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Exam 11: Acquestion Payment Process

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Question 21

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Internal controls The A. Gary Anderson Graduate School of Management (AGSM) at the University of California, Riverside periodically needs to hire part-time faculty for certain accounting and information systems courses. The department chair of Accounting and Information Systems identifies the courses each term, and sends an e-mail to professors at other local universities. Candidates respond to the e-mail, indicating which course(s) they are qualified and available to teach. AGSM department faculty evaluates each candidate and decides which candidates will teach which courses. At that point, AGSM's clerical staff requests the following information: resume, degree transcripts and student evaluations for the last year. Once those items are received, AGSM sends each part-time faculty member a hiring packet; the faculty member fills out the hiring packet, which includes various personnel, tax and payroll forms, and brings the completed packet to AGSM. The newly-hired faculty member is assigned an office and teaches the class as scheduled. AGSM staff process payroll once a month; faculty can have their salary deposited electronically in the bank or pick up a paper check on the first of the month. Identify five risks for AGSM based on the preceding scenario. Suggest an internal control to address each risk, and indicate whether the internal control is primarily preventive, detective or corrective. Use the table below to record your responses. $\begin{array} { | l | l | l | } \hline \text { Risk } & \text { Control } & \text { Control type } \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline\end{array}$

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Question 22

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Hall's Office Supplies is a small store in a rural area of the United States; Ian Hall is the owner. The store also employs three purchasing agents and an accountant. While the purchasing agents handle day-to-day inventory purchases, Ian makes all large purchases (equipment, furniture and computers, for example) himself. Each purchasing agent is responsible for purchasing a specific group of inventory items; for example, one purchasing agent handles all purchases of computer-related supplies (mouse pads, compact discs) . Each purchasing agent uses his/her best judgment when deciding how much and how often to order inventory items. When inventory and other items arrive at the store, the relevant purchasing agent checks it in and puts it in the stockroom. Vendors send invoices directly to the accountant, who pays them within thirty days and reconciles the bank statement at least monthly. Ian works as a salesperson Monday through Friday from 8 a.m. to 5 p.m.; he is assisted by two half-time sales staff. One staff person works from 8 a.m. to 12 noon, while the other works from 1 p.m. to 5 p.m. The part-time staff is in charge of keeping the shelves stocked. Hall's Office Supplies maintains a manual accounting information system, and retains copies of all documents for one year. -Ian wants to do everything possible to save money in the store's operations. Based on the preceding scenario, he is least likely to be able to:

A) Take advantage of quantity discounts from vendors.
B) Take advantage of cash discounts for early payment of vendor invoices.
C) Minimize the space devoted to inventory storage.
D) Control salary costs.

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Question 23

Multiple Choice

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Hall's Office Supplies is a small store in a rural area of the United States; Ian Hall is the owner. The store also employs three purchasing agents and an accountant. While the purchasing agents handle day-to-day inventory purchases, Ian makes all large purchases (equipment, furniture and computers, for example) himself. Each purchasing agent is responsible for purchasing a specific group of inventory items; for example, one purchasing agent handles all purchases of computer-related supplies (mouse pads, compact discs) . Each purchasing agent uses his/her best judgment when deciding how much and how often to order inventory items. When inventory and other items arrive at the store, the relevant purchasing agent checks it in and puts it in the stockroom. Vendors send invoices directly to the accountant, who pays them within thirty days and reconciles the bank statement at least monthly. Ian works as a salesperson Monday through Friday from 8 a.m. to 5 p.m.; he is assisted by two half-time sales staff. One staff person works from 8 a.m. to 12 noon, while the other works from 1 p.m. to 5 p.m. The part-time staff is in charge of keeping the shelves stocked. Hall's Office Supplies maintains a manual accounting information system, and retains copies of all documents for one year. -Which of the following internal controls would most effectively prevent inventory theft at Hall's Office Supplies?

BNC Corporation maintains a relational database system for its acquisition/payment process. To achieve strong internal control over the process:

"Purchase goods/services" is the __ step in the acquisition/payment process.

Clients of American Hospital Supply can place all their orders online, thus eliminating the need for: (i) paper documents in the acquisition/payment process, (ii) periodic counts of inventory.

Which of the following steps in the acquisition/payment process occurs first?

-In the partial data flow diagram above, symbol "B" could represent:

Hall's Office Supplies is a small store in a rural area of the United States; Ian Hall is the owner. The store also employs three purchasing agents and an accountant. While the purchasing agents handle day-to-day inventory purchases, Ian makes all large purchases (equipment, furniture and computers, for example) himself. Each purchasing agent is responsible for purchasing a specific group of inventory items; for example, one purchasing agent handles all purchases of computer-related supplies (mouse pads, compact discs) . Each purchasing agent uses his/her best judgment when deciding how much and how often to order inventory items. When inventory and other items arrive at the store, the relevant purchasing agent checks it in and puts it in the stockroom. Vendors send invoices directly to the accountant, who pays them within thirty days and reconciles the bank statement at least monthly. Ian works as a salesperson Monday through Friday from 8 a.m. to 5 p.m.; he is assisted by two half-time sales staff. One staff person works from 8 a.m. to 12 noon, while the other works from 1 p.m. to 5 p.m. The part-time staff is in charge of keeping the shelves stocked. Hall's Office Supplies maintains a manual accounting information system, and retains copies of all documents for one year. -Internal controls in the acquisition/payment process would be strengthened if:

The vendor's name and address would appear on all the following documents except:

The second step in the acquisition/payment process:

Which of the following departments could initiate a purchase requisition: (i) accounting, (ii) receiving?

RFID is: (i) a form of internal control, (ii) a document used in the acquisition/payment process.

Several flowchart symbols and possible descriptions of each are listed below. Match each descriptions with the most appropriate symbols. Do not use any symbol more than once

Premises

Responses

Begin process

Cash register tape

Choose column headings for flowchart

Credit approved?

Customer file

Customer invoice

Enforce internal controls

Evaluate customer credit online

File remittance advice by customer name.

No appropriate symbol

Update customer file

Premises

Begin process

Cash register tape

Choose column headings for flowchart

Credit approved?

Customer file

Customer invoice

Enforce internal controls

Evaluate customer credit online

File remittance advice by customer name.

Update customer file

Responses

No appropriate symbol

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Correct Answer

Premises

Responses

Begin process

Cash register tape

Choose column headings for flowchart

Credit approved?

Customer file

Customer invoice

Enforce internal controls

Evaluate customer credit online

File remittance advice by customer name.

Update customer file

Premises

Begin process

Cash register tape

Choose column headings for flowchart

Credit approved?

Customer file

Customer invoice

Enforce internal controls

Evaluate customer credit online

File remittance advice by customer name.

Update customer file

Responses

Hall's Office Supplies is a small store in a rural area of the United States; Ian Hall is the owner. The store also employs three purchasing agents and an accountant. While the purchasing agents handle day-to-day inventory purchases, Ian makes all large purchases (equipment, furniture and computers, for example) himself. Each purchasing agent is responsible for purchasing a specific group of inventory items; for example, one purchasing agent handles all purchases of computer-related supplies (mouse pads, compact discs) . Each purchasing agent uses his/her best judgment when deciding how much and how often to order inventory items. When inventory and other items arrive at the store, the relevant purchasing agent checks it in and puts it in the stockroom. Vendors send invoices directly to the accountant, who pays them within thirty days and reconciles the bank statement at least monthly. Ian works as a salesperson Monday through Friday from 8 a.m. to 5 p.m.; he is assisted by two half-time sales staff. One staff person works from 8 a.m. to 12 noon, while the other works from 1 p.m. to 5 p.m. The part-time staff is in charge of keeping the shelves stocked. Hall's Office Supplies maintains a manual accounting information system, and retains copies of all documents for one year. -To achieve strong internal control, __ should prepare a bank reconciliation at least monthly.

Which step in the acquisition/payment process immediately follows "purchase goods/services?"

The purchasing department is most closely associated with which of the following steps in the acquisition/payment process?

Hall's Office Supplies is a small store in a rural area of the United States; Ian Hall is the owner. The store also employs three purchasing agents and an accountant. While the purchasing agents handle day-to-day inventory purchases, Ian makes all large purchases (equipment, furniture and computers, for example) himself. Each purchasing agent is responsible for purchasing a specific group of inventory items; for example, one purchasing agent handles all purchases of computer-related supplies (mouse pads, compact discs) . Each purchasing agent uses his/her best judgment when deciding how much and how often to order inventory items. When inventory and other items arrive at the store, the relevant purchasing agent checks it in and puts it in the stockroom. Vendors send invoices directly to the accountant, who pays them within thirty days and reconciles the bank statement at least monthly. Ian works as a salesperson Monday through Friday from 8 a.m. to 5 p.m.; he is assisted by two half-time sales staff. One staff person works from 8 a.m. to 12 noon, while the other works from 1 p.m. to 5 p.m. The part-time staff is in charge of keeping the shelves stocked. Hall's Office Supplies maintains a manual accounting information system, and retains copies of all documents for one year. -Weak internal controls would allow the accountant to: (i) pay for merchandise not received, (ii) steal money from Hall's Office Supplies, (iii) steal inventory.

Hall's Office Supplies is a small store in a rural area of the United States; Ian Hall is the owner. The store also employs three purchasing agents and an accountant. While the purchasing agents handle day-to-day inventory purchases, Ian makes all large purchases (equipment, furniture and computers, for example) himself. Each purchasing agent is responsible for purchasing a specific group of inventory items; for example, one purchasing agent handles all purchases of computer-related supplies (mouse pads, compact discs) . Each purchasing agent uses his/her best judgment when deciding how much and how often to order inventory items. When inventory and other items arrive at the store, the relevant purchasing agent checks it in and puts it in the stockroom. Vendors send invoices directly to the accountant, who pays them within thirty days and reconciles the bank statement at least monthly. Ian works as a salesperson Monday through Friday from 8 a.m. to 5 p.m.; he is assisted by two half-time sales staff. One staff person works from 8 a.m. to 12 noon, while the other works from 1 p.m. to 5 p.m. The part-time staff is in charge of keeping the shelves stocked. Hall's Office Supplies maintains a manual accounting information system, and retains copies of all documents for one year. -Ian could achieve stronger internal control by enforcing separation of duties for:

ACB Corporation's purchasing department sent a copy of a purchase order to the receiving department. Which of the following statements is most true?