AIS Exam 2- Tori Question with 100%
Verified Answers Latest Version
what are the three things that occur in the expenditure cycle?
- purchase processing
- cash disbursement system
- purchase returns and allowances
what are the steps of the purchase processing cycle?
1. monitor inventory records
2. prepare purchase order
3. receive goods
4. receive invoice
5. record the transaction
when monitoring inventory records what can you determine?
when purchases need to be made
what are two items that help with monitoring inventory?
- purchase requisition
- valid vendor files
when preparing a purchase order what must you do?
you must send one copy of it to the vendor and retain another
copy of it for recording purposes.
when you receive the goods what must be done?
you must fill out a receiving report and update the inventory
records
what needs to be done if no goods are received?
nothing- you have no obligations and no accounting entry
where should you record the transaction from a purchase?
- in the purchase journal
- in the accounts payable sub ledger
- in the fixed asset sub ledger
what are the steps of the cash disbursements process?
,1. identify laibilities due
2. prepare cash disbursement
3. update accounts payable subsidiary ledger and cash
disbursements journal
4. post to general ledger
when identifying liabilities due what are some examples of
ones that could be due?
accounts payable
when preparing a cash dispursment what must be done
checks and ACH's must be authorized by comparing the invoice
receiving report and purchase order
what are the steps to the purchase returns and allowances
process?
1. process return request
2. ship goods
3. receive debit from vendor
4. record
5. post to general ledger
what do you receive as a debit from the vendor?
a debit memo
where do you record a purchase return and allowance?
the purchases journal
the accounts payable sub ledger
what is the physical and IT control to avoid the risk of
unauthorized inventory purchases?
physical: transaction authorization
IT: automated purchase approval
what is the physical and IT control to avoid the risk of
receiving incorrect items?
physical: transaction authorization, accounting records,
independent verification
IT: imput data edits, error messages, automated posting to
accounts, file backup
, what is the physical and IT control to avoid the risk of
misappropriation of cash and inventory?
physical: supervision, segregation of duties, independent
verification
IT: automated three way match multilevel security to provide
segregation of duties
what is the physical and IT control to avoid the risk of
unauthorized access to data?
physical: access controls, segregation of duties
IT: password control, multilevel security to prevent unauthorized
access to data
what needs to be approved?
purchases, quantity price, vendors and disbursements of cash
what does accounts payable authorize? what does it not
authorize?
accounts payable authorizes the payments of bills not the cash
disbursements clerk who writes the checks
how should there be segregation of duties in the expenditure
cycle?
- segregation of the custody and authorization of the asset
- segregation of inventory control from the warehouse
- segregation of the general ledger and accounts payable from
cash disbursements
what is the highest importance within the receiving
department? why?
supervision over the receiving department, to watch over where
the inventory arrives and that it is logged in by a receiving clerk
what does supervision over the receiving department
minimize?
it minimizes the risks of:
- failures to properly inspect the assets
- theft of the assets
what do the accounting records rest on?
Verified Answers Latest Version
what are the three things that occur in the expenditure cycle?
- purchase processing
- cash disbursement system
- purchase returns and allowances
what are the steps of the purchase processing cycle?
1. monitor inventory records
2. prepare purchase order
3. receive goods
4. receive invoice
5. record the transaction
when monitoring inventory records what can you determine?
when purchases need to be made
what are two items that help with monitoring inventory?
- purchase requisition
- valid vendor files
when preparing a purchase order what must you do?
you must send one copy of it to the vendor and retain another
copy of it for recording purposes.
when you receive the goods what must be done?
you must fill out a receiving report and update the inventory
records
what needs to be done if no goods are received?
nothing- you have no obligations and no accounting entry
where should you record the transaction from a purchase?
- in the purchase journal
- in the accounts payable sub ledger
- in the fixed asset sub ledger
what are the steps of the cash disbursements process?
,1. identify laibilities due
2. prepare cash disbursement
3. update accounts payable subsidiary ledger and cash
disbursements journal
4. post to general ledger
when identifying liabilities due what are some examples of
ones that could be due?
accounts payable
when preparing a cash dispursment what must be done
checks and ACH's must be authorized by comparing the invoice
receiving report and purchase order
what are the steps to the purchase returns and allowances
process?
1. process return request
2. ship goods
3. receive debit from vendor
4. record
5. post to general ledger
what do you receive as a debit from the vendor?
a debit memo
where do you record a purchase return and allowance?
the purchases journal
the accounts payable sub ledger
what is the physical and IT control to avoid the risk of
unauthorized inventory purchases?
physical: transaction authorization
IT: automated purchase approval
what is the physical and IT control to avoid the risk of
receiving incorrect items?
physical: transaction authorization, accounting records,
independent verification
IT: imput data edits, error messages, automated posting to
accounts, file backup
, what is the physical and IT control to avoid the risk of
misappropriation of cash and inventory?
physical: supervision, segregation of duties, independent
verification
IT: automated three way match multilevel security to provide
segregation of duties
what is the physical and IT control to avoid the risk of
unauthorized access to data?
physical: access controls, segregation of duties
IT: password control, multilevel security to prevent unauthorized
access to data
what needs to be approved?
purchases, quantity price, vendors and disbursements of cash
what does accounts payable authorize? what does it not
authorize?
accounts payable authorizes the payments of bills not the cash
disbursements clerk who writes the checks
how should there be segregation of duties in the expenditure
cycle?
- segregation of the custody and authorization of the asset
- segregation of inventory control from the warehouse
- segregation of the general ledger and accounts payable from
cash disbursements
what is the highest importance within the receiving
department? why?
supervision over the receiving department, to watch over where
the inventory arrives and that it is logged in by a receiving clerk
what does supervision over the receiving department
minimize?
it minimizes the risks of:
- failures to properly inspect the assets
- theft of the assets
what do the accounting records rest on?
