Professional Documents
Culture Documents
Module 4-7 (Ais) Reviewer
Module 4-7 (Ais) Reviewer
Module 4-7 (Ais) Reviewer
4. When will a credit check approval most likely require specific authorization by the credit
department?
a. when verifying that the current transaction does not exceed the customer’s credit limit
b. when verifying that the current transaction is with a valid customer
c. when a valid customer places a materially large order
d. when a valid customer returns goods
7. Which function or department below records the decrease in inventory due to a sale?
a. warehouse
b. sales department
c. billing department
d. inventory control
8. Which situation indicates a weak internal control structure?
a. the AR clerk authorizes the write off of bad debts
b. the record-keeping clerk maintains both AR and AP subsidiary ledgers
c. the inventory control clerk authorizes inventory purchases
d. the AR clerk prepares customer statements every month
MODULE 5
1. Which document helps to ensure that the receiving clerks actually count the number of
goods received?
a. packing list
b. blind copy of purchase order
c. shipping notice
d. invoice
2. When the goods are received and the receiving report has been prepared, which ledger
may be updated?
a. standard cost inventory ledger
b. inventory subsidiary ledger
c. general ledger
d. accounts payable subsidiary ledger
3. Which statement is NOT correct for an expenditure system with proper internal controls?
a. Cash disbursements maintain the check register.
b. Accounts payable maintains the accounts payable subsidiary ledger.
c. Accounts payable is responsible for paying invoices.
d. Accounts payable is responsible for authorizing invoices.
5. Which documents would an auditor most likely choose to examine closely to ascertain
that all expenditures incurred during the accounting period have been recorded as a liability?
a. invoices
b. purchase orders
c. purchase requisitions
d. receiving reports
7. Which one of the following departments does not have a copy of the purchase order?
a. the purchasing department
b. the receiving department
c. accounts payable
d. general ledger
MODULE 6
1. The document that captures the total amount of time that individual workers spend on each
production job is called a
a. time card.
b. job ticket.
c. personnel action form.
d. labor distribution form.
7. Depreciation
a. is calculated by the department that uses the
fixed asset.
b. allocates the cost of the asset over its useful life.
c. is recorded weekly.
d. results in book value approximating fair market value.
8. Depreciation records include all of the following information about fixed assets EXCEPT the
a. economic benefit of purchasing the asset.
b. cost of the asset.
c. depreciation method being used.
d. location of the asset.
11. Which of the following is NOT a characteristic of the fixed asset system?
a. acquisitions are routine transactions requiring general authorization
b. retirements are reported on an authorized disposal report form
c. acquisition cost is allocated over the expected life of the asset
d. transfer of fixed assets among departments is recorded in the fixed asset subsidiary ledger
MODULE 7
3. Refer to the equation for the EOQ in the text. Car Country, a local Ford dealer, sells 1,280
small SUVs each year. Keeping a car on the lot costs Car Country $200 per month, so the
company prefers to order as few SUVs as is economically feasible. However, each time an
order is placed, the company incurs total costs of $300. Of this $300, $240 is fixed and $60 is
variable. Determine the company’s economic order quantity.
a. 8
b. 16
c. 18
d. 56
e. 62
Questions 4 through 6 are based on the diagram
below, which represents the EOQ model.
8. All of the following are problems with traditional accounting information EXCEPT:
a. Managers in a JIT setting require immediate information.
b. The measurement principle tends to ignore standards other than money.
c. Variance analysis may yield insignificant values.
d. The overhead component in a manufacturing company is usually very large.
e. All of these are problems associated with traditional accounting information.
9. Which of the following is NOT a problem associated with standard cost accounting?
a. Standard costing motivates management to produce large batches of products and build
inventory.
b. Applying standard costing leads to product cost distortions in a lean environment.
c. Standard costing data are associated with excessive time lags that reduce its usefulness.
d. The financial orientation of standard costing may promote bad decisions.
e. All of the above are problems with standard costing.