Finance

Q: What internal accounting control(s) would be the most effective in preventing a storekeeper from taking inventory home at night? When shortages become apparent, he claims the goods were never received.

Q: What type of errors or fraud might happen if (1) the accounts payable ledger is not periodically reconciled to the control account in the general ledger and (2) suppliers' invoices are not compared to purchase orders or to receiving reports before payment?

Q: Explain why supervision is so important in the receiving department.

Q: Describe internal control procedures that would (1) detect that a vendor overcharged for goods delivered, (2) prevent payment for an invoice for goods that were never delivered and (3) prevent issuing two checks in payment of the same invoice.

Q: List specific jobs that should be segregated in (1) the purchases processing system and (2) the cash disbursements system.

Q: Which internally generated documents should be compared to the supplier's invoice to: (1) verify the price of an item and (2) verify the quantity being billed for?

Q: The personnel action form provides authorization control by a. preventing paychecks for terminated employees b. verifying pay rates for employees c. informing payroll of new hires d. all of the above

Q: Payroll checks are typically drawn on a. the regular checking account b. a payroll imprest account c. a wages payable account d. petty cash

Q: Payroll uses time card data to do all of the following except a. prepare the payroll register b. update employee payroll records c. prepare the labor distribution summary d. prepare paychecks

Q: Why would an organization require the paymaster to deliver all unclaimed paychecks to the internal audit department? a. to detect a "phantom employee" for whom a check was produced b. to prevent an absent employee's check from being lost c. to avoid paying absent employees for payday d. to prevent the paymaster from cashing unclaimed checks

Q: Which of the following situations represents a serious control weakness? a. Timekeeping is independent of the payroll department. b. Paychecks are distributed by the employees immediate supervisor. c. Time cards are reconciled with job tickets. d. Personnel is responsible for updating employee records, including creation of records for new hires.

Q: Which department is responsible for approving changes in pay rates for employees? a. payroll b. treasurer c. personnel d. cash disbursements

Q: Which of the following statements is not true? a. Routine payroll processing begins with the submission of time cards. b. Payroll clerks must verify the hours reported on the time cards. c. Payroll reconciles personnel action forms with time cards and prepares paychecks. d. Cash disbursements signs paychecks and forwards them to the paymaster for distribution.

Q: In the payroll subsystem, which function should distribute paychecks? a. personnel b. timekeeping c. paymaster d. payroll

Q: Which internal control is not an important part of the payroll system? a. Supervisors verify the accuracy of employee time cards. b. Paychecks are distributed by an independent paymaster. c. Accounts payable verifies the accuracy of the payroll register before transferring payroll funds to the general checking accounting. d. General ledger reconciles the labor distribution summary and the payroll disbursement voucher.

Q: An important reconciliation in the payroll system is a. general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable b. personnel compares the number of employees authorized to receive a paycheck to the number of paychecks prepared c. production compares the number of hours reported on job tickets to the number of hours reported on time cards d. payroll compares the labor distribution summary to the hours reported on time cards

Q: The document that captures the total amount of time that individual workers spend on each production job is called a a. time card b. job ticket c. personnel action form d. labor distribution form

Q: A supplier invoice a. is included with the goods b. shows what was ordered even if all was not shipped c. is sent by vendor to accounts payable d. none of the above

Q: Copies of a purchase order are sent to all of the following except a. inventory control b. receiving c. general ledger d. accounts payable

Q: If a company uses an actual cost system, inventory records can first be updated from the a. vendor invoice b. purchase order c. receiving report d. purchase requisition

Q: If a company uses a standard cost system, inventory records can be updated from the a. vendor invoice b. purchase order c. receiving report d. purchase requisition

Q: In a real-time processing system with a high number of transactions, the best and most practical control over cash disbursements is to have a. all checks manually signed by the treasurer b. all checks signed by check-signing equipment c. checks over a certain dollar amount manually signed by the treasurer d. checks over a certain dollar amount manually signed by the cash disbursements clerk

Q: In a computerized system that uses an economic order quantity (EOQ) model and the perpetual inventory method, who determines when to reorder inventory? a. the inventory control clerk b. the purchasing department c. the vendor d. the computer system

Q: In regards to the accounts payable department, which statement is not true? a. the purchase requisition shows that the transaction was authorized b. the purchase order proves that the purchase was required c. the receiving report provides evidence of the physical receipt of the goods d. the supplier's invoice indicates the financial value of the transaction

Q: When searching for unrecorded liabilities at the end of an accounting period, the accountant would search all of the files except a. the purchase requisition file b. the cash receipts file c. the purchase order file d. the receiving report file

Q: The major risk exposures associated with the receiving department include all of the following except a. goods are accepted without a physical count b. there is no inspection for goods damaged in shipment c. inventories are not secured on the receiving dock d. the audit trail is destroyed

Q: The receiving department is not responsible to a. inspect shipments received b. count items received from vendors c. order goods from vendors d. safeguard goods until they are transferred to the warehouse

Q: Of the following duties, it is most important to separate a. warehouse from stores b. warehouse from inventory control c. accounts payable and accounts receivable d. purchasing and accounts receivable

Q: The cash disbursement clerk performs all of the following tasks except a. reviews the supporting documents for completeness and accuracy b. prepares checks c. signs checks d. marks the supporting documents paid

Q: To maintain a good credit rating and to optimize cash management, cash disbursements should arrive at the vendor's place of business a. as soon as possible b. on the due date c. on the discount date d. by the end of the month

Q: The documents in a voucher packet include all of the following except a. a check b. a purchase order c. a receiving report d. a supplier's invoice

Q: In the expenditure cycle, general ledger does not a. post the journal voucher from the accounts payable department b. post the account summary from inventory control c. post the journal voucher from the purchasing department d. reconcile the inventory control account with the inventory subsidiary summary

Q: Which of the following statements is not correct? a. the voucher system is used to improve control over cash disbursements b. the sum of the paid vouchers represents the voucher payable liability of the firm c. the voucher system permits the firm to consolidate payments of several invoices on one voucher d. many firms replace accounts payable with a voucher payable system

Q: Usually the open voucher payable file is organized by a. vendor b. payment due date c. purchase order number d. transaction date

Q: Because of time delays between receiving inventory and making the journal entry a. liabilities are usually understated b. liabilities are usually overstated c. liabilities are usually correctly stated d. none of the above

Q: When purchasing inventory, which document usually triggers the recording of a liability? a. purchase requisition b. purchase order c. receiving report d. supplier's invoice

Q: In a merchandising firm, authorization for the purchase of inventory is the responsibility of a. inventory control b. purchasing c. accounts payable d. cash disbursements

Q: In a merchandising firm, authorization for the payment of inventory is the responsibility of a. inventory control b. purchasing c. accounts payable d. cash disbursements

Q: The financial value of a purchase is determined by reviewing the a. packing slip b. purchase requisition c. receiving report d. supplier's invoice

Q: When a copy of the receiving report arrives in the purchasing department, it is used to a. adjust perpetual inventory records b. record the physical transfer of inventory from receiving to the warehouse c. analyze the receiving department's process d. recognize the purchase order as closed

Q: The receiving report is used to a. accompany physical inventories to the storeroom or warehouse b. advise the purchasing department of the dollar value of the goods delivered c. advise general ledger of the accounting entry to be made d. advise the vendor that the goods arrived safely

Q: The reason that a blind copy of the purchase order is sent to receiving is to a. inform receiving when a shipment is due b. force a count of the items delivered c. inform receiving of the type, quantity, and price of items to be delivered d. require that the goods delivered are inspected

Q: The open purchase order file in the purchasing department is used to determine a. the quality of items a vendor ships b. the best vendor for a specific item c. the orders that have not been received d. the quantity of items received

Q: The purpose of the purchase order is to a. order goods from vendors b. record receipt of goods from vendors c. authorize the purchasing department to order goods d. approve payment for goods received

Q: All of the following departments have a copy of the purchase order except a. the purchasing department b. the receiving department c. accounts payable d. general ledger

Q: The purpose of the purchase requisition is to a. order goods from vendors b. record receipt of goods from vendors c. authorize the purchasing department to order goods d. bill for goods delivered

Q: The payroll department is responsible for both updating the employee records and writing paychecks.

Q: Timekeeping is part of the personnel function.

Q: Payroll processing can be automated easily because accounting for payroll is very simple.

Q: The supervisor is the best person to determine the existence of a "phantom employee" and should distribute paychecks.

Q: Ideally, payroll checks are written on a special bank account used only for payroll.

Q: Work-in-process records are updated by payroll personnel.

Q: Because a time clock is used, no supervision is required when employees enter and leave the work place.

Q: Most payroll systems for mid-size firms use real-time data processing.

Q: The personnel department authorizes changes in employee pay rates.

Q: Time cards are used by cost accounting to allocate direct labor charges to work in process.

Q: When goods are received, the receiving clerk sends copies of the receiving report to the inventory control clerk and the AP clerk.

Q: The receiving report is prepared by the vendor to provide evidence that the purchase order was received.

Q: The inventory procurement process begins with the purchasing clerk preparing a purchase order.

Q: Supervision in receiving is intended to reduce the theft of assets.

Q: If accounts payable receives an invoice directly from the supplier it needs to be reconciled with the purchase order and receiving report.

Q: One reason for authorizing purchases is to enable efficient inventory management.

Q: Inspection of shipments in the receiving department would be improved if the documentation showed the value of the inventory.

Q: Inventory control should be located in the warehouse.

Q: A purchasing system that employs electronic data interchange does not use a purchase order.

Q: Permitting warehouse staff to maintain the only inventory records violates separation of duties.

Q: Authorization for a cash disbursement occurs in the cash disbursement department upon receipt of the supplier's invoice.

Q: A three way match involves a purchase order, a purchase requisition, and an invoice.

Q: Authorization of purchases in a merchandising firm occurs in the inventory control department.

Q: When a trading partner agreement is in place, the traditional three way match may be eliminated.

Q: A major risk exposure in the expenditure cycle is that accounts payable may be overstated at the end of the accounting year.

Q: Proper segregation of duties requires that the responsibility approving a payment be separated from posting to the cash disbursements journal.

Q: The use of inventory reorder points suggests the need to obtain specific authorization.

Q: The accounts payable department reconciles the accounts payable subsidiary ledger to the control account.

Q: In a voucher system, the sum of all unpaid vouchers in the voucher register equals the firm's total voucher payable balance.

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