All in ("ACCT 3326 Exam 3 (FINAL) CH 9 quiz Qs") folder combined PLUS All in ("ACCT 3326 ("AIS CH 8,9&12") EXTRAS but should use") folder combined
The business process used when there is an existing customer account balance is A) accounts receivable. B) cash-received-on-account. C) cash sales. D) aged trial balance.
B
12.Confidentiality of information is an ethical consideration for which of the following party or parties? A.Management B.Employees C.Consultants D.All of the above.
D
122. All of the following are things that might go wrong when implementing a new system except: a) An untested system is installed anyway b) Complete documentation is lacking c) Not enough resources are allocated for subsequent maintenance d) all of these are common missteps in systems implementation
D
123. After successfully implementing a new system, what activities should the implementation team normally perform in their follow-up work? a.Evaluate the control procedures of the new system b.Determine if output schedules for reports are being met under the new system c.Observe some of the employees' work performances under the new system d.all of the above activities should normally be performed
D
In ERP, the invoice verification component ensures that A) cost requirements have been met. B) quantity requirements have been met. C) shipping deadlines have been met. D) Answers A and B are correct.
D
In a cash remittance processing, the open-items accounts receivable file serves as the A) billing data B) credit sales journal C) accounts receivable control account D) subsidiary accounts receivable ledger
D
In a general ledger file update, all entries into the general ledger are A) first documented using a journal voucher B) updated by each user department as necessary C) dumped and not processed if any invalid data is found in any entry D) first documented using a journal voucher, then are used to build a journal voucher file
D
Which of the following statements is true? a. encryption and hashing are both reversible (can be decoded) b. encryption is reversible, but hashing is not c. hashing is reversible, but encryption is not d. neither hashing nor encryption is reversible
b
A) billing screen.
Input concerning whether manual invoicing is required or if a customer is entitled to rebates in the SAP ERP system can be found in the A) billing screen. B) sales screen. C) payment transactions screen. D) account management screen.
B) marketing.
In the SAP ERP system, the "create customer" screen, which is used to input statistical and demographic data, is A) control data. B) marketing. C) unloading points. D) initial.
43X. The internal control process of separating the custody of inventory from the accounts payable record keeping will help to minimize the risk of: A. Fictitious purchases B. Invalid vendors C. Duplicate purchases D. Incorrect amounts
A
57. Information Technology governance includes all of the following except: a) A decentralized approach to IT acquisition b) Using IT strategically to carry out the objectives of an organization c) Ensuring effective management of an organization's IT resources d) Control over IT-related risks
A
6. A type of assurance services that involves accumulating and analyzing support for the information provided by management is called an: A. Audit B. Investigation C. Financial Statement Examination D. Control Test
A
6. Under a system of sound internal controls, if a company sold defective goods, the return of those goods from the customer should be accepted by the: A. Receiving Clerk B. Sales Clerk C. Purchasing Clerk D. Inventory Control Clerk
A
A warehouse employee uses a document to fulfill a customer order. The employee is most likely using a A) picking list. B) packing list. C) bill of lading. D) shipping advice.
A
A well-known hacker started her own computer security consulting business. Many companies pay her to attempt to gain unauthorized access to their network. If she is successful, she offers advice as to how to design and implement better controls. What is the name of the testing for which the hacker is being paid? A) Penetration test B) Vulnerability scan C) Deep packet inspection D) Buffer overflow test
A
According to the Trust Services Framework, the reliability principle of availability is achieved when the system produces data that A) is available for operation and use at times set forth by agreement. B) can be maintained as required without affecting system availability, security, and integrity. C) is complete, accurate, and valid. D) is protected against unauthorized physical and logical access.
A
Which of the following is NOT one of the four major issues researched by the S & P Corporate governance Scoring System? A) ownership structure and influence B) research and development initiatives C) financial stakeholder rights and relations D) financial transparency and information disclosures E) board structure and processes
research and development initiatives
For proper segregation of duties in cash disbursements, the person who signs checks also a)reviews the monthly bank rec b)returns the checks to AP c)is denied access to the supporting docs d)is responsible for mailing the checks
returns the checks to AP --allows for segregation between custody and record keeping
Which of the following internal controls would help prevent overpayment to a vendor or duplicate payment to a vendor? a)review cancellation of supporting docs after issuing payment b)requiring the check signer to mail the payment directly to the vendor c)review of the accounts where the expenditure transaction has been recorded d)approving the purchase before the goods are ordered from the vendor
review cancellation of supporting docs after issuing payment
) The ________ boards typically never initiate or determine strategy unless a crisis occurs. A) rubber stamp B) active participation C) catalyst D) nominal participation E) minimal review
rubber stamp
One process, which is transparent to customers and has a beneficial effect on the company's cash flow, is to A) implement a cycle billing plan. B) factor accounts receivable. C) decrease the amount of time in which customers have to pay their monthly invoices. D) Answers B and C are both correct.
A
With respect to the segregation of duties, the main function of cash disbursements is A) custody of assets. B) authorization. C) reconciliation. D) recording of transactions.
A
________ is an authorized attempt by an internal audit team or an external security consultant to attempt to break into the organization's information system. A) Penetration test B) Intrusion test C) Vulnerability test D) Log analysis test
A
PETTY CASH SYSTEM
A cash box within the Company to fund small, emergency purchases. An Employee presents an authorized Purchase Requisition to Petty Cash and receives cash.
C) use several regional lock-box systems located geographically around clusters of customers.
A company located in Delaware has customers nationwide. The most effective system to deal with the issue of float is to A) use one lock-box collection system located in the Midwest. B) have customers send their remittances to the company's corporate office in Delaware. C) use several regional lock-box systems located geographically around clusters of customers. D) factor its accounts receivable to a collection agency.
B) sales.
A company that uses the SAP ERP system wants to identify the areas within their company that have responsibility to a certain customer. The screen that should be used to enter this information is A) correspondence. B) sales. C) billing. D) initial.
29. There are different ways to issue a purchase order to a vendor. Which of the following is not one of the ways? A. Hard copy via fax or mail B. Hard copy by hand C. Electronically via e-mail D. Directly through the computer network
B
32. The four approaches to through-the-computer auditing include all but which of the following: a) Use of embedded audit modules b) Testing of outputs to verify processing c) Computer program testing d) Validation of computer programs
B
32. This document, prepared by the purchasing department, for use by the receiving department, is copy of the purchase order that eliminates all data about the price and quantity of the items ordered. A. Packing slip B. Blind purchase order C. Empty purchase order D. Receiving report
B
33. The best educational background for a Certified Information Systems Auditor is: a) A degree in information systems or technology b) A degree which combines the study of accounting with the study of information systems c) No college degree, but work experience in information systems d) An accounting degree
B
39. If an auditor were to audit a payroll application using around-the-computer auditing techniques, the individual would: a) Use test data b) Verify that the output from the computerized processing was correct for the input data used to generate it c) Never use a surprise audit because of the amount of time and work involved d) Prepare a profile of a computer file and check the processed data with the profile thus obtained
B
42. The internal control process of having the receiving reports prepared on pre-numbered forms so that the sequence of receipts can be reviewed for proper recording will help to minimize the related risk of: A. Invalid vendors B. Omitted purchases C. Fictitious purchases D. Timing issues
B
46. The four approaches to through-the-computer auditing include all but which of the following: a) Use of embedded audit modules b) Testing of outputs to verify processing c) Computer program testing d) Validation of computer programs
B
47. Goods received are unacceptable due to may different situations. Which of the following is not one of those situations? A. Damage or defects B. Changes in the company needs regarding future sales or production C. Errors in the type of goods delivered or ordered D. Timing issues
B
5.Which of the following best describes what is meant by the term "generally accepted auditing standards"? A.Procedures used to gather evidence to support the accuracy of a client's financial statements. B.Measures of the quality of an auditor's conduct. C.Professional pronouncements issued by the Auditing Standards Board. D.Rules acknowledged by the accounting profession because of their widespread application.
B
50. The greatest drawback of an integrated test facility is that: a) It requires the construction of a high volume of test data b) It introduces artificial transactions into the transaction stream c) It produces overkill in the audit function d) It is not broad enough to cover the entire spectrum of activities involved in the AIS
B
51. All of the following are true concerning embedded audit modules except: a) They provide for continuous auditing of application processing b) The auditor does not have to be involved in the development of these programs c) Once implemented, the system can capture information that is useful to the auditor on an ongoing basis d) With this approach, the application program incorporates subroutines for audit purposes
B
54. The careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adequate cash balances exist to meed obligations is called: A. Cash disbursements B. Cash management C. Independent checks D. Accounts payable management
B
56. When an auditor audits with the computer, the auditor: a) Uses the computer to process transaction data under normal processing conditions b) Uses the computer as a tool to assist in various other auditing tasks c) Relies heavily upon test data to evaluate the presence or absence of specific computer controls d) Must also use an integrated test facility
B
60. Which of the following services does SOX not prevent auditors from performing for their own clients? a) Internal auditing outsourcing services b) Expert services related to the audit c) Actuarial services d) Implementation of a financial information system
B
63X. The internal control process that requires the approval of a cash disbursement transaction to take place prior to the preparation of the check, will help to minimize the risk of: A. Fictitious payments B. Invalid payments C. Timing issues D. Stolen cash
B
65. Continuous audit techniques can improve the effectiveness of the audit by: a) Focusing most of the audit effort near the year-end b) Alerting auditors to potential problems when the problems occur c) Protecting the privacy of the auditors d) Facilitating parallel simulation
B
7. The IT environment plays a key role in how auditors conduct their work in all but which of the following areas: A. Consideration of Risk B. Consideration of Information Fairness C. Design and Performance of Audit Tests D. Audit Procedures Used
B
79. Which of these individuals is least likely to participate in a system's study? a. Internal auditor b.External auditor c.Top manager e.Member of the IT department
B
The best way to prevent improper buyer-vendor relationships is to A) separate the purchasing and receiving functions. B) have formal written policies and procedures over procurement. C) have cash disbursements report to the treasurer. D) permit only purchasing supervisors to select vendors.
B
The control procedure designed to restrict what portions of an information system an employee can access and what actions he or she can perform is called _____________ . A) Authentication B) Authorization C) Intrusion prevention D) Intrusion detection
B
The department responsible for authorizing employee pay deductions is the A) payroll department. B) personnel department. C) independent paymaster. D) production department (for factory workers).
B
The Bad Luck Fortune Cookie Company has a 360-day past-due balance of $1,300.00. After repeated attempts at collection, the account is deemed worthless. The departments involved with processing this transaction up to the point of issuing an approved write-off memo are the A) credit and accounts receivable departments. B) treasurer, billing, and accounts receivable departments. C) credit, treasurer, accounts receivable, and internal audit departments. D) credit, treasurer, cash receipts, and internal audit departments.
C
The first step in a batch-processing environment using sequential file updating is A) Preparing general ledger reports B) updating the master file C) preparing the transaction file D) updating the general ledger
C
The function responsible for reconciling the bank account upon which voucher checks are drawn is A) cash disbursements. B) accounts payable. C) internal audit. D) purchasing.
C
Within the purchasing processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? a) the invoice b) the receiving report c) the purchase order d) the purchase requisition
D
_______ is/are an example of a detective control. A) Physical access controls B) Encryption C) Emergency response teams D) Log analysis
D
Debit Memo
For purchase returns, prepared by Purchasing Agent for Shipping, Accounts Payable, and the Vendor. For: damaged goods, inferior quality, wrong quantity or good, and/or delivered late.
Which country pioneered the use of worker participation on corporate boards? A) England B) France C) Sweden D) Japan E) Germany
Germany
D) All of these answers are correct.
Hierarchy assignment includes a customer's A) distribution channel. B) geographical location. C) credit approval. D) All of these answers are correct.
Which of the following is NOT descriptive of interlocking directorates? A) Interlocking directorates occur because large firms have a large impact on other corporations. B) Interlocking directorates are more common in small, family-owned companies. C) Interlocking directorates are a useful method for gaining inside information about an uncertain environment. D) Interlocking directorates occur in about 20% of the 1000 largest US firms. E) Interlocking directorates provide objective expertise about a firm's strategy.
Interlocking directorates are more common in small, family-owned companies.
PURCHASE REQUISITION
Issued by Inventory Control or a Department when there is a shortage of goods or materials. Identifies the requestor, the items needed, quantities needed, the date the items are needed, the delivery location, and possibly the price or price range and possible Vendor. Needs authorization from the appropriate supervisory level before being sent to Purchasing.
Which of the following is NOT a key characteristic of transformational executive leaders? A) The CEO presents a role for others to identify with and to follow. B) The CEO communicates high performance standards for all employees. C) The CEO demonstrates confidence in the employees' abilities to meet the expressed high standards. D) The CEO energizes the board to formulate strategy. E) The CEO articulates a strategic vision for the corporation.
The CEO energizes the board to formulate strategy.
A) implement a cycle billing plan.
One process, which is transparent to customers and has a beneficial effect on the company's cash flow, is to A) implement a cycle billing plan. B) factor accounts receivable. C) decrease the amount of time in which customers have to pay their monthly invoices. D) Answers B and C are both correct.
ECONOMIC ORDER QUANTITY
Optimize the order size based on: The carrying costs (storage costs) The ordering costs (cost of processing the transaction) AND the stock-out costs (cost of lost sales)
JUST-IN-TIME MANUFACTURING (JIT)
Order goods or raw materials only when a Sales Order exists from a Customer. Eliminates finished goods inventory.
MATERIALS REQUIREMENT PLANNING (MRP)
Order raw materials or inventory just before they are needed based on sales forecasts and production schedules. Plan for only a small inventory of goods in storage.
101. The authorization of a cash disbursement occurs when the accounts payable department matches the purchase order, receiving report, and the invoice, and then forwards the matched documents to the cash disbursements department.
T
109. Because the evaluated receipts settlement process relies heavily on an IT system that can quickly access online purchase-order files, a system slowdown could halt all receiving activity.
T
79. When the company is a vendor, goods flow into the company and cash is paid out.
T
84. The use of a blind purchase order forces the receiving clerk to perform an independent check of the quantity and quality of the delivery.
T
92. For a number of different reasons, a company may find it necessary to reject goods received which will start the purchase returns process.
T
97. When preparing the cash disbursement journals, it is important that the records have the actual date of cash disbursement, as is shown on the check.
T
C) credit, treasurer, accounts receivable, and internal audit departments.
The Bad Luck Fortune Cookie Company has a 360-day past-due balance of $1,300.00. After repeated attempts at collection, the account is deemed worthless. The departments involved with processing this transaction up to the point of issuing an approved write-off memo are the A) credit and accounts receivable departments. B) treasurer, billing, and accounts receivable departments. C) credit, treasurer, accounts receivable, and internal audit departments. D) credit, treasurer, cash receipts, and internal audit departments.
A) can be passed through the system by using a "dummy" customer master record.
The SAP ERP system requires a customer master record for each customer. A one-time customer of the company A) can be passed through the system by using a "dummy" customer master record. B) should be manually billed using a 30-day account, thus bypassing the SAP ERP system. C) must pay cash and pick up the goods from the company's shipping dock. D) must be set up using detailed records in the SAP ERP system like any other customer.
B) misstatements
The SEC Interpretive Guidance "Management's Report on Internal Control Over Financial Reporting" approved in 2007, focuses management on internal controls that best protect against risk of material ________ in financial statements. A) fraud B) misstatements C) negligence D) mistakes
D) a journal voucher from cash receipts and a control total from accounts receivable.
The amount of cash receipts for August 12 is $6,389.42. For general ledger to post this amount, it must receive A) a journal voucher from cash receipts. B) the deposit slip from the bank for August 12 showing $6,389.42 as a deposit. C) a control total from accounts receivable. D) a journal voucher from cash receipts and a control total from accounts receivable.
Disney Company intentionally attempted to circumvent system access controls to determine whether there are weaknesses. This procedure is referred to as: Select one: a. Penetration testing b. Intrusion detection c. Integrity testing d. Vulnerability testing
a. Penetration testing
Intentionally attempting to circumvent IT system access controls to determine whether there are weaknesses in any controls is called: a. Penetration testing b. Intrusion detection c. Integrity testing d. Vulnerability testing
a. Penetration testing
This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer. Information included on this form would be: products, quantities, and agreed-upon prices. a. Purchase order b. Purchase requisition c. Purchase invoice d. Purchase journal
a. Purchase order
The Disney Company activities involved with the fixed assets continuance phase include all of the following except: Select one: a. Recording the disposal of fixed assets b. Updating cost data for improvements to assets c. Adjusting for periodic depreciation d. Keeping track of the physical location of the assets
a. Recording the disposal of fixed assets
A tear-off part of a check that has a simple explanation of the reasons for the payment is called: a. Remittance advice b. Disbursement journal c. Transaction description d. Cash register
a. Remittance advice
Disney Company implemented several new internal controls, what is the name of the tear-off part of a check that has a simple explanation of the reasons for the payment? Select one: a. Remittance advice b. Disbursement journal c. Transaction description d. Cash register
a. Remittance advice
Which of the following internal controls would help prevent overpayment to a vendor or duplicate payment to a vendor? a. Review and cancellation of supporting documents after issuing payment b. Requiring the check signer to mail the payment to the vendor c. Review of the accounts where the expenditure transaction has been recorded d. Approving the purchase before the goods are ordered from the vendor
a. Review and cancellation of supporting documents after issuing payment
Which of the following internal controls would help prevent overpayment to a vendor or duplicate payment to a vendor? a. Review and cancellation of supporting documents after issuing payment b. requiring the check signer to mail the payment directly to the vendor c. Review of the accounts where the expenditure transaction has been recorded d. approving the purchase before the goods are ordered from the vendor
a. Review and cancellation of supporting documents after issuing payment
The acquisition of materials and supplies and the related cash disbursements is referred to as: a. The Procurement Process b. Systems and Control Process c. Expenditure and Return Process d. Conversion Process
a. The Procurement Process
The New York Stock Exchange (NYSE) requires corporations to have A) a majority of the board be outsiders. B) cumulative voting. C) at least one employee director as a representative on the board. D) at least two outside directors providing stockholder representation. E) an audit committee composed entirely of independent, outside members.
an audit committee composed entirely of independent, outside members.
Which of the following is most likely to be effective in deterring fraud by upper-level managers? a)internal controls b)an enforced code of ethics c)matching docs prior to payment d)segregating custody of inventory
an enforced code of ethics
The percentage of CEOs of the 100 largest companies who also serve as chairman of the board is A) less than 10%. B) approximately 20%. C) approximately 50%. D) approximately 68%. E) over 90%.
approximately 68%.
Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchase transactions? a)is an authorized PO required before the receiving departments can accept a shipment or the AP department can record a voucher? b)are prenumbered purchase reqs used, and are they subsequently matched with vendor invoices? c)is there a regular reconciliation of the inventory records with the file of unpaid vouchers? d)are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
The relationship among the board of directors, top management, and shareholders is referred to as A) corporate synergy. B) corporate management. C) corporate governance. D) corporate strategy. E) corporate responsibility.
corporate governance.
A lead director A) has not been a popular approach in the United Kingdom. B) creates a balance of power when the CEO is also Chair of the Board. C) has lost popularity in the United States since 2003. D) has no involvement in the CEO's evaluation. E) totally replaces the CEO position.
creates a balance of power when the CEO is also Chair of the Board.
Able wants to send a file to Baker over the internet and protect the file so that only Baker can read it and can verify that it came from Able. What should Able do? a. encrypt the file using Able's public key, and then encrypt it again using Baker's private key b. encrypt the file using Able's private key, and then encrypt it again using Baker's private key c. encrypt the file using Able's public key, and then encrypt it agin using Baker's public key d. encrypt the file using Able's private key, and then encrypt it agin using Baker's public key
d
Which of the following can organizations use to protect the privacy of a customer's personal information when giving programmers a realistic data set with which to test a new application? a. digital signature b. digital watermark c. data loss prevention d. data masking
d
Which of the following statements is true? a. VPNs protect the confidentiality of information while it is in transit over the internet b. encryption limits firewalls' ability to filter traffic c. a digital certificate contains that entity's public key d. all of the above are true
d
Which of the following statements is true? a. symmetric encryption is faster than asymmetric encryption and can be used to provide nonrepudiation of contracts b. symmetric encryption is faster than asymmetric encryption but cannot be used to provide nonrepudiation of contracts c. asymmetric encryption is faster than symmetric encryption and can be used to provide nonrepudiation of contracts d. asymmetric encryption is faster than symmetric encryption but cannot be used to provide nonrepudiation of contracts
d
Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchase transactions? a) is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? b) are prenumbered purchase requisitions used, and are they subsequently matched with vendor invoices? c) is there a regular reconciliation of the inventory records with the file of unpaid vouchers? d) are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
d) are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
Personnel who work in the receiving area should complete all of the following processes except: a) counting the goods received b) inspecting goods received for damage c) preparing a receiving report d) preparing an invoice
d) preparing an invoice
Within the purchasing processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? a) the invoice b) the receiving report c) the purchase order d) the purchase requisition
d) the purchase requisition
Which of the following controls is not normally performed in the accounts payable department? a) the vendor's invoice is matched with the related receiving report b) vendor invoices are selected for payment c) asset and expense accounts to be recorded are assigned d) unused purchase orders and receiving reports are accounted for
d) unused purchase orders and receiving reports are accounted for
Common expenditure processes would include all of the following, except: a. Preparation of a purchase requisition b. Receipt of the goods or services c. Recording the liability d. Payment received on account
d. Payment received on account
Personnel who work in the receiving area should complete all of the following processes, except: a. Counting the goods received b. Inspecting goods received for damage c. Preparing a receiving report d. Preparing an invoice
d. Preparing an invoice
Credit cards given to employees by the organization in order for the employees to make designated purchases are called: a. Employee Debit Cards b. Organization Purchase Cards c. Expenditure Cards d. Procurement Cards
d. Procurement Cards
A record keeping tool used to record purchases in a manual accounting system. This "tool" would consist of recording all of the purchased orders issued to vendors in a chronological order. a. Purchase order b. Purchase requisition c. Purchase invoice d. Purchase journal
d. Purchase journal
Disney Company implemented several new internal controls, which documents should be matched to make sure that the invoice received relates to a valid order that was placed and that the goods were received? Select one: a. Purchase requisition, purchase order, and receiving report. b. Purchase order, receiving log, and invoice. c. Purchase requisition, receiving report, and statement. d. Purchase order, receiving report, and invoice.
d. Purchase order, receiving report, and invoice.
When a board of directors is involved to a limited degree in the performance or review of selected key decisions, indicators, or programs of management, the degree of involvement is referred to as A) rubber stamp. B) nominal participation. C) active participation. D) minimal review. E) phantom.
nominal participation.
According to the text, most publicly owned large corporations today tend to have boards with what degree of involvement in the strategic management process? A) passive to minimal B) minimal to nominal C) rubber stamp type D) nominal to active E) active to catalyst
nominal to active
Under what circumstances does a DIRECT interlocking directorate exist? A) when both management and the board establish corporate strategic management B) when a corporation's employees are included on its board C) occurs when two firms share a director or when an executive of one firm sits on the board of a second firm D) when all board members are also employed by the corporation E) when two corporations have directors who serve on the board of a third firm
occurs when two firms share a director or when an executive of one firm sits on the board of a second firm
All of the following are true of overconfident CEOs EXCEPT A) overconfident CEOs tend to charge ahead with mergers and acquisitions even though they are aware that most acquisitions destroy shareholder value. B) overconfident CEOs view their company as undervalued by outside investors. C) overconfident CEOs are more likely to do deals that diversify their firm's lines of businesses. D) the overconfidence of CEOs may lead to hubris. E) overconfident CEOs were less likely to make an acquisition when they could avoid selling new stock to finance them.
overconfident CEOs were less likely to make an acquisition when they could avoid selling new stock to finance them.
purchase order
document issued to a seller by a buyer that indicates details (products, quantities, and agreed-upon prices) for products or services that the seller will provide to the buyer
purchase requisition form
documents the need and requests that specific items and quantities be purchased, it must be authorized by a designated member of management
A careless director or directors can be held personally liable for harm done to the corporation if they failed to act with A) codetermination. B) figurehead role. C) cumulative voting. D) accountability. E) due care.
due care.
Which of the following budgeting processes is LEAST likely to motivate managers toward organizational goals? a. setting budget targets at attainable levels b. participation by subordinates in the budgetary process c. use of management by exception d. holding subordinates accountable for the items they control e. having top management set budget levels
e. having top management set budget levels
22. Which of the following would be referred to as a common carrier? A. Taxi-cab B. Trucking company C. City bus D. Fire department vehicle
. Trucking company
dual signature
2 people sign the check
The percentage of directors of small, publicly held U.S. corporations which are outsiders is approximately A) 2 - 12%. B) 20 - 40%. C) 40 - 60%. D) 60 - 80%. E) 98 - 100%.
20 - 40%.
100. Systems design usually comes after: Systems analysis Systems funding Systems deletion Systems implementation
A
105. Which one of these design feasibility areas is typically performed by accountants? a) Economic b) Organizational c) Hardware d) Schedule e) Social
A
80. An intensive investigation of a company's present information system in order to discover systems weaknesses is termed a: a) Systems study b) Systems follow‑up c) Systems design d) Systems survey
A
Errors in the keying operation can be detected using A) a key verification control procedure B) a data transfer control register C) program data editing D) none of these is correct
A
The "amount due" field of a bill is checked to ensure that the sign is positive. This is an example of a field A) sign check B) length check C) format check D) type check
A
Which of the following is a preventive control? A) Training B) Log analysis C) CIRT D) Virtualization
A
The document prepared when purchased items are returned is a(n): A. Debit memo B. Invoice C. Receiving report D. Shipping notice
A. Debit memo
40. Internal control activities within the purchasing process, identified as adequate records and documents, would include which of the following? A. Files are to be maintained for purchase requisitions, purchase orders, receiving reports, and invoices. B. Periodic physical inventory counts are to be reconciled with the inventory ledger. C. Companies are to implement controls where the corresponding benefit exceeds the related cost. D. Avoid having the same individuals who handle the inventory also have access to the related accounting records.
A. Files are to be maintained for purchase requisitions, purchase orders, receiving reports, and invoices.
Which of the following internal controls wold help prevent overpayment to a vendor or duplicate payment to a vendor? A. Review and cancellation of supporting documents after issuing payment. B. Requiring the check signer to mail the payment to the vendor C. Review of the accounts where the expenditure transaction has been recorded D. Approving the purchase before the goods are ordered from the vendor
A. Review and cancellation of supporting documents after issuing payment.
REORDER POINT
An order is placed when a minimum number of units remain (safety stock) in stock.
1.Which of the following types of audits is most likely to be conducted for the purpose of identifying areas for cost savings? A.Financial Statement Audits B.Operational Audits C.Regulatory Audits D.Compliance Audits
B
34. Computer assisted audit techniques: a) Are never used in compliance testing b) May be used for substantive and compliance testing c) Are used primarily when auditing around the computer d) Are good tools for auditors who are lacking in technical computer skills
B
4. One of the most critical controls to prevent theft of inventory purchased is to: A. Require authorization of the purchase requisition. B. Segregate inventory custody from inventory record keeping. C. Compare the purchase order, receiving report, and invoice. D. Segregate the authorization of purchases from the inventory record keeping.
B
5. Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? A. The department that initiated the purchase request. B. The receiving department. C. The purchasing department. D. The accounts payable department.
B
60. A chronological listing of all payments is referred to as a(n): A. Remittance Advice B. Cash Disbursements Journal C. Accounts Payable Ledger D. Purchases Journal
B
7.A request for proposal (RFP) is used during the A.Phase-in period. B.Purchase of software C.Feasibility study D.In-house design
B
84. According to the chapter, which of these comes closest in meaning to the term "systems approach?" a) Narrow point of view b) Broad point of view c) Focus on achieving those goals important to computerized systems d) Focus first and foremost on computerization
B
98. Which of these is not a logical procedure that is followed in the systems analysis phase of a systems study? a) Define the problem(s) in the current system b) Identify the company's goals c) Perform a systems survey to acquire information about the current system d) Generate possible solutions to solve the company's problem(s) e) all of the above are systems analysis procedures
B
A company that uses the SAP ERP system wants to identify the areas within their company that have responsibility to a certain customer. The screen that should be used to enter this information is A) correspondence. B) sales. C) billing. D) initial.
B
A special purpose hardware device or software running on a general purpose computer, which filters information that is allowed to enter and leave the organization's information system, is known as a(n) A) demilitarized zone. B) firewall. C) intrusion prevention system. D) intrusion detection system.
B
A technology that is not typically used in a real-time sales system is A) bar coding B) sequential file processing C) a POS system D an EDI ordering system
B
For proper segregation of duties in cash disbursements, the person who signs checks also: a) reviews the monthly bank reconciliation b) returns the checks to accounts payable c) is denied access to the supporting documents d) is responsible for mailing the checks
B
In the SAP ERP system, an outline agreement with a vendor is basically a A) request for a quotation. B) contract. C) purchase order. D) purchase requisition.
B
Input data should be accompanied by the completion of a(n) A) data transfer log B) input document control form C) data transfer register D) key verification control procedure
B
Sue Pang enters salse data into the computer-input program using a keyboard. The type of system Sue is using is a(n) A) automatic identification system B) manual data entry system C) point-of-sale system D) electronic data interchange system
B
The department responsible for the actual computation and preparation of payroll is the A) accounts payable department. B) payroll department. C) personnel department. D) production department (for factory workers).
B
The final step in the procurement process should be A) preparation of the purchase order. B) vendor payment. C) receipt of the goods. D) invoice verification.
B
The use of check digits A) is highly unusual in today's EDP environment B) is very common because of the high reliability of this procedure C) eliminates using key verification as a control procedures D) eliminates using data editing routines as a method to detect errors
B
There are various approaches to an accounts receivable application. The approach in which a customer's remittances are applied against a customer's total outstanding balance is called A) aging schedule processing. B) balance-forward processing. C) open-item processing. D) None of these answers is correct.
B
Which of the following is not a major control feature of the cash disbursements business process? A) Use of a voucher system B) Use of an imprest fund C) An independent bank reconciliation D) Separation of approval from actual payment
B
Which of the following is not an independent verification related to cash disbursements? a) the cash disbursements journal is reconciled to the general ledger b) the stock of unused checks should be adequately secured and controlled c) the bank statement is reconciled on a monthly basis d) the A/P subsidiary ledger is reconciled to the general ledger
B
Which of the following is not seen as an advantage to using generalized audit software (GAS)? A) Auditors can learn the software in a short period of time. B) It can be applied to a variety of clients after detailed customizations. C) It can be applied to a variety of clients with minimal adjustments to the software. D) It greatly accelerates audit testing over manual procedures.
B
Which of the screens listed below in SAP ERP system is not optional when a company records information relating to a sale? A) Pricing B) Create sales order C) Business data header D) Scheduling
B
Within cash disbursements, all of the following should be true before a check is prepared, except that: a) the purchase order, receiving report, and invoice have been matched b) the purchased goods have been used c) sufficient cash is available d) the invoice discount date or due date is imminent
B
________ is not a risk specific to the IT environments. A) Reliance on the functioning capabilities of hardware and software B) Increased human involvement C) Loss of data due to insufficient backup D) Unauthorized access
B
32. This document, prepared by the purchasing department, for use by the receiving department, is copy of the purchase order that eliminates all data about the price and quantity of the items ordered. A. Packing slip B. Blind purchase order C. Empty purchase order D. Receiving report
B. Blind purchase order
60. A chronological listing of all payments is referred to as a(n): A. Remittance Advice B. Cash Disbursements Journal C. Accounts Payable Ledger D. Purchases Journal
B. Cash Disbursements Journal
54. The careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adequate cash balances exist to meed obligations is called: A. Cash disbursements B. Cash management C. Independent checks D. Accounts payable management
B. Cash management
47. Goods received are unacceptable due to may different situations. Which of the following is not one of those situations? A. Damage or defects B. Changes in the company needs regarding future sales or production C. Errors in the type of goods delivered or ordered D. Timing issues
B. Changes in the company needs regarding future sales or production
29. There are different ways to issue a purchase order to a vendor. Which of the following is not one of the ways? A. Hard copy via fax or mail B. Hard copy by hand C. Electronically via e-mail D. Directly through the computer network
B. Hard copy by hand
Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchase to lessen which of the following risks? A. Unauthorized access B. Invalid data entered by vendors C. Repudiation of purchase transactions D. Virus and worm attacks
B. Invalid data entered by vendors
63X. The internal control process that requires the approval of a cash disbursement transaction to take place prior to the preparation of the check, will help to minimize the risk of: A. Fictitious payments B. Invalid payments C. Timing issues D. Stolen cash
B. Invalid paymen
42. The internal control process of having the receiving reports prepared on pre-numbered forms so that the sequence of receipts can be reviewed for proper recording will help to minimize the related risk of: A. Invalid vendors B. Omitted purchases C. Fictitious purchases D. Timing issues
B. Omitted purchases
13. For proper segregation of duties in cash disbursements, the person who signs checks also: A. Reviews the monthly bank reconciliation. B. Returns the checks to accounts payable. C. Is denied access to the supporting documents. D. Is responsible for mailing the checks
B. Returns the checks to accounts payable.
10. Within cash disbursements, all of the following should be true before a check is prepared, except that: A. The purchase order, receiving report, and invoice have been matched. B. The purchased goods have been used. C. Sufficient cash is available. D. The invoice discount date or due date is imminent.
B. The purchased goods have been used
10. Within cash disbursements, all of the following should be true before a check is prepared, except that: A. The purchase order, receiving report, and invoice have been matched. B. The purchased goods have been used. C. Sufficient cash is available. D. The invoice discount date or due date is imminent.
B. The purchased goods have been used.
Within cash disbursements, all of the following should be true before a check is prepared, except that: A. The purchase order, receiving report, and invoice have been matched. B. The purchased goods have been used. C. Sufficient cash is available. D. The invoice discount date or due date is imminent.
B. The purchased goods have been used.
Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? A. The department that initiated the purchase request. B. The receiving department. C. The purchasing department. D. The accounts payable department
B. The receiving department.
Which of the following is not an independent verification related to cash disbursements? A. the cash disbursements journal is reconciled to the general ledger B. The stock of unused checks should be adequately secured and controlled c. the bank statement is reconciled on a monthly basis d. the accounts payable subsidiary ledger is reconciled to the general ledger
B. The stock of unused checks should be adequately secured and controlled
Which of the following is not an independent verification related to cash disbursements? A. The cash disbursements journal is reconciled to the general ledger. B. The stock of unused checks should be adequately secured and controlled. C. The bank statement is reconciled on a monthly basis. D. The accounts payable subsidiary ledger is reconciled to the general ledger.
B. The stock of unused checks should be adequately secured and controlled.
Which of the following is NOT a trend in corporate governance expected to continue? A) Institutional investors are becoming active on boards. B) Boards are getting more involved in shaping company strategy. C) Boards are getting larger. D) Shareholders are demanding that directors and top managers own more than token amounts of stock in the corporation. E) Outside directors are taking charge of annual CEO evaluations.
Boards are getting larger.
108. Which of these is true when designing control procedures for a computer system? a.Control procedures are irrelevant b.Control procedures should be designed and implemented after the proposed system is functioning properly c.Control procedures should be built into the system as it is designed d.Control procedures should be implemented regardless of their costs
C
75. The acronym SDLC stands for a) Systems design and logic for computers b) Study, dedication, life, and conviction c) Systems development life cycle d) Secondary development and allocation
C
82. The four phases of the systems development life cycle end with this phase: a) Analysis b) Design c) Implementation, follow-up, and maintenance d) Development
C
11.The use of the SDLC for IT system changes is important for several reasons. Which of the following is not part of the purposes of the SDLC processes? A.As a part of strategic management of the organization B.As part of the internal control structure of the organization C.As part of the audit of an IT system D.As partial fulfillment of management's ethical obligations
C
12. The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of: A. Invalid transactions B. Fictitious customers C. Omitted transactions D. Duplicate transactions
C
12.Which of the following is the most significant disadvantage of auditing around the computer rather than through the computer? A.The time involved in testing processing controls is significant. B.The cost involved in testing processing controls is significant. C.A portion of the audit trail is not tested. D.The technical expertise required to test processing controls is extensive.
C
124. The most time‑consuming path in a PERT network is called the: a) Slack path b) Completion path c) Critical path d) none of the above
C
16. It is important that documentation support or agree with an invoice before payment is approved and a check is issued. Which documents should be matched to make sure that the invoice received relates to a valid order that was placed and that the goods were received? A. Purchase requisition, purchase order, and receiving report. B. Purchase order, receiving log, and invoice. C. Purchase requisition, receiving report, and statement. D. Purchase order, receiving report, and invoice.
C
16. Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? A. Computer-based matching system B. Electronic data interchange C. Evaluated receipt settlement D. Microsoft Dynamics GP®
C
16X. Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? A. Computer-based matching system B. Electronic data interchange C. Evaluated receipt settlement D. Microsoft Dynamics
C
20. The examination of the system to determine the adequacy of security measures and to identify security deficiencies is called: A. Intrusion detection B. Penetration testing C. Vulnerability testing D. Integrity testing
C
20.Which of the following is most likely to be an attribute unique to the audit work of CPAs, compared with work performed by attorneys or practitioners of other business professions? A.Due professional care B.Competence C.Independence D.A complex underlying body of professional knowledge
C
3. This phase of SDLC involves the planning and continuing oversight of the design, implementation, and use of the IT systems. A. Systems Analysis B. Systems Implementation C. Systems Planning D. Systems Design
C
3. Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor? A. Purchasing B. Receiving C. Accounts Payable D. Shipping
C
3.Which of the following is not part of the system design phase of the SDLC? A.Conceptual design B.Evaluation and selection C.Parallel operation D.Detailed design
C
30. When purchased goods are received, which of the following tasks should be completed in the receiving area? A. An inspection of the goods - quantity counted and condition assessed. B. Documenting the details of the receipt, before the carrier leaves. C. Match the purchase order, the receiving report, and the purchase invoice to be sure that they agree. D. Preparation of a receiving report detailing the contents and condition of the goods.
C
32. Which of the following statements is not true regarding people skills for IT auditors? a) People skills are more important than technical skills b) An example of people skills would be the ability to work on a team c) In the case of protecting against computer viruses, technical skills matter more than people skills d) Many internal controls evaluated by auditors concern human behavior
C
33. This document, prepared by the vendor, provides details of the items included in the delivery; and is normally signed by the receiving clerk as verification of receipt. A. Packing slip B. Receiving report C. Bill of lading D. Purchase order
C
35. A computerized AIS is harder to audit than a manual system for all of the following reasons except: a) The file information is not human readable b) The volume of transaction records and master file records is usually much larger in computerized systems than in manual systems c) An audit trail does not exist in a computerized AIS d) Computerized systems often use remote real-time data processing, thus complicating the tracing of transaction records to their sources
C
38. The advantages of around-the-computer auditing include: a) The emphasis which is placed on testing data processing exceptions b) Use of live data c) The minimal disturbance of a company's records d) both b and c
C
38. The internal control activities within the purchasing process, related to authorization of transactions, would include which of the following? A. The accounting duties related to requisitioning, ordering, and receiving goods should be performed by different individuals. B. The custody of inventory and the recording of inventory transactions are required to be maintained. C. Specific individuals are to be authoritative responsibility for preparing purchase requisitions and purchase orders which would include which items to purchase, how many items, and which vendor. D. Periodic physical inventory counts are to be reconciled with the inventory ledger and general ledger.
C
4.Which of the following is not a part of general accepted auditing standards? A.General Standards B.Standards of Fieldwork C.Standards of Information Systems D.Standards of Reporting
C
45. Which of the following is not typically checked by an auditor in a review of a responsibility system of computer program development and maintenance? a) Documentation of all program changes on proper change-request forms b) Proper costing of all program change requests c) A review of each program change request by an internal auditor d) Matches between program documentation and the production version of a computer program
C
45X. The internal control process that requires purchase records to be matched and verified for item descriptions, quantities, dates, authorized prices, and mathematical accuracy, will help to minimize the risk of: A. Stolen goods B. Omitted transactions C. Invalid purchases D. Incorrect accumulation
C
49. An integrated test facility is used to: a) Test only the computer programs of an AIS b) Test only the manual operations of an AIS c) Test both the programs and the manual operations of an AIS in an operational setting d) Test the computer programs, the manual operations, and the auditing procedures of a company using a computerized AIS
C
5. Which of the following is not a major purpose served by the continual and proper use of the IT governance committee and the SDLC? A. The fulfillment of ethical obligations B. The strategic management process of the organization C. The conversion of the system D. The internal control structure of the organization
C
52. Which of the following statements is not true regarding people skills for IT auditors? a) People skills are more important than technical skills b) An example of people skills would be the ability to work on a team c) In the case of protecting against computer viruses, technical skills matter more than people skills d) Many internal controls evaluated by auditors concern human behavior
C
53. All of the following are examples of parameters that might be used to set passwords except: a) A minimum password length of six digits b) Restriction of passwords to numeric characters only c) Required use of words that can be found in a dictionary d) A requirement for a minimum interval (such as one day) before a password may be changed
C
58. Which audit technique examines the way transactions are processed? a) Exception reporting technique b) Transaction tagging technique c) Snapshot technique d) Parallel simulation technique
C
59. When a payment has been made, the cash disbursements clerk will clearly mark the invoice with information pertaining to the date an the check number used to satisfy the obligation. This process is called: A. Marking the invoice B. Retiring the invoice C. Cancelling the invoice D. Destroying the invoice
C
61. All of the following are reasons why SOX was enacted, except: a) Enron's CEO, Jeffrey Skilling, claimed he did not know about the company's financial shenanigans because he was not involved in their accounting b) Public perception was that auditors were having conflicts of interest with respect to the auditing and consulting services they provided c) The FASB has long been thought to be ineffective d) Congress wanted to restore investor confidence in the wake of a rash of corporate scandals
C
62X. The security of assets and documents related to cash disbursements would include all of the following, except: A. Access to cash should be limited to the authorized check signers. B. Physical controls should be in place where the cash is retained and disbursed. C. Access to records should be limited to persons with the authority to sign checks. D. The company's stock of unused checks should be protected and controlled.
C
66. Information technology governance is the process of using information technology resources: a) In governmental agencies b) To audit accounting systems c) To achieve organizational objectives d) To hire the board of directors
C
7. The source document that initiates the recording of the return and the adjustment to the customer's credit status is the: A. Pick list B. Sales journal C. Credit memorandum D. Sales invoice
C
7.Auditors should design a written audit program so that: A.All material transactions will be included in substantive testing. B.Substantive testing performed prior to year end will be minimized. C.The procedures will achieve specific audit objectives related to specific management assertions. D.Each account balance will be tested under either a substantive test or a test of controls.
C
80. Sound internal control dictates that immediately upon receiving checks from customers by mail, a responsible employee should a. Add the checks to the daily cash summary. b. Verify that each check is supported by a prenumbered sales invoice. c. Prepare a duplicate listing of checks received. d. Record the checks in the cash receipts journal.
C
81. Which of these is not a phase in the life cycle of an information system? a) Planning b) Analysis c) Control d) Implementation
C
83. Which of these is most likely to be the first task in a systems study? a) Systems analysis b) Systems design c) Preliminary investigation d) any of these are possible—it depends upon the system under study
C
84. Upon receipt of customers' checks in the mailroom, a responsible employee should prepare a remittance listing that is forwarded to the cashier. A copy of the listing should be sent to the a. Internal auditor to investigate the listing for unusual transactions. b. Treasurer to compare the listing with the monthly bank statement. c. Accounts receivable bookkeeper to update the subsidiary accounts receivable records. d. Entity's bank to compare the listing with the cashier's deposit slip.
C
9. Which of the following would represent proper segregation of duties? A. The employee who has custody of cash also does accounts receivable record keeping. B. The employee who has custody of cash completes the bank reconciliation. C. The employee who opens mail containing checks prepares a list of checks received. D. The employee who opens mail containing checks records transactions in the general ledger.
C
90. 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? a. Employees responsible for authorizing sales and bad debt write-offs are denied access to cash. b. Shipping documents and sales invoices are matched by an employee who does not have authority to write off bad debts. c. Employees involved in the credit-granting function are separated from the sales function. d. Subsidiary accounts receivable records are reconciled to the control account by an employee independent of the authorization of credit.
C
95. The steering committee in a systems study: a) Consists entirely of outside consultants b) Represents management in a systems study c) Should include external auditors d) Is typically composed entirely of end users
C
99. Once all facts and data have been collected in the systems survey, this activity can begin: a) The preliminary investigation b) Appoint a steering committee c) Perform the data analysis d) Perform the systems implementation
C
A ________ is responsible for controlling the use of computer programs, transaction files and other computer records and documentation and releases them to the operators only when authorized. A) software engineer B) chief computer operator C) librarian D) data control operator
C
A code is not used in ERP master records to identify a(n) A) plant. B) accounting unit. C) specific invoice. D) purchasing organization.
C
A data editing routine that compares numeric data input within a range is a(n) A) table lookup B) hash total check C) limit test D) internal label test
C
A document which identifies a vendor and confirms the quantity and price of goods identified in it is called a(n) A) purchase requisition. B) outline agreement. C) purchase order. D) scheduling agreement.
C
A sales order is A) the same as the purchase order. B) an external use document. C) an internal use document. D) optional when selling to established customers.
C
Alberta Products Company updates their accounts receivable master file each day. The EDP departments uses the son-father-grandfather retention of master files. A computer operator accidentally destroyed the most recent accounts receivable master file by using the purchase transaction file to update it. The operator now has today's correct transaction file. How can the operator reconstruct the accounts receivable master file for the update? A) Process yesterday's son against today's transaction file B) process yesterday's grandfather agains yesterday's transaction file C) process yesterday's father against yesterday's transaction file D) process yesterday's son against yesterday's transaction file
C
All employees of E.C. Hoxy are required to pass through a gate and present their photo identification cards to the guard before they are admitted. Entry to secure areas, such as the Information Technology Department offices, requires further procedures. This is an example of a(n) A) hardening procedure. B) authentication control. C) physical access control. D) authorization control.
C
Among the following pair of functions, which pair represents the most serious internal control weakness when the duties are performed by the same individual? A) Purchasing and verification of vendor invoices B) Check signing and cancellation of voucher documentation C) Cash disbursement and verification of vendor invoices D) Physical handling of incoming merchandise and preparation of receiving reports
C
An electronic processing system can be used A) only in a batch environment B) with real-tim on-line processing C) In either a batch or real-time, on-line processing environment D) in situations where documentation is not a priority
C
An example of a physical control is: A) a hash total. B) a parallel test. C) the matching of employee fingerprints to a database before access to the system is allowed. D) the use of backup generators to prevent data loss during power outages.
C
Computers process information consistently for all transactions. This creates a risk that: A) auditors will not be able to access data quickly. B) auditors will not be able to determine if data is processed consistently. C) erroneous processing can result in the accumulation of a great number of misstatements in a short period of time. D) all of the above.
C
Controls which are built in by the manufacturer to detect equipment failure are called: A) input controls. B) data integrity controls. C) hardware controls. D) manufacturer's controls.
C
During input, a data entry clerk incorrectly keyed produce code "ABXY" as "BAXY". Both ABXY and BAXY are valid codes. Which of the following controls would prevent this situation? A) a table-lookup procedure B) a check digit test C) key verification D) limit test
C
Form 941 is filed to report federal income and social security taxes withheld from employees. It is filed A) weekly. B) monthly. C) quarterly. D) annually.
C
General controls include all of the following except: A) systems development. B) online security. C) processing controls. D) hardware controls.
C
How does ERP's materials management module assist in vendor selection? A) It links the quotation documents with the requisition. B) It downloads product information from the vendor's system. C) It provides a 100-point scoring system to evaluate vendors. D) It sends rejection letters to vendors whose bids are not accepted.
C
In a manual input system, batch controls are prepared initially by the A) EDP department B) computer software C) user department D) general ledger department
C
In an IT system, automated equipment controls or hardware controls are designed to: A) correct errors in the computer programs. B) monitor and detect errors in source documents. C) detect and control errors arising from the use of equipment. D) arrange data in a logical sequential manner for processing purposes.
C
In an electronic input system requiring human intervention, the main processing phases and their proper sequence are A) dat input and data editing B) data editing and data input C) data input and editing, and transfer to the host application system D) data input, transfer to the host application system, and data editing
C
In comparing (1) the adequacy of the hardware controls in the system with (2) the organization's methods of handling the errors that the computer identifies, the independent auditor is: A) unconcerned with both (1) and (2). B) equally concerned with (1) and (2). C) less concerned with (1) than with (2). D) more concerned with (1) than with (2).
C
In real time sales system, which transaction-processing step below would not be performed entirely by using EDI? A) Receiving and translating an incoming customer order B) Sending an acknowledgement of the incoming order C) sending the customer a three-ring bound catalogue using the U.S. mail D) transmitting an advanced shipping notice to the customer
C
In the SAP ERP system, all of the different master records are created when the A) payee customer record is created. B) ship-to-customer record is created. C) sold-to-customer record is created. D) bill-to-customer record is created.
C
In the SAP ERP system, if a company wishes to initiate a dunning procedure against a customer, input will be made in the A) account management screen. B) payment transactions screen. C) correspondence screen. D) control data screen.
C
In the materials planning system, purchase requisitions can A) only be prepared electronically. B) only be prepared manually. C) be prepared either manually or electronically. D) Purchase requisitions are not part of the materials planning system.
C
Key verification control procedures A) edit data b) do not use batch totals C) do not edit data D) electronically replace incorrect data with data from an existing database
C
Many clients have outsourced their IT functions. The difficulty the independent auditor faces when a computer service center is used is to: A) gain the permission of the service center to review their work. B) find compatible programs that will analyze the service center's programs. C) determine the adequacy of the service center's internal controls. D) try to abide by the Code of Professional Conduct to maintain the security and confidentiality of client's data.
C
Risk ________ for payroll, procurement, and customer order management business processes is required for compliance with Sarbanes-Oxley A) control B) compliance C) assessment D) assertions
C
Risk assessment should evaluate whether controls sufficiently address identified risks of material misstatements due to fraud and A) controls specifically designed to prevent fraud. B) controls intended to address the risk of collusion. C) controls intended to address the risk of management override of these controls. D) controls specifically designed to prevent material misstatements.
C
The Materials Management module of ERP maintains vendor master data. Users in different departments can update these records as necessary. There are several categories of information maintained in vendor master records. Which category of data below is not maintained in the vendor master records? A) General data such as name, address, and telephone B) Purchasing data such as quotations, invoice verification, or inventory control C) Object data such as an organization accounting unit D) Company code (accounting data) defines agreed payment terms and sub-ledger reconciliation account number
C
The Trust Services Framework reliability principle that states sensitive information be protected from unauthorized disclosure is known as A) Availability B) Security C) Confidentiality D) Integrity
C
The Trust Services Framework reliability principle that states that users must be able to enter, update, and retrieve data during agreed-upon times is known as A) security B) integrity C) availability D) maintainability
C
The approach to auditing where the auditor does not test automated controls to reduce assessed control risk is called: A) the single-stage audit. B) the test deck approach. C) auditing around the computer. D) generalized audit software (GAS).
C
The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client's data recorded in a machine language is: A) the test data approach. B) called auditing around the computer. C) the generalized audit software approach. D) the microcomputer-aided auditing approach.
C
The continued integration of IT in accounting systems can impact a company by: A) increasing the costs of handling a large amount of data. B) increasing the number of manual controls needed. C) giving management higher-quality information more quickly than a manual system, thus helping management in their decision making process. D) decreasing the segregation of duties.
C
The final input screen in the "create customer" function of the SAP ERP system is the A) billing screen. B) taxes screen. C) partner functions screen. D) output screen.
C
The first screen used to create a customer in a SAP ERP system is A) control data. B) contact person. C) initial. D) account management.
C
The key to the success of the attribute rating approach to vendor selection is A) attributes must be identified and listed. B) a weight must be assigned to each identified attribute. C) individual evaluators should rank attributes independently of each other. D) attribute numerical rankings should be multiplied by their appropriate weights.
C
The steps that criminals take to trick an unsuspecting employee into granting them access is called A) reconnaissance. B) research. C) social engineering. D) scanning and mapping the target.
C
The type of file updating which should be used in a DBMS system using batch processing is A) random-access B) sequential-access C) automatic D) peer-to-peer
C
What documents typically accompany the physical shipment of goods to a customer? A) The picking list and purchase order B) Packing and picking lists C) The packing list and a bill of lading D) The sales order and an invoice
C
When purchasing software or developing in-house software: A) cost should be the only factor. B) extensive testing of the software is generally not required. C) a team of both IT and non-IT personnel should be involved in the decision process. D) the librarian and the IT manager should be the only ones involved in the decision process.
C
When the client changes the computer software: A) no additional testing is needed by the auditor. B) and application controls are effective, the auditor can easily identify when software changes are made. C) and general controls are effective, the auditor can easily identify when software changes are made. D) application and general controls can no longer by relied upon by the auditor.
C
Which illustration is not an example of a supervision technique? A) Using professional shoppers in a retail environment B) Using a test package for a bank teller or cash counter C) Having a cash register make sound when it is opened in the presence of a customer D) All of these answers above are correct.
C
Which of the following is least likely to be used in obtaining an understanding of client general controls? A) Examination of system documentation B) Inquiry of key users C) Walk through of a sales transaction D) Reviews of questionnaires completed by client IT personnel
C
Which of the following is not a general control? A) Separation of IT duties B) Systems development C) Processing controls D) Hardware controls
C
Which of the following is not a risk in an IT system? A) Need for IT experienced staff B) Separation of IT duties from accounting functions C) Improved audit trail D) Hardware and data vulnerability
C
Which of the following statements is correct? A) Auditors should evaluate application controls before evaluating general controls. B) Auditors should evaluate application controls and general controls simultaneously. C) Auditors should evaluate general controls before evaluating application controls. D) None of these statements is correct.
C
Which of the following tests determines that every field in a record has been completed? A) Validation B) Sequence C) Completeness D) Programming
C
Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor? A. Purchasing B. Receiving C. Accounts Payable D. Shipping
C. Accounts Payable
59. When a payment has been made, the cash disbursements clerk will clearly mark the invoice with information pertaining to the date an the check number used to satisfy the obligation. This process is called: A. Marking the invoice B. Retiring the invoice C. Cancelling the invoice D. Destroying the invoice
C. Cancelling the invoice
75. One of the newest technologies related to payables is one where invoices are exchanged and payments are made via the internet. The name given to this process is: A. Random Array of Invoice and Disbursements (RAID) B. Electronic Invoice Payment Procedures (EIPP) C. Electronic Invoice Presentment and Payment (EIPP) D. Routing Application Invoice Delivery (RAID)
C. Electronic Invoice Presentment and Payment (EIPP)
16X. Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? A. Computer-based matching system B. Electronic data interchange C. Evaluated receipt settlement D. Microsoft Dynamics
C. Evaluated receipt settlement
45X. The internal control process that requires purchase records to be matched and verified for item descriptions, quantities, dates, authorized prices, and mathematical accuracy, will help to minimize the risk of: A. Stolen goods B. Omitted transactions C. Invalid purchases D. Incorrect accumulation
C. Invalid purchases
30. When purchased goods are received, which of the following tasks should be completed in the receiving area? A. An inspection of the goods - quantity counted and condition assessed. B. Documenting the details of the receipt, before the carrier leaves. C. Match the purchase order, the receiving report, and the purchase invoice to be sure that they agree. D. Preparation of a receiving report detailing the contents and condition of the goods.
C. Match the purchase order, the receiving report, and the purchase invoice to be sure that they agree.
In a system of proper internal controls, the same employee should not be allowed to: A. Sign checks and cancel the supporting voucher package. B. Receive goods and prepare the related receiving report. C. Prepare voucher packages and sign checks. D. Initiate purchase requisitions and inspect goods received.
C. Prepare voucher packages and sign checks.
38. The internal control activities within the purchasing process, related to authorization of transactions, would include which of the following? A. The accounting duties related to requisitioning, ordering, and receiving goods should be performed by different individuals. B. The custody of inventory and the recording of inventory transactions are required to be maintained. C. Specific individuals are to be authoritative responsibility for preparing purchase requisitions and purchase orders which would include which items to purchase, how many items, and which vendor. D. Periodic physical inventory counts are to be reconciled with the inventory ledger and general ledger.
C. Specific individuals are to be authoritative responsibility for preparing purchase requisitions and purchase orders which would include which items to purchase, how many items, and which vendor.
16. Which of the following is not a method of unethically inflating sales revenue? A. Channel stuffing B. Holding sales open C. Premature recognition of contingent sales D. Promotional price discounts
D
18. A computer software technique in which the computer software matches an invoice to its related purchase order and receiving report is called a(n): A. Three way matching B. Document matching C. Disbursement approval D. Automated matching
D
2. Personnel who work in the receiving area should completed all of the following processes, except: A. Counting the goods received B. Inspecting goods received for damage C. Preparing a receiving report D. Preparing an invoice
D
91. Independent reconciliation of the periodic inventory counts and the inventory ledger and the general ledger will help to assure that inventory is being properly accounted for.
F
93. The cash disbursement process must be designed to ensure that the company appropriately records all accounts payable transactions.
F
90. Independent reconciliation of the accounts payable subsidiary ledger to the general ledger control account will help to assure that all inventory has been properly recorded.
FF
TIMED REORDER
Order goods at a given point in time on a regular basis.
113. Corporate governance policies and procedures must be in place to assure that funds are expended only to the benefit the organization and its owners.
T
C) initial.
The first screen used to create a customer in a SAP ERP system is A) control data. B) contact person. C) initial. D) account management.
B) Sales group
Which input field listed below is not mandatory when creating a sales order in the "initial" screen of the SAP ERP system? A) Sales organization field B) Sales group C) Distribution channel field D) Division code field
3. The purpose of tracing shipping documents to prenumbered sales invoices would be to provide evidence that: A. Shipments to customers were properly invoiced. B. No duplicate shipments or billings occurred. C. Goods billed to customers were shipped. D. All prenumbered sales invoices were accounted for.
a
A digital signature is _______________. a. created by hashing a document and then encrypting the hash with the signer's private key b. created by hashing a document and then encrypting the hash with the signer's public key c. created by hashing a document and then encrypting the hash with the signer's symmetric key d. none of the above
a
automated matching
a computer software technique in which the computer software matches an invoice to its related purchase order and receiving report
A person who receives a paycheck for an individual who does not actually work for Disney Company is called: Select one: a. Ghost employee b. Shell employee c. Abundant employee d. Absent employee
a. Ghost employee
Which system would Disney Company use to record purchases of raw materials inventory, components of work in process, and record the total cost of sales for products finished and sold? Select one: a. a perpetual inventory system. b. the accounting information system. c. a periodic inventory system. d. quality control system.
a. a perpetual inventory system.
The document prepared when purchase items are returned is a a. debit memo b. invoice c. receiving report d. sales journal
a. debit memo
One of the most critical controls to prevent theft of inventory purchased is to: a) require authorization of the purchase requisition b) segregate inventory custody from inventory record keeping c) compare the purchase order, receiving report, and invoice d) segregate the authorization of purchases from the inventory record keeping
b
For proper segregation of duties in cash disbursements, the person who signs checks also: a) reviews the monthly bank reconciliation b) returns the checks to accounts payable c) is denied access to the supporting documents d) is responsible for mailing the checks
b) returns the checks to accounts payable
Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? a) the department that initiated the purchase request b) the receiving department c) the purchasing department d) the A/P department
b) the receiving department
Which of the following is not an independent verification related to cash disbursements? a) the cash disbursements journal is reconciled to the general ledger b) the stock of unused checks should be adequately secured and controlled c) the bank statement is reconciled on a monthly basis d) the A/P subsidiary ledger is reconciled to the general ledger
b) the stock of unused checks should be adequately secured and controlled
The control procedure designed to restrict what portions of information system an employee can access and what actions he or she can perform is called ________. a. Authentication b. Authorization c. Intrusion Prevention d. Intrusion Detection
b. Authorization Authorization is the process of controlling what actions - read, write, delete, etc. - a user is permitted to perform.
Which of the following statements is true? a. Journal vouchers authorize all GL postings in real-time GLS. b. Batch processing of journal vouchers is common for large organizations with multiple sources of transactions c. adjusting and reversing entries to the GL do not require journal vouchers because these entries are not transactions d. Journal Vouchers are used to capture summaries of multiple transactions but are not used to capture single transactions.
b. Batch processing of journal vouchers is common for large organizations with multiple sources of transactions
The careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adeqaute cash balances exist to meet obligations is called: a. Cash disbursements b. Cash management c. Independent checks d. Accounts payable management
b. Cash management
This type of software alerts the organization to hacking or other unauthorized use of the system or network. a. Penetration testing b. Intrusion detection c. Integrity testing d. Vulnerability testing
b. Intrusion detection
Which of the following would normally be considered in a strategic plan? a. setting a target of 12 percent return on sales b. maintaining the image of the company as the industry leader c. setting a market price per share of stock outstanding d. distributing monthly reports for departmental variance analysis e. both a and c
b. maintaining the image of the company as the industry leader
What would not affect Disney Company internal reports? Select one: a. the type of organization. b. their audit completion status. c. the underlying function being managed. d. the time horizon.
b. their audit completion status.
The Disney Company disposal of a tangible asset could include all of the following methods except: Select one: a. Throwing it away b. Sending it to another department c. Exchanging it for another asset d. Donating it to another party
b.. Sending it to another department
2. An example of an independent verification in the sale process is: A. Preparation of packing lists on prenumbered forms. B. Initialing the sales order. C. Proof of recorded dates, quantities, and prices on an invoice. D. Physical controls in record storage areas.
c
In a system of proper internal controls, the same employee should not be allowed to: a) sign checks and cancel the supporting voucher package b) receive goods and prepare the related receiving report c) prepare voucher packages and sign checks d) initiate purchase requisitions and inspect goods received
c) prepare voucher packages and sign checks
15. If every SUPERVISOR has at least one SUBORDINATES and may have many SUBORDINATES, the minimum...maximum cardinality for SUBORDINATES is a. 1...1 b. 0...1 c. 1...N d. 0...N e. N...N
c. 1...N
Which department is generally responsible for the notification of the need to make cash disbursements and the maintenance of vendor accounts? a. Accounting department b. Purchasing department c. Accounts payable department d. Shipping department
c. Accounts payable department
This document, prepared by the vendor, provides details of the items included in the delivery; and is normally signed by the receiving clerk as verification of receipt. a. Packing Slip b. Receiving Report c. Bill of lading d. Purchase order
c. Bill of lading
When a payment has been made, the cash disbursements clerk will clearly mark the invoice with information pertaining to the date and the check number used to satisfy the obligation. This process is called: a. Marking the invoice b. Retiring the invoice c. Cancelling the invoice d. Destroying the invoice
c. Cancelling the invoice
One of the newest technologies related to payables is one where invoices are exchanged and payments are made via the internet. The name given to this process is: a. Random Array of Invoice and Disbursements (RAID) b. Electronic Invoice Payment Procedure (EIPP) c. Electronic Invoice Presentment and Payment (EIPP) d. Routing Application Invoice Delivery (RAID)
c. Electronic Invoice Presentment and Payment (EIPP)
This type of system matching takes place without invoices. The receipt of goods is carefully evaluated an, if it matches the purchase order, settlement of the obligation occurs through the system. a. Business Process Engineering b. Controlled Access Invoicing c. Evaluated Receipt Settlement d. Double Matching System
c. Evaluated Receipt Settlement
The examination of the system to determine the adequacy of security measures and to identify security deficiencies is called: a. Intrusion detection b. Penetration testing c. Vulnerability testing d. Integrity testing
c. Vulnerability testing
An XBRL taxonomy is a. the document format used to produce web pages b. the final product c. a classification scheme d. a tag stored in each database record
c. a classification scheme
Which of the given departments will immediately adjust the vendor account for each purchase transactions so that the company will know the correct amount owed to the vendor? a. purchasing b. receiving c. accounts payable d. shipping
c. accounts payable
At Disney Company, administrative processes would generally result from transactions: Select one: a. that are large volumes of daily materials transactions. b. that are large volumes of daily sales and cash inflow transactions. c. that are periodic. d. that are infrequent or intermittent.
c. that are periodic.
Disney Company should delegate the responsibility for making investment decisions to: Select one: a. board of directors. b. chief financial officer. c. treasurer. d. president/CEO.
c. treasurer.
A manager suspects that certain employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the a)cash disbursements b)approved vouchers c)receiving report d)vendors' invoices
cash disbursements
purchases journal
chronological listing of all purchase orders issued to vendors
5. If a SUPERVISOR can have either none or many SUBORDINATES, the minimum...maximum cardinality for SUBORDINATES is a. 1...1 b. 0...1 c. 1...N d. 0...N e. N...N
d. 0...N
Which of the following statements is true? a. "Emergency" changes need to be documented once the problem is resolved. b. Changes should be tested in a system separate from the one used to process transactions. c. Change controls are necessary to maintain adequate segregation of duties. d. All of the above are true.
d. All of the above are true. Correct.
Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchase transactions? a. is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? b. Are prenumbered purchase requisitions used, and are they subsequently matched with vendor invoices? c. Is there a regular reconciliation of the inventory records with the file of unpaid vouchers d. Are prenumbered purchase orders, receiving reports and vouchers used and are the entire sequences accounted for?
d. Are prenumbered purchase orders, receiving reports and vouchers used and are the entire sequences accounted for?
The date that is the end of the accounting period is referred to as the: a. Fiscal date b. Change off c. Accounting cut d. Cutoff
d. Cutoff
Risk within the Disney Company control environment related to the fixed asset processes can be minimizes with all of the following access controls except: Select one: a. Passwords b. Number of employees who have access to the system c. Limits on the number of computer workstations where information may be entered d. Field checks
d. Field checks
Modifying default configurations to turn off unnecessary programs and features to improve security is called _______. a. User account management b. Defense-in-depth c. Vulnerability scanning d. Hardening
d. Hardening This is the definition of hardening.
Disney Company implemented a new item that records all of the purchase orders issued to vendors in a chronological order, what is this called? Select one: a. Purchase order b. Purchase requisition c. Purchase invoice d. Purchase journal
d. Purchase journal
It is important that documentation support or agree with an invoice before payment is approved and a check is issued. Which documents should be matched to make sure that the invoice received relates to a valid order that was placed and that the goods were received? a. Purchase requisition, purchase order, and receiving report b. Purchase order, receiving log, and invoice c. Purchase requisition, receiving report, and statement. d. Purchase order, receiving report, and invoice.
d. Purchase order, receiving report, and invoice
Disney Company implemented several new internal controls, which document is prepared by the receiving department to identify the sequential listing of all receipts? Select one: a. Receiving report b. Packing slip c. Bill of lading d. Receiving log
d. Receiving log
Which of the following controls is not normally performed in the accounts payable department? a. The vendor's invoice is matched with the related receiving report. b. Vendor invoices are approved for payment c. Asset and expense accounts to be recorded are assigned d. Unused purchase orders and receiving reports are accounted for.
d. Unused purchase orders and receiving reports are accounted for.
13. Unlike an ER model, only an EER model shows a. the cardinality of relationships b. the optionality of relationships c. attributes of entities and relationships d. all of the above e. a and b
d. all of the above
Disney Company has all of the following elements occur in the resource management component of the logistics function except: Select one: a. maintenance and control. b. human resources. c. inventory control. d. capital budgeting.
d. capital budgeting.
Personnel who work in the receiving area should complete all of the following processes except: a. counting the goods received b. inspecting the goods received for damage c. preparing a receiving report d. preparing an invoice
d. preparing an invoice
Within the purchasing processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? a. the invoice b. the receiving report c. the purchase order d. the purchase requisition
d. the purchase requisition
A/P subsidiary ledger
includes the detail of amounts owed to each vendor
penetration testing
intentionally attempting to circumvent IT system access controls to determine if there are weaknesses in the controls
Within the purchasing processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? a)the invoice b)the receiving report c)the purchase order d)the purchase requisition
the purchase requisition
Within cash disbursements, all of the following should be true before a check is prepared, except that a)the PO, receiving report, and invoice have been matched b)the purchased goods have been used c)sufficient cash is available d)the invoice discount date or due date is imminent
the purchased goods have been used
intrusion detection
this software alerts the organization to hacking or other unauthorized use of the system or network
According to the research, in turbulent environments, the best type of planning is A) top-down strategic planning. B) bottom-up strategic planning. C) horizontal strategic planning. D) concurrent strategic planning. E) composite strategic planning.
top-down strategic planning.
t/f the accts payable subsidiary ledger and cash disbursements journal are fundamental records in the cash disbursements process
true
t/f the best thing IT can do is automate the 3 way match and inform management if there's a problem
true
Which of the following controls is NOT normally performed in the AP department? a)the vendor's invoice is matched with the related receiving report b)vendor invoices are selected for payment c)asset and expense accounts to be recorded are assigned d)unused POs and receiving reports are accounted for
unused POs and receiving reports are accounted for
what do we do if purchase order receiving report and invoice don't match?
we do an adjusting entry
Vendor
Seller of goods. Collects cash in a transaction.
Outside directors are defined as A) those individuals who scan the external environment. B) individuals on the board who are not employed by the board's corporation. C) those individuals with public relations responsibilities. D) board members who are also officers or executives employed by the corporation. E) individuals who organize and coordinate politically focused activities.
individuals on the board who are not employed by the board's corporation.
Sixty-six percent of the outstanding stock in the largest U.S. and UK corporations is now owned by A) family directors. B) affiliated directors. C) institutional investors. D) retired directors. E) management directors.
institutional investors.
Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchasing processes to lessen which of the following risks? a)unauthorized access b)invalid data entered by vendors c)repudiation of purchase transactions d)virus and worm attacks
invalid data entered by vendors
Codetermination A) is the process by which both management and the board establish corporate strategic management. B) is the inclusion of a corporation's employees on its board. C) occurs when one or more individuals on one board also serve on other boards. D) is present when all board members are also employed by the corporation. E) occurs when minority shareholders concentrate their votes.
is the inclusion of a corporation's employees on its board.
The vast majority of inside directors are from all of the following EXCEPT A) lower-level operating employee. B) president of the corporation. C) vice-president of operational units. D) chief executive officer. E) vice-president of functional units.
lower-level operating employee.
A highly involved board does all of the following EXCEPT A) tends to be very active. B) provides advice when necessary. C) keeps management alert. D) takes their tasks of initiating and determining strategy very seriously. E) manage the every day operations of the organization.
manage the every day operations of the organization.
common expenditure processes
1) prepare purchase requisition and/or purchase order for goods or services needed 2) notify the vendor or supplier of goods or services needed 3) receive goods or services, often by common carrier 4) record the payable 5) pay the resulting invoice 6) update records affected such as accounts payable, cash, inventory, and expenses
111. When designing a computer‑based information system, the initial step in the systems design process is to identify: a) The required outputs b) The source documents that serve as the basis for input c) The processing required d) The computers that will be used e) The data required for input
A
43. The most important advantage of an integrated test facility is that it: a) Allows auditors to evaluate transactions in an operational setting b) Can test every exception transaction as opposed to test data which includes only a limited set of such transactions c) Works best at evaluating input controls d) Has no disadvantages
A
) For many large corporations the typical strategic planning staff has just fewer than how many people? A) 5 B) 10 C) 7 D) 15 E) 3
10
The average LARGE, publicly held U.S. corporation has around A) 7 directors. B) 10 directors. C) 19 directors. D) 25 directors. E) 30 directors.
10 directors.
The average board member of a U.S. Fortune 500 firm serves on ________ board(s). A) 3 B) 6 C) 9 D) 12 E) only 1
3
what is the number 1 control of the cash disbursements process?
3 way match
More than ________ of outside directors surveyed said that they had been named as part of a lawsuit against the corporation. A) 40% B) 50% C) 60% D) 70% E) 80%
40%
According to a survey of 156 large corporations, in what percentage of the firms were strategies first proposed in business units and then sent to headquarters for approval? A) 10% B) 36% C) 50% D) 66% E) 96%
66%
What percentage of public corporations have periodic board meetings devoted primarily to the review of overall strategy? A) 24% B) 34% C) 44% D) 64% E) 74%
74%
A study by Korn/Ferry found that ________ of U.S. boards of directors had at least one ethnic minority member in 2007. A) 6% B) 26% C) 47% D) 78% E) 96%
78%
Surveys of LARGE U.S. and Canadian corporations found outsiders make up what percentage of total board membership? A) 2% B) 30% C) 50% D) 80% E) 98%
80%
What percentage of the 100 largest companies listed in 2011 had boards of directors with at least one woman member? A) 4% B) 20% C) 50% D) 82% E) 96%
96%
The percentage of large U.S. corporations using nominating committees to identify potential new directors is approximately A) less than 6%. B) 37%. C) 57%. D) 87%. E) 97%.
97%
1. Within the revenue processes, a signed approval of a sales order indicates all of the following except: A. The date of delivery. B. The sale is to an accepted customer. C. The customer's credit has been approved. D. The sales price is correct.
A
10. Immediately upon receiving checks from customers in the mail, a responsible employee working in an environment of adequate internal control should prepare a listing of receipts and forward it to the company's cashier. A copy of this cash receipts listing should also be sent to the company's: A. Treasurer for comparison with the monthly bank statement. B. Internal auditor for investigation of any unusual transactions. C. Accounts receivable clerk for updating of the accounts receivable subsidiary ledger. D. Bank for comparison with deposit slips.
A
10.A retail store chain is developing a new integrated computer system for sales and inventories in its store locations. Which of the following implementation methods would involve the most risk? A.Direct cutover B.Phased-in implementation C.Parallel running D.Pilot testing
A
10.Risk assessment is a process designed to: A.Identify possible events that may affect the business. B.Establish policies and procedures to carry out internal controls. C.Identify and capture information in a timely manner. D.Review the quality of internal controls throughout the year.
A
11. A manager suspects that certain employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: A. Cash disbursements. B. Approved vouchers. C. Receiving reports. D. Vendors' invoices.
A
11.Which of the following audit procedures is most likely to be performed during the planning phase of the audit? A.Obtain an understanding of the client's risk assessment process. B.Identify specific internal control activities that are designed to prevent fraud. C.Evaluate the reasonableness of the client's accounting estimates. D.Test the timely cutoff of cash payments and collections.
A
11X. A manager suspects that certain employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: A. Cash disbursements. B. Approved vouchers. C. Receiving reports. D. Vendors' invoices.
A
128. Which of these is not generally a reason to outsource: a.Retain control over data b.Attractive business solution c.Lower data processing costs c.Avoid seasonal fluctuations
A
13. When a company sells items over the Internet, there are many IT risks. The risk of hardware and software failures that prevent website sales would be a(n): A. Availability risk. B. Processing integrity risk. C. Security risk. D. Confidentiality risk.
A
14. Which of the following internal controls wold help prevent overpayment to a vendor or duplicate payment to a vendor? A. Review and cancellation of supporting documents after issuing payment. B. Requiring the check signer to mail the payment to the vendor C. Review of the accounts where the expenditure transaction has been recorded D. Approving the purchase before the goods are ordered from the vendor
A
14. Which of the following internal controls would help prevent overpayment to a vendor or duplicate payment to a vendor? A. Review and cancellation of supporting documents after issuing payment. B. Requiring the check signer to mail the payment to the vendor C. Review of the accounts where the expenditure transaction has been recorded D. Approving the purchase before the goods are ordered from the vendor
A
16.Which of the following is a general control to test for external access to a client's computerized systems? A.Penetration tests B.Hash totals C.Field checks D.Program tracing
A
18.Generalized audit software can be used to: A.Examine the consistency of data maintained on computer files. B.Perform audit tests of multiple computer files concurrently. C.Verify the processing logic of operating system software. D.Process test data against master files that contain both real and fictitious data.
A
19. In order to help safeguard the security and confidentiality in an electronic business environment, a company should implement controls such as user ID, password, log-in procedures, access levels, and authority tables in order to reduce the risk of: A. Unauthorized access B. Incomplete audit trail C. Virus and worm attacks D. Repudiation of purchase transactions
A
19.Independent auditors are generally actively involved in each of the following tasks except: A.Preparation of a client's financial statements and accompanying notes. B.Advising client management as to the applicability of a new accounting standard. C.Proposing adjustments to a client's financial statements. D.Advising client management about the presentation of the financial statements.
A
21. The acquisition of materials and supplies and the related cash disbursements is referred to as: A. The Procurement Process B. Systems and Control Process C. Expenditure and Return Process D. Conversion Process
A
27. This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer. Information included on this form would be: products, quantities, and agreed-upon prices. A. Purchase order B. Purchase requisition C. Purchase invoice D. Purchase journal
A
31. Which of the following is not true? a) An internal audit is never performed by external auditors b) The primary goals of an internal audit and an external audit are somewhat different c) Both internal and external audits are similar in their insistence upon objectivity in the performance of the audit evaluation d) Both the internal audit and the external audit rely heavily upon the audit trail of transactions in an accounting system
A
34X. This document, prepared by the vendor, is intended to show the quantities and descriptions of items included in the shipment. A. Packing slip B. Sales invoice C. Bill of lading D. Purchase order
A
37. Which of the following is not one of the groups of SOX compliance requirements? a) Requirements to use an IT auditor to evaluate controls b) Regulations governing executive reporting and conduct c) Rules about financial statement reporting d) Audit committeecorporate governance requirements
A
4. The study of the current system to determine the strengths and weaknesses and the user needs of that system is called: A. Systems Analysis B. Systems Design C. Systems Planning D. Systems Implementation
A
4.Which of the following feasibility aspects is an evaluation of whether the technology exists to meet the need identified in the proposed change to the IT system? A.Technical feasibility B.Operational feasibility C.Economic feasibility D.Schedule feasibility
A
40. Internal control activities within the purchasing process, identified as adequate records and documents, would include which of the following? A. Files are to be maintained for purchase requisitions, purchase orders, receiving reports, and invoices. B. Periodic physical inventory counts are to be reconciled with the inventory ledger. C. Companies are to implement controls where the corresponding benefit exceeds the related cost. D. Avoid having the same individuals who handle the inventory also have access to the related accounting records.
A
40. Through-the-computer auditing uses all of the following except: a) Confirmation sampling b) Test data c) Tests of program authorization d) Embedded audit modules
A
41. The term "test data" is associated with: a) Auditing through-the-computer b) Auditing around-the-computer c) Auditing of manual accounting systems d) Non-auditing procedures performed by a firm's accounting subsystem employees
A
42. Three common techniques auditors use to test computer programs are: a) Test data, integrated test facilities, and parallel simulation b) Test data, edit checks, and integrated test facilities c) Test data, program change control, and parallel simulation d) Program change control, edit checks, and parallel simulation
A
6.In an audit of financial statement in accordance with generally accepted auditing standards, an auditor is required to: A.Document the auditor's understanding of the client company's internal controls. B.Search for weaknesses in the operation of the client company's internal controls. C.Perform tests of controls to evaluate the effectiveness of the client company's internal controls. D.Determine whether controls are appropriately designed to prevent or detect material misstatements.
A
6.Within the systems analysis phase of the SDLC, which of the following data collection methods does not involve any feedback from users of the IT system? A.Documentation review B.Interviews using structured questions C.Interviews using unstructured questions D.Questionnaires
A
62. Which of the following is not a principle of the AICPA's Trust Services? a) Maintainability b) Availability c) Online privacy d) Processing integrity
A
63. Risks of using an integrated test facility include: a) Failure to remove fake transactions from the client's system b) High costs of building the facility c) Discovery of many control weaknesses d) none of the above
A
64. The internal control process that requires that the bank reconciliation be performed monthly, will help to minimize the risk of: A. Invalid payments B. Invalid vendors C. Incorrect posting D. Duplicate payments
A
67. Increased use of big data by organizations is causing internal audit functions: a) To increase recruiting of IT specialists b) To abandon the CISA certification c) To stop using cloud computing d) To increase their focus on debits and credits
A
79. Which of the following procedures would an auditor most likely perform to test controls relating to management's assertion about the completeness of cash receipts for cash sales at a retail outlet? a. Observe the consistency of the employees' use of cash registers and tapes. b. Inquire about employees' access to recorded but undeposited cash. c. Trace deposits in the cash receipts journal to the cash balance in the general ledger. d. Compare the cash balance in the general ledger with the bank confirmation request.
A
82. Which of the following controls most likely would reduce the risk of diversion of customer receipts by an entity's employees? a. A bank lockbox system. b. Prenumbered remittance advices. c. Monthly bank reconciliations. d. Daily deposit of cash receipts.
A
83. An auditor suspects that a client's cashier is misappropriating cash receipts for personal use by lapping customer checks received in the mail. In attempting to uncover this embezzlement scheme, the auditor most likely would compare the a. Dates checks are deposited per bank statements with the dates remittance credits are recorded. b. Daily cash summaries with the sums of the cash receipts journal entries. c. Individual bank deposit slips with the details of the monthly bank statements. d. Dates uncollectible accounts are authorized to be written off with the dates the write-offs are actually recorded.
A
85. Which of the following is least likely to be a member of a study team? a) CEO of a company b) Internal auditor or accountant c) IT specialist d) Middle-level manager who uses the system
A
87. Which of the following controls most likely would assure that all billed sales are correctly posted to the accounts receivable ledger? a. Daily sales summaries are compared to daily postings to the accounts receivable ledger. b. Each sales invoice is supported by a prenumbered shipping document. c. The accounts receivable ledger is reconciled daily to the control account in the general ledger. d. Each shipment on credit is supported by a prenumbered sales invoice.
A
88. An auditor tests an entity's policy of obtaining credit approval before shipping goods to customers in support of management's financial statement assertion of a. Valuation or allocation. b. Completeness. c. Existence or occurrence. d. Rights and obligations.
A
9. The document prepared when purchased items are returned is a(n): A. Debit memo B. Invoice C. Receiving report D. Shipping notice
A
92. Compared to top management's system information goals, obtaining the information needs of operating management is normally: a) Easier b) More difficult c) No different d) Not required
A
96. This type of survey instrument best allows employees to answer in their own words: a) Open-ended questionnaire b) Closed-ended questionnaire c) Multiple-choice questionnaire d) Fill-in-the-blank questionnaire
A
A control that relates to all parts of the IT system is called a(n): A) general control. B) systems control. C) universal control. D) applications control.
A
A customer pumps gas at a local convenience store. The customer pays for the gasoline by inserting a credit card into the gasoline pump. This is an example of a(n) A) networked vending machine B) point-of-sale system C) automatic identification system D) electronic data interface system
A
A database management system: A) allows clients to create databases that include information that can be shared across multiple applications. B) stores data on different files for different purposes, but always knows where they are and how to retrieve them. C) allows quick retrieval of data, but at a cost of inefficient use of file space. D) allows quick retrieval of data, but it needs to update files continually.
A
A manager suspects that certain employees are ordering merchandise for themselves over the internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: a) cash disbursements b) approved vouchers c) receiving reports d) vendors' invoices
A
A significant difference between a cash sales business process and a cash-received-on-account business process is that A) no previous customer account balance exists in a cash sales business process. B) the float is shorter in a cash-received-on-account business process. C) more direct supervision is required in a cash-received-on-account business process. D) There is no significant difference between the two business processes.
A
An access control matrix A) is a table specifying which portions of the system users are permitted to access. B) matches the user's authentication credentials to his authorization. C) is used to implement authentication controls. D) is the process of restricting access of authenticated users to specific portions of the system and limiting what actions they are permitted to perform.
A
An auditor who is testing IT controls in a payroll system would most likely use test data that contain conditions such as: A) time tickets with invalid job numbers. B) overtime not approved by supervisors. C) deductions not authorized by employees. D) payroll checks with unauthorized signatures.
A
An outline agreement detailing the total quantity of material to be ordered over a period of time is a A) quantity contract. B) value contract. C) scheduling agreement. D) subcontract.
A
An outline detailing the goods or services to be provided to a customer is a(n) A) contract. B) inquiry. C) quotation. D) sales order.
A
Automatic identification of products is greatly enhanced by A) using UPC as a base B) employing JIT processing C) manually prepared price tags affixed by receiving personnel upon delivery D) transaction tagging using each manufacturer's unique inventory control numbers
A
Check digits are especially effective at detecting A) transposition errors B) accidental keying mistakes C) incorrect account numbers D) customer accounts that were never assigned
A
Computer Processing of accounting data is typically composed of A) producing preliminary reports and then final listings after submission of corrections B) five steps which occur in four separate and distinct cycles C) sevens steps (following the typical accounting cycle) D) a series of mathematical algorithms
A
Controls which are designed to assure that the information processed by the computer is authorized, complete, and accurate are called: A) input controls. B) processing controls. C) output controls. D) general controls.
A
ERP can check to see whether a contract exists with a vendor to fill the requirements of a purchase requisition. If no vendor is available, ERP will A) prepare a request for quotation. B) prepare a quotation. C) select an appropriate vendor. D) issue a warning diagnostic to the user about the situation.
A
Employers engaged in interstate commerce are required by law to pay overtime at a minimum of one and one-half times the regular rate for hours worked in excess of 40 per week. The law that requires this is called the A) Fair Labor Standards Act (FLSA). B) Federal Unemployment Tax Act (FUTA). C) Federal Income Tax Act (FITA). D) Federal Insurance Contributions Act (FICA).
A
Identify the primary means of protecting data stored in a cloud from unauthorized access. A) authentication B) authorization C) virtualization D) securitization
A
If the time an attacker takes to break through the organization's preventive controls is greater than the sum of the time required to detect the attack and the time required to respond to the attack, then security is A) Effective B) Ineffective C) Overdone D) Undermanaged
A
In ERP, master records are created that reflect the organization structure and business processes of the company. Company, plant, and storage locations are known in ERP as A) objects. B) organizations. C) targets. D) entities.
A
In a system using batch processing with sequential file updating, at what point is the general ledger updated? A) after all master files are updated B) After each transaction batch is entered C) after all transactions are entered D) after each transaction batch is edited
A
In the ERP HR modules, several infotypes for the same object can exist at the same time, but only one infotype for the object is valid. In such a case, the other infotypes are referred to as A) delimited. B) invalid. C) archived. D) parents.
A
In the SAP ERP system, how many types of customer records must be created and maintained? A) Four B) One C) Six D) Two
A
In the cash-received-on-account process, the remittance list is used to post the A) cash receipts journal. B) accounts receivable ledger. C) Answers A and B are both correct. D) None of these answers is correct.
A
Information security procedures protect information integrity by A) preventing fictitious transactions. B) making the system more efficient. C) making it impossible for unauthorized users to access the system. D) reducing the system cost.
A
Input concerning whether manual invoicing is required or if a customer is entitled to rebates in the SAP ERP system can be found in the A) billing screen. B) sales screen. C) payment transactions screen. D) account management screen.
A
Key verification is often used A) to verify only selected essential fields B) to verify essential and nonessential numeric fields C) to verify all input fields, both alpha and numeric D) when two or more people key input data in unison
A
Management and auditors must be concerned with evaluating the existence and functioning of controls as they are necessary to protect against the risk of A) material misstatements. B) fraud. C) management misrepresentations. D) human errors.
A
Misstatements in the financial statement may not be detected with the increased use of IT due to: I. the loss of a visible audit trail. II. reduced human involvement. A) I only B) II only C) both I and II
A
Multi-factor authentication A) involves the use of two or more basic authentication methods. B) provides weaker authentication than the use of effective passwords. C) is a table specifying which portions of the systems users are permitted to access. D) requires the use of more than one effective password.
A
Output controls need to be designed for which of the following data integrity objectives? A) Detecting errors after the processing is completed B) Preventing errors before the processing is completed C) Detecting errors in the general ledger adjustment process D) Preventing errors in separation of duties for IT personnel
A
Output systems can be manual, electronic, or something in between. Irrespective of the media used in an output system, output distribution should be controlled using a A) distribution register B) transaction register C) check register D) POS terminal
A
Program data editing is a software technique that should A) be used in addition to verification B) be used in place of verification C) be applied only to characters within input fields D) only be used after visual verification has detected errors in the in put
A
The ERP master records that has a hierarchical structure is the A) material master record. B) vendor master record. C) object master record. D) purchasing information master record.
A
The SAP ERP system requires a customer master record for each customer. A one-time customer of the company A) can be passed through the system by using a "dummy" customer master record. B) should be manually billed using a 30-day account, thus bypassing the SAP ERP system. C) must pay cash and pick up the goods from the company's shipping dock. D) must be set up using detailed records in the SAP ERP system like any other customer.
A
The Trust Services Framework reliability principle that states access to the system and its data should be accessible to meet operational and contractual obligations to legitimate users is known as A) Availability B) Security C) Privacy D) Integrity
A
The auditor's objective in determining whether the client's automated controls can correctly handle valid and invalid transactions as they arise is accomplished through the: A) test data approach. B) generalized audit software approach. C) microcomputer-aided auditing approach. D) generally accepted auditing standards.
A
The department or function that is responsible for selecting a vendor to order materials from is A) purchasing. B) individual departments requesting the material. C) requisitioning (stores). D) sales.
A
The department responsible for collecting and maintaining time cards and reconciling these to job time summary tickets is the A) timekeeping department. B) payroll department. C) personnel department. D) production department (for factory workers).
A
The function responsible for forwarding voucher checks directly to payees is A) cash disbursements. B) accounts payable. C) internal audit. D) purchasing.
A
The master file in a computer system is equivalent to which one of the following manual systems features? A) subsidiary ledger B) journal C) register D) log
A
The most effective method for protecting an organization from social engineering attacks is providing A) employee awareness training. B) a demilitarized zone. C) a firewall. D) stateful packet filtering.
A
The prices entered on sales orders should be independent of the sales order function. To achieve this transaction cycle control, the company's ordering system should use A) an independently prepared master price list authorized by management. B) prices found in the order database. C) prices listed by the sales representative who initiated the order. D) All of these answers are correct.
A
The steps that criminals take to identify potential points of remote entry is called A) scanning and mapping the target. B) reconnaissance. C) research. D) social engineering.
A
Three technologies make extended supply-chain systems feasible. Which of the below is not one? A) XML-type data generation B) POS system C) Bar coding for automatic identification D) EDI ordering system
A
To do a blind count, the receiving department A) should receive a copy of the purchase order with the quantities omitted. B) should not receive a copy of the purchase requisition. C) should not receive a copy of the purchase order. D) should prepare the receiving report only after the count is completed.
A
When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that: A) multiple users can access and update data files. B) the accounting information is only in one place. C) the database administrator may lack appropriate accounting knowledge. D) multiple users could all access the data simultaneously causing a system shutdown.
A
When the auditor is obtaining an understanding of the independent computer service center's internal controls the auditor should: A) use the same criteria used to evaluate the client's internal controls. B) use different criteria because the service center resides outside the company. C) use the same criteria used to evaluate the client's internal controls but omit tests of transactions. D) use different criteria for the service center by including substantive tests of balances.
A
When the client uses a computer but the auditor chooses to use only the non-IT segment of internal control to assess control risk, it is referred to as auditing around the computer. Which one of the following conditions need not be present to audit around the computer? A) Application controls need to be integrated with general controls. B) The source documents must be available in a non-machine language. C) The documents must be filed in a manner that makes it possible to locate them. D) The output must be listed in sufficient detail to enable the auditor to trace individual transactions.
A
When using the test data approach: A) test data should include data that the client's system should accept or reject. B) application programs tested must be virtually identical to those used by employees. C) select data may remain in the client system after testing. D) none of the above statements is correct.
A
Which application would not be ideally suited to processing by an OLRS system? A) Payroll B) on-line reservations C) inventory control D) customer accounts
A
Which of the following best describes the test data approach? A) Auditors process their own test data using the client's computer system and application program. B) Auditors process their own test data using their own computers that simulate the client's computer system. C) Auditors use auditor-controlled software to do the same operations that the client's software does, using the same data files. D) Auditors use client-controlled software to do the same operations that the client's software does, using auditor created data files.
A
Which of the following internal controls would help prevent overpayment to a vendor or duplicate payment to a vendor? a) review and cancellation of supporting documents after issuing payment b) requiring the check signer to mail the payment directly to the vendor c) review of the accounts where the expenditure transaction has been recorded d) approving the purchase before the goods are ordered from the vendor
A
Which of the following is not a general control? A) Computer performed validation tests of input accuracy. B) Equipment failure causes error messages on monitor. C) There is a separation of duties between programmer and operators. D) There are adequate program run instructions for operating the computer.
A
Which of the following is not an example of an applications control? A) Back-up of data is made to a remote site for data security. B) There is a preprocessing authorization of the sales transactions. C) There are reasonableness tests for the unit selling price of a sale. D) After processing, all sales transactions are reviewed by the sales department.
A
Which one of the following identifies the necessary information to maintain a built-up voucher system? A) All approved invoices awaiting payment, paid invoices, and the vendor subsidiary ledger B) All approved invoices awaiting payment C) All paid and unpaid invoices D) A vendor subsidiary ledger and paid invoice file
A
Which one of the following represents a weakness in internal control regarding the human resources area? A) The payroll staff distributes paychecks to employees in other departments. B) The payroll department supervisor makes decisions regarding the hiring of payroll department employees. C) The supervisors of all departments are responsible for initiating requests for salary increases for their subordinate employees. D) Supervisors are responsible for reviewing and approving time reports of their subordinate employees.
A
D) All of these answers are correct.
A customer has placed an order. The customer's credit has been checked and is satisfactory. When the availability of the goods is checked, it is found that some items are in stock and the vendor has backordered other items. At this point the customer A) may cancel the order. B) may request the order be held until all goods can be shipped. C) may request partial shipment of the goods currently in. D) All of these answers are correct.
C) quotation.
A document sent to an outside firm to inform them of product prices, availability, and delivery information is known as a(n) A) inquiry. B) blanket order. C) quotation. D) sales order.
B) have the customer audit his or her cash receipt.
A grocery store customer will be given a gallon of ice cream if his or her receipt has a red star stamped on it. The idea behind this technique from an accounting control standpoint is to A) promote the dairy industry's "Got Milk" campaign. B) have the customer audit his or her cash receipt. C) keep the customer happy. D) Answers A and C are both correct.
Receiving Report
A listing of all orders received during a given period. An open Purchase Order must exist to receive a shipment. The Receiving Report details the date the items are received, the supplier, the shipper, the Purchase Order number, each item and the quantity and the quality, and who received and inspected the shipment.
C) an internal use document.
A sales order is A) the same as the purchase order. B) an external use document. C) an internal use document. D) optional when selling to established customers.
D) receiving, credit, and billing departments.
A sales return occurs when a customer actually returns goods that have been shipped. The departments involved with processing this transaction up to the point of issuing a credit memo are the A) shipping, receiving, and billing departments. B) receiving, billing, and accounts receivable departments. C) shipping, receiving, and credit departments. D) receiving, credit, and billing departments.
A) no previous customer account balance exists in a cash sales business process.
A significant difference between a cash sales business process and a cash-received-on-account business process is that A) no previous customer account balance exists in a cash sales business process. B) the float is shorter in a cash-received-on-account business process. C) more direct supervision is required in a cash-received-on-account business process. D) There is no significant difference between the two business processes.
Remittance Advice
A tear-off part of a check that has a simple explanation of the reasons for the payment. Invoice numbers, and line item descriptions.
B) remittance advice.
A turnaround document that is used to enhance internal control and promote the accuracy of incoming cash receipts is the A) journal voucher. B) remittance advice. C) bank deposit slip. D) remittance list.
A) picking list.
A warehouse employee uses a document to fulfill a customer order. The employee is most likely using a A) picking list. B) packing list. C) bill of lading. D) shipping advice.
2.Financial statement audits are required to be performed by: A.Governmental Auditors B.CPAs C.Internal Auditors D.IT Auditors
B
2.Which phase of the system development life cycle includes determining user needs of the IT system? A.Systems planning B.Systems analysis C.Systems design D.Systems implementation
B
11X. A manager suspects that certain employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: A. Cash disbursements. B. Approved vouchers. C. Receiving reports. D. Vendors' invoices
A. Cash disbursements.
A manager suspects that certain employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: A. Cash disbursements. B. Approved vouchers. C. Receiving reports. D. Vendors' invoices.
A. Cash disbursements.
22. Which of the following would be referred to as a common carrier? A. Taxi-cab B. Trucking company C. City bus D. Fire department vehicle
B
43X. The internal control process of separating the custody of inventory from the accounts payable record keeping will help to minimize the risk of: A. Fictitious purchases B. Invalid vendors C. Duplicate purchases D. Incorrect amounts
A. Fictitious purchases
64. The internal control process that requires that the bank reconciliation be performed monthly, will help to minimize the risk of: A. Invalid payments B. Invalid vendors C. Incorrect posting D. Duplicate payments
A. Invalid payments
34X. This document, prepared by the vendor, is intended to show the quantities and descriptions of items included in the shipment. A. Packing slip B. Sales invoice C. Bill of lading D. Purchase order
A. Packing slip
27. This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer. Information included on this form would be: products, quantities, and agreed-upon prices. A. Purchase order B. Purchase requisition C. Purchase invoice D. Purchase journal
A. Purchase order
14. Which of the following internal controls wold help prevent overpayment to a vendor or duplicate payment to a vendor? A. Review and cancellation of supporting documents after issuing payment. B. Requiring the check signer to mail the payment to the vendor C. Review of the accounts where the expenditure transaction has been recorded D. Approving the purchase before the goods are ordered from the vendor
A. Review and cancellation of supporting documents after issuing payment.
21. The acquisition of materials and supplies and the related cash disbursements is referred to as: A. The Procurement Process B. Systems and Control Process C. Expenditure and Return Process D. Conversion Process
A. The Procurement Process
What tools do companies use to limit access to sensitive company data? encryption techniques_______ digital signatures________ firewall__________
A. YES. YES. YES.
Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor? a)purchasing b)receiving c)AP d)shipping
AP
Electronic Invoice Presentment and Payment (EIPP)
Accounts Payable can receive Invoices and make payments through the Internet. The Web Browser is the interface for such a system.
A) contract.
An outline detailing the goods or services to be provided to a customer is a(n) A) contract. B) inquiry. C) quotation. D) sales order.
D) inventory database.
As part of adequate transaction cycle controls in order processing, after the finished goods department has picked a customer's order according to a delivery document, the records which should be updated to reflect actual quantities picked are found in the A) order database. B) credit files. C) master price list. D) inventory database.
C) top-down
Auditing standard No. 5 describes a ________ approach to selecting controls to be tested. A) hybrid B) bottom-up C) top-down D) This standard does not discuss the selection of controls to be tested.
121. When using a point-scoring system, the winner is usually the choice with: The lowest score The highest score The median score The vendor with the most resources
B
1. To fulfill the management obligations that are an integral part of IT governance, management need not focus on: A. Aligning IT strategy with the business strategy B. Hiring an acceptable IT manager C. Measuring IT's performance D. Insisting that an IT control framework be adopted and implemented
B
1.IT governance includes all but which of the following responsibilities? A.Aligning IT strategy with the business strategy B.Writing programming code for IT systems C.Insisting that an IT control framework be adopted and implemented D.Measuring IT's performance
B
10. Within cash disbursements, all of the following should be true before a check is prepared, except that: A. The purchase order, receiving report, and invoice have been matched. B. The purchased goods have been used. C. Sufficient cash is available. D. The invoice discount date or due date is imminent.
B
11. Common types of independent checks within the revenue process include all of the following, except: A. Verification of information in the sales journal and on sales invoices. B. Verification of the bank statement and the cash account in the general journal. C. Reconciliation of accounts receivable detail with invoices and with the general ledger. D. Reconciliation of inventory records with actual (counted) quantities on hand.
B
118. The choice of developing its own system or acquiring a software package from an external vendor is also called this type of decision: Point-scoring decision Make-or-buy decision Overall feasibility decision PERT decision
B
12. When a company sells items over the Internet, it is usually called e-commerce. There are many IT risks related to Internet sales. The risk of invalid data entered by a customer would be a(n): A. Availability risk. B. Processing integrity risk. C. Security risk. D. Confidentiality risk.
B
12. Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be: A. Supported by a receiving report. B. Stamped "paid" by the check signer. C. Prenumbered and accounted for. D. Approved for authorized purchases.
B
13. For proper segregation of duties in cash disbursements, the person who signs checks also: A. Reviews the monthly bank reconciliation. B. Returns the checks to accounts payable. C. Is denied access to the supporting documents. D. Is responsible for mailing the checks.
B
13. In order to ensure that all records are updated only for authorized transactions, appropriate individuals should be assigned all of the following duties, except: A. Opening and closing all bank accounts. B. Preparing the bank reconciliation. C. Approving bank deposits. D. Approving electronic transfers of funds.
B
14. Independent checks and reconciliations, related to cash receipts, include all of the following, except: A. Cash counts should occur on a surprise basis and be conducted by someone not responsible for cash receipts functions. B. Cash collections should be deposited in the bank in a timely manner to prevent the risk of theft. C. Physical count of cash needs to be conducted from time to time in order to compare actual cash on hand with the amounts in the accounting records. D. Daily bank deposits should be compared with the detail on the related remittance advice and in the cash receipts journal.
B
15. Which of the following is not an independent verification related to cash disbursements? A. The cash disbursements journal is reconciled to the general ledger. B. The stock of unused checks should be adequately secured and controlled. C. The bank statement is reconciled on a monthly basis. D. The accounts payable subsidiary ledger is reconciled to the general ledger.
B
17. Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchase to lessen which of the following risks? A. Unauthorized access B. Invalid data entered by vendors C. Repudiation of purchase transactions D. Virus and worm attacks
B
17. It is necessary for a company to maintain good control over their accounts payable and paying by the due date, for all of the following reasons, except: A. Avoid late payment fees B. Maintain relationships with customers C. To take advantage of discounts for early payment D. To stay on good terms with its vendors
B
18. Which of the following is most likely to be effective in deterring fraud by upper level managers? A. Internal controls B. An enforced code of ethics C. Matching documents prior to payment D. Segregating custody of inventory from inventory record keeping
B
8. Many companies design their IT system so that all documents and reports can be retrieved from the system in readable form. Auditors can then compare the documents used to input the data into the system with reports generated from the system, without gaining any extensive knowledge of the computer system and does not require the evaluation for computer controls. This process is referred to as: A. Auditing through the system B. Auditing around the system C. Computer assisted audit techniques D. Auditing with the computer
B
8.Which of the following audit objectives relates to the management assertion of existence? A.A transaction is recorded in the proper period. B.A transaction actually occurred (i.e., it is real) C.A transaction is properly presented in the financial statements. D.A transaction is supported by detailed evidence.
B
81. Tracing shipping documents to prenumbered sales invoices provides evidence that a. No duplicate shipments or billings occurred. b. Shipments to customers were properly invoiced. c. All goods ordered by customers were shipped. d. All prenumbered sales invoices were accounted for.
B
86. Which of the following audit procedures would an auditor most likely perform to test controls relating to management's assertion concerning the completeness of sales transactions? a. Verify that extensions and footings on the entity's sales invoices and monthly customer statements have been recomputed. b. Inspect the entity's reports of prenumbered shipping documents that have not been recorded in the sales journal. c. Compare the invoiced prices on prenumbered sales invoices to the entity's authorized price list. d. Inquire about the entity's credit granting policies and the consistent application of credit checks.
B
86. Which of these statements is true? a) Accountants need not bother with systems studies—they are mostly performed by IT specialists b) System studies enable bright accountants to express ideas for improving a system c) Systems studies rarely involve accounting information systems d) all of these are true
B
9. IT audit procedures typically include a combination of data accuracy tests where the data processed by computer applications are reviewed for correct dollar amounts or other numerical values. These procedures are referred to as: A. Security controls B. Processing controls C. Input controls D. Output controls
B
92. Employers bond employees who handle cash receipts because fidelity bonds reduce the possibility of employing dishonest individuals and a. Protect employees who make unintentional misstatements from possible monetary damages resulting from their misstatements. b. Deter dishonesty by making employees aware that insurance companies may investigate and prosecute dishonest acts. c. Facilitate an independent monitoring of the receiving and depositing of cash receipts. d. Force employees in positions of trust to take periodic vacations and rotate their assigned duties.
B
94. When a customer fails to include a remittance advice with a payment, it is common practice for the person opening the mail to prepare one. Consequently, mail should be opened by which of the following four company employees? a. Credit manager. b. Receptionist. c. Sales manager. d. Accounts receivable clerk.
B
A ________ total represents the summary total of codes from all records in a batch that do not represent a meaningful total. A) record B) hash C) output D) financial
B
A batch processing system would work best when processing A) inventory B) payroll C) accounts receivable D) accounts payable
B
A border router A) Routes electronic communications within an organization B) Connects an organization's information system to the Internet C) Permits controlled access from the Internet to selected resources D) Serves as the main firewall
B
A data editing routine that compares data with acceptable values is a A) limit test B) table lookup C) financial total check D) valid code check
B
A grocery store customer will be given a gallon of ice cream if his or her receipt has a red star stamped on it. The idea behind this technique from an accounting control standpoint is to A) promote the dairy industry's "Got Milk" campaign. B) have the customer audit his or her cash receipt. C) keep the customer happy. D) Answers A and C are both correct.
B
A software-based control procedure that checks for some errors as they are being input is called A) input verification B) key verification C) input control testing D) transcription checking
B
A turnaround document that is used to enhance internal control and promote the accuracy of incoming cash receipts is the A) journal voucher. B) remittance advice. C) bank deposit slip. D) remittance list.
B
According to the Trust Services Framework, the confidentiality principle of integrity is achieved when the system produces data that A) can be maintained as required without affecting system availability, security, and integrity. B) is protected against unauthorized physical and logical access. C) is complete, accurate, and valid. D) is available for operation and use at times set forth by agreement.
B
According to the Trust Services Framework, the reliability principle of integrity is achieved when the system produces data that A) can be maintained as required without affecting system availability, security, and integrity. B) is complete, accurate, and valid. C) is available for operation and use at times set forth by agreement. D) is protected against unauthorized physical and logical access.
B
An essential input field that should contain data is empty. The data edit control that would detect this error is a A) limit check B) completeness check C) sequence check D) hash total check
B
Auditors: A) link controls and deficiencies in general controls to specific transaction-related audit objectives. B) can use a control risk matrix to help identify both manual and automated application controls and control deficiencies for each related audit objective. C) can rely on IT-based application controls for all cycles if general controls are ineffective. D) can use the IT staff to determine how much reliance they can place on general controls.
B
Goods receipt documents can be prepared in several ways. Which way below would not be used when preparing a goods receipt document? A) By the Inventory Management system B) By allowing accounts payable to prepare the document C) By reference to the purchase order D) Posting the goods receipt document into quality inspection
B
Identify the statement below which is not a useful control procedure regarding access to system outputs. A) Requiring employees to log out of applications when leaving their desk. B) Allowing visitors to move through the building without supervision. C) Restricting access to rooms with printers. D) Coding reports to reflect their importance.
B
If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll IT application? A) Gross wages earned B) Employee numbers C) Total hours worked D) Total debit amounts and total credit amounts
B
In a general ledger accounting system, the link created between the general ledger accounts and the reports in which they appear is called A) a line locator B) line coding C) soft coding D) hard coding
B
In the SAP ERP system, the "create customer" screen, which is used to input statistical and demographic data, is A) control data. B) marketing. C) unloading points. D) initial.
B
In the billing stage of the customer order business management process, the ERP uses much of the data from a customer's sales order to create the A) goods issued notice. B) invoice. C) delivery. D) packing list.
B
Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchasing processes to lessen which of the following risks? a) unauthorized access b) invalid data entered by vendors c) repudiation of purchase transactions d) virus and worm attacks
B
Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? a) the department that initiated the purchase request b) the receiving department c) the purchasing department d) the A/P department
B
It is important for the auditor to understand both the general controls and the application controls a company has implemented. Which of the following statements is true about these controls? A) Auditors do not link IT controls to audit objectives. B) After identifying specific IT-based application controls that can be used to reduce control risk, auditors can reduce substantive testing. C) General controls affect audit objectives in only one cycle. D) The impact of general controls and application controls on audits does not vary depending on the level of complexity in the IT environment.
B
Rather than maintain an internal IT center, many companies outsource their basic IT functions such as payroll to an: A) external general service provider. B) independent computer service center. C) internal control service provider. D) internal auditor.
B
SAP ERP contains more than one human resource module. The module that incorporates organizational structure represented as an administrative hierarchy composed of units is A) time management. B) personnel planning and development. C) payroll. D) personnel administration.
B
Sarbanes-Oxley Act of 2002 requires companies maintain an adequate ________ structure over the business processes that support financial reporting. A) risk assessment B) internal control C) assurance assessment D) reliability process
B
The SEC Interpretive Guidance "Management's Report on Internal Control Over Financial Reporting" approved in 2007, focuses management on internal controls that best protect against risk of material ________ in financial statements. A) fraud B) misstatements C) negligence D) mistakes
B
The Trust Services Framework reliability principle that states access to the system and its data should be controlled and restricted to legitimate users is known as A) availability. B) security. C) privacy. D) integrity.
B
The most important output control is: A) distribution control, which assures that only authorized personnel receive the reports generated by the system. B) review of data for reasonableness by someone who knows what the output should look like. C) control totals, which are used to verify that the computer's results are correct. D) logic tests, which verify that no mistakes were made in processing.
B
The primary objective of a voucher system is to A) sign checks. B) review cash payments. C) record liabilities. D) reconcile the vendor subsidiary ledger to the control account.
B
The specific component of ERP which allows a user to check goods movement and manage inventory stocks is the A) materials management module. B) inventory management module. C) vendor master record. D) material master record.
B
The steps that criminals take to study their target's physical layout to learn about the controls it has in place is called A) scanning and mapping the target. B) reconnaissance. C) research. D) social engineering.
B
The type of OLRS system in which users do not input, but only request information, is a(n) A) data entry system B) inquiry/response system C) file processing system D) transaction processing system
B
To provide an adequate separation of functions in the accounts receivable business process, maintaining the subsidiary accounts receivable ledger should be the responsibility of A) billing. B) accounts receivable. C) cash receipts. D) general ledger.
B
Various payroll forms and reports must be submitted to federal and state entities by certain deadlines. The federal form which is not due on or before January 31 of each year is the A) Form W-2. B) Form W-3. C) Form 941. D) Form 1099-MISC.
B
Vendor payment is typically made A) when an authorized order is placed. B) once an invoice is posted. C) when a goods receipt document is prepared. D) when a purchase requisition has been approved.
B
Verifying the identity of the person or device attempting to access the system is an example of A) identification. B) authentication. C) authorization. D) threat monitoring.
B
When a system sorts edited data immediately before a master file update in a batch-oriented system, the operation sequence for editing and sorting is called A) sort and edit B) edit and sort C) sort and update D) edit and update
B
Which illustration is not an example of a customer audit technique? A) Providing a customer with a remittance advice that must be returned with payment B) Pricing items at $1.00 rather than 99 cents so the customer does not expect change C) Entering the customer in a prize contest if he or she calls a number and provides feedback about the purchase D) All of these answers are correct.
B
Which input field listed below is not mandatory when creating a sales order in the "initial" screen of the SAP ERP system? A) Sales organization field B) Sales group C) Distribution channel field D) Division code field
B
Which of the following accesses the purchase order database during the processing of a purchase order? A) General ledger and accounts payable B) Accounts payable, stores, and the receiving department C) Receiving department, stores, and the general ledger D) Accounts payable, stores and the general ledger
B
Which of the following activities is optional in the customer order business management process? A) Order entry B) Contract creation C) Shipping D) Billing
B
Which of the following best explains the relationship between general controls and application controls? A) Application controls are effective even if general controls are extremely weak. B) Application controls are likely to be effective only when general controls are effective. C) General controls have no impact on application controls. D) None of the above.
B
Which of the following combinations of credentials is an example of multi-factor authentication? A) Voice recognition and a fingerprint reader B) A PIN and an ATM card C) A password and a user ID D) All of the above
B
Which of the following is a correct statement regarding general controls? A) Auditors should evaluate the effectiveness of application controls before evaluating general controls. B) General controls have a pervasive effect on the effectiveness of application controls. C) Ineffective general controls have no impact on the potential for material misstatements across all system applications. D) General controls have no impact on audit testing.
B
Which of the following is a corrective control designed to fix vulnerabilities? A) Virtualization B) Patch management C) Penetration testing D) Authorization
B
Which of the following is an example of a detective control? A) Encryption. B) Continuous monitoring. C) Physical access controls. D) Incident response teams.
B
Which of the following is most likely to be effective in deterring fraud by upper-level managers? a) internal controls b) an enforced code of ethics c) matching documents prior to payment d) segregating custody of inventory record keeping
B
Which of the following is most likely to be effective in deterring fraud by upper level managers? A. Internal controls B. An enforced code of ethics C. Matching documents prior to payment D. Segregating custody of inventory from inventory record keeping
B. An enforced code of ethics
For proper segregation of duties in cash disbursements, the person who signs checks also: A. Reviews the monthly bank reconciliation. B. Returns the checks to accounts payable. C. Is denied access to the supporting documents. D. Is responsible for mailing the checks.
B. Returns the checks to accounts payable.
4. One of the most critical controls to prevent theft of inventory purchased is to: A. Require authorization of the purchase requisition. B. Segregate inventory custody from inventory record keeping. C. Compare the purchase order, receiving report, and invoice. D. Segregate the authorization of purchases from the inventory record keeping.
B. Segregate inventory custody from inventory record keeping.
One of the most critical controls to prevent theft of inventory purchased is to: A. Require authorization of the purchase requisition. B. Segregate inventory custody from inventory record keeping. C. Compare the purchase order, receiving report, and invoice. D. Segregate the authorization of purchases from the inventory record keeping
B. Segregate inventory custody from inventory record keeping.
Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be: A. Supported by a receiving report. B. Stamped "paid" by the check signer. C. Pre-numbered and accounted for. D. Approved for authorized purchases
B. Stamped "paid" by the check signer.
5. Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? A. The department that initiated the purchase request. B. The receiving department. C. The purchasing department. D. The accounts payable department.
B. The receiving department.
Which of the following is a trend in corporate governance? A) Boards are getting less involved in shaping corporate strategy. B) Shareholders are demanding that directors and top managers own less stock in the company. C) Boards are establishing mandatory retirement ages for board members. D) Boards are getting larger. E) Boards are looking for fewer members with international experience.
Boards are establishing mandatory retirement ages for board members.
106. Which of the following is not a general objective when designing an AIS? a) A system should provide information that is timely and relevant for decision making by management and operating personnel b) The output of a system should be highly accurate c) A system should have sufficient capacity to accommodate levels of normal activity; any additional capacity proves too costly in the long run d) A system should be as simple as permitted so that its structure and operation can be easily understood and its procedures easily accomplished e) A system should be flexible to accommodate changes of a reasonable magnitude when required
C
13.The primary objective of compliance testing in a financial statement audit is to determine whether: A.Procedures have been updated regularly. B.Financial statement amounts are accurately stated. C.Internal controls are functioning as designed. D.Collusion is taking place.
C
15. An IT system that uses touch screens, bar coded products, and credit card authorization during the sale is called a(n): A. Electronic data interchange system. B. E-commerce system. C. Point of sales system. D. E-payables system.
C
15.Which of the following computer assisted auditing techniques allows fictitious and real transactions to be processed together without client personnel being aware of the testing process? A.Test data method B.Embedded audit module C.Integrated test facility D.Parallel simulation
C
17.Suppose that during the planning phase of an audit, the auditor determines that weaknesses exist in the client's computerized systems. These weaknesses make the client company susceptible to the risk of an unauthorized break-in. Which type of audit procedures should be emphasized in the remaining phases of this audit? A.Tests of controls B.Penetration tests C.Substantive tests D.Rounding errors tests
C
36. Information technology governance: a) Is a component of IT auditing b) Has one objective - to ensure that IT is used strategically to fulfill an organization's mission c) Is intended to ensure both the strategic use of IT and control over IT resources d) Is primarily intended to deter IT fraud
C
75. One of the newest technologies related to payables is one where invoices are exchanged and payments are made via the internet. The name given to this process is: A. Random Array of Invoice and Disbursements (RAID) B. Electronic Invoice Payment Procedures (EIPP) C. Electronic Invoice Presentment and Payment (EIPP) D. Routing Application Invoice Delivery (RAID)
C
77. Which of these should come first when performing a systems study? a) Systems analysis b) Systems design c) Preliminary investigation d) Systems audit
C
8. In a system of proper internal controls, the same employee should not be allowed to: A. Sign checks and cancel the supporting voucher package. B. Receive goods and prepare the related receiving report. C. Prepare voucher packages and sign checks. D. Initiate purchase requisitions and inspect goods received.
C
93. During the consideration of a small business client's internal control, the auditor discovered that the accounts receivable clerk approves credit memos and has access to cash. Which of the following controls would be most effective in offsetting this weakness? a. The owner reviews errors in billings to customers and postings to the subsidiary ledger. b. The controller receives the monthly bank statement directly and reconciles the checking accounts. c. The owner reviews credit memos after they are recorded. d. The controller reconciles the total of the detail accounts receivable accounts to the amount shown in the ledger.
C
A company located in Delaware has customers nationwide. The most effective system to deal with the issue of float is to A) use one lock-box collection system located in the Midwest. B) have customers send their remittances to the company's corporate office in Delaware. C) use several regional lock-box systems located geographically around clusters of customers. D) factor its accounts receivable to a collection agency.
C
A document sent to an outside firm to inform them of product prices, availability, and delivery information is known as a(n) A) inquiry. B) blanket order. C) quotation. D) sales order.
C
A service center: A) must have an auditor hired by the PCAOB test the controls of the service center. B) audit cannot be relied upon by those outside of the firm. C) can engage a CPA firm to issue a report on their internal controls for use by all customers and their independent auditors. D) must make all of their systems available to any external party.
C
A timekeeping system in which all employee attendance and absence information is maintained is A) comprehensive time management. B) negative timekeeping system. C) positive timekeeping system. D) complex timekeeping system.
C
An extra digit addded to a code number verified by applying mathematical calculations to individual code number characters is a A) control digit B) has digit C) check digit D) verification digit
C
An internal control deficiency occurs when computer personnel: A) participate in computer software acquisition decisions. B) design flowcharts and narratives for computerized systems. C) originate changes in customer master files. D) provide physical security over program files.
C
Auditing standard No. 5 describes a ________ approach to selecting controls to be tested. A) hybrid B) bottom-up C) top-down D) This standard does not discuss the selection of controls to be tested.
C
Identify one aspect of systems reliability that is not a source of concern with regards to a public cloud. A) Confidentiality B) Privacy C) Efficiency D) Availability
C
In ERP, human resource object types are identified with a one or two letter identifier. The code for the object Employee is A) E. B) EE. C) P. D) W.
C
New employees of Baker Technologies are assigned user names and appropriate permissions. Each of them were given a company's issued laptop that have an integrated fingerprint reader. In order to log in, the user's fingerprint must be recognized by the reader. This is an example of a(n) A) remote access control. B) defense in depth. C) biometric device. D) authorization control.
C
To maintain an adequate separation of duties, various functions within the customer order process should be independent of each other. An example of this is A) that billing does not have access to the accounts receivable ledger. B) that shipping only accepts goods from finished goods that are identified on an independently prepared packing list. C) Answers A and B are both correct. D) None of these answers is correct.
C
Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? a) computer based matching system b) electronic data interchange c) evaluated receipt settlement d) Microsoft Dynamics
C
Which of the following computer-assisted auditing techniques inserts an audit module in the client's application system to identify specific types of transactions? A) Parallel simulation testing B) Test data approach C) Embedded audit module D) Generalized audit software testing
C
Which of the following controls prevent and detect errors while transaction data are processed? A) Software B) Application C) Processing D) Transaction
C
Which of the following describes the process of implementing a new system in one part of the organization, while other locations continue to use the current system? A) Parallel testing B) Online testing C) Pilot testing D) Control testing
C
Which of the following is a component of general controls? A) Processing controls B) Output controls C) Back-up and contingency planning D) Input controls
C
Which of the following is not one of the essential criteria for successfully implementing each of the principles that contribute to systems reliability, as discussed in the Trust Services Framework? A) Designing and employing appropriate control procedures to implement policies. B) Developing and documenting policies. C) Effectively communicating policies to all outsiders. D) Monitoring the system and taking corrective action to maintain compliance with policies.
C
Which of the following is not one of the three fundamental information security concepts? A) The idea of defense-in-depth employs multiple layers of controls. B) The time-based model of security focuses on the relationship between preventive, detective and corrective controls. C) Information security is a technology issue based on prevention. D) Security is a management issue, not a technology issue.
C
Which of the following normally receives a copy of the purchase requisition? A) Vendor B) Stores C) Purchasing D) Receiving department
C
Which of the following should not have access to signed paychecks? A) Payroll and personnel B) Cash disbursement, personnel, and timekeeping C) Personnel, payroll, and timekeeping D) Cash disbursement, personnel, and bookkeeping
C
23X. Common expenditure processes would include all of the following, except: A. Preparation of a purchase requisition B. Receipt of the goods or services C. Recording the liability D. Payment received on account
D
62X. The security of assets and documents related to cash disbursements would include all of the following, except: A. Access to cash should be limited to the authorized check signers. B. Physical controls should be in place where the cash is retained and disbursed. C. Access to records should be limited to persons with the authority to sign checks. D. The company's stock of unused checks should be protected and controlled
C. Access to records should be limited to persons with the authority to sign checks.
33. This document, prepared by the vendor, provides details of the items included in the delivery; and is normally signed by the receiving clerk as verification of receipt. A. Packing slip B. Receiving report C. Bill of lading D. Purchase order
C. Bill of lading
Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? A. Computer-based matching system B. Electronic data interchange C. Evaluated receipt settlement D. Microsoft Dynamics
C. Evaluated receipt settlement
21.Which of the following terms in not associated with the auditor's requirement to maintain independence? A.Objectivity B.Neutrality C.Professional Skepticism D.Competence
D
1. Within the purchases processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? A. The invoice B. The receiving report C. The purchase order D. The purchase requisition
D
10. This type of processing control test involves a comparison of different items that are expected to have the same values, such s comparing two batches or comparing actual data against a predetermined control total. A. Validation Checks B. Batch Totals C. Run-to-Run Totals D. Balancing Tests
D
101. Which of these is not a common dimension in a feasibility study? a) Technical b) Operational c) Schedule d) all of these are common dimensions
D
104. Which of these are the five feasibility areas that a design team should examine? a) Technical, legal, social, economic, schedule b) Economic, software, legal, hardware, schedule c) Organizational, hardware, operational, legal, economic d) Schedule, economic, operational, technical, legal
D
107. Converting to a new computerized system will typically entail large dollar expenditures to make the new system operative. These monetary expenditures normally are incurred for: a) Transferring a company's financial data from its present storage media to computerized storage media b) Testing the operations of the new system before it replaces the old system c) Establishing good internal controls for the new computerized system d) all of the above
D
109. All of these are examples of typical benefits that a company might enjoy when switching to a new computer system except: a.Reduced clerical costs b.Enhanced sales c.Better customer service d.Lower hardware and software costs
D
11. If a company does not prepare an aging of accounts receivable, which of the following accounts is most likely to be misstated? A. Sales revenues B. Accounts receivable C. Sales returns and allowances D. Allowance for uncollectible accounts
D
116. All of these are common selection criteria for choosing a final software package from a vendor except: a) Evaluate the performance capabilities of each proposed system b) Weigh the costs and benefits of each proposed system c) Evaluate the maintainability of each proposed system d) all of these are common selection criteria for selection
D
117. Within the context of systems studies, a point-scoring system is commonly used: Selecting employees to use for such studies To identify the most productive employees To rank processing alternatives for a given task To rank competing systems when purchasing a system
D
14. The use of electronic data interchange (EDI) to conduct sales electronically has both risks and benefits. Which of the following is a benefit of EDI, rather than a risk? A. Incomplete audit trail B. Repudiation of sales transactions C. Unauthorized access D. Shorter inventory cycle time
D
14.Which of the following computer assisted auditing techniques processes actual client input data (or a copy of the real data) on a controlled program under the auditor's control to periodically test controls in the client's computer system? A.Test data method B.Embedded audit module C.Integrated test facility D.Parallel simulation
D
15. Whenever a company grants credit to customers, there is a danger that customers will not pay. In fact, most companies have occasional problems with customers who fail to pay which leads to writing off the accounts receivable. Proper controls related to these uncollectible accounts include all of the following, except: A. Segregation of responsibilities so that no one has the opportunity to write off an account to cover up stolen cash. B. Thorough guidelines are to be established for determining the amount of an allowance for uncollectible accounts. C. An accounts receivable aging report should be generated to analyze all customer balances and the lengths of time that have elapsed since the payments were due. D. Mathematical verification of the cash receipts journal and the accounts receivable ledger
D
2. Which of the following is not one of the approaches used to achieve the management of an IT control framework? A. Information Systems Audit and Control Association control objectives for IT B. The International Organization for Standardization 17799, Code of Practice for Information Security Management C. The Information Technology Infrastructure Library D. Sarbanes-Oxley Act section on IT Controls
D
20X. The information from a purchase must flow into the purchase recording systems, the accounts payable and cash disbursement systems, and the inventory tracking systems. In an IT accounting system, these recording and processing systems are called: A. General Ledger Systems B. Integrated Accounting Systems C. Journal Application Systems D. Transaction Processing Systems
D
3.Which of the following is not considered a cause for information risk? A.Management's geographic location is far from the source of the information needed to make effective decisions. B.The information is collected and prepared by persons who use the information for very different purposes. C.The information relates to business activities that are not well understood by those who collect and summarize the information for decision makers. D.The information has been tested by internal auditors and a CPA firm.
D
32. The primary purpose of an internal audit is: a) To verify the accuracy of a firm's financial statements b) To punish employees for inefficient performance c) To meet the requirements of the accounting profession d) To ascertain employee adherence to organizational policies and procedures
D
36. The date that is the end of the accounting period is referred to as the: A. Fiscal date B. Change off C. Accounting cut D. Cutoff
D
39. Internal control activities within the purchasing process, identified as segregation of duties, would include all of the following, except: A. Responsibility for authorization, custody, and record keeping are to be assigned to different individuals. B. Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals. C. Complete separation of inventory custody from inventory accounting. D. Purchasing records and programs must be protected from unauthorized access.
D
41X. A company should study risks common to its system prior to deciding the mix of controls needed. High-risk characteristics that might justify the need for extensive internal controls include all of the following, except: A. Goods received are especially difficult to differentiate, count, or inspect. B. High volumes of goods are often received, or the goods are of high value. C. Receiving and / or record keeping are performed at one centralized location. D. Changes in price or vendors is frequent.
D
44. The internal control process of requiring physical controls in the warehouse and receiving areas, in order to limit access to inventory items, will help to minimize the risk of: A. Incorrect posting B. Omitted purchases C. Invalid vendors D. Stolen goods
D
44. Which of the following audit techniques is likely to require the most technical expertise on the part of an auditor? a) Test data b) Integrated test facility c) Evaluation of program change control d) Parallel simulation
D
47. The auditor's role in reviewing the system of computer program development: a) Does not include checking to see that all program changes are properly documented b) Does not include a check of librarian functions c) Does not include checking to see that program change requests are properly costed d) Includes a cross-check of program changes against in-use programs
D
48. Which of the following is not a condition for fraud as identified in the fraud triangle? a) Incentives or pressures b) Rationalization c) Opportunity d) Flawed moral character
D
5. To ensure that all credit sales transactions of an entity are recorded, which of the following controls would be most effective? A. On a monthly basis, the accounting department supervisor reconciles the accounts receivable subsidiary ledger to the accounts receivable control account. B. The supervisor of the accounting department investigates any account balance differences reported by customers. C. The supervisor of the billing department sends copies of approved sales orders to the credit department for comparison of authorized credit limits and current customer balances. D. The supervisor of the billing department matches prenumbered shipping documents with entries recorded in the sale journal.
D
5.The purpose of the feasibility study is to assist in A.Selecting software B.Designing internal controls C.Designing reports for the IT system D.Prioritizing IT requested changes
D
54. SQL is: a) An example of an integrated test facility b) A generalized audit software program c) A tool used for continuous auditing d) A query language used by auditors to retrieve and manipulate data
D
55. Prewritten computer programs used for audit purposes are called: a) Sequential access program systems b) Positive confirmation audit systems c) Embedded audit modules d) Generalized auditing packages
D
56. It is important that documentation support or agree with an invoice before payment is approved and a check is issued. Which documents should be matched to make sure that the invoice received relates to a valid order that was placed and that the goods were received? A. Purchase requisition, purchase order, and receiving report. B. Purchase order, receiving log, and invoice. C. Purchase requisition, receiving report, and statement. D. Purchase order, receiving report, and invoice.
D
59. Which section of SOX requires CEOs and CFOs to "sign off" on their company's financial statements? a) Section 404 b) Section 201 c) Section 103 d) Section 302
D
6. Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchasing transactions? A. Is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? B. Are prenumbered purchase requisitions used and are they subsequently matched with vendor invoices? C. Is there a regular reconciliation of the inventory records with the file of unpaid vouchers? D. Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
D
61. This control requires the approval and signature of two authorized persons, which reduces the risk of significant fraud or error. A. Double Remittance B. Duo-Authorization C. Bi-Sign D. Dual Signature
D
64. Controls over access to IT systems are particularly important because: a) Weak access controls prevent unauthorized use of systems b) Access controls allow auditors to employ continuous auditing techniques c) Access controls make test data more effective d) Weak access controls can allow users to bypass many other controls
D
65X. A computer software technique in which the computer software matches an invoice to its related purchase order and receiving report is called a(n): A. Three way matching B. Document matching C. Disbursement approval D. Automated matching
D
7. Which of the following controls is not normally performed in the accounts payable department? A. The vendor's invoice is matched with the related receiving report. B. Vendor invoices are approved for payment. C. Asset and expense accounts to be recorded are assigned. D. Unused purchase orders and receiving reports are accounted for.
D
70. In order to help safeguard the processing integrity in an electronic business environment, a company should implement input controls such as field check, validity check, limit check, reasonableness check, and computer logs in order to reduce the risk of: A. Worm attacks B. Hackers C. Unauthorized access D. Invalid data entry
D
78. Which of these acronyms is not normally associated with the systems studies? SDLC RFP PERT SOX
D
8. Which of the following is not a document that is part of the cash collection process? A. Remittance advice B. Cash receipts journal C. Bank deposit slip D. Packing slip
D
8.Which of the following steps within the systems implementation phase could not occur concurrently with other steps, but would occur at the end? A.Employee training B.Data conversion C.Software programming D.Post-implementation review
D
85. Which of the following procedures most likely would not be a control designed to reduce the risk of misstatements in the billing process? a. Comparing control totals for shipping documents with corresponding totals for sales invoices. b. Using computer programmed controls on the pricing and mathematical accuracy of sales invoices. c. Matching shipping documents with approved sales orders before invoice preparation. d. Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger.
D
87. A poorly-planned information system can result in: a) Employee resistance and even sabotage b) Inflexible systems that are hard to maintain or modify c) Systems that solve the wrong problems d) all of these are true
D
88. A waitress brings cold food to a customer, who complains. Which of these is most likely to be the cause of the problem and not a symptom of this problem? a) The angry customer b) An irritable waitress c) The cold food itself d) The inability of the kitchen staff to keep up with many orders at once
D
89. A student fails a course at his university. Which of these is most likely to be the cause of the problem and not a symptom of this problem? a) An angry student b) The student gets placed on probation c) The student's mother pays an angry visit to the dean of students d) The student did not study for the course
D
89. Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded? a. The billing department supervisor sends copies of approved sales orders to the credit department for comparison to authorized credit limits and current customer account balances. b. The accounting department supervisor indepen-dently reconciles the accounts receivable subsidiary ledger to the accounts receivable control account monthly. c. The accounting department supervisor controls the mailing of monthly statements to customers and investigates any differences reported by customers. d. The billing department supervisor matches prenumbered shipping documents with entries in the sales journal.
D
9.Each of the following are methods for implementing a new application system except: A.Direct cutover B.Parallel C.Pilot D.Test
D
9.Which of the following statements regarding an audit program is true? A.A standard audit program should be developed for use on any client engagement. B.The audit program should be completed by the client company before the audit planning stage begins. C.An audit program should be developed by the internal auditor before audit testing begins. D.An audit program establishes responsibility for each audit test by requiring the signature or initials of the auditor who performed the test.
D
90. Which of these is not a general systems goal? a) Relevant output b) Cost awareness c) Flexible structure d) Higher salaries
D
91. Proper authorization of write-offs of uncollectible accounts should be approved in which of the following departments? a. Accounts receivable. b. Credit. c. Accounts payable. d. Treasurer.
D
91. The systems goals of a company's operating management include: a) Cost awareness b) Relevant output c) Flexible structure d) all of the above e) none of the above
D
97. This is a common method for reviewing a company's internal control procedures: a) Use an informant b) Consult historical records c) Get top management's opinions d) Use internal control questionnaires
D
A customer has placed an order. The customer's credit has been checked and is satisfactory. When the availability of the goods is checked, it is found that some items are in stock and the vendor has backordered other items. At this point the customer A) may cancel the order. B) may request the order be held until all goods can be shipped. C) may request partial shipment of the goods currently in. D) All of these answers are correct.
D
A procurement document that is not available in ERP is the A) quotation. B) contract. C) scheduling agreement. D) invoice.
D
A purchase order prepared under an existing contract or scheduling agreement is called a A) consignment purchase order. B) stock transport purchase order. C) standard purchase order. D) release order.
D
A retail sales Point-of-Sale terminal A) records cash and charge sales B) updates inventory records C) provides data for posting to daily sales records D) all of the above
D
A sales return occurs when a customer actually returns goods that have been shipped. The departments involved with processing this transaction up to the point of issuing a credit memo are the A) shipping, receiving, and billing departments. B) receiving, billing, and accounts receivable departments. C) shipping, receiving, and credit departments. D) receiving, credit, and billing departments.
D
A transaction log that is "tagged" means that A) it has been catalogued in the EDP library B) it is full and cannot hold any more information C) it has been key verified and data edited D) additional, audit-oriented information is included with original transaction data
D
As a control procedure, key verification requires that A) user departments key all of their own data B) input fields are visually verified C) key mismatches are electronically corrected D) each source document key-transcribed a second time
D
As part of adequate transaction cycle controls in order processing, after the finished goods department has picked a customer's order according to a delivery document, the records which should be updated to reflect actual quantities picked are found in the A) order database. B) credit files. C) master price list. D) inventory database.
D
Auditors should evaluate which of the following before evaluating application controls because of the potential for pervasive effects? A) Input controls B) Control environment C) Processing controls D) General controls
D
Auditors typically obtain information about general and application controls through all of the following ways except for: A) interviews with IT personnel. B) reviews of detailed questionnaires completed by IT staff. C) examination of system documentation such as flowcharts. D) filings submitted to the PCAOB or SEC.
D
Auditors usually obtain information about general and application controls through: A) interviews with IT personnel. B) examination of systems documentation. C) reading program change requests. D) all of the above methods.
D
Companies with non-complex IT environments often rely on desktops and networked servers to perform accounting system functions. Which of the following is not an audit consideration in such an environment? A) Limited reliance on automated controls B) Unauthorized access to master files C) Vulnerability to viruses and other risks D) Excess reliance on automated controls
D
Compatibility tests utilize a(n) ________, which is a list of authorized users, programs, and data files the users are authorized to access or manipulate. A) Validity test B) Biometric matrix C) Logical control matrix D) Access control matrix
D
Controls specific to IT include all of the following except for: A) adequately designed input screens. B) pull-down menu lists. C) validation tests of input accuracy. D) separation of duties.
D
Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are: A) user controls. B) general controls. C) audit controls. D) application controls.
D
Effective internal control provides ________ assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. A) little B) adequate C) total D) reasonable
D
Electronic data entry A) requires no human intervention B) is sequentially processed C) is always manually entered D) is on-line
D
For a general ledger accounting system to be properly maintained, data must be A) collected B) recorded C) properly classified and entered into appropriate records for further summations D) all of these answers are correct
D
For compliance with SOX, assessed risk for business processes must be clearly A) tested and reported to FASB. B) documented on form Circular E and submitted to the SEC. C) tested and checked for material irregularities. D) documented and controls selected for testing and evaluation.
D
Fundamental controls over data transfer between user departments and data processing include A) batch control totals B) data transfer registers C) acitivity file totals D) A and B are both correct
D
General controls may include firewalls which are used to protect from: A) erroneous internal handling of data. B) insufficient documentation of transactions. C) illogical programming commands. D) unauthorized external users.
D
Hierarchy assignment includes a customer's A) distribution channel. B) geographical location. C) credit approval. D) All of these answers are correct.
D
In the ERP system, which one of the following is an "infotype"? A) Hiring B) Leaving employment C) Changing jobs D) Employee personnel data
D
Old and new systems operating simultaneously in all locations is a test approach known as: A) pilot testing. B) horizontal testing. C) integrative testing. D) parallel testing.
D
One of the unique risks of protecting hardware and data is: A) lack of traditional authorization. B) the decreased risk of loss or destruction of data files if data is stored in a centralized location. C) the ease at which the IT system can be installed and maintained. D) the unauthorized access to the IT system resulting in improper changes in software programs and master files.
D
Personnel who work in the receiving area should complete all of the following processes except: a) counting the goods received b) inspecting goods received for damage c) preparing a receiving report d) preparing an invoice
D
Program data editing techniques may be applied to A) fields B) records C) files D) all of these answers are correct
D
Programmers should be allowed access to: A) user controls. B) general controls. C) systems controls. D) applications controls.
D
Restricting access of users to specific portions of the system as well as specific tasks, is an example of A) authentication. B) threat monitoring. C) identification. D) authorization.
D
Security controls should require that users enter a(n) ________ before being allowed access to software and other related data files. A) echo check B) parity check C) self-diagnosis test D) authorized password
D
The ERP system compares which of the following documents in its invoice verification procedure? A) Purchase order and goods receipt document B) Goods receipt document, invoice, and requisition C) Goods receipt document, invoice, purchase order, and requisition D) Goods receipt document, invoice, and purchase order
D
The amount of cash receipts for August 12 is $6,389.42. For general ledger to post this amount, it must receive A) a journal voucher from cash receipts. B) the deposit slip from the bank for August 12 showing $6,389.42 as a deposit. C) a control total from accounts receivable. D) a journal voucher from cash receipts and a control total from accounts receivable.
D
The compensating control for loss of segregation duties in an electronic input system is A) supervision and review B) input document control forms C) prneumbered documents D) transaction logs
D
The customer order business management process begins when a A) customer order is entered into the system. B) customer order is shipped. C) customer invoice is generated and sent to the customer. D) potential customer makes an inquiry or requests a quotation.
D
The document prepared when a customer is requesting the delivery of goods that are detailed in a contract is called a A) sales order. B) release order. C) call-off. D) Answers B and C are both correct.
D
The documents which accounts payable should use to verify a purchase transaction are A) purchase requisition, receiving report, and invoice. B) receiving report and purchase order. C) invoice, purchase requisition, and purchase order. D) purchase requisition, invoice, receiving report, and purchase order.
D
The federal tax which requires that employees and employers contribute equally for old age, survivors', disability, and hospital insurance benefits is A) federal unemployment tax. B) federal income tax. C) workers' compensation. D) social security tax.
D
The greatest amount of internal and business process control in the cash disbursements process comes from A) the signing of voucher checks by an authorized party. B) the prenumbering of vouchers and voucher checks. C) the accounts payable function. D) a final review of transaction documents prior to the authorization of payment.
D
The most important element of any preventive control is A) the procedure(s). B) the penalty. C) the performance. D) the people.
D
The process that uses automated tools to identify whether a system possesses any well-known security problems is known as a(n) A) penetration test. B) log analysis. C) intrusion detection system. D) vulnerability scan.
D
The steps that criminals take to find known vulnerabilities and learn how to take advantage of those vulnerabilities is called A) scanning and mapping the target. B) reconnaissance. C) social engineering. D) research.
D
The type of purchase order a vendor receives when the vendor must receive and assemble parts into an end product is known as a A) third-party purchase order. B) standard purchase order. C) stock transport purchase order. D) subcontract purchase order.
D
There are "white hat" hackers and "black hat" hackers. Cowboy451 was one of the "black hat" hackers. He had researched an exploit and determined that he could penetrate the target system, download a file containing valuable data, and cover his tracks in eight minutes. Six minutes into the attack he was locked out of the system. Using the notation of the time-based model of security, which of the following must be true? A) P < 6 B) D = 6 C) P = 6 D) P > 6
D
To control incoming cash from the mail and ensure an accurate accounting, the department which should have complete control over the transaction is the A) mailroom. B) cash receipts. C) accounts receivable. D) No one department should have complete control over incoming cash
D
To maintain adequate separation of functions, accounts receivable should not have access to A) cash received from customers. B) checks received from customers. C) invoices and credit memos. D) Answers A and B are both correct.
D
To provide an adequate separation of functions in the accounts receivable business process, maintaining the accounts receivable control account should be the responsibility of A) billing. B) accounts receivable. C) cash receipts. D) general ledger.
D
Typical controls developed for manual systems which are still important in IT systems include: A) management's authorization of transactions. B) competent personnel. C) adequate preparation of input source documents. D) all of the above.
D
Using a lock-box system A) expedites the cash flow for a company. B) helps to reduce interest income lost due to delays in depositing out-of-state-checks. C) promotes the segregation of duties because a third-party handles cash receipts. D) All of these answers are correct.
D
Vendors found on a company's approved vendor list should possess the attribute(s) of A) financial soundness. B) reliability. C) no conflicts of interest. D) An approved vendor should possess all of these attributes.
D
When a "sold-to" customer record is created in the SAP ERP system, other master records are automatically created using the same information. The input screen in which these records are associated with each other is the A) output screen. B) billing screen. C) account management screen. D) partner functions screen.
D
When preparing the transaction file in a batch processing with sequential file system, the edit program A) builds a transaction file rom processed batch input B) performs batch balancing procedures C) ensures all documents are accounted for prior to processing D) accumulates revised batch-control totals for the input data
D
Which of the following controls is not normally performed in the accounts payable department? a) the vendor's invoice is matched with the related receiving report b) vendor invoices are selected for payment c) asset and expense accounts to be recorded are assigned d) unused purchase orders and receiving reports are accounted for
D
Which of the following is an example of a corrective control? A) Intrusion detection. B) Physical access controls. C) Encryption. D) Incident response teams.
D
Which of the following is not a benefit of using IT-based controls? A) Ability to process large volumes of transactions B) Ability to replace manual controls with computer-based controls C) Reduction in misstatements due to consistent processing of transactions D) Reduction in internal control evaluation in setting control risk
D
Which of the following is not an application control? A) Preprocessing authorization of sales transactions B) Reasonableness test for unit selling price of sale C) Post-processing review of sales transactions by the sales department D) Logging in to the company's information systems via a password
D
Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchase transactions? a) is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? b) are prenumbered purchase requisitions used, and are they subsequently matched with vendor invoices? c) is there a regular reconciliation of the inventory records with the file of unpaid vouchers? d) are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
D
Which of the following reviews and approves the purchase order prior to its further processing? A) Stores B) Receiving C) Internal audit D) The requesting department
D
Which of the following statements related to application controls is correct? A) Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions. B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. C) Application controls relate to all aspects of the IT function. D) Application controls relate to the processing of individual transactions.
D
Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchasing transactions? A. Is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? B. Are pre-numbered purchase requisitions used and are they subsequently matched with vendor invoices? C. Is there a regular reconciliation of the inventory records with the file of unpaid vouchers? D. Are pre-numbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
D. Are pre-numbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
6. Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchasing transactions? A. Is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can record a voucher? B. Are prenumbered purchase requisitions used and are they subsequently matched with vendor invoices? C. Is there a regular reconciliation of the inventory records with the file of unpaid vouchers? D. Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
D. Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
65X. A computer software technique in which the computer software matches an invoice to its related purchase order and receiving report is called a(n): A. Three way matching B. Document matching C. Disbursement approval D. Automated matching
D. Automated matching
41X. A company should study risks common to its system prior to deciding the mix of controls needed. High-risk characteristics that might justify the need for extensive internal controls include all of the following, except: A. Goods received are especially difficult to differentiate, count, or inspect. B. High volumes of goods are often received, or the goods are of high value. C. Receiving and / or record keeping are performed at one centralized location. D. Changes in price or vendors is frequent.
D. Changes in price or vendors is frequent.
36. The date that is the end of the accounting period is referred to as the: A. Fiscal date B. Change off C. Accounting cut D. Cutoff
D. Cutoff
61. This control requires the approval and signature of two authorized persons, which reduces the risk of significant fraud or error. A. Double Remittance B. Duo-Authorization C. Bi-Sign D. Dual Signature
D. Dual Signature
70. In order to help safeguard the processing integrity in an electronic business environment, a company should implement input controls such as field check, validity check, limit check, reasonableness check, and computer logs in order to reduce the risk of: A. Worm attacks B. Hackers C. Unauthorized access D. Invalid data entry
D. Invalid data entry
23X. Common expenditure processes would include all of the following, except: A. Preparation of a purchase requisition B. Receipt of the goods or services C. Recording the liability D. Payment received on account
D. Payment received on account
Personnel who work in the receiving area should complete all of the following processes, except: A. Counting the goods received B. Inspecting goods received for damage C. Preparing a receiving report D. Preparing an invoice
D. Preparing an invoice
56. It is important that documentation support or agree with an invoice before payment is approved and a check is issued. Which documents should be matched to make sure that the invoice received relates to a valid order that was placed and that the goods were received? A. Purchase requisition, purchase order, and receiving report. B. Purchase order, receiving log, and invoice. C. Purchase requisition, receiving report, and statement. D. Purchase order, receiving report, and invoice.
D. Purchase order, receiving report, and invoice.
39. Internal control activities within the purchasing process, identified as segregation of duties, would include all of the following, except: A. Responsibility for authorization, custody, and record keeping are to be assigned to different individuals. B. Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals. C. Complete separation of inventory custody from inventory accounting. D. Purchasing records and programs must be protected from unauthorized access.
D. Purchasing records and programs must be protected from unauthorized access.
44. The internal control process of requiring physical controls in the warehouse and receiving areas, in order to limit access to inventory items, will help to minimize the risk of: A. Incorrect posting B. Omitted purchases C. Invalid vendors D. Stolen goods
D. Stolen goods
Within the purchases processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? A. The invoice B. The receiving report C. The purchase order D. The purchase requisition
D. The purchase requisition
20X. The information from a purchase must flow into the purchase recording systems, the accounts payable and cash disbursement systems, and the inventory tracking systems. In an IT accounting system, these recording and processing systems are called: A. General Ledger Systems B. Integrated Accounting Systems C. Journal Application Systems D. Transaction Processing Systems
D. Transaction Processing Systems
7. Which of the following controls is not normally performed in the accounts payable department? A. The vendor's invoice is matched with the related receiving report. B. Vendor invoices are approved for payment. C. Asset and expense accounts to be recorded are assigned. D. Unused purchase orders and receiving reports are accounted for.
D. Unused purchase orders and receiving reports are accounted for
Which of the following controls is not normally performed in the accounts payable department? A. The vendor's invoice is matched with the related receiving report. B. Vendor invoices are approved for payment. C. Asset and expense accounts to be recorded are assigned. D. Unused purchase orders and receiving reports are accounted for.
D. Unused purchase orders and receiving reports are accounted for.
103. In conducting a feasibility study, operational feasibility refers to whether: a) A proposed system is attainable given the existing technology b) A manager can coordinate and control the activities of the systems department c) An adequate computer site exists for the proposed system d) The proposed system will produce economic benefits that exceed its costs e) The system can be used effectively within the operating environment of an organization
E
102. The most important factor in planning for a major change in a computer-based system is: a) The organization of the IT department b) The ability of the systems programmers to write appropriate software c) The selection of the most advanced computer equipment d) Giving the systems people a free hand in all changes e) The participation of top management in the planning process
E
103. In conducting a feasibility study, operational feasibility refers to whether: a) A proposed system is attainable given the existing technology b) A manager can coordinate and control the activities of the systems department c) An adequate computer site exists for the proposed system d) The proposed system will produce economic benefits that exceed its costs e) The system can be used effectively within the operating environment of an organization
E
110. All of these are examples of typical costs that a company will usually incur when switching to a new computer system except the costs of: a.New computer hardware and software b.Hiring additional employees c.Operating the new system d.Site preparation e.Lost customers
E
119. Which of these is not a common selection criterion when choosing an AIS? Performance capabilities of each proposed system Compatibility of each proposed system with existing systems Vendor stability and support The costs and benefits of each proposed system all of these are common selection criteria
E
74. Which of these is not a stage in the systems development life cycle? a) Planning and investigation b) Analysis c) Design and acquisition d) Implementation, followup, and maintenance e) All of these are stages in the systems development life cycle
E
Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? a)computer-based matching system b)electronic data interchange c)evaluated receipt settlement (ERS) d)Microsoft Dynamics
ERS
D) reasonable
Effective internal control provides ________ assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. A) little B) adequate C) total D) reasonable
Which of the following regions is the most globalized region of the world in terms of boards of directors with most companies having one or more non-national directors? A) Asia B) Middle East C) North American D) Pacific Rim E) Europe
Europe
108. When a company implements an evaluated receipt settlement results in the increase in the strength of the internal controls.
F
112. It is likely that expenditure fraud and ethics violations could be eliminated by a strong, ethical "tone at the top" along with encouragement of ethical behavior by all employees, and strong internal controls.
F
115. Strong corporate governance will prevent fraud, theft, and mismanagement within the expenditure process.
F
85. A company is not obligated to pay for goods until 30 days after the goods are received.
F
90. Independent reconciliation of the accounts payable subsidiary ledger to the general ledger control account will help to assure that all inventory has been properly recorded.
F
C) sold-to-customer record is created.
In the SAP ERP system, all of the different master records are created when the A) payee customer record is created. B) ship-to-customer record is created. C) sold-to-customer record is created. D) bill-to-customer record is created.
A) Four
In the SAP ERP system, how many types of customer records must be created and maintained? A) Four B) One C) Six D) Two
C) correspondence screen.
In the SAP ERP system, if a company wishes to initiate a dunning procedure against a customer, input will be made in the A) account management screen. B) payment transactions screen. C) correspondence screen. D) control data screen.
B) invoice.
In the billing stage of the customer order business management process, the ERP uses much of the data from a customer's sales order to create the A) goods issued notice. B) invoice. C) delivery. D) packing list.
A) cash receipts journal.
In the cash-received-on-account process, the remittance list is used to post the A) cash receipts journal. B) accounts receivable ledger. C) Answers A and B are both correct. D) None of these answers is correct.
BLIND PURCHASE ORDER
Omits data on price and quantity. Requires Receiving to count the goods and assess their quality.
C) controls intended to address the risk of management override of these controls.
Risk assessment should evaluate whether controls sufficiently address identified risks of material misstatements due to fraud and A) controls specifically designed to prevent fraud. B) controls intended to address the risk of collusion. C) controls intended to address the risk of management override of these controls. D) controls specifically designed to prevent material misstatements.
B) internal control
Sarbanes-Oxley Act of 2002 requires companies maintain an adequate ________ structure over the business processes that support financial reporting. A) risk assessment B) internal control C) assurance assessment D) reliability process
_______ theory argues that senior executives over time tend to view the corporation as an extension of themselves. A) Population ecology B) Motivation C) Stewardship D) Agency E) Goal setting
Stewardship
B) cash-received-on-account.
The business process used when there is an existing customer account balance is A) accounts receivable. B) cash-received-on-account. C) cash sales. D) aged trial balance.
D) potential customer makes an inquiry or requests a quotation.
The customer order business management process begins when a A) customer order is entered into the system. B) customer order is shipped. C) customer invoice is generated and sent to the customer. D) potential customer makes an inquiry or requests a quotation.
D) Answers B and C are both correct.
The document prepared when a customer is requesting the delivery of goods that are detailed in a contract is called a A) sales order. B) release order. C) call-off. D) Answers B and C are both correct.
C) partner functions screen.
The final input screen in the "create customer" function of the SAP ERP system is the A) billing screen. B) taxes screen. C) partner functions screen. D) output screen.
PURCHASE ORDER
The formal request to a Vendor to deliver products to a given location, at a given price, on a given date, and the shipping information. Is a legal Promise to Pay by the Buyer. May need more than one Purchase Order to fulfill a Purchase Requisition.
A) an independently prepared master price list authorized by management.
The prices entered on sales orders should be independent of the sales order function. To achieve this transaction cycle control, the company's ordering system should use A) an independently prepared master price list authorized by management. B) prices found in the order database. C) prices listed by the sales representative who initiated the order. D) All of these answers are correct.
B) balance-forward processing.
There are various approaches to an accounts receivable application. The approach in which a customer's remittances are applied against a customer's total outstanding balance is called A) aging schedule processing. B) balance-forward processing. C) open-item processing. D) None of these answers is correct.
D) No one department should have complete control over incoming cash
To control incoming cash from the mail and ensure an accurate accounting, the department which should have complete control over the transaction is the A) mailroom. B) cash receipts. C) accounts receivable. D) No one department should have complete control over incoming cash
D) Answers A and B are both correct.
To maintain adequate separation of functions, accounts receivable should not have access to A) cash received from customers. B) checks received from customers. C) invoices and credit memos. D) Answers A and B are both correct.
C) Answers A and B are both correct.
To maintain an adequate separation of duties, various functions within the customer order process should be independent of each other. An example of this is A) that billing does not have access to the accounts receivable ledger. B) that shipping only accepts goods from finished goods that are identified on an independently prepared packing list. C) Answers A and B are both correct. D) None of these answers is correct.
D) general ledger.
To provide an adequate separation of functions in the accounts receivable business process, maintaining the accounts receivable control account should be the responsibility of A) billing. B) accounts receivable. C) cash receipts. D) general ledger.
B) accounts receivable.
To provide an adequate separation of functions in the accounts receivable business process, maintaining the subsidiary accounts receivable ledger should be the responsibility of A) billing. B) accounts receivable. C) cash receipts. D) general ledger.
Evaluated Receipt Settlement (ERS)
Use the shipping documents in lieu of a Vendor Invoice to prepare the Accounts Payable Disbursement Voucher. Compare the Purchase Order, the Receiving Report and the shipping documents.
Procurement cards
Used at designated Vendors for specific types of purchases. Spending limit is established for each card. Only one Invoice to pay.
D) All of these answers are correct.
Using a lock-box system A) expedites the cash flow for a company. B) helps to reduce interest income lost due to delays in depositing out-of-state-checks. C) promotes the segregation of duties because a third-party handles cash receipts. D) All of these answers are correct.
C) The packing list and a bill of lading
What documents typically accompany the physical shipment of goods to a customer? A) The picking list and purchase order B) Packing and picking lists C) The packing list and a bill of lading D) The sales order and an invoice
D) partner functions screen.
When a "sold-to" customer record is created in the SAP ERP system, other master records are automatically created using the same information. The input screen in which these records are associated with each other is the A) output screen. B) billing screen. C) account management screen. D) partner functions screen.
B) Pricing items at $1.00 rather than 99 cents so the customer does not expect change
Which illustration is not an example of a customer audit technique? A) Providing a customer with a remittance advice that must be returned with payment B) Pricing items at $1.00 rather than 99 cents so the customer does not expect change C) Entering the customer in a prize contest if he or she calls a number and provides feedback about the purchase D) All of these answers are correct.
C) Having a cash register make sound when it is opened in the presence of a customer
Which illustration is not an example of a supervision technique? A) Using professional shoppers in a retail environment B) Using a test package for a bank teller or cash counter C) Having a cash register make sound when it is opened in the presence of a customer D) All of these answers above are correct.
B) Contract creation
Which of the following activities is optional in the customer order business management process? A) Order entry B) Contract creation C) Shipping D) Billing
B) Create sales order
Which of the screens listed below in SAP ERP system is not optional when a company records information relating to a sale? A) Pricing B) Create sales order C) Business data header D) Scheduling
The document prepared when purchased items are returned is a(n): a) debit memo b) invoice c) receiving report d) sales journal
a
A manager suspects that certain employees are ordering merchandise for themselves over the internet without recording the purchase or receipt of the merchandise. When vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: a) cash disbursements b) approved vouchers c) receiving reports d) vendors' invoices
a) cash disbursements
The document prepared when purchased items are returned is a(n): a) debit memo b) invoice c) receiving report d) sales journal
a) debit memo
Which of the following internal controls would help prevent overpayment to a vendor or duplicate payment to a vendor? a) review and cancellation of supporting documents after issuing payment b) requiring the check signer to mail the payment directly to the vendor c) review of the accounts where the expenditure transaction has been recorded d) approving the purchase before the goods are ordered from the vendor
a) review and cancellation of supporting documents after issuing payment
The accounting record that includes the details of amounts owed to each vendor is called the: a. Accounts payable subsidiary ledger b. Purchases journal c. Accounts receivable subsidiary ledger d. Receiving log
a. Accounts payable subsidiary ledger
What Disney Company accounting record would include details of amounts owed to each vendor? Select one: a. Accounts payable subsidiary ledger b. Purchases journal c. Accounts receivable subsidiary ledger d. Receiving log
a. Accounts payable subsidiary ledger
There are four primary functions of corporate governance. Which of the following is NOT one of those functions? a. Availability b. Management Oversight c. Internal Controls and Compliance d. Financial Stewardship
a. Availability
A manager suspects that certain employees are ordering merchandise for themselves over the Internet without recording the purchase or receipt of the merchandise. Where vendors' invoices arrive, one of the employees approves the invoices for payment. After the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the: a. Cash disbursements b. Approved vouchers c. Receiving reports d. Vendors' invoices
a. Cash disbursements
Disney Company wishes to implement software that allows the integration all of the conversion processes to allow for minimal disruptions due to reporting requirements or inventory movement issues? Which software would they implement? Select one: a. Computer-integrated manufacturing systems (CIMs) b. Computer aided design (CAD) c. Material resource planning (MRP) d. Computer aided manufacturing (CAM)
a. Computer-integrated manufacturing systems (CIMs)
The Disney Company should implement which procedure for proper segregation of duties related to fixed assets? Select one: a. Custody of fixed assets is to be separate from the related record keeping b. Custody of fixed assets need not be separate from the purchasing of fixed assets c. The IT function of programming need not be separated from the accounting for fixed assets. d. All of the above are correct statements related to the segregation of duties.
a. Custody of fixed assets is to be separate from the related record keeping
The document prepared when purchased items are returned is a(n): a. Debit memo b. Invoice c. Receiving report d. Shipping notice
a. Debit memo
Which of the following techniques is the most effective way for a firewall to use to protect the perimeter? a. Deep packet inspection b. Packet filtering c. Access control lists d. All of the above are equally effective.
a. Deep packet inspection Deep packet inspection examines the contents of the data in the body of the IP packet, not just the information in the packet header. This is the best way to catch malicious code.
Disney Company implemented several new internal controls, which risk would be minimized when separating the custody function from the accounts payable record keeping? Select one: a. Fictitious purchases b. Invalid vendors c. Duplicate purchases d. Incorrect amounts
a. Fictitious purchases
The internal control process of separating custody of inventory from the accounts payable record keeping will help to minimize the risk of: a. Fictitious purchases b. Invalid vendors c. Duplicate purchases d. Incorrect amounts
a. Fictitious purchases
Internal control activities within the purchasing process, identified as adequate records and documents, would include which of the following? a. Files are to be maintained for purchase requisitions, purchase orders, receiving reports, and invoices b. Periodic physical inventory counts are to be reconciled with the inventory ledger c. Companies are to implement controls where the corresponding benefit exceeds the related cost. d. Avoid having the same individuals who handle the inventory also have access to the related accounting records.
a. Files are to be maintained for purchase requisitions, purchase orders, receiving reports, and invoices
What is the correct computation for gross pay for a Disney Company employee? Select one: a. Hours Worked times Authorized Pay Rate b. Hours Worked times Authorized Pay Rate minus Withholding Taxes c. Net Pay minus Authorized Deductions d. Net Pay times Withholding Taxes
a. Hours Worked times Authorized Pay Rate
Disney Company improved the internal control process by requiring a check of the fixed asset subsidiary ledger and depreciation schedule for mathematical accuracy and agreement with authorized documentation to minimize the risk of: Select one: a. Incorrect amounts b. Lost or stolen assets c. Duplicate transactions d. Omitted transactions
a. Incorrect amounts
The internal control process that requires purchase return records be matched with the original purchase documentation and verified for item descriptions, quantities, dates, and prices, will help to minimize the risk of: a. Incorrect amounts b. Omitted returns c. Fictitious returns d. Invalid vendors
a. Incorrect amounts
Disney Company implemented several new internal controls, requiring that the bank reconciliation be performed monthly will help to minimize the risk of which internal control problem? Select one: a. Invalid payments b. Invalid vendors c. Incorrect posting d. Duplicate payments
a. Invalid payments
The internal control process that requires that the bank reconciliation be performed monthly, will help to minimize the risk of: a. Invalid payments b. Invalid vendors c. Incorrect posting d. Duplicate payments
a. Invalid payments
Disney Company properly classifies the following accounts as: Select one: a. Issuance of bonds and acquiring loans are considered debt while the issuance of stock is considered equity. b. Issuance of bonds and the acquiring loans are considered debt while the issuance of stock is considered revenue. c. Issuance of bonds, acquiring loans, and the issuance of stock are all considered debt. d. Issuance of bonds, acquiring loans, and the issuance of stock are all considered equity.
a. Issuance of bonds and acquiring loans are considered debt while the issuance of stock is considered equity.
Disney Company implemented several new internal controls, which document is prepared by the vendor and shows the quantities and descriptions of items for a shipment? Select one: a. Packing slip b. Sales invoice c. Bill of lading d. Purchase order
a. Packing slip
This document, prepared by the vendor, is intended to show the quantities and descriptions of items included in the shipment. a. Packing slip b. Sales invoice c. Bill of lading d. Purchase order
a. Packing slip
Disney Company cash disbursements department lists all paychecks and the total amount of payroll funds to transfer to the payroll bank account in which journal? Select one: a. Payroll Disbursements Journal b. Cash Receipts Journal c. Payroll Journal d. Cash Disbursements Journal
a. Payroll Disbursements Journal
Internal controls related to the purchase returns would include all of the following, except: a. The accounts payable employee who prepares the debit memo should also be responsible for handling the inventory and approving the return. b. Special authorization should be required to officially reject and return the items. c. Debit memos should be issued on pre-numbered forms in numerical sequence d. Accounts payable records and data files should be restricted to those who are specifically authorized to approve or record the related purchase return.
a. The accounts payable employee who prepares the debit memo should also be responsible for handling the inventory and approving the return.
When Disney documents how their journals work, which is the correct statement? Select one: a. The accounts payable journal will not show detail of purchases from a vendor. b. Details of amounts owed by a customer in are the accounts payable journal. c. The sales journal contains all sales information. d. Details of amounts owed to a vendor are contained in the purchases journal.
a. The accounts payable journal will not show detail of purchases from a vendor.
Which of the following is a preventive control? a. Training b. Log analysis c. CIRT d. Virtualization
a. Training Training is designed to prevent employees from falling victim to social engineering attacks and unsafe practices such as clicking on links embedded in e-mail from unknown sources.
In order to help safeguard the security and confidentiality in an electronic business environment, a company should implement controls such as user ID, password, log-in procedures, access levels, and authority tables in order to reduce the risk of: a. Unauthorized access b. Incomplete audit trail c. Virus and worm attacks d. Repudiation of purchase transactions
a. Unauthorized access
The security and confidentiality risk of computer based matching would include: a. Unauthorized access to the system's ordering and matching functions would allow the insertion of fictitious vendors and/or invoices b. Errors in system logic can cause systematic and repetitive errors in matching c. The criteria used to identify duplicate payments may be too tightly defined and will overlook duplicate payments d. System breakdowns or interruptions can stop or slow the processing of invoices and payments
a. Unauthorized access to the system's ordering and matching functions would allow the insertion of fictitious vendors and/or invoices.
3. In a data flow diagram, a single-headed arrow originating from a data store and going to a process indicates that the data store is being a. accessed by the process b. updated by the process c. deleted by the process d. all of the above e. a and b
a. accessed by the process
Disney Company variances represent the differences between: Select one: a. actual costs and the standard costs applied. b. raw materials ordered and raw materials received. c. the sales targets and sales accomplishments. d. actual quantity on hand and quantity according to the accounting system.
a. actual costs and the standard costs applied.
At what level of management is the long-range planning function most important? a. at top management levels b. at middle management levels c. at lower management levels d. for staff functions e. for line functions
a. at top management levels
A manger suspects that certain employees are ordering merchandise for themselves over the internet without recording the purchase or receipt of the merchandise. When vendors invoices arrive, one of the employees approves the invoice payment. after the invoices are paid, the employee destroys the invoices and related vouchers. To trace whether this is actually happening, it would be best to begin tracing from the a. cash disbursement b. approve vouchers c. receiving reports d. vendors invoices
a. cash disbursements
7. In a data flow diagram, arrows are used to represent a. data flows. b. relationships. c. data stores. d. processes. e. inputs.
a. data flows.
Which statement about fraud is correct? Select one: a. fraud is harder to conceal in routine conversion activities because of their visibility. b. fraud is harder to conceal in administrative processes such as investments because of the limited access to the records. c. fraud is harder to conceal when initiated by top management due to limited access to records. d. fraud would not occur with proper internal control processes.
a. fraud is harder to conceal in routine conversion activities because of their visibility.
14. Extended entity relationship diagrams are used to depict a ______ model of the system, while data flow diagrams are used to depict a _______ model of the system. a. logical data, logical process b. logical process, logical data c. logical process, physical process d. conceptual data, physical process e. conceptual data, database
a. logical data, logical process
Disney Company created a system of proper internal controls, proper separation of duties within the logistics function means: Select one: a. one person should not have both inventory handling and accounting responsibilities. b. one person should not have production responsibilities over more than one station. c. one person should not have quality assurance responsibilities over a work station other than his own. d. each person can only have one duty or function in the production function.
a. one person should not have both inventory handling and accounting responsibilities.
The Disney Company docment that describes the chain of events that occur to build a finished good during manufacturing is referred to as the: Select one: a. operations list. b. bill of materials. c. engineering. d. capital budgeting.
a. operations list.
Which statement below best describes a profit center? a. the authority to make decision affecting the major determinants of profit, including the power to choose its markets and sources of supply b. the authority to make decisions affecting the major determinants of profit, including the power to choose its markets, sources of supply, and significant control over the amount of invested capital c. the authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply d. the authority to provide specialized support to other units within the organization e. the responsibility for combining the raw materials, direct labor, and other factors of production into a final product
a. the authority to make decision affecting the major determinants of profit, including the power to choose its markets and sources of supply
2. In an EER diagram, an "O" on the relationship line next to an entity is used to indicate that a. the entity`s participation in the relationship is optional b. the entity`s participation in the relationship is mandatory c. there are no instances of that entity (empty set). d. there are no primary keys defined for the entity. e. there are no secondary keys in the entity (all key relation).
a. the entity`s participation in the relationship is optional
Which task should the general ledger perform? a. update the general ledger b. prepare journal vouchers c. have custody of physical assets d. have record-keeping responsibility for special journals of subsidiary ledgers
a. update the general ledger
Which of the following is NOT an output report of the financial reporting system? a. variance analysis report b. statement of cash flows c. tax return d. comparative balance sheet
a. variance analysis report
Board members who are not employed by the corporation, but handle the legal or insurance needs of the firm and are thus not true "outsiders," are what kind of directors? A) affiliated directors B) family directors C) retired directors D) management directors E) interlocked directors
affiliated directors
The theory which states that problems arise in corporations because top management no longer is willing to bear the brunt of their decisions unless they own a substantial amount of stock in the corporation is called A) codetermination. B) agency theory. C) interlocking management theory. D) strategic leadership theory. E) ownership theory.
agency theory.
An agency problem can occur when A) the desires and objectives of the owners and agents conflict. B) it is difficult or expensive for the owners to verify what the agent is actually doing. C) the owners and agents have different attitudes toward risk. D) executives do not select risky strategies because they fear losing their jobs if the strategy fails. E) all of the above
all of the above
Which of the following provides an example of a transformational leader? A) Phil Knight at Nike has energized his corporation and commanded respect. B) Louis Gerstner proposed a new vision for IBM to change its business model from computer hardware to services. C) Microsoft CEO, Steve Ballmer, crawled under tables to plug in PC monitors and diagnosed problems with an operating system. D) Verizon Communications CEO Ivan Seidenberg showed his faith in his people by letting his key managers handle important projects and represent the company in public forums. E) all of the above
all of the above
Which of the following statements is true regarding the board of directors? A) The board is charged by law to act with due care. B) If a director or the board as a whole fails to act with due care and, as a result, the corporation is in some way harmed, the careless director or directors can be held personally liable for the harm done. C) Director liability insurance is often needed to attract people to become members of boards. D) Directors must be aware of the needs of various constituent groups to balance all their interests. E) all of the above
all of the above
Which of the following statements about obtaining consent to collect and use a customer's personal information is true? a. the default policy in Europe is opt-out, but in the US the default is opt-in b. the default policy in Europe is opt-in, but in the US the default is opt-out c. the default policy in both Europe and the US is opt-in d. the default policy in both Europe and the US is opt-out
b
Which of the following statements is true? a. encryption is sufficient to protect confidentiality and privacy b. cookies are text files that only store information. They cannot perform any actions c. the controls for protecting confidentiality are not effective for protecting privacy d. all of the above are true
b
Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be: a) supported by a receiving report b) stamped "paid" by the check signer c) prenumbered and accounted for d) approved for authorized purchases
b
Which of the following is most likely to be effective in deterring fraud by upper-level managers? a) internal controls b) an enforced code of ethics c) matching documents prior to payment d) segregating custody of inventory record keeping
b) an enforced code of ethics
Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchasing processes to lessen which of the following risks? a) unauthorized access b) invalid data entered by vendors c) repudiation of purchase transactions d) virus and worm attacks
b) invalid data entered by vendors
One of the most critical controls to prevent theft of inventory purchased is to: a) require authorization of the purchase requisition b) segregate inventory custody from inventory record keeping c) compare the purchase order, receiving report, and invoice d) segregate the authorization of purchases from the inventory record keeping
b) segregate inventory custody from inventory record keeping
Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be: a) supported by a receiving report b) stamped "paid" by the check signer c) prenumbered and accounted for d) approved for authorized purchases
b) stamped "paid" by the check signer
Within cash disbursements, all of the following should be true before a check is prepared, except that: a) the purchase order, receiving report, and invoice have been matched b) the purchased goods have been used c) sufficient cash is available d) the invoice discount date or due date is imminent
b) the purchased goods have been used
Which of the following combinations of credentials is an example of multi-factor authentication? a. Voice recognition and fingerprint reader b. A PIN and an ATM card c. Password and user ID d. All of the above
b. A PIN and an ATM card The PIN is something a person knows, the ATM card is something the person has.
Which of the following is most likely to be effective in deterring fraud by upper level managers? a. Internal controls b. An enforced code of ethics c. Matching documents prior to payment d. Segregating custody of inventory from inventory record keeping
b. An enforced code of ethics
This document, prepared by the purchasing department, for use by the receiving department, is copy of the purchase order that eliminates all data about the price and quantity of the items ordered. a. Packing slip b. Blind purchase order c. Bill of lading d. Purchase order
b. Blind purchase order
Which of the following groups have an ethical obligation to establish the proper tone at the top, strong internal controls, and high ethical standards? a. Stockholders b. Board of Directors and Management c. Employees d. Audit Committee
b. Board of Directors and Management
A chronological listing of all payments is referred to as a(n): a. Remittance Advice b. Cash Disbursements Journal c. Accounts Payable Ledger d. Purchases Journal
b. Cash Disbursements Journal
Good received are unacceptable due to may different situations. Which of the following is not one of those situations? a. Damage or defects b. Changes in the company needs regarding future sales or production c. Errors in the type of goods delivered or ordered d. Timing issues
b. Changes in the company needs regarding future sales or production.
When goods are received at the end of the accounting period, and the invoice is not received until after the start of the following period, a problem may arise as to when to record the liability. This is referred to as a(n): a. Obligation referral b. Cutoff issue c. Liability deferral d. Channel stuffing
b. Cutoff issue
In order to have proper security of assets and documents related to fixed assets, Disney Company should implement all of the following internal controls except: Select one: a. Supervisors need to make certain that the assets are being used for their intended purpose. b. Designated members of management should be assigned responsibility for the disposal of any assets c. Maintaining adequate insurance coverage d. Electronic controls are needed to control access to automated records
b. Designated members of management should be assigned responsibility for the disposal of any assets
The internal control process that requires the segregation of the authorization of purchase returns and the accounts payable record keeping and the custody of inventory, will help to minimize the risk of: a. Incorrect amounts b. Fictitious returns c. Timing issues d. Duplicate returns
b. Fictitious returns
There are different ways to issue a purchase order to a vendor. Which of the following is not one of the ways? a. Hard copy via fax or mail b. Hard copy by hand c. Electronically via e-mail d. Directly through the computer network
b. Hard copy by hand
Advantages of an automated system includes all of the following, except: a. Reduce time, costs, errors, and duplicate payments. b. Increased cost of the system c. Provides management more timely information to forecast future cash outflows for payment of invoices d. Summarized detailed transactions into summary accounts that are posted to the general ledger accounts.
b. Increased cost of the system
Which of the Following Statements is true? a. The concept of defense-in-depth reflects the fact that security involves the use of a few sophisticated technical controls. b. Information security is necessary for protecting confidentiality, privacy, integrity of processing, and availability of information resources. c. The time-based model of security can be expressed in the following formula: P < D + C d. Information security is primarily an IT issue, not a managerial concern.
b. Information security is necessary for protecting confidentiality, privacy, integrity of processing, and availability of information resources. As figure 8-2 shows, security is the foundation for achieving the other four components of system reliability.
Input controls such as field check, validity check, limit check, and reasonableness check are useful in IT systems of purchase to lessen which of the following risks? a. Unauthorized access b. Invalid data entered by vendors c. Repudiation of purchase transactions d. Virus and worm attacks
b. Invalid data entered by vendors
The internal control process that requires the approval of a cash disbursement transaction to take place prior to the preparation of the check, will help to minimize the risk of: a. Fictitious payments b. Invalid payments c. Timing issues d. Stolen cash
b. Invalid payments
Disney Company improved internal controls by requiring physical controls in place in areas where fixed assets are stored, this will minimize the risk of: Select one: a. Incorrect amounts b. Lost or stolen assets c. Duplicate transactions d. Omitted transactions
b. Lost or stolen assets
It is necessary for a company to maintain good control over their accounts payable and paying by the due date, for all of the following reasons, except: a. Avoid late payment fees b. Maintain relationships with customers c. to take advantage of discounts for early payment d. To stay on good terms with its vendors
b. Maintain relationships with customers
Disney Company implemented proper internal controls requiring the payroll register to be reconciled with the time sheets will help to minimize the risk of: Select one: a. Invalid payroll transactions b. Omitted paychecks c. Duplicate paychecks d. Fictitious employees
b. Omitted paychecks
The internal control process of having the receiving reports prepared on pre-numbered forms so that the sequence of receipts can be reviewed for proper recording will help to minimize the related risk of: a. Invalid vendors b. Omitted purchases c. Fictitious purchases d. Timing issues
b. Omitted purchases
Which of the following is a corrective control designed to fix vulnerabilities? a. Virtualization b. Patch Management c. Penetration Testing d. Authorization
b. Patch Management Patch management involves replacing flawed code that represents a vulnerability with corrected code, called a patch.
The policies and procedures that employees follow when completing the purchase of goods or materials, capturing vendor data and purchase quantities, and routing the resulting purchasing documents to the proper departments within the company are called: a. Systems b. Processes c. Activities d. Requisitions
b. Processes
A company may reject goods received due to a number of reasons. The process related to this is referred to as: a. Purchases b. Purchase Returns c. Accounts Payable d. Receiving
b. Purchase Returns
This form is prepared to document the need to make a purchase and requests that the specific items and quantities be purchased. a. Purchase order b. Purchase requisition c. Purchase invoice d. Purchase journal
b. Purchase requisition
For proper segregation of duties in cash disbursements, the person who signs checks also: a. Reviews the monthly bank reconciliation b. Returns the checks to accounts payable c. Is denied access to supporting documents d. Is responsible for mailing the checks
b. Returns the checks to accounts payable
One of the most critical controls to prevent theft of inventory purchased is to: a. Require authorization of the purchase requisition b. Segregate inventory custody from inventory record keeping c. Compare the purchase order, receiving report, and invoice d. Segregate the authorization of purchases from the inventory record keeping
b. Segregate inventory custody from inventory record keeping
Disney Company implemented several new internal controls, which is one of the most critical controls to prevent theft of inventory by company employees? a. Require authorization of the purchase requisition. b. Segregate inventory custody from inventory record keeping. c. Compare the purchase order, receiving report, and invoice. d. Segregate the authorization of purchases from the inventory record keeping.
b. Segregate inventory custody from inventory record keeping.
Within accounts payable, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be: a. Supported by a receiving report b. Stamped "paid" by the check signer c. Prenumbered and accounted for d. Approved for authorized purchases
b. Stamped "paid" by the check signed
In order to help safeguard the availability in an electronic business environment, a company should implement controls such as business continuity planning, backup data and systems, in order to reduce the risk of: a. Unauthorized access b. System failures c. Repudiation of purchase transactions d. Invalid data entry
b. System failures
Within cash disbursements, all of the following should be true before a check is prepared, except that: a. The purchase order, receiving report, and invoice have been matched b. The purchased goods have been used c. Sufficient cash is available d. The invoice discount date or due date is imminent
b. The purchased good have been used
Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? a. the department that initiated the purchase request b. The receiving department c. The purchasing department d. The accounts payable department
b. The receiving department
Which of the following is not independent verification related to cash disbursements? a. The cash disbursements journal is reconciled to the general ledger b. The stock of unused checks should be adequately secured and controlled c. The bank statement is reconciled on a monthly basis. d. The accounts payable subsidiary ledger is reconciled to the general ledger
b. The stock of unused checks should be adequately secured and controlled
Disney Company implemented proper internal controls, which of the following is a proper internal control for independent checks and reconciliations in the payroll process? Select one: a. IT controls over computer records and physical controls in records storage area. b. Time sheets reconciled with the payroll register. c. The payroll register is checked for mathematical accuracy and agreement with authorized pay rates and deductions. d. Supervisor approves time sheets prior to preparation of payroll documents.
b. Time sheets reconciled with the payroll register.
Which of the following would be referred to as a common carrier? a. Taxi-cab b. Trucking company c. City bus d. Fire department vehicle
b. Trucking company
Which of the following is most likely to be effective in deterring fraud by upper-level managers? a. internal controls b. an enforced code of ethics c. matching documents prior to payment d. segregating custody of inventory away from inventory record keeping
b. an enforced code of ethics
The Disney Company document that specifies descriptions and quantities of component materials and parts needed to manufacture a finished product is called the: Select one: a. operations list. b. bill of materials. c. engineering. d. capital budgeting.
b. bill of materials.
11. Another term for logical data modeling is a. philosophical data modeling. b. conceptual data modeling. c. systematic data modeling. d. physical data modeling. e. logical data analysis.
b. conceptual data modeling.
The requirements of a board of directors vary significantly by country and by state; however, there is a developing consensus as to what the major responsibilities should be. Which of the following is NOT one of the responsibilities? A) effective board leadership including the processes, makeup and output of the board B) strategy of the organization C) risk vs. initiative and the overall risk profile of the organization D) becoming directly involved in managerial decisions E) sustainability
becoming directly involved in managerial decisions
Input controls such as field check, validity check, limit check and reasonableness check are useful in IT systems of purchasing processes to lessen which of the following risks? a. unauthorized access b. invalid data entered by vendors c. repudiation of purchase transactions d. virus and worm attacks
b. invalid data entered by vendors
Which Disney Company department is responsible for managing and recording the movement of inventory throughout the conversion process? Select one: a. production schedule department. b. inventory control department. c. maintenance and control department. d. the human resources department.
b. inventory control department.
When Disney Company updates their accounting records, where are closing entries journalized? Select one: a. journalized in all of the special journals. b. journalized in the general journal. c. journalized in the subsidiary ledgers. d. journalized in the general ledger.
b. journalized in the general journal.
Which of the following is the fundamental purpose of a responsibility accounting? a. variance analysis b. motivation c. authority d. budgeting e. pricing
b. motivation
Hercules, Inc. uses a performance reporting system that shows data for each subordinate employee who reports to a supervisor, the actual costs incurred during the period, the budgeted costs, and all variances from budget for that subordinate's department. The name of this reporting system is a. contribution accounting b. responsibility accounting c. flexible budgeting d. program budgeting e. cost-benefit accounting
b. responsibility accounting
For proper segregation of duties in cash disbursements, the person who signs checks also a. reviews the monthly bank reconciliation b.returns the checks to A/P c. is denied access to supporting document s d. is responsible for mailing the checks
b. returns the checks to A/P
One of the most critical controls to prevent theft of inventory purchased is to a. require authorization of the purchase requisition b. segregate inventory custody from inventory record keeping c. compare the purchase order, receiving report and invoice d. segregate the authorization of purchases from the inventory record keeping
b. segregate inventory custody from inventory record keeping
Within accounts payable, to ensure that each voucher is submitted and paid only once each invoice approved to be paid should be a. supported by a receiving report b. stamped "paid" by the check signer c. renumbered and accounted for d. approved for authorized purchases
b. stamped "paid" by the check signer
16. In an EER model, "crow`s feet" are used to indicate a. all relationships b. the "many" side of a relationship c. the "one" side of a relationship d. mandatory relationships e. optional relationships
b. the "many" side of a relationship
Which statement below best describes an investment center? a. the authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply b. the authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply and significant control over the amount of invested capital c. the authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply d. the authority to provide specialized support to other units within the organization e. the responsibility for developing markets for and selling of the output of the organization
b. the authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply and significant control over the amount of invested capital
An XBRL instance document is a. the document format used to produce web pages b. the final product (report) c. a classification scheme d. a tag stored in each database recrod
b. the final product (report)
Within cash disbursements all of the following should be true before a check is prepared except that: a. the purchase order, receiving report and invoice have been matched b. the purchased goods have been used c. sufficient cash is available d. the invoice discount date or due dat tis imminent
b. the purchased goods have been used
Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? a. the department that initiated the purchase request b. the receiving department c. the purchasing department d. the accounts payable department
b. the receiving department
The role of the board of directors in the strategic management of the corporation is likely to A) be more active in the future. B) be less active in the future. C) be nonexistent as planning departments take over. D) remain the same. E) shift more toward managing daily operations.
be more active in the future.
4. The purpose of tracing sales invoices to shipping documents would be to provide evidence that: A. Shipments to customers were properly invoiced. B. No duplicate shipments or billings occurred. C. Goods billed to customers were shipped. D. All prenumbered sales invoices were accounted for.
c
Confidentiality focuses on protecting _________________. a. personal information collected from customers b. a company's annual report stored on its website c. merger and acquisition plans d. all of the above
c
In a system of proper internal controls, the same employee should not be allowed to: a) sign checks and cancel the supporting voucher package b) receive goods and prepare the related receiving report c) prepare voucher packages and sign checks d) initiate purchase requisitions and inspect goods received
c
One of the ten Generally Accepted Privacy Principles concerns security. According to GAPP, what is the nature of the relationship between security and privacy? a. Privacy is a necessary, but not sufficient, precondition to effective security b. privacy is both necessary and sufficient to effective security c. security is a necessary, but not sufficient, precondition to protect privacy d. security is both necessary and sufficient to protect privacy
c
Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor? a) purchasing b) receiving c) accounts payable d) shipping
c
Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor? a) purchasing b) receiving c) accounts payable d) shipping
c) accounts payable
Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? a) computer based matching system b) electronic data interchange c) evaluated receipt settlement d) Microsoft Dynamics
c) evaluated receipt settlement
The security of assets and documents related to cash disbursements would include all of the following, except: a. Access to cash should be limited to the authorized check signers b. Physical controls should be in place where the cash is retained and disbursed c. Access to records should be limited to persons with the authority to sign checks d. The company's stock of unused checks should be protected and controlled.
c. Access to records should be limited to persons with the authority to sign checks
Which of the given departments will immediately adjust the vendor account for each purchase transaction so that the company will know the correct amount owed to the vendor? a. Purchasing b. Receiving c. Accounts Payable d. Shipping
c. Accounts Payable
Disney Company implemented new internal control procedures, which department should be responsible for the maintenance of vendor accounts and cash disbursements? Select one: a. Accounting department b. Purchasing department c. Accounts payable department d. Shipping department
c. Accounts payable department
Disney Company implemented several new internal controls, which document is prepared by the vendor identifying items in the delivery and is normally signed by the receiving clerk to verify receipt? Select one: a. Packing slip b. Receiving report c. Bill of lading d. Purchase order
c. Bill of lading
In a system of proper internal controls, the same employee should not be allowed to: a. Sign checks and cancel the supporting voucher package b. Receive goods and prepare the related receiving report c. Prepare voucher packages and sign checks d. Initiate purchase requisitions and inspect goods received
c. Prepared voucher packages and sign checks
Disney Company requires management approval of fixed asset changes prior to recording the transaction in the accounting records, this will minimize the risk of: a. Incorrect amounts b. Lost or stolen assets c. Duplicate transactions d. Omitted transactions
c. Duplicate transactions
Which of the following IT systems is designed to avoid document matching process and is an "invoiceless" system? a. Computer based matching system b. electronic data interchange c. Evaluated receipt settlement d. Microsoft Dynamics
c. Evaluated receipt settlement
Which of the following IT systems is designed to avoid the document matching process and is an "invoiceless" system? a. Computer-based matching system b. Electronic data interchange c. Evaluated receipt settlement d. Microsoft Dynamics
c. Evaluated receipt settlement
Which statement about financial statements is correct? Select one: a. Financial statements are generated from the values of the special journals and subsidiary ledgers. b. Financial statements are presented with complete chart of account detail. c. Financial statements may contain condensed data from the general ledger. d. Financial statements show units in inventory and dollar value of those units.
c. Financial statements may contain condensed data from the general ledger
What is the correct computation for net pay for a Disney Company employee? Select one: a. Hours Worked times Authorized Pay Rate b. Gross Pay minus Withholding Taxes c. Gross Pay minus Authorized Deductions d. Hours Worked times Withholding Tax Rate
c. Gross Pay minus Authorized Deductions
The internal control process that requires purchase orders to be matched and verified for item descriptions, quantities, dates, authorized prices, and mathematical accuracy, will help to minimize the risk of: a. Stolen goods b. Omitted transactions c. Invalid purchases d. Incorrect accumulation
c. Invalid purchases
The internal control process that requires the approval of the purchase return transaction take place before the preparation of the debit memo, will help to minimize the risk of: a. Fictitious returns b. Omitted returns c. Invalid returns d. Wrong vendor
c. Invalid returns
When purchased goods are received, which of the following tasks should be completed in the receiving area? a. An inspection of the goods- quantity counted and condition assessed. b. Documenting the details of the receipt, before the carrier leaves. c. Match the purchase order, the receiving report, and the purchase invoice to be sure that they agree d. Preparation of a receiving report detailing the contents and condition of the goods
c. Match the purchase order, the receiving report, and the purchase invoice to be sure that they agree
Which of the following is a detective control? a. Endpoint Hardening b. Physical access controls c. Penetration testing d. Patch management
c. Penetration testing Penetration testing is a detective control designed to identify how long it takes to exploit a vulnerability.
The textbook referred to the three primary categories of processing in the typical purchasing systems. Which of the following is not one of those categories? a. Purchase Processes b. Cash Disbursement Processes c. Receiving Processes d. Purchase Return Processes
c. Receiving Processes
The internal control activities within the purchasing process, related to authorization of transactions, would include which of the following? a. The accounting duties related to requisitioning, ordering, and receiving goods should be performed by different intervals b. The custody of inventory and the recording of inventory transactions are required to be maintained. c. Specific individuals are to be authoritative responsibility for preparing requisitions and purchase orders which would include which items to purchase, how many items, and which vendor. d. Periodic physical inventory counts are to be reconciled with the inventory ledger and general ledger.
c. Specific individuals are to be authoritative responsibility for preparing requisitions and purchase orders which would include which items to purchase, how many items, and which vendor
Disney Company holds raw materials being held for future production, what is this called? Select one: a. Routing b. Work-in-process c. Stores d. Warehousing
c. Stores
A weakness that an attacker can take advantage of to either disable or take control of a system is called a(n) ______. a. Exploit b. Patch c. Vulnerability d. Attack
c. Vulnerability A vulnerability is any weakness that can be use to disable or take control of a system.
At Disney Company, investment and capital processes should: Select one: a. be a frequent event that require documented procedures. b. do not require established procedures due to their infrequency. c. are infrequent events that require proper internal controls. d. involve the company's sales of products and services.
c. are infrequent events that require proper internal controls.
10. Ovals in an EER diagram are used to indicate a. processes b. relationships c. attributes d. data flows e. mandatory entities
c. attributes
4. At the highest level, a DFD is referred to as a a. Level 0 DFD. b. Level 1 DFD. c. context diagram. d. scope diagram. e. master level DFD.
c. context diagram.
12. In a data flow diagram, open ended rectangles are used to indicate a. external entities/agents b. processes c. data stores d. data flows e. none of the above
c. data stores
All of the following are components of debt for Disney Company except: Select one: a. interest. b. maturity date. c. dividends. d. principle amount owed.
c. dividends.
The act of Disney Company misstating financial information in order to improve financial statement results is referred to as: Select one: a. just in time production systems. b. manufacturing resource planning. c. earning management. d. absorption costing.
c. earning management.
18. A context diagram treats the entire information system as one process and shows a. all the entities and relationships in the system. b. all the entities and processes in the system. c. inputs to and outputs from the system. d. inputs, all processes, and all outputs from the system. e. inputs, controls, boundaries, and the system
c. inputs to and outputs from the system.
Which of the following statements is true about journal vouchers? a. journal vouchers detailing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the journal voucher history file b. journal vouchers summarizing transaction activity flow from the accounting department into the GLS, where they are independently reconciled and posted to the general ledger accounts c. journal vouchers summarizing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the general ledger accounts d. journal vouchers summarizing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the journal voucher history file
c. journal vouchers summarizing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the general ledger accounts
The Disney Company process responsible for maintaining the capital resources used to support the production process is referred to as: Select one: a. the production schedule. b. production orders. c. maintenance and control. d. the human resources process.
c. maintenance and control.
In a system of proper internal controls, the same employee should not be allowed to a.sign checks and cancel the supporting voucher package b. receiving goods and prepare the receiving report c. prepare voucher packages and sign checks d. initiate purchase requisitions and inspect goods received
c. prepare voucher packages and sign checks
A majority of public companies would produce which internal report regularly for company management? Select one: a. balance sheets. b. income statements. c. sales reports. d. statement of cash flows.
c. sales reports.
The Disney Company conversion process is initiated when they recognize: Select one: a. the receipt of raw materials. b. the shipment of finished goods to customers. c. the need to produce goods for customers. d. the payment of employees.
c. the need to produce goods for customers.
Which Disney Company process outlines the issuance and movement of materials into the various production phases? Select one: a. production scheduling process. b. inventory control process. c. the routing process. d. the production orders process.
c. the routing process.
Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchasing transactions? a. Is an authorized purchase order required before the receiving department can accept a shipment or the accounts payable department can accept a shipment or the accounts payable department can record a voucher? b. Are prenumbered purchase requisitions used and are they sub-sequentially matched with vendor invoices? c. Is there a regular reconciliation of the inventory records with the file of unpaid vouchers? d. Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
d. Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?
A computer software technique in which the computer software matches an invoice to its related purchase order and receiving report is called a(n): a. Three way matching b. Document matching c. Disbursement approval d. Automated matching
d. Automated matching
A company should study risks common to its system prior to deciding the mix of controls needed. High-risk characteristics that might justify the need for extensive internal control include all of the following, except: a. Goods received are especially difficult to differentiate, count, or inspect. b. High volumes of goods are often received, or the goods are of high value. c. Receiving and/or record keeping are performed at one centralized location. d. Changes in price or vendors is frequent.
d. Changes in price or vendors is frequent
The internal control process that requires vendor statements to be reviewed monthly and reconciled with accounts payable records, will help to minimize the risk of: a. Invalid returns b. Stolen goods c. Wrong account numbers d. Omitted returns
d. Omitted returns
The document that identifies the items being returned, along with the relevant information regarding the vendor, quantity and price, is called: a. Credit memo b. Receiving report c. Purchase requisition d. Debit memo
d. Debit memo
Select the correct statement about Disney Company managers needs for information from those listed below. Select one: a. Disney managers only need reports showing dollar values. b. Disney managers only need reports showing unit data. c. All Disney managers need the same information. d. Disney managers need the information associated with their area of responsibility.
d. Disney managers need the information associated with their area of responsibility.
This control requires the approval and signature of two authorized persons, which reduces the risk of significant fraud or error. a. Double Remittance b. Duo-Authorization c. Bi-Sign d. Dual Signature
d. Dual Signature
To reduces the risk of significant fraud or error, Disney Company implemented several new internal controls. Which control requires the approval and signature of two authorized persons? Select one: a. Double Remittance b. Duo-Authorization c. Bi-Sign d. Dual Signature
d. Dual Signature
Which statement about users is correct? Select one: a. Investors and creditors use nonfinancial feedback to evaluate business performance. b. Internal managers need only nonfinancial feedback for proper planning and control of operations. c. Internal managers need reports at the same frequency as external users. d. Internal managers need much more frequent and detailed reports than external users.
d. Internal managers need much more frequent and detailed reports than external users.
In order to help safeguard the processing integrity in an electronic business environment, a company should implement input controls such as field check, validity check, limit check, reasonableness check, and computer logs in order to reduce the risk of: a. Worm attacks b. Hackers c. Unauthorized access d. Invalid data entry
d. Invalid data entry
Disney Company implemented several new internal controls, which activity related to segregation of duties is not within the purchasing process? Select one: a. Responsibility for authorization, custody, and record keeping are to be assigned to different individuals. b. Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals. c. Complete separation of inventory custody from inventory accounting. d. Purchasing records and programs must be protected from unauthorized access.
d. Purchasing records and programs must be protected from unauthorized access.
Internal control activities within he purchasing process, identified as segregation of duties, would include all of the following except: a. Responsibility for authorization, custody, and record keeping are to be assigned to different individuals b. Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals c. Complete separation of inventory custody from inventory accounting. d. Purchasing records and programs must be protected from unauthorized access.
d. Purchasing records and programs must be protected from unauthorized access.
This document, prepared and maintained by the receiving department, is a sequential listing of all receipts. a. Receiving report b. Packing slip c. Bill of lading d. Receiving log
d. Receiving log
Which type of Disney Company transaction is done on a recurring basis where the volume of the transactions are large and the employee responsible for handling them does not need specific authorization for completing each transaction? Select one: a. Non-routine transaction b. Payroll transaction c. Fixed asset transaction d. Routine transaction
d. Routine transaction
The internal control process of requiring physical controls in the warehouse and receiving areas, in order to limit access to inventory items, will help to minimize the risk of: a. Incorrect posting b. Omitted purchases c. Invalid vendors d. Stolen goods
d. Stolen goods
Within the Disney Company purchasing processes, which document is prepared first that triggers the remaining purchasing processes? Select one: a. The invoice b. The receiving report c. The purchase order d. The purchase requisition
d. The purchase requisition
Within the purchase processes, which of the following is the first document prepared and thereby the one that triggers the remaining purchasing processes? a. The invoice b. The receiving report c. The purchasing order d. The purchase requistion
d. The purchase requistion
The information from a purchase must flow into the purchase recording system, the accounts payable and cash disbursement systems, and the inventory tracking systems. In an IT accounting system, these recording and processing systems are called: a. General Ledger Systems b. Integrated Accounting Systems c. Journal Application Systems d. Transaction Processing Systems
d. Transaction Processing Systems
Each category of processes in the typical purchasing system would include controls and risks. For each of the categories, the goal of the internal controls system is to reduce specific types of business risks. Which of the following is not one of those risks? a. Recording invalid transactions b. Recording transactions at the wrong amounts c. Omitting actual transactions from the accounting records d. Transactions properly accumulated or transferred to the correct accounting records
d. Transaction properly accumulated or transferred to the correct accounting records
All of the following are characteristics of the strategic planning process except a. emphasis on both the short and long run b. analysis of external economic factors c. review of the attributes and behavior of the organization's competition d. analysis and review of departmental process e. analysis of consumer demand
d. analysis and review of departmental process
17. Which of the following symbols is used in a Level 0 DFD but not in a context diagram? a. process b. external entity/agent c. data flow d. data store e. none of the above (all are used in both)
d. data store
Which file provides historical financial data for comparative financial reports? a. journal voucher history file b. budget master file c. responsibility file d. general ledger history file
d. general ledger history file
Disney Company should classify investment processes as those that: Select one: a. involve issuing stock. b. involve issuing bonds. c. involve purchasing fixed assets. d. investing excess funds.
d. investing excess funds.
6. In an EER model, a | (vertical line) on a relationship line next to an entity is used to indicate a. optional participation in the relationship. b. a composite key for the relationship. c. foreign keys in the entity. d. mandatory participation in the relationship. e. the "many" side of the relationship.
d. mandatory participation in the relationship.
For proper internal controls, when would posting to the Disney Company general ledger occur? Select one: a. as the transaction is recorded in the special journals. b. is not required if special journals are utilized. c. automatically at the end of each business day. d. only when proper authorization has been given.
d. only when proper authorization has been given.
Disney Company physical controls may include all of the following but: Select one: a. fences and alarm systems. b. security guards. c. high tech security tools. d. reconciling actual inventory to the general ledger.
d. reconciling actual inventory to the general ledger.
1. A Level 0 DFD a. is the same as a context diagram. b. shows more detail than a Level 1 DFD. c. shows less detail than a context diagram. d. shows details about a high level process depicted in a context diagram. e. none of the above.
d. shows details about a high level process depicted in a context diagram.
The activity in the Disney Company conversion process that does not require express or specific authorization is: Select one: a. the initiation of production orders. b. the issuance of materials into the production process. c. the transfer of finished goods to the warehouse or shipping areas. d. the movement of production pieces from one stage of production to the next.
d. the movement of production pieces from one stage of production to the next.
Which of the following controls is not normally performed in the accounts payable department? a. the vendors invoice is matched with he related receiving report b. vendor invoices are selected for payment c. asset and expense accounts to be recorded are assigned d. unused purchase orders and receiving reports are accounted for
d. unused purchase orders and receiving reports are accounted for
The doc prepared when purchased items are returned is a(n) a)debit memo b)invoice c)receiving report d)sales journal
debit memo
vulnerability testing
examining the system to determine adequacy of security measures and to identify security deficiencies
The function of a nominating committee is to A) find board members who have compatible viewpoints with management. B) find outside board members for election by the stockholders. C) search for internal employees who would provide valuable insight into the working operations of the corporation. D) search for candidates who could bring prestige to the board. E) find inside board members for election by the stockholders.
find outside board members for election by the stockholders.
) All of the following are true of the dual chair/CEO position EXCEPT A) it is being increasingly criticized because of the potential for conflict of interest. B) it endangers the ability to properly oversee top management. C) it is separated by law in Germany, the Netherlands, and Finland. D) it is more popular in American corporations than firms in the United Kingdom. E) firms with a dual chair/CEO role have significantly better stock performance.
firms with a dual chair/CEO role have significantly better stock performance.
A staggered board A) increases the chances of a hostile takeover. B) has only a portion of the board stand for election each year. C) makes it easier for shareholders to curb a CEO's power. D) is seen in less than 50% of U.S. boards. E) all of the above
has only a portion of the board stand for election each year.
In implementing the Sarbanes-Oxley Act, the SEC required in 2003 that a company disclose A) the number of insiders on their PR committee. B) if it has adopted a code of ethics that applied to the CEO and the CFO. C) the CEO's pay. D) the CFO's pay. E) all of the above
if it has adopted a code of ethics that applied to the CEO and the CFO.
blind purchase order
includes info from the PO but omits info about price and quantity ordered. the receiving clerk can use this to make sure that the receipt represents a valid purchase order but still forces independent check of quantity and quality of delivery
In a system of proper internal controls, the same employee should not be allowed to a)sign checks and cancel the supporting voucher package b)receive goods and prepare the related receiving report c)prepare voucher packages and sign checks d)initiate purchase reqs and inspect goods received
prepare voucher packages and sign checks --permits record keeping (preparation of voucher packages) and custody (check-signing authority)
receiving report
prepared by receiving clerk, detailing contents and condition of receipt
Personnel who work in the receiving area should complete all of the following processes except a)counting the goods received b)inspecting goods received for damage c) preparing a receiving report d)preparing an invoice
preparing an invoice
The U.S. Clayton Act and Banking Act of 1933 A) promote interlocking directorates by U.S. companies to foster better communications and working relationships. B) prohibit acts or contracts tending to create a monopoly. C) prevent unfair practices in interstate commerce. D) promote racial parity on the board of directors. E) prohibit interlocking directorates by U.S. companies competing in the same industry
prohibit interlocking directorates by U.S. companies competing in the same industry
bill of lading
provides details about items included in deliver, receiving clerk must sign it as verification of receipt
According to the text, one of the primary responsibilities of top management in strategic management is A) ensuring that day-to-day operations are efficient and well run. B) providing executive leadership. C) balancing the budget. D) managing the short-term planning process. E) making all important decisions.
providing executive leadership.
According to the text, which of the following is NOT a typical standing committee of boards of directors? A) audit committee B) compensation committee C) executive committee D) nominating committee E) public relations committee
public relations committee
One of the most critical controls to prevent theft of inventory purchased is to a)require authorization of the purchase req b)segregate inventory custody from inventory record keeping c)compare the purch order, receiving report, and invoice d)segregate the authorization of purchases from the inventory record keeping
segregate inventory custody from inventory record keeping
The Sarbanes-Oxley Act was designed to protect A) retired workers from losing their pensions. B) CEOs from losing their golden parachutes. C) CEO salary increases. D) shareholders from the excesses and failed oversight of firms. E) corporations from misguided whistleblowers.
shareholders from the excesses and failed oversight of firms.
receiving log
should be maintained as a sequential listing of all receipts
packing slip
shows quantities and descriptions of items included in the shipment, generally does not include prices
Within AP, to ensure that each voucher is submitted and paid only once, each invoice approved to be paid should be a)supported by a receiving report b)stamped "paid" by the check signer c)prenumbered and accounted for d)approved for authorized purchases
stamped "paid" by the check signer
According to ________ theory, ________ directors tend to identify with the corporation. A) agency; inside B) corporate governance; inside C) stewardship; inside D) corporate governance; affiliated E) stewardship; outside
stewardship; inside
A description of what the company is capable of becoming is referred to as A) strategic vision. B) strategic concept. C) strategic mission. D) strategic flexibility. E) strategic familiarity.
strategic vision.
Catalyst-level board of directors typically A) are less involved than active participation boards. B) take leading roles in establishing and modifying the company mission, objectives, and strategy. C) are involved in a limited degree of key decision making. D) are held to a greater degree of legal responsibility. E) experience more financial success than less involved boards.
take leading roles in establishing and modifying the company mission, objectives, and strategy.
The concept of the lead director originated in A) the United Kingdom. B) the United States. C) France. D) Sweden. E) Germany.
the United Kingdom.
cash management
the careful oversight of cash balances, forecasted cash
cutoff
the date for the end of the accounting period
three way match
the document matching of a purchase order to the related receiving report and invoice.
debit memo
the document that identifies items being returned, along with relevant info about vendor, quantity, and price
Internal control is strengthened by the use of a blind purchase order, upon which the quantity of goods ordered is intentionally left blank. This blind copy is used in which department? a)the department that initiated the purchase request b)the receiving department c)the purchasing department d)the AP department
the receiving department
Which of the following is NOT an independent verification related to cash disbursements? a)the cash disbursements journal is reconciled to the general ledger b)the stock of unused checks should be adequately secured and controlled c)the bank statement is reconciled on a monthly basis d)the AP subsidiary ledger is reconciled to the GL
the stock of unused checks should be adequately secured and controlled --this is not an independent verification, which is a check on accuracy and completeness (like reconciliations)
When calculating a "deserved pay" for CEOs based upon earnings growth and shareholder return, financial research firm Obermatt found that A) there is a negative correlation between CEO pay and company performance. B) there is a positive correlation between CEO pay and company performance. C) there is no correlation between CEO pay and company performance. D) CEO pay packages were rejected by 90% of shareholders. E) most compensation systems were aligned with the interests of shareholders.
there is no correlation between CEO pay and company performance.
From the perspective of the public, the primary job of the board of directors is A) to lend credence to the decisions of the executive committee. B) dictated solely by legal requirements. C) to act as representatives for public identification. D) to closely monitor the actions of management. E) insulated from legal judgments because management actually makes the decisions.
to closely monitor the actions of management.
Which of the following is NOT a task of the board of directors in strategic management? A) to monitor B) to implement C) to influence D) to initiate and determine E) to evaluate
to implement
) Under what circumstances does an INDIRECT interlocking directorate exist? A) when both management and the board establish corporate strategic management B) when a corporation's employees are included on its board C) when one or more individuals on one board also serve on a board of a second firm D) when all board members are also employed by the corporation E) when two corporations have directors who serve on the board of a third firm
when two corporations have directors who serve on the board of a third firm
All of the following criteria reflect survey findings of the characteristics of a good director EXCEPT A) willing to challenge management when necessary. B) expertise on global business issues. C) understands the firm's key technologies and processes. D) available for outside meetings to advise management. E) willing to always agree with executive decisions.
willing to always agree with executive decisions
Research reveals that the likelihood of a firm engaging in illegal behavior or being sued declines A) with a larger board. B) with the addition of insiders on the board. C) with the addition of outsiders on the board. D) with a smaller board. E) with a well-compensated board.
with the addition of outsiders on the board.