Deck 10: Purchasing and Payments Process

Question 1

Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction.

A) Selecting vendors
B) Returning goods or negotiating allowances
C) Paying for purchases
D) Receiving raw materials

Answer 1

Selecting vendors

Question 2

Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction.

A) Returning goods or negotiating allowances
B) Negotiating contracts and payment terms
C) Paying for purchases
D) Receiving raw materials

Answer 2

Negotiating contracts and payment terms

Question 3

Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction.

A) Returning goods or negotiating allowances
B) Paying for purchases
C) Ordering raw materials
D) Receiving raw materials

Answer 3

Ordering raw materials

Question 4

In which financial statement is a line item for inventory found?

A) Balance sheet
B) Income statement
C) Cash flow statement
D) Statement of shareholder equity

Question 5

Inventory is a balance sheet line item that includes all items used in the creation of products. Which of the following is classified as an item that is used in the creation of a product?

A) Raw materials
B) Work in progress
C) Finished goods
D) Cash

Question 6

Inventory is a balance sheet line item that includes all items used in the creation of products. Which of the following is classified as products in the process of being manufactured?

A) Raw materials
B) Work in progress
C) Finished goods
D) Cash

Question 7

Inventory is a balance sheet line item that includes all items used in the creation of products. Which of the following is classified as products ready to ship to customers?

A) Raw materials
B) Work in progress
C) Finished goods
D) Cash

Question 8

Review the diagram below:
What business activity does A represent?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 9

Review the diagram below:
What business activity does B represent?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 10

Review the diagram below:
What business activity does C represent?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 11

Review the diagram below:
What business activity does D represent?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 12

Review the diagram below:
What business activity does E represent?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 13

Review the diagram below:
Which deliverable is A?

A) Purchase Requisition
B) Purchase Order
C) Receiving Report
D) Check or electronic transfer

Question 14

Review the diagram below:
Which deliverable is B?

A) Purchase Requisition
B) Purchase Order
C) Receiving Report
D) Check or electronic transfer

Question 15

Review the diagram below:
Which deliverable is C?

A) Purchase Requisition
B) Purchase Order
C) Receiving Report
D) Check or electronic transfer

Question 16

Review the diagram below:
Which deliverable is D?

A) Purchase Requisition
B) Purchase Order
C) Receiving Report
D) Check or electronic transfer

Question 17

There are four departments in a company that are directly involved in the purchasing processes. Which department manages inventory and is responsible for ensuring that there is an optimal amount of inventory on hand, issuing requisitions when additional inventory is required?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 18

There are four departments in a company that are directly involved in the purchasing processes. Which department receives the purchase requisitions and transforms them into purchase orders?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 19

There are four departments in a company that are directly involved in the purchasing processes. Which department receives the orders along with a supplier-generated packing slip, checks the condition of the shipment and counts the quantities?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 20

There are four departments in a company that are directly involved in the purchasing processes. Which department receives the vendor invoices?

A) Inventory Control
B) Purchasing
C) Receiving
D) Accounts Payable

Question 21

Choose from the list below the best definition of Inventory management.

A) Inventory management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
B) Inventory management oversees the lifecycle of a product from procuring raw materials through customer sales.
C) Inventory management receives the orders along with a supplier-generated packing slip, which shows quantities and descriptions.
D) Inventory management are products in the process of being manufactured.

Question 22

Choose from the list below the best definition of Supply chain management.

A) Supply chain management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes.
B) Supply chain management oversees the life cycle of a product from procuring raw materials through customer sales.
C) Supply chain management receives the orders along with a supplier-generated packing slip, which shows quantities and descriptions.
D) Supply chain management are products in the process of being manufactured.

Question 23

Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.

A) Purchasing
B) Sales
C) Operations
D) Marketing

Question 24

Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.

A) Sales
B) Receiving
C) Operations
D) Marketing

Question 25

Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.

A) Sales
B) Operations
C) Warehouse
D) Marketing

Question 26

Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes.

A) Sales
B) Operations
C) Marketing
D) Accounts Payable

Question 27

Choose from the list below the best control activity to prevent receiving products from unapproved vendors.

A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards.
B) All purchases routed through the purchasing department
C) Segregation of duties
D) Implement training for employees who communicate with vendors for purchasing.

Question 28

Choose from the list below the best control activity to prevent purchases from unapproved vendors which are conflicts of interest or unauthorized related-party transactions that may result in regulatory or reputational damage.

A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards.
B) All purchases routed through the purchasing department
C) Segregation of duties
D) Implement training for employees who communicate with vendors for purchasing.

Question 29

Choose from the list below the best control activity to prevent unauthorized changes to the vendor table that may result in fraudulent purchases or loss of financial assets.

A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards.
B) All purchases routed through the purchasing department
C) Segregation of duties
D) Implement training for employees who communicate with vendors for purchasing.

Question 30

Choose from the list below the best control activity to prevent entering oral or written contracts prior to the completion of the vendor onboarding process that may result in a financial obligation to unapproved vendors.

A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards.
B) All purchases routed through the purchasing department
C) Segregation of duties
D) Implement training for employees who communicate with vendors for purchasing.

Question 31

Choose from the list below the best control activity to prevent unauthorized purchase requisitions that may result in unauthorized or fraudulent purchases.

A) An authorized person from the department making the request must approve the requisition.
B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
C) Match purchase requisitions with purchase orders and generate an exception report investigation.
D) Each blanket purchase order must specify monetary limits and have a specified duration.

Question 32

Choose from the list below the best control activity to prevent unauthorized purchase orders submitted to an unauthorized vendor that may result in unauthorized or fraudulent purchases.

A) An authorized person from the department making the request must approve the requisition.
B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
C) Match purchase requisitions with purchase orders and generate an exception report investigation.
D) Each blanket purchase order must specify monetary limits and have a specified duration.

Question 33

Choose from the list below the best control activity to prevent purchase requisitions split into more than one purchase order to circumvent authorized limits that may result in unauthorized or fraudulent purchases.

A) An authorized person from the department making the request must approve the requisition.
B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
C) Match purchase requisitions with purchase orders and generate an exception report investigation.
D) Each blanket purchase order must specify monetary limits and have a specified duration.

Question 34

Choose from the list below the best control activity to prevent blanket purchase orders that may result in excessive purchases.

A) An authorized person from the department making the request must approve the requisition.
B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities.
C) Match purchase requisitions with purchase orders and generate an exception report investigation.
D) Each blanket purchase order must specify monetary limits and have a specified duration.

Question 35

Choose from the list below the best control activity to prevent accepting goods that were not ordered.

A) Three-way matching of purchase order, receiving report, and vendor invoice prior to payment
B) Implement an e-procurement system that matches the scheduled delivery window period with the delivery date.
C) Match goods received data to data on purchase orders.
D) Restrict physical access to the receiving department.

Question 36

Choose from the list below the best control activity to prevent goods accepted earlier or later than the scheduled delivery date that may result in excessive or obsolete inventory.

A) Three-way matching of purchase order, receiving report, and vendor invoice prior to payment
B) Implement an e-procurement system that matches the scheduled delivery window period with the delivery date.
C) Match goods received data to data on purchase orders.
D) Restrict physical access to the receiving department.

Question 37

Choose from the list below the best control activity to prevent goods that are received but not recorded.

A) Three-way matching of purchase order, receiving report, and vendor invoice prior to payment
B) Implement an e-procurement system that matches the scheduled delivery window period with the delivery date.
C) Match goods received data to data on purchase order.
D) Restrict physical access to the receiving department.

Question 38

Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.

A) Purchasing
B) Sales
C) Operations
D) Marketing

Question 39

Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.

A) Sales
B) Receiving
C) Operations
D) Marketing

Question 40

Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.

A) Sales
B) Operations
C) Accounts Payable
D) Marketing

Question 41

Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes.

A) Sales
B) Operations
C) Marketing
D) Fixed Asset Accounting

Question 42

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"The department that uses a particular fixed asset generally initiates the purchasing process with a purchase requisition."

A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Question 43

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"Routine purchases of fixed assets follow a common pattern; the fixed asset is inspected, the receiving report is prepared, the fixed asset is delivered to the requesting department for installation and/or use, fixed assets are tagged for future identification purposes."

A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Question 44

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"The accounting for a fixed asset occurs when the asset is recorded."

A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Question 45

The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description?
"In addition to the purchasing and payment journal entries, the fixed asset accountant ensures the fixed asset subsidiary ledger is updated."

A) Stage 1: Asset Procurement
B) Stage 2: Receiving and Tagging
C) Stage 3: Recording Assets
D) Stage 4: Asset Reconciliation

Question 46

Choose the best definition from the list below of bid rigging.

A) Vendors collude with one another and reach advance agreement as to the winning bidder for a particular contract. The winning bidder agrees to compensate the other vendors in some manner.
B) An external document used to request a supplier to sell and deliver the products in the quantities and for the prices specified
C) A supplier generated document, which shows quantities and descriptions of items delivered to the receiving department at the specified warehouse location
D) A document that shows the descriptions and quantities of goods received from vendors

Question 47

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

A) Tagging all fixed assets
B) Expand the list of bidders to make it more difficult for bidders to collude.
C) Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
D) Periodically checking fixed assets against the fixed asset records

Question 48

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

A) Tagging all fixed assets
B) Regular management review of fixed asset accounting transactions and trends in fixed asset ratios
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Periodically checking fixed assets against the fixed asset records

Question 49

Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk.

A) Tagging all fixed assets
B) Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger
C) Periodically checking fixed assets against the fixed asset records
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Question 50

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

A) Tagging all fixed assets
B) Expand the list of bidders to make it more difficult for bidders to collude.
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Question 51

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Ensure regular management review of fixed asset accounting transactions and trends in fixed asset ratios.
C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Question 52

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
C) Periodically checking physical fixed assets against the fixed asset records
D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.

Question 53

Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk.

A) Expand the list of bidders to make it more difficult for bidders to collude.
B) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders.
C) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud.
D) Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger

Question 54

The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.

A) Purchasing
B) Sales
C) Operations
D) Marketing

Question 55

The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match.

A) Sales
B) Receiving
C) Operations
D) Marketing

Question 56

The traditional three-way match matches the purchase order, receiving report and what other document?

A) Vendor invoice
B) Sales order
C) Vendor table
D) Packing slip

Question 57

The traditional three-way match matches the purchase order, vendor invoice and what other document?

A) Sales order
B) Receiving report
C) Vendor table
D) Packing slip

Question 58

The traditional three-way match matches the receiving report, vendor invoice and what other document?

A) Sales order
B) Vendor table
C) Purchase order
D) Packing slip

Question 59

Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk.

A) Report missing numbers in a sequence of prenumbered checks or ETFs for investigation and resolution.
B) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher
C) A three-way match against the purchase order, receiving report, and vendor's invoice
D) Take advantage of all supplier discounts if favorable to the company.

Question 60

Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk.

A) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher
B) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
C) A three-way match against the purchase order, receiving report, and vendor's invoice
D) Take advantage of all supplier discounts if favorable to the company.

Question 61

Payments recorded in the wrong vendor account may result in duplicate payments to vendors. Choose the best control activity to address this risk.

A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
B) A three-way match against the purchase order, receiving report, and vendor's invoice
C) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher
D) Take advantage of all supplier discounts if favorable to the company.

Question 62

Payments recorded in the wrong vendor account may result in duplicate payments to vendors. Choose the best control activity to address this risk.

A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
B) A three-way match against the purchase order, receiving report, and vendor's invoice
C) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher
D) Take advantage of all supplier discounts if favorable to the company.

Question 63

Payments recorded in the wrong vendor account may result in duplicate payments to vendors. Choose the best control activity to address this risk.

A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
B) A three-way match against the purchase order, receiving report, and vendor's invoice
C) Take advantage of all supplier discounts if favorable to the company.
D) Reconciliation of vendor statements with the accounts payable subsidiary ledger

Question 64

Payments made to unauthorized or nonexistent purchases may result in fraudulent misappropriation of cash. Choose the best control activity to address this risk.

A) Apply a three-way match against the purchase order, receiving report, and vendor's invoice.
B) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
C) Take advantage of all supplier discounts if favorable to the company.
D) Reconciliation of vendor statements with accounts payable subsidiary ledger

Question 65

Payments made to unauthorized or nonexistent purchases may result in fraudulent misappropriation of cash. Choose the best control activity to address this risk.

A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
B) Comparison of payment information with purchase order and receiving report information
C) Take advantage of all supplier discounts if favorable to the company.
D) Reconciliation of vendor statements with accounts payable subsidiary ledger

Question 66

Invoices paid twice may result in overpayments to vendors. Choose the best control activity to address this risk.

A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
B) Comparison of payment information with purchase order and receiving report information
C) Vendor invoice, payment voucher and supporting documentation must be tagged or cancelled to prevent reuse.
D) Take advantage of all supplier discounts if favorable to the company.

Question 67

The use of cash not being optimized may result in loss of assets and poor cash management. Choose the best control activity to address this risk.

A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period
B) Comparison of payment information with purchase order and receiving report information
C) Vendor invoice, payment voucher and supporting documentation must be tagged or cancelled to prevent reuse.
D) Take advantage of all supplier discounts if favorable to the company.

Question 68

There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below.

A) Inventory
B) Bill of Material
C) Time and Attendance
D) Payroll

Question 69

There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below.

A) Bill of Material
B) Shipping/Receiving
C) Time and Attendance
D) Payroll

Question 70

There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below.

A) Bill of Material
B) Time and Attendance
C) Fixed Assets
D) Payroll

Question 71

There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below.

A) Bill of Material
B) Time and Attendance
C) Payroll
D) Accounts Payable

Question 72

The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report is summarized to show what products have been received within a period of time?

A) Product received - by time
B) Purchase requisitions filled and open
C) Purchase orders filled and open
D) Purchase orders aging

Question 73

The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists the total number of purchase requisitions that have been purchased or remain outstanding within a period of time?

A) Product received - by time
B) Purchase requisitions filled and open
C) Purchase orders filled and open
D) Purchase orders aging

Question 74

The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists the total number of purchase orders that have been completed by suppliers and vendors or remain outstanding within a period of time?

A) Product received - by time
B) Purchase requisitions filled and open
C) Purchase orders filled and open
D) Purchase orders aging

Question 75

The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists days purchase orders have been outstanding classified in buckets?

A) Product received - by time
B) Purchase requisitions filled and open
C) Purchase orders filled and open
D) Purchase orders aging

Question 76

The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists the items on backorder from suppliers and vendors?

A) Backorder report
B) Purchase requisitions filled and open
C) Purchase orders filled and open
D) Purchase orders aging

Question 77

The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report is a master list of all approved vendors from the vendor master table?

A) Product received - by time
B) Main vendor table
C) Purchase orders filled and open
D) Purchase orders aging

Question 78

The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic describes how long it took to receive an order, quantity of goods received, and condition of goods received?

A) Vendor performance
B) Receiving reconciliation
C) Vendor prices
D) Vendor frequency

Question 79

The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic compares the goods received to the approved purchase order?

A) Vendor performance
B) Receiving reconciliation
C) Vendor prices
D) Vendor frequency

Question 80

The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic analyzes vendor price increases greater than a threshold amount over a period of time?

A) Vendor performance
B) Receiving reconciliation
C) Vendor prices
D) Vendor frequency