Expenditure Cycle Quiz p1

What is the primary risk associated with purchasing goods or services without a purchase order?

• Overpayment for goods or services

• Payment for goods or services not ordered

• Delayed processing of payments

• Incorrect allocation of expenses

What is the most effective control for ensuring the accuracy of vendor invoices?

• Matching purchase orders to receiving reports and invoices
• Requiring multiple signatures on all invoices
• Conducting periodic physical inventory counts
• Separating the duties of invoice processing and payment approval

Which of the following is a red flag for potential fraud in the expenditure process?

• A high volume of transactions with a single vendor
• Payment terms that are not consistent with industry standards
• Unusually low prices for goods or services
• A lack of detailed supporting documentation for payments

What is the purpose of an accounts payable aging report?

• To track the amount of cash on hand for payments
• To identify unpaid invoices and their due dates
• To reconcile vendor statements with internal records
• To ensure proper classification of expenses

What is the primary purpose of conducting periodic vendor reviews?

• To ensure that all vendors are paid on time
• To identify potential fraud or conflicts of interest
• To negotiate better prices with vendors
• To reduce the amount of paperwork required for processing payments

What is the primary risk associated with using electronic payment methods, such as wire transfers or ACH payments?

• Incorrect allocation of expenses
• Unauthorized access to bank accounts
• Inaccurate recording of payment amounts
• Delays in payment processing