Sample Quiz KEY1

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1.

The revenue cycle consists of


a. One subsystem-order entry
b. Two subsystem-order entry and inventory control
c. Two subsystems-sales order processing and cash receipts
d. Three subsystems-sales order processing, credit authorization, and cash receipts

2. The adjustments to accounting records to reflect the decrease in inventory due to a sale
occurs in the
a. Warehouse
b. Billing department
c. Shipping department
d. Inventory control department

3. Which document triggers the revenue cycle?


a. The sales order
b. The sales invoice
c. The customer purchase order
d. The journal voucher

4. Copies of the sales order can be used for all of the following except
a. Purchase order
b. Shipping notice
c. Credit authorization
d. Packing slip

5. The purpose of the sales invoice is to


a. Record deduction of inventory
b. Bill the customer
c. Transfer goods from seller to shipper
d. Select items from inventory for shipment

6. Which department is least likely to be involved in the revenue cycle?


a. Credit
b. Billing
c. Accounts payable
d. Shipping

7. Which document is included with a shipment sent to a customer?


a. Sales invoice
b. Packing slip
c. Stock release form
d. Shipping notice
8. Good internal controls in the revenue cycle should ensure all of the following except
a. All sales are profitable
b. Credit is authorized
c. All sales are recorded
d. Inventory to be shipped is not stolen

9. Which department prepares the bill of lading?


a. Sales
b. Shipping
c. Warehouse
d. Credit

10. A remittance advice is


a. Used to increased (debit) an account receivable by the cash received
b. Is retained by the customer to show proof of payment
c. Is a turn-around document
d. None of the above

11. The purpose of purchase requisition is to


a. Order goods from vendors
b. Authorize the purchasing department to order goods
c. Record receipt of goods from vendors
d. Bill for goods delivered

12. The purpose of receiving report is to


a. Order goods from vendors
b. Authorize the purchasing department to order goods
c. Record receipt of goods from vendors
d. Bill for goods delivered

13. All of the following departments have a copy of the purchase order except
a. The purchasing department
b. Accounts payable
c. The receiving department
d. General ledger

14. The purpose of the purchase order is to


a. Order goods from vendors
b. Authorize the purchasing department to order goods
c. Record receipt of goods from vendors
d. Bill for goods delivered
15. The purchase order
a. Is the source document to make an entry into the accounting records
b. Is prepared by the inventory control department
c. Indicates item description, quantity, and price
d. Is approved by the end-user department

16. The reason that a blind copy of the purchase is sent to receiving is to
a. Inform receiving when a shipment is due
b. Inform receiving of the type, quantity, and price of items to be delivered
c. Force a count of the items delivered
d. Require that the goods delivered are inspected

17. The financial value of a purchase is determined by reviewing the


a. Packing slip
b. Receiving report
c. Purchase requisition
d. Supplier’s invoice

18. In a merchandising firm, authorization for the payment of inventory is the responsibility of
a. Inventory control
b. Accounts payable
c. Purchasing
d. Cash disbursements

19. When purchasing inventory, which document usually triggers the recording of a liability?
a. Purchase requisition
b. Receiving report
c. Purchase order
d. Supplier’s invoice

20. Because of time delays between receiving inventory and making the journal entry
a. Liabilities are usually understated
b. Liabilities are usually correctly stated
c. Liabilities are usually overstated
d. None of the above

21. The document that captures the total amount of time that individual workers spend on each
production job is called a
a. Time card
b. Personal action form
c. Job ticket
d. Labor distribution form
22. Which transaction is not processed in the Fixed Asset System?
a. Purchase of building
b. Purchase of raw materials
c. Improvement of equipment
d. Sale of company van

23. Depreciation
a. Is calculated by the department that uses the fixed asset
b. Is recorded weekly
c. Allocates the cost of the asset over its useful life
d. Results in book value approximating fair market value

24. Objectives of the fixed asset system do not include


a. Authorizing the acquisition of fixed assets
b. Computing gain and/or loss on disposal of fixed assets
c. Recording depreciation expense
d. Maintaining a record of the fair market value of all fixed assets

25. Which of the following is not a characteristic of the fixed asset system?
a. Acquisitions are routine transactions requiring general authorization
b. Acquisition cost is allocated over the expected life of the asset
c. Retirements are reported on an authorized disposal report form
d. Transfer of fixed assets among departments is recorded in the fixed asset subsidiary
ledger

26. In the payroll subsystem, which function should distribute paychecks?


a. Personnel
b. Paymaster
c. Timekeeping
d. Payroll

27. Which department is responsible for approving changes in pay rates for employees?
a. Payroll
b. Personnel
c. Treasurer
d. Cash disbursements

28. Which of the following situations represents a serious control weakness?


a. Timekeeping is independent of the payroll department
b. Timecards are reconciled with job tickets
c. Paychecks are distributed by the employees immediate supervisor
d. Personnel is responsible for updating employee records, including creation of
records for new hires

29. Cost accounting updates work-in-process accounts from


a. Timecards
b. Job tickets
c. The labor distribution summary
d. Personnel action forms

30. Payroll checks are typically drawn on


a. The regular checking account
b. A wages payable account
c. A payroll imprest account
d. Petty cash

31. Which subsystem is not a part of the production system?


a. Directing the movement of work through the process
b. Authorizing work to be performed
c. Determining raw material requirements
d. Monitoring the flow of cost information related to production

32. The purpose of cost accounting system is to


a. Produce information for inventory valuation
b. Direct the movement of work-in-process
c. Authorize release of raw materials
d. Determine material requirements

33. Which process creates a homogenous product through a continuous series of standard
procedures?
a. Batch process
b. Continuous process
c. Make-to-order process
d. None of the above

34. Which of the following is best likely produced from a continuous process?
a. Wedding invitations
b. Jet aircraft
c. Milk products
d. All of the above

35. All of the following are characteristics of batch processing except


a. Each item in the batch is similar
b. Batches are produced to replenish depleted inventory levels
c. Batches are produced in accordance with detailed customer specification
d. Setting up and retooling is required for different batches

36. When determining which items to produce, a firm must know


a. Last year’s production level
b. The standard cost of the item
c. Raw material inventory levels
d. The sales forecast

37. A move ticket


a. Is the formal plan and authority to begin production
b. Records the work done in each work center
c. Specifies the materials and production required for each batch
d. Authorizes storekeeper to release materials to work centers

38. The internal control significance of the excess materials requisition is that it
a. Indicates the amount of material released to work centers
b. Indicates the standard quantities required for production
c. Identifies materials used in production that exceed the standard amount allowed
d. Documents the return of raw materials inventory of unused production materials

39. The storekeeper releases raw materials based on the


a. Production schedule
b. Work order
c. Materials requisition
d. Bill of materials

40. Computer integrated manufacturing groups all of the following technologies except
a. Robotics
b. Automated storage and retrieval systems
c. Materials requirements planning
d. Computer aided design

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