SUA CHAPTER #4 EXAM QUESTIONS
WITH COMPLETE ANSWERS
Where does the purchase order go? - ANSWER-One copy of the purchase order
goes to the supplier, a second copy goes to the receiving department to prepare for
the receipt of goods and a third copy goes to the accounting department.
What is on a purchase order? - ANSWER-1. The name and address of the vendor
2. The goods or service desired
3. Price
4. Quantity
5. The desired delivery date
6. Shipping and payment terms
Purchase Transaction:
Receipt of Goods - ANSWER-When the supplier makes the delivery, the receiving
department personnel will prepare a document called a receiving report.
What is on a receiving report? - ANSWER-1. The description and condition (i.e. any
damages) of the goods received
2. The quantity received
3. The date the goods were received
Where does the receiving report go? - ANSWER-The receiving report is sent to the
accounting department to notify them of the receipt of goods. The requesting party
may also be notified of receipt.
Purchase Transaction:
Record Purchase - ANSWER--Typically a company does not record the purchase
until the supplier sends the invoice.
-A supplier invoice is a document indicating the description and quantity of the goods
shipped or services rendered, the price including freight, the cash discount terms
and the date of the bill.
What does the A/P clerk do when the goods are received? - ANSWER--matches the
purchase order, the receiving report and the invoice (a three-way match); any
discrepancies between the documents need to be corrected with the supplier
-will then update: purchases journal, accounts payable subsidiary ledger, and fixed
asset subsidiary ledger (if applicable)
Record Purchase
:
Update the Purchases Journal - ANSWER--The purchases journal is for recording
purchases of goods and services on account. If the company purchased inventory,
the purchases account is debited. -If the company purchased another type of asset
(i.e. a fixed asset or supplies) the other general ledger account is debited. Offsetting
the debit is a credit to the accounts payable account.
, -Only record what is actually received, doesn't matter what is listed on the invoice. If
you received less (i.e. the supplier did not ship the full quantity or a portion was
rejected) than the quantity listed on the invoice, you need to adjust the invoice before
you record it in the purchases journal.
Record Purchase
:
Update the Accounts Payable Subsidiary Ledger - ANSWER-The accounts payable
subsidiary ledger is a ledger for recording individual purchases, cash disbursements
and purchase returns and allowance for each vendor. Purchases are recorded as
credits in the accounts payable subsidiary ledger.
Record Purchase:
Update the Fixed Asset Subsidiary Ledger (if necessary) - ANSWER-The fixed asset
subsidiary ledger is a ledger for recording individual purchases of fixed assets. The
purchase is recorded as a debit to the asset record.
Cash disbursement transaction process - ANSWER-1. Issue check
2. Update records
Cash Disbursement Transaction:
Issue Check Task - ANSWER--Once the supplier invoice has been approved for
payment, the company will issue a check based on the terms of the contract (i.e.
2/10 net/30, due on receipt of invoice, etc.)
-Companies prefer to issue checks rather than cash for two reasons:
1. Checks provide an additional record of the transaction which can be later verified.
2. Checks are pre-numbered and therefore easier to control than cash (more difficult
to be stolen).
Cash Disbursement Transaction:
Update Records Task - ANSWER--Once the check has been issued the company
needs to update the cash disbursements journal and the accounts payable
subsidiary ledger.
-The cash disbursements journal is a journal for recording cash disbursements. It
indicates the total cash paid, the debit to accounts payable at the gross amount of
the original purchase, cash disbursements taken and other debits and credits.
Services/Other Expense Purchase Transaction Process - ANSWER-1. Issue
purchase order (optional)
2. Receive service
3. Receive and approve invoice
4. Issue check
5. Update records
Services/Other Expense Purchase:
WITH COMPLETE ANSWERS
Where does the purchase order go? - ANSWER-One copy of the purchase order
goes to the supplier, a second copy goes to the receiving department to prepare for
the receipt of goods and a third copy goes to the accounting department.
What is on a purchase order? - ANSWER-1. The name and address of the vendor
2. The goods or service desired
3. Price
4. Quantity
5. The desired delivery date
6. Shipping and payment terms
Purchase Transaction:
Receipt of Goods - ANSWER-When the supplier makes the delivery, the receiving
department personnel will prepare a document called a receiving report.
What is on a receiving report? - ANSWER-1. The description and condition (i.e. any
damages) of the goods received
2. The quantity received
3. The date the goods were received
Where does the receiving report go? - ANSWER-The receiving report is sent to the
accounting department to notify them of the receipt of goods. The requesting party
may also be notified of receipt.
Purchase Transaction:
Record Purchase - ANSWER--Typically a company does not record the purchase
until the supplier sends the invoice.
-A supplier invoice is a document indicating the description and quantity of the goods
shipped or services rendered, the price including freight, the cash discount terms
and the date of the bill.
What does the A/P clerk do when the goods are received? - ANSWER--matches the
purchase order, the receiving report and the invoice (a three-way match); any
discrepancies between the documents need to be corrected with the supplier
-will then update: purchases journal, accounts payable subsidiary ledger, and fixed
asset subsidiary ledger (if applicable)
Record Purchase
:
Update the Purchases Journal - ANSWER--The purchases journal is for recording
purchases of goods and services on account. If the company purchased inventory,
the purchases account is debited. -If the company purchased another type of asset
(i.e. a fixed asset or supplies) the other general ledger account is debited. Offsetting
the debit is a credit to the accounts payable account.
, -Only record what is actually received, doesn't matter what is listed on the invoice. If
you received less (i.e. the supplier did not ship the full quantity or a portion was
rejected) than the quantity listed on the invoice, you need to adjust the invoice before
you record it in the purchases journal.
Record Purchase
:
Update the Accounts Payable Subsidiary Ledger - ANSWER-The accounts payable
subsidiary ledger is a ledger for recording individual purchases, cash disbursements
and purchase returns and allowance for each vendor. Purchases are recorded as
credits in the accounts payable subsidiary ledger.
Record Purchase:
Update the Fixed Asset Subsidiary Ledger (if necessary) - ANSWER-The fixed asset
subsidiary ledger is a ledger for recording individual purchases of fixed assets. The
purchase is recorded as a debit to the asset record.
Cash disbursement transaction process - ANSWER-1. Issue check
2. Update records
Cash Disbursement Transaction:
Issue Check Task - ANSWER--Once the supplier invoice has been approved for
payment, the company will issue a check based on the terms of the contract (i.e.
2/10 net/30, due on receipt of invoice, etc.)
-Companies prefer to issue checks rather than cash for two reasons:
1. Checks provide an additional record of the transaction which can be later verified.
2. Checks are pre-numbered and therefore easier to control than cash (more difficult
to be stolen).
Cash Disbursement Transaction:
Update Records Task - ANSWER--Once the check has been issued the company
needs to update the cash disbursements journal and the accounts payable
subsidiary ledger.
-The cash disbursements journal is a journal for recording cash disbursements. It
indicates the total cash paid, the debit to accounts payable at the gross amount of
the original purchase, cash disbursements taken and other debits and credits.
Services/Other Expense Purchase Transaction Process - ANSWER-1. Issue
purchase order (optional)
2. Receive service
3. Receive and approve invoice
4. Issue check
5. Update records
Services/Other Expense Purchase:
