control feature is designed to neutralize the threat of
the failure to bill customers
loss of data
A company fails to bill customers due to a lack of controls. The exposure the company faces is
an overstated accounts receivable balance
a loss of inventory and revenue.
uncollectible sales and losses due to bad debts
All of the following edit checks for online editing of accounts receivable transactions would probably be included except
validity checks on customer and invoice numbers
check digit verification on the amount of the sale
closed loop verification on the customer name to ensure the proper account is being updated.
field checks on the values in dollar fields
When a proper segregation of duties exists in the area of handling cash receipts, the __________, who reports to the __________, actually handles the cash and is not the same person who posts cash receipts to customer accounts.
In a cash collection system with proper controls, the __________ function,
responsible to the __________, is separate and distinct from the cash handling
accounts receivable; treasurer
accounts receivable; controller
A serious exposure for an organization that is connected with the revenue cycle is the loss of assets. What is the related threat and applicable control procedure association with this exposure?
shipping errors; reconciliation of sales order with picking ticket and packing slip
theft of cash; segregation of duties and minimization of cash handling
loss of data; backup and recovery procedures
poor performance; preparation and review of performance reports
Which of the following duties could be performed by the same individual and not violate segregation of duty controls?
handling cash and posting to customer accounts
issuing credit memos and maintaining customer accounts
handling cash and authorizing credit memos
handling cash receipts and mailing vendor payments
To prevent the loss of valuable data in the revenue cycle, internal file labels can be
keep competitors from accessing files.
record off - site storage locations.
organize the on - site physical storage site.
reduce the possibility of erasing important files.
In the shipping area of the company, the __________ is used to obtain the goods from the warehouse facility and prepare them for shipment to the customer.
Many Internet retailers allow customers to customize products by presenting them with various alternative options. These interactive sales order entry systems are called
The Squishy Things Toy Company was established in 1948. It sells to retail toy stores all over the country. Until recently, the family - run business had resisted changing its sales order entry system, which involves telephone calls from outside sales people and paper documents. A simple way for the firm to increase the efficiency of this system is
sales force automation.
optical character recognition
The Squishy Things Toy Company was established in 1948. It recently signed a large contract with a chain of retail toy stores. As a condition of the contract, the Squishy will be required to track and forecast product sales by linking in to the chain's sales database. Squishy will then be responsible for shipping products to the chain's regional warehouses as needed. The relationship between Squishy and the chain is a
vendor - managed inventory
electronic data interchange.
The Squishy Things Toy Company was established in 1948. It recently signed a large contract with a chain of retail toy stores. As a condition of the contract, the Squishy will be required to track and forecast product sales by linking in to the chain's sales database. Squishy will then be responsible for shipping products to the chain's regional warehouses as needed. The technology that is used for communication
between Squishy and the chain is
sales force automatio
electronic data interchang
optical character recognitio
Sad Clown Pajamas is an Internet-based wholesaler. Customers enter their orders online. The manager of Callow Youth Clothing was entering an order when the following error message popped up: Did you mean to enter a quantity of 1000 for
your order? This message is the result of a
Sad Clown Pajamas is an Internet-based wholesaler. Customers enter their orders online. The manager of Callow Youth Clothing was entering and order when the following error message popped up: Please enter your email address. This message isthe result of a
Sad Clown Pajamas is an Internet-based wholesaler. Customers enter their orders online. The manager of Callow Youth Clothing was entering and order when the following error message popped up: Your total order exceeds your available credit.
Please contact our Credit Department. This message is the result of a
In Petaluma, California, electric power is provided to consumers by the Power To The People Electrical Company, a local co-op. Each month PTTP mails bills to 70,000 households and then processes payments as they are received. The customers are provided with a remittance advice, which is a
warning that failure to pay by the due date will result in a late charge
Which of the following is an example of a wireless technology used to increase the efficiency of picking and packing products for shipment?
Laz Chance wears roller blades and headpho
nes when he is at work at the Squishy Things Toy Company. He is a product packer. The headphones give him computer-generated instructions so he knows the location of each item and quantity that should be included in the order. These instructions are the equivalent of a
bill of landing
Laz Chance wears roller blades and headphones when he is at work at the Squishy
Things Toy Company. He is a product packer. The headphones give him computer-generated instructions so he knows the location of each item and quantity that should be included in the order. He encloses a paper form in the box when the order is complete. The form is called a
The shipping department at Squishy Things Toy Company follows policies that determine which carrier will deliver orders according to the size, weight, and destination of the shipment. It maintains standing agreements with shippers that specify legal responsibility for the shipment while it is in transit. The terms of the agreements define an order's
Sad Clown Pajamas is an Internet-based wholesaler. The manager of Callow Youth Clothing received an order from Sad Clown and found that the wrong product had been shipped. He repackaged the order and sent it back for a refund. When it was received, he received a
Sad Clown Pajamas is an Internet-based wholesaler. The customer account manager at Sad Clown received a call from the manager at Callow Youth Clothing. The firm was entering bankruptcy liquidation and it was unlikely that they would be able to pay the outstanding balance on their account. The account manager decided to write off the account, so he issued a
Because it is the most fungible of all assets, the management of cash has always been the most difficult of all control issues. The most important of cash controls is
minimization of cash handlin
segregation of duties
frequent reconciliation of record
A sales clerk at an electronics store scanned the bar code for a low cost set of headphones and then substituted a high cost set of headphones for his friend, who paid the lower price. Which of the following controls would help to prevent this sort of fraud?
Physical inventory checking
Segregation of dutie
An electronic lockbox
Using the _______ method, customers typically pay a sales invoice that reflects a single transaction, referred to as a _______
open invoice; monthly statement
open invoice; remittance advice
balance-forward; monthly statemen
balance-forward; remittance advic
Using the _______ method of maintaining accounts receivable, customers typically pay a sales invoice that lists all transactions during a given time period represented, referred to as a _______.
openinvoice; monthly statement
balance-forward; monthly statement
balance-forward; remittance advice
Which of the following poses an internal control problem?
Credit memos are approved by the Sales Manag
Disbursements of cash are approved by the Finance Manage
Raw material deliveries are compared with the relevant purchase orders clerks in the Shipping and Receiving Department
Bank accounts are reconciled by the Finance Departmen
Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in
Products are released from inventory after a warehouse employee and a shipping clerk sign the
Sales representatives set up new customer accounts and determine their credit limits
When payments are received, they are sent to the cashier’s office and remittance data are sent to
the accounts receivable department
In the expenditure cycle, the primary external exchange of information occurs with
the audit committee
Within the expenditure cycle, internal information flows
from the production cycle to the expenditure cycle.
from the revenue cycle to the expenditure cycle.
to the general ledger from the expenditure cycle.
All of the above are correct.
To accomplish the objectives set forth in the expenditure cycle, a number of key
management decisions must be addressed. Which of the decisions below is
not ordinarily found as part of the expenditure cycle?
How can cash payments to vendors be managed to maximize cash flow?
What is the optimal level of inventory and supplies to carry on hand?
Where should inventories and supplies be held?
What are the optimal prices for each product or service?
There are three basic activities in the expenditure cycle. One of the basic activities is the receiving and storage of goods, supplies, and services. What is the counterpart of this activity in the revenue cycle?
the sales order entry process
the shipping function
the cash collection activity
he cash payments activity
The first major business activity in the expenditure cycle is ordering inventory and supplies. The traditional approach to management of inventory to ensure sufficient inventory to maintain production is known as
economic order quantity
optimal inventory quantity
EOQ includes several variables that must be taken into consideration when calculating the optimal order size. One variable, the costs associated with holding inventory, is referred to as
the reorder point
The decision of when to place an order in a traditional inventory system is specified by the
company inventory policies.
economic order quantity.
When goods are being ordered from a vendor, which electronic files are either read or updated?
inventory, vendors, and accounts payable
vendors and accounts payable
open purchase orders and accounts payable
inventory, vendors, and open purchase orders
One alternative approach to managing inventory is materials requirements planning (MRP). What is a key feature of this approach?
to minimize or entirely eliminate carrying and stockout costs
to reduce required inventory levels by scheduling production rather than estimating needs
to determine the optimal reorder point
to determine the optimal order size
The major advantage of an MRP inventory system is that it reduces inventory levels. This is because
the uncertainty about when materials are needed is reduced, thus reducing the need to carry large
levels of inventory.
the system is able to compute exactly the cost of purchasing by taking into account all costs
associated with inventory carrying.
inventory is brought to the production site exactly when needed and in the correct quantities by the
None of the above are correct.
The inventory management approach that attempts to minimize, if not eliminate, carrying and stockout costs is
the materials requirements planning.
the economic order quantity.
a just-in-time inventory system.
There is no such inventory management approach.
What aspect below best characterizes a JIT inventory system?
frequent deliveries of smaller quantities of items to the work centers
frequent deliveries of large quantities to be held at the work centers
less frequent deliveries of large quantities of goods to central receiving
infrequent bulk deliveries of items directly to work centers
What is the key difference between the MRP and JIT inventory management approaches?
Only JIT reduces costs and improves efficiency.
MRP is especially useful for products such as fashion apparel.
JIT is more effectively used with products that have predictable patterns of demand.
MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.
MRP will be a preferred method over JIT when the
demand for inventory is fairly predictable.
demand for inventory is mostly unpredictable.
product has a short life cycle.
None of the above are correct.
A key decision in ordering is selecting a suitable vendor. Which of the following would not be a major criterion in vendor selection?
prices of goods
quality of goods
credit rating of the vendor
ability to deliver on time
Once a vendor is selected for a product, the company's identity is recorded in the
purchase requisition file
product inventory transaction file
product inventory master record
The paper document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices is called
a purchase order
a materials requisition
a sales invoice
a receiving report
A purchase order is
a document formally requesting a vendor to sell a certain product at a certain price.
a request for delivery of certain items and quantities.
a contract between the buyer and vendor once accepted by the vendor.
All of the above are true.
A standing order to purchase specified items at a designated price, from a particular supplier for a set period of time, is called a
blanket purchase order.
A major cost in the purchasing function is the number of purchase orders processed. One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest
price. This name of this technique is
an EDI auction.
a trading exchange.
a reverse auction.
a supplier consortium
The receiving department has two major responsibilities in connection with the expenditure cycle. Identify one of these responsibilities.
shipping products most efficiently and at the lowest cost
deciding if the delivery should be accepted
verifying any purchase discounts for the delivery
deciding on the location where the delivery will be stored until used
Which of the following is generally not shown on a receiving report?
price of the items
quantity of the items
purchase order number
counted and inspected by
A receiving clerk notes that a delivery of 10 units has been received, but the purchase order specified 12 units.
A debit memo will be prepared to adjust for the difference in the quantity ordered and received. Who should prepare this document?
the receiving clerk
the sales department
the purchasing department
Identify which of the following scenarios the buyer could adjust by using a debit memo document.
quantity different from that ordered
damage to the goods
goods that fail inspection for quality
All of the above are possible scenarios.
What is one of the best ways to improve the overall efficiency and effectiveness of the receipt and storage of ordered items?
requiring all suppliers to have a second party verify quantities purchased before shipment
requiring all suppliers to have bar-codes on their items to allow electronic scanning upon delivery by the receiving department
requiring all suppliers to use EDI to expedite the receiving department function
requiring all delivery trucks to have satellite data terminals to expedite the receiving department function
All of the following technologies could be useful aids in the receiving process except
radio frequency identification tags.
Vendor invoices are approved by the __________, which reports to the __________.
purchasing department; controller
accounts payable department; treasurer
purchasing department; treasurer
accounts payable department; controller
From a legal standpoint, when does the obligation to pay a vendor arise?
when the goods are requisitioned
when the goods are ordered
when the goods are received by the purchaser
when the goods are billed
The disbursement voucher and supporting documents are sent to the __________ for payment prior to the due date.
accounts payable department
A __________ system is a system in which an approved invoice is posted to the
vendor account and is stored in an open invoice file until payment is made by check.
A disbursement voucher contains
a list of outstanding invoices.
the net payment amount after deducting applicable discounts and allowances.
the general ledger accounts to be debited.
A legal obligation arises at the time goods are received from a supplier. The objective of accounts payable is to authorize payment only for goods or services actually ordered and received. The best way to process supplier invoices is to use
electronic funds transfer for small, occasional purchases from suppliers.
a nonvoucher system.
EDI for all small, occasional purchases from suppliers.
a disbursement voucher system.
What is not an advantage to using disbursement vouchers?
Disbursement vouchers reduce the number of checks written.
Disbursement vouchers can be prenumbered which simplifies the tracking of all payables.
Disbursement vouchers facilitate separating the time of invoice approval from the time of invoice payment.
There are no disadvantages to using disbursement vouchers.
Which of the following is not an advantage of a voucher system?
several invoices may be included on one voucher, reducing the number of checks
disbursement vouchers may be pre-numbered and tracked through the system
the time of voucher approval and payment can be kept separate
it is a less expensive and easier system to administer than other systems
What is the final activity in the expenditure cycle?
receipt and storage of goods
approving vendor invoices for payment
the payment of approved invoices
In a typical cash disbursement procedure, who usually handles the checks and may even be able to sign checks up to a certain dollar limit?
the accounts payable supervisor
Duties in the expenditure cycle should be properly segregated to promote internal control. This means that the authorization function is performed by __________, the recording function is performed by __________, and the cash disbursement function is performed by the __________
accounts payable; purchasing; cashier
purchasing; accounts payable; cashier
purchasing; cashier; accounts payable
purchasing; accounts payable; treasurer
A voucher package should include
a purchase requisition, vendor invoice, and receiving report
a purchase order, vendor invoice, and receiving report.
a purchase requisition, purchase order, and receiving report
a bill of lading and vendor invoice.
The evaluated receipt settlement (ERS) replaces the more traditional 3-way matching process with a 2-way match of the purchase order and the
What may be the biggest opportunity to improve the efficiency of accounts payable?
convert a manual AIS system to EDI and EFT
streamline noninventory purchases
use disbursement vouchers
When purchasing miscellaneous supplies, companies can reduce costs, improve efficiency, and combat employee fraud by using
a JIT inventor< system
If available, a 1% discount for payment within 10 days instead of 30 days represents an approximate savings of __________ % annually.
When a legacy system is replaced with an integrated Enterprise Resource Planning (ERP) system, many benefits are realized for the organization. What is a key improvement in the record keeping function?
Any department can now submit a request to purchase items.
The system tracks the exact time of delivery
Major suppliers send electronic notification of incoming deliveries
Inventory records are more accurate and timely
The threat of paying prices that are too high for goods ordered can pose a problem in the expenditure cycle. What is an appropriate control that would be applicable to help mitigate this threat?
require the receiving department to verify the existence of a valid purchase order
use only approved suppliers and solicit competitive bids
only pay invoices that are supported by the original voucher package
use bar-code technology
What is probably the most effective control for the prevention of kickbacks to purchasing agents?
purchasing from approved vendors
good supervision in the purchasing area
a corporate policy to prohibit purchasing agents from accepting kickbacks
reviews of vendor performance
There are several threats that are associated with the process and activity of receiving and storing goods. Identify one of these threats below.
error is counting
requests for unnecessary items
errors in vendor invoices
What is the easiest way to prevent the acceptance of unordered goods
order only from approved vendo
always require that a valid purchase order exists before goods can be accepted at the time of
have an appropriate conflict of interest policy in pla
require receiving personnel to call the vendor before accepting any goo
Which of the following is not a common control for ensuring inventory is secure and
inventory counts are accurate
control of physical access to the inventory storage areas
transfers of inventory with proper documentation
sending "blind" copies of purchase orders to inventory control for data entry
making physical counts of inventory at least once per year
Double-checking the accuracy of an invoice is an applicable control that can help to neutralize a threat in the expenditure cycle. What process or activity would specifically be associated with this control
receive and store goods
pay for goods and services
There is a threat of paying an invoice twice. What is an applicable control that may help mitigate this threat?
payment should never be authorized for a photocopy of an invoice
double-check invoice accura
approval of a purchase ord
adequate perpetual inventory records
Which control would be best to prevent payments made to fictitious vendors?
allow payments only to approved vend
restrict access to any payment or approval documents
have an independent bank reconcilia
make sure all documents are in order before approving paym
In the expenditure cycle, good control dictates that expenditures should be paid by check. This may not be feasible when minor purchases are made. To facilitate quick payment for minor purchases, a(n) __________ should be set up and maintained using __________.
special bank account; disbursement vouch
imprest fund; vouche
cash box; small denomination bi
petty cash fund; procurement cards
A surprise count of petty cash by the auditor should find the total of __________ equal to the amount authorized for the fund.
cash and credit memos
cash and petty cash vouchers
cash and checks
Special care should be taken when EFT payments are made to vendors. What control
should be put in place that assigns responsibility for EFT payments?
encrypt all EFT transmissions
time stamp all EFT transactions
establish a control group to monitor EFT transactions for validity and accu
number all EFT transaction
Which of the following threats is not specific to the purchase requisition process of the expenditure cycle?
purchaising from unauthorized vendors
requisitioning goods not neede
All of the above are threats in the purchase requisition process
There is a symmetrical interdependence between a firm’s expenditure cycle and its
general ledger and reporting system
There is a symmetrical interdependence between a firm’s revenue cycle and its
Inbound logistics is part of the
The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is ina dequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on ensuring that the amounts purchased minimize these costs, will employ
a just-in-time inventory system
the economic order quantity
a recorder point
materials requirements planning
The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on ensuring that orders are placed with sufficient lead time to prevent stockouts, will employ
a just-in-time inventory< system
the economic order quantity.
a reorder point.
The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on forecasting demand for Sad Clown's products, will employ
a just-in-time inventory system.
The management at Sad Clown Pajamas, an Internet-based wholesaler, is considering a new inventory control system. The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs. The new system, which will focus on reducing or completely eliminating carrying costs, will employ
a just-in-time inventory syste
a reorder point
Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he proudly announced that he had negotiated a ______ with a client that defined a long-term commitment to buy components from Folding Squid
blanket purchase order
Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he proudly announced that he had received a ______ from a client to buy a large quantity of components from Folding Squid.
Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he pulled out a ______ that showed that recent deliveries had raised inventory levels enough to meet current sales quotas
Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned. That required the purchasing manager to send a _______ to the supplier
Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned. That required the purchasing manager to request a _______ from the supplier.
The best system to use when the objective is to minimize the number of checks th at need to be written to pay vendor invoices is
a voucher system
a nonvoucher system
a fail-safe system
In the expenditure cycle, evaluated receipt settlement increases efficiency by
eliminating the need for receiving reports
eliminating the need for vendor invoices
eliminating the need for purchase orders
eliminating the need to prepare and mail checks
In the expenditure cycle, financial data electronic interchange increases efficiency by
Piet du Schnorrer!
eliminating the need for vendor invoic
eliminating the need for purchase orde
eliminating the need to prepare and mail check
Procurement cards differ from corporate credit cards in which of the following ways
Credit limits can be set for procurement cards, but not corporate credit ca
Credit cards can be used to make purchases without an explicit sign off by supervisors, but
procurement cards require a sign
Procurement cards can only be used with approved vendors, but cred
it cards can be used anywhere
Procurement card invoices are sent separately for each card, whereas corporate credit cards are
consolidated into a single invoic
The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. He also reviews receiving reports, approves or corrects them, and authorizes the cashier to pay vendor invoices. Which of the following would correct control weaknesses, if any, related to these activities
Vendor invoices should be reviewed by the purchasing manager to ensure that they are c
Accounts payable should reconcile purchase orders, receiving reports, and i
Vendor invoices should be reviewed by accounts receivable and then cancelled wh
Controls are adequate under the current syst
The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. Receiving reports are prepared by shipping and receiving based on the relevant purchase order(s). Purchase orders, receiving reports, and vendor invoices are reconciled by accounts payable, which authorizes payment. Which of the following would correct control weaknesses, if any, related to these activities?
Vendor invoices should be reviewed by the purc hasing manager to ensure that they are correct.
Accounts payable should authorize purchase orders
Receiving reports should be reviewed and corrected by the purchasing manager
Controls are adequate under the current system
The receiving clerk at Folding Squid Technologies examines incoming shipments and reconciles their contents with the relevant purchase orders. A receiving report is then sent to accounts receivable and the vendor's invoice is approved for payment. Which of the following would correct control weaknesses, if any, related to these activities?
The invoice should be approved for payment by the shipping clerk after the purchase order and
receiving report are reconciled.
Accounts payable should reconcile the purchase order and the receiving report
Invoices, purchase orders, and receiving reports should be reconciled by the receiving clerk.
The receiving clerk at Folding Squid Technologies examines incoming shipments and checks their purchase order numbers. A receiving report is then sent to accounts payable, where it is reconciled with the relevant purchase orders and invoices and payment is authorized. Which of the following would correct control weaknesses, if any, related to these activities?
Vendor invoices should be approved for payment by the shipping clerk after the purchase order and receiving report are reconcile
Vendor invoices should be approved for payment by the purchasing manager
Purchase orders and receiving reports should be reconciled by the purchasing manager