MCQ

Credit Card International developed a management reporting software package that enables members interactively to query a data warehouse and drill down into transaction and trend information via various network setups. What type of management reporting system has Credit Card International developed? AOn-line analytical processing system BOn-line transaction-processing system COn-line executive information system DOn-line information storage system

A

What is one misconception about enterprise risk management as it pertains to an organization? AEnterprise risk management is a specific function or a department within an organization, usually with its own leadership team that communicates effectively with all other practice areas. BEnterprise risk management is embedded in the culture of an organization, and enhances its capabilities and practices by integrating with strategy-setting. CIn order to manage risk properly and create real value in an organization, enterprise risk management must be a top initiative for any organization looking to gain competitive advantage. DPrinciples applied through effective enterprise risk management is visible at all levels of the organization and across all functions.

A

Which of the following characteristics distinguishes electronic data interchange (EDI) from other forms of electronic commerce? AEDI transactions are formatted using standards that are uniform worldwide. BEDI transactions need not comply with generally accepted accounting principles. CEDI transactions ordinarily are processed without the Internet. DEDI transactions are usually recorded without security and privacy concerns.

A

Which of the following would least likely be a limitation existing in a sound system of internal controls over financial reporting? AIncompatible duties BCollusion CManagement override DErrors in judgment

A

Which of the following is usually a benefit of transmitting transactions in an electronic data interchange (EDI)environment?

A compressed business cycle with lower year-end receivables balances

A software tool used to access database records infrequently most likely is

A query utility program

A Security Policy consists of three-level models. Which of the following statements would be included in the Policy Implementation level?

A three-level authentication system to log in to the net banking system

Which of the following is an essential element of the audit trail in an electronic data interchange (EDI) system? ADisaster recovery plans that ensure proper backup of files BEncrypted hash totals that authenticate messages CActivity logs that indicate failed transactions DHardware security modules that store sensitive data

Activity logs that indicate failed transactions

Product quality related costs are part of a total quality control program. A product quality related cost incurred in detecting individual products that do not conform to specifications is an example of:

Appraisal costs

Preventive controls typically

Are less costly than detective controls

Timeliness of data availability is most significant when designing which of the following?

Internet catalog and order system

Which of the following is usually a benefit of transmitting transactions in an electronic data interchange (EDI) environment?

Assurance of the thoroughness of transaction data because of standardized controls

A customer notified a company that the customers account did not refelct the most recent monthly payment. The company investigated the issue and determined that a clerk had mistakenly applied the customer's payments to a different customer's account. Which of the following controls would help to prevent such an error? A. Checksum B. Closed-loop verification C. Field Check D. Completeness test

B

According to COSO, which of the following is a compliance objective? ATo maintain adequate staffing to keep overtime expense within budget BTo maintain a safe level of carbon dioxide emissions during production CTo maintain material price variances within published guidelines DTo maintain accounting principles that conform to GAAP

B

The internal audit activity that evaluates the effectiveness and contributes to the improvement of management processes is known as AGovernance BRisk Management CControl DReporting Responsibilities

B

Which of the following activities is least relevant to internal control over financial reporting? AInformation processing BEmployee development CPhysical controls DSegregation of duties

B

Which of the following is a true statement regarding materiality as it relates to corporate governance? AThere is no concept of materiality relevant to corporate governance. BIt is a fundamental concept that helps distinguish the important from the trivial. CUsers of financial statements are not relevant to determining materiality. DIt does not permit decision-makers to omit issues from consideration.

B

Which of the following is not a purpose of the Sarbanes-Oxley Act? ARegulate the auditors of public companies BEnsure the adherence of relevant laws and regulations CEnhance corporate reporting and disclosure DClarify sound corporate governance

B

Which of the following is usually a benefit of using electronic funds transfer for international cash transactions? ACreation of multilingual disaster recovery plans BReduction in the frequency of data entry errors COff-site storage of foreign source documents DImprovement in the audit trail for cash transactions

B

The Enterprise Risk Management - Integrated Framework is similar to the Internal Control—Integrated Framework in the following way:

Both employ the foundational control environment as the basis for the rest of the framework.

What is a major disadvantage to using a private key to encrypt data?

Both sender and receiver must have the private key before this encryption method will work.

According to COSO, the four categories of entity objectives in the enterprise risk management framework include each of the following, except AEffective and efficient use of the entity's resources BCompliance with applicable laws and regulations CImplementation of internal controls DReliability of reporting

C

Corporate governance is defined as The framework of rules and practices which ensures accountability, fairness, and appropriate disclosure in a corporation's relationship with all its stakeholders. The framework of explicit and implicit contracts with owners, creditors, customers, employees, government, and the community. AI only BII only CBoth I and II DNeither I nor II

C

Cryptocurrencies are a digital form of payment within blockchain. Which statement about cryptocurrencies is NOT true? AThe most popular cryptocurrency is bitcoin BCryptocurrency transactions are chronological. CCryptocurrencies are treated like cash and can be bought on the stock exchange. DThere is no trace or connection between one transaction to another.

C

The update to the ERM framework highlights all of the following needs in industry, except: AGreater insight into the value of enterprise risk management when setting and carrying out strategy. BAlignment between performance and enterprise risk management to improve the setting of performance targets and understanding the impact of risk on performance. CSets out core definitions, components, and principles for all levels of management involved in designing and implementing internal control practices. DGlobalization of markets and operations and the need to apply a common approach across global markets

C

Which of the following allows customers to pay for goods or services from a web site while maintaining financial privacy? ACredit card BSite draft CE-cash DElectronic check

C

The intent of Section 404 of the Sarbanes-Oxley Act is to give investors comfort about the internal control systems of public companies related to reliable financial reporting, including all of the following assurances except AThat records that accurately reflect transactions are maintained in appropriate detail BThat all transactions are recorded CThat all transactions are authorized by management DThat material authorized transactions have been prevented or timely detected

D

The materials manager of a warehouse is given a new product line to manage with new inventory control procedures. Which of the following sequences of the COSO internal control monitoring-for-change continuum is affected by the new product line? AControl baseline but not change management BChange management but not control baseline CNeither control baseline nor change management DBoth control baseline and change management

D

Which of the following tasks would be included in a document flowchart for processing cash receipts?

Compare control and remittance totals

A sharp rise in the price of oil (a major input) would result in:

Cost (Push) inflation

Real-time processing is most appropriate for which of the following bank transactions?

Credit authorizations for consumer loan applicants

Before signing the financial statements and assertions about internal control over financial reporting, the chief executive officer and chief financial officer would do all of the following except AConsider the materiality of information BDetermine disclosure requirements on a timely basis CCoordinate the development of the appropriate internal controls infrastructure DIdentify all disclosure issues

D

Engaging in traditional electronic data interchange (EDI) provides which of the following benefits? AEnhanced audit trails BGuaranteed payments from customers CAdded flexibility to entice new partners DReduced likelihood of out-of-stock inventory

D

Which of the following policies is most appropriate? AAlways sorting transactions before updating the master file BAlways sorting transactions after updating the master file CSorting transactions before updating the master file only if random access storage is used DSorting transactions before updating the master file only if sequential access storage is used

D

General controls in an information system include each of the following, except AInformation technology infrastructure BSecurity management CSoftware acquisition DLogic tests

D Logic tests

An auditor most likely would introduce test data into a computerized payroll system to test internal controls related to the

Discovery of invalid employee I.D. numbers

Which of the following characteristics distinguishes electronic data interchange (EDI) from other forms of electronic commerce?

EDI transactions are formatted using strict standards that have been agreed to worldwide.

Each of the following would help prevent incorrect postings to the general ledger in a computerized accounting system, except

Establishing a unique transaction number for each general ledger posting.

Able Co. uses an online sales order processing system to process its sales transactions. Able's sales data are electronically sorted and subjected to edit checks. A direct output of the edit checks most likely would be a

File of all rejected sales transactions

The primary purpose of a Business Impact Analysis is to:

Identify business units that are essential to the survival of the entity

An enterprise resource planning system is designed to

Integrate data from all aspects of an organization's activities

What decision making model equates the initial investment with the PV of the future cash flows?

Internal rate of return

What is strategic planning?

It establishes the general direction of the organization.

The only sales variance listed below that does not use contribution margin to compute results is

sales price variance

In order to sell at the rate of output in markets controlled by monopolists, price is set where

Marginal review equals marginal costs

The discount rate is determined in advance for which of the following capital budgeting techniques?

NPV

In order to comply with a director's duty of loyalty to a corporation, what action(s) should a director take when presented with a corporate opportunity?

Offer the opportunity to the corporation and accept it if the corporation rejects it

Considering the SCOR model of supply chain operations, which of the following key management processes does assessing the ability of the suppliers to supply resources fall into?

Plan

The Enterprise Risk Management — Integrating With Strategy and Performance Framework includes a

Principles-based approach that can be applied across global markets and provides greater risk and performance transparency.

The benefits of properly monitoring internal control includes the following except

Problems are identified and addressed in a reactive manner

The discount rate set by the federal reserve is the _______

Rate that the central banks charge for loans to each other

A value-added network (VAN) is a privately owned network that performs which of the following functions? ARoute data transactions between trading partners BRoute data within a company's multiple networks CProvide additional accuracy for data transmissions DProvide services to send marketing data to customers

Route data transactions between trading partners

Which of the following is an example of a validity check? AThe computer ensures that a numerical amount in a record does not exceed some predetermined amount. BAs the computer corrects errors and data are successfully resubmitted to the system, the causes of the errors are printed out. CThe computer flags any transmission for which the control field value did not match that of an existing file record. DAfter data for a transaction are entered, the computer sends certain data back to the terminal for comparison with data originally sent.

The computer flags any transmission for which the control field value did not match that of an existing file record.

Which of the following statements is inapplicable to database management systems (DBMS)?

The database administrator is that part of the software that directs the program operation when data is added to, located within, or deleted from the database.

Hash total is an important control method used in the processing of an organization. Which of these is not an example of hash total?

The number of invoices in a batch

Misstatements in a batch computer system caused by incorrect programs or data may not be detected immediately because

There are time delays in processing transactions in a batch system.

What would be the primary reason for a company to agree to a debt covenant limiting the percentage of its long-term debt?

To reduce the coupon rate on the bonds being sold

Stagflation occurs when

a combinatin of rising unemployment and rising price level

The perfomance measurement tool generally associated with the display of information evaluating multiple dimensions of business outcomes is referred to as the

balances scorecard

Controllable margin is used as a refined meause of SBU reporting that is best described as

contribution margin net of controllable fixed costs (those costs that managers can impact in less than one year)

When employing the MACRS method of depreciation in a capital budgeting decision, the use of MACRS as compared to the straight line method of depreciation will result in

equal total depreciation for both methods

Price dicrimination is accomplished most effectively in market with:

fairly distinct segments of customers

demand for a product tends to be price inelasticc if ___________

few good substitutes are available for the product

The total amount of the initial outlay for the project

included in the payback model calculation

Utility companies can generally price their product, a good that establishes a comfortable life-style (i.e. electricity, gas for home heating) based on the fact that the demand is....

is relatively inelastic

When the economy is at full employment

there is no cyclical unemployment

breakeven analysis assumes that over the relevant range

unit variable costs are unchanged