Purchases & Payments Cycle Quiz

Why do you need to maintain optimum inventory levels?

• To ensure that the manufacturing process does not come to a standstill because they ran out of raw material

• To ensure that the retail section does not run out of goods to sell

• To ensure that services departments can continue rendering services with the necessary material needed to do so

• To ensure that you do not jeopardise the cash flow by ordering too much inventory

When receiving a Statement from the supplier, what will the creditors clerk do?

• Compare the statement to the invoices referred to on the statement

• Perform a reconciliation between the statement from the supplier and the account in the creditors ledger

• Prepare a payment requisition to request payment

• Forward the payment requisition and the supporting documents to the responsible department

What must be done if you discover a problem with the goods after accepting it?

• Prepare a pre-numbered debit note and send it to the supplier with the goods

• If the supplier accepts the goods, they will issue a credit note to us

• Update the purchases journal and the creditors ledger

• Update the inventory records

What is the importance of recording payments to creditors accurately?

• To avoid paying invalid or fictitious creditors

• To avoid paying the wrong amounts

• To avoid losing settlement discounts or being charged interest

• To avoid losing interest from the bank

What must be checked on the documents during the recording of purchases?

• Purchases are entered into the purchases journal

• Allocated to the correct account

• Posted to the creditors ledger

• Posted to the general ledger

What is the role of the head of the purchasing department?

• Confirms that funds are available

• Confirms that the correct supplier is used

• Confirms that the requisition was properly authorised

• Authorises the purchase order

What should be done with the copies of the Goods Received Note?

• The original is sent to the supplier

• One copy goes to the purchasing department

• One copy goes to the accounting department

• One copy is used to update the warehouse records

What is the process for authorising payments?

• Compare payment requisition with supporting documentation

• Cancel the documents by crossing the documents, or stamp it 'Paid'

• Sign the payment requisition to authorise the payment

• Ensure that there are always 2 people to review the documents