Chapter 11: Expenditure Cycle

6 Written Questions

1. a commitment to purchase specified items at designated prices from a particular supplier for a set time period, often one year.
2. an approach to inventory magmt that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production operations are to begin
3. an 'invoicesless' approach to the accounts payable process. ERS replaces the traditional threeway matching process with a two-way match of the purchase order and receiving report. ERS saves time and money by reducing the number of potential mismatches. ERS also saes suppliers the time and expense of generating and tracking invoices.
4. a document that formally requests a vendor to sell and deliver specified products at designated prices. it is also a promise to pay and becomes a contract once the vendor accepts it.
5. a document that records details about each delivery, including the date rceived, shipper, vendor, and purchase order numbers.
6. a system that minimizes or virtually eliminates manufacturing inventories by scheduling inventory deliveries at the precise times and locations needed. Instead of making infrequent bulk deliveries to a central receiving and storage facility, suppliers deliver materials in small lots at frequent intervals to the specific locations that require them

6 Multiple Choice Questions

1. the level to which the inventory balance of an item must fall befor an order to replenish stock is initiated.
   1. imprest fund
   2. debit memo
   3. voucher package
   4. reorder point
2. a document used to record a reduction to the balance due to a vendor
   1. imprest fund
   2. debit memo
   3. receiving report
   4. kickbacks
3. a recurring set of business activities and related data processing operations associated with the purchase of and payment for goods and services
   1. debit memo
   2. expenditure cycle
   3. reorder point
   4. purchase order
4. a corporate credit card that employees can use to purchase specific kinds of items
   1. disbursement voucher
   2. purchase order
   3. imprest fund
   4. procurement card
5. the set of documents used to authorize payment to a vendor. it consists of a purchase order, receiving report, and vendor invoice.
   1. reorder point
   2. voucher package
   3. kickbacks
   4. nonvoucher system
6. a document that identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances
   1. procurement card
   2. purchase order
   3. disbursement voucher
   4. imprest fund

5 True/False Questions

1. nonvoucher system → a method for processing accounts payable in which each approved invoice is posted to individual vendor records in the accounts payable file and iis then stored in an open invoice file. when a check is written to pay for an invoice, the invoice is removed from the open invoice file, marked paid, and stored in the paid invoice file.

   True        False

2. economic order quantity EOQ → the optimal order size so as to minimize the sum of ordering, carrying, and stockout costs. Ordering costs include all expenses associated with processing purchase transactions. Carrying costs are the costs associated with holding inventory. stockout costs represent costs, such as lost sales or production delays, which result from inventory shortages.

   True        False

3. kickbacks → gifts given by vendors to purchaseing agents for the purpose of influencing their choice of suppliers

   True        False

4. purchase requisition → a documentor electronic form that identifies the requisitioner; specifies the delivery location and date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest vendors

   True        False

5. imprest fund → a document used to record a reduction to the balance due to a vendor

   True        False