Accounts Payable and Purchasing: Questions and Answers
Chapter 5—The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures
TRUE/FALSE
1. Purchasing decisions are authorized by inventory control.
ANS: T PTS: 1
2. The blind copy of the purchase order that goes to the receiving department contains no item descriptions.
ANS: F PTS: 1
3. Firms that wish to improve control over cash disbursements use a voucher system.
ANS: T PTS: 1
4. In a voucher system, the sum of all unpaid vouchers in the voucher register equals the firm’s total voucher payable balance.
ANS: T PTS: 1
5. The accounts payable department reconciles the accounts payable subsidiary ledger to the control account.
ANS: F PTS: 1
6. The use of inventory reorder points suggests the need to obtain specific authorization.
ANS: F PTS: 1
7. Proper segregation of duties requires that the responsibility approving a payment be separated from posting to the cash disbursements journal.
ANS: T PTS: 1
8. A major risk exposure in the expenditure cycle is that accounts payable may be overstated at the end of the accounting year.
ANS: F PTS: 1
9. When a trading partner agreement is in place, the traditional three way match may be eliminated.
ANS: T PTS: 1
10. Authorization of purchases in a merchandising firm occurs in the inventory control department.
ANS: T PTS: 1
11. A three way match involves a purchase order, a purchase requisition, and an invoice.
ANS: F PTS: 1
12. Authorization for a cash disbursement occurs in the cash disbursement department upon receipt of the supplier’s invoice.
ANS: F PTS: 1
13. An automated cash disbursements system can yield better cash management since payments are made on time.
ANS: T PTS: 1
14. Permitting warehouse staff to maintain the only inventory records violates separation of duties.
ANS: T PTS: 1
15. A purchasing system that employs electronic data interchange does not use a purchase order.
ANS: F PTS: 1
16.
TRUE/FALSE
1. Purchasing decisions are authorized by inventory control.
ANS: T PTS: 1
2. The blind copy of the purchase order that goes to the receiving department contains no item descriptions.
ANS: F PTS: 1
3. Firms that wish to improve control over cash disbursements use a voucher system.
ANS: T PTS: 1
4. In a voucher system, the sum of all unpaid vouchers in the voucher register equals the firm’s total voucher payable balance.
ANS: T PTS: 1
5. The accounts payable department reconciles the accounts payable subsidiary ledger to the control account.
ANS: F PTS: 1
6. The use of inventory reorder points suggests the need to obtain specific authorization.
ANS: F PTS: 1
7. Proper segregation of duties requires that the responsibility approving a payment be separated from posting to the cash disbursements journal.
ANS: T PTS: 1
8. A major risk exposure in the expenditure cycle is that accounts payable may be overstated at the end of the accounting year.
ANS: F PTS: 1
9. When a trading partner agreement is in place, the traditional three way match may be eliminated.
ANS: T PTS: 1
10. Authorization of purchases in a merchandising firm occurs in the inventory control department.
ANS: T PTS: 1
11. A three way match involves a purchase order, a purchase requisition, and an invoice.
ANS: F PTS: 1
12. Authorization for a cash disbursement occurs in the cash disbursement department upon receipt of the supplier’s invoice.
ANS: F PTS: 1
13. An automated cash disbursements system can yield better cash management since payments are made on time.
ANS: T PTS: 1
14. Permitting warehouse staff to maintain the only inventory records violates separation of duties.
ANS: T PTS: 1
15. A purchasing system that employs electronic data interchange does not use a purchase order.
ANS: F PTS: 1
16.