1. The packing packing slip is also also known known as the the shippin shipping g notice. notice. ANS: F 2. The bill bill of lading lading is a legal contra contract ct between between the buyer buyer and the seller seller.. ANS: F 3. Another Another nae nae for the stock stock release release for for is the the picking picking ticket. ticket. ANS: T !. "arehou "arehouse se stock records records are the the foral accounti accounting ng records records for in#entory in#entory.. ANS: F $. The purpos purposee of the the in#oice in#oice is to bill bill the custoer custoer.. ANS: T %. &n ost large large organi'ati organi'ations( ons( the )ournal )ournal #oucher #oucher file has replaced replaced the foral foral general )ournal. )ournal. ANS: T *. The cash cash receip receipts ts )ourna )ournall is a special special )ournal )ournal.. ANS: T +. &n the re#enue re#enue cycle( cycle( the internal internal control control ,liit ,liit accessaccess- applies applies to physical physical assets assets only. only. ANS: F . &n real/tie real/tie processin processing g systes( systes( routine routine credit authori' authori'atio ations ns are autoated. autoated. ANS: T 10. &n a coputeri'ed accounting syste( segregation segregation of of functions functions refers to in#entory in#entory control( control( accounts accounts recei#able( billing( and general ledger tasks. ANS: F 11. 11. A written written custoer custoer purchase purchase order order is reuired reuired to trigger trigger the sales sales order syste. syste. ANS: F
12. &n#entory control has physical custody of in#entory. ANS: F 13. The principal source docuent in the sales order syste is the sales order. ANS: T 1!. Sales orders should be prenubered docuents. ANS: T 1$. &ntegrated accounting systes autoatically transfer data between odules. ANS: T 1%. &f a custoer subits a written purchase order( there is no need to prepare a sales order. ANS: F 1*. Sales return in#ol#es recei#ing( sales( credit( and billing departents( but not accounts recei#able. ANS: F 1+. A reittance ad#ice is a for of turn/around docuent. ANS: T 1. A bill of lading is a reuest for payent for shipping charges. ANS: F 20. &n point of sale systes( authori'ation takes the for of #alidation of credit card charges. ANS: T MULTIPLE CHOICE
1. The re#enue cycle consists of a. one subsysteorder entry b. two subsystessales order processing and cash receipts c. two subsystesorder entry and in#entory control d. three subsystessales order processing( credit authori'ation( and cash receipts ANS: 2. The reconciliation that occurs in the shipping departent is intended to ensure that a. credit has been appro#ed b. the custoer is billed for the e4act uantity shipped c. the goods shipped atch the goods ordered
d. in#entory records are reduced for the goods shipped ANS: 5 3. The ad)ustent to accounting records to reflect the decrease in in#entory due to a sale occurs in the a. warehouse b. shipping departent c. billing departent d. in#entory control departent ANS: 6 !. "hich docuent triggers the re#enue cycle7 a. the sales order b. the custoer purchase order c. the sales in#oice d. the )ournal #oucher ANS: $. 5opies of the sales order can be used for all of the following e4cept a. purchase order b. credit authori'ation c. shipping notice d. packing slip ANS: A %. The purpose of the sales in#oice is to a. record reduction of in#entory b. transfer goods fro seller to shipper c. bill the custoer d. select ites fro in#entory for shipent ANS: 5 *. The custoer open order file is used to a. respond to custoer ueries b. fill the custoer order c. ship the custoer order d. authori'e custoer credit ANS: A +. The stock release copy of the sales order is not used to a. locate and pick the ites fro the warehouse shel#es b. record any out/of/stock ites c. authori'e the warehouse clerk to release custody of the in#entory to shipping d. record the reduction of in#entory ANS: 6 . The shipping notice
a. b. c. d.
is ailed to the custoer is a foral contract between the seller and the shipping copany is always prepared by the shipping clerk infors the billing departent of the uantities shipped
ANS: 6 10. The billing departent is not responsible for a. updating the in#entory subsidiary records b. recording the sale in the sales )ournal c. notifying accounts recei#able of the sale d. sending the in#oice to the custoer ANS: A 11. 5ustoers should be billed for backorders when a. the custoer purchase order is recei#ed b. the backordered goods are shipped c. the original goods are shipped d. custoers are not billed for backorders because a backorder is a lost sale ANS: 12. 8sually specific authori'ation is reuired for all of the following e4cept a. sales on account which e4ceed the credit liit b. sales of goods at the list price c. a cash refund for goods returned without a receipt d. write off of an uncollectible account recei#able ANS: 13. "hich of following functions should be segregated7 a. opening the ail and aking the )ournal entry to record cash receipts b. authori'ing credit and deterining reorder uantities c. aintaining the subsidiary ledgers and handling custoer ueries d. pro#iding inforation on in#entory le#els and reconciling the bank stateent ANS: A 1!. "hich situation indicates a weak internal control structure7 a. the ailroo clerk authori'es credit eos b. the record keeping clerk aintains both accounts recei#able and accounts payable subsidiary ledgers c. the warehouse clerk obtains a signature before releasing goods for shipent d. the accounts recei#able clerk prepares custoer stateents e#ery onth ANS: A 1$. The ost effecti#e internal control procedure to pre#ent or detect the creation of fictitious credit eoranda for sales returns is to a. super#ise the accounts recei#able departent b. liit access to credit eoranda c. prenuber and seuence check all credit eoranda
d. reuire anageent appro#al for all credit eoranda ANS: 6 1%. The accounts recei#able clerk destroys all in#oices for sales ade to ebers of her faily and does not record the sale in the accounts recei#able subsidiary ledger. "hich procedure will not detect this fraud7 a. prenuber and seuence check all in#oices b. reconcile the accounts recei#able control to the accounts recei#able subsidiary ledger c. prepare onthly custoer stateents d. reconcile total sales on account to the debits in the accounts recei#able subsidiary ledger ANS: 5 1*. "hich departent is least likely to be in#ol#ed in the re#enue cycle7 a. credit b. accounts payable c. billing d. shipping ANS: 1+. "hich docuent is included with a shipent sent to a custoer7 a. sales in#oice b. stock release for c. packing slip d. shipping notice ANS: 5 1. 9ood internal controls in the re#enue cycle should ensure all of the following e4cept a. all sales are profitable b. all sales are recorded c. credit is authori'ed d. in#entory to be shipped is not stolen ANS: A 20. "hich control does not help to ensure that accurate records are kept of custoer accounts and in#entory7 a. reconcile accounts recei#able control to accounts recei#able subsidiary b. authori'e credit c. segregate custody of in#entory fro record keeping d. segregate record keeping duties of general ledger fro accounts recei#able ANS: 21. &nternal controls for handling sales returns and allowances do not include a. coputing bad debt e4pense using the percentage of credit sales b. #erifying that the goods ha#e been returned c. authori'ing the credit eo by anageent d. using the original sales in#oice to prepare the sales returns slip ANS: A
22. The printer ran out of preprinted sales in#oice fors and se#eral sales in#oices were not printed. The best internal control to detect this error is a. a batch total of sales in#oices to be prepared copared to the actual nuber of sales in#oices prepared b. seuentially nubered sales in#oices c. #isual #erification that all sales in#oices were prepared d. none of the abo#e will detect this error ANS: A 23. "hich departent prepares the bill of lading7 a. sales b. warehouse c. shipping d. credit ANS: 5 2!. A reittance ad#ice is a. used to increase debit; an account recei#able by the cash recei#ed b. is a turn/around docuent c. is retained by the custoer to show proof of payent d. none of the abo#e ANS: 2$. A weekly reconciliation of cash receipts would include coparing a. the cash prelist with bank deposit slips b. the cash prelist with reittance ad#ices c. bank deposit slips with reittance ad#ices d. )ournal #ouchers fro accounts recei#able and general ledger ANS: A 2%. At which point is super#ision ost critical in the cash receipts syste7 a. accounts recei#able b. general ledger c. ail roo d. cash receipts ANS: 5 2*. <6& trading partner agreeents specify all of the following e4cept a. selling price b. uantities to be sold c. payent ters d. person to authori'e transactions ANS: 6 2+. A cash prelist is a. a docuent that records sales returns and allowances b. a docuent returned by custoers with their payents
c. the source of inforation used to prepare onthly stateents d. none of the abo#e ANS: 6 2. An ad#antage of real/tie processing of sales is a. the cash cycle is lengthened b. current in#entory inforation is a#ailable c. hard copy docuents pro#ide a peranent record of the transaction d. data entry errors are corrected at the end of each batch ANS: 30. 5oercial accounting systes ha#e fully integrated odules. The word ,integrated- eans that a. segregation of duties is not possible b. transfer of inforation aong odules occurs autoatically c. batch processing is not an option d. separate entries are ade in the general ledger accounts and the subsidiary ledgers ANS: 31. The data processing ethod that can shorten the cash cycle is a. batch( seuential file processing b. batch( direct access file processing c. real/tie file processing d. none of the abo#e ANS: 5 32. "hich of the following is not a risk e4posure in a icrocoputer accounting syste7 a. reliance on paper docuentation is increased b. functions that are segregated in a anual en#ironent ay be cobined in a icrocoputer accounting syste c. backup procedures reuire huan inter#ention d. data are easily accessible ANS: A 33. "hich )ournal is not used in the re#enue cycle7 a. cash receipts )ournal b. sales )ournal c. purchases )ournal d. general )ournal ANS: 5 3!. =eriodically( the general ledger departent recei#es all of the following e4cept a. total increases to accounts recei#able b. total of all sales backorders c. total of all sales d. total decreases in in#entory ANS:
3$. The credit departent a. prepares credit eos when goods are returned b. appro#es credits to accounts recei#able when payents are recei#ed c. authori'es the granting of credit to custoers d. none of the abo#e ANS: 5 3%. Ad)ustents to accounts recei#able for payents recei#ed fro custoers is based upon a. the custoer>s check b. the cash prelist c. the reittance ad#ice that accopanies payent d. a eo prepared in the ailroo ANS: 5 3*. The re#enue cycle utili'es all of the following files e4cept a. credit eo file b. sales history file c. shipping report file d. cost data reference file ANS: 6 3+. All of the following are ad#antages of real/tie processing of sales e4cept a. The cash cycle is shortened b. =aper work is reduced c. &ncorrect data entry is difficult to detect d. 8p/to/date inforation can pro#ide a copetiti#e ad#antage in the arketplace ANS: 5 SHORT ANSER
1. 6istinguish between a packing slip( shipping notice( and a bill of lading. ANS: The packing slip tra#els with the goods to the custoer( and it describes the contents on the order. 8pon filling the order( the shipping departent sends the shipping notice to the billing departent to notify the that the order has been filled and shipped. The shipping notice contains additional inforation that the packing slip ay not contain( such as shipent date( carrier and freight charges. The bill of lading is a foral contract between the seller and the transportation carrier? it shows legal ownership and responsibility for assets in transit. 2. State two specific functions or )obs that should be segregated in the sales processing syste. ANS: sales order processing and credit appro#al? in#entory control record keeping; fro warehouse custody;? and general ledger fro accounts recei#able subsidiary ledger
3. State two specific functions or )obs that should be segregated in the cash receipts syste. ANS: cash receipts custody; fro accounts recei#able record keeping;? and general ledger fro accounts recei#able subsidiary ledger ail roo recei#ing cash; and accounts recei#able subsidiary ledger !. @ist two points in the sales processing syste when authori'ation is reuired. ANS: credit check( sales returns policy( preparation of cash prelist $. For the re#enue cycle( state two specific independent #erifications that should be perfored. ANS: shipping #erifies that the goods sent fro the warehouse are correct in type and uantity? billing reconciles the shipping notice with the sales order to ensure that custoers are billed only for the uantities shipped? general ledger reconciles )ournal #ouchers subitted by the billing departent sales )ournal;( in#entory control in#entory subsidiary ledger;( and cash receipts cash receipts )ournal; treasurer deterines that all cash recei#ed got to the bank %. "hat task can the accounts recei#able departent engage in to #erify that all checks sent by the custoers ha#e been appropriately deposited and recorded7 ANS: The copany should periodically( perhaps onthly( send an account suary to each custoer listing in#oices and aounts paid by check nuber and date. This for allows the custoer to #erify the accuracy of the records. &f any payents are not recorded( they will notify the copany of the discrepancy. These reports should not be handled by the accounts recei#able clerk or the cashier. *. "hat specific internal control procedure would pre#ent the sale of goods on account to a fictitious custoer7 ANS: credit check +. The clerk who opens the ail routinely steals reittances. 6escribe a specific internal control procedure that would pre#ent or detect this fraud. ANS: super#ision two people; when opening the ail? custoer coplaints when onthly stateents ailed . A custoer payent of 2!* was correctly posted in the general ledger but was recorded as 2*! in the custoer>s account recei#able. 6escribe a specific internal control procedure that would detect this error. ANS: reconcile the accounts recei#able control account to the accounts recei#able subsidiary ledger? copare control totals of cash recei#ed with total credits to ABC subsidiary ledger
10. 9oods are shipped to a custoer( but the shipping departent does not notify billing and the custoer ne#er recei#es an in#oice. 6escribe a specific internal control procedure that would detect this error. ANS: illing departent atches the stock release copy of the sales order fro shipping; to the in#oice( ledger( and file copies of the sales order sent directly to billing;( and then ails the in#oice to the custoer. After a certain aount of tie has passed( the billing departent should in#estigate any unatched in#oice( ledger( and file copies of the sales order. 11. A clerk ebe''les custoer payents on account and co#ers up the theft by aking an ad)ustent to the accounts recei#able ledger. 6escribe a specific internal control procedure that would pre#ent this fraud. ANS: segregation of duties? do not let one person ha#e custody of payents and the ability to ake ad)ustents to the records? all ad)ustents to accounts recei#able records ust be authori'ed 12. A credit sale is ade to a custoer( e#en though the custoer>s account is four onths o#erdue. 6escribe a specific internal control procedure that would pre#ent this fro happening. ANS: perfor a credit check and reuire anageent appro#al for all sales to accounts that are o#erdue 13. "hat specific internal control procedure would pre#ent a custoer fro being billed for all $0 ites ordered although only !0 ites were shipped7 ANS: billing should reconcile the shipping report with the sales order 1!. "hat specific internal control procedure would pre#ent the shipping clerk fro taking goods fro the storeroo and sending the to soeone who had not placed an order7 ANS: shipping clerk should not ha#e access to the storeroo 1$. "hat specific internal control procedure would pre#ent an accounts recei#able clerk fro issuing a fictitious credit eo to a custoer who is also a relati#e; for goods that were ,supposedly- returned fro pre#ious sales7 ANS: credit eo should be authori'ed after #erifying the return of goods based on e#idence fro the person who recei#ed the goods 1%. "hat specific internal control procedure would pre#ent an increase in sales returns since salesen were placed on coission7 ANS: custoer credit should be #erified by the credit departent reduce coissions for sales returns
1*. "hat specific internal control procedure would detect the isplaceent of a sales in#oice after preparation and not ailed to the custoer7 The in#oice was ne#er found. ANS: all docuents should be prenubered 1+. "hat function does the recei#ing departent ser#e in the re#enue cycle7 ANS: The recei#ing departent counts and inspects ites which are returned by custoers. The recei#ing departent prepares a return slip of which a copy goes to the warehouse for restocking( and a copy goes to the sales order departent so that a credit eo can be issued to the custoer. 1. "hat are the three rules that ensure that no single eployee or departent processes a transaction in its entirety. ANS: The three rules that ensure segregation of functions are: 1. Transaction authori'ation should be separate fro transaction processing 2. Asset custody should be separate fro asset record keeping. 3. The organi'ation structure should be such that the perpetration of a fraud reuires collusion between 2 or ore indi#iduals. 20. "hat is autoation and why is it used7 ANS: Autoation in#ol#es using technology to ipro#e the efficiency and effecti#eness of a task. Autoation of the re#enue cycle is typically used to reduce o#erhead costs( ake better credit granting decisions( and better collect outstanding accounts recei#able. 21. "hat is the ob)ecti#e of re/engineering7 ANS: The ob)ecti#e of re/engineering is to greatly reduce costs by identifying and eliinating non #alue/added tasks and also by strealining necessary e4isting processes. 22. "hat are the key segregation of duties related to coputer progras that process accounting transactions. ANS: Cesponse: The tasks of design( aintenance( and operation of coputer progras need to be segregated. The prograers who write the original coputer progras should not also be responsible for aking progra changes. oth of these functions ust also be separate fro the daily task of operating the syste. 23. Dow is <6& ore than technology7 "hat uniue control probles ay it pose7 ANS:
<6& represents a uniue business arrangeent between the buyer and seller in which they agree( in ad#ance( to the ters of their relationship on such ites as selling price( uantities( deli#ery ties( payent ters and ethods of handling disputes. The ters of agreeent are binding. Ene proble is ensuring that only #alid transactions are processed. Another risk is that a non/trading partner will asuerade as a trading partner and access the firs processing systes. 2!. "hat akes point/of/sales systes different fro re#enue cycles of anufacturing firs7 ANS: &n point/of/sale systes( the custoer literally has possession of the ites purchased( thus the in#entory is in hand. Typically( for anufacturing firs( the order is placed and the good is shipped to the custoer at soe later tie period. Thus( updating in#entory at the tie of sale is necessary in point/of/sale systes since the in#entory is changing hands( while it is not necessary in anufacturing firs until the goods are actually shipped to the custoer. 2$. 9i#e three e4aples of Access 5ontrol in a =oint/of/Sale =ES; syste. ANS: @ock on the cash drawer &nternal cash register tape that can be accessed only by the anager =hysical security o#er the in#entory. The following are e4aples: Steel cables to secure e4pensi#e leather coats to the clothing rack. @ocked showcases to display )ewelry and costly electronic euipent. Gagnetic tags attached to erchandise( which will sound an alar when re o#ed fro the store. • • •
