Computer Based Accounting_1

Question 1 of 152

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The credit manager reports to the __________ and the treasurer reports to the
__________.

Select one of the following:

  • controller; vice president of finance

  • treasurer; controller

  • marketing manager; vice president of finance

  • treasurer; vice president of
    finance

Question 2 of 152

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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?

Select one of the following:

  • competitors

  • creditors

  • customers

  • marketing organization

Question 3 of 152

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What is the primary objective of the revenue cycle?

Select one of the following:

  • to maximize revenue and minimize expense

  • to reduce outstanding accounts receivable balances through increased cash
    sales

  • 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

Question 4 of 152

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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?

Select one of the following:

  • 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?

Question 5 of 152

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Which of the activities listed below is not part of the revenue cycle?

Select one of the following:

  • sales order entry

  • shipping

  • receiving

  • billing

Question 6 of 152

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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?

Select one of the following:

  • shipping

  • billing

  • general ledger

  • cash collections

Question 7 of 152

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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

Select one of the following:

  • bulletin boards

  • smorgasbords

  • catalogue boards

  • choiceboards

Question 8 of 152

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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

Select one of the following:

  • VMI

  • EDI

  • POS

  • VAN

Question 9 of 152

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Matching customer accounts and inventory item numbers to the information in the
customer and inventory master files is an example of a

Select one of the following:

  • completeness test

  • field check

  • reasonabless test

  • validity check

Question 10 of 152

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During the sales order entry process, a __________ is performed to compare the
quantity ordered with the standard amounts normally ordered

Select one of the following:

  • completeness test

  • redundant data check

  • field check

  • reasonableness test

Question 11 of 152

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During the sales order entry process, a __________ is performed to verify that each
transaction record contains all appropriate data items.

Select one of the following:

  • completeness test

  • redunddant data check

  • field check

  • reasonableness test

Question 12 of 152

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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

Select one of the following:

  • a validity check

  • a reasonableness test

  • a completeness test

  • a limit check

Question 13 of 152

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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?

Select one of the following:

  • 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.

Question 14 of 152

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How is credit approval generally handled for well-established customers with a documented payment history?

Select one of the following:

  • 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

Question 15 of 152

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The maximum allowable account balance for a given customer is called the

Select one of the following:

  • credit checkpoint

  • credit limit

  • reorder point

  • backorder point

Question 16 of 152

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What is the normal procedure for new customers or customers making a purchase that
causes their credit limit to be exceeded?

Select one of the following:

  • 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

Question 17 of 152

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Why should inventory quantities on hand be checked before a sale is actually made?

Select one of the following:

  • 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

Question 18 of 152

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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

Select one of the following:

  • production department

  • purchasing department

  • billing department

  • A and B above

Question 19 of 152

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Customer inquiries during the sales order process are best handled by

Select one of the following:

  • a sales order and customer service person

  • accounting personnel

  • the credit manager

  • A and C Above

Question 20 of 152

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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
called

Select one of the following:

  • EDI systems

  • POS systems

  • VMI systems

  • CRM systems

Question 21 of 152

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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

Select one of the following:

  • conveyor belts and forklifts

  • conveyor belts and forklifts equipped with RFDC

  • conveyor belts

  • bar-code scanners

Question 22 of 152

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Once a customer order has been approved, which document is produced next?

Select one of the following:

  • the sales invoice

  • the packing slip

  • the remittance advice

  • the purchase order

Question 23 of 152

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In a shipping department, a __________ is a legal contract that defines responsibility
for goods that are in transit.

Select one of the following:

  • packing slip

  • bill of lading

  • picking list

  • back order

Question 24 of 152

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The __________ is a legal contract that defines responsibility for the goods that are in
transit.

Select one of the following:

  • bill of lading

  • freight bill

  • sales order

  • order acknowledgement

Question 25 of 152

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Two documents usually accompany goods sent from the vendor to the customer. What are these two documents?

Select one of the following:

  • 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

Question 26 of 152

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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?

Select one of the following:

  • any back orders are initiated

  • inventory quantities are updated

  • the customer accounts receivable is posted

  • shipping document
    s such as the bill of lading are produced

Question 27 of 152

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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?

Select one of the following:

  • the bill of lading

  • the purchase order

  • the packing list

  • the sales invoice

Question 28 of 152

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A company uses an invoice method whereby customers typically pay according to
each invoice. This is the __________ method.

Select one of the following:

  • monthly statement

  • open-invoice

  • balance forward

  • cycle billing

Question 29 of 152

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A type of accounts receivable system that matches specific invoices and payments from the customer is called a(n) __________ system.

Select one of the following:

  • closed invoice

  • balance forward

  • cycle billing

  • open invoice

Question 30 of 152

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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

Select one of the following:

  • remittance advice

  • remittance list

  • credit memorandum

  • debit memorandum

Question 31 of 152

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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.

Select one of the following:

  • closed invoice

  • open invoice

  • balance forward

  • invoice forward

Question 32 of 152

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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.

Select one of the following:

  • remittance list

  • monthly statement

  • invoice

  • aging report

Question 33 of 152

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When a customer pays off the balance on an invoice, the transaction is credited to the __________ file.

Select one of the following:

  • customer master

  • sales transaction

  • cash receipts

  • All of the above are correct

Question 34 of 152

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A type of business document in which part of the original document is returned to the source for further processing is called a __________ document.

Select one of the following:

  • feedback

  • returnable

  • closed-loop

  • turnaround

Question 35 of 152

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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.

Select one of the following:

  • closed invoice

  • open invoice

  • cycle billing

  • balance forward

Question 36 of 152

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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?

Select one of the following:

  • 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

Question 37 of 152

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The benefits of a cash lockbox system are maximized when

Select one of the following:

  • the bank is located close to the company.

  • several banks around the country are used.

  • only one bank is designated.

  • EFT is used.

Question 38 of 152

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A system where the bank electronically notifies a company about customers' remittances received through the postal system is known an

Select one of the following:

  • e-cash system.

  • electronic lockbox.

  • electronic funds transfer (EFT).

  • electronic data interchange (EDI).

Question 39 of 152

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When customers send their remittances electronically to the company's bank, this is
called

Select one of the following:

  • FEDI

  • EFT

  • to use procurement cards

  • an electronic lockbox

Question 40 of 152

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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

Select one of the following:

  • inventory records

  • cash receipts

  • credit approval decisions

  • exceptions reports

Question 41 of 152

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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

Select one of the following:

  • FEDI.

  • EFT

  • to use procurement cards

  • an electronic lockbox

Question 42 of 152

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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?

Select one of the following:

  • an effective marketing staff

  • all the components of the expenditure cycle

  • adequate controls

  • adequate system flowchart documentation

Question 43 of 152

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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?

Select one of the following:

  • 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

Question 44 of 152

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The activities involved in soliciting and processing customer orders within the
revenue cycle are known as the __________.

Select one of the following:

  • sales order entry process

  • shipping order process

  • revenue process

  • marketing process

Question 45 of 152

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To ensure proper separation of duties the __________ makes decisions concerning
issuance of credit memos.

Select one of the following:

  • accounts receivable supervisor

  • warehouse manager

  • credit manager

  • cashier

Question 46 of 152

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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?

Select one of the following:

  • separation of shipping and billing duties

  • credit approval by a credit manager and not marketing personnel

  • data entry application controls

  • price lists

Question 47 of 152

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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?

Select one of the following:

  • 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.

Question 48 of 152

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Which of the following would be the least effective control to minimize the loss of
inventory?

Select one of the following:

  • 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

Question 49 of 152

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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

Select one of the following:

  • the failure to bill customers

  • billing errors

  • loss of data

  • poor performance

Question 50 of 152

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A company fails to bill customers due to a lack of controls. The exposure the company faces is

Select one of the following:

  • customer dissatisfaction.

  • an overstated accounts receivable balance

  • a loss of inventory and revenue.

  • uncollectible sales and losses due to bad debts

Question 51 of 152

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All of the following edit checks for online editing of accounts receivable transactions would probably be included except

Select one of the following:

  • 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

Question 52 of 152

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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.

Select one of the following:

  • cashier; treasurer

  • cashier; controller

  • accountant; treasurer

  • accountant; controller

Question 53 of 152

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In a cash collection system with proper controls, the __________ function,
responsible to the __________, is separate and distinct from the cash handling
activities.

Select one of the following:

  • accounts receivable; treasurer

  • accounts receivable; controller

  • cashier; controller

  • cashier; treasurer

Question 54 of 152

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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?

Select one of the following:

  • 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

Question 55 of 152

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Which of the following duties could be performed by the same individual and not violate segregation of duty controls?

Select one of the following:

  • 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

Question 56 of 152

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To prevent the loss of valuable data in the revenue cycle, internal file labels can be
used to

Select one of the following:

  • keep competitors from accessing files.

  • record off - site storage locations.

  • organize the on - site physical storage site.

  • reduce the possibility of erasing important files.

Question 57 of 152

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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.

Select one of the following:

  • picking ticket

  • packing slip

  • bill of lading

  • invoice

Question 58 of 152

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Many Internet retailers allow customers to customize products by presenting them with various alternative options. These interactive sales order entry systems are called

Select one of the following:

  • choiceboards

  • orderboards

  • optionboards

  • waterboards

Question 59 of 152

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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

Select one of the following:

  • vendor-managed inventory

  • sales force automation.

  • computer-data interchange.

  • optical character recognition

Question 60 of 152

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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

Select one of the following:

  • vendor - managed inventory

  • sales force automation.

  • electronic data interchange.

  • optical character recognition

Question 61 of 152

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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

Select one of the following:

  • vendor-managed inventory

  • sales force automatio

  • electronic data interchang

  • optical character recognitio

Question 62 of 152

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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

Select one of the following:

  • validity check.

  • reasonableness test

  • limit check

  • completeness test

Question 63 of 152

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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

Select one of the following:

  • validity check

  • reasonableness test

  • limit check

  • completeness test

Question 64 of 152

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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

Select one of the following:

  • validity checkl

  • reasonableness test

  • limit check

  • completeness test

Question 65 of 152

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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

Select one of the following:

  • warning that failure to pay by the due date will result in a late charge

  • confirmation of the firm's privacy policy.

  • turnaround document

  • bill

Question 66 of 152

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Which of the following is an example of a wireless technology used to increase the efficiency of picking and packing products for shipment?

Select one of the following:

  • Bar codes

  • RFID

  • OCR

  • laser scans

Question 67 of 152

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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

Select one of the following:

  • picking ticket

  • bill of landing

  • packing slip

  • remittance advice

  • credit memo

Question 68 of 152

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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

Select one of the following:

  • picking ticket

  • bill of landing

  • packing slip

  • remittance advice

  • credit memo

Question 69 of 152

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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

Select one of the following:

  • pciking ticket

  • bill of landing

  • packing slip

  • remittance advice

  • credit memo

Question 70 of 152

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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

Select one of the following:

  • picking ticket

  • bill of landing

  • packing slip

  • remittance advice

  • credit memo

Question 71 of 152

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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

Select one of the following:

  • picking ticket

  • bill of landing

  • packing slip

  • remittance advice

  • credit memo

Question 72 of 152

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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

Select one of the following:

  • minimization of cash handlin

  • lockbox arrangement

  • segregation of duties

  • frequent reconciliation of record

Question 73 of 152

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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?

Select one of the following:

  • RFID

  • Physical inventory checking

  • Segregation of dutie

  • An electronic lockbox

Question 74 of 152

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Using the _______ method, customers typically pay a sales invoice that reflects a single transaction, referred to as a _______

Select one of the following:

  • open invoice; monthly statement

  • open invoice; remittance advice

  • balance-forward; monthly statemen

  • balance-forward; remittance advic

Question 75 of 152

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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 _______.

Select one of the following:

  • openinvoice; monthly statement

  • open invoice; remittance advice

  • balance-forward; monthly statement

  • balance-forward; remittance advice

Question 76 of 152

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Which of the following poses an internal control problem?

Select one of the following:

  • 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

Question 77 of 152

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Which of the following poses an internal control problem?

Select one of the following:

  • Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in
    this service.

  • Products are released from inventory after a warehouse employee and a shipping clerk sign the
    pick list.

  • 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

Question 78 of 152

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In the expenditure cycle, the primary external exchange of information occurs with

Select one of the following:

  • customers

  • suppliers

  • management

  • the audit committee

Question 79 of 152

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Within the expenditure cycle, internal information flows

Select one of the following:

  • 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.

Question 80 of 152

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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?

Select one of the following:

  • 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?

Question 81 of 152

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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?

Select one of the following:

  • the sales order entry process

  • the shipping function

  • the cash collection activity

  • he cash payments activity

Question 82 of 152

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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

Select one of the following:

  • safety stock

  • just-in-time production

  • economic order quantity

  • optimal inventory quantity

Question 83 of 152

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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

Select one of the following:

  • ordering costs

  • carrying costs

  • the reorder point

  • stockout costs

Question 84 of 152

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The decision of when to place an order in a traditional inventory system is specified by the

Select one of the following:

  • company inventory policies.

  • economic order quantity.

  • stockout point.

  • reorder point.

Question 85 of 152

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When goods are being ordered from a vendor, which electronic files are either read or updated?

Select one of the following:

  • inventory, vendors, and accounts payable

  • vendors and accounts payable

  • open purchase orders and accounts payable

  • inventory, vendors, and open purchase orders

Question 86 of 152

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One alternative approach to managing inventory is materials requirements planning (MRP). What is a key feature of this approach?

Select one of the following:

  • 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

Question 87 of 152

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The major advantage of an MRP inventory system is that it reduces inventory levels. This is because

Select one of the following:

  • 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
    vendor.

  • None of the above are correct.

Question 88 of 152

Medal-premium 1

The inventory management approach that attempts to minimize, if not eliminate, carrying and stockout costs is

Select one of the following:

  • the materials requirements planning.

  • the economic order quantity.

  • a just-in-time inventory system.

  • There is no such inventory management approach.

Question 89 of 152

Medal-premium 1

What aspect below best characterizes a JIT inventory system?

Select one of the following:

  • 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

Question 90 of 152

Medal-premium 1

What is the key difference between the MRP and JIT inventory management approaches?

Select one of the following:

  • 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.

Question 91 of 152

Medal-premium 1

MRP will be a preferred method over JIT when the

Select one of the following:

  • demand for inventory is fairly predictable.

  • demand for inventory is mostly unpredictable.

  • product has a short life cycle.

  • None of the above are correct.

Question 92 of 152

Medal-premium 1

A key decision in ordering is selecting a suitable vendor. Which of the following would not be a major criterion in vendor selection?

Select one of the following:

  • prices of goods

  • quality of goods

  • credit rating of the vendor

  • ability to deliver on time

Question 93 of 152

Medal-premium 1

Once a vendor is selected for a product, the company's identity is recorded in the

Select one of the following:

  • general ledger

  • purchase requisition file

  • product inventory transaction file

  • product inventory master record

Question 94 of 152

Medal-premium 1

The paper document or electronic form that formally requests a supplier to sell and deliver specified products at designated prices is called

Select one of the following:

  • a purchase order

  • a materials requisition

  • a sales invoice

  • a receiving report

Question 95 of 152

Medal-premium 1

A purchase order is

Select one of the following:

  • 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.

Question 96 of 152

Medal-premium 1

A standing order to purchase specified items at a designated price, from a particular supplier for a set period of time, is called a

Select one of the following:

  • set order.

  • blanket purchase order.

  • purchase order.

  • commodity order.

Question 97 of 152

Medal-premium 1

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

Select one of the following:

  • an EDI auction.

  • a trading exchange.

  • a reverse auction.

  • a supplier consortium

Question 98 of 152

Medal-premium 1

The receiving department has two major responsibilities in connection with the expenditure cycle. Identify one of these responsibilities.

Select one of the following:

  • 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

Question 99 of 152

Medal-premium 1

Which of the following is generally not shown on a receiving report?

Select one of the following:

  • price of the items

  • quantity of the items

  • purchase order number

  • counted and inspected by

Question 100 of 152

Medal-premium 1

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?

Select one of the following:

  • the receiving clerk

  • management

  • the sales department

  • the purchasing department

Question 101 of 152

Medal-premium 1

Identify which of the following scenarios the buyer could adjust by using a debit memo document.

Select one of the following:

  • quantity different from that ordered

  • damage to the goods

  • goods that fail inspection for quality

  • All of the above are possible scenarios.

Question 102 of 152

Medal-premium 1

What is one of the best ways to improve the overall efficiency and effectiveness of the receipt and storage of ordered items?

Select one of the following:

  • 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

Question 103 of 152

Medal-premium 1

All of the following technologies could be useful aids in the receiving process except

Select one of the following:

  • bar coding.

  • radio frequency identification tags.

  • EFT.

  • satellite technology.

Question 104 of 152

Medal-premium 1

Vendor invoices are approved by the __________, which reports to the __________.

Select one of the following:

  • purchasing department; controller

  • accounts payable department; treasurer

  • purchasing department; treasurer

  • accounts payable department; controller

Question 105 of 152

Medal-premium 1

From a legal standpoint, when does the obligation to pay a vendor arise?

Select one of the following:

  • when the goods are requisitioned

  • when the goods are ordered

  • when the goods are received by the purchaser

  • when the goods are billed

Question 106 of 152

Medal-premium 1

The disbursement voucher and supporting documents are sent to the __________ for payment prior to the due date.

Select one of the following:

  • cashier

  • treasurer

  • controller

  • accounts payable department

Question 107 of 152

Medal-premium 1

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.

Select one of the following:

  • voucher

  • nonvoucher

  • cycle

  • blanket invoice

Question 108 of 152

Medal-premium 1

A disbursement voucher contains

Select one of the following:

  • a list of outstanding invoices.

  • the net payment amount after deducting applicable discounts and allowances.

  • the general ledger accounts to be debited.

  • All of the above are correct.

Question 109 of 152

Medal-premium 1

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

Select one of the following:

  • electronic funds transfer for small, occasional purchases from suppliers.

  • a nonvoucher system.

  • EDI for all small, occasional purchases from suppliers.

  • a disbursement voucher system.

Question 110 of 152

Medal-premium 1

What is not an advantage to using disbursement vouchers?

Select one of the following:

  • 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.

Question 111 of 152

Medal-premium 1

Which of the following is not an advantage of a voucher system?

Select one of the following:

  • 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

Question 112 of 152

Medal-premium 1

What is the final activity in the expenditure cycle?

Select one of the following:

  • ordering goods.

  • receipt and storage of goods

  • approving vendor invoices for payment

  • the payment of approved invoices

Question 113 of 152

Medal-premium 1

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?

Select one of the following:

  • the accounts payable supervisor

  • the controller

  • the cashier

  • the treasurer

Question 114 of 152

Medal-premium 1

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 __________

Select one of the following:

  • accounts payable; purchasing; cashier

  • purchasing; accounts payable; cashier

  • purchasing; cashier; accounts payable

  • purchasing; accounts payable; treasurer

Question 115 of 152

Medal-premium 1

A voucher package should include

Select one of the following:

  • 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.

Question 116 of 152

Medal-premium 1

The evaluated receipt settlement (ERS) replaces the more traditional 3-way matching process with a 2-way match of the purchase order and the

Select one of the following:

  • vendor invoice

  • sales invoice

  • receiving report

  • disbursement voucher

Question 117 of 152

Medal-premium 1

What may be the biggest opportunity to improve the efficiency of accounts payable?

Select one of the following:

  • convert a manual AIS system to EDI and EFT

  • streamline noninventory purchases

  • use ERS

  • use disbursement vouchers

Question 118 of 152

Medal-premium 1

When purchasing miscellaneous supplies, companies can reduce costs, improve efficiency, and combat employee fraud by using

Select one of the following:

  • procurement cards

  • a JIT inventor< system

  • credit cards

  • debit cards

Question 119 of 152

Medal-premium 1

If available, a 1% discount for payment within 10 days instead of 30 days represents an approximate savings of __________ % annually.

Select one of the following:

  • 1

  • 12

  • 18

  • 36

Question 120 of 152

Medal-premium 1

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?

Select one of the following:

  • 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

Question 121 of 152

Medal-premium 1

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?

Select one of the following:

  • 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

Question 122 of 152

Medal-premium 1

What is probably the most effective control for the prevention of kickbacks to purchasing agents?

Select one of the following:

  • purchasing from approved vendors

  • good supervision in the purchasing area

  • a corporate policy to prohibit purchasing agents from accepting kickbacks

  • reviews of vendor performance

Question 123 of 152

Medal-premium 1

There are several threats that are associated with the process and activity of receiving and storing goods. Identify one of these threats below.

Select one of the following:

  • error is counting

  • kickbacks

  • requests for unnecessary items

  • errors in vendor invoices

Question 124 of 152

Medal-premium 1

What is the easiest way to prevent the acceptance of unordered goods

Select one of the following:

  • order only from approved vendo

  • always require that a valid purchase order exists before goods can be accepted at the time of
    deliver

  • have an appropriate conflict of interest policy in pla

  • require receiving personnel to call the vendor before accepting any goo

Question 125 of 152

Medal-premium 1

Which of the following is not a common control for ensuring inventory is secure and
inventory counts are accurate

Select one of the following:

  • 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

Question 126 of 152

Medal-premium 1

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

Select one of the following:

  • order goods

  • receive and store goods

  • pay for goods and services

  • general issues

Question 127 of 152

Medal-premium 1

There is a threat of paying an invoice twice. What is an applicable control that may help mitigate this threat?

Select one of the following:

  • payment should never be authorized for a photocopy of an invoice

  • double-check invoice accura

  • approval of a purchase ord

  • adequate perpetual inventory records

Question 128 of 152

Medal-premium 1

Which control would be best to prevent payments made to fictitious vendors?

Select one of the following:

  • 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

Question 129 of 152

Medal-premium 1

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 __________.

Select one of the following:

  • special bank account; disbursement vouch

  • imprest fund; vouche

  • cash box; small denomination bi

  • petty cash fund; procurement cards

Question 130 of 152

Medal-premium 1

A surprise count of petty cash by the auditor should find the total of __________ equal to the amount authorized for the fund.

Select one of the following:

  • cash and credit memos

  • cash and petty cash vouchers

  • cash

  • cash and checks

Question 131 of 152

Medal-premium 1

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?

Select one of the following:

  • 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

Question 132 of 152

Medal-premium 1

Which of the following threats is not specific to the purchase requisition process of the expenditure cycle?

Select one of the following:

  • stockouts

  • purchaising from unauthorized vendors

  • requisitioning goods not neede

  • All of the above are threats in the purchase requisition process

Question 133 of 152

Medal-premium 1

There is a symmetrical interdependence between a firm’s expenditure cycle and its
supplier´s

Select one of the following:

  • production cycle

  • revenue cycle

  • expenditure cycle

  • general ledger and reporting system

Question 134 of 152

Medal-premium 1

There is a symmetrical interdependence between a firm’s revenue cycle and its
customers’

Select one of the following:

  • production cycle

  • revenue cycle

  • expenditure cycle

  • general ledger

Question 135 of 152

Medal-premium 1

Inbound logistics is part of the

Select one of the following:

  • revenue cycle

  • expenditure cycle

  • production cycle

  • general ledger

Question 136 of 152

Medal-premium 1

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

Select one of the following:

  • a just-in-time inventory system

  • the economic order quantity

  • a recorder point

  • materials requirements planning

Question 137 of 152

Medal-premium 1

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

Select one of the following:

  • a just-in-time inventory< system

  • the economic order quantity.

    d)

  • a reorder point.

  • materials requirements planning

Question 138 of 152

Medal-premium 1

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

Select one of the following:

  • a just-in-time inventory system.

  • the economic order quantity.

  • a reorder point.

  • materials requirements planning

Question 139 of 152

Medal-premium 1

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

Select one of the following:

  • a just-in-time inventory syste

  • the economic order quantity

  • a reorder point

  • materials requirements planning

Question 140 of 152

Medal-premium 1

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

Select one of the following:

  • purchase order

  • blanket purchase order

  • receiving report

  • debit memo

  • credit memo

Question 141 of 152

Medal-premium 1

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.

Select one of the following:

  • purchase order

  • blanket purchase order

  • receiving report

  • debit memo

  • credit memo

Question 142 of 152

Medal-premium 1

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

Select one of the following:

  • purchase order

  • blanket purchase order

  • receiving report

  • debit memo

  • credit memo

Question 143 of 152

Medal-premium 1

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

Select one of the following:

  • purchase order

  • blanket purchase order

  • receiving report

  • debit memo

  • credit memo

Question 144 of 152

Medal-premium 1

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.

Select one of the following:

  • purchase order

  • blanket purchase order

  • receiving report

  • debit memo

  • credit memo

Question 145 of 152

Medal-premium 1

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

Select one of the following:

  • a voucher system

  • a just-in-time inventory system

  • a nonvoucher system

  • a fail-safe system

Question 146 of 152

Medal-premium 1

In the expenditure cycle, evaluated receipt settlement increases efficiency by

Select one of the following:

  • 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

Question 147 of 152

Medal-premium 1

In the expenditure cycle, financial data electronic interchange increases efficiency by

Select one of the following:

  • Piet du Schnorrer!

  • eliminating the need for vendor invoic

  • eliminating the need for purchase orde

  • eliminating the need to prepare and mail check

Question 148 of 152

Medal-premium 1

Procurement cards differ from corporate credit cards in which of the following ways

Select one of the following:

  • 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

Question 149 of 152

Medal-premium 1

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

Select one of the following:

  • 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

Question 150 of 152

Medal-premium 1

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?

Select one of the following:

  • 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

Question 151 of 152

Medal-premium 1

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?

Select one of the following:

  • 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.

  • Controls are adequate under the current system

Question 152 of 152

Medal-premium 1

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?

Select one of the following:

  • 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

  • Controls are adequate under the current system

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Computer Based Accounting_1

jixxxa92
Quiz by , created almost 3 years ago

Quiz on Computer Based Accounting_1, created by jixxxa92 on 14/01/2014.

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