61. Recording a purchase is initiated by an invoice approval, not an invoice.
62. In order to streamline the purchasing process, department managers should place orders directly with suppliers.
63. A purchase requisition is a document the purchasing department sends to the vendor to place an order.
64. Assume that a buyer receives a shipment of MODEL SD010 with an invoice amount of $780, although $870 worth of goods were received. The purchase order was for $870. Since the difference was in the buyer's favor, the buyer's purchasing department should authorize payment of $780.
Multiple Choice Questions
65. The main principles of internal control include which of the following:
A. Establish responsibilities.
B. Maintain minimal records.
C. Use only computerized systems.
D. Bond all employees.
E. Require automated sales systems.
66. A good system of internal control:
A. Urges adherence to prescribed managerial policies.
B. Insures profitable operations.
C. Eliminates the need for an audit.
D. Requires the use of noncomputerized systems.
E. Is not necessary if the company uses a computerized system.
67. A company's internal control system:
A. Eliminates the risk of loss.
B. Monitors and controls business activities.
C. Eliminates human error.
D. Eliminates the need for audits.
E. Is not necessary in large companies.
68. When two clerks share the same cash register, which internal control principle is violated?
A. Establish responsibilities
B. Maintain adequate records
C. Insure assets
D. Bond key employees
E. Apply technological controls
69. Prenumbered printed checks are an example of which internal control principle?
A. Technological controls. B. Maintain adequate records.
C. Perform regular and independent reviews.
D. Establish responsibilities.
E. Divide responsibility for related transactions.
70. The impact of technology on internal controls includes which of the following?
A. Reduced processing errors.
B. Elimination of the need for regular audits.
C. Elimination of the need to bond employees.
D. More efficient separation of duties.
E. Elimination of fraud.