ACC-304 Midterm 1

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

a) Hire private investigators to investigate employee behavior.

Considering the potential of fraud belongs to which component of COSO's Internal Control Model? a) Risk assessment. b) Control activities. c) Information and communication. d) Control environment.

a) Risk assessment.

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

a) Selling goods and services and collecting cash.

Which of the following is an example of a turnaround document? a) Utility bill. b) A company's financial statements. c) Employee earnings record. d) Purchase orders.

a) Utility bill.

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

a) master file.

The amount of risk a company is willing to accept in order to achieve its goals and objectives is called a) risk appetite. b) risk management. c) risk acceptance. d) risk tolerance.

a) risk appetite.

The value of information can best be determined by a) the benefit provided by information less the cost of producing it. b) the relevance provided to decision makers. c) the time it takes to help decision makers make their decisions. d) the usefulness provided to decision makers.

a) the benefit provided by information less the cost of producing it.

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

b) Measure the throughput and utilization of data and physical assets.

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

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

Hiring qualified personnel, segregating employee duties, and controlling physical access to assets and information are examples of what kind of internal controls? a) General controls. b) Preventive controls. c) Corrective controls. d) Detective controls.

b) Preventive controls.

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

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

Information is best described as a) raw facts about transactions. b) data that have been organized and processed to provide meaning and improve decision making. c) facts that are collected, recorded, stored, and processed by an information system. d) A set of related, coordinated, and structured data.

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

Which of the following is a benefit of implementing an ERP system at a multinational corporation? a) Customer service improves as employees can quickly access data. b) Increased productivity of employees. c) All of these are correct. d) Standardization of procedures and reports across business units.

c) All of these are correct.

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

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

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

c) Operations objectives.

Which of the following is the most common source document in the expenditure cycle? a) Bill of lading. b) Remittance advice. c) Purchase order. d) Credit memo.

c) Purchase order.

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

c) The general ledger cycle.

Data must be collected about three facets of each business activity. These facets are a) activity of interest, the process, and the people who participate. b) the resource(s), the benefits, and the process. c) activity of interest, the resource(s), and the people who participate. d) activity of interest, the resource(s), and the process.

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

A(n) ________ helps employees understand management's vision. It communicates company core values and inspires employees to live by those values. a) diagnostic control system b) interactive control system c) belief system d) boundary system

c) belief system

In an ERP system, the module used to record data about transactions in the disbursement cycle is called a) order to cash. b) financial. c) purchase to pay. d) manufacturing.

c) purchase to pay.

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

d) Accessible

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

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

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

d) Increasing product costs

What is the first step in the data processing cycle? a) Storage b) Processing c) Output d) Input

d) Input

________ information reduces uncertainty, improves decision making, or confirms or corrects prior expectations. a) Verifiable b) Reliable c) Complete d) Relevant

d) Relevant

In which transaction cycle would information for generating customer orders be most likely to pass between internal and external accounting information systems? a) The expenditure cycle. b) The HR/payroll cycle. c) The financing cycle. d) The revenue cycle.

d) The revenue cycle.

The examination of the relationships between different sets of data is called a) reconciliation of independently maintained records. b) top-level reviews. c) comparison of actual quantities with recorded amounts. d) analytical reviews.

d) analytical reviews.

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

d) company culture

ERP is the abbreviation for a) entity resource planning. b) enterprise resource program. c) enterprise reporting program. d) enterprise resource planning.

d) enterprise resource planning.

Before a company can identify the information needed to effectively manage a process, the company must a) consult with its operation department. b) upgrade its information system. c) hire an information system director. d) understand its business process.

d) understand its business process.