Exam (elaborations)
ACG 3401 Exam 3 Review (1).
ACG 3401 Exam 3 Review (1).
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ACG 3401 Exam 3 ReviewProcurement/Expenditure Cycle - ANS-1. Purchase Requisition
2. Purchasing
3. Receiving/Inspection
4. Accounts Payable
5. Cash Disbursements
Split Expenditure Cycle - ANS-Physical Phase (Purchasing) and Financial Phase (Cash
Disbursements)
- split caused by time lag
Payroll Cycle - ANS-kept separate from other cash disbursements
Periodic Method - ANS-what everybody mostly uses; take a physical count of goods at end of
year; downside is everything that is gone is COGS, even if it is stolen or destroyed
Perpetual Method - ANS-check as the purchase or sale occurs
Valid Vendor File - ANS-only choose from certain approved vendors
- People adding people to vendor file should not be doing anything else in the vendor system
(control)
Receiving Report - ANS-report shows that we have received the items
Purchase Requisition - ANS-a need to order, usually done by item; list of quantity and items of
what we have ordered
Purchase Order - ANS-typically by vendor
Blind Copy - ANS-leaves out quantity to force receiving people to count what's in the box
- Most receiving docs have a lot of supervision
Conservatism - ANS-don't understate liabilities or overstate assets
3 way match - ANS-Compare Purchase order, receiving report, and the invoice
always concerned about - ANS-unrecorded liabilities
Voucher system used when - ANS-you have a separate cash disbursements and AP
department
, Computer Based Accounting Systems have two extremes - ANS-automation - use technology to
improve efficiency and effectiveness
reengineering - use technology to restructure business processes and firm organization
Authorization Controls - ANS-- Purchases of inventory should be authorized by the Inventory
Control department, not by purchasing agents
- Accounts Payable authorizes the payments of bills, not the cash disbursements clerk, who
writes the checks
Computer-Based Authorization Controls - ANS-Authorizations are automated.
- programmed decision rules must be debugged
Automating inventory in EDI and JIT
- faulty inventory model can lead to over-purchasing or under-purchasing
Cash disbursements may automate check printing and signing.
- programming logic must be flawless
- automated signing only below a dollar threshold
Separation of valid vendor file and who processes the purchases
Segregation of Functions - ANS-- Custody of the asset, inventory, by the Warehouse must be
separate from record-keeping for the assets by the Inventory Control.
- Custody of the asset, cash, by Cash Disbursements must be kept separate from
record-keeping for the asset by A/P
Computer-Based Segregation of Functions - ANS-Extensive consolidation by the computer of
tasks traditionally segregated
- computer programs authorize and process purchase orders
- computer programs authorize and issue checks to vendors
Supervision - ANS-Within the expenditure cycle, supervision is of highest importance in the
Receiving department, where the inventory arrives and is logged in by a receiving clerk. Need to
minimize:
- failures to properly inspect the assets
- theft of the assets
Computer-Based Supervision - ANS-Automation often leads to a collapsing of the traditional
segregation of duties.
- requires greater supervision
Supervision takes on new aspects as technology advances.
- electronic monitoring
Supervision becomes more difficult as the workplace becomes more sophisticated.
Access Controls - ANS-Access to:
inventories (direct)
cash (direct)
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