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Flashcards in Final Exam Chapter 9 Deck (52)
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is a recurring set of business activities and related information processing operations associated with purchasing goods and services, and paying for those goods and services

expenditure cycle


what do you do if you are having problems with inaccurate or invalid master data

employee data processing integrity controls
restrict access to master data
review all changes to master data


what do you do if you are having problems with unauthorized disclosure of sensitive information

use physical and logical access controls and encrypt data


what do you do if you are having problems with loss of destruction of data

back up data regularly
implement a disaster recovery plan


what do you do if you are having problems with poor performance

use managerial reports to evaluate company and individual performance


trigger purchase requisition generate purchase order

ordering goods and services


accept delivery, count and inspect goods

reviewing and storing goods


approve vendor invoices and pay vendor invoices

paying for goods and services


paper document or electronic form that formally requests a supplier to sell and deliver specified products at specified prices

purchase order


committed to purchase specified items at a designated price from a particular supplier for a set period of time

blanket purchase order


paper document or electronic form that tells you who is requesting the goods where and when they should be delivered, the quantity of the items and department number and account number to be charged

purchase requisition for goods


what can you included to make ordering items more efficient

EDI to transmit purchase orders vendor managed inventory systems reverse auctions and pre award audits


what can you do to help prevent inaccurate inventory records

use perpetual inventory method
use barcodes and RFID tags
conduct periodic physical counts of inventory


what do you do to prevent purchasing items that are not needed

us the perpetual inventory method
review and approve purchase requisitions
centralize the purchasing function


whatdo you do to prevent purchasing goods at inflated prices

store and consult price lists for frequently purchased items
solicit competitive written bids for high cost and specialized products
review purchase orders to ensure policies have been followed
use budgetary controls


what can you do to prevent purchasing goods of inferior quality

purchase only from approved suppliers
review and approve purchase form new suppliers
hold purchasing managers responsible for rework and scrap costs
track and monitor product quality by supplier


what can you do to prevent purchasing from unreliable suppliers

require suppliers to possess quality certification
collect and monitor supplier delivery performance data


what can you do to prevent purchasing form unauthorized suppliers

maintain a list of approved suppliers
configure the system to permit purchase orders only to approve suppliers
review and approve purchase form new suppliers
employ EDI specific controls for purchase orders


how do you prevent kickbacks from suppliers

require purchasing agents to disclose financial and personal interests suppliers
prohibit purchasing agents from accepting any gifts from potential existing suppliers
train employees in how to respond to offers of gifts from suppliers
rotate job duties
require vacation leave
conduct supplier audits


what do you do about accepting unordered items

require existence of an approved purchase order prior to accepting any delivery


what do you do to prevent mistakes in counting

do not inform the receiving employees about the quantity ordered
require the receiving employees to sign receiving reports to create accountability
offer incentives for catching discrepancies
document transfer of goods to inventory
use bar codes or RFID tags
configure system to flag discrepancies between received and ordered quantities


what do you do to verify receipt of services

hold supervisors responsible for all costs
compare actual v. budgeted expenses and investigate discrepancies
conduct periodic reviews of contracts for services including audits of supplier records


what do you do to in the case of theft of inventory

restrict physical access to inventory
document all transfers of inventory between receiving and inventory employees
conduct periodic physical counts of inventory and reconcile to recorded quantities
segregate inventory receiving recording and custody functions


what do you do in the case of errors in supplier invoices

verify the mathematical accuracy of the invoices
require detailed receipts for procurement cards and verify monthly statement accuracy
use an ERS system
restrict access to the supplier master data
verify accuracy of freight charges


what do you do if you are having mistakes in a/p

use appropriate data entry and processing controls
reconcile subsidiary accounts payable records with the general control account


what do you do if you are having problems with taking advantage of discounts for prompt payment

file invoices by due date of discounts
design systems to track due dates
prepare cash flow budgets


what do you do if you are having problems paying for items not yet recieved

require that all suppler invoices be matched to supporting documents from both the receiving and inventory control departments
for services have tight budgetary controls and carefully review departmental expenses
Require receipts for travel expenses
use corporate credit cards for travel expenses


what do you do if you are having problems with duplicate payments

require a complete voucher package for all payments
cancel all supporting documents when a payment is made


what do you do if you are having theft of cash problems

restrict physical access to cash, blank checks and check signing machines
have checks numbered sequentially and periodically accounted for by the cashier
segregations of duties
require 2 signatures
restrict access to the approved supplier list
have an independent party reconcile bank statements


how do you deal with the theft of petty cash

handled by an employee who has no other cash handling or accounting responsibilities
set up an imprest fund
cancel the vouchers when the fund is replenished
audit the fund on a surprise basis and hold the person in charge of the fund responsible for shortages