When Reviewing the Controls and Procedures in the Acquisition and Payment

question 120

Multiple Choice

When reviewing the controls and procedures in the acquisition and payment cycle,

• A) companies cannot record the liability for the acquisition until the invoice is received from the vendor.
• B) the purchasing department has the responsibility for verifying for appropriateness of the acquisition.
• C) personnel who record the acquisitions should not have access to cash or other assets.
• D) the accounts payable department should account for all receiving reports to assure that the occurrence objective is satisfied.

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Definitions:

Permanent/Temporary

Categories of accounts in accounting, where permanent accounts carry their end-of-period balances into the next period, and temporary accounts are closed.

Deposits In Transit

Deposits that were made by customers of a bank but did not reach, or were not processed by, the bank before the preparation of the bank statement.

Bank Collections

The process of banks acting as intermediaries to collect and process payments, such as checks or drafts, on behalf of clients.

Credit Memorandum

A document issued by a seller to acknowledge a reduction in the amount that a buyer owes, often due to a return or refund.