Chapter 4: The Expenditure Cycle Part 1

Question 1

What are the five main steps of the procurement cycle (subsystem) in the expenditure cycle? In order

Answer 1

1. Purchase Requisition
2. Purchasing
3. Receiving/Inspection
4. Accounts Payable
5. Cash Disbursements

Question 2

What is the primary goal of the expenditure cycle?
a. Maximizing profits through product sales
b. Providing needed resources to the organization
c. Reducing workforce expenses
d. Increasing vendor pricing

Answer 2

b. Providing needed resources to the organization

Question 3

It is the first step in the procurement cycle (subsystem)

Answer 3

Purchase Requisition

Question 4

When does the manual purchases system begin?

Answer 4

When inventory levels drop to reorder levels

Question 5

What does the General Ledger (G/L) department do?

Answer 5

Reconciles inventory amounts with the account summary

Question 6

Acronym of Purchase Requisition

Answer 6

PR

Question 7

It is the last step in the procurement cycle (subsystem)

Answer 7

Cash Disbursements

Question 8

What is the purpose of using a blind copy of the purchase order?

Answer 8

To force workers to count the goods.

Question 9

What does the General Ledger department do?

Answer 9

Reconciles inventory amounts with the account summary received from inventory control

Question 10

What document does A/P prepare and post in the voucher register?

Answer 10

Cash Disbursements Voucher

Question 11

What file contains information that includes the name and address of the primary supplier, economic order quantity of the item, and the standard or expected unit cost to the item.

Answer 11

Valid Vendor File

Question 12

PO

Answer 12

Purchase order

Question 13

A/P

Answer 13

Accounts payable

Question 14

G/L

Answer 14

General ledger

Question 15

BC

Answer 15

Receiving Department

Question 16

Where are copies of the receiving report sent after it is prepared?

Answer 16

Copies are sent to the raw materials storeroom, Open PO file, AP (Pending file), Inventory control, and Receiving report file.

Question 17

Where does A/P send the voucher and supporting documents?

Answer 17

Cash disbursement

Question 18

What does A/P update after sending the voucher and supporting documents to Cash Disbursements?

Answer 18

accounts payable subsidiary ledger.

Question 19

What are the accounts debited and credited in the journal entry for cash disbursements?

Answer 19

Accounts Payable (DR)
Cash (CR)

Question 20

This department receives The journal voucher from cash disbursements and
A summary of the accounts payable subsidiary ledger from A/P

Answer 20

G/L department

Question 21

What is the purpose of the journal voucher in the manual cash disbursements system?

Answer 21

The journal voucher is used to update the general ledger.

Question 22

The accounts payable control account is reconciled with the __________

Answer 22

Subsidiary summary

Question 23

What account is reconciled with the subsidiary summary in the manual cash disbursements system?

Answer 23

Accounts Payable Control Account

Question 24

Enumerate the steps involved in cash disbursements

Answer 24

•Prepares the check
•Records the information in a check register (cash disbursements journal)
•Check will be released and pays the account due
•Returns paid vouchers to accounts payable
•Sends a journal voucher to G/L

Question 25

Enumerate the two extremes of CBAS technology.

Answer 25

Automation Reengineering

Question 26

Enumerate the three master files

Answer 26

•Supplier (vendor) master file •Accounts payable master file •Inventory master file

Question 27

Enumerate the five transaction and open document files.

Answer 27

•Purchase order file •Open purchase order file •Supplier’s invoice file •Open vouchers file •Cash disbursements file

Question 28

Enumerate the three other files

Answer 28

•Supplier reference and history file •Buyer file •Accounts payable detail file

Question 29

Use technology to improve efficiency and effectiveness

Answer 29

Automation

Question 30

Use technology to restructure business processes and firm's organization

Answer 30

reengineering

Question 31

How does an automated system promotes effective cash management?

Answer 31

By scanning the voucher file daily for items due and writing checks automatically

Question 32

A lag exist between the arrival of goods in the receiving Department Iand recording inventory receipts in the inventory file.

Answer 32

Time lag

Question 33

How does a reengineered system eliminate clerical tasks?

Answer 33

By distributing terminals to user areas

Question 34

Reengineering system uses _________ to shorten lag time in record keeping

Answer 34

Real-time procedures and direct access files

Question 35

This system removes the physical separation between authorization and transaction processing.

Answer 35

Segregation of duties

Question 36

List the control implications in a computer-based system

Answer 36

•Improved inventory control •Better cash management •Time lag •Less paper documents

Question 37

Inventory requirements are detected as they arise and are processed automatically

Answer 37

Improve inventory control

Question 38

The automated system promotes effective cash management and reduces the firms labor cost, saves processing time, and promote accuracy.

Answer 38

Better cash management

Question 39

True or False In a computer-based system, the paper documents increase?

Answer 39

False Less paper documents

Question 40

Enumerate the traditional segregation of duties

Answer 40

•Warehouse (stores) •Inventory control •Accounts payable •General ledger •Requisitioning •Purchases •Purchases returns and allowances •Cash disbursements