Acquisition and Expenditure Cycle
True / False Questions 1.
Acquisition and expenditure activities include (1) purchasing goods and services, (2) receiving the goods or services, (3) recording the asset or expense and related liability, and (4) depreciating assets purchased. True False 2.
Purchases are requisitioned by a purchasing department that seeks the best prices and quality. True False 3.
The accounts payable department reconciles the vendor invoice, purchase order, and receiving report prior to approving the payment to the vendor. True False 4.
Bill of ladings for goods shipped from a vendor to the purchasing company should always include the company's purchase order number. True False …show more content…
Vouchers should be stamped PAID to
A. prevent duplicate payment.
B. generate a new purchase order.
C. indicate posting in the voucher register.
D. facilitate preparation of the bank reconciliation.
A voucher package is used to
A. document receipt of inventory.
B. document completion of services.
C. document a purchase contract.
D. provide a source document for recording the purchase of a good or service.
An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal. The purpose of this substantive audit procedure most likely was to
A. identify usually large purchases that should be investigated further.
B. verify that cash disbursements were for goods actually received.
C. determine that purchases were properly recorded.
D. test whether payments were for goods actually ordered.
The usual source for journal entries posted to the general ledger to record the purchase of inventory is
A. sales invoices updated with cost data from the inventory records department.
B. purchase invoices updated with cost data from the inventory records department.
C. receiving reports updated with cost data from the accounts payable department.
D. vouchers payable journal from the accounts payable department.
Which of the following would detect the understatement of a
Fed income tax TBChap008 Essay17486 Words | 70 Pages
Chapter 08 Business Income, Deductions, and Accounting Methods True / False Questions 1. The Internal Revenue Code authorizes deductions for trade or business activities if the expenditure is "ordinary and necessary". True False 2. Business activities are distinguished from personal activities in that business activities are motivated by the pursuit of profits. True False 3. The phase "ordinary and necessary" has been defined to mean that an expense must be essential and indispensable…