Question 1

Differentiate between a purchase requisition and a purchase order.

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Question 2

The Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable reporting the receipt of inventory.
Accounts payable compares the warehouse memo to the supplier's invoice. Accounts payable prepares a check which the treasurer signs.
Describe at least five needed internal control improvements.

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Question 3

Why should employee paychecks be drawn against a special checking account?

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Question 4

In a manufacturing firm, employees typically fill out two different documents regarding their time worked. What are they? Why are there two?

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Question 5

Name the key tasks associated with purchases procedures.

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Question 6

How does a voucher payable system work? What documents are reconciled? Who prepares the voucher? How is the A/P balance determined? How does the voucher payable system improve control over cash?

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Question 7

Explain why a three way match may not be required for transactions covered by a trading partner agreement.

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Question 8

What is a vouchers payable system and why is it used?

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Question 9

What is the purpose of the suppliers invoice?

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Question 10

How does the procedure for determining inventory requirements differ between a basic batch processing system and batch processing with real-time data input of sales and receipts of inventory? What about for the procedures used by the receiving department?

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Question 11

What are the steps taken in the cash disbursement system?

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Question 12

Why does the payroll process lend itself to batch processing?

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Question 13

Name two major benefits of automating the purchasing effort.

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Question 14

What is the purpose of a receiving report?

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Question 15

Outline the key steps taken in the purchasing system.

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Question 16

The Golf Club Company makes custom golf clubs. The manufacturing supervisor interviews people who have specialized manufacturing skills, and he informs payroll when an employee is hired. The employees use a time clock to record the hours they work. The employees are also required to keep a record of the time they spend working on each order. The supervisor approves all time cards.
The accountant analyzes the job tickets and prepares a labor distribution summary. Payroll prepares the payroll register and paychecks. The supervisor distributes the paychecks to the employees. Payroll informs cash disbursement of the funds required to cover the entire payroll amount. The cash disbursements clerk ensures that there are adequate funds in the company's regular checking account to cover the payroll.
Describe at least three internal control weaknesses; for each weakness suggest an improvement to internal control.

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Question 17

What is the principle objective of the cash disbursement system?

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Question 18

Explain the purpose of each of the following documents used in the payroll system:
the personnel action form, the job ticket, the time card.

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Question 19

Describe internal control procedures that would (1) prevent an employee from punching the time clock for another, absent employee and (2) prevent a supervisor from stealing the unclaimed paychecks of employees who have been terminated.

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Question 20

Where is access control exercised in the purchasing/cash disbursement functions?

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Quiz 10: Auditing the Expenditure Cycle