Question 1

Which of the following describes the best physical control(s)  over cash disbursements?

Accepted Answer

A)   All disbursements to vendors over $50 are made with prenumbered checks.
B)   Cash can be disbursed to vendors when approved by the purchasing manager.
C)   Access to inventory is limited to authorized personnel only.
D)   All of the above are good physical controls over cash disbursements.E) A) and D)
F) B) and C)

Question 2

The purchasing process normally includes purchase order processing, receiving, and accounts payable.

Accepted Answer

A) True 
 B)False

Question 3

Providing managers with budgets delegates authority to managers to spend up to a prescribed ceiling on goods and services related to their assigned responsibilities.

Accepted Answer

A) True 
 B)False

Question 4

Warehouse personnel are responsible for periodically reviewing the open purchase order file and following up on unfilled orders.

Accepted Answer

A) True 
 B)False

Question 5

List and explain the activities in the purchasing process.

Accepted Answer

<b>Procuring goods and vendor services.<...

Question 6

Competitive bidding is a relatively uncomplicated procedure in that the lowest priced bidder that can meet the needs of the organization will be accepted.

Accepted Answer

A) True 
 B)False

Question 7

What are some of the key reports required for effective management of the purchasing process?

Accepted Answer

Some key reports are the vendo...

Question 8

For a purchase order system to be effective, it must be a real-time system.

Accepted Answer

A) True 
 B)False

Question 9

What documents the receipt of goods?

Accepted Answer

A)   Receipt verification
B)   Ticket
C)   Purchase validation
D)   InvoiceE) A) and B)
F) A) and C)

Question 10

Which of the following is NOT a reason why a company would be motivated to use an EDI system for purchase orders?

Accepted Answer

A)   With an EDI system, purchase orders can be sent through the computer to a vendor.
B)   An EDI system is inexpensive to purchase and easy to implement.
C)   EDI systems reduce the possibility of human data entry error.
D)   With the computerized EDI system, there is less paperwork involved.E) A) and D)
F) None of the above

Question 11

Financial planners want an aging that monitors the expected timeliness of delivery while purchasing officers desire an aging that estimates future cash requirements.

Accepted Answer

A) True 
 B)False

Question 12

What are listings of the cash disbursements transaction file are referred to?

Accepted Answer

A)   Accounts payable master file
B)   Check register
C)   Invoice register
D)   Vendor master fileE) None of the above
F) A) and D)

Question 13

List four of the five actions that result from the receipt of merchandise from a vendor.

Accepted Answer

Physical count of shipment, create inven...

Question 14

What are the two major data entry processes?

Accepted Answer

A)   Creation and issuance of purchase orders; recording of cash disbursements
B)   Creation and issuance of purchase orders; recording of merchandise received and services rendered
C)   Recording of merchandise received and services rendered; recording of cash disbursements
D)   Creation and issuance of purchase orders; recording of accounts payableE) C) and D)
F) A) and D)

Question 15

Which of the following statements is false?

Accepted Answer

A)   Payment for goods and services typically makes the largest demand on an organization's cash.
B)   Most commonly, after a purchase order has been approved, a manager will then deal with vendors directly.
C)   The order for goods and services has traditionally been in the form of a paper purchase order that is mailed to a vendor.
D)   Purchasing personnel are responsible for periodically reviewing the file records and following up on unfilled orders.E) None of the above
F) A) and C)

Question 16

Define electronic data interchange (EDI). List 3 of the advantages of implementing an EDI system.

Accepted Answer

EDI replaces the traditional paper purch...

Question 17

Where are purchase order data stored?

Accepted Answer

A)   Completed purchase order file
B)   Open invoice file
C)   Inventory order file
D)   Open purchase order fileE) A) and B)
F) A) and C)

Question 18

When do disbursement activities begin?

Accepted Answer

A)   Upon receipt of goods
B)   After validation of receipt of goods
C)   Upon approval of the invoice
D)   After data has been keyed into the open invoice fileE) A) and B)
F) C) and D)

Question 19

An organization is not under an obligation to pay a vendor until the organization receives the vendor's invoice.

Accepted Answer

A) True 
 B)False

Question 20

Rarely is there a deficiency in the audit trail between the cash disbursements journal and the vendor accounts since the check number is ordinarily used as a posting reference.

Accepted Answer

A) True 
 B)False

Exam 10: The Purchasing Process

Which of the following is NOT a reason why a company would be motivated to use an EDI system for purchase orders?

Correct AnswerverifiedShow Answer

An organization is not under an obligation to pay a vendor until the organization receives the vendor's invoice.

Correct AnswerverifiedShow Answer

What documents the receipt of goods?

Correct AnswerverifiedShow Answer

What are the two major data entry processes?

Correct AnswerverifiedShow Answer

When do disbursement activities begin?

Correct AnswerverifiedShow Answer

Competitive bidding is a relatively uncomplicated procedure in that the lowest priced bidder that can meet the needs of the organization will be accepted.

Correct AnswerverifiedShow Answer

Where are purchase order data stored?

Correct AnswerverifiedShow Answer

Warehouse personnel are responsible for periodically reviewing the open purchase order file and following up on unfilled orders.

Correct AnswerverifiedShow Answer

Define electronic data interchange (EDI). List 3 of the advantages of implementing an EDI system.

Correct AnswerverifiedEDI replaces the traditional paper purch...View AnswerShow Answer

Which of the following describes the best physical control(s) over cash disbursements?

Correct AnswerverifiedShow Answer

For a purchase order system to be effective, it must be a real-time system.

Correct AnswerverifiedShow Answer

The purchasing process normally includes purchase order processing, receiving, and accounts payable.

Correct AnswerverifiedShow Answer

List four of the five actions that result from the receipt of merchandise from a vendor.

Correct AnswerverifiedPhysical count of shipment, create inven...View AnswerShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

What are listings of the cash disbursements transaction file are referred to?

Correct AnswerverifiedShow Answer

List and explain the activities in the purchasing process.

Correct AnswerverifiedProcuring goods and vendor services.<...View AnswerShow Answer

Rarely is there a deficiency in the audit trail between the cash disbursements journal and the vendor accounts since the check number is ordinarily used as a posting reference.

Correct AnswerverifiedShow Answer

What are some of the key reports required for effective management of the purchasing process?

Correct AnswerverifiedSome key reports are the vendo...View AnswerShow Answer

Financial planners want an aging that monitors the expected timeliness of delivery while purchasing officers desire an aging that estimates future cash requirements.

Correct AnswerverifiedShow Answer

Providing managers with budgets delegates authority to managers to spend up to a prescribed ceiling on goods and services related to their assigned responsibilities.

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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EDI replaces the traditional paper purch...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Physical count of shipment, create inven...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Procuring goods and vendor services.<...
View Answer

Correct Answer
verified

Correct Answer
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Some key reports are the vendo...
View Answer

Correct Answer
verified

Correct Answer
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