AIS

_1_ e. general ledger

1. Contains summary-level data for every asset, liability, equity, revenue, and expense account

_10_ a. data processing

10. The steps a company must follow to efficiently and effectively process data about its transactions

_11_ q. entity

11. Something about which information is stored

__5_ u. data value

5. Contents of a specific field, such as "George" in a name field

__6_ s. field

6. Portion of a data record that contains the data value for a particular attribute, like a cell in a spreadsheet

_7_ c. turnaround documents

7. Company data sent to an external party and then returned to the system as input

75) Which of the following is not a factor of internal environment according to the COSO Enterprise Risk Management Framework? A) Analyzing past financial performance and reporting B) Providing sufficient resources to knowledgeable employees to carry out duties C) Disciplining employees for violations of expected behavior D) Setting realistic targets for long-term performance

A) Analyzing past financial performance and reporting

83) ________ controls prevent, detect and correct transaction errors and fraud.

A) Application

EDI is used to electronically communicate between a company and its suppliers and customers. EDI stands for

A) Electronic Data Interchange

28) Changing an employee's hourly wage rate would be recorded in which file?

A) Employee master file

Which document should always be included with a merchandise shipment to a customer?

A) Packing slip

102) Which of the following statements about REA modeling and REA diagrams is true?

A) REA is an acronym for Resources, Events, and Agents.

Which of the following documents would normally trigger the process to record a customer payment?

A) Remittance advice

72) Which of the following is a control related to design and use of documents and records? A) Sequentially prenumbering sales invoices B) Comparing physical inventory counts with perpetual inventory records C) Reconciling the bank statement to the general ledger D) Locking blank checks in a drawer or safe

A) Sequentially prenumbering sales invoices

78) Accountants must try to protect the AIS from threats. Which of the following would be a measure that should be taken?

A) Take a proactive approach to eliminate threats. B) Detect threats that do occur. C) Correct and recover from threats that do occur. D) All of the above are proper measures for the accountant to take. Answer: D

71) According to The Sarbanes-Oxley Act of 2002, the audit committee of the board of directors is directly responsible for

A) hiring and firing the external auditors.

66) A control procedure designed so that the employee that records cash received from customers does not also have access to the cash itself is an example of a(n)

A) preventive control.

Which of the following is generally not shown on a receiving report?

A) price of the items

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he proudly announced that he had received a ________ from a client to buy a large quantity of components from Folding Squid.

A) purchase order

65) A delivery of inventory from a vendor, with whom a credit line is already established, would be initially recorded in which type of accounting record and as part of what transaction cycle?

A) purchases journal; expenditure cycle

Identify in which of the following scenarios a company could adjust the balance due the vendor by issuing a debit memo.

A) quantity different from that ordered B) damage to the goods C) goods that fail inspection for quality D) All of the above are possible scenarios. Answer: D

47) The data processing method used by FedEx to track packages is an example of

A) real-time processing.

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

A) remittance advice.

51) Performance reports for sales departments should compare actual versus budget A) revenue. B) cost. C) return on investment. D) profit.

A) revenue.

A document typically encountered in the revenue cycle that is both an output document and a source document is the

A) sales invoice

The activities involved in soliciting and processing customer orders within the revenue cycle are known as the ________.

A) sales order entry process

39) Pre-numbered checks, invoices, and purchase orders are examples of

A) sequence codes.

37) When the sum of all entries in the subsidiary ledger equals the balance in the corresponding general ledger account, it is assumed that

A) the recording processes were accurate

33) Documents that are sent to customers or suppliers and then sent back to the company in the course of a business transaction are known as

A) turnaround documents.

All of the following are opportunities to improve efficiency of the accounts payable function except

A) use blanket purchase orders. B) convert a manual AIS system to EDI and EFT. C) streamline noninventory purchases. D) use evaluated receipt settlement. Answer: A

Batch Processing, 35

Accumulating transaction records into groups or batches for processing at a regular interval such as daily or weekly. The records are usually sorted into some sequence (such a numerically or alphabetically ) before processing.

XBRL Element

An individual financial statement item.

1HR. Payroll Service Bureau

An organization that maintains the payroll master file for each of its clients and performs their payroll processing activities for a fee.

The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. He also reviews receiving reports, approves or corrects them, and authorizes the cashier to pay vendor invoices. Which of the following would correct control weaknesses, if any, related to these activities?

B) Accounts payable should reconcile purchase orders, receiving reports, and invoices.

21) These are used to transmit time and attendance data directly to the payroll processing system. A) Badge readers B) Electronic time clocks C) Magnetic cards D) none of the above

B) Electronic time clocks

How is credit approval generally handled for established customers with a documented payment history?

B) General authorization by a sales clerk

Which of the decisions below is not ordinarily found as part of the revenue cycle?

B) How often should accounts receivable be subjected to audit?

96) When undertaking risk assessment, the expected loss is calculated like this.

B) Impact times likelihood

96) When undertaking risk assessment, the expected loss is calculated like this. A) Impact times expected loss B) Impact times likelihood C) Inherent risk times likelihood D) Residual risk times likelihood

B) Impact times likelihood ITL

30) Which step below is not considered to be part of the data processing cycle?

B) feedback from external sources

61) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message, "Your journal entry must be a numeric value. Please reenter." This message was the result of a A) validity check. B) field check. C) zero-balance check. D) completeness test.

B) field check.

4) Pull manufacturing is officially known as A) manufacturing resource planning (MRP). B) just-in-time manufacturing system (JIT). C) the economic order quantity (EOQ) system. D) ahead-of-time production implementation (ATPI). Answer: B

B) just-in-time manufacturing system (JIT).

A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices. This describes the ________ method.

B) open-invoice

40) Which item below is not considered a major input to the general ledger and reporting system? A) summary entries from the major subsystems B) reports from managers C) adjusting entries D) financing and investing activities

B) reports from managers

The benefits of a lockbox arrangement with a bank are maximized when

B) several banks around the country are used, in order to minimize the time payments spend in the mail.

One of the basic activities in the expenditure cycle is the receiving and storage of goods, supplies, and services. What is the counterpart of this activity in the revenue cycle?

B) shipping function

33) The document that lists each employee's gross pay, payroll deductions, and net pay in a multicolumn format is called A) an employee earnings statement. B) the payroll register. C) a deduction register. D) an employee time sheet summary.

B) the payroll register.

Block Code, 30

Blcoks of numbers that are reserved for specific categories of data, there by helping to organize the data. EX. A chart of accounts.

108) In a relational database, the relationship between tables (entities) is always

C) 1-to-many

114) An example of a detective control that a new system implementation team may introduce during the physical design phase of a SDLC for implementing a new ERP system for discrete manufacturing is:

C) A report that shown any zero cost parts.

88) This control framework's intent includes helping the organization to provide reasonable assurance that objectives are achieved and problems are minimized, and to avoid adverse publicity and damage to the organization's reputation.

C) COSO's enterprise risk management framework

105) A(n) ________ diagram graphically depicts a database's contents by showing entities and relationships.

C) entity-relationship

42) A subsidiary ledger

C) records all detailed data for any general ledger account that has individual sub-accounts.

34) The key to preventing unauthorized changes to the payroll master file is A) hiring totally honest people to access and make changes to this file. B) segregation of duties between the preparation of paychecks and their distribution. C) segregation of duties between the authorization of changes and the physical handling of paychecks. D) having the controller closely review and then approve any changes to the master file.

C) segregation of duties between the authorization of changes and the physical handling of paychecks.

Each month PTTP mails bills to 70,000 households and then processes payments as they are received. The customers are provided with a remittance advice, which is a

C) turnaround document

1. Bill of materials

C. A list of the raw materials used to create a finished product.

Control and Accounting Information Systems

Control and Accounting Information Systems

44) Concerning a master file, which of the following statements is false?

D) A master file's individual records are rarely, if ever, changed. (this is false)

Responding to customer inquiries and general customer service is an important aspect in the revenue cycle. Since customer service is so important, software programs have been created to help manage this function. These special software packages are called

D) CRM systems. Answer: D

74) With a limited work force and a desire to maintain strong internal control, which combination of duties would result in the lowest risk exposure? A) Updating the inventory subsidiary ledgers and recording purchases in the purchases journal B) Approving a sales return on a customer's account and depositing customers' checks in the bank C) Updating the general ledger and working in the inventory warehouse D) Entering payments to vendors in the cash disbursements journal and entering cash received from customers in the cash receipts journal

D) Entering payments to vendors in the cash disbursements journal and entering cash received from customers in the cash receipts journal

90) Which of the following is not one of the eight interrelated risk and control components of COSO Enterprise Risk Management Framework?

D) Event assessment

Which of the following is not an advantage of a voucher system?

D) It is a less expensive and easier system to administer than other systems. Answer: D

What is not an advantage of using disbursement vouchers?

D) There are no disadvantages to using disbursement vouchers. Answer: D

97) The Sarbanes-Oxley Act (SOX) applies to

D) all publicly held companies.

A company should check inventory quantities before for all the following reasons except to

D) determine the credit limit for a customer. Answer: D

In the revenue cycle, before a shipping notice is prepared, the shipping department personnel should match the inventory received from the warehouse to details from

D) picking ticket and sales order.

Database Design Using the REA Data Model

Database Design Using the REA Data Model

Source Documents, 28

Documents used to capture transaction data at its source - when the tranaction takes place . Ex. sales orders, purchase orders, and employee time cards.

EXPENDITURE CYCLE

EXPENDITURE CYCLE

Responsibility Accounting

Evaluating performance based on controllable costs.

Flexible Budget

Evaluating performance by computing standards in light of actual activity levels.

Introduction to Systems Development and Systems Analysis

Introduction to Systems Development and Systems Analysis

Sequence Codes, 30

Items are numbered consecutively so that gaps in the sequence code indicate missing items that should be investigated. EX. prenumbered checks, invoices, and purchase orders.

2. Operations list

K. A document that lists the steps required to manufacture a finished

XBRL Linkbases

One or more XBRL files that define the relationships among elements found in a specific instance document. *A FILE that define the relationships among XBRL Elements.

Payroll Register

Payroll Register A listing of payroll data for each employee for a payroll period.

Turnaround Document, 28

Records of company data sent to an external party & then returned to the systems as input. Turn-around documents are in machine-readable form to facilitate their subsequent processing as input records. EX. Utility bill.

PRIOR CPA EXAM QUESTIONS

THE REVENUE CYCLE

Data Processing Cycle, 28

The 4 operations (data input, datea storage, data processing & information output) performed on data to generate meaningful & relevant information.

The Expenditure Cycle

The Expenditure Cycle

Data Value, 34

The actual value stored in a field. It describes a particular attribute of an entity. EX. the customer name field would contain "ZYX Company" if that company was a customer.

Source Data Automation, 29

The collection of transaction data in machine-readable form at the time and place or origina. Ex. Point-of-Sale terminals & ATMS.

Attibutes, 34

The properties identifying numbers, and characteristics of interest of an entity that is stored in a database. EX. employee number, pay rate, name, address.

c. Record daily sales

Transaction file

d. Record payroll checks

Transaction file

f. Record production run variances

Transaction file

g. Record Sales Commissions

Transaction file

l. Record purchases

Transaction file

Group Code, 30

Two or more subgroups of digits that are used to code an item. A group code is often used in conjunction with a block code.

hash total

a batch total that does not have any intrinsic meaning

record count

a batch total that represents the number of transactions processed

financial total

a batch total that represents the total dollar value of a set of transactions

parity checking

a control that verifies that all the data was transmitted correctly by counting the number of odd or even bits

10. Cost driver

a-- a factorthat causes costs to change

31. Which of the following control procedures may prevent the failure to bill customers for some shipments?

a. Each shipment should be supported by a prenumbered sales invoice that is accounted for.

44. Which of the following departments should have the responsibility for authorizing payroll rate changes?

a. Personnel

34. The mailing of disbursement checks and remittance advices should be controlled by the employee who

a. Signed the checks last

35. Which of the following internal control procedures will most likely prevent the concealment of a cash shortage resulting from the improper write-off of a trade account receivable?

a. Write-offs must be approved by a responsible officer after review of credit department recommendations and supporting evidence.

32. To achieve good internal accounting control, which department should perform the activities of matching shipping documents with sales orders and preparing daily sales summaries?

a. billing.

43. Jackson, the purchasing agent of Judd Hardware Wholesalers, has a relative who owns a retail hardware store. Jackson arranges for hardware to be delivered by manufacturers to the retail store on a COD basis, thereby enabling his relative to buy at Judd's wholesale prices. Jackson probably was able to accomplish this because of Judd's poor internal control over

a. purchase orders.

41. Tracing bills of lading to sales invoices provides evidence that

a. shipments to customers were invoiced.

Proper authorization procedures in the revenue cycle usually provide for the approval of bad-debt write-offs by an employee in which of the following departments?

a. treasurer.

Completeness check

an application control that ensures that a customer's ship-to address is entered in a sales order

49. Which of the following is not a universal rule for achieving strong internal control over cash?

b. Decentralize the receiving of cash as much as possible.

33. Which of the following is the most effective control procedure to detect vouchers that were prepared for the payment of goods that were not received?

b. Match purchase order, receiving report, and vendor's invoice for each voucher in the accounts payable department

37. A company policy should clearly indicate that defective merchandise returned by customers is to be delivered to the

b. receiving clerk.

c. Prepare biweekly payroll checks

batch

e. Prepare a daily bank deposit

batch

f. Preparation of customer bills by a local utility

batch

36. Which of the following control procedures is not usually performed in the vouchers payable department?

c. Controlling the mailing of the check and remittance advice

44. Which of the following controls most likely would be effective in offsetting the tendency of sales personnel to maximize sales volume at the expense of high bad-debt write-offs?

c. Employees involved in the credit-granting function are separated from the sales function.

28. In a properly designed accounts payable system, a voucher is prepared after the invoice, purchase order, requisition and receiving report are verified. The next step in the system is to

c. approve the voucher for payment.

6. Materials requistion

d--a document used to authorize removal of raw material from inventory.

53. Which of the following controls would be most effective in ensuring that recorded purchases are free of material errors?

d. Purchase orders, receiving reports and vendor's invoices are matched independently in preparing vouchers

45. Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?

d. The billing department supervisor matches prenumbered shipping documents with entries in the sales journal.

Which of the following is an effective internal accounting control over accounts receivable?

d. The billing function should be assigned to people other than those responsible for maintaining accounts receivable subsidiary records.

4. Lean manufacturing

m- a production planning that is an extension of jit inventory control.

d. Process an order through an e-commerce Web site

online-real time

recovery point objective (RPO)

the amount of data an organization is willing to re-enter or possibly lose in the event of a disaster

_12_ v. master file

12. Stores cumulative information about an organization; like a ledger in a manual AIS.

_13_ f. subsidiary ledger

13. Contains detailed data for any general ledger account with many individual subaccounts

_14_ w. transaction file

14. Contains records of individual business transactions that occur during a specific time period

_15_ z. online, real-time processing

15. Updating each transaction as it occurs

_16_ d. source data automation

16. Devices that capture transaction data in machine-readable form at the time and place of their origin

_17_ o. specialized journal

17. Used to record large numbers of repetitive transactions

_18_ x. database

18. Set of interrelated, centrally coordinated files

_19_ k. group code

19. Two or more subgroups of digits are used to code items

_2__ i. sequence code

2. Items are numbered consecutively to account for all items; missing items cause a gap in the numerical sequence

_20_ y. batch processing

20. Updating done periodically, such as daily

_21_ h. coding

21. Systematic assignment of numbers or letters to items to classify and organize them

_22_ l. mnemonic code

22. Letters and numbers, derived from the item description, are interspersed to identify items; usually easy to memorize

_23_ b. source documents

23. Initial record of a transaction that takes place; usually recorded on preprinted forms or formattted screens

_24_ t. record

24. Fields containing data about entity attributes; like a row in a spreadsheet

_25_ j. block code

25. Sets of numbers are reserved for specific categories of data

_26_ g. control account

26. The general ledger account corresponding to a subsidiary ledger, where the sum of all subsidiary ledger entries should equal the amount in the general ledger account

__3_ p. audit trail

3. Path of a transaction through a data processing system from point of origin to final output, or backwards from final output to point of origin

__4_ m. chart of accounts

4. List of general ledger account numbers; allows transaction data to be coded, classified, and entered into proper accounts; facilitates preparation of financial statements and reports

__8_ n. general journal

8. Used to record infrequent or non-routine transactions

__9_ r. attribute

9. Characteristics of interest that need to be stored

Time Sheet

A data entry screen (or paper document) used by salaried professionsl to record how much time was spent performing various tasks for specific clients.

Audit Trail

A detective control that can be used to trace changes in general ledger account balances back to source documents.

Time Card

A document that records the employee's arrival and departure times for each work shift. The time card records the total hours worked by an employee during a pay period.

XBRL Extension Taxonomy

A file containing a set of customized tags to define new XBRL elements that are unique to a specific organization.

Instance Document

A file that contains specific data values for a set of XBRL elements for a specific time period or point in time.

Transaction File, 34

A file that contains the individual business transactions that occur during a specific fiscal period. A transaction file is conceptually similar to a journal in a manual AIS.

XBRL Schema

A file that defines the attributes of XBRL elements.

XBRL Style Sheet

A file that explains how to display an XBRL instance document.

Payroll Clearing Account

A general ledger account used to check the accuracy and completeness of recording payroll costs and their subsequent allocation to appropriate cost centers.

Specialized Journals, 32

A journal used to record a large number or repetitive tranactions such as credit sales, cash receivpts purchases, & cash disbursements.

General Journal, 32

A journal used to record infrequent or nonrountine transactions, such as loan payments & end-of-period adjusting & closing entries.

General Ledger, 30

A ledger that contains summary-level data for every asset, liability, equite, revenue, and expense account of the orgnaization.

Subsidiary Ledger, 30

A ledger used to record detailed data for a general ledger account with many individual subaccounts, such as accounts receivable, inventory, and accounts payable.

Chart of Accounts, 31

A listing of all the numbers assigned to balance sheet & income statement accounts. The account numbers allow transaction data to be codes, classified, and entered into the proper accounts, They also facilitate financial statement & report preparation.

Balanced Scorecard

A multi-dimensional performance report.

Audit Trail, 33

A path that allows a transction to be traced through a data processing system from point of origin to output or backwards from output to point of origin. It is used to check the accuracy & validity of ledger posting & to trace changes in general ledger accounts from their beginning balance to their ending balance.

Master File, 34

A permanent file of records that stores cumulative data about an organization. As transactions take place, individual records within a master file are updated to keep them current.

Document, 35

A record of a transaction or other company data. EX. checks, invoices , receiving reports, & purchase requisitions.

Earnings Statement

A report listing the amount of gross pay, deductions, and net pay for the current period and the year-to-date totals for each category.

Query, 37

A request for the data base to provide the information needed to deal with a problem or answer a question. The information is retrieved, displayed or printed, and/or analyzed as requested.

Record, 34

A set of fields whose data values describe specific attributes of an entity, such as all payroll data relating to a single employee. EX. a row in a spreadsheet.

XBRL Taxonomy

A set of files that defines XBRL elements and specifies the relationships among them.

Database, 34

A set of interrelated, centrally controlled data files that are stored with as little data redundancy as possible. A database consolidated records previously stored in separate files into a common pool and serves a variety of users and data processing applications.

File, 34

A set of logically related records, such as the payroll records of all employees.

Enterprise Resource Planning (ERP) System, 37

A systems that integrates all aspects of an organization's activities, such as accounting, finance, marketing, human resources, manufacturing, inventory management - into one system. An ERP system is modularized; companies can purchase the individual modules that meet their specific needs. An ERP facilitates information flow among the company's various business functions and manages communications with outside stakeholders.

Control Account, 30

A title given to a general ledger account that summarizes the total amounts recorded in a subsidiary ledger. EX. the accounts receivable control account in the general ledger represents the total amount owed by all customers. The balances in the accounts receivable subsidiary ledger indicate the amount owed by each specific customer.

Which of the following would be the least effective control to prevent paying the same vendor invoice twice?

A) Allow only the accounts payable department to authorize payment for vendor invoices and allow only the cash disbursements department to cut and mail checks to vendors.

Which control would best prevent payments made to fictitious vendors?

A) Allow payments only to approved vendors.

55) Which of the following statements is not true about an XBRL instance document? A) An instance document includes instruction code as to how the document should be physically arranged and displayed. B) An instance document contains facts about specific financial statement line items. C) An instance document uses separate tags for each specific element. D) An instance document can be used to tag financial and nonfinancial elements.

A) An instance document includes instruction code as to how the document should be physically arranged and displayed.

75) Which of the following is not a factor of internal environment according to the COSO Enterprise Risk Management Framework?

A) Analyzing past financial performance and reporting

83) ________ controls prevent, detect and correct transaction errors and fraud. A) Application B) Detective C) General D) Preventive

A) Application

73) Which of the following duties could be performed by the same individual without violating segregation of duties controls?

A) Approving accounting software change requests and testing production scheduling software changes

73) Which of the following duties could be performed by the same individual without violating segregation of duties controls? A) Approving accounting software change requests and testing production scheduling software changes B) Programming new code for accounting software and testing accounting software upgrades C) Approving software changes and implementing the upgraded software D) Managing accounts payable function and revising code for accounting software to more efficiently process discount due dates on vendor invoices

A) Approving accounting software change requests and testing production scheduling software changes

61) Data about which of the following facets of a business activity is most likely to be recorded in a transaction file?

A) Business activity

27) Which of the following is not true about the accounts receivable subsidiary ledger?

A) Debits and credits in the subsidiary ledger must always equal.

59) Changing an employee's hourly wage rate would be recorded where?

A) Employee master file

The accounts receivable department must know when customers pay their invoices, yet segregation of duties controls dictate that the collection and recording functions be kept separate from each other. What is a solution to this potential internal control problem?

A) Have customers send a remittance advice with their payment. B) Have mailroom personnel prepare a remittance list which can be forwarded to accounts receivable. C) Establish a lockbox arrangement with a bank. D) all of the above Answer: D

87) This control framework addresses the issue of control from three vantage points: business objectives, information technology resources, and information technology processes.

A) ISACA's control objectives for information and related technology

87) This control framework addresses the issue of control from three vantage points: business objectives, information technology resources, and information technology processes. A) ISACA's control objectives for information and related technology B) COSO's internal control framework C) COSO's enterprise risk management framework D) none of the above

A) ISACA's control objectives for information and related technology

81) Which of the following is accomplished by corrective controls?

A) Identify the cause of the problem. B) Correct the resulting errors. C) Modify the system to prevent future occurrences of the problem. D) All of the above are accomplished by corrective controls. Answer: D

81) Which of the following is accomplished by corrective controls? A) Identify the cause of the problem. B) Correct the resulting errors. C) Modify the system to prevent future occurrences of the problem. D) All of the above are accomplished by corrective controls.

A) Identify the cause of the problem. B) Correct the resulting errors. C) Modify the system to prevent future occurrences of the problem. D) All of the above are accomplished by corrective controls. Answer: D

92) Which component of the COSO Enterprise Risk Management Integrated Framework is concerned with understanding how transactions are initiated, data are captured and processed, and information is reported?

A) Information and communication

92) Which component of the COSO Enterprise Risk Management Integrated Framework is concerned with understanding how transactions are initiated, data are captured and processed, and information is reported? A) Information and communication B) Internal environment C) Event identification D) Objective setting

A) Information and communication

95) The risk that exists before management takes any steps to control the likelihood or impact of a risk is A) Inherent risk

A) Inherent risk

95) The risk that exists before management takes any steps to control the likelihood or impact of a risk is A) Inherent risk B) Residual risk C) Risk appetite D) Risk assessment

A) Inherent risk

64) IFRS is an acronym for what? A) International Financial Reporting Standards B) Internal Forensic Response System C) Input and Financial Reporting Standards D) Internal Fault Recovery System

A) International Financial Reporting Standards

76) Which of the following statements about internal environment is false?

A) Management's attitudes toward internal control and ethical behavior have only minimal impact on employee beliefs or actions.

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

A) Management's attitudes toward internal control and ethical behavior have only minimal impact on employee beliefs or actions.

109) A "1-to-many" relationship between Customer Number in the Customer Table and Customer Number in the Sales Order Table means there can be _________.

A) Many sales orders for a given customer, but only one customer per sales order

65) Which of the following is not one of the risk responses identified in the COSO Enterprise Risk Management Framework?

A) Monitoring

65) Which of the following is not one of the risk responses identified in the COSO Enterprise Risk Management Framework? A) Monitoring B) Avoidance C) Acceptance D) Sharing

A) Monitoring

63) Which of the following statements about data processing methods is true?

A) Online real-time processing does not store data in a temporary file.

Which of the following would probably be the least effective control to mitigate the risk of paying an invoice payable to a phony vendor for inventory purchases, mailed to the company by an employee attempting to commit fraud?

A) Only pay from original invoices.

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

A) Packing slip received from the shipping department

Comparing quantities on a vendor invoice to quantities on the receiving report would not prevent or detect which of the following situations?

A) Receiving and accepting inventory not ordered

1) Which of the following is a key feature of materials requirements planning (MRP-II)? A) Reducing required inventory levels by scheduling production, rather than estimating needs B) Minimizing or eliminating carrying and stockout costs C) Determining the optimal reorder points for all materials D) Determining economic order quantity for all materials

A) Reducing required inventory levels by scheduling production, rather than estimating needs

Which of the following is not one of the controls for the mail room where customer payments are commingled with other mail?

A) Requiring the controller to be personally present when mail is received and opened

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

A) Send monthly statements to all customers with balances owed.

72) Which of the following is a control related to design and use of documents and records?

A) Sequentially prenumbering sales invoices

78) Accountants must try to protect the AIS from threats. Which of the following would be a measure that should be taken? A) Take a proactive approach to eliminate threats. B) Detect threats that do occur. C) Correct and recover from threats that do occur. D) All of the above are proper measures for the accountant to take.

A) Take a proactive approach to eliminate threats. B) Detect threats that do occur. C) Correct and recover from threats that do occur. D) All of the above are proper measures for the accountant to take. Answer: D

101) The REA data model is so named because it classifies entities into three distinct categories. These categories include all of the following except: A) The Entities that are identified for a business B) The Resources the organization acquires and uses C) The Events that are the business activities in which the organization engages D) The Agents participating in these events Answer: A

A) The Entities that are identified for a business

Consider the following revenue cycle scenario: The company has been exposed to customer dissatisfaction and the suggested control procedure to be implemented is to install and use bar-code scanners. What is the threat?

A) The company may be shipping the wrong merchandise.

When a customer places an order (on account) for a certain product, what should be done before the order is checked for inventory availability?

A) The customer's available credit should be checked.

A sales clerk at an electronics store scanned the bar code for a low cost set of headphones and then substituted a high cost set of headphones for his friend, who paid the lower price. Which of the following controls would best help to prevent this sort of fraud?

A) Use of RFID tags

Which is the best control to prevent invoicing customers for the quantity ordered, which was more than the quantity shipped due to items on backorder?

A) Use the information from the packing slip to prepare the sales invoice.

69) A computer operator is allowed to work as a programmer on a new payroll software project. Does this create a potential internal control problem?

A) Yes, the computer operator could alter the payroll program to increase her salary.

69) A computer operator is allowed to work as a programmer on a new payroll software project. Does this create a potential internal control problem? A) Yes, the computer operator could alter the payroll program to increase her salary. B) Yes, this is a potential problem unless the computer operator is supervised by the payroll manager. C) No, ideal segregation of duties is not usually possible, and operators are often the best at programming changes and updates. D) No, as long as the computer operator separately accounts for hours worked in programming and in operations.

A) Yes, the computer operator could alter the payroll program to increase her salary.

A purchase order is

A) a document formally requesting a vendor to sell a certain product at a certain price. B) a request for delivery of certain items and quantities. C) a contract between the buyer and vendor once accepted by the vendor. D) All of the above are true. Answer: D

A disbursement voucher contains

A) a list of outstanding invoices. B) the net payment amount after deducting applicable discounts and allowances. C) the general ledger accounts to be debited. D) All of the above are correct. Answer: D

45) Recording interest earned on an investment is an example of which type of adjusting journal entry? A) accrual entry B) deferral entry C) revaluation entry D) correcting entry

A) accrual entry

44) Adjusting entries that reflect events that have already occurred, but for which no cash flow has taken place are classified as A) accruals. B) deferrals. C) revaluations. D) corrections.

A) accruals.

35) Pre-numbering of source documents helps to verify that

A) all transactions have been recorded since the numerical sequence serves as a control.

10) What specific control can help restrict the rights of authorized users to only the portion of a database needed to complete their specific job duties? A) an access control matrix B) passwords and user IDs C) closed-loop verification D) specific authorization

A) an access control matrix

47) Immediately after the adjusting entries are posted, the next step in the general ledger and reporting system is to prepare A) an adjusted trial balance. B) closing entries. C) financial statements. D) an unadjusted trial balance.

A) an adjusted trial balance.

67) Which of the following is an example of a preventive control?

A) approving customer credit prior to approving a sales order

67) Which of the following is an example of a preventive control? A) approving customer credit prior to approving a sales order B) reconciling the bank statement to the cash control account C) counting inventory on hand and comparing counts to the perpetual inventory records D) maintaining frequent backup records to prevent loss of data

A) approving customer credit prior to approving a sales order

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

A) balance forward.

Stepanek Sales and Service provides free coffee to employees. Stepanek arranged with Ingebrigtson's Joe to deliver as many coffee packages, sugar, creamer, and filters as needed each week. Ingebrigtson's sends a monthly invoice for Stepanek to pay. This arrangement is best described as a

A) blanket purchase order.

62) Data about all of the following facets of a business activity are most likely to be recorded in a master file except the

A) business activity.

For good internal control, who should sign checks?

A) cashier

The disbursement voucher and supporting documents are sent to the ________ for payment prior to the due date.

A) cashier

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

A) cashier; treasurer

17) Which activity below is not performed by the Human Resource Management (HRM)? A) compensation B) training C) discharge D) recruitment and hiring

A) compensation

During the sales order entry process, a ________ is performed to verify that each transaction record contains all appropriate data items.

A) completeness test

50) Performance reports for cost centers should compare actual versus budget ________ costs. A) controllable B) uncontrollable C) fixed D) variable

A) controllable

When a customer pays off the balance on an invoice, the payment is credited to the ________ file.

A) customer master

68) Independent checks on performance include all the following except A) data input validation checks. B) reconciling hash [SIC, CASH?] totals. C) preparing a trial balance report. D) supervisor review of journal entries and supporting documentation.

A) data input validation checks.

What is the question number 68???

A) data input validation checks.

103) The process of defining a database so that it faithfully represents all aspects of the organization including its interactions with the external environment is called

A) data modeling.

One of the major responsibilities of the receiving department is

A) deciding if the delivery should be accepted.

25) Hiring decisions at Frazier's Razors are made by Sheila Frazier, the Director of Human Resources. Pay rates are approved by the Vice President for Operations. At the end of each pay period, supervisors submit time cards to Sheila, who prepares paycheck requisitions. Paychecks are then distributed through the company's mail room. This represents a(an) ________ segregation of duties. A) effective B) partial C) ineffective D) limited

A) effective

53) The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, action figures (collectively) are a(an)

A) entity.

One of the threats associated with the process and activity of receiving and storing goods is

A) errors in counting.

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

A) failure to bill customers.

29) Why is a separate payroll account used to clear payroll checks? A) for internal control purposes to help limit any exposure to loss by the company B) to make bank reconciliation easier C) banks don't like to commingle payroll and expense checks D) All of the above are correct.

A) for internal control purposes to help limit any exposure to loss by the company

30) What step can be taken to reduce the distribution of fraudulent paychecks? A) have internal audit investigate unclaimed paychecks B) allow department managers to investigate unclaimed paychecks C) immediately mark "void" across all unclaimed paychecks D) match up all paychecks with time cards

A) have internal audit investigate unclaimed paychecks

71) According to The Sarbanes-Oxley Act of 2002, the audit committee of the board of directors is directly responsible for A) hiring and firing the external auditors. B) performing tests of the company's internal control structure. C) certifying the accuracy of the company's financial reporting process. D) overseeing day-to-day operations of the internal audit department.

A) hiring and firing the external auditors.

93) The COSO Enterprise Risk Management Integrated Framework identifies four objectives necessary to achieve corporate goals. Objectives specifically identified include all of the following except

A) implementation of newest technologies.

93) The COSO Enterprise Risk Management Integrated Framework identifies four objectives necessary to achieve corporate goals. Objectives specifically identified include all of the following except A) implementation of newest technologies. B) compliance with laws and regulations. C) effective and efficient operations. D) reliable reporting.

A) implementation of newest technologies.

29) A typical source document could be

A) in some paper form. B) a computer data entry screen. D) both A and B Answer: D

42) The general ledger and reporting system is designed to provide information for which of the following user groups? A) internal users B) external users C) inquiry processing by internal or external users D) all of the above

A) internal users B) external users C) inquiry processing by internal or external users D) all of the above Answer: D

Accounting recognizes a sale when

A) inventory becomes the legal property of the customer.

Key differences exist when an integrated Enterprise Resource Planning system (ERP) replaces an existing AIS or legacy system. For example, ________ are more accurate and timely, enabling sales order entry staff to provide customers more accurate information about delivery dates.

A) inventory records

8) Direct labor must be tracked and accounted for as part of the production process. Traditionally, direct labor was tracked using ________ but an AIS enhancement is to use ________ to record and track direct labor costs. A) job-time tickets; coded identification cards B) move tickets; coded identification cards C) employee earnings records; job-time tickets D) time cards; electronic time entry terminals

A) job-time tickets; coded identification cards

70) One of the objectives of the segregation of duties is to

A) make sure that different people handle different parts of the same transaction.

70) One of the objectives of the segregation of duties is to A) make sure that different people handle different parts of the same transaction. B) ensure that no collusion will occur. C) make sure that different people handle different transactions. D) achieve an optimal division of labor for efficient operations.

A) make sure that different people handle different parts of the same transaction.

3) Push manufacturing is officially known as A) manufacturing resource planning (MRP II). B) just-in-time manufacturing system (JIT). C) the economic order quantity (EOQ) system. D) ahead-of-time production implementation (ATPI).

A) manufacturing resource planning (MRP II).

What control would best mitigate the threat of paying an invoice twice?

A) never authorize payment of a photocopy of an invoice

A(n) ________ system posts an approved invoice to the vendor account and stores it in an open invoice file until payment is made by check.

A) nonvoucher

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

A) order to cash.

53) The benefits of XBRL include: A) organizations can publish financial information only once, using standard XBRL tags. B) tagged data is readable and interpretable by computers, so users don't need re-enter data into order to work with it. C) Both are benefits of XBRL. D) Neither are benefits of XBRL.

A) organizations can publish financial information only once, using standard XBRL tags. B) tagged data is readable and interpretable by computers, so users don't need re-enter data into order to work with it. C) Both are benefits of XBRL. Answer: C

28) Which type of payroll report contains information such as the employees' gross pay, payroll deductions, and net pay in a multicolumn format? A) payroll register B) deduction register C) employee earnings statement D) federal W-4 form

A) payroll register

22) Payroll deductions fall into the broad categories of ________ and ________. A) payroll tax withholdings; voluntary deductions B) unemployment; social security taxes C) unemployment taxes; income taxes D) voluntary deductions; income taxes

A) payroll tax withholdings; voluntary deductions

Laz Chance wears roller blades and headphones when he is at work at the Squishy Things Toy Company. He is a product packer. The headphones give him computer-generated instructions so he knows the location of each item and quantity that should be included in the order. These instructions are the equivalent of a

A) picking ticket.

66) A control procedure designed so that the employee that records cash received from customers does not also have access to the cash itself is an example of a(n) A) preventive control. B) detective control. C) corrective control. D) authorization control.

A) preventive control.

43) An audit trail

A) provides the means to check the accuracy and validity of ledger postings.

A monthly statement sent to customers serves a control purpose by

A) providing an opportunity for customers to verify the balance owed and activity on the account.

He ordered 100 one-size fits all pajama bottoms, but when he ordered 1000 one-size fits all pajama tops, the following error message popped up: "Did you mean to enter a quantity of 1000 for your order?" This message is the result of a

A) reasonableness test.

2) An MRP inventory system reduces inventory levels by A) reducing the uncertainty about when materials are needed. B) computing exact costs of purchasing and carrying inventory. C) delivering materials to the production floor exactly when needed and in exact quantities. D) none of the above

A) reducing the uncertainty about when materials are needed.

99) According to the COSO Enterprise Risk Management Framework, the risk assessment process incorporates all of the following components except

A) reporting potential risks to auditors.

99) According to the COSO Enterprise Risk Management Framework, the risk assessment process incorporates all of the following components except A) reporting potential risks to auditors. B) identifying events that could impact the enterprise. C) evaluating the impact of potential events on achievement of objectives. D) establishing objectives for the enterprise.

A) reporting potential risks to auditors.

49) Budgets and performance reports should be developed on the basis of A) responsibility accounting. B) generally accepted accounting principles. C) financial accounting standards. D) managerial accounting standards.

A) responsibility accounting.

91) The COSO Enterprise Risk Management Integrated Framework stresses that

A) risk management activities are an inherent part of all business operations and should be considered during strategy setting.

91) The COSO Enterprise Risk Management Integrated Framework stresses that A) risk management activities are an inherent part of all business operations and should be considered during strategy setting. B) effective risk management is comprised of just three interrelated components; internal environment, risk assessment, and control activities. C) risk management is the sole responsibility of top management. D) risk management policies, if enforced, guarantee achievement of corporate objectives.

A) risk management activities are an inherent part of all business operations and should be considered during strategy setting.

26) An ERP system might facilitate the purchase of direct materials by all of the following except

A) selecting the best supplier by comparing bids.

37) All of the following are controls that should be implemented in a payroll process, except A) supervisors distribute paychecks since they should know all employees in their department. B) someone independent of the payroll process should reconcile the payroll bank account. C) sequential numbering of paychecks and accounting for the numbers. D) restrict access to blank payroll checks and documents.

A) supervisors distribute paychecks since they should know all employees in their department.

13) The threat of loss of data exposes the company to A) the loss of assets. B) ineffective decision making. C) inefficient manufacturing. D) All of the above are correct.

A) the loss of assets. B) ineffective decision making. C) inefficient manufacturing. D) All of the above are correct. Answer: D

36) Source documents generally help to improve accuracy in transaction processing because

A) they specify which information to collect. B) logically related data can be grouped in the same area of the document. C) they provide directions and steps for completing the form. D) All of the above are correct. Answer: D

5) A master production schedule is used to develop detailed A) timetables of daily production and determine raw material needs. B) reports on daily production and material usage. C) daily reports on direct labor needs. D) inventory charts.

A) timetables of daily production and determine raw material needs.

36) What is the purpose of a general ledger payroll clearing account? A) to check the accuracy and completeness of payroll recording and its allocation to cost centers B) to make the bank reconciliation easier C) to make sure that all employees are paid correctly each week D) to prevent the cashier from having complete control of the payroll cycle

A) to check the accuracy and completeness of payroll recording and its allocation to cost centers

57) Which of the following tasks are facilitated by maintaining a strong and secure audit trail? A) tracing a transaction from original source document to the general ledger to a report B) tracing an item in a report back through the general ledger to the original source document C) tracing changes in general ledger accounts from beginning to ending balances D) All of the above are facilitated by the audit trail.

A) tracing a transaction from original source document to the general ledger to a report B) tracing an item in a report back through the general ledger to the original source document C) tracing changes in general ledger accounts from beginning to ending balances D) All of the above are facilitated by the audit trail. Answer: D

When purchasing miscellaneous supplies, companies can reduce costs, improve efficiency, and combat employee fraud by

A) using procurement cards

56) Which of the following are appropriate controls for the general ledger and reporting system? A) using well-designed documents and records B) online data entry with the use of appropriate edit checks C) prenumbering documents and accounting for the sequence numbers D) All of the above are appropriate.

A) using well-designed documents and records B) online data entry with the use of appropriate edit checks C) prenumbering documents and accounting for the sequence numbers D) All of the above are appropriate. Answer: D

60) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message, "The account number referenced in your journal entry does not exist. Do you want to create a new account?" This message was the result of a A) validity check. B) closed loop verification. C) zero-balance check. D) completeness test.

A) validity check.

40) A general journal

A) would be used to record monthly depreciation entries.

The receiving clerk at Folding Squid Technologies examines incoming shipments and reconciles their contents with the relevant purchase orders. A receiving report is then sent to accounts receivable and the vendor's invoice is approved for payment. Which of the following would correct control weaknesses, if any, related to these activities?

B) Accounts payable should reconcile the purchase order and the receiving report

16) ________ are associated with testing to ensure that products meet quality standards. A) External failure costs B) Inspection costs C) Internal failure costs D) Prevention costs

B) Inspection costs

What is the best way to prevent the acceptance of unordered goods?

B) Match the packing slip to a purchase order before accepting delivery.

34) Which of the following is an example of source data automation?

B) POS (point-of-sale) scanners in retail stores

57) Which of the following information would most likely be reviewed by management on an exception report?

B) Quality control system failures

49) Callow Youth Clothing (CYC) is a boutique retailer located in Estes Park, Colorado. During the peak tourist season, it has average daily cash and credit card sales in excess of $5,000. What is the best way for CYC to ensure that sales data entry is efficient and accurate?

B) Source data automation

What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?

B) Specific authorization must be granted by the credit manager.

115) Instead of using the SDLC to develop a new system "in-house," a company may choose to purchase an "Off-the-Shelf" (OTS) system from a software company. This situation means: A) The accountants and IT personnel who would have been working on the SDLC can relax now because the purchased OTS is seasoned, well tested software that the company can start using as soon as it is received from the software company. B) The OTS will need to be configured (set up) so it can effectively support the business C) Any data in the legacy system that will be loaded into the OTS may need to be converted so that the data can be processed in the new OTS D) Both B and C

B) The OTS will need to be configured (set up) so it can effectively support the business C) Any data in the legacy system that will be loaded into the OTS may need to be converted so that the data can be processed in the new OTS D) Both B and C Answer: D

115) Instead of using the SDLC to develop a new system "in-house," a company may choose to purchase an "Off-the-Shelf" (OTS) system from a software company. This situation means:

B) The OTS will need to be configured (set up) so it can effectively support the business C) Any data in the legacy system that will be loaded into the OTS may need to be converted so that the data can be processed in the new OTS D) Both B and C Answer: D

60) Which of the following statements is not correct?

B) The audit trail consists of records stored sequentially in an audit file.

25) What usually initiates data input into a system?

B) The performance of some business activity generally serves as the trigger for data input.

Two documents usually accompany goods shipped to a customer. What are the two documents?

B) a packing slip and a bill of lading

A voucher package should include

B) a purchase order, vendor invoice, and receiving report.

43) When updating the general ledger, sales, purchases, and production are examples of ________ entries, and issuance or retirement of debt and the purchase or sale of investment securities are examples of ________ entries. A) adjusting; controller originated B) accounting subsystem; treasurer originated C) adjusting; special journal D) controller generated; special journal

B) accounting subsystem; treasurer originated ASTO

In a revenue cycle with proper controls, the ________ who reports to the ________, is not involved in any cash handling activities.

B) accounts receivable clerk; controller

106) On an entity-relationship (E-R) diagram, anything about which an organization wants to collect and store information is called

B) an entity.

51) The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the price of figures is a(an)

B) attribute.

This document is a legal contract that defines responsibility for goods that are in transit.

B) bill of lading

The shipping department at Squishy Things Toy Company follows policies that determine which carrier will deliver orders according to the size, weight, and destination of the shipment. It maintains standing agreements with shippers that specify legal responsibility for the shipment while it is in transit. The terms of the agreements are documented on

B) bills of lading.

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he proudly announced that he had negotiated a(n) ________ with a client that defined a long-term commitment to buy components from Folding Squid.

B) blanket purchase order

A surprise count of an imprest petty cash fund should find the total of ________ equal to the amount authorized for the fund.

B) cash and vouchers

All of the following edit checks for online editing of accounts receivable transactions would probably be included except

B) check digit verification on the amount of the sale.

It has been discovered that credit sales have been made to customers with a poor credit rating. If this continues, the company will face increasing uncollectible receivables and losses due to bad debts. Separation of duties between ________ and ________ should help resolve the problem.

B) credit approval; marketing

46) An adjusting entry made at the end of an accounting period that reflects the exchange of cash prior to performance of a related event is classified as a(n) A) accrual entry. B) deferral entry. C) revaluation entry. D) correcting entry.

B) deferral entry.

59) Adjusting entries that are made to recognize revenue that has been received but not yet earned are classified as A) estimates. B) deferrals. C) accruals. D) revaluations.

B) deferrals.

82) Duplicate checking of calculations is an example of a ________ control, and procedures to resubmit rejected transactions is an example of a ________ control.

B) detective; corrective

82) Duplicate checking of calculations is an example of a ________ control, and procedures to resubmit rejected transactions is an example of a ________ control. A) corrective; detective B) detective; corrective C) preventive; corrective D) detective; preventive

B) detective; corrective DC

Evaluated receipt settlement increases efficiency by

B) eliminating the need for vendor invoices.

55) Hector Sanchez works in the accounting department of a multinational manufacturing company. His job includes updating accounts payable based on purchase orders and checks. His responsibilities are part of the company's

B) expenditure cycle.

In the expenditure cycle, good control dictates that expenditures should be paid by check. This may not be feasible when minor purchases are made. To facilitate quick payment for minor purchases, a(n) ________ should be set up and maintained using ________.

B) imprest fund; vouchers

79) The process that a business uses to safeguard assets, provide accurate and reliable information, and promote and improve operational efficiency is known as

B) internal control.

79) The process that a business uses to safeguard assets, provide accurate and reliable information, and promote and improve operational efficiency is known as A) a phenomenon. B) internal control. C) an AIS threat. D) a preventive control.

B) internal control.

9) Overproduction or underproduction can be a threat to an organization. To which process or activity does this threat relate? A) product design B) planning and scheduling C) production operations D) cost accounting

B) planning and scheduling

77) One reason why many organizations do not adequately protect their systems is because

B) productivity and cost cutting cause management to forgo implementing and maintaining internal controls.

77) One reason why many organizations do not adequately protect their systems is because A) control problems may be overestimated by many companies. B) productivity and cost cutting cause management to forgo implementing and maintaining internal controls. C) control technology has not yet been developed. D) all of the above

B) productivity and cost cutting cause management to forgo implementing and maintaining internal controls.

Duties in the expenditure cycle should be properly segregated to promote internal control. This means that the authorization function is performed by ________, the recording function is performed by ________, and cash handling is performed by the ________.

B) purchasing; accounts payable; cashier

31) Common source documents for the revenue cycle include all of the following except

B) receiving report.

What is one of the best ways to improve the overall efficiency and effectiveness of the receipt and storage of ordered items?

B) requiring all suppliers to include RFID tags on their items

110) You define a relationship between the Sales Order (Child) table and the Customer (parent) table using a 1-to-many link between

B) the Foreign Key in the Sales Order Table and the Primary Key in the Customer table

A serious exposure in the revenue cycle is loss of assets. What is the related threat and applicable control procedure that address this exposure?

B) theft of cash; segregation of duties and minimization of cash handling

32) The payroll transaction file would contain A) entries to add new hires. B) time card data. C) changes in tax rates. D) All of the above are correct.

B) time card data.

84) The primary purpose of the Foreign Corrupt Practices Act of 1977 was

B) to prevent the bribery of foreign officials by American companies.

84) The primary purpose of the Foreign Corrupt Practices Act of 1977 was A) to require corporations to maintain a good system of internal control. B) to prevent the bribery of foreign officials by American companies. C) to require the reporting of any material fraud by a business. D) All of the above are required by the act.

B) to prevent the bribery of foreign officials by American companies.

What is the best control to mitigate the threat of paying prices that are too high for goods ordered?

B) use only approved suppliers and solicit competitive bids

58) All of the following situations would likely be communicated in an exception report except

B) weekly credit and cash sales comparison.

114) An example of a detective control that a new system implementation team may introduce during the physical design phase of a SDLC for implementing a new ERP system for discrete manufacturing is: A) Field edits for the input fields in the new application system's screens (forms). B) The online response time of the new system C) A report that shown any zero cost parts. D) The locks on the doors of data center where the new system will be processed.

C) A report that shown any zero cost parts.

12) Which of the following organization controls should be implemented and maintained to counteract the general threat that the loss of production data will greatly slow or halt production activity? A) Store key master inventory and production order files on-site only to prevent their theft. B) Back up data files only after a production run has been physically completed. C) Access controls should apply to all terminals within the organization. D) Allow access to inventory records from any terminal within the organization to provide efficient data entry.

C) Access controls should apply to all terminals within the organization.

88) This control framework's intent includes helping the organization to provide reasonable assurance that objectives are achieved and problems are minimized, and to avoid adverse publicity and damage to the organization's reputation. A) ISACA's control objectives for information and related technology B) COSO's internal control framework C) COSO's enterprise risk management framework D) none of the above

C) COSO's enterprise risk management framework C-CE

What control should be put in place that assigns responsibility for EFT payments made to vendors?

C) Establish a control group to monitor EFT transactions for validity and accuracy.

46) Which of the following statements is true?

C) On-line batch processing is a combination of real-time and batch processing.

Which of the following would be the least effective control to minimize the loss of inventory?

C) Periodically back up all perpetual inventory records.

Procurement cards differ from corporate credit cards in which of the following ways?

C) Procurement cards can only be used with approved vendors, but credit cards can be used anywhere.

94) Which attribute below is not an aspect of the COSO ERM Framework internal environment?

C) Restricting access to assets

94) Which attribute below is not an aspect of the COSO ERM Framework internal environment? A) Enforcing a written code of conduct B) Holding employees accountable for achieving objectives C) Restricting access to assets D) Avoiding unrealistic expectations

C) Restricting access to assets

Which of the following poses an internal control problem?

C) Sales representatives have authority to increase customers' credit limits in $1,000 increments.

23) Which of the following is an independent check on performance? A) The Purchasing Agent physically reviews the contents of shipments and compares them with the purchase orders he has placed. B) Production teams perform quality evaluations of the products that they produce. C) The General Manager compares budgeted amounts with expenditure records from all departments. D) Petty cash is disbursed by Fred Haynes. He also maintains records of disbursements, places requests to finance to replace expended funds, and periodically reconciles the petty cash balance.

C) The General Manager compares budgeted amounts with expenditure records from all departments.

85) Congress passed this federal law for the purpose of preventing financial statement fraud, to make financial reports more transparent and to strengthen the internal control of public companies.

C) The Sarbanes-Oxley Act of 2002

85) Congress passed this federal law for the purpose of preventing financial statement fraud, to make financial reports more transparent and to strengthen the internal control of public companies. A) Foreign Corrupt Practices Act of 1977 B) The Securities Exchange Act of 1934 C) The Sarbanes-Oxley Act of 2002 D) The Control Provision of 1998

C) The Sarbanes-Oxley Act of 2002

50) In Petaluma, California, electric power is provided to consumers by the Power To The People Electrical Company (PTTP), a local co-op. Each month PTTP mails bills to 70,000 households and then processes payments as they are received. What is the best way for this business to ensure that payment data entry is efficient and accurate?

C) Turnaround documents

111) When you define a relationship between the Customer Number in the Sales Order (Child) Table and the Customer Number in the Customer (Parent) Table using a 1-to-many link, setting the Referential Integrity control on the relationship means:

C) You cannot use a Customer Number in entering a new Sales Order that does not already exist in the Customer Table

What is probably the most effective control for the prevention of kickbacks to purchasing agents?

C) a corporate policy to prohibit purchasing agents from accepting kickbacks

6) The document that authorizes the transfer of raw materials from the storeroom to the production floor is referred to as A) a bill of materials. B) a production order. C) a materials requisition. D) a move ticket.

C) a materials requisition.

A major cost in the purchasing function is the number of purchase orders processed. One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest price. This name of this technique is

C) a reverse auction

When an ERP is used, it is assumed that there will be increases in efficiency and the effectiveness of the activities related to the revenue cycle. However, what must be in place and functioning well to fully realize these benefits?

C) adequate controls

38) What is the best control to reduce the risk of losing payroll data? A) passwords B) physical security controls C) backup and disaster recovery procedures D) encryption

C) backup and disaster recovery procedures

In the ________ method of tracking accounts receivable, customers pay according to the amount showing on their monthly statement and payments are applied against the total account balance.

C) balance forward

19) Which of the following is not one of the major sources of input to the payroll system? A) payroll rate changes B) time and attendance data C) checks to insurance and benefits providers D) withholdings and deduction requests from employees

C) checks to insurance and benefits providers

He entered all the items and quantities, completed the checkout and payment process, but the following error message popped up when he tried to exit the site: "Please enter your email address." This message is likely the result of a

C) completeness test.

89) The COSO Enterprise Risk Management Framework includes eight components. Which of the following is not one of them?

C) compliance with federal, state, or local laws

89) The COSO Enterprise Risk Management Framework includes eight components. Which of the following is not one of them? A) control environment B) risk assessment C) compliance with federal, state, or local laws D) monitoring

C) compliance with federal, state, or local laws C-C3

15) In an Activity-Based Costing (ABC) system, a cause-and-effect relationship is known as a A) cost stimulator. B) overhead stimulator. C) cost driver. D) cost catalyst.

C) cost driver.

To ensure proper segregation of duties, only the ________ has authority to issue credit memos.

C) credit manager

A key decision in ordering is selecting a suitable vendor. Which of the following would not be a major criterion in vendor selection?

C) credit rating of the vendor

A ________ system prepares and mails monthly statements to customers throughout the entire month, instead of just at the end of the month.

C) cycle billing

54) The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the data about an individual figure's price is stored in a(an)

C) field.

104) In which stage(s) of the database design process does data modeling occur?

C) in both the systems analysis and design stages

24) Petty cash is disbursed by the Fred Haynes in the Cashier's Office. He also maintains records of disbursements, places requests to the Finance Department to replace expended funds, and periodically reconciles the petty cash balance. This represents a(an) ________ segregation of duties. A) effective B) ideal C) ineffective D) limited

C) ineffective

39) The general ledger and reporting system consists of the ________ involved in ________ the general ledger and ________ reports. A) business transactions; updating; processing B) data processing; business transactions for; printing C) information processing; updating; creating D) business transactions; data processing; preparing

C) information processing; updating; creating IUC

"Your total order exceeds your available credit. A Credit Department representative will contact you within 24 hours." This message is the result of a

C) limit check.

80) Internal control is often referred to as a(n) ________, because it permeates an organization's operating activities and is an integral part of management activities.

C) process

80) Internal control is often referred to as a(n) ________, because it permeates an organization's operating activities and is an integral part of management activities. A) event B) activity C) process D) system

C) process

Which of the following is not a basic activity of the revenue cycle? A) sales order entry B) shipping C) receiving D) billing

C) receiving

Evaluated receipt settlement (ERS) approves payment of vendor invoices after reconciling the purchase order and the

C) receiving report

27) The Director of Information Technology for the city of Bumpkiss, Minnesota, formed a company to sell computer supplies and software. All purchases made on behalf of the City were made from his company. He was later charged with fraud for overcharging the City, but was not convicted. The control issue in this case arose because the Director had both ________ and ________ duties. A) custody; authorization B) custody; recording C) recording; authorization D) management; custody

C) recording; authorization

Because it is the most fungible of all assets, the management of cash has always been the most difficult of all control issues. The most important of cash controls is

C) segregation of duties.

Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?

C) sending "blind" copies of purchase orders to inventory control for data entry

112) What is the correct sequence of the phases in the systems development life cycle?

C) system analysis, conceptual design, physical design, implementation and conversion, and operations and maintenance

112) What is the correct sequence of the phases in the systems development life cycle? A) conceptual design, physical design, system analysis, implementation and conversion, and operations and maintenance B) conceptual design, system analysis, physical design, implementation and conversion C) system analysis, conceptual design, physical design, implementation and conversion, and operations and maintenance D) system analysis, physical design, conceptual design, and operations and maintenance

C) system analysis, conceptual design, physical design, implementation and conversion, and operations and maintenance

31) Pay rate information is stored in A) employees' personnel files. B) employee subsidiary ledgers. C) the payroll master file. D) electronic time cards.

C) the payroll master file.

What is the primary objective of the revenue cycle?

C) to provide the right product in the right place at the right time at the right price

58) Information about financing and investing activities for use in making general ledger entries is typically provided by the A) budget department. B) controller. C) treasurer. D) chief executive officer.

C) treasurer.

62) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message when she tried to save her entry, "The amounts debited and credited are not equal. Please correct and try again." This message was the result of a A) validity check. B) field check. C) zero-balance check. D) completeness test.

C) zero-balance check.

20) In the payroll system, checks are issued to A) employees and to banks participating in direct deposit. B) a company payroll bank account. C) government agencies. D) All of the above are correct.

D) All of the above are correct. Answer: D

66) Implementation of an ERP system requires increased focus on all except which of the following controls

D) Appropriate disposal of hard copy reports

98) Global Economic Strategies, L.L.D., has been diligent in ensuring that their operations meet modern control standards. Recently, they have extended their control compliance system by incorporating policies and procedures that require the specification of company objectives, uncertainties associated with objectives, and contingency plans. They are transitioning from a ________ to a ________ control framework.

D) COSO-Integrated Framework; COSO-ERM

98) Global Economic Strategies, L.L.D., has been diligent in ensuring that their operations meet modern control standards. Recently, they have extended their control compliance system by incorporating policies and procedures that require the specification of company objectives, uncertainties associated with objectives, and contingency plans. They are transitioning from a ________ to a ________ control framework. A) COSO-Integrated Framework; COBIT B) COBIT; COSO-Integrated Framework C) COBIT; COSO-ERM D) COSO-Integrated Framework; COSO-ERM E) COSO-ERM; COBIT

D) COSO-Integrated Framework; COSO-ERM

The purchasing manager at Folding Squid Technologies has responsibility for reviewing and authorizing purchase orders. Receiving reports are prepared by shipping and receiving based on the relevant purchase order(s). Purchase orders, receiving reports, and vendor invoices are reconciled by accounts payable, which authorizes payment. Which of the following would correct control weaknesses, if any, related to these activities?

D) Controls are adequate under the current system. Answer: D

The receiving clerk at Folding Squid Technologies examines incoming shipments and checks their purchase order numbers. A receiving report is then sent to accounts payable, where it is reconciled with the relevant purchase orders and invoices and payment is authorized. Which of the following would correct control weaknesses, if any, related to these activities?

D) Controls are adequate under the current system. Answer: D

74) With a limited work force and a desire to maintain strong internal control, which combination of duties would result in the lowest risk exposure?

D) Entering payments to vendors in the cash disbursements journal and entering cash received from customers in the cash receipts journal

90) Which of the following is not one of the eight interrelated risk and control components of COSO Enterprise Risk Management Framework? A) Internal environment B) Monitoring C) Risk response D) Event assessment

D) Event assessment

18) Which department should have the sole ability to provide information to the AIS about hiring, terminations, and pay rate changes? A) payroll B) timekeeping C) production D) Human Resource Management (HRM)

D) Human Resource Management (HRM)

113) In developing new systems using the SDLC,

D) It is best to analyze, design, test and implement IT controls at the same time that you analyze, design, test and implement non-control functionality.

113) In developing new systems using the SDLC, A) It is best to defer designing and implementing controls until after the new system is implemented because implementing internal controls in the system may delay the implementation of the new system and cause the company to loose money during the time of the delay B) It is easier to program the IT controls in a new system after it has been implemented rather than programming IT controls at the same time that you program IT operating functionality C) Programmer who implemented a new system are generally available and can easily remember what they previously programmed, so it is alright to wait about designing and programming IT controls until after you implement the non-control functionality that supports operations. D) It is best to analyze, design, test and implement IT controls at the same time that you analyze, design, test and implement non-control functionality.

D) It is best to analyze, design, test and implement IT controls at the same time that you analyze, design, test and implement non-control functionality.

14) What is the primary drawback to using a volume-driven base, such as direct labor or machine hours, to apply overhead to products in a traditional cost accounting system? A) The cost accountant may not fully understand how to track direct labor or machine hours. B) It is difficult for an AIS to incorporate such a measurement into its system. C) It is difficult for an ERP to incorporate such a measurement into its integrated system. D) Many overhead costs are incorrectly allocated to products since they do not vary with production volume.

D) Many overhead costs are incorrectly allocated to products since they do not vary with production volume.

86) Which of the following is not one of the important aspects of the Sarbanes-Oxley Act?

D) New rules for information systems development

86) Which of the following is not one of the important aspects of the Sarbanes-Oxley Act? A) The creation of the Public Company Accounting Oversight Board B) New rules for auditors and management C) New roles for audit committees D) New rules for information systems development

D) New rules for information systems development

The best solution for maintaining accurate automated perpetual inventory system is to use

D) RFID tags. Answer: D

56) The Cape Fear Rocket Club heads out to the dunes of Kittyhawk, North Carolina every August to pierce the sky with their fiery projectiles. An enterprising seller of t-shirts has devised a series of designs that capture the spirit of the event in silk-screened splendor. His employees can be found on many of the major intersections hawking his wares out of the backs of station wagons and pickup trucks. What is the best way for this business to ensure that sales data entry is efficient and accurate?

D) Sequentially numbered forms

48) Which statement below regarding the AIS is false?

D) Traditionally, most AIS have been designed so that both financial and operational data are stored in a manner that facilitates their integration in reports.

To accomplish the objectives set forth in the expenditure cycle, a number of key management decisions must be addressed. Which of the decisions below is not ordinarily found as part of the expenditure cycle?

D) What are the optimal prices for each product or service? Answer: D

52) Concerning XBRL, which of the following statements is not true? A) XBRL is a variant of XML. B) XBRL is specifically designed for use in communicating the content of financial data. C) XBRL creates unique tags for each data item. D) XBRL's adoption will require accountants and systems professionals tag data for their clients.

D) XBRL's adoption will require accountants and systems professionals tag data for their clients.

54) Communications technology and the Internet can be used to reduce the time and costs involved in disseminating financial statement information. Users of such financial information still struggle in that many recipients have different information delivery requirements and may have to manually reenter the information into their own decision analysis tools. The ideal solution to solve these problems and efficiently transmit financial information via the Internet is to use A) HTML code. B) XML. C) pdf file. D) XBRL

D) XBRL.

One objective of accounts payable is to authorize payment only for goods or services actually ordered and received. The best way to process supplier invoices is to use

D) a disbursement voucher system. Answer: D

Vendor invoices are approved by the ________, which reports to the ________.

D) accounts payable department; controller Answer:

97) The Sarbanes-Oxley Act (SOX) applies to A) all companies with gross annual revenues exceeding $500 million. B) publicly held companies with gross annual revenues exceeding $500 million. C) all private and publicly held companies incorporated in the United States. D) all publicly held companies.

D) all publicly held companies.

11) The best control procedure for accurate data entry is A) the use of on-line terminals. B) an access control matrix. C) passwords and user IDs. D) automation of data collection

D) automation of data collection

63) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message when she tried to save her entry, "The data you have entered does not include a source reference code. Please enter this data before saving." This message was the result of a A) validity check. B) field check. C) zero-balance check. D) completeness test.

D) completeness test.

41) The general ledger

D) contains summary-level data for every account of the organization.

38) The general ledger account that corresponds to a subsidiary ledger account is known as a

D) control account.

100) Change management refers to

D) controls designed to ensure that updates in information technology do not have negative consequences.

100) Change management refers to A) disbursement controls on petty cash. B) operational controls applied to companies after mergers or acquisitions. C) replacement of upper management and their introduction to the organization. D) controls designed to ensure that updates in information technology do not have negative consequences.

D) controls designed to ensure that updates in information technology do not have negative consequences.

26) Change management refers to A) disbursement controls on petty cash. B) operational controls applied to companies after mergers or acquisitions. C) replacement of upper management and their introduction to the organization. D) controls designed to ensure that updates in information technology do not have negative consequences.

D) controls designed to ensure that updates in information technology do not have negative consequences.

Sad Clown Pajamas is an Internet-based wholesaler. The manager of Callow Youth Clothing received an order from Sad Clown and found that the wrong product had been shipped. He repackaged the order and sent it back for a refund. When Sad Clown Pajamas received the returned product, they mailed a ______ to Callow Youth Clothing's manager.

D) credit memo

Bob Chum is the sales manager at Folding Squid Technologies. At lunch with the company CEO, he complained that a recent shipment from a vendor had been unsatisfactory and so had to be returned. That required the purchasing manager to send a ________ to the supplier.

D) debit memo Answer: D

A customer service manager at Sad Clown Pajamas, Bob, received a call from the manager at Callow Youth Clothing, who informed Bob that Callow was entering bankruptcy liquidation and it was unlikely that they would be able to pay the outstanding balance on their account. Bob should

D) document the phone conversation and forward it to the credit department manager.

Which of the following duties could be performed by the same individual and not violate segregation of duty controls?

D) handling cash receipts and mailing vendor payments Answer: D

35) Which of the following is not a potential effect of inaccurate data on employee time cards? A) increased labor expenses B) erroneous labor expense reports C) damaged employee morale D) inaccurate calculation of overhead costs

D) inaccurate calculation of overhead costs

Once a vendor is selected for a product, the vendor's identity is recorded in the

D) inventory master file. Answer: D

When goods are being ordered from a vendor, which electronic files are either read or updated?

D) inventory, vendors, and open purchase orders Answer: D

A method for tracking accounts receivable that matches specific invoices and payments from the customer is called a(n) ________ method.

D) open-invoice

Double-checking the accuracy of an invoice is a control that can help to neutralize a threat in the expenditure cycle. What activity would specifically be associated with this control?

D) paying for goods and services Answer: D

7) Which objective listed below is not a cost accounting objective for the production cycle? A) provide information for planning, controlling, and evaluating the performance of production operations B) provide cost data about products used in pricing and product mix decisions C) collect and process the information used to calculate inventory and cost of goods sold amounts that appear in the financial statements D) provide tests of audit control functions as part of the AIS

D) provide tests of audit control functions as part of the AIS

32) Which of the following documents would be found in the expenditure cycle?

D) purchase order

During the sales order entry process, a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.

D) reasonableness test

52) The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the data about an individual figure is a(an)

D) record.

To prevent the loss of valuable data in the revenue cycle, internal file labels can be used to

D) reduce the possibility of erasing important files. Answer: D

107) In a relational database, entities such as shown in a E-R diagram are contained in

D) tables

41) Who provides the adjusting entries for a well-designed general ledger and reporting system? A) various user departments B) the treasurer's area C) the other major AIS subsystems D) the controller's area

D) the controller's area

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

D) the purchasing department manager Answer: D

48) Financial statements are prepared in a certain sequence. Which statement is prepared last in the sequence? A) the adjusted trial balance B) the income statement C) the balance sheet D) the statement of cash flows

D) the statement of cash flows

45) Which of the following is conceptually similar to a journal in a manual AIS?

D) transaction file

In organizations with at least basic segregation of duties, the credit manager reports to the ________ and the treasurer reports to the ________.

D) treasurer; vice president of finance

A type of business document in which part of the original document is returned to the source for further processing is called a ________ document.

D) turnaround

Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a

D) validity check.

Use the following information to answer 113 and 114

During the first two phases of the SDLC, systems analysis and conceptual design, control requirements are considered. During the third phase of SDLC, the physical design stage, input, output, and database attributes are designed, as well as specific controls. Programs and procedures are developed during this stage as well. A final part of this stage is the delivery of the developed system, which will be further enhanced during the implementation and conversion stage of the SDLC.

3. Master production schedule

L. A document that specifies how much of a finished good is to be purchased

Mnemonic Code, 30

Letters and numbers that are interspersed to identify an items. The mnemonic code is dervied from the description of the items & is usually easy to memorize.

a. Update customer address change

Master file

b. Update unit pricing information

Master file

e. Change employee pay rates

Master file

h. Change employee office location

Master file

i. Update accounts payable balance

Master file

j. Change customer credit limit

Master file

k. Change vendor payment discount terms

Master file

1. Which of the following is NOT a step in the data processing cycle? a. data collection b. data input c. data storage d. data processing

Soln: (A) data collection is part of data input & therefore not a step in the data processing cycle.

3. Which of the following would contain the total value of all inventory owned by an organization? a. accounts receivable b. petty cash c. prepaid rent d. retained earnings

Soln: (B) General Ledger - maintains summary information on inventory & every other GL account.

10. Recording and processing information about a transactions at the time it takes place is referred to as which of the following? a. batch processing b. online, real-time processing c. captured transaction processing d. chart of accounts processing

Soln: (B) Online, real-time processing involves processing transactions as they occur.

5. Which of the following documents is most likely to be used in the expenditure cycle? a. Sales orders b. credit memo c. receiving report d. job time ticket

Soln: (C) Receiving Report - This is an expenditure cycle document that is used to record the receipt of goods from suppliers. Companies pay their suppliers based on the goods received and recorded on the receiving report.

7. How does the chart of accounts list general ledger accounts? a. alphabetical order b. chronological order c. size order d. the order in which they appear in financial statements

Soln: (D) The order in which they appear in financial statements.

2. All of the information (name, GPA, major, etc) about a particular student is stored in the same.... a. file b. record c. attribute d. field

Soln: (b) record: should include all information maintained by the system about a particular entity , such as a student.

4. Which of the following is most likely to be a general ledger control account? a. accounts receivable b. petty cash c. prepaid rent d. retained earnings

Soln:(A) Accounts Receivable - typically made of many individual customer accounts maintained in a subsidiary ledger. The total of all individual customer accounts in the subsidiary ledger is maintained in the AR control account in the GL.

Report, 36

Systems output, organized in a meaningful fashion, that is used by employees to control operational activities, by managers to make decisions, and design strategies, and by investors and creditors to understand a company's business activities.

Online, real-time processing, 35

The computer system processes data immediately after capture and provides updated information to users on a timely basis.

Entity, 34

The items about which information is stored in a record, EX. an employee, an inventory items, a customer.

Field, 34

The portion of a data record where the data value for a particular attribute is stored. Ex. In a spreadsheet each row might represent a customer and each column is an attribute of the customer. Each cell in a spreadsheet is a field.

1-CH10.Journal Voucher File

The set of journal entries that updated the general ledger.

Coding, 30

The systematic assignment of numbwers or letter to items to classify and organize them.

incremental daily backup

a daily backup procedure that copies only the activity that occurred on that particular day

field check

a data-entry application control that could be used to verify that only numeric data is entered into a field

closed-loop verification

a data-entry application control that displays the value of a data item and asks the user to verify that the system has accessed the correct record

check digit verification

a data-entry application control that verifies the accuracy of an account number by recalculating the last number as a function of the preceding numbers

cold site

a disaster recovery plan that contracts for use of an alternate site that is prewired for Internet connectivity but has no computing or network equipment

turnaround document

a document sent to an external party and subsequently returned so that preprinted data can be scanned rather than manually reentered

archive

a file used to store information for long periods of time

recovery time objective (RTO)

a measure of the length of time that an organization is willing to function without its information system

Business continuity plan (BCP)-pg 144

a plan that describes how to resume business operations after a major calamity, such as Hurricane Katrina, that destroys not only an organization's data center but also its head quarters.

41. To avoid potential errors and irregularities, a well-designed system of internal accounting controls in the accounts payable area should include a separation of which of the following functions?

a. cash disbursements and vendor invoice verification

43. For good internal control, the billing department should be under the direction of the

a. controller.

32. For effective internal accounting control, the accounts payable department should compare the information on each vendor's invoice with the

a. receiving report and the purchase order

9. Records of company data sent to an external party & then returned to the systems as input are called....

a. turnaround documents b. source data automation documentation c. source documents d. external input documents Soln: (A) Turnaround documents, ex. utility bill is sent to a customer, who then returns the bill with payment.

42. A sales clerk at Schackne Company correctly prepared a sales invoice for $5,200, but the invoice was entered as $2,500 in the sales journal and similarly posted to the gereral ledger and accounts receivable ledger. The customer remitted only $2,500, the amount on his or her monthly statement. The most effective procedure for preventing this type of error is to

a. use predetermined totals to control posting routines.

zero-balance test

an application control that makes sure an account does not have a balance after processing

limit check

an application control that tests whether a customer is 18 or older

reasonableness test

an application control that validates the correctness of one data item in a transaction record by comparing it to the value of another data item in that transaction record

validity check

an application control that verifies that an account number entered in a transaction record matches an account number in the related master file

sign check

an application control that verifies that the quantity ordered is greater than 0

11. Throughput

b--a measure of the number of good units produced in a period of time.

29. To determine whether the system of internal accounting control operated effectively to minimize errors of failure to invoice a shipment, the auditor would select a sample of transactions from the population represented by the

b. bill of lading file.

51. A CPA reviews a client's payroll procedures. The CPA would consider internal controls to be less than effective if a payroll department supervisor was assigned the responsibility for

b. distributing payroll checks to employees

33. Shipping documents should be compared with sales records or invoices to

b. ensure that shipments are billed to customers.

52. Internal accounting control is strengthened when the quantity of merchandise ordered is omitted from the copy of the purchase order sent to the

b. receiving department

g. Accumulate daily costs from a production run of a single automobile part

batch

40. Matching the supplier's invoice, the purchase order, and the receiving report normally should be the responsibility of the

c. General accounting function

Which of the following would be the best protection for a company that wishes to prevent the lapping of trade accounts receivables?

c. Have customers send payments directly to the company's depository bank

35. To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all

c. Receiving reports

47. Which of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

c. The cashier posts the receipts to the accounts receivable subsidiary ledger cards.

55. When goods are received, the receiving clerk should match the goods with the

c. Vendor's shipping document and the purchase order

31. In a properly designed internal accounting control system, the same employee should not be permitted to

c. prepare disbursement vouchers and sign checks

For effective internal accounting control, employees maintaining the accounts receivable subsidiary ledger should not also approve

c. write-offs of customer accounts.

change control

change control a plan to ensure that modifications to an information system do not reduce its security

Online-realtime processing

cheaper, more efficient. Think make, register, process, and identify. For example, while employee check in and checkout times may be gathered in real time

58. The authority to accept incoming goods in receiving should be based on a(an)

d. Approved purchase order

Segregation of duties control means separating:

d. Authorization, Custody and Record Keeping

37. For effective internal control purposes, the vouchers payable department should generally

d. Establish the agreement of the vendor's invoice with the receiving report and purchase order

25. Which of the following in an internal control procedure would prevent a paid disbursement voucher from being presented for payment a second time?

d. The official signing the check should compare the check with the voucher and should deface the voucher documents.

46. An entity with a large volume of customer remittances by mail most likely could reduce the risk of employee misappropriation of cash by using

d. a bank lock-box system.

54. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

d. authorization of transactions from the custody of related assets

38. To conceal defalcations involving receivables, the auditor would expect an experienced bookkeeper to charge which of the following accounts?

d. sales returns.

30. In a properly designed internal accounting control system, the same employee may be permitted to

d. sign checks and also cancel supporting documents.

9. Job-order costing

f-- A cost accounting method that assigns costs to specific batches or production runs and is used when the product or service consists of uniquely identifiable items.

7. Move ticket

i--a document used to track transfer of inventory from 1 work center to another.

5. Production order

j--a document that authorizes manufacture of a finished good.

8. Job-time ticket

n--a production planning technique

12. Computer-integrated manufacturing

o--Computer-integrated Manufacturing (CIM) A term used to refer to the use of robots and other IT techniques as part of the production process.

Batch processing

often used for data that does not need frequent updating and naturally occurs or is processed at fixed times. Think prepare or accumulate. For example - payroll is usually only processed at a fixed interval such as weekly, biweekly, or monthly.

h. Identify the replacement drill bit size for a bit broken during a recent production run

on-line real time

a. Make an airline reservation

online-real time

b. Register for a university course

online-real time

2.8 Which of the following actions update a master file and which would be stored as a record in a transaction file?

see below: MM, TT,M,TT,MMMM,T * Master: update or change *Transaction File: Record