Purchases System Assurance MCQ CH 7 Practice Note

ASsurance
MCQ PRACTICE BOOK
CHAPTER 7
Purchases system
Prepared By:
K. M. MAHAFUZUL
ALAM
C L A S S
CA STUDY & SUPPORT FACEBOOK GROUP
01728-928984 kmmhafuzulalam@gmail.com facebook.com/kmmhafuzul.alam

MCQ PRACTICE BOOK
CHAPTER 7 - Purchases system
ORDERING
1. WHICH OF THE FOLLOWING IS NOT A POTENTIAL RISK ASSOCIATED WITH THE ORDERING
PROCESS?
- A) DELAYED DELIVERY OF GOODS
- B) UNAUTHORIZED PURCHASES C L A S S
- C) OVERLY STRINGENT VENDOR VETTING
- D) INCORRECT QUANTITIES ORDERED
2. WHICH CONTROL OBJECTIVE IS NOT TYPICALLY ASSOCIATED WITH THE ORDERING

PROCESS?
- A) TIMELY RECEIPT OF GOODS
- B) ACCURATE RECORDING OF ORDERS
- C) MINIMIZATION OF PURCHASING COSTS
- D) ADHERENCE TO BUDGETARY CONSTRAINTS
3. WHAT IS THE PRIMARY PURPOSE OF CONTROLS OVER ORDERING IN A PURCHASES

SYSTEM?
- A) TO MINIMIZE VENDOR RELATIONSHIPS
- B) TO ENSURE ONLY AUTHORIZED PERSONNEL CAN PLACE ORDERS
- C) TO MAXIMIZE PURCHASING COSTS
- D) TO DELAY THE ORDERING PROCESS
4. SCENARIO: IN A MANUFACTURING COMPANY, A JUNIOR EMPLOYEE PLACES A LARGE

ORDER WITH A NEW VENDOR WITHOUT PROPER AUTHORIZATION. WHAT RISK DOES THIS
SCENARIO PRIMARILY HIGHLIGHT?
- B) UNAUTHORIZED PURCHASES
- C) OVERPAYMENT FOR GOODS
- D) LACK OF VENDOR RELIABILITY
5. SCENARIO: A COMPANY'S ORDERING SYSTEM LACKS SEGREGATION OF DUTIES,

ALLOWING THE SAME EMPLOYEE TO BOTH APPROVE AND PLACE ORDERS. WHAT CONTROL
OBJECTIVE DOES THIS WEAKNESS PRIMARILY VIOLATE?
- A) TIMELY RECEIPT OF GOODS
- B) ACCURATE RECORDING OF ORDERS
- C) AUTHORIZATION OF PURCHASES
- D) MINIMIZATION OF PURCHASING COSTS
6. SCENARIO: A COMPANY IMPLEMENTS A TWO-STEP VERIFICATION PROCESS FOR

PLACING ORDERS, REQUIRING BOTH ELECTRONIC AND MANUAL APPROVAL. WHAT
CONTROL DOES THIS REPRESENT?
- A) SEGREGATION OF DUTIES
- B) PROPER AUTHORIZATION
- C) INVOICE VERIFICATION
- D) VENDOR VETTING PROCESS
7. TRUE OR FALSE: RISKS ASSOCIATED WITH THE ORDERING PROCESS MAY INCLUDE
INCORRECT QUANTITIES ORDERED.
8. TRUE OR FALSE: CONTROL OBJECTIVES RELATED TO ORDERING TYPICALLY INCLUDE

MINIMIZING PURCHASING COSTS.
9. TRUE OR FALSE: CONTROLS OVER ORDERING PRIMARILY AIM TO MAXIMIZE VENDOR

RELATIONSHIPS.
PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

MCQ PRACTICE BOOK
ORDERING
10. TRUE OR FALSE: A WEAKNESS IN THE ORDERING PROCESS MAY RESULT IN

OVERPAYMENT FOR GOODS.
11. TRUE OR FALSE: LACK OF SEGREGATION OF DUTIES IN THE ORDERING PROCESS

VIOLATES THE CONTROL OBJECTIVE OF TIMELY RECEIPT OF GOODS.
12. TRUE OR FALSE: IMPLEMENTING A TWO-STEP VERIFICATION PROCESS FOR PLACING

ORDERS ENHANCES CONTROL OVER AUTHORIZATION.
13. WHICH OF THE FOLLOWING IS NOT A TEST OF CONTROLS OVER ORDERS?

- A) REVIEWING THE VENDOR'S CREDIT HISTORY
- B) RECONCILING PURCHASE ORDERS WITH INVOICES
- C) CONFIRMING ORDERS WITH AUTHORIZED PERSONNEL C L A S S
- D) PERFORMING PERIODIC AUDITS OF ORDER RECORDS CA STUDY & SUPPORT FACEBOOK GROUP
14. WHAT IS THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER ORDERS?

- A) TO ENSURE TIMELY DELIVERY OF GOODS
- B) TO IDENTIFY DEFICIENCIES IN THE ORDERING PROCESS
- C) TO INCREASE PURCHASING COSTS
- D) TO DELAY THE ORDERING PROCESS
15. WHICH OF THE FOLLOWING IS NOT A POTENTIAL WEAKNESS IN THE ORDERING

PROCESS?
- A) LACK OF PROPER AUTHORIZATION FOR PURCHASES
- B) DELAYED DELIVERY OF GOODS
- D) INACCURATE RECORDING OF ORDERS
16. SCENARIO: IN A COMPANY, PURCHASE ORDERS ARE ROUTINELY RECONCILED WITH

INVOICES TO ENSURE ACCURACY. WHAT TYPE OF CONTROL TEST IS THIS?
- A) REVIEWING AUTHORIZATION PROCEDURES
- B) TESTING INVOICE VERIFICATION CONTROLS
- C) CONFIRMING ORDERS WITH AUTHORIZED PERSONNEL
- D) RECONCILING PURCHASE ORDERS WITH INVOICES
17. SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT PURCHASE ORDERS ARE OFTEN
PLACED WITHOUT PROPER AUTHORIZATION. WHAT DOES THIS FINDING INDICATE?
- A) THE CONTROL OVER PURCHASE AUTHORIZATION IS EFFECTIVE
- B) THE CONTROL OVER PURCHASE AUTHORIZATION IS INEFFECTIVE
- C) THE CONTROL OVER INVOICE VERIFICATION IS EFFECTIVE
- D) THE CONTROL OVER VENDOR VETTING IS EFFECTIVE
18. SCENARIO: A COMPANY CONDUCTS PERIODIC AUDITS OF ORDER RECORDS TO

ENSURE COMPLIANCE WITH PURCHASING POLICIES. WHAT IS THE PRIMARY PURPOSE OF
THIS ACTIVITY?
- A) TO DELAY THE ORDERING PROCESS
- B) TO MAXIMIZE PURCHASING COSTS
- C) TO IDENTIFY DEFICIENCIES IN THE ORDERING PROCESS
- D) TO MINIMIZE VENDOR RELATIONSHIPS

MCQ ANSWER
ORDERING
1. ANSWER: C) OVERLY STRINGENT VENDOR VETTING

EXPLANATION: OVERLY STRINGENT VENDOR VETTING IS NOT TYPICALLY CONSIDERED A
RISK ASSOCIATED WITH THE ORDERING PROCESS. IT MAY SLOW DOWN THE PROCESS
UNNECESSARILY, BUT IT'S NOT A DIRECT RISK LIKE DELAYED DELIVERY, UNAUTHORIZED
PURCHASES, OR INCORRECT QUANTITIES ORDERED.
2. ANSWER: C) MINIMIZATION OF PURCHASING COSTS

EXPLANATION: WHILE MINIMIZING PURCHASING COSTS IS AN IMPORTANT OBJECTIVE
OVERALL, IT'S NOT TYPICALLY ASSOCIATED WITH THE CONTROL OBJECTIVES OF THE
ORDERING PROCESS. THE CONTROL OBJECTIVES ARE MORE FOCUSED ON THE ACCURACY,
TIMELINESS, AND AUTHORIZATION OF ORDERS.
3. ANSWER: B) TO ENSURE ONLY AUTHORIZED PERSONNEL CAN PLACE ORDERS

EXPLANATION: THE PRIMARY PURPOSE OF CONTROLS OVER ORDERING IN A PURCHASES
SYSTEM IS TO ENSURE THAT ONLY AUTHORIZED PERSONNEL CAN PLACE ORDERS,
THEREBY PREVENTING UNAUTHORIZED PURCHASES AND ENSURING COMPLIANCE WITH
PROCUREMENT POLICIES.
C L A S S
4. ANSWER: B) UNAUTHORIZED PURCHASES

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS THE RISK OF UNAUTHORIZED

PURCHASES SINCE THE JUNIOR EMPLOYEE PLACED A LARGE ORDER WITH A NEW VENDOR
WITHOUT PROPER AUTHORIZATION.
5. ANSWER: C) AUTHORIZATION OF PURCHASES

EXPLANATION: THIS WEAKNESS PRIMARILY VIOLATES THE CONTROL OBJECTIVE OF
AUTHORIZATION OF PURCHASES BECAUSE THE LACK OF SEGREGATION OF DUTIES ALLOWS
THE SAME EMPLOYEE TO BOTH APPROVE AND PLACE ORDERS, BYPASSING PROPER
AUTHORIZATION PROCEDURES.
6. ANSWER: B) PROPER AUTHORIZATION

EXPLANATION: IMPLEMENTING A TWO-STEP VERIFICATION PROCESS FOR PLACING
ORDERS REPRESENTS A CONTROL OVER PROPER AUTHORIZATION, ENSURING THAT
ORDERS ARE APPROVED BOTH ELECTRONICALLY AND MANUALLY BEFORE THEY ARE
PLACED.
7. TRUE
EXPLANATION: RISKS ASSOCIATED WITH THE ORDERING PROCESS MAY INDEED INCLUDE
INCORRECT QUANTITIES ORDERED, WHICH CAN LEAD TO INVENTORY ISSUES, STOCKOUTS,
OR EXCESS INVENTORY.
8. TRUE
EXPLANATION: CONTROL OBJECTIVES RELATED TO ORDERING MAY INCLUDE MINIMIZING
PURCHASING COSTS, AMONG OTHERS, AS CONTROLLING COSTS IS A CRUCIAL ASPECT OF
EFFICIENT PROCUREMENT MANAGEMENT.
9. FALSE
EXPLANATION: CONTROLS OVER ORDERING PRIMARILY AIM TO ENSURE COMPLIANCE
WITH PROCUREMENT POLICIES, INCLUDING PROPER AUTHORIZATION, ACCURACY OF
ORDERS, AND ADHERENCE TO BUDGETARY CONSTRAINTS, RATHER THAN MAXIMIZING
VENDOR RELATIONSHIPS.

MCQ ANSWER
ORDERING
10. TRUE
EXPLANATION: A WEAKNESS IN THE ORDERING PROCESS, SUCH AS LACK OF PROPER
AUTHORIZATION OR INEFFECTIVE CONTROLS, MAY INDEED RESULT IN OVERPAYMENT FOR
GOODS DUE TO UNAUTHORIZED PURCHASES OR ERRORS IN ORDERING.
11. FALSE
EXPLANATION: LACK OF SEGREGATION OF DUTIES IN THE ORDERING PROCESS PRIMARILY
VIOLATES THE CONTROL OBJECTIVE OF PROPER AUTHORIZATION OR AUTHORIZATION OF
PURCHASES, NOT TIMELY RECEIPT OF GOODS.
12. TRUE
EXPLANATION: IMPLEMENTING A TWO-STEP VERIFICATION PROCESS FOR PLACING ORDERS
ENHANCES CONTROL OVER AUTHORIZATION BY REQUIRING MULTIPLE LAYERS OF
APPROVAL BEFORE ORDERS ARE PLACED, THEREBY REDUCING THE RISK OF
UNAUTHORIZED PURCHASES.
C L A S S
13. ANSWER: A) REVIEWING THE VENDOR'S CREDIT HISTORY

EXPLANATION: REVIEWING THE VENDOR'S CREDIT HISTORY IS MORE RELATED TO VENDOR

VETTING THAN TO TESTS OF CONTROLS OVER ORDERS, WHICH FOCUS ON ENSURING THE
EFFECTIVENESS OF CONTROLS IN THE ORDERING PROCESS ITSELF.
14. ANSWER: B) TO IDENTIFY DEFICIENCIES IN THE ORDERING PROCESS

EXPLANATION: THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER ORDERS IS TO
IDENTIFY DEFICIENCIES OR WEAKNESSES IN THE ORDERING PROCESS, ENSURING THAT
CONTROLS ARE EFFECTIVE IN MITIGATING RISKS AND MAINTAINING COMPLIANCE WITH
POLICIES AND PROCEDURES.
15. ANSWER: C) OVERLY STRINGENT VENDOR VETTING

EXPLANATION: OVERLY STRINGENT VENDOR VETTING IS NOT TYPICALLY CONSIDERED A
WEAKNESS IN THE ORDERING PROCESS. WHILE THOROUGH VENDOR VETTING IS
IMPORTANT, BEING OVERLY STRINGENT MIGHT DELAY THE PROCUREMENT PROCESS
UNNECESSARILY.
16. ANSWER: D) RECONCILING PURCHASE ORDERS WITH INVOICES

EXPLANATION: RECONCILING PURCHASE ORDERS WITH INVOICES IS A TYPE OF CONTROL
TEST FOCUSING ON ENSURING THE ACCURACY OF ORDERS BY COMPARING THEM WITH THE
INVOICES RECEIVED FROM VENDORS.
17. ANSWER: B) THE CONTROL OVER PURCHASE AUTHORIZATION IS INEFFECTIVE

EXPLANATION: THE FINDING THAT PURCHASE ORDERS ARE OFTEN PLACED WITHOUT
PROPER AUTHORIZATION INDICATES THAT THE CONTROL OVER PURCHASE AUTHORIZATION
IS INEFFECTIVE, AS UNAUTHORIZED PURCHASES ARE BEING MADE.
18. ANSWER: C) TO IDENTIFY DEFICIENCIES IN THE ORDERING PROCESS

EXPLANATION: THE PRIMARY PURPOSE OF CONDUCTING PERIODIC AUDITS OF ORDER
RECORDS IS TO IDENTIFY DEFICIENCIES OR WEAKNESSES IN THE ORDERING PROCESS,
ENSURING THAT CONTROLS ARE EFFECTIVE AND COMPLIANCE WITH PURCHASING POLICIES
IS MAINTAINED.

MCQ PRACTICE BOOK
GOODS INWARD AND RECORDING OF INVOICES
1. WHICH OF THE FOLLOWING IS A POTENTIAL RISK ASSOCIATED WITH GOODS INWARD AND RECORDING OF
INVOICES?
- A) DELAYED PAYMENTS TO VENDORS
- B) UNAUTHORIZED ACCESS TO PURCHASE RECORDS C L A S S

- D) OVERPAYMENT FOR GOODS RECEIVED
2. WHAT IS A PRIMARY CONTROL OBJECTIVE RELATED TO GOODS INWARD AND RECORDING OF INVOICES?
- A) TIMELY PAYMENT PROCESSING
- B) ACCURATE RECORDING OF GOODS RECEIVED
- C) MAXIMIZATION OF VENDOR RELATIONSHIPS
- D) MINIMIZATION OF PURCHASE COSTS
3. WHAT IS THE PURPOSE OF CONTROLS OVER GOODS INWARD IN A PURCHASES SYSTEM?

- A) TO DELAY GOODS RECEIPT
- B) TO ENSURE ACCURATE RECORDING OF GOODS RECEIVED
- C) TO MINIMIZE VENDOR RELATIONSHIPS
- D) TO MAXIMIZE PURCHASE COSTS
4. SCENARIO: A COMPANY IMPLEMENTS BARCODE SCANNING FOR GOODS RECEIVED TO ENSURE ACCURATE
RECORDING. WHAT CONTROL DOES THIS REPRESENT?
- C) AUTOMATED CONTROLS
5. TRUE OR FALSE: RISKS ASSOCIATED WITH GOODS INWARD AND RECORDING OF INVOICES MAY INCLUDE
DELAYED DELIVERY OF GOODS.
6. TRUE OR FALSE: CONTROL OBJECTIVES RELATED TO GOODS INWARD AND RECORDING OF INVOICES TYPICALLY
INCLUDE MINIMIZING VENDOR RELATIONSHIPS.
7. WHICH OF THE FOLLOWING IS A POTENTIAL WEAKNESS IN CONTROLS OVER GOODS INWARD?

- A) OVERLY STRINGENT VENDOR VETTING
- B) LACK OF SEGREGATION OF DUTIES
- C) TIMELY PAYMENT PROCESSING
- D) AUTOMATED INVOICE RECORDING
8. WHAT IS THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER GOODS INWARD AND INVOICES?
- A) TO MAXIMIZE PURCHASE COSTS
- B) TO IDENTIFY DEFICIENCIES IN THE GOODS RECEIPT PROCESS
- D) TO DELAY PAYMENT PROCESSING
9. SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT GOODS RECEIVED ARE NOT PROPERLY INSPECTED BEFORE
RECORDING. WHAT DOES THIS FINDING INDICATE?
- A) THE CONTROL OVER GOODS INWARD IS EFFECTIVE
- B) THE CONTROL OVER GOODS INWARD IS INEFFECTIVE
10. TRUE OR FALSE: CONTROLS OVER PURCHASE RECORDING PRIMARILY AIM TO DELAY PAYMENT PROCESSING.
11. WHICH OF THE FOLLOWING IS A POTENTIAL TEST OF CONTROLS OVER GOODS INWARD AND INVOICES?
- A) REVIEWING VENDOR CONTRACTS
- D) PERFORMING PERIODIC AUDITS OF PURCHASE RECORDS
12. SCENARIO: A COMPANY CONDUCTS REGULAR RECONCILIATIONS OF PURCHASE ORDERS WITH INVOICES TO
ENSURE ACCURACY. WHAT TYPE OF CONTROL TEST IS THIS?
- B) TESTING INVOICE VERIFICATION CONTROLS
- D) RECONCILING PURCHASE ORDERS WITH INVOICES

MCQ PRACTICE BOOK
13. TRUE OR FALSE: RISKS ASSOCIATED WITH GOODS INWARD AND RECORDING OF INVOICES MAY INCLUDE
UNAUTHORIZED ACCESS TO PURCHASE RECORDS.
14. WHAT IS A PRIMARY CONTROL OBJECTIVE RELATED TO PURCHASE RECORDING?

- A) TIMELY PAYMENT PROCESSING
- B) ACCURATE RECORDING OF PURCHASES
C L A S S
- C) MAXIMIZATION OF VENDOR RELATIONSHIPS
- D) MINIMIZATION OF PURCHASE COSTS CA STUDY & SUPPORT FACEBOOK GROUP
15. SCENARIO: A COMPANY IMPLEMENTS DUAL APPROVAL FOR RECORDING PURCHASES, REQUIRING BOTH
ELECTRONIC AND MANUAL VERIFICATION. WHAT CONTROL DOES THIS REPRESENT?
16. TRUE OR FALSE: CONTROLS OVER GOODS INWARD PRIMARILY AIM TO MINIMIZE PURCHASE COSTS.
17. WHICH OF THE FOLLOWING IS NOT A POTENTIAL WEAKNESS IN CONTROLS OVER PURCHASE RECORDING?
- A) LACK OF SEGREGATION OF DUTIES
- B) DELAYED PAYMENT PROCESSING
- C) INACCURATE RECORDING OF PURCHASES
- D) AUTOMATED INVOICE VERIFICATION
18. WHAT IS THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER PURCHASE RECORDING?
- A) TO MAXIMIZE PURCHASE COSTS
- B) TO IDENTIFY DEFICIENCIES IN PURCHASE RECORDING PROCESSES
- D) TO DELAY PAYMENT PROCESSING
19. SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT PURCHASES ARE RECORDED WITHOUT PROPER
DOCUMENTATION. WHAT DOES THIS FINDING INDICATE?
- A) THE CONTROL OVER PURCHASE RECORDING IS EFFECTIVE
- B) THE CONTROL OVER PURCHASE RECORDING IS INEFFECTIVE
20. TRUE OR FALSE: RISKS ASSOCIATED WITH PURCHASE RECORDING MAY INCLUDE INACCURATE RECORDING OF
PURCHASES.
21. WHICH OF THE FOLLOWING IS A POTENTIAL TEST OF CONTROLS OVER PURCHASE RECORDING?
- D) PERFORMING PERIODIC AUDITS OF PURCHASE RECORDS
22. SCENARIO: A COMPANY CONDUCTS REGULAR AUDITS OF PURCHASE RECORDS TO ENSURE COMPLIANCE WITH
PURCHASING POLICIES. WHAT IS THE PRIMARY PURPOSE OF THIS ACTIVITY?
- A) TO DELAY PAYMENT PROCESSING
- B) TO MAXIMIZE PURCHASE COSTS
- C) TO IDENTIFY DEFICIENCIES IN PURCHASE RECORDING PROCESSES
23. TRUE OR FALSE: CONTROLS OVER GOODS INWARD PRIMARILY AIM TO MAXIMIZE VENDOR RELATIONSHIPS.
24. WHAT IS A POTENTIAL RISK ASSOCIATED WITH CONTROLS OVER GOODS INWARD?
- A) DELAYED PAYMENT PROCESSING
- D) UNAUTHORIZED ACCESS TO PURCHASE RECORDS
25. SCENARIO: A COMPANY IMPLEMENTS PERIODIC TRAINING FOR STAFF INVOLVED IN GOODS INWARD PROCESSES
TO ENSURE COMPLIANCE WITH CONTROL PROCEDURES. WHAT CONTROL DOES THIS REPRESENT?
- D) STAFF TRAINING AND AWARENESS

MCQ ANSWER
1. ANSWER: D) OVERPAYMENT FOR GOODS RECEIVED

EXPLANATION: OVERPAYMENT FOR GOODS RECEIVED IS A POTENTIAL RISK ASSOCIATED WITH GOODS INWARD
AND RECORDING OF INVOICES, AS IT CAN OCCUR IF INVOICES ARE NOT ACCURATELY RECORDED OR MATCHED
WITH THE RECEIVED GOODS.
2. ANSWER: B) ACCURATE RECORDING OF GOODS RECEIVED

EXPLANATION: A PRIMARY CONTROL OBJECTIVE RELATED TO GOODS INWARD AND RECORDING OF INVOICES
IS TO ENSURE THE ACCURATE RECORDING OF GOODS RECEIVED, WHICH INVOLVES MATCHING RECEIVED GOODS
WITH CORRESPONDING INVOICES TO PREVENT ERRORS OR DISCREPANCIES.
3. ANSWER: B) TO ENSURE ACCURATE RECORDING OF GOODS RECEIVED

EXPLANATION: THE PURPOSE OF CONTROLS OVER GOODS INWARD IN A PURCHASES SYSTEM IS TO ENSURE
THE ACCURATE RECORDING OF GOODS RECEIVED, WHICH INVOLVES VERIFYING THAT THE GOODS RECEIVED
MATCH THE PURCHASE ORDERS AND INVOICES.
C L A S S
4. ANSWER: C) AUTOMATED CONTROLS CA STUDY & SUPPORT FACEBOOK GROUP
EXPLANATION: IMPLEMENTING BARCODE SCANNING FOR GOODS RECEIVED REPRESENTS AN AUTOMATED

CONTROL, WHICH HELPS ENSURE ACCURATE RECORDING BY AUTOMATING THE PROCESS OF IDENTIFYING AND
RECORDING RECEIVED GOODS.
5. FALSE
EXPLANATION: RISKS ASSOCIATED WITH GOODS INWARD AND RECORDING OF INVOICES MAY INCLUDE
OVERPAYMENT FOR GOODS RECEIVED, INACCURATE RECORDING OF GOODS, OR DISCREPANCIES BETWEEN
GOODS RECEIVED AND INVOICED QUANTITIES, BUT DELAYED DELIVERY OF GOODS IS TYPICALLY NOT DIRECTLY
RELATED TO THIS PROCESS.
6. FALSE
EXPLANATION: CONTROL OBJECTIVES RELATED TO GOODS INWARD AND RECORDING OF INVOICES TYPICALLY
INCLUDE ENSURING ACCURATE RECORDING OF GOODS RECEIVED, TIMELY PROCESSING OF INVOICES, AND
MINIMIZING THE RISK OF OVERPAYMENT, RATHER THAN MINIMIZING VENDOR RELATIONSHIPS.
7. ANSWER: B) LACK OF SEGREGATION OF DUTIES

EXPLANATION: A POTENTIAL WEAKNESS IN CONTROLS OVER GOODS INWARD IS THE LACK OF SEGREGATION
OF DUTIES, WHICH MEANS THAT THE SAME INDIVIDUAL MAY BE RESPONSIBLE FOR BOTH RECEIVING GOODS AND
RECORDING THEM, INCREASING THE RISK OF ERRORS OR FRAUD.
8. ANSWER: B) TO IDENTIFY DEFICIENCIES IN THE GOODS RECEIPT PROCESS

EXPLANATION: THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER GOODS INWARD AND INVOICES IS TO
IDENTIFY DEFICIENCIES OR WEAKNESSES IN THE GOODS RECEIPT PROCESS, ENSURING THAT CONTROLS ARE
EFFECTIVE IN PREVENTING ERRORS, FRAUD, OR INACCURACIES IN RECORDING GOODS RECEIVED AND
PROCESSING INVOICES.
9. ANSWER: B) THE CONTROL OVER GOODS INWARD IS INEFFECTIVE

EXPLANATION: THE FINDING THAT GOODS RECEIVED ARE NOT PROPERLY INSPECTED BEFORE RECORDING
INDICATES THAT THE CONTROL OVER GOODS INWARD IS INEFFECTIVE, AS GOODS ARE BEING RECORDED
WITHOUT PROPER VERIFICATION, INCREASING THE RISK OF ERRORS OR DISCREPANCIES.
10. FALSE
EXPLANATION: CONTROLS OVER PURCHASE RECORDING PRIMARILY AIM TO ENSURE ACCURATE RECORDING
OF GOODS RECEIVED AND INVOICES, TIMELY PROCESSING OF INVOICES, AND COMPLIANCE WITH PROCUREMENT
POLICIES, RATHER THAN DELAYING PAYMENT PROCESSING.
11. ANSWER: B) RECONCILING PURCHASE ORDERS WITH INVOICES

EXPLANATION: RECONCILING PURCHASE ORDERS WITH INVOICES IS A POTENTIAL TEST OF CONTROLS OVER
GOODS INWARD AND INVOICES, AS IT INVOLVES COMPARING THE DETAILS OF PURCHASE ORDERS WITH
RECEIVED GOODS AND INVOICES TO ENSURE ACCURACY AND COMPLETENESS.
12. ANSWER: D) RECONCILING PURCHASE ORDERS WITH INVOICES

EXPLANATION: REGULAR RECONCILIATIONS OF PURCHASE ORDERS WITH INVOICES TO ENSURE ACCURACY
REPRESENT A CONTROL TEST FOCUSED ON RECONCILING DOCUMENTS TO IDENTIFY ANY DISCREPANCIES OR
ERRORS IN THE RECORDING OF PURCHASES.

MCQ ANSWER
13. TRUE
EXPLANATION: RISKS ASSOCIATED WITH GOODS INWARD AND RECORDING OF INVOICES MAY INDEED INCLUDE
UNAUTHORIZED ACCESS TO PURCHASE RECORDS, WHICH COULD LEAD TO DATA BREACHES OR FRAUDULENT
ACTIVITIES.
14. ANSWER: B) ACCURATE RECORDING OF PURCHASES

EXPLANATION: A PRIMARY CONTROL OBJECTIVE RELATED TO PURCHASE RECORDING IS TO ENSURE THE ACCURATE
RECORDING OF PURCHASES, WHICH INVOLVES CORRECTLY DOCUMENTING AND CATEGORIZING ALL PROCUREMENT
TRANSACTIONS.
15. ANSWER: B) PROPER AUTHORIZATION

EXPLANATION: IMPLEMENTING DUAL APPROVAL FOR RECORDING PURCHASES REPRESENTS A CONTROL OVER
PROPER AUTHORIZATION, ENSURING THAT PURCHASES ARE VERIFIED BOTH ELECTRONICALLY AND MANUALLY
BEFORE BEING RECORDED, REDUCING THE RISK OF UNAUTHORIZED OR ERRONEOUS TRANSACTIONS.
16. FALSE
EXPLANATION: CONTROLS OVER GOODS INWARD PRIMARILY AIM TO ENSURE ACCURATE RECORDING OF GOODS
RECEIVED, TIMELY PROCESSING OF INVOICES, AND COMPLIANCE WITH PROCUREMENT POLICIES, RATHER THAN
MINIMIZING PURCHASE COSTS.
C L A S S
17. ANSWER: D) AUTOMATED INVOICE VERIFICATION CA STUDY & SUPPORT FACEBOOK GROUP
EXPLANATION: AUTOMATED INVOICE VERIFICATION IS NOT TYPICALLY CONSIDERED A WEAKNESS IN CONTROLS

OVER PURCHASE RECORDING. IN FACT, AUTOMATED SYSTEMS CAN ENHANCE CONTROL BY REDUCING THE RISK OF
HUMAN ERROR AND ENSURING CONSISTENT VERIFICATION PROCESSES.
18. ANSWER: B) TO IDENTIFY DEFICIENCIES IN PURCHASE RECORDING PROCESSES

EXPLANATION: THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER PURCHASE RECORDING IS TO IDENTIFY
DEFICIENCIES OR WEAKNESSES IN THE PURCHASE RECORDING PROCESSES, ENSURING THAT CONTROLS ARE
EFFECTIVE IN PREVENTING ERRORS, FRAUD, OR INACCURACIES.
19. ANSWER: B) THE CONTROL OVER PURCHASE RECORDING IS INEFFECTIVE

EXPLANATION: THE FINDING THAT PURCHASES ARE RECORDED WITHOUT PROPER DOCUMENTATION INDICATES
THAT THE CONTROL OVER PURCHASE RECORDING IS INEFFECTIVE, AS TRANSACTIONS ARE NOT BEING ADEQUATELY
DOCUMENTED, INCREASING THE RISK OF ERRORS OR UNAUTHORIZED ACTIVITIES.
20. TRUE
EXPLANATION: RISKS ASSOCIATED WITH PURCHASE RECORDING MAY INDEED INCLUDE INACCURATE RECORDING
OF PURCHASES, WHICH CAN LEAD TO FINANCIAL DISCREPANCIES, INVENTORY ISSUES, OR COMPLIANCE ISSUES.
21. ANSWER: B) RECONCILING PURCHASE ORDERS WITH INVOICES

EXPLANATION: RECONCILING PURCHASE ORDERS WITH INVOICES IS A POTENTIAL TEST OF CONTROLS OVER
PURCHASE RECORDING, AS IT INVOLVES COMPARING THE DETAILS OF PURCHASE ORDERS WITH RECEIVED GOODS
AND INVOICES TO ENSURE ACCURACY AND COMPLETENESS IN RECORDING PURCHASES.
22. ANSWER: C) TO IDENTIFY DEFICIENCIES IN PURCHASE RECORDING PROCESSES

EXPLANATION: THE PRIMARY PURPOSE OF CONDUCTING REGULAR AUDITS OF PURCHASE RECORDS IS TO IDENTIFY
DEFICIENCIES OR WEAKNESSES IN THE PURCHASE RECORDING PROCESSES, ENSURING COMPLIANCE WITH POLICIES
AND PROCEDURES AND MITIGATING RISKS RELATED TO INACCURATE OR UNAUTHORIZED TRANSACTIONS.
23. FALSE
EXPLANATION: CONTROLS OVER GOODS INWARD PRIMARILY AIM TO ENSURE ACCURATE RECORDING OF GOODS
RECEIVED, TIMELY PROCESSING OF INVOICES, AND COMPLIANCE WITH PROCUREMENT POLICIES, RATHER THAN
MAXIMIZING VENDOR RELATIONSHIPS.
24. ANSWER: D) UNAUTHORIZED ACCESS TO PURCHASE RECORDS

EXPLANATION: A POTENTIAL RISK ASSOCIATED WITH CONTROLS OVER GOODS INWARD IS UNAUTHORIZED
ACCESS TO PURCHASE RECORDS, WHICH COULD LEAD TO DATA BREACHES, MANIPULATION OF RECORDS, OR
FRAUDULENT ACTIVITIES.
25. ANSWER: D) STAFF TRAINING AND AWARENESS

EXPLANATION: IMPLEMENTING PERIODIC TRAINING FOR STAFF INVOLVED IN GOODS INWARD PROCESSES
REPRESENTS A CONTROL OVER STAFF TRAINING AND AWARENESS, ENSURING THAT EMPLOYEES UNDERSTAND AND
ADHERE TO CONTROL PROCEDURES, REDUCING THE RISK OF ERRORS OR FRAUD IN THE PROCUREMENT PROCESS.

MCQ PRACTICE BOOK
PAYMENT
1. WHICH OF THE FOLLOWING IS A POTENTIAL RISK ASSOCIATED WITH PAYMENTS?

- A) TIMELY INVOICE PROCESSING
- B) OVERPAYMENT FOR GOODS OR SERVICES
- C) ACCURATE RECORDING OF PAYMENTS
- D) PROPER AUTHORIZATION OF PAYMENTS
C L A S S
2. WHAT IS A PRIMARY CONTROL OBJECTIVE RELATED TO PAYMENTS?
- A) MINIMIZATION OF VENDOR RELATIONSHIPS
- B) ACCURATE RECORDING OF PAYMENTS
- C) DELAYED PAYMENT PROCESSING
- D) MAXIMIZE PURCHASE COSTS
3. WHAT IS THE PURPOSE OF CONTROLS OVER CASH PAYMENTS IN A FINANCIAL SYSTEM?

- B) TO ENSURE PROPER AUTHORIZATION AND DOCUMENTATION OF PAYMENTS
- C) TO DELAY PAYMENT PROCESSING
4. SCENARIO: A COMPANY IMPLEMENTS SEGREGATION OF DUTIES BETWEEN THE PERSONNEL RESPONSIBLE FOR
AUTHORIZING PAYMENTS AND THOSE RESPONSIBLE FOR PROCESSING PAYMENTS. WHAT CONTROL DOES THIS
REPRESENT?
- A) PROPER AUTHORIZATION
- B) VENDOR VETTING PROCESS
- D) ACCURATE RECORDING OF PAYMENTS
5. TRUE OR FALSE: RISKS ASSOCIATED WITH PAYMENTS MAY INCLUDE TIMELY INVOICE PROCESSING.
6. TRUE OR FALSE: CONTROL OBJECTIVES RELATED TO PAYMENTS TYPICALLY INCLUDE MAXIMIZING VENDOR
RELATIONSHIPS.
7. WHICH OF THE FOLLOWING IS A POTENTIAL WEAKNESS IN CONTROLS OVER CASH PAYMENTS?

- B) PROPER AUTHORIZATION OF PAYMENTS
- D) UNAUTHORIZED ACCESS TO PAYMENT RECORDS
8. WHAT IS THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER CASH PAYMENTS?

- B) TO IDENTIFY DEFICIENCIES IN THE PAYMENT PROCESS
9. SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT PAYMENTS ARE OFTEN PROCESSED WITHOUT PROPER
AUTHORIZATION. WHAT DOES THIS FINDING INDICATE?
- A) THE CONTROL OVER PAYMENT AUTHORIZATION IS EFFECTIVE
- B) THE CONTROL OVER PAYMENT AUTHORIZATION IS INEFFECTIVE
10. TRUE OR FALSE: CONTROLS OVER CASH PAYMENTS PRIMARILY AIM TO MAXIMIZE PURCHASE COSTS.
11. WHICH OF THE FOLLOWING IS A POTENTIAL TEST OF CONTROLS OVER CASH PAYMENTS?
- D) PERFORMING PERIODIC AUDITS OF PAYMENT RECORDS
12. SCENARIO: A COMPANY CONDUCTS REGULAR RECONCILIATIONS OF PAYMENT AUTHORIZATIONS WITH ACTUAL
PAYMENTS MADE TO ENSURE ACCURACY. WHAT TYPE OF CONTROL TEST IS THIS?
- B) TESTING PAYMENT VERIFICATION CONTROLS
- C) CONFIRMING PAYMENTS WITH AUTHORIZED PERSONNEL
- D) RECONCILING PAYMENT AUTHORIZATIONS WITH ACTUAL PAYMENTS MADE

MCQ PRACTICE BOOK
PAYMENT
13. TRUE OR FALSE: RISKS ASSOCIATED WITH CASH PAYMENTS MAY INCLUDE DELAYED PAYMENT PROCESSING.
14. WHAT IS A PRIMARY CONTROL OBJECTIVE RELATED TO CASH PAYMENTS?

- A) MINIMIZATION OF VENDOR RELATIONSHIPS
- B) ACCURATE RECORDING OF PAYMENTS
- C) DELAYED PAYMENT PROCESSING C L A S S
- D) MAXIMIZE PURCHASE COSTS

15. SCENARIO: A COMPANY IMPLEMENTS DUAL APPROVAL FOR PROCESSING PAYMENTS, REQUIRING BOTH
ELECTRONIC AND MANUAL VERIFICATION. WHAT CONTROL DOES THIS REPRESENT?
16. TRUE OR FALSE: CONTROLS OVER CASH PAYMENTS PRIMARILY AIM TO MINIMIZE PURCHASE COSTS.
17. WHICH OF THE FOLLOWING IS NOT A POTENTIAL WEAKNESS IN CONTROLS OVER CASH PAYMENTS?
- B) DELAYED PAYMENT PROCESSING
- C) INACCURATE RECORDING OF PAYMENTS
- D) AUTOMATED PAYMENT VERIFICATION
18. WHAT IS THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER CASH PAYMENTS?
- B) TO IDENTIFY DEFICIENCIES IN CASH PAYMENT PROCESSES
19. SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT PAYMENTS ARE RECORDED WITHOUT PROPER
DOCUMENTATION. WHAT DOES THIS FINDING INDICATE?
- A) THE CONTROL OVER PAYMENT RECORDING IS EFFECTIVE
- B) THE CONTROL OVER PAYMENT RECORDING IS INEFFECTIVE
- C) THE CONTROL OVER PAYMENT AUTHORIZATION IS EFFECTIVE
20. TRUE OR FALSE: RISKS ASSOCIATED WITH CASH PAYMENTS MAY INCLUDE INACCURATE RECORDING OF
PAYMENTS.
21. WHICH OF THE FOLLOWING IS A POTENTIAL TEST OF CONTROLS OVER CASH PAYMENTS?
- D) PERFORMING PERIODIC AUDITS OF PAYMENT RECORDS
22. SCENARIO: A COMPANY CONDUCTS REGULAR AUDITS OF PAYMENT RECORDS TO ENSURE COMPLIANCE WITH
PAYMENT POLICIES. WHAT IS THE PRIMARY PURPOSE OF THIS ACTIVITY?
- A) TO DELAY PAYMENT PROCESSING
- B) TO MAXIMIZE PURCHASE COSTS
- C) TO IDENTIFY DEFICIENCIES IN PAYMENT RECORDING PROCESSES
23. TRUE OR FALSE: CONTROLS OVER CASH PAYMENTS PRIMARILY AIM TO MAXIMIZE VENDOR RELATIONSHIPS.
24. WHAT IS A POTENTIAL RISK ASSOCIATED WITH CONTROLS OVER CASH PAYMENTS?
- A) DELAYED PAYMENT PROCESSING
- D) UNAUTHORIZED ACCESS TO PAYMENT RECORDS
25. SCENARIO: A COMPANY IMPLEMENTS PERIODIC TRAINING FOR STAFF INVOLVED IN PROCESSING CASH
PAYMENTS TO ENSURE COMPLIANCE WITH CONTROL PROCEDURES. WHAT CONTROL DOES THIS REPRESENT?
- D) STAFF TRAINING AND AWARENESS

MCQ ANSWER
PAYMENT
1. ANSWER: B) OVERPAYMENT FOR GOODS OR SERVICES

EXPLANATION: OVERPAYMENT FOR GOODS OR SERVICES IS A POTENTIAL RISK ASSOCIATED WITH
PAYMENTS, AS IT CAN LEAD TO FINANCIAL LOSSES AND INEFFICIENCIES IF PAYMENTS EXCEED THE AGREED-
UPON AMOUNTS.
C L A S S
2. ANSWER: B) ACCURATE RECORDING OF PAYMENTS CA STUDY & SUPPORT FACEBOOK GROUP
EXPLANATION: A PRIMARY CONTROL OBJECTIVE RELATED TO PAYMENTS IS TO ENSURE THE ACCURATE

RECORDING OF PAYMENTS, WHICH INVOLVES PROPERLY DOCUMENTING ALL FINANCIAL TRANSACTIONS
AND MAINTAINING RELIABLE RECORDS.
3. ANSWER: B) TO ENSURE PROPER AUTHORIZATION AND DOCUMENTATION OF PAYMENTS

EXPLANATION: THE PURPOSE OF CONTROLS OVER CASH PAYMENTS IN A FINANCIAL SYSTEM IS TO
ENSURE PROPER AUTHORIZATION AND DOCUMENTATION OF PAYMENTS, REDUCING THE RISK OF
UNAUTHORIZED OR ERRONEOUS TRANSACTIONS AND ENSURING COMPLIANCE WITH INTERNAL POLICIES
AND REGULATIONS.
4. ANSWER: A) PROPER AUTHORIZATION

EXPLANATION: IMPLEMENTING SEGREGATION OF DUTIES BETWEEN PERSONNEL RESPONSIBLE FOR
AUTHORIZING PAYMENTS AND THOSE RESPONSIBLE FOR PROCESSING PAYMENTS REPRESENTS A CONTROL
OVER PROPER AUTHORIZATION, REDUCING THE RISK OF UNAUTHORIZED PAYMENTS.
5. FALSE
EXPLANATION: RISKS ASSOCIATED WITH PAYMENTS TYPICALLY INCLUDE OVERPAYMENT FOR GOODS OR
SERVICES, INACCURATE RECORDING OF PAYMENTS, UNAUTHORIZED PAYMENTS, OR FRAUD, BUT TIMELY
INVOICE PROCESSING IS NOT USUALLY CONSIDERED A RISK.
6. FALSE
EXPLANATION: CONTROL OBJECTIVES RELATED TO PAYMENTS TYPICALLY INCLUDE ENSURING PROPER
AUTHORIZATION, ACCURATE RECORDING, AND TIMELY PROCESSING OF PAYMENTS, AS WELL AS
MINIMIZING THE RISK OF OVERPAYMENT OR UNAUTHORIZED PAYMENTS, RATHER THAN MAXIMIZING
VENDOR RELATIONSHIPS.
7. ANSWER: D) UNAUTHORIZED ACCESS TO PAYMENT RECORDS

EXPLANATION: A POTENTIAL WEAKNESS IN CONTROLS OVER CASH PAYMENTS IS UNAUTHORIZED
ACCESS TO PAYMENT RECORDS, WHICH COULD LEAD TO DATA BREACHES, MANIPULATION OF RECORDS,
OR FRAUDULENT ACTIVITIES.
8. ANSWER: B) TO IDENTIFY DEFICIENCIES IN THE PAYMENT PROCESS

EXPLANATION: THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER CASH PAYMENTS IS TO IDENTIFY
DEFICIENCIES OR WEAKNESSES IN THE PAYMENT PROCESS, ENSURING THAT CONTROLS ARE EFFECTIVE IN
PREVENTING ERRORS, FRAUD, OR UNAUTHORIZED TRANSACTIONS.
9. ANSWER: B) THE CONTROL OVER PAYMENT AUTHORIZATION IS INEFFECTIVE

EXPLANATION: THE FINDING THAT PAYMENTS ARE OFTEN PROCESSED WITHOUT PROPER AUTHORIZATION
INDICATES THAT THE CONTROL OVER PAYMENT AUTHORIZATION IS INEFFECTIVE, AS TRANSACTIONS ARE
BEING EXECUTED WITHOUT APPROPRIATE APPROVAL, INCREASING THE RISK OF FRAUD OR ERRORS.
10. FALSE
EXPLANATION: CONTROLS OVER CASH PAYMENTS PRIMARILY AIM TO ENSURE PROPER AUTHORIZATION,
ACCURATE RECORDING, AND TIMELY PROCESSING OF PAYMENTS, AS WELL AS COMPLIANCE WITH
POLICIES AND REGULATIONS, RATHER THAN MAXIMIZING PURCHASE COSTS.
11. ANSWER: D) PERFORMING PERIODIC AUDITS OF PAYMENT RECORDS

EXPLANATION: PERFORMING PERIODIC AUDITS OF PAYMENT RECORDS IS A POTENTIAL TEST OF
CONTROLS OVER CASH PAYMENTS, AS IT INVOLVES REVIEWING PAYMENT TRANSACTIONS AND RECORDS
TO ENSURE COMPLIANCE WITH POLICIES, ACCURACY, AND INTEGRITY OF FINANCIAL DATA.
12. ANSWER: D) RECONCILING PAYMENT AUTHORIZATIONS WITH ACTUAL PAYMENTS MADE

EXPLANATION: REGULAR RECONCILIATIONS OF PAYMENT AUTHORIZATIONS WITH ACTUAL PAYMENTS
MADE REPRESENT A CONTROL TEST FOCUSED ON RECONCILING DOCUMENTS AND VERIFYING THE
ACCURACY AND COMPLETENESS OF PAYMENT TRANSACTIONS.

MCQ ANSWER
PAYMENT
13. FALSE
EXPLANATION: RISKS ASSOCIATED WITH CASH PAYMENTS TYPICALLY INCLUDE OVERPAYMENT, UNAUTHORIZED
PAYMENTS, FRAUD, OR INACCURATE RECORDING OF PAYMENTS, BUT DELAYED PAYMENT PROCESSING IS NOT
USUALLY CONSIDERED A RISK.
14. ANSWER: B) ACCURATE RECORDING OF PAYMENTS

EXPLANATION: A PRIMARY CONTROL OBJECTIVE RELATED TO CASH PAYMENTS IS TO ENSURE THE ACCURATE
RECORDING OF PAYMENTS, WHICH INVOLVES PROPERLY DOCUMENTING ALL FINANCIAL TRANSACTIONS AND
MAINTAINING RELIABLE RECORDS.
C L A S S
15. ANSWER: B) PROPER AUTHORIZATION CA STUDY & SUPPORT FACEBOOK GROUP
EXPLANATION: IMPLEMENTING DUAL APPROVAL FOR PROCESSING PAYMENTS REPRESENTS A CONTROL OVER
PROPER AUTHORIZATION, ENSURING THAT PAYMENTS ARE VERIFIED BOTH ELECTRONICALLY AND MANUALLY BEFORE
BEING PROCESSED, REDUCING THE RISK OF UNAUTHORIZED TRANSACTIONS.
16. FALSE
ACCURATE RECORDING, AND TIMELY PROCESSING OF PAYMENTS, AS WELL AS COMPLIANCE WITH POLICIES AND
REGULATIONS, RATHER THAN MINIMIZING PURCHASE COSTS.
17. ANSWER: D) AUTOMATED PAYMENT VERIFICATION

EXPLANATION: AUTOMATED PAYMENT VERIFICATION IS NOT TYPICALLY CONSIDERED A WEAKNESS IN CONTROLS
OVER CASH PAYMENTS. IN FACT, AUTOMATED SYSTEMS CAN ENHANCE CONTROL BY REDUCING THE RISK OF HUMAN
ERROR AND ENSURING CONSISTENT VERIFICATION PROCESSES.
18. ANSWER: B) TO IDENTIFY DEFICIENCIES IN CASH PAYMENT PROCESSES

EXPLANATION: THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER CASH PAYMENTS IS TO IDENTIFY
DEFICIENCIES OR WEAKNESSES IN THE CASH PAYMENT PROCESSES, ENSURING THAT CONTROLS ARE EFFECTIVE IN
PREVENTING ERRORS, FRAUD, OR UNAUTHORIZED TRANSACTIONS.
19. ANSWER: B) THE CONTROL OVER PAYMENT RECORDING IS INEFFECTIVE

EXPLANATION: THE FINDING THAT PAYMENTS ARE RECORDED WITHOUT PROPER DOCUMENTATION INDICATES THAT
THE CONTROL OVER PAYMENT RECORDING IS INEFFECTIVE, AS TRANSACTIONS ARE NOT BEING ADEQUATELY
DOCUMENTED, INCREASING THE RISK OF ERRORS OR UNAUTHORIZED ACTIVITIES.
20. TRUE
EXPLANATION: RISKS ASSOCIATED WITH CASH PAYMENTS MAY INDEED INCLUDE INACCURATE RECORDING OF
PAYMENTS, WHICH CAN LEAD TO FINANCIAL DISCREPANCIES, COMPLIANCE ISSUES, OR FRAUDULENT ACTIVITIES.
21. ANSWER: D) PERFORMING PERIODIC AUDITS OF PAYMENT RECORDS

EXPLANATION: PERFORMING PERIODIC AUDITS OF PAYMENT RECORDS IS A POTENTIAL TEST OF CONTROLS OVER
CASH PAYMENTS, AS IT INVOLVES REVIEWING PAYMENT TRANSACTIONS AND RECORDS TO ENSURE COMPLIANCE
WITH POLICIES, ACCURACY, AND INTEGRITY OF FINANCIAL DATA.
22. ANSWER: C) TO IDENTIFY DEFICIENCIES IN PAYMENT RECORDING PROCESSES

EXPLANATION: THE PRIMARY PURPOSE OF CONDUCTING REGULAR AUDITS OF PAYMENT RECORDS IS TO IDENTIFY
DEFICIENCIES OR WEAKNESSES IN THE PAYMENT RECORDING PROCESSES, ENSURING COMPLIANCE WITH POLICIES
AND PROCEDURES AND MITIGATING RISKS RELATED TO INACCURATE OR UNAUTHORIZED TRANSACTIONS.
23. FALSE
ACCURATE RECORDING, AND TIMELY PROCESSING OF PAYMENTS, AS WELL AS COMPLIANCE WITH POLICIES AND
REGULATIONS, RATHER THAN MAXIMIZING VENDOR RELATIONSHIPS.
24. ANSWER: D) UNAUTHORIZED ACCESS TO PAYMENT RECORDS

EXPLANATION: A POTENTIAL RISK ASSOCIATED WITH CONTROLS OVER CASH PAYMENTS IS UNAUTHORIZED
ACCESS TO PAYMENT RECORDS, WHICH COULD LEAD TO DATA BREACHES, MANIPULATION OF RECORDS, OR
FRAUDULENT ACTIVITIES.
25. ANSWER: D) STAFF TRAINING AND AWARENESS

EXPLANATION: IMPLEMENTING PERIODIC TRAINING FOR STAFF INVOLVED IN PROCESSING CASH PAYMENTS
REPRESENTS A CONTROL OVER STAFF TRAINING AND AWARENESS, ENSURING THAT EMPLOYEES UNDERSTAND AND
ADHERE TO CONTROL PROCEDURES, REDUCING THE RISK OF ERRORS OR FRAUD IN THE PAYMENT PROCESS.

MCQ PRACTICE BOOK
DEFICIENCIES IN THE PURCHASES SYSTEM
1. WHICH OF THE FOLLOWING IS NOT A POTENTIAL DEFICIENCY IN THE PURCHASES SYSTEM?

- C) PROPER AUTHORIZATION OF PURCHASES
- D) INCOMPLETE VENDOR RECORDS
2. SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT PURCHASE ORDERS ARE OFTEN PLACED WITHOUT PROPER AUTHORIZATION. WHAT DEFICIENCY
DOES THIS FINDING INDICATE?
- B) INADEQUATE VENDOR VETTING PROCESS
- C) INSUFFICIENT TRAINING FOR STAFF
- D) LACK OF PROPER AUTHORIZATION CONTROLS
3. TRUE OR FALSE: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INCLUDE TIMELY DELIVERY OF GOODS.
- A) TRUE
- B) FALSE
4. WHICH OF THE FOLLOWING IS A POTENTIAL CONSEQUENCE OF DEFICIENCIES IN THE PURCHASES SYSTEM?

- A) INCREASED VENDOR RELATIONSHIPS
- B) ENHANCED CONTROL ENVIRONMENT
- C) OVERPAYMENT FOR GOODS OR SERVICES
- D) TIMELY PAYMENT PROCESSING
C L A S S
5. WHAT IS A DEFICIENCY IN THE PURCHASES SYSTEM?
- A) OVERLY STRINGENT VENDOR VETTING
- B) TIMELY PAYMENT PROCESSING
- C) INACCURATE RECORDING OF ORDERS
- D) PROPER AUTHORIZATION OF PURCHASES
6. SCENARIO: IN A COMPANY, PURCHASE ORDERS ARE ROUTINELY PLACED WITHOUT SPECIFYING QUANTITIES OR DESCRIPTIONS OF GOODS. WHAT
DEFICIENCY DOES THIS REPRESENT?
- A) LACK OF PROPER AUTHORIZATION CONTROLS
- B) INCOMPLETE PURCHASE ORDERS
- C) DELAYED DELIVERY OF GOODS
- D) LACK OF SEGREGATION OF DUTIES
7. TRUE OR FALSE: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INCLUDE INSUFFICIENT DOCUMENTATION OF VENDOR AGREEMENTS.
- A) TRUE
- B) FALSE
8. WHAT IS A POTENTIAL CONSEQUENCE OF DEFICIENCIES IN PURCHASE ORDER DOCUMENTATION?

- A) ENHANCED VENDOR RELATIONSHIPS
- B) IMPROVED CONTROL ENVIRONMENT
- C) DIFFICULTY IN RECONCILING INVOICES WITH ORDERS
9. SCENARIO: DURING A REVIEW, IT IS DISCOVERED THAT THE PURCHASING DEPARTMENT LACKS CLEAR POLICIES AND PROCEDURES FOR VENDOR
SELECTION. WHAT DEFICIENCY DOES THIS INDICATE?
10. TRUE OR FALSE: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INCLUDE EXCESSIVE DELAYS IN PAYMENT PROCESSING.
- A) TRUE
- B) FALSE
11. WHAT IS A POTENTIAL CONSEQUENCE OF DEFICIENCIES IN PAYMENT PROCESSING?

- A) ENHANCED VENDOR RELATIONSHIPS
- B) IMPROVED CONTROL ENVIRONMENT
- C) INCREASED RISK OF LATE FEES OR PENALTIES
- D) TIMELY DELIVERY OF GOODS
12. SCENARIO: IN A COMPANY, PURCHASE INVOICES ARE OFTEN PROCESSED WITHOUT VERIFYING THE ACCURACY OF GOODS RECEIVED. WHAT
- B) INADEQUATE INVOICE VERIFICATION PROCESS
13. TRUE OR FALSE: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INCLUDE EXCESSIVE RELIANCE ON A SINGLE VENDOR.
- A) TRUE
- B) FALSE
14. WHAT IS A POTENTIAL CONSEQUENCE OF DEFICIENCIES IN VENDOR DIVERSIFICATION?

- A) ENHANCED CONTROL ENVIRONMENT
- B) INCREASED RISK OF SUPPLY CHAIN DISRUPTIONS
- C) IMPROVED EFFICIENCY IN PURCHASING
15. SCENARIO: IN A COMPANY, PURCHASE ORDERS ARE OFTEN PLACED WITHOUT OBTAINING COMPETITIVE QUOTES FROM MULTIPLE VENDORS. WHAT

MCQ ANSWER
DEFICIENCIES IN THE PURCHASES SYSTEM
1. ANSWER: C) PROPER AUTHORIZATION OF PURCHASES

EXPLANATION: PROPER AUTHORIZATION OF PURCHASES IS NOT A POTENTIAL DEFICIENCY IN THE PURCHASES SYSTEM.
INSTEAD, IT REPRESENTS A CONTROL OR BEST PRACTICE AIMED AT ENSURING THAT PURCHASES ARE APPROVED BY AUTHORIZED
PERSONNEL BEFORE BEING MADE.
2. ANSWER: D) LACK OF PROPER AUTHORIZATION CONTROLS

EXPLANATION: THE FINDING THAT PURCHASE ORDERS ARE OFTEN PLACED WITHOUT PROPER AUTHORIZATION INDICATES A
DEFICIENCY IN THE CONTROL OVER PROPER AUTHORIZATION OF PURCHASES, AS TRANSACTIONS ARE BEING EXECUTED
WITHOUT APPROPRIATE APPROVAL.
3. ANSWER: A) TRUE
EXPLANATION: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INDEED INCLUDE TIMELY DELIVERY OF GOODS, AS DELAYS IN
RECEIVING GOODS CAN DISRUPT OPERATIONS AND IMPACT BUSINESS ACTIVITIES.
4. ANSWER: C) OVERPAYMENT FOR GOODS OR SERVICES

EXPLANATION: ONE POTENTIAL CONSEQUENCE OF DEFICIENCIES IN THE PURCHASES SYSTEM IS OVERPAYMENT FOR GOODS OR
SERVICES, AS INADEQUATE CONTROLS OR PROCESSES MAY LEAD TO ERRORS OR FRAUDULENT ACTIVITIES RESULTING IN
PAYMENTS EXCEEDING THE VALUE OF GOODS OR SERVICES RECEIVED.
5. ANSWER: C) INACCURATE RECORDING OF ORDERS

EXPLANATION: INACCURATE RECORDING OF ORDERS REPRESENTS A DEFICIENCY IN THE PURCHASES SYSTEM, AS IT CAN LEAD
TO DISCREPANCIES BETWEEN WHAT WAS ORDERED AND WHAT WAS RECEIVED, CAUSING OPERATIONAL INEFFICIENCIES OR
FINANCIAL LOSSES.
6. ANSWER: B) INCOMPLETE PURCHASE ORDERS

EXPLANATION: PURCHASE ORDERS ROUTINELY PLACED WITHOUT SPECIFYING QUANTITIES OR DESCRIPTIONS OF GOODS
REPRESENT INCOMPLETE PURCHASE ORDERS, WHICH IS A DEFICIENCY AS IT CAN LEAD TO CONFUSION OR ERRORS IN FULFILLING
THE ORDERS.
7. ANSWER: A) TRUE
EXPLANATION: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INDEED INCLUDE INSUFFICIENT DOCUMENTATION OF VENDOR
AGREEMENTS, WHICH CAN LEAD TO MISUNDERSTANDINGS OR DISPUTES BETWEEN THE COMPANY AND ITS VENDORS.
8. ANSWER: C) DIFFICULTY IN RECONCILING INVOICES WITH ORDERS

EXPLANATION: ONE POTENTIAL CONSEQUENCE OF DEFICIENCIES IN PURCHASE ORDER DOCUMENTATION IS DIFFICULTY IN
RECONCILING INVOICES WITH ORDERS, AS INCOMPLETE OR INACCURATE PURCHASE ORDERS MAY NOT PROVIDE SUFFICIENT
INFORMATION FOR MATCHING INVOICES.
9. ANSWER: B) INADEQUATE VENDOR VETTING PROCESS

EXPLANATION: THE LACK OF CLEAR POLICIES AND PROCEDURES FOR VENDOR SELECTION INDICATES A DEFICIENCY IN THE
VENDOR VETTING PROCESS, AS IT SUGGESTS A LACK OF STRUCTURED CRITERIA OR EVALUATION METHODS FOR ASSESSING AND
SELECTING VENDORS.
10. ANSWER: A) TRUE

EXPLANATION: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INDEED INCLUDE EXCESSIVE DELAYS IN PAYMENT PROCESSING,
WHICH CAN RESULT IN LATE PAYMENTS, PENALTIES, OR STRAINED VENDOR RELATIONSHIPS.
11. ANSWER: C) INCREASED RISK OF LATE FEES OR PENALTIES

EXPLANATION: ONE POTENTIAL CONSEQUENCE OF DEFICIENCIES IN PAYMENT PROCESSING IS AN INCREASED RISK OF LATE
FEES OR PENALTIES, AS DELAYED PAYMENTS MAY INCUR ADDITIONAL CHARGES OR PENALTIES FROM VENDORS OR CREDITORS.
12. ANSWER: B) INADEQUATE INVOICE VERIFICATION PROCESS

EXPLANATION: PROCESSING PURCHASE INVOICES WITHOUT VERIFYING THE ACCURACY OF GOODS RECEIVED REPRESENTS AN
INADEQUATE INVOICE VERIFICATION PROCESS, AS IT CAN LEAD TO ERRORS OR DISCREPANCIES IN RECORDING EXPENSES AND
PAYMENTS.
13. ANSWER: A) TRUE

EXPLANATION: DEFICIENCIES IN THE PURCHASES SYSTEM MAY INDEED INCLUDE EXCESSIVE RELIANCE ON A SINGLE VENDOR,
WHICH CAN INCREASE DEPENDENCY RISKS, LIMIT COMPETITIVE PRICING, AND EXPOSE THE COMPANY TO SUPPLY CHAIN
VULNERABILITIES.
14. ANSWER: B) INCREASED RISK OF SUPPLY CHAIN DISRUPTIONS

EXPLANATION: ONE POTENTIAL CONSEQUENCE OF DEFICIENCIES IN VENDOR DIVERSIFICATION IS AN INCREASED RISK OF
SUPPLY CHAIN DISRUPTIONS, AS RELIANCE ON A SINGLE VENDOR MAY MAKE THE COMPANY MORE VULNERABLE TO
DISRUPTIONS SUCH AS PRODUCTION DELAYS, QUALITY ISSUES, OR SUPPLY SHORTAGES.

EXPLANATION: PLACING PURCHASE ORDERS WITHOUT OBTAINING COMPETITIVE QUOTES FROM MULTIPLE VENDORS
REPRESENTS AN INADEQUATE VENDOR VETTING PROCESS, AS IT SUGGESTS A LACK OF THOROUGH EVALUATION OR
COMPARISON OF AVAILABLE SUPPLIERS AND PRICING OPTIONS.
C L A S S

MCQ PRACTICE BOOK
SCENARIO
*1. ORDERING:**
SCENARIO: IN A MANUFACTURING COMPANY, THE PRODUCTION MANAGER URGENTLY NEEDS A SPECIFIC COMPONENT TO CONTINUE
PRODUCTION. THE REGULAR SUPPLIER OF THIS COMPONENT IS OUT OF STOCK, SO THE MANAGER DECIDES TO PLACE AN ORDER WITH A
NEW VENDOR WITHOUT OBTAINING PROPER APPROVAL.
QUESTION: WHAT DEFICIENCY IN THE ORDERING PROCESS DOES THIS SCENARIO HIGHLIGHT?
**2. GOODS INWARD AND RECORDING OF INVOICES:**
SCENARIO: IN A RETAIL STORE, THE WAREHOUSE STAFF RECEIVES A SHIPMENT OF GOODS FROM A SUPPLIER. DUE TO A HIGH WORKLOAD,
THEY OVERLOOK CHECKING THE QUANTITY AND QUALITY OF THE RECEIVED GOODS AND PROCEED TO RECORD THE INVOICE IN THE
SYSTEM.
QUESTION: WHAT DEFICIENCY IN THE GOODS INWARD AND RECORDING OF INVOICES PROCESS DOES THIS SCENARIO HIGHLIGHT?
- D) LACK OF SEGREGATION OF DUTIES C L A S S
**3. PAYMENT:** CA STUDY & SUPPORT FACEBOOK GROUP
SCENARIO: IN AN ACCOUNTING DEPARTMENT, AN EMPLOYEE PROCESSES A PAYMENT TO A VENDOR WITHOUT VERIFYING THE ACCURACY
OF THE INVOICE AGAINST THE PURCHASE ORDER AND GOODS RECEIVED. THE PAYMENT IS MADE PROMPTLY TO AVOID LATE FEES.
QUESTION: WHAT DEFICIENCY IN THE PAYMENT PROCESS DOES THIS SCENARIO HIGHLIGHT?
- B) INCOMPLETE DOCUMENTATION OF PAYMENTS
**4. DEFICIENCIES:**
SCENARIO: DURING AN INTERNAL AUDIT, IT IS DISCOVERED THAT SEVERAL PURCHASE ORDERS WERE PROCESSED WITHOUT PROPER
AUTHORIZATION. ADDITIONALLY, THERE IS EVIDENCE OF INCOMPLETE DOCUMENTATION FOR SOME PURCHASES.
QUESTION: WHAT DEFICIENCIES IN THE PURCHASES SYSTEM DOES THIS SCENARIO PRIMARILY HIGHLIGHT?
- A) LACK OF SEGREGATION OF DUTIES AND INCOMPLETE DOCUMENTATION OF PURCHASES
**5. ORDERING:**
SCENARIO: IN A SOFTWARE COMPANY, THE MARKETING TEAM URGENTLY NEEDS A SPECIFIC SOFTWARE TOOL TO LAUNCH A NEW
CAMPAIGN. WITHOUT CONSULTING THE PROCUREMENT DEPARTMENT, THEY DIRECTLY PURCHASE THE SOFTWARE ONLINE USING THEIR
CORPORATE CREDIT CARD.
SCENARIO: IN A DISTRIBUTION CENTER, A NEW EMPLOYEE RESPONSIBLE FOR GOODS RECEIVING OVERLOOKS THE VERIFICATION PROCESS
AND ACCEPTS A SHIPMENT OF DAMAGED GOODS WITHOUT RECORDING THE DISCREPANCIES IN THE SYSTEM.
**7. PAYMENT:**
SCENARIO: IN A CONSTRUCTION COMPANY, AN EMPLOYEE MISTAKENLY PROCESSES A DUPLICATE PAYMENT FOR THE SAME INVOICE
WITHOUT NOTICING THE ERROR.

MCQ PRACTICE BOOK
* SCENARIO
SCENARIO: DURING AN AUDIT, IT IS DISCOVERED THAT THE PURCHASING DEPARTMENT LACKS CLEAR POLICIES AND PROCEDURES FOR VENDOR
SELECTION, LEADING TO INCONSISTENT PRACTICES ACROSS DIFFERENT TEAMS.
- C) DELAYED DELIVERY OF GOODS C L A S S
**9. ORDERING:** CA STUDY & SUPPORT FACEBOOK GROUP
SCENARIO: IN A RESTAURANT, THE KITCHEN MANAGER URGENTLY NEEDS A SPECIFIC INGREDIENT TO PREPARE A SPECIAL DISH FOR A VIP GUEST. WITHOUT
FOLLOWING THE STANDARD PROCUREMENT PROCESS, THE MANAGER DIRECTLY ORDERS THE INGREDIENT FROM A LOCAL SUPPLIER AT A PREMIUM PRICE.
SCENARIO: IN A WAREHOUSE, THE RECEIVING CLERK FAILS TO PROPERLY RECORD THE RECEIPT OF A LARGE SHIPMENT OF GOODS, RESULTING IN
DISCREPANCIES BETWEEN THE ACTUAL INVENTORY AND THE RECORDED INVENTORY LEVELS.
**11. PAYMENT:**
SCENARIO: IN AN OFFICE SETTING, AN ACCOUNTS PAYABLE CLERK MISTAKENLY PROCESSES A PAYMENT FOR AN INVOICE THAT HAS ALREADY BEEN PAID,
RESULTING IN AN OVERPAYMENT TO THE VENDOR.
SCENARIO: DURING A REVIEW OF PURCHASING PRACTICES, IT IS DISCOVERED THAT SEVERAL EMPLOYEES HAVE BEEN USING PERSONAL EMAIL ACCOUNTS
TO COMMUNICATE WITH VENDORS, BYPASSING THE OFFICIAL PROCUREMENT CHANNELS.
**13. ORDERING:**
SCENARIO: IN A MANUFACTURING COMPANY, THE PROCUREMENT MANAGER PLACES AN ORDER WITH A VENDOR WHO OFFERS THE LOWEST PRICE
WITHOUT CONSIDERING FACTORS SUCH AS QUALITY, RELIABILITY, OR DELIVERY TIME.
- D) LACK OF VENDOR VETTING PROCESS
SCENARIO: IN A RETAIL STORE, THE GOODS RECEIVING CLERK FAILS TO RECORD THE RECEIPT OF A SHIPMENT OF PRODUCTS IN THE INVENTORY
MANAGEMENT SYSTEM, LEADING TO DISCREPANCIES IN STOCK LEVELS.
**15. PAYMENT:**
SCENARIO: IN A CORPORATE OFFICE, AN EMPLOYEE MISTAKENLY PROCESSES A PAYMENT TO A FRAUDULENT VENDOR WHO SUBMITTED A FAKE INVOICE.

MCQ ANSWER
SCENARIO
1. ANSWER: A) LACK OF PROPER AUTHORIZATION CONTROLS

EXPLANATION: THIS SCENARIO HIGHLIGHTS A DEFICIENCY IN THE ORDERING PROCESS RELATED TO THE LACK OF PROPER
AUTHORIZATION CONTROLS, AS THE PURCHASE WAS MADE WITHOUT OBTAINING PROPER APPROVAL.

EXPLANATION: THIS SCENARIO HIGHLIGHTS A DEFICIENCY IN THE GOODS INWARD AND RECORDING OF INVOICES PROCESS
RELATED TO AN INADEQUATE INVOICE VERIFICATION PROCESS, AS THE RECEIVED GOODS WERE NOT PROPERLY CHECKED
BEFORE RECORDING THE INVOICE.
3. ANSWER: B) INCOMPLETE DOCUMENTATION OF PAYMENTS

EXPLANATION: THIS SCENARIO HIGHLIGHTS A DEFICIENCY IN THE PAYMENT PROCESS RELATED TO INCOMPLETE
DOCUMENTATION OF PAYMENTS, AS THE PAYMENT WAS PROCESSED WITHOUT VERIFYING THE ACCURACY OF THE INVOICE
AGAINST THE PURCHASE ORDER AND GOODS RECEIVED.
4. ANSWER: A) LACK OF SEGREGATION OF DUTIES AND INCOMPLETE DOCUMENTATION OF PURCHASES

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS DEFICIENCIES IN THE PURCHASES SYSTEM RELATED TO BOTH THE LACK
OF SEGREGATION OF DUTIES (PROCESSING PURCHASE ORDERS WITHOUT PROPER AUTHORIZATION) AND INCOMPLETE
DOCUMENTATION OF PURCHASES.

AUTHORIZATION CONTROLS, AS THE PURCHASE WAS MADE WITHOUT CONSULTING THE PROCUREMENT DEPARTMENT OR
OBTAINING PROPER APPROVAL.

EXPLANATION: THIS SCENARIO HIGHLIGHTS A DEFICIENCY IN THE GOODS INWARD AND RECORDING OF INVOICES PROCESS
RELATED TO AN INADEQUATE INVOICE VERIFICATION PROCESS, AS THE DISCREPANCIES IN THE RECEIVED GOODS WERE NOT
PROPERLY RECORDED IN THE SYSTEM.

DOCUMENTATION OF PAYMENTS, AS A DUPLICATE PAYMENT WAS MISTAKENLY PROCESSED WITHOUT PROPER VERIFICATION,
LEADING TO INCOMPLETE RECORDS OF PAYMENTS.

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS DEFICIENCIES IN THE PURCHASES SYSTEM RELATED TO AN INADEQUATE
VENDOR VETTING PROCESS, AS THE LACK OF CLEAR POLICIES AND PROCEDURES FOR VENDOR SELECTION LEADS TO
INCONSISTENT PRACTICES AND POTENTIALLY UNQUALIFIED OR UNRELIABLE VENDORS BEING ENGAGED.

AUTHORIZATION CONTROLS, AS THE INGREDIENT WAS ORDERED WITHOUT FOLLOWING THE STANDARD PROCUREMENT
PROCESS OR OBTAINING PROPER APPROVAL.
10. ANSWER: D) LACK OF SEGREGATION OF DUTIES

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS DEFICIENCIES IN THE GOODS INWARD AND RECORDING OF INVOICES
PROCESS RELATED TO THE LACK OF SEGREGATION OF DUTIES, AS THE RECEIVING CLERK FAILED TO PROPERLY RECORD THE
RECEIPT OF THE SHIPMENT, INDICATING A BREAKDOWN IN RESPONSIBILITIES AND OVERSIGHT.

DOCUMENTATION OF PAYMENTS, AS AN OVERPAYMENT WAS MADE DUE TO THE ACCOUNTS PAYABLE CLERK MISTAKENLY
PROCESSING A PAYMENT FOR AN INVOICE THAT HAD ALREADY BEEN PAID.
12. ANSWER: D) LACK OF PROPER AUTHORIZATION CONTROLS

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS DEFICIENCIES IN THE PURCHASES SYSTEM RELATED TO THE LACK OF
PROPER AUTHORIZATION CONTROLS, AS EMPLOYEES USING PERSONAL EMAIL ACCOUNTS TO COMMUNICATE WITH VENDORS
BYPASS THE OFFICIAL PROCUREMENT CHANNELS, POTENTIALLY LEADING TO UNAUTHORIZED PURCHASES OR ENGAGEMENTS.
13. ANSWER: D) LACK OF VENDOR VETTING PROCESS

EXPLANATION: THIS SCENARIO HIGHLIGHTS A DEFICIENCY IN THE ORDERING PROCESS RELATED TO THE LACK OF A VENDOR
VETTING PROCESS, AS THE PROCUREMENT MANAGER SELECTED A VENDOR BASED SOLELY ON PRICE WITHOUT CONSIDERING
OTHER IMPORTANT FACTORS SUCH AS QUALITY, RELIABILITY, OR DELIVERY TIME.

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS DEFICIENCIES IN THE GOODS INWARD AND RECORDING OF INVOICES
PROCESS RELATED TO THE LACK OF PROPER AUTHORIZATION CONTROLS, AS THE GOODS RECEIVING CLERK FAILED TO RECORD
THE RECEIPT OF THE SHIPMENT, INDICATING A BREAKDOWN IN OVERSIGHT AND APPROVAL PROCESSES.

EXPLANATION: THIS SCENARIO HIGHLIGHTS A DEFICIENCY IN THE PAYMENT PROCESS RELATED TO THE LACK OF PROPER
AUTHORIZATION CONTROLS, AS AN EMPLOYEE MISTAKENLY PROCESSED A PAYMENT TO A FRAUDULENT VENDOR WITHOUT
PROPER VERIFICATION OR APPROVAL.
C L A S S

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MCQ PRACTICE BOOK

CA STUDY & SUPPORT FACEBOOK GROUP

01728-928984 kmmhafuzulalam@gmail.com facebook.com/kmmhafuzul.alam

2. WHICH CONTROL OBJECTIVE IS NOT TYPICALLY ASSOCIATED WITH THE ORDERING

3. WHAT IS THE PRIMARY PURPOSE OF CONTROLS OVER ORDERING IN A PURCHASES

4. SCENARIO: IN A MANUFACTURING COMPANY, A JUNIOR EMPLOYEE PLACES A LARGE

5. SCENARIO: A COMPANY'S ORDERING SYSTEM LACKS SEGREGATION OF DUTIES,

6. SCENARIO: A COMPANY IMPLEMENTS A TWO-STEP VERIFICATION PROCESS FOR

8. TRUE OR FALSE: CONTROL OBJECTIVES RELATED TO ORDERING TYPICALLY INCLUDE

9. TRUE OR FALSE: CONTROLS OVER ORDERING PRIMARILY AIM TO MAXIMIZE VENDOR

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

10. TRUE OR FALSE: A WEAKNESS IN THE ORDERING PROCESS MAY RESULT IN

11. TRUE OR FALSE: LACK OF SEGREGATION OF DUTIES IN THE ORDERING PROCESS

12. TRUE OR FALSE: IMPLEMENTING A TWO-STEP VERIFICATION PROCESS FOR PLACING

13. WHICH OF THE FOLLOWING IS NOT A TEST OF CONTROLS OVER ORDERS?

14. WHAT IS THE PRIMARY PURPOSE OF TESTS OF CONTROLS OVER ORDERS?

15. WHICH OF THE FOLLOWING IS NOT A POTENTIAL WEAKNESS IN THE ORDERING

16. SCENARIO: IN A COMPANY, PURCHASE ORDERS ARE ROUTINELY RECONCILED WITH

18. SCENARIO: A COMPANY CONDUCTS PERIODIC AUDITS OF ORDER RECORDS TO

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

1. ANSWER: C) OVERLY STRINGENT VENDOR VETTING

2. ANSWER: C) MINIMIZATION OF PURCHASING COSTS

3. ANSWER: B) TO ENSURE ONLY AUTHORIZED PERSONNEL CAN PLACE ORDERS

4. ANSWER: B) UNAUTHORIZED PURCHASES

EXPLANATION: THIS SCENARIO PRIMARILY HIGHLIGHTS THE RISK OF UNAUTHORIZED

5. ANSWER: C) AUTHORIZATION OF PURCHASES

6. ANSWER: B) PROPER AUTHORIZATION

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

13. ANSWER: A) REVIEWING THE VENDOR'S CREDIT HISTORY

EXPLANATION: REVIEWING THE VENDOR'S CREDIT HISTORY IS MORE RELATED TO VENDOR

14. ANSWER: B) TO IDENTIFY DEFICIENCIES IN THE ORDERING PROCESS

15. ANSWER: C) OVERLY STRINGENT VENDOR VETTING

16. ANSWER: D) RECONCILING PURCHASE ORDERS WITH INVOICES

17. ANSWER: B) THE CONTROL OVER PURCHASE AUTHORIZATION IS INEFFECTIVE

18. ANSWER: C) TO IDENTIFY DEFICIENCIES IN THE ORDERING PROCESS

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

GOODS INWARD AND RECORDING OF INVOICES

- C) OVERLY STRINGENT VENDOR VETTING

3. WHAT IS THE PURPOSE OF CONTROLS OVER GOODS INWARD IN A PURCHASES SYSTEM?

7. WHICH OF THE FOLLOWING IS A POTENTIAL WEAKNESS IN CONTROLS OVER GOODS INWARD?

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

GOODS INWARD AND RECORDING OF INVOICES

14. WHAT IS A PRIMARY CONTROL OBJECTIVE RELATED TO PURCHASE RECORDING?

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

GOODS INWARD AND RECORDING OF INVOICES

1. ANSWER: D) OVERPAYMENT FOR GOODS RECEIVED

2. ANSWER: B) ACCURATE RECORDING OF GOODS RECEIVED

3. ANSWER: B) TO ENSURE ACCURATE RECORDING OF GOODS RECEIVED

4. ANSWER: C) AUTOMATED CONTROLS CA STUDY & SUPPORT FACEBOOK GROUP

EXPLANATION: IMPLEMENTING BARCODE SCANNING FOR GOODS RECEIVED REPRESENTS AN AUTOMATED

7. ANSWER: B) LACK OF SEGREGATION OF DUTIES

8. ANSWER: B) TO IDENTIFY DEFICIENCIES IN THE GOODS RECEIPT PROCESS

9. ANSWER: B) THE CONTROL OVER GOODS INWARD IS INEFFECTIVE

11. ANSWER: B) RECONCILING PURCHASE ORDERS WITH INVOICES

12. ANSWER: D) RECONCILING PURCHASE ORDERS WITH INVOICES

PREPARED BY: K. M. MAHAFUZUL ALAM facebook.com/kmmhafuzul.alam

GOODS INWARD AND RECORDING OF INVOICES

2. GOODS INWARD AND RECORDING OF INVOICES:

3. PAYMENT: CA STUDY & SUPPORT FACEBOOK GROUP

6. GOODS INWARD AND RECORDING OF INVOICES:

9. ORDERING: CA STUDY & SUPPORT FACEBOOK GROUP

10. GOODS INWARD AND RECORDING OF INVOICES:

14. GOODS INWARD AND RECORDING OF INVOICES: