9AIS 9-10

Question 1

1. Which document is not prepared by the sales
   department?
   a. packing slip
   b. shipping notice
   c. bill of lading
   d. stock release

Answer 1

c. bill of lading

Question 2

2. Which document triggers the update of the inventory
   subsidiary ledger?
   a. bill of lading
   b. stock release
   c. sales order
   d. shipping notice

Answer 2

b. stock release

Question 3

3. Which function should not be performed by the billing
   department?
   a. recording the sales in the sales journal
   b. sending the ledger copy of the sales order to accounts
   receivable
   c. sending the stock release document and the shipping
   notice to the billing department as
   proof of shipment
   d. sending the stock release document to inventory control

Answer 3

c. sending the stock release document and the shipping
notice to the billing department as
proof of shipment

Question 4

4. When will a credit check approval most likely require
   specific authorization by the credit department?
   a. when verifying that the current transaction does not
   exceed the customer’s credit limit
   b. when verifying that the current transaction is with a valid
   customer
   c. when a valid customer places a materially large order
   d. when a valid customer returns goods

Answer 4

b. when verifying that the current transaction is with a valid
customer

Question 5

5. Which type of control is considered to be a compensating
   control?
   a. segregation of duties
   b. access control
   c. supervision
   d. accounting records

Answer 5

c. supervision

Question 6

6. Which of the following is not an output control?
   a. The shipping department verifies that the goods sent
   from the warehouse are correct in type and quantity.
   b. General ledger clerks reconcile journal vouchers that
   were independently prepared in
   various departments.
   c. The sales clerk uses pre-numbered sales orders.
   d. The billing department reconciles the shipping notice with
   the sales invoice to ensure
   that customers are billed only for the quantities shipped.

Answer 6

c. The sales clerk uses pre-numbered sales orders.

Question 7

7. Which function or department below records the
   decrease in inventory due to a sale?
   a. warehouse
   b. sales department
   c. billing department
   d. inventory control

Answer 7

d. inventory control

Question 8

9. The bill of lading is prepared by the
   a. sales clerk.
   b. warehouse clerk.
   c. shipping clerk.
   d. billing clerk.

Answer 8

c. shipping clerk.

Question 9

8. Which situation indicates a weak internal control
   structure?
   a. the AR clerk authorizes the write off of bad debts
   b. the record-keeping clerk maintains both AR and AP
   subsidiary ledgers
   c. the inventory control clerk authorizes inventory purchases
   d. the AR clerk prepares customer statements every month

Answer 9

a. the AR clerk authorizes the write off of bad debts

Question 10

10. Which of the following functions should be segregated?
    a. opening the mail and recording cash receipts in the
    journal
    b. authorizing credit and determining reorder quantities
    c. shipping goods and preparing the bill of lading
    d. providing information on inventory levels and reconciling
    the bank statement

Answer 10

a. opening the mail and recording cash receipts in the
journal

Question 11

1. Which document helps to ensure that the receiving clerks
   actually count the number of goods received?
   a. packing list
   b. blind copy of purchase order
   c. shipping notice
   d. Invoice

Answer 11

b. blind copy of purchase order

Question 12

2. When the goods are received and the receiving report
   has been prepared, which ledger may be updated?
   a. standard cost inventory ledger
   b. inventory subsidiary ledger
   c. general ledger
   d. accounts payable subsidiary ledger

Answer 12

a. standard cost inventory ledger

Question 13

3. Which statement is not correct for an expenditure system
   with proper internal controls?
   a. Cash disbursements maintain the check register.
   b. Accounts payable maintains the accounts payable
   subsidiary ledger.
   c. Accounts payable is responsible for paying invoices.
   d. Accounts payable is responsible for authorizing invoices.

Answer 13

c. Accounts payable is responsible for paying invoices.

Question 14

5. Which documents would an auditor most likely choose to
   examine closely in order to ascertain that all expenditures
   incurred during the accounting period have been recorded
   as a liability?
   a. invoices
   b. purchase orders
   c. purchase requisitions
   d. receiving reports

Answer 14

d. receiving reports

Question 15

4. Which duties should be segregated?
   a. matching purchase requisitions, receiving reports, and
   invoices and authorizing payment
   b. authorizing payment and maintaining the check register
   c. writing checks and maintaining the check register
   d. authorizing payment and maintaining the accounts
   payable subsidiary ledger

Answer 15

b. authorizing payment and maintaining the check register

Question 16

6. Which task must still require human intervention in an
   automated purchases/cash disbursements system?
   a. determination of inventory requirements
   b. preparation of a purchase order
   c. preparation of a receiving report
   d. preparation of a check register

Answer 16

c. preparation of a receiving report

Question 17

7. In a well-designed internal control structure, two tasks
   that should be performed by different persons are
   a. preparation of purchase orders and authorization of
   monthly payroll.
   b. preparation of bank reconciliations and recording of cash
   disbursements.
   c. distribution of payroll checks and approval of credit sales.
   d. posting of amounts from both the cash receipts journal
   and cash disbursements journal to the general ledger.
   e. posting of amounts from the cash receipts journal to the
   general ledger and distribution
   of payroll checks.

Answer 17

b. preparation of bank reconciliations and recording of cash
disbursements.

Question 18

8. Which one of the following situations represents a
   strength in the internal control for purchasing and accounts
   payable?
   a. Prenumbered receiving reports are issued randomly.
   b. Invoices are approved for payment by the purchasing
   department.
   c. Unmatched receiving reports are reviewed on an annual
   basis.
   d. Vendors’ invoices are matched against purchase orders
   and receiving reports before a liability is recorded.
   e. The purchasing department reconciles the accounts
   payable subsidiary vendor ledger
   with the general ledger control account.

Answer 18

d. Vendors’ invoices are matched against purchase orders
and receiving reports before a liability is recorded.

Question 19

9. Which of the following tasks should the cash
   disbursement clerk NOT perform?
   a. review the supporting documents for completeness and
   accuracy
   b. prepare checks
   c. approve the liability
   d. mark the supporting documents paid

Answer 19

c. approve the liability

Question 20

10. Which of the following is true?
    a. The cash disbursement function is part of accounts
    payable.
    b. Cash disbursements is an independent accounting
    function.
    c. Cash disbursements is a treasury function.
    d. The cash disbursement function is part of the general
    ledger department.

Answer 20

c. Cash disbursements is a treasury function.

Question 21

11. The document that captures the total amount of time
    that individual workers spend on each production job is
    called a
    a. time card.
    b. job ticket.
    c. personnel action form.
    d. labor distribution form.

Answer 21

b. job ticket.

Question 22

13. Which internal control is not an important part of the
    payroll system?
    a. supervisors verify the accuracy of employee time cards
    b. paychecks are distributed by an independent paymaster
    c. the accounts payable department verifies the accuracy of
    the payroll register before transferring payroll funds to the
    general checking account
    d. the general ledger department reconciles the labor
    distribution summary and the payroll
    disbursement voucher

Answer 22

c. the accounts payable department verifies the accuracy of
the payroll register before transferring payroll funds to the
general checking account

Question 22

12. An important reconciliation in the payroll system is when
    a. The general ledger department compares the labor
    distribution summary from cost accounting to the
    disbursement voucher from accounts payable.
    b. the personnel department compares the number of
    employees authorized to receive a paycheck to the number
    of paychecks prepared.
    c. the production department compares the number of hours
    reported on job tickets to
    the number of hours reported on time cards.
    d. the payroll department compares the labor distribution
    summary to the hours reported
    on time cards.

Answer 22

a. The general ledger department compares the labor
distribution summary from cost accounting to the
disbursement voucher from accounts payable.

Question 23

14. The department responsible for approving pay rate
    changes is
    a. payroll
    b. treasurer
    c. personnel
    d. cash disbursements

Answer 23

c. personnel

Question 24

15. Which function should distribute paychecks? a. personnel b. timekeeping c. paymaster d. Payroll

Answer 24

c. paymaster