AIS Midterm

A well-planned and drawn level 0 data flow diagram for the revenue cycle would show which of the following processes? a)0.1 Take customer's order; 0.2 Ship product; 0.3 Bill customer. b)1.0 Take customer's order; 2.0 Ship product; 3.0 Bill customer. c)0.1 Take customer's order; 0.12 Ship product; 0.13 Bill customer. d)1.1 Take customer's order; 1.2 Ship product; 1.3 Bill customer.

1.0 Take customer's order; 2.0 Ship product; 3.0 Bill customer.

With respect to computer-based storage concepts, which of the following statements is (are) true?

A file is a group of related records. A set of interrelated, centrally coordinated files is referred to as a database.

Which of the following are important systems development controls? A) A project development plan that shows the prioritization of all projects that must be completed b)A steering committee that oversees systems development c)A change-management plan that outlines all personnel retention in corporate reorganization plans d)A post-implementation review to determine whether anticipated benefits were achieved e)A data processing schedule that shows when each task should be performed f)Performance measurements used to evaluate all company employees

A steering committee that oversees systems development A post-implementation review to determine whether anticipated benefits were achieved A data processing schedule that shows when each task should be performed

Which of the following statements about data storage is (are) true?

A subsidiary ledger contains detailed data for any general ledger account with many individual subaccounts. A chart of accounts is a list of the numbers assigned to each general ledger account.

Which of the following statements is false? A flowchart is an analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner. Flowcharts use a standard set of symbols to describe pictorially the flow of documents and data through a system. Flowcharts are easy to prepare and revise when the designer utilizes a flowcharting software package. A system flowchart is a narrative representation of an information system.

A system flowchart is a narrative representation of an information system.

Which of the following is most likely to be a general ledger control account? A/R Petty Cash Prepaid Rent Retained Earnings

A/R

Joey Smith has been the controller of Nadia Cake for the past 5 years. The owners of Nadia have recently decided to expand their operation and are in the process of obtaining a loan from a local bank. In order to be qualified for the loan, the bank asks Nadia to conduct an audit of the financial records. The auditors have been unable to obtain Nadia's financial statements that were prepared by Joey. While there is no evidence of wrongdoing, the auditors are not able to complete the audit. Which of the following characteristics of useful information is absent in the situation described above?

Accessible

An adjusting entry that is made to reflect events that have occurred but for which cash has not yet been received or disbursed is called a(n)

Accrual

Which of the following are data flow diagram preparation guidelines? a)Data flows can only move in one direction. b)All data flows should come from, and go to, a transformation process, a data store, or a source or destination. c)Processes and data stores typically take their names from the data inflows or outflows. d)In a DFD, you should always show how the system starts and stops.

All data flows should come from, and go to, a transformation process, a data store, or a source or destination. Processes and data stores typically take their names from the data inflows or outflows.

The integrated database underlying an ERP system results in which of the following general threats to the revenue cycle? Inaccurate or invalid master data Unauthorized disclosure of sensitive information Loss or destruction of data All of the above

All of the above

Which of the following expenditure cycle activities can be eliminated through the use of IT or reengineering? Ordering goods Approving vendor invoices Receiving goods Cash disbursements

Approving vendor invoices

How are data sources and destinations represented in a data flow diagram?

As a square

How does the chart of accounts list general ledger accounts? Aplhabetical Order Categorical Size Order As it appears in financial statements

As it appears in financial statements

Which control could be used to mitigate the threat of inaccurate updating of the general ledger?

Audit trail creation and review.

Which control could be used to mitigate the threat of fraudulent financial reporting?

Audit.

Which of the following is not a SOX requirement? a)Auditors mist report specific information to the company's audit committee. b)Audit committee members must be on the company's board of directors and be independent of the company. c)The CEO must certify that financial statements were reviewed by management and are not misleading. d)Auditors must maintain an audit trail that documents all client-auditor communications.

Auditors must maintain an audit trail that documents all client-auditor communications.

To achieve effective segregation of duties, certain functions must be separated. Which of the following is the correct listing of the accounting-related functions that must be segregated? Control, recording, and monitoring Authorization, recording, and custody Control, custody, and authorization Monitoring, recording, and planning

Authorization, recording, and custody

Which of the following is an example of a common activity in an AIS? a)Organizing community services for the company. b)Selling goods and services and collecting cash. c)Keeping track of the number of customers who visited the company's website. d)Recording sales calls for marketing purposes.

B

Which of the following are business process diagram preparation guidelines? a)Unlike DFDs, most BPDs will not start with an action verb. b)BPDs depict the major steps in a process sequentially, reading from left to right and top to bottom. c)Each row or swim lane in a BPD contains the activities performed by the indicated employee or department. d)A BPD, no matter how detailed, is rarely sufficient to evaluate internal controls, such as whether duties are properly segregated. e)Show what technology is used in each business process.

BPDs depict the major steps in a process sequentially, reading from left to right and top to bottom. Each row or swim lane in a BPD contains the activities performed by the indicated employee or department.

Identify all the controls that mitigate the threat of picking the wrong items or the wrong quantity of an item a)Data entry edit controls b)Documentation of all inventory transfers c)Periodic physical counts of inventory, and reconciliation to recorded quantities d)Reconciliation of picking lists to sales order details e)Restriction of physical access to inventory f)Bar-code and RFID technology

Bar-code and RFID technology Reconciliation of picking lists to sales order details

Which of the following revenue cycle activities can potentially be eliminated by technology? Sales order entry Shipping Billing Cash collections

Billing

Which of the following is NOT a component of an AIS? a)IT infrastructure b)people c)company culture d)software

C

Which of the following statements is true? COSO's enterprise risk management framework is narrow in scope and is limited to financial controls. COSO's internal control-integrated framework has been widely accepted as the authority on internal controls. The Foreign Corrupt Practices Act had no impact on internal accounting control systems. It is easier to add controls to an already designed system than to include them during the initial design stage.

COSO's internal control-integrated framework has been widely accepted as the authority on internal controls.

What is the best control procedure to prevent paying the same invoice twice?

Cancel all supporting documents when the check is signed.

For good internal control over customer remittances, the mailroom 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? Setting customer credit limits Preparing a bill of lading Checking customer credit Approving sales returns

Checking customer credit

Which of the following are part of an internal environment? Commitment to integrity, ethical values, and competence Management's philosophy, operating style, and risk appetite Effective management to auditor communication Principles of value creation Internal control oversight by the board of directors

Commitment to integrity, ethical values, and competence Management's philosophy, operating style, and risk appetite Internal control oversight by the board of directors

Where do adjusting entries usually come from?

Controller

Which person makes closing entries in the general ledger and reporting system?

Controller

Once business activity data have been entered into the system, they must be processed to keep the databases current. Which of the following are NOT one of the four different types of data processing activities? a)Deleting data records no longer needed b)Creating new data records c)Controlling access to the data records d)Updating previously stored data e)Reading, retrieving, or viewing existing data

Controlling access to the data records

Which of the following controls could be used to mitigate the threat of uncollectible accounts? a)Credit limits. b) Encryption. c)Restriction of access to pricing master data. d)Restriction of physical access to inventory.

Credit limits.

Which of the following is a benefit of implementing an ERP system at a multinational corporation?

Customer service improves as employees can quickly access data. Standardization of procedures and reports across business units. Increased productivity of employees.

Which of the following statements is false? Flowcharts make use of many symbols. A document flowchart emphasizes the flow of documents or records containing data. DFDs help convey the timing of events. Both a and b are false.

DFDs help convey the timing of events.

Which document is used to record adjustments to accounts payable based on the return of unacceptable inventory to the supplier?

Debit memo

An adjusting entry that is made to reflect the exchange of cash prior to performance of the related business activity is called a(n)

Deferral

Recognizing advance insurance payments from customers as a liability would result in what type of adjusting entries?

Deferrals.

An XBRL file that explains the relationships among and between financial statement categories (e.g., that Short-term Liabilities and Long-term Liabilities are both part of the Liabilities section is called a(n)

Definition Linkbase

A BPD for the revenue cycle will include which of the following? a)Description of all the major functions performed within all cycles within an organization. b)Description of all selling functions within an organization. c)Description of all purchasing functions performed within an organization. d)Description of all human resource and payroll functions within an organization.

Description of all selling functions within an organization.

Which of the following is not a guideline when preparing a data flow diagram? a)Give each process a sequential number. b)Group transformation processes. c)Subdivide the DFD. d) Do not ignore any aspects of the system.

Do not ignore any aspects of the system.

Which of the following flowcharts illustrates the flow of data among areas of responsibility in an organization? Program flowchart Computer configuration chart System flowchart Document flowchart

Document flowchart

With respect to flowcharts, which of the following statements are true? a)Flowcharts can be used to analyze how to improve business processes, but not document flows. b)Document flowcharts trace a document from its cradle to its grave, showing everything that happens as it flows through the system. c)An internal control flowchart is not very helpful in spotting system weaknesses or inefficiencies. d)A system flowchart describes the specific logic used to perform a process shown on a program flowchart. e)An internal control flowchart can be used to describe, analyze, and evaluate internal control strengths.

Document flowcharts trace a document from its cradle to its grave, showing everything that happens as it flows through the system. An internal control flowchart can be used to describe, analyze, and evaluate internal control strengths.

Identify all the controls that mitigate the threat of theft of inventory: a)Reconciliation of picking lists to sales order details b)Data entry edit controls c)Documentation of all inventory transfers d)Reconciliation of shipping documents with sales orders, picking tickets, and packing slips e)Bar-code and RFID technology f)Restriction of physical access to inventory g)Periodic physical counts of inventory, and reconciliation to recorded quantities

Documentation of all inventory transfers Bar-code and RFID technology Restriction of physical access to inventory Periodic physical counts of inventory, and reconciliation to recorded quantities

Which of the following is an example of an ERP system? a)Each week Emily enters all of the data into a system that automatically generates purchase orders, based on predetermined inventory reorder points. Production quotas for the coming week are also automatically generated based on customer orders. b)Ken is a freelance contractor. He keeps records of all expenses and revenues on his cell phone app and the files are uploaded to the cloud on a regular basis. c)John uses a computerized information system to keep track of all the financial data generated by his business. d)Jim has a system that keeps track of the cash receipts and cash disbursements of his cleaning business. At the end of each month, the system helps him prepare a monthly profit and loss statement.

Each week Emily enters all of the data into a system that automatically generates purchase orders, based on predetermined inventory reorder points. Production quotas for the coming week are also automatically generated based on customer orders.

The COBIT 5 framework describes best practices for the effective governance and management of IT. It is based on five key principles of IT governance and management. Which of the following are among the five key principles? a)Enabling a holistic approach b)Covering the enterprise end-to-end c)Meeting stakeholders' needs d)Coordinating multiple different frameworks e)Integrating governance and management

Enabling a holistic approach Covering the enterprise end-to-end Meeting stakeholders' needs

An adjusting entry that is made to record a portion of expenses that are expected to occur over multiple time periods is called a

Estimate

What does COSO call an incident, whether positive or negative, that affects the implementation of an organization's strategy or the achievement of its objectives.

Event

What is the name of the law Congress passed to prevent companies from bribing foreign officials?

FCPA

Which of the following techniques is the most efficient way to process customer payments and update accounts receivable? EFT UPIC FEDI ACH

FEDI- FEDI integrates EFT, for processing customer payments, with EDI, for processing related remittance data to update accounts receivable

ERP systems are modular, with each module handling a standard business process. This modular design allows businesses to add or delete modules as needed. Which of the following are typical ERP modules mentioned in the text? a)Financial—general ledger, budgeting, cash management, and preparation of managerial reports and financial statements. b)Vendor relationship management—procurement and promotion, vendor contact and service, and call center support. c)System tools—tools for establishing master file data, specifying flow of information, and access controls. d)Order to cash—sales order entry, shipping, inventory, cash receipts, and commission calculation. e)Project management—costing, billing, time and expense, performance units, and activity management.

Financial—general ledger, budgeting, cash management, and preparation of managerial reports and financial statements. System tools—tools for establishing master file data, specifying flow of information, and access controls. Order to cash—sales order entry, shipping, inventory, cash receipts, and commission calculation. Project management—costing, billing, time and expense, performance units, and activity management.

A DFD is a representation of which of the following?

Flow of data in an organization

All of the following are recommended guidelines for making flowcharts more readable, clear, concise, consistent, and understandable except: Divide a document flowchart into columns with labels. Flowchart all data flows, especially exception procedures and error routines. Design the flowchart so that flow proceeds from top to bottom and from left to right. Show the final disposition of all documents to prevent loose ends that leave the reader dangling.

Flowchart all data flows, especially exception procedures and error routines.

Which of the following would contain the total value of all inventory owned by an organization? General Ledger Cash Budget Source Document

General Ledger

Which of the following are data flow diagram preparation guidelines? a)All transformation processes should have one or more incoming data flows, but may not have an outgoing data flow. b)Include all error paths, no matter how unimportant they may seem. c)Give each process a sequential number to help readers navigate among the DFD levels. d)Include all relevant data elements so that they are considered during the system development.

Give each process a sequential number to help readers navigate among the DFD levels. Include all relevant data elements so that they are considered during the system development.

Which of the following are Human Resources standards that attract, develop, and retain competent employees? a)Hire employees based on educational background, experience, achievements, integrity, and meeting written job requirements. b)Train new employees on their responsibilities, expected levels of performance and behavior, and the company's policies and procedures. c)Give dismissed employees weeks to find a new job before they have to leave. d)Rotate employee duties periodically, and require all employees to take an annual vacation. e)Evaluate, compensate, and promote employees based more on subjective criteria than performance.

Hire employees based on educational background, experience, achievements, integrity, and meeting written job requirements. Train new employees on their responsibilities, expected levels of performance and behavior, and the company's policies and procedures. Rotate employee duties periodically, and require all employees to take an annual vacation.

Which of the following is not a key method of monitoring internal control system performance? a)Perform internal control evaluations. b)Hire private investigators to investigate employee behavior. c)Implement a fraud hotline. d)Employ a computer security officer.

Hire private investigators to investigate employee behavior.

Which of the following controls is designed to mitigate the risk of purchasing goods of inferior quality?

Holding purchasing managers responsible for the costs associated with rework and scrap

Which of the following is part of an internal environment? a)Monitoring the achievement of management objectives b)Human resource standards that attract, develop, and retain competent individuals c)Commitment to risk assessment and response d)Organizational structure e)Methods of assigning authority and responsibility

Human resource standards that attract, develop, and retain competent individuals Organizational structure Methods of assigning authority and responsibility

Which of the following are business process diagram preparation guidelines? a)Show documents as they flow through the system, and show where each is stored. b)Divide the BPD into columns with labels, clearly label all symbols, and use arrowheads on all flow lines. c)Identify business processes, documents, data flows, and data processing procedures. d)Get an understanding of the system using tools, such as observing business processes and data flows, or by walking through the system transactions. e)Place the name, date, and preparer's name on each page of the completed BPD.

Identify business processes, documents, data flows, and data processing procedures. Get an understanding of the system using tools, such as observing business processes and data flows, or by walking through the system transactions. Place the name, date, and preparer's name on each page of the completed BPD.

Which of the following is the correct order of the risk assessment steps discussed in this chapter? Identify threats, estimate risk and exposure, identify controls, and estimate costs and benefits. Identify controls, estimate risk and exposure, identify threats, and estimate costs and benefits. Estimate risk and exposure, identify controls, identify threats, and estimate costs and benefits. Estimate costs and benefits, identify threats, identify controls, and estimate risk and exposure.

Identify threats, estimate risk and exposure, identify controls, and estimate costs and benefits.

Your current system is deemed to be 90 percent reliable. A major threat has been identified with an impact of $3,000,000. Two control procedures exist to deal with the threat. Implementation of control A would cost $100,000 and reduce the likelihood to 6 percent. Implementation of control B would cost $140,000 and reduce the likelihood to 4 percent. Implementation of both controls would cost $220,000 and reduce the likelihood to 2 percent. Given the data, and based solely on an economic analysis of costs and benefits, what should you do?

Implement control B only.

Which of the following are flowchart preparation guidelines? a)There is no need to identify departments, job functions, or external parties on the flowchart. b)Design the flowchart so that data flow from bottom to top and from right to left. c)In document flowcharts, divide the flowchart into columns with labels, clearly label all symbols, and use arrowheads on all the flow lines. d)It is usually not necessary to show procedures and processes in the order they take place. e)Develop an understanding of the system using tools, such as interviews or questionnaires, or by walking through the system transactions.

In document flowcharts, divide the flowchart into columns with labels, clearly label all symbols, and use arrowheads on all the flow lines. Develop an understanding of the system using tools, such as interviews or questionnaires, or by walking through the system transactions.

With respect to data flow diagrams, which of the following statements are true? (Check all that apply.) a)In order to provide more information, a portion of a level zero diagram (such as process 2.0) can be divided into sub-processes (for example, 2.1, 2.2, and 2.3, if there are three sub-processes). b)If two or more data flows move together, two lines are used. If the data flow separately, a single line is used. c)A context diagram is the lowest-level DFD; it provides a low-level view of a system. d)DFDs are subdivided into successively lower levels in order to provide ever-increasing amounts of detail.

In order to provide more information, a portion of a level zero diagram (such as process 2.0) can be divided into sub-processes (for example, 2.1, 2.2, and 2.3, if there are three sub-processes) DFDs are subdivided into successively lower levels in order to provide ever-increasing amounts of detail.

Which of the following shows the implied causal linkages among the portions of the balanced scorecard? Financial → internal → innovation and learning → customer Innovation and learning → internal → customer → financial Customer → financial → internal → innovation and learning Internal → customer → innovation and learning → financial

Innovation and learning → internal → customer → financial

What is the first step in the data processing cycle?

Input

An XBRL file presented to end users and that contains tagged data is called a(n)

Instance document

Which of the following XBRL documents contains the actual data values for a companys net income for a particular year? Style sheets Schema Linkbases Instance document

Instance document

COSO identified five interrelated components of internal control. Which of the following is not one of the five? Risk assessment Internal control policies Monitoring Information and communication

Internal control policies

The number of orders shipped per warehouse worker each day is a metric that would most likely appear in which part of the balanced scorecard?

Internal operations

What is financial electronic data interchange (FEDI)?

It is the combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package.

Which of the following is an important part of the audit trail? Journal vouchers Flexible budgets Trial balance Data warehouse

Journal vouchers

Which control would help reduce the threat of cash flow problems?

Lockbox arrangements

Which control would help reduce the threat of theft of cash?

Lockbox arrangements

Which of the following provides a means to both improve the efficiency of processing customer payments and to enhance control over those payments? CRM Lockboxes Aging accounts receivable EDI

Lockboxes

Which of the following inventory control methods is most likely to be used for a product for which sales can be reliably forecast?

MRP

3 Steps to processing input

Make sure to capture transaction data and enter them into the system. Make sure the input data is processed and stored correctly. Make sure captured data are accurate and complete.

Which of the following statements are true? a)Management must identify and analyze risks to determine how they should be managed. b)Management must specify objectives clearly enough for risks to be identified and assessed. c)Residual risk is the susceptibility of a set of accounts or transactions to significantly control problems in the absence of internal control. d)Inherent risk is the risk that remains after management implements internal controls, or some other response, to risk. e)Management must take an entity-wide view of risk.

Management must identify and analyze risks to determine how they should be managed. Management must specify objectives clearly enough for risks to be identified and assessed. Management must take an entity-wide view of risk.

Which of the following statements about the control environment is false? Management's attitudes toward internal control and ethical behavior have little impact on employee beliefs or actions. An overly complex or unclear organizational structure may be indicative of problems that are more serious. A written policy and procedures manual is an important tool for assigning authority and responsibility. Supervision is especially important in organizations that cannot afford elaborate responsibility reporting or are too small to have an adequate separation of duties.

Management's attitudes toward internal control and ethical behavior have little impact on employee beliefs or actions.

Which of the following does not help safeguard assets, documents, and data? a)Create and enforce appropriate policies and procedures. b)Periodically reconcile recorded asset quantities with a count of those assets. c)Measure the throughput and utilization of data and physical assets. d)Store data and documents in fireproof storage areas or secure offsite locations. e)Restrict access to data and documents.

Measure the throughput and utilization of data and physical assets.

All of the following are guidelines that should be followed in naming DFD data elements except: Process names should include action verbs, such as update, edit, prepare, and record. Make sure the names describe all the data or the entire process. Name only the most important DFD elements. Choose active and descriptive names.

Name only the most important DFD elements.

Which of the following is the most effective way to segregate duties in an ERP system? a)No one person should be responsible for recording and monitoring of organizational assets. b) No one person should be responsible for authorization, recording, and have custody of organizational assets. c)No one person should be responsible for authorization, monitoring, and risk assessment. d)No one person should be responsible for recording, risk assessment, and control procedures.

No one person should be responsible for authorization, recording, and have custody of organizational assets.

Recording and processing information about a transaction at the time it takes place is referred to as which of the following? Batch processing Online, real-time processing Captured transaction processing Chart of accounts processing

Online, real-time processing

Which method is most likely used when a company offers customers discounts for prompt payment? Open-invoice method Balance-forward method Accounts receivable aging method Cycle billing method

Open-invoice method

Which objective deals with a company's effectiveness and efficiency and the allocation of resources? a)Compliance objectives. b)Operations objectives. c)Reporting objectives. d)Strategic objectives.

Operations objectives.

Data entry processing integrity controls such as field checks, completeness tests, and closed-loop verification are NOT needed for journal entries made by

Other accounting subsystems

Which document often accompanies merchandise shipped to a customer? Picking ticket Packing slip Credit memo Sales order

Packing slip

Which of the following is a threat to the shipping process? a)Stockouts or excess inventory. b)Incomplete/inaccurate orders. c)Inaccurate or invalid credit memos. d)Picking the wrong items or the wrong quantity.

Picking the wrong items or the wrong quantity.

Which document is used to authorize the release of merchandise from the inventory control (warehouse) to shipping? Picking ticket Packing slip Shipping order Sales invoice

Picking ticket

Which of the following is least likely to be a specialized journal? Sales Journal Cash Receipts Journal Prepaid Insurance Journal Cash Disbursement Journal

Prepaid Insurance Journal

All other things being equal, which of the following is true? Detective controls are superior to preventive controls. Corrective controls are superior to preventive controls. Preventive controls are equivalent to detective controls. Preventive controls are superior to detective controls.

Preventive controls are superior to detective controls.

Hiring qualified personnel, segregating employee duties, and controlling physical access to assets and information are examples of what kind of internal controls?

Preventive controls.

Which method would provide the greatest efficiency improvements for the purchase of non-inventory items such as miscellaneous office supplies?

Procurement cards

Which of the following is the most common source document in the expenditure cycle?

Purchase order.

Which of the following is not an independent check? Bank reconciliation Periodic comparison of subsidiary ledger totals to control accounts Trial balance Re-adding the total of a batch of invoices and comparing it with your first total

Re-adding the total of a batch of invoices and comparing it with your first total

The documentation skills that accountants require vary with their job function. However, all accountants should at least be able to do which of the following?

Read documentation to determine how the system works.

Which of the following documents is most likely to be used in the expenditure cycle? Sales Order Receiving report Credit Memo Job Time Ticket

Receiving report

According to the text, management can respond to risk in which of the following ways? a)Reduce its likelihood and impact b)Prepare for its occurrence c)Accept its likelihood and impact d)Examine its likelihood and impact e)Share it or transfer it to someone else f)Avoid it by not engaging in the activity that produces the risk

Reduce its likelihood and impact Accept its likelihood and impact Share it or transfer it to someone else Avoid it by not engaging in the activity that produces the risk

________ information reduces uncertainty, improves decision making, or confirms or corrects prior expectations.

Relevant

Which of the following is NOT a flowcharting symbol category? a)Storage b)Reporting c)Processing d)Input/output

Reporting

The company objective that helps management improve decision making and monitor company activities and performance is called:

Reporting objective

Which of the following are ways that companies endorse integrity? (Check all that apply.) a)Requiring employees to report dishonest or illegal acts, and disciplining employees who knowingly fail to report them b)Making a commitment to competence, and hiring employees with the necessary knowledge, experience, training, and skills c)Implementing aggressive sales practices and handsomely rewarding those who achieve them and not giving bonuses to those who underachieve d)Actively making employees aware that favorable outcomes and reports are more important than almost anything else e)Consistently rewarding achievements and giving verbal labels to both high and low producers f)Developing a written code of conduct that explicitly describes honest and dishonest behaviors

Requiring employees to report dishonest or illegal acts, and disciplining employees who knowingly fail to report them Making a commitment to competence, and hiring employees with the necessary knowledge, experience, training, and skills Developing a written code of conduct that explicitly describes honest and dishonest behaviors

Which of the following procedures is designed to prevent the purchasing agent from receiving kickbacks? Maintaining a list of approved suppliers and requiring all purchases to be made from suppliers on that list Requiring purchasing agents to disclose any financial investments in potential suppliers Requiring approval of all purchase orders Pre-numbering and periodically accounting for all purchase orders

Requiring purchasing agents to disclose any financial investments in potential suppliers

Identify all the controls that mitigate the threat of mistakes when counting deliveries from suppliers:

Requiring receiving employees to sign the receiving report Not informing receiving employees about the quantities ordered Use of bar codes and RFID tags

Preparing performance reports that contain data only about items that a specific organizational unit controls is an example of which of the following?

Responsibility accounting system

In the ERM model, COSO specified four types of objectives that management must meet to achieve company goals. Which of the following is not one of those types? Responsibility objectives Strategic objectives Compliance objectives Reporting objectives Operations objectives

Responsibility objectives

Which of the following control procedures is designed to mitigate the threat of the theft of cash?

Restriction of access to the supplier master file Physical security of blank checks Use of a dedicated computer and browser for online banking

Which control could be used to mitigate the threat of inaccurate or invalid general ledger data?

Review of all changes to general ledger data.

Considering the potential of fraud belongs to which component of COSO's Internal Control Model?

Risk assessment.

COSO Internal Controls has five components. COSO ERM has the same five components, with an additional three components added. Which of the following are among the three added components? a)Risk response b)Information and communication c)Event identification d)Objective setting e)Risk assessment f)Control activities

Risk response Event identification Objective setting

Which documents are used to create a three-way match when approving the payment of a supplier invoice?

Sales order, receiving report, supplier invoice

What is the name of the law that Congress passed to prevent financial statement fraud, make financial reports more transparent, protect investors, strengthen internal controls, and punish executives who perpetrate fraud?

Sarbanes Oxley Act

The definition of an XBRL element, including such information as whether its normal account balance is a debit or a credit, is found in which of the following?

Schema

Identify all the controls that mitigate the threat of the theft of inventory

Segregation of duties of inventory custody and receiving Documentation of all transfers of inventory Restriction of physical access to inventory

Which of the following is a control procedure relating to both the design and the use of documents and records? Locking blank checks in a drawer Reconciling the bank account Press enter after select an option to check the answer Sequentially pre-numbering sales invoices Comparing actual physical quantities with recorded amounts

Sequentially pre-numbering sales invoices

Which of the following is true? It is easier to verify the accuracy of invoices for purchases of services than invoices for purchases of raw materials. Setting up petty cash as an imprest fund violates segregation of duties. The EOQ formula is used to identify when to reorder inventory. A voucher package usually includes a debit memo.

Setting up petty cash as an imprest fund violates segregation of duties

Which of the following are flowchart preparation guidelines? a)Show data entered into, or retrieved from, a database as passing through a processing operation (computer program) first. b)Show where documents or processes originate, and data are processed, but do not show where data are stored or sent. c)Show the final disposition of all the documents. d)Do not indicate on the flowchart who prepared the flowchart. e)Identify the business processes, documents, data flows, and data processing procedures to be flowcharted

Show data entered into, or retrieved from, a database as passing through a processing operation (computer program) first. Show the final disposition of all the documents. Identify the business processes, documents, data flows, and data processing procedures to be flowcharted.

Which of the following controls is designed to ensure that after updating the general ledger, assets have debit balances and liabilities have credit balances?

Sign check

Which of the following is not an advantage of an ERP system? Better Access Controls Standardization of procedures and reports Improved monitoring capabilities Simplicity and reduced costs

Simplicity and reduced costs

Which of the following statements are true? a)The likelihood and impact of a risk must be considered separately. b)Some events pose a greater risk because they are more likely to occur. c)The benefits of an internal control procedure are usually easier to measure than the costs. d)The objective of an internal control system is to provide reasonable assurance that events do not take place. e)Detective controls are superior to preventive controls; neither is as good as a corrective control.

Some events pose a greater risk because they are more likely to occur. The objective of an internal control system is to provide reasonable assurance that events do not take place.

Which of the following graph design principles is most important for ensuring that financial data is accurately interpreted?

Starting the y-axis of the graph at zero

An XBRL file that provides instructions on how to display an XBRL report on a computer monitor or in a printed report is called a(n)

Style Sheet

Which XBRL document provides the instructions on how to display or print an XBRL-encoded report?

Style sheet

Which of the following is not a transaction cycle? a)The HR/payroll cycle. b)The revenue cycle. c)The general ledger cycle. d)The expenditure cycle.

The general ledger cycle.

Which of the following matches is performed in evaluated receipt settlement (ERS)? The vendor invoice with the receiving report The purchase order with the receiving report The vendor invoice with the purchase order The vendor invoice, the receiving report, and the purchase order

The purchase order with the receiving report

With respect to data input, data must be collected about three facets of each business activity. Which of the following is (are) one of those facets? (Check all that apply.)

The resource(s) affected by each activity The people who participate in each activity Each activity of interest

In which transaction cycle would information for generating customer orders be most likely to pass between internal and external accounting information systems?

The revenue cycle.

For sound internal control, which of the following sources should be permitted to update the general ledger?

Treasurer

Which person makes original journal entries in the general ledger and reporting system about events such as dividend payments and payments to creditors?

Treasurer

A DFD consists of the following four basic elements: data sources and destinations, data flows, transformation processes, and data stores. Each is represented on a DFD by a different symbol.

True

Records of company data sent to an external party and then returned to the system as input are called _________. Turnaround documents Source data automation documents Source documents External input documents

Turnaround documents

Which of the following are basic principles upon which the ERM is built? a)Each employee must decide for himself how much uncertainty he will accept as he creates value. b)Uncertainty results in the possibility that something can negatively affect the company's ability to create value. c)Companies are formed to create value for management and the government. d)The ERM framework can manage uncertainty, but not the ability to create value. e)Uncertainty results in the possibility that something can positively affect the company's ability to create value.

Uncertainty results in the possibility that something can negatively affect the company's ability to create value. Uncertainty results in the possibility that something can positively affect the company's ability to create value.

Which of the following is an example of a turnaround document?

Utility bill.

Which of the following is designed primarily to improve the efficiency of financial reporting? XML XBRL IFRS The balanced scorecard

XBRL

A legal contract that defines responsibility for goods while they are in transit is called

a bill of lading.

A graphical description of data sources, data flows, transformation processes, data storage, and data destinations is called

a data flow diagram.

According to internal control frameworks, which of the following principles apply to the information and communication process? a)Communicate relevant internal control matters to external parties b)Monitor all management decisions to ensure they were properly made c)Obtain or generate the information needed to support internal control d)Audit internal control systems to make sure they function properly e)Internally communicate the information needed to support all internal control components

a)Communicate relevant internal control matters to external parties c)Obtain or generate the information needed to support internal control e)Internally communicate the information needed to support all internal control components

To achieve proper segregation of systems duties, which of the following system functions should be separated from the other system functions? a)Data control b)Security management c)Programming d)Systems analysis e)Accounting f)Change management g)Internal auditing h)Users

a)Data control b)Security management c)Programming d)Systems analysis h)Users

According to the text, which of the following are key methods of monitoring internal control system performance? a)Install fraud detection software b)Schedule periodic government inspections c)Track purchased software and mobile devices d)Implement effective supervision e)Use responsibility accounting systems f)Observe employees implementing the controls

a)Install fraud detection software c)Track purchased software and mobile devices d)Implement effective supervision e)Use responsibility accounting systems

Which of the following are disadvantages of ERP systems? a)It can take years to select and fully implement an ERP system. b)They are complex because they have to integrate many different business activities and systems. c)Data input must be captured or keyed multiple times as it is entered into different systems. d)Usually companies must adapt their processes to standardized ERP business processes. e)The organization is less able to control access to the system.

a)It can take years to select and fully implement an ERP system. b)They are complex because they have to integrate many different business activities and systems. as it is entered into different systems. d)Usually companies must adapt their processes to standardized ERP business processes.

Which of the following are advantages of ERP systems? a)Procedures and reports are standardized across business units. b)ERP systems are relatively inexpensive. c)Because the ERP system benefits are so great, there is little resistance to their installation. d)ERP systems provide an integrated, enterprise-wide view of an organization's data and financial situation. e)Management gains greater visibility into every area of the enterprise, and greater monitoring capabilities.

a)Procedures and reports are standardized across business units. d)ERP systems provide an integrated, enterprise-wide view of an organization's data and financial situation. e)Management gains greater visibility into every area of the enterprise, and greater monitoring capabilities.

Which of the following statements about ERP systems is (are) true? a)The importance of sound internal controls in an ERP system cannot be overstated. b)Top management's commitment to an ERP system greatly increases the chances of success. c)One way to choose a suitable ERP system is to select a package designed for your industry. d)Companies seldom hire outside help to implement ERP software. e)Since there are so few quality ERP systems, choosing one is an easy task.

a)The importance of sound internal controls in an ERP system cannot be overstated. b)Top management's commitment to an ERP system greatly increases the chances of success. c)One way to choose a suitable ERP system is to select a package designed for your industry.

Data must be collected about three facets of each business activity. These facets are

activity of interest, the resource(s), and the people who participate.

The examination of the relationships between different sets of data is called

analytical reviews.

Effective segregation of accounting duties is achieved when which of the following functions are separated? a)Managing information systems b)Custody of cash and other assets c)Authorization of transactions and decisions d)Recording transactions and preparing documents and reports e)Supervision of accounting duties and processes

b)Custody of cash and other assets c)Authorization of transactions and decisions d)Recording transactions and preparing documents and reports

Which of the following are important independent checks on performance? a)Single-entry accounting b)Reconciliation of independently maintained records. c)Analytical reviews that examine relationships between different sets of data d)An independent review where a person double checks the work she performed

b)Reconciliation of independently maintained records. c)Analytical reviews that examine relationships between different sets of data

To minimize the risk of theft of consumer remittances, the person who handles and deposits customer payments can also a)authorize credit memos b)none of these activities can be performed by the person who handles and deposits customer payments c)post adjustments to accounts receivable d)reconcile the bank statements

b)none of these activities can be performed by the person who handles and deposits customer payments

To minimize the risk of the theft of cash, the person who handles customer payments should not also have the duties of: a)picking merchandise. b)reconciling the bank account. c)posting remittances to customer accounts. d) taking customer orders. e)creating or authorizing credit memos.

b)reconciling the bank account. c)posting remittances to customer accounts. e)creating or authorizing credit memos.

A(n) ________ helps employees understand management's vision. It communicates company core values and inspires employees to live by those values.

belief system

The control procedure for restricting access to pricing master data is designed to mitigate the threat of:

billing errors.

For good internal control, who should sign checks?

cashier

Which person makes adjusting entries in the general ledger and reporting system?

controller

Entries that are made to counteract the effects of errors found in the general ledger are called

corrections

All of the following are ways an AIS can add value to an organization except: a)Sharing knowledge b)Improving efficiency c)Improving internal controls d)Increasing product costs

d

A potential adverse occurrence is called a threat or an event. With respect to threats, which of these statements is false? a)The probability a threat will occur is called the likelihood or risk. b)None of these statements about threats are false. c)The potential dollar loss from a threat is called the exposure or impact. d)The timing of when a threat will occur is called the timeframe or timeline.

d)The timing of when a threat will occur is called the timeframe or timeline.

Which of the following is not a step in the data processing cycle? Data collection Data input Data storage Data processing

data collection

Information is best described as

data that have been organized and processed to provide meaning and improve decision making.

The type of flowchart that illustrates the flow of documents and data among areas of responsibility within an organization is called

document flowchart.

ERP is the abbreviation for

enterprise resource planning.

A ______ is a pictorial, analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner.

flowchart

Which of the following statements are true? i)Controls are more effective when placed in a system after it is up and running. ii)Employees who process transactions should verify the presence of appropriate authorizations. iii)Control activities are policies and procedures that provide reasonable assurance that risk responses are carried out. iv)Systems analysts have the ultimate responsibility for selecting and implementing appropriate controls over technology. v)Throughput and response time are useful system performance measurements.

ii)Employees who process transactions should verify the presence of appropriate authorizations. iii)Control activities are policies and procedures that provide reasonable assurance that risk responses are carried out. v)Throughput and response time are useful system performance measurements.

The purpose of employing data entry processing integrity controls is to mitigate the threat of

inaccurate updating of the general ledger.

The control procedure of supplier audits is designed to mitigate the risk of:

kickbacks.

Which control procedure is designed to minimize the threat of posting errors to accounts receivable?

mailing of monthly statements to customers

Cupcake by Emma is a dessert retailer located in Springtown, Texas. Emma is a sole proprietorship that stocks an inventory of between 30 and 50 different kind of dessert. Inventory is updated in real time by the company's AIS. If Emma wishes to keep cumulative data about its company, Emma might use a

master file.

The control procedure for mailing monthly statements to customers is designed to mitigate the threat of

posting errors in accounts receivable.

Which document is used to establish a contract for the purchase of goods or services from a supplier?

purchase order

In an ERP system, the module used to record data about transactions in the disbursement cycle is called

purchase to pay.

The control procedure of requiring competitive bidding is primarily designed to mitigate the risk of

purchasing at inflated prices.

To minimize the risk of the theft of cash, the person who makes cash disbursements should not also have the duties of:

reconciling the bank account. approving supplier invoices.

All of the information (e.g., name, GPA, major, etc.) about a particular student is stored in the same _______________. file record attribute field

record

The amount of risk a company is willing to accept in order to achieve its goals and objectives is called

risk appetite

Five COSO components

risk assessment, control environment, control activities, Information and communication, Monitoring

Which of the following is used to change a customer's accounts receivable balance? a)packing slip b)sales invoice c)bill of lading d)picking list e)sales order

sales invoice

In a DFD, a data destination is represented by

square

Which document is no longer used to approve a supplier payment when a company is using ERS

supplier invoice

The type of flowchart that illustrates the relationships among system input, processing, storage, and output in an organization is called

system flowchart.

The value of information can best be determined by

the benefits associated with obtaining the information minus the cost of producing it.

The control procedure for separating the duties of the billing and shipping functions is designed to mitigate the threat of

the failure to bill customers.

Restricting physical access to inventory is designed to minimize the threat of

theft of inventory

Documentation methods such as DFDs, BPDs, and flowcharts save both time and money, adding value to an organization.

true

Before a company can identify the information needed to effectively manage a process, the company must

understand its business process.

A BPD provides users a ________ of the different steps or activities in a business process.

visual view