NAME:   COURSE: ICT 2  

SCORE
SECTION:   DATE:  

MIDTERM EXAMINATION

PART I: MULTIPLE CHOICE. SELECT THE BEST ANSWER TO THE FOLLOWING QUESTIONS. (2 PTS. EACH)

B 1. Which document helps to ensure that the receiving clerks actually count the number of goods received?
A. Packing list C. Shipping Notice
B. Blind Copy of Purchase Order D. Invoice

A 2. When the goods are received and the receiving report has been prepared, which ledger may be
updated?
A. Standard Cost Inventory Ledger C. General Ledger
B. Inventory Subsidiary Ledger D. Accounts Payable Subsidiary Ledger

D 3. Which statement is NOT correct for an expenditure system with proper internal controls?
A. Cash disbursements maintain the C. Accounts payable is responsible for paying
check register. invoices.
B. Accounts payable maintains the D. Accounts payable is responsible for authorizing
accounts payable subsidiary ledger. invoices.

A 4. Which duties should be segregated?

A. Matching Purchase Requisitions, C. Writing checks and maintaining the Check
Receiving Reports, and invoices and Register
authorizing payment
B. Authorizing payment and maintaining D. Authorizing payment and maintaining the
the Check Register Accounts Payable Subsidiary Ledger

A 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 C. Purchase Requisitions
B. Purchase Orders D. Receiving Reports

C 6. Which task must still require human intervention in an automated purchases/cash disbursements
system?
A. Determination of inventory C. Preparation of a Receiving Report
requirements
B. Preparation of a Purchase Order D. Preparation of a Check Register

B 7. Which one of the following departments does not have a copy of the purchase order?
A. Purchasing Department C. Accounts Payable
B. Receiving Department D. General Ledger
 D 8. Which document typically triggers the process of recording a liability?
A. Purchase Requisition C. Receiving Report
B. Purchase Order D. Supplier’s Invoice

C 9. Which of the following tasks should the cash disbursement clerk NOT perform?
A. Review the supporting documents for C. Approve the liability
completeness and accuracy
B. Prepare checks D. Mark the supporting documents paid

A 10. Which of the following is true?

A. The cash disbursement function is part C. Cash disbursements is a treasury function
of accounts payable
B. Cash disbursements is an independent D. The cash disbursement function is part of the
accounting function. general ledger department

PART II: ESSAY. PROVIDE THE REQUIREMENT FOR EACH OF THE ITEMS BELOW. (10 PTS. EACH)

1. UNRECORDED LIABILITIES
You are auditing the financial statements of a New York City company that buys a product from a manufacturer in Los
Angeles. The buyer closes its books on June 30.

Assume the following details:

 June 10, buyer sends Purchase Order to seller
 June 15, seller ships goods
 July 5, buyer receives goods
 July 10, buyer receives seller’s invoice

Required
a. Could this transaction have resulted in an unrecorded liability in the buyer’s financial statements?
b. If yes, what documents provide audit trail evidence of the liability?
c. On what date did the buyer realize the liability?
d. On what date did the buyer recognize the liability?

2. ACCOUNTING DOCUMENTS
Required
Answer the following questions.
a. Which department is responsible for initiating the purchase of materials?
b. What is the name of the document generated by the department identified in (a) above?
c. Typically, multiple copies of a Purchase Order are prepared. One copy should go to the vendor, and one is retained in
the Purchasing Department. To achieve proper control, which other departments should receive copies of the purchase
order?
d. What documents does the Accounts Payable clerk review before setting up a liability?

3. DATA PROCESSING
Explain how the processing procedures would differ, if at all, for the transactions if a computer-based system with
a. a basic batch-processing system were implemented.
b. a batch-processing system with real-time data input were used.
*BASIC BATCH PROCESSING MAY STILL HAVE DELAYS AS DATA MAY BE INPUTED DURING END OF DAY/ END OF WEEK,
-AFTER BEING COLLECTED. SO, SOME PROCESS REMAINS THE SAME BUT ONLY AUTOMATED. IF WITH REAL-TIME DATA
INPUT, THE PROCESS USUALLY UNDERGO REENGINEERING, SO SOME OF THE PROCEDURES IN MANUAL AND BASIC
BATCH PROCESSING WILL BE REPLACED BY A MORE STREAMLINED PROCEDURES. THIS WILL MAKE THE ENTIRE PROCESS
FASTER, AS SOME TASKS CAN NOW BE DONE SIMULTANEOUSLY.
*REFER TO MODULE 5 FIG. 1 AND FIG. 4 (YUNG MGA DIKIT-DIKIT NA ARROWS YUN YUNG MGA SABAY-SABAY. YOU CAN
USE THAT AS AN EXAMPLE).