Exam 2 AIS

What does a properly designed audit trail enable (check all that apply): A. trace any item appearing in a report back through the general ledger to the original source document, thereby validating the data in the report B. construction of a trial balance C. trace any transaction from its original source document to the journal entry that updated the general ledger D. construction of a journal voucher file

A & C

All of the following are recommended guidelines for making flowcharts more readable, clear, concise, consistent, and understandable EXCEPT: A. Flowchart all data flows, especially exception procedures and error routines. B. Design the flowchart so that flow proceeds from top to bottom and from left to right. C. Show the final disposition of all documents to prevent loose ends that leave the reader dangling. D. Divide a document flowchart into columns with labels.

A. Flowchart all data flows, especially exception procedures and error routines.

Which of the following statements is false: A. A system flowchart is a narrative representation of an information system. B. Flowcharts are easy to prepare and revise when the designer utilizes a flowcharting software package. C. A flowchart is an analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner. D. Flowcharts use a standard set of symbols to describe pictorially the flow of documents and data through a system.

A. a system flowchart is a narrative representation of an information system

Which control could be used to mitigate the threat of fraudulent financial reporting? A. audit B. balanced scorecard C. responsibility accounting D. use of packaged software

A. audit

The (blank), who reports to the treasurer, is responsible for paying suppliers? A. cashier B. CEO C. CFO D. controller

A. cashier

Which control could be used to mitigate the threat of hiring unqualified or larcenous employees? A. criminal background investigation checks of all applicants for finance related positions B. continuing education on changes in employment laws C. segregation of duties: HRM department updates master data, but only payroll department issues paychecks D. thorough documentation of hiring, performance evaluation, and dismissal procedures

A. criminal background investigation checks of all applicants for finance related positions

Recognizing advance insurance payments from customers as a liability would result in what type of adjusting entries? A. deferrals B. corrections C. accruals D. estimates

A. deferrals

Which of the following is not a guideline when preparing a data flow diagram? A. do not ignore any aspects of the system B. group transformation processes C. subdivide the dfd D. give each process a sequential number

A. do not ignore any aspects of the system

Cancelling all supporting documents when payment is made to a supplier is a control procedure designed to mitigate the threat of? A. duplicate payments B. cash flow problems C. failure to take advantage of discounts for prompt payment D. paying for items not received

A. duplicate payments

Which document lists the current amount and year-to-date totals of gross pay, deductions, and net pay for one employee? A. earnings statement B. payroll register C. time card D. paycheck

A. earnings statement

Which XRBL document provides the instructions on how to display or print an XRBL-encoded report? A. none of these are correct B. schema C. style sheet D. taxonomy

C. style sheet

Evaluated receipt settlement reduces the threat of: A. errors in supplier invoices B. mistakes in posting to accounts payable C. accepting unordered items D. theft of inventory

A. errors in supplier invoices

The purpose of employing data processing integrity controls is to mitigate the threat of: A. inaccurate updating of the general ledger B. unauthorized journal entries C. None of these are correct D. both unauthorized journal entries and inaccurate updating of the journal ledger

A. inaccurate updating of the general ledger

Online processing is most useful for which of these tasks? A. making changes in employee benefit choices B. preparing payroll checks C. reconciling job-time tickets and time cards D. paying payroll tax obligations

A. making changes in employee benefit choices

Data entry processing integrity controls, such as field checks, completeness tests, and closed-loop verification are not needed for journal entries made by: A. other accounting subsystems B. the controller C. the treasurer D. All of the listed sources of journal entries (Treasurer, Controller, other accounting subsystems) need to employ field checks, completeness tests, and closed-loop verification to ensure accuracy.

A. other accounting subsystems

Traditionally, accountants have been most involved with which portion of the HRM/payroll cycle? A. payroll B. training C. hiring D. performance evaluation

A. payroll

Which document is used to authorize the release of merchandise from the inventory control (warehouse) to shipping: A. picking ticket B. packing slip C. sales invoice D. shipping order

A. picking ticket

Which method would provide the greatest efficiency improvements for the purchase of non-inventory items such as misc. office supplies? A. procurement cards B. EFT C. bar-coding D. EDI

A. procurement cards

The documentation skills that accountants require vary with their job function. However, all accountants should at least be able to do the following? A. read documentation to determine how the system works B. critique and correct documentation that others prepare C. teach others how to prepare documentation D. prepare documentation for a newly developed information system

A. read documentation to determine how the system works

Which of the following is used to change a customer's accounts receivable balance? A. Sales invoice B. Picking list C. Bill of lading D. Packing slip E. Sales order

A. sales invoice

Which of the following is true? A. setting up petty cash as an imprest fund violates segregation of duties B. a voucher package usually includes a debit memo C. it is easier to verify the accuracy of invoices for purchases of services than invoices for purchases of raw materials D. The EOQ formula is used to identify when to reorder

A. setting up petty cash an an imprest fund violates segregation of duties

How are data sources and destinations represented in a DFD? A. square B. curved arrow C. circle D. two parallel lines E. none of the above

A. square

In a DFD, a data destination is represented by: A. square B. arrow C. two horizontal lines D. bubble

A. square

The type of flowchart that illustrates the relationships among system input, processing, storage, and output in an organization is called ________: A. system flowchart B. program flowchart C. document flowchart D. internal control flowchart

A. system flowchart

Separation of the check-writing and accounts payable function is designed to mitigate the threat of: A. theft of cash B. duplicate payments C. paying for items not received D. failure to take advantage of discounts for prompt payments

A. theft of cash

Restricting physical access to inventory is designed to minimize the threat of A. theft of inventory. B. picking the wrong items or the wrong quantity. C. shipping errors. D. failure to bill.

A. theft of inventory

For sound internal control, which of the following sources should be permitted to update the general ledger? A. treasurer B. controller C. both the treasurer and controller D. neither the treasurer nor the controller

A. treasurer

Which of the following is used to verify that the total debits equal the total credits in the general ledger: A. trial balance B. journal voucher file C. review by the treasurer D. audit trail

A. trial balance

Which of the following statements is true? A. Turnover and absenteeism are costly B. all employees must fill out time cards C. default configurations of ERP packages typically provide good segregation of duties D. financial statements report the value of employee knowledge and skills

A. turnover and absenteeism costly

Encryption of payroll master data is a control designed to reduce the risk of: A. unauthorized disclosure of sensitive information B. loss or destruction of data C. errors in processing payroll D. inaccurate or invalid master data

A. unauthorized disclosure of sensitive information

A BPD provides users a _____ of the different steps or activities in a business process: A. visual view B. narrative C. data flow D. decision tree

A. visual view

An adjusting entry that is made to record a portion of expenses that are expected to occur over multiple time periods is called a(n): A. revaluation B. estimate C. defferal D. accrual

B

An adjusting entry that is made to reflect events that have occurred but for which cash has not yet been received or disbursed is called an: A. deferral B. accrual C. estimate D. revaluation

B

A graphical description of data sources, data flows, transformation processes, data storage, and data destinations is called: A. BPD B. DFD C. context diagram D. flowchart

B. DFD

Which of the following techniques is the most efficient way to process customer payments and AR? A. UPIC B. FEDI C. ACH D. EFT

B. FEDI

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

B. It is the combination of EFT and EDI that enables both remittance data and funds transfer instructions to be included in one electronic package.

An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs is called: A. JIT B. MRP C. EOQ D. reorder point

B. MRP

To minimize the risk of theft of consumer remittances, the person who handles and deposits customer payments can also: A. reconcile the bank statements B. None of these activities can be performed by the person who handles and deposits customer payments. C. authorize credit memos. D. post adjustments to accounts receivable.

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

Payroll service bureaus and PEOs are especially attractive to small and midsized businesses for which of the following reasons: A. freeing up of computer resources B. all of these are correct C. reduced costs D. wider range of benefits

B. all of these are correct

A management report that measures four dimensions of performance: financial, internal operations, innovation and learning, and customer perspectives of the organization is known as: A. schema B. balanced scorecard C. flexible budget D. extension taxonomy

B. balanced scorecard

A legal contract that defines responsibility for goods while they are in transit is called A. a packing slip. B. a bill of lading. C. a picking ticket. D. an invoice.

B. bill of lading

Where should unclaimed paychecks be returned? A. HRM department B. cashier C. payroll department D. absent employee's supervisor

B. cashier

The control that is used to match account numbers with account descriptions, to ensure that the correct general ledger account is being accessed is called: A. a completeness test B. closed-loop verification C. field (format) checks D. a validity check

B. closed-loop verification

From where do adjusting entries usually come? A. various accounting cycle subsystems, such as sales order entry B. controller C. treasurer D. unit managers

B. controller

Which of the following controls could be used to mitigate the threat of uncollectible accounts? A. Restriction of access to pricing master data B. Credit limits C. Restriction of physical access to inventory D. Encryption

B. credit limits

For good internal control, who should improve credit memos: A. billing manager B. credit manager C. sales manager D. controller

B. credit manager

Which of the following provides real time data about key measures of operating performance? A. flexible budget B. dashboards C. XRBL D. the balanced scorecard

B. dashboards

Which document is used to record adjustments to A/P based on the return of unacceptable inventory to the suppliers? A. purchase order B. debit memo C. credit memo D. receiving report

B. debit memo

Which document is used to reduce the balance owed to a supplier? A. purchase order B. debit memo C. supplier invoice D. credit memo

B. debit memo

To maximize effectiveness of internal controls over payroll, which of the following persons should be responsible for distributing employee paychecks? A. controller B. departmental secretary C. payroll clerk D. departmental supervisor

B. departmental secretary

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

B. description of all selling functions within an organization

The type of flowchart that illustrates the flow of documents and data among areas of responsibility within an organization is called: A. system flowchart B. document flowchart C. program flowchart D. business process flowchart

B. document flowchart

The primary control benefit associated with issuing earnings statements to employees is to reduce the threat of: A. all of these are correct B. errors in processing payroll C. loss or destruction of payroll data D. theft or fraudulent distribution of paychecks

B. errors in processing payroll

A DFD is a representation of which of the following? A. decision rules in a computer program B. flow of data in an organization C. the logical operations performed by a computer program D. computer hardware configuration

B. flow of data in an organization

A ______ is a pictorial, analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner: A. context flow diagram B. flowchart C. BFD D. narrative

B. flowchart

Which of the following XRBL documents contains the actual data values for a company's net income for a particular year? A. linkbases B. instance document C. style sheets D. schema

B. instance document

The number of orders shipped per warehouse worker each day is a metric that would most likely appear in which part of the balanced scoreboard? A. innovation and learning B. internal operations C. customer D. financial

B. internal operations

Which of the following could be used to mitigate the threat of kickbacks? A. competitive bidding B. job rotations and mandatory vacations C. centralized purchasing function D. review and approval of purchase requisitions

B. job rotations and mandatory vacations

Which of the following is an important part of the audit trail? A. data warehouse B. journal vouchers C. flexible budgets D. trial balance

B. journal vouchers

Which control would help reduce the threat of cash flow problems? A. Having the person who opens the mail immediately create a list of all customer payments received B. Lockbox arrangements C. Prompt, restrictive endorsement of all customer checks D. All of these controls reduce the threat of cash flow problems E. None of these controls reduce the threat of cash flow problems

B. lockbox arrangements

Which control procedure is designed to minimize the threat of posting errors to accounts receivable? A. Approval of credit memos by the credit manager B. Mailing of monthly statements to customers C. All of these controls minimize the threat of posting errors to accounts receivable D. Aging of accounts receivable E. Separation of the shipping and billing functions

B. mailing of monthly statements to customers

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

B. name only the most important DFD elements

Which method is most likely used when a company offers customers discounts for prompt payment? A. AR aging method B. open-invoice method C. balance forward D. cycle billing

B. open-invoice method

Which document often accompanies merchandise shipped to a customer? A. picking ticket B. packing slip C. credit memo D. sales order

B. packing slip

Which of the following matches is performed in evaluated receipt settlement? A. the vendor invoice, receiving report, and the purchase order B. purchase order with the receiving report C. vendor invoice with the receiving report D. vendor invoice with the purchase order

B. purchase order with the receiving report

Which of the following controls could be used to mitigate the threat of accepting unordered items? A. supplier audits B. requiring existence of approved purchase order prior to accepting any delivery C. configurations of the ERP system to flag discrepancies between received and ordered quantities that exceed tolerance threshold for investigation D. use of bar codes

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

Which of the following controls is designed to ensure that after updating the general ledger, assets have debit balances and liabilities have credit balances: A. validity check B. sign check C. completeness check D. field check

B. sign check

Which document is used to track the time worked by office professionals such as accountants and lawyers? A. workforce inventory B. time sheet C. form 1099-Misc D. time card

B. time sheet

Segregating the duties of HRM and payroll functions reduces the risk of: A. inaccurate payments B. unauthorized changes to payroll master data C. errors in processing payroll D. inaccurate time and attendance data

B. unauthorized changes to payroll master data

Which of the following revenue cycle activities can potentially be eliminated by technology? A. shipping B. sales order entry C. cash collections D. billing

D. billing

Who should make adjusting entries? A. CISO B. CFO C. controller D. treasurer

C

Which department should have responsibility for authorizing pay-rate changes? A. payroll B. timekeeping C. HRM D. accounting

C. HRM

Which of the following is designed primarily to improve the efficiency of financial reporting? A. IFRS B. XML C. XRBL D. the balanced scorecard

C. XRBL

Which of the following expenditure cycle activities can be eliminated through the use of IT or reengineering? A. ordering goods B. receiving goods C. approving vendor invoices D. cash disbursements

C. approving vendor invoices

For good internal control over customer remittances, the mailroom clerk should separate the checks from the remittance advices and send the customer payments to which department? A. AR B. billing C. cashier D. sales

C. cashier

For good internal control, who should sign checks? A. accounts payable B. purchasing agent C. cashier D. controller

C. cashier

Which activity is part of the sales order entry process? A. approving sales returns B. setting customer credit limits C. checking customer credit D. preparing a bill of lading

C. checking customer credit

Entries that are made to counteract the effects of errors found in the general ledger are called: A. accruals B. deferrals C. corrections D. estimates

C. corrections

Which of the following statements is false? A. document flowchart emphasizes the flow of documents or records containing data B. flowcharts make use of many symbols C. DFDs help convey the timing of events D. both a and b are false

C. dfds help convey the timing of events

Which of the following illustrates the flow of data among areas of responsibility in an organization? A. system flowchart B. computer configuration chart C. document flowchart D. program flowchart

C. document flowchart

Which portion of the balanced scorecard contains lagging measures of performance? A. internal operations B. customer C. financial D. innovation and learning

C. financial

Which of the following shows the implied casual linkages among the portions of the balanced scorecard? A. Internal -> customer -> innovation/learning -> financial B. customer -> financial -> internal -> innovation/learning C. innovation/learning -> internal -> customer -> financial D. financial -> internal -> innovation/learning -> customer

C. innovation/learning -> internal -> customer -> financial

Which control would help reduce the threat of theft of cash? A. None of these controls reduce the threat of theft of cash B. Cash flow budgets C. Lockbox arrangements D. All of these controls reduce the threat of theft of cash E. Discounts for prompt payment by customers

C. lockbox arrangements

Which of the following provides a means to both improve the efficiency of processing customer payments and also enhance the control over those payments? A. aging AR B. EDI C. lockboxes D. CRM

C. lockboxes

A method for processing amounts payable in which each approved invoice is posted to an individual supplier records in the accounts payable file and is then stored in an open invoice file is called: A. disbursement voucher B. voucher package C. nonvoucher system D. voucher system

C. nonvoucher system

Which of the following is an important supporting document to authorize the transfer of funds to the payroll bank account? A. earnings statement B. W-2 form C. payroll register D. time card

C. payroll register

Which of the following is a threat to the shipping process? A. Incomplete/inaccurate orders B. Inaccurate or invalid credit memos C. Picking the wrong items or the wrong quantity D. Stockouts or excess inventory

C. picking the wrong items or the wrong quantity

Which document is used to establish a contract for the purchase of goods or services from a supplier? A. vendor invoice B. purchase requisition C. purchase order D. disbursement voucher

C. purchase order

Preparing performance reports that contain data only about items that a specific unit controls is an example of which of the following? A. flexible budget system B. closing the books C. responsibility accounting system D. management by exception

C. responsibility accounting system

The definition of an XRBL element, including such information as whether its normal account balance is a debit or credit, is found in which of the following? A. linkbase B. instance document C. style sheet D. schema

D

Which of the following inventory control methods is most likely to be used for a product for which sales can be reliably forecast? A. JIT B. ABC C. EOQ D. MRP

D. MRP

A document that records the employee's arrival and departure times for each work shift is known as: A. a time sheet B. a position control report C. a payroll register D. a time card

D. a time card

An adjusting journal entry to record interest revenue that has been earned but not yet received is an example of which of the following? A. revaluation B. defferal C. estimate D. accrual

D. accrual

The integrated database underlying an ERP system results in which of the following general threats to the revenue cycle? a. inaccurate or invalid master data b. unauthorized disclosure of sensitive information c. loss or destruction of data d. all of the above

D. all of the above

Use of a payroll service bureau or a PEO provides which of the following benefits? A. fewer staff needed to process payroll B. lower cost of processing payroll C. less need for developing and maintaining payroll tax expertise D. all of the above

D. all of the above

Which control could be used to mitigate the threat of inaccurate updating of the general ledger? A. audit B. use of packaged software C. training and experience in applying ifrs and XRBL D. audit trail creation and review

D. audit trail creation and review

What is the best control procedure to prevent paying the same invoice twice? A. prepare checks only for invoices that have been matched to receiving reports and purchase orders B. require 2 signatures on all checks above a certain limit C. segregate check preparation and check-signing functions D. cancel all supporting documents when the check is signed

D. cancel all supporting documents when the check is signed

An adjusting entry that is made to reflect the exchange of cash prior to performance of the related business activity is called a(n): A. accrual B. revaluation C. estimate D. defferal

D. defferal

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

D. encryption

Spreadsheet error protection controls reduce the risk of: A. unauthorized adjusting entries B. loss or destruction of general ledger data C. fraudulent financial reporting D. inaccurate adjusting entries

D. inaccurate adjusting entries

Using biometrics to authenticate time cards reduces the risk of: A. theft or fraudulent disbursements of checks B. hiring unqualified or larcenous employees C. failure to make required payments D. inaccurate time and attendance data

D. inaccurate time and attendance data

To more effectively use employees' knowledge and skills, many organizations are implementing ____: A. professional employer organizations B. payroll service bureaus C. HRM systems D. knowledge management systems

D. knowledge management systems

Which control procedure would be the most effective in detecting the failure to prepare a paycheck for a new employee before paychecks are distributed? A. use of a separate payroll bank account B. validity checks on the employee number on each time card C. zero-balance check D. record counts of time cards submitted and time cards processed

D. record counts of time cards submitted and time cards processed

Which of the following is not a flowcharting symbol category? A. storage B. input/output C. processing D. reporting

D. reporting

Which of the following procedures is designed to prevent the purchasing agent from receiving kickbacks? A. prenumbering and periodically accounting for all purchase orders B. requiring approval of all purchase orders C. maintaining a list of approved suppliers and requiring all purchases to be made from suppliers on that list D. requiring purchasing agents to disclose any financial investments in potential suppliers

D. requiring purchasing agents to disclose any financial investments in potential suppliers

Which control could be used to mitigate the threat of inaccurate or invalid general ledger data? A. audit trail creation and review B. reconciliations and control reports C. spreadsheet error protection controls D. review of all changes to general ledger data

D. review of all changes to general ledger data

Which control reduces the risk of theft or fraudulent distribution of paychecks? A. batch totals B. regular review of all changes to master payroll data C. encryption of all payroll data D. use of a separate checking account for payroll

D. use of a separate checking account for payroll

Documentation methods such as DFDs, BPDs, and flowcharts save both time and money, adding value to an organization true false

True

A DFD consists of the following four basic elements: data sources and destinations, data flows, transformation processes, and data stores. each is represented on a dfd by a different symbol true false

true