TRUE/FALSE
1. Purchasing decisions are authorized by inventory control.
ANS: T
2. The blind copy of the purchase order that goes to the receiving department contains no item
descriptions.
ANS: F
3. Firms that wish to improve control over cash disbursements use a voucher system.
ANS: T
4. In a voucher system, the sum of all unpaid vouchers in the voucher register equals the firms
total
voucher payable balance.
ANS: T
5. The accounts payable department reconciles the accounts payable subsidiary ledger to the
control
account.
ANS: F
6. The use of inventory reorder points suggests the need to obtain specific authorization.
ANS: F
7. Proper segregation of duties requires that the responsibility approving a payment be separated
from
posting to the cash disbursements journal.
ANS: T
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
9. When a trading partner agreement is in place, the traditional three way match may be
eliminated.
ANS: T
10. Authorization of purchases in a merchandising firm occurs in the inventory control
department.
ANS: T
11. A three way match involves a purchase order, a purchase requisition, and an invoi
ce.
ANS: F
12. Authorization for a cash disbursement occurs in the cash disbursement departmen
t upon receipt of the suppliers invoice.
ANS: F
13. An automated cash disbursements system can yield better cash management sin
ce payments are made
on time.
ANS: T
14. Permitting warehouse staf to maintain the only inventory records violates separati
on of duties.
ANS: T
15. A purchasing system that employs electronic data interchange does not use a pur
chase order.
ANS: F
17. Inspection of shipments in the receiving department would be improved if the doc
umentation showed
the value of the inventory.
ANS: F
18. One reason for authorizing purchases is to enable efficient inventory management
.
ANS: T
19. If accounts payable receives an invoice directly from the supplier it needs to be re
conciled with the
purchase order and receiving report.
ANS: T
MULTIPLE CHOICE
ANS: A
9. When a copy of the receiving report arrives in the purchasing department, it is used to
d. recognize the purchase order as closed
ANS: D
10. The financial value of a purchase is determined by reviewing the
a. packing slip
b. purchase requisition
c. receiving report
d. suppliers invoice
ANS: D
11. Which document is least important in determining the financial value of a purchase?
a. purchase requisition
b. purchase order
c. receiving report
d. suppliers invoice
ANS: A
12. 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
ANS: C
13. 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
ANS: A
14. When purchasing inventory, which document usually triggers the recording of a liability?
a. purchase requisition
b. purchase order
c. receiving report
d. suppliers invoice
ANS: D
15. 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
ANS: A
16. Usually the open voucher payable file is organized by
d. transaction date
ANS: B
17. Which of the following statements is not correct?