Quiz Three Flashcards
To accomplish the objectives set forth in the expenditure cycle, a number of key management decisions must be addressed. Which of the decisions below is not ordinarily found as part of the expenditure cycle?
What are the optimal prices for each product or service?
The traditional approach to inventory management to ensure sufficient quantity on hand to maintain production is known as
Economic order quantity
The need to place an order for inventory is specified by the
reorder point
What is a key feature of materials requirements planning (MRP)?
Reduce required inventory levels by scheduling production rather than estimating needs
The inventory management approach that attempts to minimize, if not eliminate, carrying and stockout costs is
Just in time quantity
Once a vendor is selected for a product, the vendor’s identity is recorded in the
Inventory master file
A purchase order is
A) A document formally requesting a vendor to sell a certain product at a certain price
B) A request for delivery of certain items and quantities
C) A contract between the buyer and vendor once accepted by the vendor
D) All of the above are true
Stepanek Sales and Service provides free coffee to employees. Stepanek arranged with Ingebrigtson’s Joe to deliver as many coffee packages, sugar, creamer, and filters as needed each week. Ingebrigtson’s sends a monthly invoice for Stepanek to pay. This arrangement is best described as a
Blanket purchase order
Which of the following is generally not shown on a receiving report?
Price of the items
Vendor invoices are approved by the ________, which reports to the ________
Accounts payable department; controller
All of the following are opportunities to improve efficiency of the accounts payable function except
use blanket purchase orders
When purchasing miscellaneous supplies, companies can reduce costs, improve efficiency, and combat employee fraud by
Using procurement cards
What is the best control to mitigate the threat of paying prices that are too high for goods ordered?
Use only approved suppliers and solicit competitive bids
hat is probably the most effective control for the prevention of kickbacks to purchasing agents?
A corporate policy to prohibit purchasing agents from accepting kickbacks
The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. He also reviews receiving reports, approves or corrects them, and authorizes the cashier to pay vendor invoices. Which of the following would correct control weaknesses, if any, related to these activities?
Accounts payable should reconcile purchase orders, receiving reports, and invoices
