ACC 321: Final Exam Peggy

What does end-user documentation include?

A and B, Control procedures, Error recovery procedures.

Which of the following best describes a manual accounting system?

A and B, but not C. Slow and prone to error, Limited in the volume of data it can process

Of the following business organizations, which one requires daily financial statement preparation?

A bank

Data flow diagrams include what symbols?

A circle to indicate a process or operation

What does the Sarbanes-Oxley Act of 2002 require relative to documentation?

A company must document its internal control in detail.

Which of the following defines sales (customer) invoice?

A document that captures the data about a sale to a customer

Which of the following defines a master file in a computerized system?

A file for storing detailed information about general ledger control accounts (similar to a subsidiary ledger)

Which of the following defines a reference file in a computerized system?

A file that stores data used repeatedly for processing transactions (e.g., payroll tax table)

Which of the following best defines internal control?

A process by which management gains reasonable assurance that its objectives will be achieved.

In regard to real-time and batch posting, or updating, which of the following statements is correct?

A system may use both kinds of posting.

Which of the following defines a scratch file?

A temporary file used during processing and is purged when the operation is completed

What are the roles of people in computerized accounting systems?

A, B, and C, To monitor the processing of data and to interpret data, To manufacture hardware, write software, and maintain the accounting system, To supervise and control the accounting function

Which of the following is the appropriate format for an element in XBRL?

A. <Inventories>40000</Inventories>

What is one or a group of data elements that uniquely identifies a record?

A. A primary key

An employee in the receiving department keyed in a receiving record and inadvertently omitted the purchase order number. What control will prevent this error?

A. Anticipation of contents

Which of the following is true concerning the cost/benefit model for risk analysis?

A. As costs of controls increase, costs associated with risks decrease

What principle of segregation of duties is demonstrated by segregating the duties of hiring personnel from distributing payroll checks?

A. Authorization of transactions from the custody of related assets.

What is a control to ensure that transactions are reconstructed correctly after an unplanned termination of processing?

A. Automatic rollback.

Which of the following is not an example of horizontal analysis?

A. Common dollar analysis

Which factor has the most influence on the effectiveness of an organization's internal control?

A. Competent, dedicated, trustworthy employees

Which of the following includes risks that are all related to accounting information system activities?

A. Computer system failure, information security breaches, errors and irregularities in transaction authorization

Which of the following is a valid method for monitoring internal control?

A. Conducted as a separate project by IT auditors and supervisory personnel.

What are two major data entry processes (think of the processes that require the most entry items per transaction)?

A. Creation and issuance of purchase orders; recording of cash disbursements.

Which of the following actions result from the disbursement of cash for payment in the purchasing process?

A. Creation of the vendor invoice file

Why are conventional files easy to understand and operate?

A. Data are separated into files that mimic journals and ledgers in manual systems.

What is a major source of purchasing errors?

A. Data entry errors

Which of the following statements is not an advantage of a database?

A. Data storage and retrieval methods are designed by application developers.

What kind of input control is involved when a self-checking digit is appended to a customer account number?

A. Data verification control

What has replaced the traditional paper purchase order?

A. Electronic Data Exchange

What are the component factors in the assessment of risk?

A. Estimated probable loss and the estimated frequency of occurrence

What are controls that concern all computer activities?

A. General controls.

Which of the following describe categories of entity objectives that must exist before management can identify potential events?

A. High-level strategic goals aligned with and supporting the organization's vision or mission.

Which of the following factors are included in the internal environment?

A. Human resource policies and practices, integrity and ethical values, commitment to competence, and board of directors or audit committee

Which of the following statements about an object-oriented database is true?

A. It can handle maps, graphs, images, audio, and video as well as the familiar text and numbers.

Which of the following best describes the Sarbanes-Oxley Act of 2002?

A. It recommended that every publicly traded company include a report in its annual report assessing the effectiveness of the company's internal control structure and procedures.

Which of the following control activities would protect inventory from theft?

A. Limited access to the warehouse containing inventory.

In accounting software packages, what are accounts that have no sub-accounts called?

A. Normal accounts

What type of transaction would initially be recorded in the general ledger?

A. Payment of a lawsuit settlement of $5 million

Which of the following is true regarding the balance forward method of accounting for accounts receivable?

A. Payments are applied to the outstanding balance rather than to particular invoices.

A company updates its account receivable master file weekly and retains the master files and corresponding transaction files for the most recent two-week period. What is the purpose of this practice?

A. Permit reconstruction of the master file if needed.

What is the most critical report for shipping activities?

A. Picking list

What is a characteristic of radio frequency identification (RFID) that makes it preferable to universal product codes (UPC)?

A. RFID codes can identify a class or type of product, and can identify an individual product as it moves along the supply chain.

Which of the following is NOT an advantage of radio frequency identification (RFID)?

A. RFID may provide information allowing a credit card user to be identified or other surveillance unknown to the consumer.

The authority for receiving incoming shipments of goods and the responsibility for checking them normally resides with which of the following?

A. Receiving department and quality control personnel

Which of the following initiates a bidding situation among suppliers?

A. Request for quotation; request for proposal

Because entries can still be made in the earlier interim periods, closings for interim periods are known as what?

A. Soft closings

When an account is designated as an "inactive account," which of the following is true of its status?

A. The accounting information system will prevent further entries from being made to the account.

While advertising, promotion, and sales solicitations are functions in the business revenue process, the costs of these activities are accounted for in which process(es)?

A. The purchases and financial processes

What is safety stock?

A. The quantity of inventory necessary to avoid the loss of sales due to stockout

What is the single most effective control that avoids allowing one person to be in a position to perpetrate and then conceal errors or inappropriate activities?

A. The segregation of authorization of transactions, custody of related assets, and modification or creation of related data and program files (or paper- based records).

What is meant by the "logical" structure of a database?

A. The way the data are thought about, or viewed, by users

Which of the following best describes the Sarbanes-Oxley Act of 2002?

A. This act requires publicly-traded companies to include a report in its annual report assessing the effectiveness of the company's internal control structures/procedures.

What is a function of control totals?

A. To ensure that all authorized transactions are processed once and only once

Data access control activities include which of the following?

A. User authentication, encryption, firewall, automatic log off

An accounts payable program posted a payable to a vendor not included in the vendor master file. What is a control that would have prevented this error?

A. Validity check.

In the processing of a batch of purchase transactions, which of the following would be used to compute a hash total?

A. Vendor account numbers

Which of the following are the principal reports required for the effective management of the purchasing process?

A. Vendor performance

Which of the following represent authorization controls for information processing in the inventory process?

A. Written approval should be required before any item of equipment, materials, goods, or scrap can be removed from the plant facilities.

Which of the following statements does not apply to accounting information?

Accounting information is generated by only external activities.

Which of the following concepts are fundamental to the Enterprise Risk Management (ERM) framework?

All of the above

Which of the following duties should be segregated for good internal control?

All of the above

Reference identifiers are necessary to provide adequate audit trails for which of the following reasons?

All of the above, A reference identifier is unique to each event, account, and document, The identifier allows an auditor to trace a data item's location to its preceding location, The reference identifier sets up the processing references for an audit trail.

Which of the following files is (are) updated by the sales transaction file?

All of the above, Customer master file, Sales order open file, Customer open invoice file, Inventory master file.

Which of the following methods can be used to create a transaction file?

All of the above, Keying in or scanning data found on source documents, Transmitting data electronically, Extracting data from master files or open files.

Which of the following are required by the Sarbanes-Oxley Act of 2002?

All of the above, Rotation of a company's external auditing firms every five years, Limited loans under special circumstances to executive management, Attestation as to the contents of the financial statements by the CEO and CFO.

Effective exception reporting depends on an accounting information system having the ability to do which of the following?

All of the above, Select records based on differences between actual account balances and the budgeted amount for those accounts, Select records based on differences between current actual account balances and prior period actual account balances, Sequence selected records based on the size of the differences between comparative account balances

IT governance

All of the above, Should be part of enterprise governance, Has historically been ignored in corporate governance matters, Refers to issues surrounding technology solutions

Which of the following applies to documentation standards?

All of the above, Standards must conform to applicable industry, national or international conventions, Each item of documentation should bear the name of person checking and authorizing documentation for use, Each item should bear the date and name of person preparing it.

The Foreign Corrupt Practices Act requires which of the following?

All of the above, The auditor engaged to examine the financial statements must report to the SEC all illegal payments, A publicly-held company must establish an independent audit committee to monitor the effectiveness of a company's internal controls, U.S. firms doing business abroad must report sizable payments to non-U.S. citizens to the U.S. Justice Department, A company registered with the SEC must devise and maintain an adequate internal control.

Which of the following is true regarding Type II SAS 70 reports?

All of the above, They include the company's opinion of the internal control system of a third-party service provider, They include the results of testing of the third-party service provider's internal control system, The report must cover the third-party service provider's audit period.

Which of the following statements concerning user documentation is true?

All of the above,User documentation describes the system from the outside looking in, Different classes of users have different capabilities and needs and require different types of user documentation, User documentation emphasizes how to operate the system and includes instructions for executing the various programs and instructions for handling data

Which of the following statements is false?

An external auditor who performs a financial statement audit is not required by professional standards to gain an understanding of the client's accounting information system before expressing an opinion.

What is the difference in an internal control flowchart and a system flowchart?

An internal control flowchart shows functional areas to indicate the authorization of transactions, the custody of assets, and the recording of transactions.

What type of file provides a permanent record of the transactions recorded during an accounting period?

Archive file

What is the appropriate use of a narrative description?

As a companion to graphical representation

What is a set of processing references that enables the tracing of an event from its source to its destination or from its destination back to its sources known as?

Audit trail

Who would be most likely to use system documentation?

Auditors

Which of the following control activities ensure that the hours worked by a contractor are valid?

B All employee time should be positive and bear a reasonable relationship to the standard 40-hour work week.

Which of the following is not a method of payment application for open item accounts?

B Intermittent identification

What is a unique aspect of vendor maintenance?

B. 1099 tasks

What is the definition of internal control?

B. A process designed to provide reasonable assurance that objectives related to organizational strategy, quality of reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations will be achieved.

What is economic order quantity?

B. A result of balancing holding costs against order costs

Disaster recovery plans should include all of the following EXCEPT:

B. A strong audit trail for all transactions.

Which of the following represent physical controls?

B. Alarms and surveillance cameras for the warehouse.

Control activities can be designed to provide reasonable assurance that all except which of the following will happen?

B. All risks will be eliminated.

Which of the following is not a responsibility of an audit committee?

B. Attesting to the fairness of the financial statements

Which of the following is the most effective type of internal control?

B. Automated preventive controls.

Which of the following controls most likely would assure that an organization can reconstruct its files?

B. Backup copies of data and program files that are stored away from originals.

Which of the following documents has become the widely accepted authority on internal control and is the basis for the others?

B. COSO's Internal Control - Integrated Framework

What are listings of the cash disbursements transaction file are referred to?

B. Check register

Which of the following is NOT a key area for focus in IT governance?

B. Choice of public accounting firm to perform the annual audits and provide tax consulting services.

Which of the following statements about computer forensics experts is (are)TRUE?

B. Computer forensic experts collect evidence and information for use in fraud cases using legally accepted methods.

Which level of the database architecture relates to the way all the data in the entire database are logically viewed?

B. Conceptual level

The accuracy and completeness of the general ledger update process can be tested by comparing the accounts receivable balance before the update, the total debits and credits to the accounts receivable account in the sales transaction file, and the accounts receivable balance after the update. What does this process use?

B. Control total analysis

What are general computer controls?

B. Controls related to the reliability and consistency of the processing environment.

What are the two major data entry processes?

B. Creation and issuance of purchase orders; recording of merchandise received and services rendered

What are the subroutines called that define the external and conceptual schema in a database management system?

B. Data definition language

When auditing a client's database, the purpose of extracting high value and old invoices is to:

B. Determine potential invoices for review.

Which of the following controls is the most effective for preventing unauthorized access to data and program files?

B. Fingertip scanners

Which of the following controls ensures the accuracy of transactions in the revenue process?

B. Independent checks should be made to ascertain that the correct prices are being charged to pre-approved customers.

Which of the following is not a part of the financial process?

B. Inventory management

Why do organizational objectives stress the importance of quality information?

B. Investors, creditors, managers, and other users rely on this information.

Which of the following is true regarding the open item method of accounting for accounts receivable?

B. Invoice records remain in the open invoice file until payment is received.

The segregation of duties between the custody of cash and the recording of cash receipts best illustrates which of the following control concepts?

B. Isolation

Which of the following statements is true about a database management system?

B. It is a collection of software specially designed to manage the data in a database in response to instructions issued by application programs or requests made by users.

What is the system called that uses technology to manage the purchase and receipt of merchandise in a manner that minimizes inventory on hand?

B. Just-in-time inventory (JIT).

The primary objective of an external auditor's obtaining an understanding of a client's internal control is to provide the auditor with which of the following?

B. Knowledge necessary to plan the audit and related testing.

Which of the following is not a consequence of uncontrolled risk?

B. Management spends time dealing with unavoidable problems

Which of the following is a leading supply chain management system?

B. Manugistics

Which of the following statements is false?

B. Most commonly, after a purchase order has been approved, a manager will then deal with vendors directly.

What type of relationship do a customer table and an invoice table have?

B. One-to-many

After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into what file?

B. Open invoice file

After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into which file?

B. Open vendor invoice file.

Which of the following are entity objective categories?

B. Organizational strategies, quality of information, effectiveness and efficiency of operations, and compliance with applicable laws and regulations

The authority for ordering goods and services normally resides with which of the following?

B. Originating department manager

Which of the following is part of the financial process because it is an event that does not fall within the revenue, purchasing, or inventory processes?

B. Payment of stock dividends

What type of transaction would not initially be recorded in the general ledger?

B. Payroll

What document identifies the products and quantities ordered and gives the warehouse location, aisle number, shelf position, bin number, or other reference to the location of the goods?

B. Picking list

What type of control is control total analysis?

B. Processing control

Which of the following is TRUE regarding the Enterprise Risk Management (ERM) framework?

B. Proper identification of risk can help management properly allocate resources.

What is the most voluminous task in the purchasing process?

B. Purchase order data entry

Adjustments that must be reversed at the beginning of each accounting period are often accomplished using which data entry efficiency feature?

B. Recurring entry

A warehouse employee of a retail company was able to conceal the theft of items of inventory by entering adjustment transactions to the inventory transactions to the inventory transaction file indicating that the items had been damaged or lost. What control would have prevented the adjustments from being recorded?

B. Requiring separate authorization for input of adjustment transactions.

Of the following control activities, which is the MOST effective for minimizing the possibility of fraudulent activity?

B. Segregation of duties.

Which of the following is an application of the recurring entry concept?

B. Standing orders

What type of account is used to accumulate physical, as opposed to monetary, data?

B. Statistical account

General controls apply to the reliability and consistency of the overall information processing environment. To what do application controls apply?

B. The flow of data in and among individual applications

When using both private and public keys for cryptography, which of the following statements is correct?

B. The private key is used for decryption

Which of the following procedures is most likely to prevent the improper disposition of equipment?

B. The segregation of duties between those authorized to dispose of equipment and those authorized to enter the disposition transaction.

The authority for disbursing cash for vendor payments or payroll disbursements normally resides with which of the following?

B. The treasurer

For what purpose would the system administrator be likely to use a user rights table?

B. To plan for access security

What is the purpose of user authentication?

B. To verify the identity of the user

A clerk was entering a sales transaction in her cash register and accidentally entered a sales representative code for a terminated employee. This error could have been detected if the system included a

B. Valid code check

When is an order placed for additional products?

B. When quantity available for sale declines to the lead time stock level

What is the optimal point of reasonable assurance for internal control?

B. When the cost of controls equals the savings on losses from risks

Numbers that are used as unique reference identifiers should have which of the following characteristics?

Both C and D, Represent the completion of a transaction, Derived from internally generated documents

From what do accounting transactions result?

Both external and internal activities

Which of the following organizations can audit a company to determine whether the company has the correct number of licenses for the number of users?

Business Software Alliance

What framework has proved to be a successful attempt to unify the elements and processes that are common to all accounting systems?

Business processes

Which of the following statements best describes mapping in a database?

C Mapping is the process of making a data element in one schema correspond to an element in another schema.

Which of the following statements is true about databases whether used on mainframes, midrange computers, networks, or personal computers?

C The theory, structure, design, and management issues are substantially the same.

If a customer's payment is delayed for an excessive period of time, what is the appropriate notice to be sent?

C. A dun

A disaster recovery plan is which of the following?

C. A general control.

Which of the following describes the best physical control(s) over cash disbursements?

C. Access to inventory is limited to authorized personnel only.

Which of the following is an advantage of a system that permits out-of-balance entries?

C. Accountants can debit various accounts one day and complete the offsetting credits the next day.

Which of the following are some of the characteristics of high quality information?

C. Accurate, confidential (when necessary), complete, and relevant

An organization must have a regular schedule for making payments of invoices. Which are criteria for selection of invoices for payment?

C. All of the above

Which of the following are principal reports required for effective management of the purchasing process?

C. All of the above

Which of the following defines the integrated test facility (ITF) method of auditing through the computer?

C. Artificial data are used to test the accounting information system.

What is(are) the method(s) of accounting for accounts receivable?

C. Both A and B are methods of accounting for accounts receivable.

Which of the following are actions that result from the receipt of a properly authorized purchase requisition?

C. Both a and b, Issuance of a purchase order, Adding the record to the open purchase order file.

Which of the following is an example of vertical analysis?

C. Common dollar analysis

The five interrelated components of internal control (according to the COSO framework) include the following:

C. Control environment, risk assessment, control activities, information and communication, and monitoring

Which of the following is an action resulting from the "receipt of cash" trigger in a sales- support organization?

C. Creation of a cash receipts transaction file record

What is the spreading of customer billing throughout the month by dividing customer accounts into groups and billing each group at a different time during the month known as?

C. Cycle billing

What kind of reasonable assurance do check digits, screen properties, and reasonableness tests provide?

C. Data have been correctly entered.

What should disbursement records include?

C. Date, name and number of payee, amount of check and vendor's invoice number

What should be the role of an information services steering committee?

C. Establish/approve information processing policies, system projects, and priorities for implementing systems; evaluate effectiveness of processing operations; monitor processing activities.

Which of the following control activities would most likely influence the behavior of managers?

C. Establishing budgets or standards and identifying variances from these budgets or standards

The revenue process encompasses which of the following?

C. Events related to the distribution of goods and services to customers

Which of the following processes receives summarized information from the other processes?

C. Financial process

Which is an example of an acquired good?

C. Fixed assets and raw materials

Which of the following first required that an organization have internal control?

C. Foreign Corrupt Practices Act

Which of the following is not one of the three categories of entity objectives?

C. Human resource policies and practices

Where does most of the data entry relating to inventory occur?

C. In the revenue and purchasing processes

Which of the following is (are) application controls

C. Input controls.

What report is essential to organizations using "just in time" operations to minimize inventory?

C. Inventory and PO aging report

What report is essential to organizations using the "just in time" inventory approach?

C. Inventory and PO aging report.

What is a foreign key?

C. It is the primary key of a table that is placed in another table so the tables can be joined.

Which of the following is NOT a reason for outsourcing?

C. Loss of jobs in the home country.

What type of relationship do a customer table and an inventory table have?

C. Many-to-many

What is a common flow of data in the purchasing process?

C. Ordering goods, receiving, invoicing, and disbursing cash

Which of the following methods is the most commonly used payment application for open item accounts?

C. Pre-identification

With which of the methods of payment application for open item accounts is a person required to identify the open invoices being paid, as well as any credits being taken?

C. Pre-identification

What type of control activity is the security system on an inventory warehouse?

C. Preventive.

What is the internal audit department's role in the control structure of the financial process?

C. Provision should be made for independent confirmation of data appearing in management reports.

Which of the following is the most important query language used in database management systems?

C. SQL

While entering data into a cash receipts transaction file, an employee transposed two numbers in a numeric code. Which of the following controls would have prevented this type of error?

C. Self-checking digit

In accounting software packages, what is the equivalent term for accounts in a subsidiary ledger?

C. Sub-accounts

Which of the following are software systems that expand an organization's reach outside to suppliers and customers?

C. Supply chain management systems

What is the core activity of an accounting information system?

C. The financial process

Which module composes the financial process in AIS software packages?

C. The general ledger module

Which of the following represents the proper segregation of duties in the revenue process?

C. The inventory management and shipping functions are in different buildings

What is lead time?

C. The period of time between the ordering of a product and its receipt

Why are audit trails for the purchasing process somewhat more complicated than those for the revenue process?

C. The purchasing process may involve two journal entries often made at difference times.

The process that encompasses events related to the distribution of good and services to customers and the receipt of money in exchange for these goods and services is known as what process?

C. The revenue process

What is the advantage of having a "hot site" as a back-up control?

C. The system is configured in a manner similar to the normal day-to-day processing and is available for immediate use.

Which of the following is an example of a data verification check?

C. The system returns an error message if the value entered in a field does not match one in a reference file of permissible values.

Which of the following is an action that follows the shipment notification to a customer in the revenue process of a merchandising or manufacturing organization?

C. Updating the inventory master file.

When do disbursement activities begin?

C. Upon approval of the invoice

When is purchasing initiated?

C. When a manager authorizes a purchase requisition and forwards it to the purchasing department

What is automatic rollback?

C. feature that backs out incomplete transactions.

Which of the following certifications is specifically designed for internal auditors?

Certified internal auditor

What kind of reporting calls for arranging together actual data for a current period and actual data for a prior period?

Comparative reporting

Which of the following is a general principle of effective reporting?

Comparative reporting

Which of the following is not accounting information?

Computer training schedule

What type of account in the general ledger has a related subsidiary ledger?

Control

Which of the following are subsystems of the inventory process in both manufacturing and service organizations?

Cost accounting, inventory management

Which of the following are essential data elements in a customer master file?

Customer code, name, address, customer type, credit limit, credit terms, account balance beginning of year, year-to-date sales, year-to-date payments, amount owing

Which of the following is not a subsystem in the revenue process?

Customer invoicing

Which of the following is necessary for printing of the sales journal?

Customer master file and sales transaction file

Which of the following is not defined by the formal organizational structure?

D Organizational goals and objectives

Which of the following best describes the importance of risk assessment?

D Risk assessment helps management set priorities and determine the organization's risk response

What is (are) the function(s) of a database administrator?

D. A and B, To participate in the preliminary planning for a database, To select the database management system product.

Which of the following statements about the internal level of a database is true?

D. A and B, but not C, It is the physical implementation of the conceptual level, It includes the file organizations to store data on the physical storage devices.

Where does mapping occur?

D. A and C, Between the external and conceptual levels, Between the conceptual and internal levels.

Which of the following statements regarding the audit committee is true?

D. A, B, and C , It is a standing subcommittee of the board of directors, Its main objectives are to protect against management wrongdoing and to increase public confidence in the independent auditor's opinion, The committee should be composed of independent board members.

Which of the following is effected through the Purchase Order module?

D. All of the above

What are the activities encompassed by the revenue process?

D. All of the above are activities of the revenue process.

Which of the following represent cash handling risks in the revenue process?

D. All of the above are associated with cash handling risks in the revenue process.

Which of the following represent batch controls for the processing of purchase orders?

D. All of the above are batch controls that would be used in the processing of purchase orders.

Which of the following are efficiency features in data entry?

D. All of the above are efficiency features in data entry.

Because the financial process must recognize events that keep the general ledger accounts up-to-date, which of the following is/are included in the financial process?

D. All of the above are included in the financial process.

The financial process encompasses which of the following activities?

D. All of the above are included in the financial process.

An aging accounts receivable report is commonly used for which of the following purposes?

D. All of the above are purposes of an aging accounts receivable report.

Which of the following represent risks associated with outsourcing?

D. All of the above are risks associated with outsourcing.

Which of the following is TRUE regarding the segregation of duties in the purchasing process?

D. All of the above are true regarding the segregation of duties in the purchasing process.

What types of entries are recorded in the financial process?

D. All of the above are types of entries recorded in the financial process.

What is the purpose of sales analysis reporting?

D. All of the above are valid purposes of sales analysis reports.

From time to time, an organization may decide to write off old, small amounts of accounts receivable because of which of the following?

D. All of the above may cause an organization to decide to write off small, apparently uncollectible amounts.

Which of the following statements about an index file is (are) true?

D. All of the above statements about an index file are true.

Which of the following is effected through the sales order module?

D. All of the above.

What is (are) included in IT governance?

D. All of these are included in IT governance.

Which of the following represents weak internal control?

D. Application developers test their own new or modified applications before the applications are implemented.

When is a cash requirements forecast prepared?

D. At regular interval

A processing feature unique to the general ledger module is one that allows the altering of recorded transactions if they have not been permanently posted. What is the feature called?

D. Both A and B

When data are to be maintained at a company's site, which keys should be used for encryption?

D. Both A and B, private, public

Where is there rarely a deficiency in the audit trail between?

D. Cash disbursements and vendor accounts

Recording a payable after the invoice is matched with other documents requires which journal entry?

D. Debit to unbilled payables; credit to accounts payable

The total computed on which of the following would be a hash total for payroll applications?

D. Department numbers.

Which of the following is not a common inventory problem for mercantile organizations?

D. Determining the lead time for products

Self-checking digits are used to detect which of the following errors?

D. Entering an invalid customer code.

49. What is a popular way of shielding an organization's private network from intruders outside of the organization?

D. Firewall.

Which of the following is an effective way to reduce business risk?

D. Having a documented and regularly tested disaster recovery plan.

Which of the following are disadvantages of a database?

D. Increased hardware requirements, required technical skills, and difficult conversion from conventional files

Some of the more important control activities in computerized accounting information systems are validity checks, reasonableness checks, and checks for logical relationships. How are these activities classified?

D. Input verification controls

Which of the internal control components provides the foundation for all the other components of internal control?

D. Internal environment

Which of the following best describes the Foreign Corrupt Practices Act of 1977 (amended 1988)?

D. It established provisions for record keeping and internal control for companies registered with the Securities and Exchange Commission.

What is a data dictionary?

D. It is a special file, stored in the database itself, that provides metadata on the description, structure, and type of each data element stored in the database.

Why is the automatic distribution entry useful in the accounts payable module?

D. It permits the specification of a master account to which entries will be made.

What is the term that accounting software packages use for control accounts?

D. Master accounts

Which of the following is not true regarding the open item method of accounting for accounts receivable?

D. No attempt is made to match individual payments and invoices.

Where are purchase order data stored?

D. Open purchase order file

What is the most popular inventory control report?

D. Order recommendation report

The need for prenumbered documents best relates to which of the following?

D. Processing of all transactions

ABC Company inputs sales transaction data in batches that are subject to edit checks. What would be a direct output of the edit checks?

D. Report of all rejected sales transactions.

What are the three types of firewalls?

D. Screen routers, operating system-based firewalls, and applications-based firewalls.

Which of the following represents a processing control in the financial process?

D. Summarized information received from other processes should be periodically reviewed to determine that the accuracy of financial statements.

Which of the following controls would be most effective in assuring the proper custody of investment securities?

D. The balances in the investment security master file are periodically compared with the physical investment securities by independent personnel.

An audit committee is a subcommittee under the direction of whom?

D. The board of directors

Which of the following does not represent an effective segregation of duties in the inventory process?

D. The clerks who handle maintenance of perpetual inventory records should also handle recording the receipt of shipments from vendors.

Omen Company is a manufacturer of men's shirts and distributes weekly sales reports to each sales manager. The quantity 2R5 appeared in the quantity sold column for one of the items on the weekly sales report for one of the sales managers. What is the most likely explanation for what occurred?

D. The system did not contain a verification control for input data.

Which of the following files is not owned by the account receivable application in a conventional accounting system?

D. Vendor master file

Which relationship among reporting frequency, type of data reported, and functional responsibilities is a common pattern?

Daily reporting of physical data for production managers

Which of the following statements about a manual accounting system is not correct?

Data are stored in only one location.

What happens to the size (number of records) of the open customer invoice file when it is updated to reflect the customer's payment of an outstanding invoice?

Decreases

What is an example of a transaction?

Depreciation of equipment

Which of the following statements about a relationship in a database is correct?

E. A, B, and C, It is a connection or interaction between tables,It may exist because of the nature of the data elements themselves, It may exist because of the need to relate information in the database in some prescribed manner.

What are the principal events to be recorded in the revenue process?

E. All of the above are principal events to be recorded in the revenue process.

What language uses a standardized tag such as <us-gaap-i:AssetsHeldSale> to enable the retrieval of information about assets held for sale from multiple balance sheets?

Extensible Business Reporting Language (XBRL)

Which of the following languages uses standardized tags for business and financial data so they can be easily searched with web browsers?

Extensible Business Reporting Language (XBRL)

Which of the following computer languages would best support the activity of identifying the balances of the cash and cash equivalent accounts of several companies and extracting them to an electronic spreadsheet for analysis?

Extensible business reporting language (XBRL)

Which of the following computer languages is used specifically for Web applications?

Extensible markup language (XML)

Who are the users of accounting systems?

Financial accountants, managerial accountants, governmental accountants, and tax accountants

What are information formats called?

Forms

Postal zip codes are examples of which type of coding system?

Group code

What are two types of block diagrams?

Horizontal block diagrams; hierarchical block diagrams

What is one question that documentation standards can answer?

How long should the documentation be?

What is a disadvantage of a data flow diagram?

Inability to represent points of detail

What is an example of a status report?

Income statement

What happens to the size (number of records) of the cash receipts transaction file when a cash receipt for a customer invoice is posted?

Increases

What is the primary benefit of creating XBRL financial reports and electronically disseminating them?

Information can be published one time and then extracted electronically for other purposes thereby eliminating the need to identify and reenter the data.

What are the primary activities of an accounting information system?

Input (capture), store, process, output (communicate) data

Which of the following activities involve an interface between users and the accounting system?

Input and output

What is the most common computer-related problem confronting organizations

Input errors

Which of the following statements about the input activity is correct?

Input is an interface between users and the accounting system.

What essential functions are performed by computer hardware?

Input, processing, storage, and output of data

What is a document that has been tagged according to the rules of XBRL?

Instance document

Documentation types can be divided into two group according to which of the following?

Intended recipients

For decision-making purposes, managers require data from which source(s) and in which terms?

Internal and external sources in both monetary and non-monetary terms

Why is internal control so important?

Internal control enables management to maintain control over all its activities and it provides a measure of protection against erroneous or fraudulent financial reporting.

In which area would real-time posting be most valuable in light of the added resources necessary to maintain a real-time system?

Inventory

Assume that data from the purchases transaction file have been transferred to the general journal transaction file. The general journal transaction file has been used to update the general ledger master file. What is the result if a trial balance is prepared at this time

Inventory shows an increase, and accounts payable shows a decrease

What is a feature or benefit of comparative reporting?

It arranges together actual data for a current period with either budget data for the current period or actual data for a prior period.

What is one problem with exception reporting?

It may have the most severe problems appearing on the report's back pages.

Which of the following statements about a system flowchart is correct?

It shows what a system does and how it does it.

What is a step that should be taken prior to creating a system flowchart?

List the steps in the system processes.

Accountants and other users are generally concerned with which type of file organization?

Logical

What file in a computerized accounting system corresponds to a paper general ledger in a paper-based system?

Master file

What file in a computerized accounting system corresponds to a paper subsidiary ledger in a paper-based system?

Master file

What file in a computerized accounting system corresponds to a sub-ledger (such as accounts receivable) in a paper-based system?

Master file

What does entity coding identify?

Master file records

Which of the coding methods represents a logical association between the characters forming the code and the item being identified?

Mnemonic code

Which of the following identifies the organization that maintains the definitions of elements used in XBRL?

Namespace

What are two types of system documentation?

Narrative description; data flow diagrams

What are the broadest and most detailed forms of system documentation, respectively?

Narrative descriptions; system flowcharts

Which of the following is not a general principle that forms a foundation for effective reporting?

Necessity for lengthy reports

How should distribution of or access to documentation be handled?

On a need-to-know basis

Which of the following statements is not true?

Only accounting events that have matured into accounting transactions must be captured and reported by the accounting system.

What type of file contains invoice data for which payment has not yet been received?

Open

What file in a computerized accounting system corresponds to documents awaiting further processing in a paper-based system?

Open file

Which of the following files is not used in the customer invoicing subsystem?

Open sales order file

What are the support activities of an accounting information system?

People, technology, control

Which type of data is more useful in accounting reports that cover a short period of time?

Physical

Production managers usually prefer the use of which measure of performance in reports that cover a short period of time?

Physical measures

Which of the following subsystems are in the inventory process?

Production control, inventory management, cost accounting

The Sarbanes-Oxley Act prohibits which of the following?

Public accounting firm partners from serving as members of boards of directors

The payroll subsystem can be a part of which business process?

Purchasing

Which of the following statements about posting, or updating, is correct?

Real-time posting updates the appropriate master files immediately upon entry of transaction data in the system.

Which of the following systems is one where the master and open files are posted, or updated, immediately?

Real-time system

What does the data processing activity of sorting involve?

Rearranging the records in a file into a meaningful sequence

What is the arranging of records in order of severity of the problem with the most severe at the beginning of the reports known as?

Record sequencing

What is the main advantage of special journals in a paper-based accounting system?

Reduction in time required

The chart of accounts file is what type of file?

Reference file

Which file stores data to be used repeatedly for processing transactions?

Reference file

What file in a computerized accounting system corresponds to a pay rate table in a paper-based system?

Reference file.

Providing reports of production hours worked to production personnel, dollar denominated data to sales personnel, and financial reports to the chief financial officer are examples of what kind of reporting?

Reporting by function

What type of reporting includes data that measure activities over which a particular manager has some authority?

Responsibility reporting

Which of the following is not a type of processing function?

Retrieving

Which is not true about the financial process?

Revenue, purchasing, and production events are initially recorded in the financial process.

What type of file is set up during a processing operation and is purged when the operation is completed?

Scratch file

Which type of system documentation provides the most detail?

System flowchart

What is the most common, flexible, and useful type of overall design documentation for an accounting information system?

System flowcharts

Which of the following issues should system narrative descriptions attempt to cover?

System specifications

What are dictionaries of element names that represent financial report concepts?

Taxonomies

Which of the following defines the specific tags for individual items of data when converting a human-readable financial report to HTML?

Taxonomy

Which of the following factors does not influence the frequency of reporting?

The conciseness of the report

Who is most responsible for operation of the accounting system in an organization?

The controller and the chief financial officer

Which of the following statements is not correct?

The customer master file is used to update the open customer invoice file.

In which of the following situations should the frequency of reporting be weekly or even daily?

The data are critical to the detection of an out-of-control situation.

Which of the following would be suitable to use as a reference identifier in an audit trail?

The document number of a check issued

Which of the following is a decision support activity?

The sales analysis subsystem

Which of the following is not a characteristic of system flowcharts?

They are also known as problem definition documentation.

Which of the following statements about computer-assisted system documentation tools is correct?

They consist primarily of flowcharting programs.

Which of the following statements about data flow diagrams is correct?

They provide a more detailed representation of an accounting information system than do block diagrams.

Which of the following is the best reason for keeping subsidiary ledger accounts current?

To check if a sale will exceed a customer's credit limit

Accounting systems documentation is used for which of the following?

To communicate how an accounting system works

Which of the following is a use of the chart of accounts reference file?

To determine if an account number is valid

The main goal in risk assessment is which of the following?

To provide "reasonable assurance" and an acceptable level of risk while achieving the lowest total cost (cost of controls added to loss from risk)

What is the main purpose of a general ledger master file?

To store account balances to be presented in reports

What is the purpose of an open customer invoice file in a computerized system?

To store data about customer invoices that have not yet been paid

Which of the following data elements are essential in a journal?

Transaction date, dollar amount of each debit and credit, and account name and number

What file in a computerized accounting system corresponds to a paper journal in a paper- based system?

Transaction file

Which file can update a subsidiary ledger master file?

Transaction file

What file in a computerized accounting system corresponds to a special journal in a paper-based system?

Transaction file.

Which of the following statements is not true?

Trustworthy accounting information and reliable computer equipment can prevent the failure of an organization, even if incompetent and dishonest people carry out the accounting function.

Which of the following statements about information processing activities is not correct?

Typical master file maintenance changes are updating account balances, deleting unwanted records, and adding new records to a file.

In what terms can accounting information be expressed?

Units, percentages, and money

Which of the following is one of the most common processing activities?

Updating, or posting

Which of the following groups requires accounting data with the broadest perspective?

Upper-level managers

What type of documentation describes an accounting system from the outside looking in?

User documentation

What is the format the Securities and Exchange Commission (SEC) has mandated for filing financial information?

XBRL files

Which of the following is/are TRUE with regard to XBRL?

XBRL has tags which provide financial information in a context.

Which of the following tools would allow an auditor to most easily and efficiently compare a client company's financial results with those of its competitors?

XBRL tagging

Which of the following describes an example(s) of transaction risks in the financial process?

all of the above

What is a process activity that updates balances in a master file?

posting