Accounting Information Systems, 11e (Bodnar/Hopwood)
Chapter 9 Procurement and Human Resources Business Processes
1) A synonym for the word “purchasing” is “procurement.”
2) The eight documents in the SAP ERP Materials Management module may be processed “on-
line.”
3) All eight documents in the SAP ERP Materials Management module are used each time an
item is purchased.
4) Numeric document type codes are assigned to each new procurement document created in the
SAP ERP system.
5) ERP can copy relevant information from an existing document to a new one, reducing errors
and expediting the business process.
6) A purchase order is an internal document created to request the procurement of something so
that it is available at a certain point in time.
7) Approval of a purchase requisition usually means that the request is within cost limits.
8) ERP maintains lists of approved and disapproved sources of supply.
9) It is common for companies to configure their systems to automatically issue purchase orders
for purchase requisitions meeting certain criteria.
10) An outline agreement contains line items.
11) Invoice verification is responsible for the payment of invoices in ERP.
12) In ERP, every module can access every master record.
13) Goods movement can be either an internal or external event.
14) Well-designed receiving procedures should call for an independent count of materials
delivered and for the preparation of the receiving report.
15) In the procurement business process it is not necessary to separate receiving from stores.
16) Buyer-vendor relationships are more a matter of procedure than of policy.
17) The imprest fund concept is primarily restricted to petty cash control.
18) A voucher payable system encompasses all expenditures, including trade accounts, payroll,
and capital expenditures.
19) Vouchers themselves can take several forms, and the form of the voucher itself is not
significant.
20) When using a built-up voucher system, the account “Vouchers Payable” is used in addition to
“Accounts Payable.”
21) In a negative timekeeping system only exceptions are recorded.
22) The travel expense component of the ERP HR-PA does not support HR recruitment efforts.
23) An “infotype” is a SAP term that denotes a collection of data fields that is grouped together
for display.
24) Payroll processing is one of the simplest procedures within a large organization.
25) The individual who distributes paychecks should be independent of personnel, timekeeping,
and the payroll department.
26) The ERP system’s “create” function adds a new blank infotype with a default validity date
from “current date” to “end of time.”
27) In the ERP system a personnel event is a single HR infotype.
28) One of the functions of the personnel department is the timekeeping function.
29) Unemployment compensation laws are the same in all states, and all states participate in the
federal-state unemployment insurance program.
30) An employer is responsible for the full amount of federal payroll taxes even when he or she
fails to withhold the appropriate contributions from employees.
31) Because the procurement business process generates revenue amounts that are considered to
be significant accounts, disclosures, and assertions on a company’s income statement, risk
assessment of the procurement business process is necessary for compliance with Sarbanes-
Oxley.
32) The payroll business process is a subset of procurement and therefore, falls outside the
control of Sarbanes-Oxley.
33) Within the procurement business process, fundamental controls are based on a separation of
function.
34) Risk assessment for the payroll business process is required for compliance with Sarbanes-
Oxley.
35) For the procurement business process, assessed risk must be clearly documented and controls
selected for testing and evaluation.
36) For the procurement business process, assessed risk is optional under Sarbanes-Oxley as long
as a company’s internal control system has been approved by external auditors.
37) Once a purchase requisition is completed, it is electronically forwarded to a(n) ________ for
approval.
38) ________ documents are used in the selection of a vendor.
39) The ________ ________ purchase order is issued to initiate a movement of goods between
plants in a company.
40) ERP Master Material records contain so much data that they are organized as ________.
41) Master records used only by purchasing in the ERP system are ________ ________ records.
42) Purchasing policies may require ________ ________, which is usually implemented through
use of request-for-quotation documents.
43) A voucher system is essentially a(n) ________ technique.
44) SAP ERP contains the ________ and the ________ HR modules.
45) The most often used feature in the SAP ERP HR modules is the ________ ________ feature.
46) In the ERP system there are ________ data structures which provide the basis for the storage
and manipulation of data.
47) To make each infotype in the ERP system unique and to prevent overwriting when updating
infotypes, ________ data is added to each infotype.
48) The SAP ERP HR object code for the object Job is ________.
49) The rate of pay for an employee cannot be changed unless authorized by the ________
department.
50) In most states, unemployment compensation laws provide for taxes only on ________.
51) The basic information about what the U.S. government requires with respect to payroll is
outlined in the Internal Revenue Service’s publication called ________ ________.
52) Risk ________ for payroll, procurement, and customer order management business
processes is required for compliance with Sarbanes-Oxley.
53) For compliance with SOX, assessed risk for business processes must be clearly documented
and ________ selected for testing and evaluation.
54) Management and auditors must be concerned with evaluating the existence and functioning
of controls as they are necessary to protect against the risk of ________ misstatements.
55) Risk ________ for payroll, procurement, and customer order management business
processes is required for compliance with Sarbanes-Oxley
A) control
B) compliance
C) assessment
D) assertions
56) For compliance with SOX, assessed risk for business processes must be clearly
A) tested and reported to FASB.
B) documented on form Circular E and submitted to the SEC.
C) tested and checked for material irregularities.
D) documented and controls selected for testing and evaluation.
57) Management and auditors must be concerned with evaluating the existence and functioning
of controls as they are necessary to protect against the risk of
A) material misstatements.
B) fraud.
C) management misrepresentations.
D) human errors.
58) In the materials planning system, purchase requisitions can
A) only be prepared electronically.
B) only be prepared manually.
C) be prepared either manually or electronically.
D) Purchase requisitions are not part of the materials planning system.
59) The final step in the procurement process should be
A) preparation of the purchase order.
B) vendor payment.
C) receipt of the goods.
D) invoice verification.
60) A procurement document that is not available in ERP is the
A) quotation.
B) contract.
C) scheduling agreement.
D) invoice.
61) ERP can check to see whether a contract exists with a vendor to fill the requirements of a
purchase requisition. If no vendor is available, ERP will
A) prepare a request for quotation.
B) prepare a quotation.
C) select an appropriate vendor.
D) issue a warning diagnostic to the user about the situation.
62) In the SAP ERP system, an outline agreement with a vendor is basically a
A) request for a quotation.
B) contract.
C) purchase order.
D) purchase requisition.
63) How does ERP’s materials management module assist in vendor selection?
A) It links the quotation documents with the requisition.
B) It downloads product information from the vendor’s system.
C) It provides a 100-point scoring system to evaluate vendors.
D) It sends rejection letters to vendors whose bids are not accepted.
64) A document which identifies a vendor and confirms the quantity and price of goods
identified in it is called a(n)
A) purchase requisition.
B) outline agreement.
C) purchase order.
D) scheduling agreement.
65) The type of purchase order a vendor receives when the vendor must receive and assemble
parts into an end product is known as a
A) third-party purchase order.
B) standard purchase order.
C) stock transport purchase order.
D) subcontract purchase order.
66) An outline agreement detailing the total quantity of material to be ordered over a period of
time is a
A) quantity contract.
B) value contract.
C) scheduling agreement.
D) subcontract.
67) A purchase order prepared under an existing contract or scheduling agreement is called a
A) consignment purchase order.
B) stock transport purchase order.
C) standard purchase order.
D) release order.
68) Goods receipt documents can be prepared in several ways. Which way below would not be
used when preparing a goods receipt document?
A) By the Inventory Management system
B) By allowing accounts payable to prepare the document
C) By reference to the purchase order
D) Posting the goods receipt document into quality inspection
69) In ERP, the invoice verification component ensures that
A) cost requirements have been met.
B) quantity requirements have been met.
C) shipping deadlines have been met.
D) Answers A and B are correct.
70) The ERP system compares which of the following documents in its invoice verification
procedure?
A) Purchase order and goods receipt document
B) Goods receipt document, invoice, and requisition
C) Goods receipt document, invoice, purchase order, and requisition
D) Goods receipt document, invoice, and purchase order
71) Vendor payment is typically made
A) when an authorized order is placed.
B) once an invoice is posted.
C) when a goods receipt document is prepared.
D) when a purchase requisition has been approved.
72) In ERP, master records are created that reflect the organization structure and business
processes of the company. Company, plant, and storage locations are known in ERP as
A) objects.
B) organizations.
C) targets.
D) entities.
73) A code is not used in ERP master records to identify a(n)
A) plant.
B) accounting unit.
C) specific invoice.
D) purchasing organization.
74) The Materials Management module of ERP maintains vendor master data. Users in different
departments can update these records as necessary. There are several categories of information
maintained in vendor master records. Which category of data below is not maintained in the
vendor master records?
A) General data such as name, address, and telephone
B) Purchasing data such as quotations, invoice verification, or inventory control
C) Object data such as an organization accounting unit
D) Company code (accounting data) defines agreed payment terms and sub-ledger reconciliation
account number
75) The ERP master records that has a hierarchical structure is the
A) material master record.
B) vendor master record.
C) object master record.
D) purchasing information master record.
76) The specific component of ERP which allows a user to check goods movement and manage
inventory stocks is the
A) materials management module.
B) inventory management module.
C) vendor master record.
D) material master record.
77) The department or function that is responsible for selecting a vendor to order materials from
is
A) purchasing.
B) individual departments requesting the material.
C) requisitioning (stores).
D) sales.
78) Which of the following accesses the purchase order database during the processing of a
purchase order?
A) General ledger and accounts payable
B) Accounts payable, stores, and the receiving department
C) Receiving department, stores, and the general ledger
D) Accounts payable, stores and the general ledger
79) Which of the following normally receives a copy of the purchase requisition?
A) Vendor
B) Stores
C) Purchasing
D) Receiving department
80) Which of the following reviews and approves the purchase order prior to its further
processing?
A) Stores
B) Receiving
C) Internal audit
D) The requesting department
81) To do a blind count, the receiving department
A) should receive a copy of the purchase order with the quantities omitted.
B) should not receive a copy of the purchase requisition.
C) should not receive a copy of the purchase order.
D) should prepare the receiving report only after the count is completed.
82) The documents which accounts payable should use to verify a purchase transaction are
A) purchase requisition, receiving report, and invoice.
B) receiving report and purchase order.
C) invoice, purchase requisition, and purchase order.
D) purchase requisition, invoice, receiving report, and purchase order.
83) With respect to the segregation of duties, the main function of cash disbursements is
A) custody of assets.
B) authorization.
C) reconciliation.
D) recording of transactions.
84) The best way to prevent improper buyer-vendor relationships is to
A) separate the purchasing and receiving functions.
B) have formal written policies and procedures over procurement.
C) have cash disbursements report to the treasurer.
D) permit only purchasing supervisors to select vendors.
85) Among the following pair of functions, which pair represents the most serious internal
control weakness when the duties are performed by the same individual?
A) Purchasing and verification of vendor invoices
B) Check signing and cancellation of voucher documentation
C) Cash disbursement and verification of vendor invoices
D) Physical handling of incoming merchandise and preparation of receiving reports
86) The key to the success of the attribute rating approach to vendor selection is
A) attributes must be identified and listed.
B) a weight must be assigned to each identified attribute.
C) individual evaluators should rank attributes independently of each other.
D) attribute numerical rankings should be multiplied by their appropriate weights.
87) Vendors found on a company’s approved vendor list should possess the attribute(s) of
A) financial soundness.
B) reliability.
C) no conflicts of interest.
D) An approved vendor should possess all of these attributes.
88) Which of the following is not a major control feature of the cash disbursements business
process?
A) Use of a voucher system
B) Use of an imprest fund
C) An independent bank reconciliation
D) Separation of approval from actual payment
89) The function responsible for forwarding voucher checks directly to payees is
A) cash disbursements.
B) accounts payable.
C) internal audit.
D) purchasing.