ACCT 360- Test 1 Practice Questions

Which of the following controls could be used to mitigate the threat of uncollectible accounts? 1. encryption 2. restriction of access to pricing master data 3. credit limits 4. restriction of physical access to inventory

3. Credit limits

A ______ is a pictorial, analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner. 1. BFD 2. Context flow diagram 3. Flowchart 4. Narrative

3. Flowchart

Which of the following is NOT a characteristic that makes information useful? 1. It is reliable 2. It is timely 3. It is inexpensive 4. It is relevant

3. It is inexpensive

Which of the following is a primary activity in the value chain? 1. Purchasing 2. Accounting 3. Post Sales Service 4. Human Resource Management

3. Post Sales Service

Which of the following is LEAST likely to be a specialized journal? 1. Sales journal 2. Cash receipts journal 3. Prepaid insurance journal 4. Cash disbursements journal

3. Prepaid insurance journal

Which of the following documents is most likely to be used in the expenditure cycle? 1. Sales order 2. Credit memo 3. Receiving report 4. Job time ticket

3. Receiving report

In what cycle does a company ship goods to customers? 1. Production cycle 2. Financing cycle 3. Revenue cycle 4. Expenditure cycle

3. Revenue Cycle

Cancelling all supporting documents when payment is made to a supplier is a control procedure designed to mitigate the threat of: 1. paying for items not recieved 2. failure to take adtanvage of discounts for prompt payment 3. duplicate payments 4. cash flow problems

3. duplicate payments

Which of the following controls could be used to mitigate the threat of unauthorized disclosure of sensitive information in the expenditure cycle? 1. tracking and monitoring product quality by supplier 2. competitive bidding 3. encryption 4. review and approval of purchases from new suppliers

3. encryption

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 (T OR F)

True

Documentation methods such as DFDs, BPDs, and flowcharts save both time and money, adding value to an organization. (T OR F)

True

Inputs and outputs of "Update employee/payroll file"?

input: New-employee form & employee change form output: updated employee/payroll file

Inputs and outputs of "Prepare reports" activity?

inputs: employee/payroll file outputs: payroll report

Inputs and outputs of "Pay taxes" activity?

inputs: employee/payroll file outputs: tax report, tax payment, payroll tax cash disbursements voucher, updated employee/payroll file

Inputs and outputs of "update general ledger" activity?

inputs: payroll tax cash disbursements voucher, payroll cash disbursements voucher outputs: updated general ledger

Inputs and outputs of "Pay Employees" function?

inputs: time cards, employee/payroll file, tax rates table outputs: employee checks, payroll register, updated employee/payroll file, payroll check, payroll cash disbursements voucher

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? 1. read documentation to determine how the system works 2. critique and correct documentation that others prepare 3. prepare documentation for a newly developed information system 4. teach others how to prepare documentation

1

With respect to data flow diagrams, which of the following statements are true? 1. in order to provide more informaiton, a portion of a level zero diagram (2.0 process) can be divided into sub-processes (2.1,2.2) 2. a context diagram is the lowest level DFD; it provides a low level view of a system 3. DFDs are subdivided into successively lower levels in order to provide ever-increasing amounts of detail 4. if two or more data flows move together, two lines are used. If the data flows separately, a single line is used

1 & 3

Which of the following are business process diagram preparation guidelines? 1. each row or swim lane in a BPD contains the activities performed by the indicated employee or department 2. unlike DFDs, most BPDs will not start with an action verb 3. show what technology is used in each business process 4. a BPD, no matter how detailed, is rarely sufficient to evaluate internal controls, such as whether duties are properly segregated 5. BPDs depict the major steps in a process sequentially, reading from left to right and top to bottom

1 &5

Which of the following are flowchart preparation guidelines? 1. show the final destination of all the documents 2. identify the business processes, documents, data flows, and data processing procedures to be flowcharted 3. show where documents or processes originate, and data are processed, but do not show where data are stored or sent 4. show data entered into, or retrieved from, a database as passing through a processing operation (computer program) first 5. do not indicate on the flowchart who prepared the flowchart

1, 2, 4

Which of the following are business process diagram preparation guidelines? 1. get an understanding of the system using tools, such as observing business processes and data flows, or by walking through the system transactions 2. divide the BPD into columns with labels, clearly label all symbols, and use arrowheads on all the flow lines 3. place the name, data, and preparer's name on each page of the completed BPD 4. show documents as they flow through the system, and show where each is stored 5. identify business processes, documents, data flows, and data processing procedures

1,3,5

Which of the following is most likely to be a general ledger control account? 1. Accounts receivable 2. Petty cash 3. Prepaid rent 4. Retained earnings

1. Accounts Receivable

Which of the following is NOT a step in the data processing cycle? 1. Data collection 2. Data input 3. Data storage 4. Data processing

1. Data collection

The type of flowchart that illustrates the flow of documents and data among areas of responsibility within an organization is called ____. 1. Document flowchart 2. Program flowchart 3. System flowchart 4. Business process flowchart

1. Document flowchart

Which of the following is NOT a means by which information improves decision making? 1. Increases information overload 2. Reduces uncertainty 3. Provides feedback about the effectiveness of prior decisions 4. Identifies situations requiring management action

1. Increases information overload

A firm, its suppliers, and its customers collectively form which of the following? 1. Supply chain 2. Value chain 3. ERP system 4. AIS

1. Supply Chain

Records of company data sent to an external party and then returned to the system as input are called _____. 1. Turnaround documents 2. Source data automation documents 3. Source documents 4. External input documents

1. Turnaround documents

In a DFD, a data destination is represented by ____ 1. a square 2. two horizontal lines 3. an arrow 4. a bubble

1. a square

A BPD for the revenue cycle will include which of the following? 1. description of all selling functions within an organization 2. description of all human resource and payroll functions within an organization 3. description of all purchasing functions performed within an organization 4. description of all the major functions performed within all cycles within an organization

1. description of all selling functions within an organization

Which control would help reduce the threat of cash flow problems? 1. lockbox arrangements 2. having the person who opens the mail immediately create a list of all customer payments received 3. none of these controls reduce the threat of cash flow problems 4. all of these controls reduce the threat of cash flow problems 5. prompt, restrictive endorsement of all customer checks

1. lockbox arrangements

Which control procedure is designed to minimize the threat of posting errors to accounts receivable? 1. mailing of monthly statements to customers 2. approval of credit memos by the credit manager 3. all of these controls minimize the threat of posting errors to accounts receivable 4. aging of accounts receivable 5. separation of the shipping and billing functions

1. mailing of monthly statements to customers

A DFD is a representation of which of the following? 1. the logical operations performed by a computer program 2. flow of data in an organization 3. decision rules in a computer program 4. computer hardware configuration

2

Which of the following are data flow diagram preparation guidelines? 1/ in a DFD, you should always show how the system starts and stops 2. Data flows can only move in one direction 3. all data flows should come from, and go to, a transformation process, a data store, or a source or destination 4. processes and data stores typically take their names from the data inflows or outflows

3 & 4

Which of the following are data flow diagram preparation guidelines? 1. include all error paths, no matter how unimportant they may seem 2. give each process a sequential number to help readers navigate among the DFD levels 3. include all relevant data elements so that they are considered during the system development 4. all transformation processes should have one or more incoming data flows, but may not have an outgoing data flow

2 & 3

Which of the following are flowchart preparation guidelines? 1. there is not need to identify departments, job functions, or external parties on the flowchart 2. in document flowcharts, divide the flowchart into columns with labels, clearly label all symbols, and use arrowheads on all the flow lines 3. it is usually not necessary to show procedures and processes in the order they take place 4. develop an understanding of the system using tools, such s interviews or questionnaires, or by walking through the system transactions 5. design the flowchart so that data flow from bottom to top and left to right

2 & 4

With respect to flowcharts, which of the following statements are true? 1. a system flowchart describes the specific logic used to perform a process shown on a program flowchart 2. an internal control flowchart can be used to describe, analyze, and evaluate internal control strengths 3. flowcharts can be used to analyze how to improve business processes, but not document flows 4. document flowcharts trace a document from its cradle to its grave, showing everything that happens as it flows through the system 5. an internal control flowchart is not very helpful in spotting system weaknesses or inefficiencies

2 & 4

A report telling how well all approved vendors have performed in the prior 12 months is information that is MOST needed in which business process? 1. Paying vendors 2. Acquiring inventory 3. Selling merchandise 4. Paying employees

2. Acquiring Inventory

Which transaction cycle includes interactions between an organization and its suppliers? 1. Revenue Cycle 2. Expenditure 3. Human resources/payroll cycle 4. General ledger and reporting system

2. Expenditure

Which of the following would contain the total value of all inventory owned by an organization? 1. Source document 2. General Ledger 3. Cash Budget

2. General Ledger

Data differ from information in which way? 1. Data are output and information is input 2. Information is output and data are input 3. Data are meaningful bits of information 4. There is no difference

2. Information is output and data are input

Recording and processing information about a transaction at the time it takes place is referred to as which of the following? 1. Batch processing 2. Online real time processing 3. Captured transaction processing 4. Chart of accounts processing

2. Online real time processing

All of the information about a particular student is stored in the same ___. 1. File 2. Record 3. Attribute 4. Field

2. Record

In the value chain concept, upgrading IT is considered what kind of activity? 1. Primary activity 2. Support activity 3. Service activity 4. Structured activity

2. Support activity

Which of the following is a function of an AIS? 1. Reducing the need to identify a strategy and strategic position 2. Transforming data into useful information 3. Allocating organizational resources 4. Automating all decision making

2. Transforming data into useful information

A legal contract that defines responsibility for goods while they are in transit is called: 1. a packing slip 2. a bill of lading 3. a picking ticket 4. an invoice

2. a bill of lading

A graphical description of data sources, data flows, transformation processes, data storage, and data destination is called? 1. a business process diagram 2. a data flow diagram 3. a flowchart 4. a context diagram

2. a data flow diagram

Which document is used to reduce the balance owed to a supplier? 1. supplier invoice 2. debit memo 3. purchase order 4. credit memo

2. debit memo

Which of the following controls could be used to mitigate the threat of kickbacks? 1. competitive bidding 2. job rotation and mandatory vacations 3. centralized purchasing function 4. review and approval of purchase requisitions

2. job rotation and mandatory vacations

Which control would help reduce the threat of theft of cash? 1. all of these controls help reduce the threat of theft of cash 2. lockbox agreements 3. discounts for prompt payment by customers 4. none of these controls reduce the threat of theft of cash 5. cash flow budgets

2. lockbox agreements

An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs is called: 1. just in time inventory system 2. materials requirements planning 3. reorder point 4. economic order quantity

2. materials requirements planning

Which of the following controls could be used to mitigate the threat of accepting unordered items? 1. use of bar codes and RFID technology 2. requiring existence of approved purchase order prior to accepting any delivery 3. configuration of the ERP system to flag discrepancies between received and ordered quantities that exceed tolerance threshold for investigation 4. supplier audits

2. requiring existence of approved purchase order prior to accepting any delivery

A BPD provides users a ______ of the different steps or activities in a business process. 1. data flow 2. visual view 3. decision tree 4. narrative

2. visual view

All of the following are guidelines that should be followed in naming DFD data elements except: 1. process names shoould include action verbs, such as update, edit, prepare, and record 2. make sure the names describe all the data or the entire process 3. name only the most important DFD elements 4. choose active and descriptive names

3

Which of the following statements is false? 1. flowcharts make use of many symbols 2. a document flowchart emphasizes the flow of documents or records containing data 3. DFDs help convey the timing of events 4. Both a and b are false

3

What is financial electronic data interchange (FEDI)? 1. it is a lockbox arrangement in which the bank electronically sends the company information about the customer account number and the amount remitted as soon as it receives payment 2. it is a document listing names and amounts of all customer payments received in the mail 3. it is the combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package 4. it is the transfer of funds through use of online banking software

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

Which of the following is a threat to the shipping process? 1. stockouts or excess inventory 2. incomplete/inaccurate orders 3. picking the wrong item or the wrong quantity 4. inaccurate or invalid credit memos

3. picking the wrong item or the wrong quantity

The type of flowchart that illustrates the relationship among system input, processing, storage, and output in an organization is called? 1. program flowchart 2. document flowchart 3. system flowchart 4. internal control flowchart

3. system flowchart

Restricting physical access to inventory is designed to minimize the threat of: 1. failure to bill 2. picking the wrong items or the wrong quantity 3. theft of inventory 4. shipping errors

3. theft of inventory

Which of the following is not a guideline when preparing a data flow diagram? 1. Group transformation processes 2. Give each process a sequential number 3. Subdivide the DFD 4. Do not ignore any aspects of the system

4. Do not ignore any aspects of the system

Which of the following is NOT a flowcharting symbol category? 1. Input/output 2. Storage 3. Processing 4. Reporting

4. Reporting

Which of the following is NOT an advantage of an ERP system? 1. Better access control 2. Standardization of procedures and reports 3. Improved monitoring capabilities 4. Simplicity and reduced costs

4. Simplicity and reduced costs

How does the chart of accounts list general ledger accounts? 1. Alphabetical order 2. Chronological order 3. Size order 4. The order in which they appear in financial statements

4. The order in which the appear in financial statements

The _____, who reports to the treasurer, is responsible for paying suppliers, 1. chief executive officer 2. chief financial officer 3. controller 4. cashier

4. cashier

Evaluated Receipt Settlement reduces the threat of: 1. mistakes in posting to accounts payable 2. theft of inventory 3. accepting unordered items 4. errors in supplier invoices

4. errors in supplier invoices

To minimize the risk of theft of consumer remittances, the person who handles and deposits customer payments can also : 1. post adjustments to accounts receivable 2. authorize credit memos 3. reconcile the bank statements 4. none of these activities can be performed by the person who handles and deposits customer payments

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

A method for processing accounts payable in which each approved invoice is posted to individual supplier records in the accounts payable file and is then stored in an open invoice file is called 1. voucher package 2. disbursement voucher 3. voucher system 4. nonvoucher system

4. nonvoucher system

Which of the following is sued to change a customer's accounts receivable balance? 1. a picking ticket 2. sales order 3. packing slip 4. sales invoice 5. bill of lading

4. sales invoice

Separation of the check writing and accounts payable functions is designed to mitigate the threat of: 1. failure to take advantage of discounts for prompt payment 2. duplicate payments 3. paying for items not received 4. theft of cash

4. theft of cash

A well-planned and drawn level 0 data flow 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) 1.1 Take customer order; 1.2 Ship product; 1.3 Bill customer d) 0.1 Take customer's order; 0.12 Ship product; 0.13 Bill customer

b) 1.0 Take customer order; 2.0 Ship product; 3.0 Bill customer