AIS ch 8, AIS CH. 12 Quiz, Chapter 13 Questions - AIS, AIS CH 10, AIS- Chapter 11, Acc 250 - 3, AIS Chapter 7, AIS Ch 4, AIS Chapter 15, f

1. All of the following are examples of programmed reports except a. cash flow reports for Division B b. year-to-date local income tax payments made by all employees living in City X and working in City Y c. inventory exception reports for Division G d. equipment utilization reports for Plant M

b. year-to-date local income tax payments made by all employees living in City X and working in City Y

The accounts receivable management method typically used by credit card companies is

balance forward method?

Which of the following is the method for tracking accounts receivable whereby customers pay according to the amount showing on their monthly statement and payments are applied against the total amount shown on the statement?

balance foward

For good internal control over customer remittances, the mail room clerk should separate the checks from the remittance advises and send the remittance advises to which department?

billing?

28. In contrast to tactical planning decisions, management control decisions, and operational control decisions, strategic planning decisions usually a. are more focused b. have a shorter time frame c. are unstructured d. have a high degree of certaint

c. are unstructured

30/40

Some are question marked and some aren't go through all again.

Which of the following is useful for evaluating current credit policies and for deciding whether to increase the credit limit for specific customers?

accounts receivable ageing report?

In a revenue cycle with proper controls, the _________ who reports to the __________, is no involved in any cash handling activities.

accounts recievable; treasurer?

36. Which of the following statements is NOT true? a. Sorting records that are coded alphabetically tends to be more difficult for users than sorting numeric sequences. b. Mnemonic coding requires the user to memorize codes. c. Sequential codes carry no information content beyond their order in the sequence. d. Mnemonic codes are limited in their ability to represent items within a class.

b. Mnemonic coding requires the user to memorize codes.

4. When a firm wants its coding system to convey meaning without reference to any other document, it would choose a. an alphabetic code b. a mnemonic code c. a group code d. a block code

b. a mnemonic code

33. Which statement is not true? Responsibility accounting a. involves both a top-down and bottom-up flow of information b. acknowledges that some economic events cannot be traced to any manager c. creates a budget d. compares actual performance with budget

b. acknowledges that some economic events cannot be traced to any manager

13. Financial statements are prepared from the a. trial balance b. adjusted trial balance c. general ledger d. general journal

b. adjusted trial balance

1. The coding scheme most appropriate for a chart of accounts is a. sequential code b. block code c. group code d. mnemonic code

b. block code

17. The audit trail fulfills all of the following purposes except a. provides the ability to answer inquiries b. ensures the accuracy of the application software c. fulfills governmental regulations d. offers a means for preventing, detecting, and correcting errors

b. ensures the accuracy of the application software

2. What account appears on the postclosing trial balance? a. income summary b. machinery c. rent expense d. interest income

b. machinery

25. The level of management that makes tactical planning decisions is a. top management b. middle management c. operations management d. front-line management

b. middle management

23. Short-range planning involves a. setting goals and objectives of the firm b. planning the production schedule for the next quarter c. planning the growth of the firm d. deciding on the degree of diversification among the firm抯 products

b. planning the production schedule for the next quarter

8. What type of data is found in the general ledger master file? a. a chronological record of all transactions b. the balance of each account in the chart of accounts c. budget records for each account in the chart of accounts d. subsidiary details supporting a control account

b. the balance of each account in the chart of accounts

29. Which of the following management principles affects the management reporting system? a. formalization of tasks b. authorization c. span of control d. all of the above

d. all of the above

6. Entries into the General Ledger System (GLS) can be made using information from a. the general journal b. a journal voucher which represents a summary of similar transactions c. a journal voucher which represents a single, unusual transaction d. all of the above

d. all of the above

24. Long-range planning involves a. planning the marketing and promotion for a product b. presenting department heads with budgetary goals for the next year c. preparing a work force utilization budget for the next quarter d. deciding the optimum size of the firm

d. deciding the optimum size of the firm

37. Which file has as its primary purpose to present comparative financial reports on a historic basis? a. journal voucher history file b. budget master file c. responsibility file d. general ledger history file

d. general ledger history file

10. Which steps in the Financial Accounting Process are in the correct sequence? a. record the transaction, post to the ledger, prepare the adjusted trial balance, enter adjusting entries, prepare financial statements b. record the transaction, prepare the unadjusted trial balance, record adjusting journal entries, record closing entries, prepare financial statements c. record the transaction, post to the ledger, record adjusting entries, prepare the unadjusted trial balance, prepare financial statements d. record the transaction, post to the ledger, prepare the adjusted trial balance, prepare financial statements, record closing entries

d. record the transaction, post to the ledger, prepare the adjusted trial balance, prepare financial statements, record closing entries

20. A characteristic of the Management Reporting System (MRS) is a. the MRS operates in conformity with generally accepted accounting principles b. it is a legal requirement that the MRS be installed and functioning properly c. the MRS is developed by implementing SEC requirements d. the MRS focuses on internal decision-making information

d. the MRS focuses on internal decision-making information

15. Which situation indicates an internal control risk in the General Ledger/Financial Reporting Systems (GL/FRS)? a. the employee who maintains the cash journal computes depreciation expense b. the cash receipts journal voucher is approved by the Treasurer c. the cash receipts journal vouchers are prenumbered and stored in a locked safe d. the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

d. the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

39. Which of the following performance measures can not result in dysfunctional behavior? a. price variance b. quotas c. ROI d. net income e. all of the above can result in dysfunctional behavior

e. all of the above can result in dysfunctional behavior

Customers that send their payments electronically directly to the billing company's bank are using

electronic funds transfer (EFT)

Separating the shipping and billing functions is designed to reduce the threat of

failure to bill customers?

Which of the following is a threat to the sales order entry activity?

failure to bill?

According to generally accepted accounting principles, a sale is recognized when

inventory becomes the legal property of the customer

Which of the following is not a threat to the shipping process?

inventory theft?

Which of the following provides a means to improve the efficiency of processing customer payments and to enhance control over those payments

lockboxes

Which of the following is not a threat to the billing process

loss of customers?

Which method is most likely used when a company offers customers discounts for a prompt payment?

open-invoice method?

Which document often accompanies merchandise shipped to a customer

packing slip

Which of the following normally triggers the billing process in the revenue cycle?

packing slip recieved from the shipping department?

Which document is used to authorize the release of merchandise form the warehouse to shipping?

picking ticket

Which activity is part of the sales order entry process?

preparing a bill of landing?

The document a customer returns with their payment and that identifies the source and the amount of the payment is called a

remittance advice?

An effective method of reducing the risk of theft is

requiring the warehouse and the shipping department to sign-off on the transfer of goods

The basic document created in the billing process is call a

sales invoice

Who should be allowed to authorize new customers?

sales manager or sales person, especially if the salesperson is in the field?

Which of the following is not a control for mitigating the risk of posting errors in accounts receivable?

setting proper credit limits

A picking ticket is generated by the

shipping process?

Which of the following is not a threat associated with billing and account receivable?

theft of cash

Which of the following is not threat to the sales order entry process?

uncollecteable accounts?

Which of the following describes sending monthly statements to customers throughout the entire month, instead of just at the end of the month?

Cycle Billing

Customers sending order digitally in a format compatible with the vendor's sales order processing system is an example of

EDI?

9) ________ attempts to minimize or eliminate carrying and stockout costs. A) Just-in- time inventory B) Materials requirements planning C) Economic order quantity D) Evaluated receipt settlement

A) Just-in- time inventory

17) Which of the following is generally not shown on a receiving report? A) price of the items B) quantity of the items C) purchase order number D) counted and inspected by

A) price of the items

8) Materials requirements planning (MRP) A) reduces the uncertainty about when materials are needed, thereby reducing the need to carry large levels of inventory. B) is able to compute exactly the cost of purchasing by taking into account all costs associated with inventory carrying. C) requires vendors to deliver inventory to the production site exactly when needed and in the correct quantities. D) None of the above is correct.

A) reduces the uncertainty about when materials are needed, thereby reducing the need to carry large levels of inventory.

An __________ is an arrangement where a bank receives customer payments and transmits payment data to the organization.

Electronic lockbox

4) Economic Order Quantity (EOQ) includes several variables that must be taken into consideration when calculating the optimal order size. One variable, the costs associated with holding inventory, is referred to as A) ordering costs. B) carrying costs. C) the reorder point. D) stockout costs.

B) carrying costs.

13) Which of the following is least likely to be a major criterion in vendor selection? A) prices of goods B) credit rating of the vendor C) quality of goods D) ability to deliver on time

B) credit rating of the vendor

10) Just-In- Time (JIT) inventory is best characterized by A) frequent deliveries of large quantities to be held at the work centers. B) frequent deliveries of smaller quantities of items to the work centers. C) less frequent deliveries of large quantities of goods to central receiving. D) infrequent bulk deliveries of items directly to work centers.

B) frequent deliveries of smaller quantities of items to the work centers.

7) What is a key feature of materials requirements planning (MRP)? A) minimize or entirely eliminate carrying and stockout costs B) reduce required inventory levels by scheduling production rather than estimating needs C) determine the optimal reorder point D) determine the optimal order size

B) reduce required inventory levels by scheduling production rather than estimating needs

5) The ________ specifies the point at which inventory is needed. A) company inventory policies B) reorder point C) economic order quantity D) stockout point

B) reorder point

2) One of the basic activities in the expenditure cycle is the receiving and storage of goods, supplies, and services. What is the counterpart of this activity in the revenue cycle? A) sales order entry process B) shipping function C) cash collection activity D) cash payments activity

B) shipping function

12) When would an MRP inventory approach be a preferred to a JIT inventory approach? A) when a product has a short life cycle B) when demand for inventory is fairly predictable C) when demand for inventory is very unpredictable D) MRP is always a preferred method over JIT.

B) when demand for inventory is fairly predictable

The __________ is a legal contract the defines responsibility for goods that are in transit

Bill of Landing

Which of the following is true regarding revenue cycle controls?

Both warehouse and shipping sign-off on the packing slip?

16) A major cost in the purchasing function is the number of purchase orders processed. One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest price. The name of this technique is A) an EDI auction. B) a trading exchange. C) a reverse auction. D) a supplier consortium.

C) a reverse auction.

15) Duc An Incorporated provides free coffee to employees. Starbucks delivers coffee packages, sugar, creamer, and filters each week. Every month, Starbucks sends Duc An an invoice. This arrangement is best described as a A) set purchase order. B) fixed purchase order. C) blanket purchase order. D) standard purchase order.

C) blanket purchase order.

3) The traditional approach to inventory management to ensure sufficient quantity on hand to maintain production is known as A) safety stock. B) just-in- time production. C) economic order quantity. D) optimal inventory quantity.

C) economic order quantity.

6) Which electronic files are either read or updated when goods are ordered from a vendor? A) inventory, vendors, and accounts payable B) vendors and accounts payable C) inventory, vendors, and open purchase orders D) open purchase orders and accounts payable

C) inventory, vendors, and open purchase orders

When a proper segregation of duties exists in the area of handling cash receipts, the ________, who reports to the __________, actually handles the cash and is not the same person who posts cash receipts to customer accounts.

Cashier; treasure

19) Identify in which of the following scenarios a company could adjust the balance due the vendor by issuing a debit memo. A) quantity different from that ordered B) damage to the goods C) goods that fail inspection for quality D) All of the above are possible scenarios.

D) All of the above are possible scenarios.

11) What is the key difference between the MRP and JIT inventory management approaches? A) Only JIT reduces costs and improves efficiency. B) MRP is especially useful for products such as fashion apparel. C) JIT is more effectively used with products that have predictable patterns of demand. D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.

D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.

14) Once a vendor is selected for a product, the vendor's identity is recorded in the A) purchase requisition transaction file. B) purchase requisition master file. C) inventory transaction file. D) inventory master file.

D) inventory master file.

18) A receiving clerk notes that a delivery of 10 units has been received, but the purchase order specified 12 units. A debit memo will need to be prepared to adjust for the difference between the quantity ordered and received. Who should prepare this document? A) the receiving clerk B) the controller C) the vendor D) the purchasing department manager

D) the purchasing department manager

1) The Gwallter Reece Chihuahua Sweater Co. (GRCCo) was established in 2013. It recently signed a large contract with PetCo pet stores. GRCCo will be required to track and forecast sweater sales by linking in to PetCo's sales database. GRCCo will then be responsible for shipping products to PetCo as needed. The relationship between GRCCo and PetCo is an example of A) sales force automation. B) electronic data interchange. C) optical character recognition. D) vendor-managed inventory.

D) vendor-managed inventory.

Which of the following techniques is the most effective way to process customer payments and update accounts receivable?

FEDI?

Of the following examples of fraud, which will be the most difficult to prevent and detect? Assume the company enforces adequate segregation of duties.

Mike issues credit cards to him and Maxine, and when the credit card balances are just under $1,000, Maxine writes off the accounts as bed debt. Mike then issues new cards?

9. Which report is not an output of the Financial Reporting System (FRS)? a. variance analysis report b. statement of cash flows c. tax return d. comparative balance sheet

a. variance analysis report

Which of the following is not a basic activity of the revenue cycle?

Receiving

The accounts receivable clerk destroys all invoices for sales made to family and friends and does not record the sales in the accounts receivable subsidiary ledgers. The family and friends usually give the clerk cash as a "thank you." Which procedure will not prevent or detect this fraud?

Send monthly statements to all customers with balances owed?

At a movie theater box office, all tickets are sequentially prenumbered. At the end of each day, the beginning ticket number is subtracted from the ending number to calculate the number of tickets sold. Then, ticket stubs are collected the the theater entrance are counted and compared with the number of tickets sold. Which of the following situations does this control detect?

Some customers presented tickets purchased on a previous day when there wasn't a ticket taker at the theater entrance (so the tickets didn't get torn)?

21. Which statement is not true? a. authority refers to an individual抯 obligation to achieve desired results b. if an employee is given the responsibility for a task, that employee should be given authority to make decisions within the limits of that task c. the level of detail provided to an employee is a function of the employee抯 position with the firm d. all of the above are true

a. authority refers to an individual抯 obligation to achieve desired results

40. Which of the following best describes a profit center: a. authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply. b. authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply, and significant control over the amount of invested capital. c. authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply. d. authority to provide specialized support to other units within the organization. e. responsibility for combining the raw materials, direct labor, and other factors of production into a final product.

a. authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply.

30. All of the following are elements of problem structure except a. certainty b. data c. procedures d. objectives

a. certainty

35. All of the following concepts encourage goal congruence except a. detailed information reporting at all management levels b. authority and responsibility c. formalization of tasks d. responsibility accounting

a. detailed information reporting at all management levels

27. All of the following are elements of operational control decisions except a. determining the scope of the activity b. setting operating standards c. evaluating performance d. taking corrective action when necessary

a. determining the scope of the activity

38. All of the following are characteristics of the strategic planning process except the a. emphasis on both the short and long run. b. review of the attributes and behavior of the organization抯 competition. c. analysis of external economic factors. d. analysis of consumer demand.

a. emphasis on both the short and long run.

22. Which statement is not true? The manager抯 span of control a. is narrow for routine and repetitive tasks b. is related to the number of layers of management c. affects the amount of detail provided to a manager d. can affect employee morale and motivation

a. is narrow for routine and repetitive tasks

32. A fundamental principle of responsibility accounting is that a. managers are accountable only for items they control b. a manager抯 span of control should not exceed eight people c. structured reports should be prepared weekly d. the information flow is in one direction, top-down

a. managers are accountable only for items they control

3. The most important advantage of sequential coding is that a. missing or unrecorded documents can be identified b. the code itself lacks informational content c. items cannot be inserted d. deletions affect the sequence

a. missing or unrecorded documents can be identified

26. The decision to enter a new market is an example of a. strategic planning b. tactical planning c. management control d. operational control

a. strategic planning

11. Which statement is not correct? a. the post-closing trial balance reports the ending balance of each account in the general ledger b. one purpose of preparing the unadjusted trial balance is to ensure that debits equal credits c. financial statements are prepared based on the unadjusted trial balance d. the unadjusted trial balance reports control account balances but omits subsidiary ledger detail

c. financial statements are prepared based on the unadjusted trial balance

2. A common use for sequential coding is a. creating the chart of accounts b. identifying inventory items c. identifying documents d. identifying fixed assets

c. identifying documents

7. Which statement is not correct? The general ledger master file a. is based on the firm抯 chart of account b. contains a record for control accounts c. is an output of the Financial Reporting System (FRS) d. supplies information for management decision making

c. is an output of the Financial Reporting System (FRS)

14. Risk exposures in the General Ledger and Financial Reporting Systems include all of the following except a. loss of the audit trail b. unauthorized access to the general ledger c. loss of physical assets d. general ledger account out of balance with the subsidiary account

c. loss of physical assets

6. With a limited work force and a desire to maintain strong internal control, which combination of duties performed by a single individual presents the least risk exposure? a. maintaining the inventory ledger and recording the inventory journal voucher in the general ledger b. recording the inventory journal voucher in the general ledger and maintaining custody of inventory c. maintaining the cash disbursements journal and recording direct labor costs applied to specific jobs d. preparing the accounts payable journal voucher and recording it in the general ledger

c. maintaining the cash disbursements journal and recording direct labor costs applied to specific jobs

34. What mechanism is used to convey to managers the standards by which their performance will be measured? a. the responsibility report b. the scheduled report c. the budget d. all of the above

c. the budget

5. The most important advantage of an alphabetic code is that a. meaning is readily conveyed to users b. sorting is simplified c. the capacity to represent items is increased d. missing documents can be identified

c. the capacity to represent items is increased

18. Which best describes a batch process General Ledger System (GLS) a. paper documents are eliminated b. the general ledger master file is updated each night c. there is a time lag between transaction processing and posting to the general ledger d. no direct access or querying of the General Ledger is possible

c. there is a time lag between transaction processing and posting to the general ledger

19. An advantage of a batch General Ledger System (GLS) is that a. separation between authorization and transaction processing is strictly enforced b. the general ledger master file is recreated with each update c. updates and reconciliation of transactions occur as a step within the transaction cycle d. errors and out-of-balance conditions are identified at the end of the month

c. updates and reconciliation of transactions occur as a step within the transaction cycle

Which of the following revenue cycle activities can potentially be eliminated by technology?

cash collections?

For good internal control over customer remittances, the mail room clerk should separate the checks from the remittance advices and send the customer payments to which department

cashier?

Which activity is part of the sales order entry process?

checking iventory

For good internal control, who should approve credit memos?

credit manager