Quiz on Purchase and Payment Cycle

What is the main account affected in the Statement of Comprehensive Income within the purchases and payments cycle?

• Bank

• General company expenses

• Cash

• Trade payables

Which document is essential for the ordering of goods and services?

• Invoice

• Goods received note

• Purchase order

• Supplier delivery note

What is the purpose of a Goods Received Note (GRN)?

• To record payments

• To authorize suppliers

• To confirm receipt of goods

• To issue purchase orders

What is the first step in the purchasing process according to the text?

• Recording purchases

• Receiving goods

• Ordering goods

• Making payments

Which of the following is NOT a function of the purchases and payments cycle?

• Ordering of goods

• Payments to creditors

• Receiving of goods

• Recording of sales

What is the role of the purchasing department in a large organization?

• To manage sales

• To source goods for the chain

• To handle customer complaints

• To oversee marketing

What must be done before a purchase order is sent to the supplier?

• It must be signed by the supplier

• It must be emailed to the finance department

• It must be authorized by the purchase manager

• It must be filed in triplicate

What is a key risk in the ordering function of the purchases and payments cycle?

• Invoices may be lost

• Orders may not be properly authorized

• Goods may be received damaged

• Payments may be made late

Which of the following is a control measure for the receiving of goods?

• Issuing purchase orders

• Preparing invoices

• Recording payments

• Inspecting goods for quality

What should be done with damaged goods upon receipt?

• They should be accepted

• They should be returned to the supplier

• They should be recorded as received

• They should be discarded