Bumble Beasley said: "The acquisition/payment process, which often deals with the asset inventory, creates the greatest value of all business processes." Which of the following terms, if eliminated from Bumble's statement, would make it stronger?

D. None of these; Bumble's statement is fine the way it is.

As the first step in the acquisition/payment process, goods are requested based on:

B. The amount of cash in the bank.

C. The relationship between a buyer and a seller.

D. The use of information technology.

The acquisition/payment process includes all of the following steps except:

B. Prepare adjusting journal entries.

The second step in the acquisition/payment process promotes strong internal control through:

C. Both properly labeled documents and separation of duties.

D. Neither properly labeled documents nor separation of duties.

The fifth step in the acquisition/payment process promotes strong internal control through:

C. Both bank reconciliations and separation of duties.

D. Neither bank reconciliations nor separation of duties.

SCP Corporation purchased inventory on account from OBP Corporation. Which of the following occurred first?

B. The first step in SCP's acquisition/payment process

A. The first step in OBP's sales/collection process

C. A value chain analysis of the transaction

D. Management approval of the transaction

SCP Corporation purchased inventory on account from OBP Corporation. Which of the following happens immediately after the first step in SCP's acquisition/payment process?

B. The second step in SCP's acquisition/payment process

A. The first step in OBP's sales/collection process

C. The second step in OBP's sales/collection process

D. An internal audit of the transaction by OBP

Which of the following statements about the acquisition/payment process is least true?

C. The document commonly used in the second step is never used in other steps of the acquisition/payment process.

A. The same document is an output of the first step and an input to the second step.

B. The document commonly used in the second step is both an output and an input.

D. Many documents from the first step can be combined into a single document in the second step.

Which of the following statements about the acquisition/payment process is most true?

B. Many documents from the first step can be combined into a single document in the second step.

A. A single document can be either an input or an output, but never both.

C. Both a single document can be either an input or an output, but never both, and many documents from the first step can be combined into a single document in the second step are true.

D. Neither a single document can be either an input or an output, but never both, nor many documents from the first step can be combined into a single document in the second step is true.

Transactions involved in the acquisition/payment process include:

A. Debit inventory, credit cash

B. Debit inventory, credit accounts payable

C. Debit accounts payable, credit cash

Accounting information systems have five generic parts. Outputs of the acquisition/payment process can include:

C. Both schedule of accounts payable and checks.

A. Schedule of accounts payable.

D. Neither schedule of accounts payable nor checks.

Which of the following can serve as both an input to and an output of the acquisition/payment process?

D. Neither check nor purchase order

C. Both check and purchase order

Which of the following documents associated with the acquisition/payment process is most likely to lead to a journal entry that debits inventory and credits accounts payable?

B. Purchase order, receiving report and invoice

A. Purchase requisition, purchase order and receiving report

C. Purchase requisition, receiving report and invoice

Which of the following items associated with the acquisition/payment process is likely to expose an organization to one or more forms of operational risk?

C. Both purchase order prepared by hand and schedule of accounts payable prepared with Excel

A. Purchase order prepared by hand

B. Schedule of accounts payable prepared with Excel

D. Neither purchase order prepared by hand nor schedule of accounts payable prepared with Excel

Accounting information systems have five generic elements. Which of the following pairs includes two examples of the same element within the context of the acquisition/payment process?

A. Purchase order and schedule of accounts payable

B. Purchase order and adequate documentation

C. Schedule of accounts payable and adequate documentation

D. All of these Purchase orders and schedules of accounts payable are process outputs. Adequate documentation is a form of internal control.

Accounting information systems have five generic elements. Which of the following pairs includes examples of two different elements within the context of the acquisition/payment process?

A. Purchase requisition and schedule of accounts payable

B. Journal entry that debits inventory and credits cash

C. Separation of duties and a blind copy of the receiving report

D. All of these A purchase requisition is an input, while a schedule of accounts payable is an output. Separation of duties and a blind copy of the receiving report are both examples of internal control. The journal entry is an example of processing.

The journal entry to record the purchase of inventory on account is:

A. Debit inventory, credit accounts payable.

B. Debit accounts payable, credit inventory.

C. Debit inventory, credit cash.

D. Debit accounts payable, credit cash.

Journal entries commonly processed as part of the acquisition/payment process can include:

B. Credits to accounts payable.

BSP Corporation purchased inventory from RSR Corporation on account, $1,000. BSP also paid $100 freight to reimburse RSR for its payment to the common carrier that transported the merchandise. The $100 freight charge is likely to be found on:

C. Both the bill of lading and RSR Corporation's invoice.

D. Either the bill of lading or RSR Corporation's invoice, but not both.

BSP Corporation wrote a check to RSR Corporation, one of its vendors. On the remittance advice, BSP indicated which invoices it was paying. Which of the following statements is most true?

B. RSR Corporation uses the open invoice method.

A. BSP Corporation uses the open invoice method.

C. BSP Corporation uses the balance forward method.

D. If RSR uses the open invoice method, BSP must also use the open invoice method.

One output of the accounting information system is the statement of cash flows. Transactions commonly associated with an organization's acquisition/payment process are most likely to be reflected in which section of the statement of cash flows?

D. Non-cash investing and financing

One output of the accounting information system is the balance sheet. Transactions commonly associated with an organization's acquisition/payment process are most likely to be reflected in which sections of balance sheet?

A. Current assets and current liabilities

B. Current assets and long-term liabilities

C. Long-term assets and current liabilities

D. Long-term assets and long-term liabilities

Internal controls associated with the acquisition/payment process include:

C. Both separation of duties and adequate documentation.

D. Neither separation of duties nor adequate documentation.

Which of the following serve as examples of strong separation of duties within the context of the acquisition/payment process?

C. Both establishing a purchasing department and requiring all purchases over $500 to be approved by a manager

A. Establishing a purchasing department

B. Requiring all purchases over $500 to be approved by a manager

D. Neither establishing a purchasing department nor requiring all purchases over $500 to be approved by a manager

As a form of internal control within the acquisition/payment process, internal auditors are most likely to:

A. Prevent or detect a problem.

B. Prevent or correct a problem.

C. Detect or correct a problem.

D. None of these; internal auditors are not a form of internal control for the acquisition/payment process.

Internal controls in the acquisition/payment process should address which of the following forms of risk?

C. Both liquidity risk and human error risk

D. Neither liquidity risk nor human error risk

Consider the following short case as you respond to the question: Abruzzi's Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant's administrative practices have developed over the ten years of its existence with minimal reliance on information technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a company check. Carlo follows a similar process for dining room supplies, but works with a set of three vendors, none of which sell kitchen supplies. Abruzzi's Italian Kitchen is exposed to:

B. Human error risk and liquidity risk.

A. Systems risk and human error risk.

C. Liquidity risk and systems risk.

D. Human error risk, systems risk and liquidity risk

Consider the following short case as you respond to the question: Abruzzi's Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant's administrative practices have developed over the ten years of its existence with minimal reliance on information technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a company check. Carlo follows a similar process for dining room supplies, but works with a set of three vendors, none of which sell kitchen supplies. Which of the following statements about internal control at Abruzzi's Italian Kitchen is most true?

D. None of these statements is true.

A. It has adequate separation of duties because Giuseppi is CEO and Maria is CFO.

B. It has adequate separation of duties because Antonio orders kitchen supplies and Carlo orders dining room supplies.

C. It does not need to separate duties because it is a family-owned business.

Consider the following short case as you respond to the question: Abruzzi's Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant's administrative practices have developed over the ten years of its existence with minimal reliance on information technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a company check. Carlo follows a similar process for dining room supplies, but works with a set of three vendors, none of which sell kitchen supplies. Internal control would be strengthened at Abruzzi's Italian Kitchen if:

C. Both the company broadened its pool of vendors for kitchen and dining room supplies and Maria took over the responsibility of paying vendors.

A. The company broadened its pool of vendors for kitchen and dining room supplies.

B. Maria took over the responsibility of paying vendors.

D. Neither the company broadened its pool of vendors for kitchen and dining room supplies nor Maria took over the responsibility of paying vendors.

Consider the following short case as you respond to the question: Abruzzi's Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant's administrative practices have developed over the ten years of its existence with minimal reliance on information technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a company check. Carlo follows a similar process for dining room supplies, but works with a set of three vendors, none of which sell kitchen supplies. Internal control would be strengthened at Abruzzi's Italian Kitchen if:

D. Neither kitchen supplies were ordered more than once a month nor non-family members were hired in key positions.

A. Kitchen supplies were ordered more than once a month.

B. Non-family members were hired in key positions.

C. Both kitchen supplies were ordered more than once a month and non-family members were hired in key positions.

The flowchart comes closest to representing:

B. The acquisition/payment process.

C. Both porter's value chain and the acquisition/payment process.

D. Neither porter's value chain nor the acquisition/payment process.

Based on the flowchart, which of the following statements is most true?

B. At least three tasks are completed manually.

A. The company does not use any form of information technology in the process depicted.

C. Both the company does not use any form of information technology in the process depicted and at least three tasks are completed manually are true.

D. Neither the company does not use any form of information technology in the process

Which of the following statements is most true?

D. Neither the company has adequate separation of duties nor the company uses all documents commonly associated with the process depicted is true.

A. The company has adequate separation of duties.

B. The company uses all documents commonly associated with the process depicted.

C. Both the company has adequate separation of duties and the company uses all documents commonly associated with the process depicted are true.

In the flowchart, the vendor:

A. Is outside the system boundary and therefore should be omitted.

B. Should be omitted because it has too few symbols in its column.

D. Should not ship goods before generating an invoice.

Which of the following statements about documents in the flowchart is most true?

B. The flowchart should include at least two more document symbols.

A. "Purchase order" and "approved purchase order" should not be shown separately since they refer to the same document.

C. Both "Purchase order" and "approved purchase order" should not be shown separately since they refer to the same document and the flowchart should include at least two more document symbols are true.

D. Neither "Purchase order" and "approved purchase order" should not be shown separately since they refer to the same document nor the flowchart should include at least two more document symbols is true.

Assuming the actual process works exactly as depicted in the flowchart, ___ is in a position to steal from the company.

C. Either the inventory manager or the accounting manager

D. Neither the inventory manager nor the accounting manager

Symbol D could be appropriately included in which column(s) of the flowchart?

C. Both general manager only and inventory manager only

D. Neither general manager only nor inventory manager only

Consider the following case as you respond to the questions: HSO Corp. designs, manufactures and sells golf carts, scooters and similar vehicles. When a prospective client contacts one of their seven corporate offices, the office manager fills out an "intake questionnaire" to determine if HSO can meet the prospective client's needs. The office manager assembles a team of employees with expertise in design, production, marketing and accounting; the team reviews the intake questionnaire and determines if HSO can take on the order. If so, the office manager prepares a three-page written proposal for the prospective client; the proposal explains the responsibilities of both HSO and the client, along with a timeline and a budget. The proposal is forwarded to the prospective client electronically, and the client has ten calendar days to accept it. If HSO cannot take on the order, the prospective client receives an automatically generated form letter; if the prospective client does not accept the proposal within ten calendar days, they receive a different form letter. The new client remits half of the fee at the time the proposal is accepted, and HSO prepares weekly progress reports as the project moves forward. The reports are filed in HSO's database; a hard copy is sent to the client. On a monthly basis, HSO's office manager prepares a comprehensive status report for all current engagements. One week before each project is concluded, HSO bills the client for half of the remaining amount due; after the client has paid all outstanding invoices, HSO completes the work and bills the client for all remaining amounts. HSO delivers the finished product; the client must pay the full amount due within 30 days of the final invoice date. If the client pays within 15 days, HSO gives a 3% discount off the amount due. On April 1 of the current year, EPL Corporation accepted a three-page written proposal from HSO to design and build 10 customized golf carts for EPL's internal use. The total price for the order was $3400. Which of the following occurred first?

B. The first step in EPL's acquisition/payment process

A. The first step in HSO's sales/collection process

D. HSO's receipt of cash from EPL

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C. Both the same transaction can be considered part of both processes and all organizations that have a sales/collection process also have an inventory acquisition/payment process.

D. Neither the same transaction can be considered part of both processes nor all organizations that have a sales/collection process also have an inventory acquisition/payment process.

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The primary purpose of the acquisition/payment process is to:

The acquisition/payment process:

The acquisition/payment process helps an organization create value for its stakeholders, which can include:

The acquisition/payment process helps an organization create value for its stakeholders. Which of the following authors developed a model that assists in understanding value creation?

The items and activities commonly associated with the acquisition/payment process can be seen in:

Which of the following balance sheet items are commonly associated with the acquisition/payment process?

Which of the following statements best explains the relationship between the acquisition/payment process and the sales/collection process?

Which of the following balance sheet items is least likely to be associated with the acquisition/payment process?

Bumble Beasley said: "The acquisition/payment process, which often deals with the asset inventory, creates the greatest value of all business processes." Which of the following terms, if eliminated from Bumble's statement, would make it stronger?

As the first step in the acquisition/payment process, goods are requested based on:

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