ITAC final 2

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

14) Turnaround documents are an example of a(n)

D) input control.

21) Check digit verification is an example of a(n)

D) input control.

27) As responsibility reports are rolled up into reports for higher level executives, they

A) become less detailed.

1. Which of the following control procedures is designed to reduce the risk of ordering unneeded inventory? a. Tracking and monitoring product quality by supplier b. Purchasing only from approved suppliers c. Holding purchasing managers responsible for rework and scrap costs d. All of the above e. None of the above

1. Which of the following control procedures is designed to reduce the risk of theft of inventory? a. Restriction of physical access to inventory b. Periodic physical counts of inventory and reconciliation to recorded quantities on hand c. Documentation of all transfers of inventory between employees d. All of the above e. None of the above

1. Which of the following controls would be most effective in mitigating the risk of inventory theft? a. Reconciling shipping documents to sales orders, picking lists and packing slips. b. Separating the functions of shipping and billing c. Documentation of all transfers of inventory between employees d. Use of lockboxes

1. Which of the following types of fraud requires access to the accounts receivable master file? a. Lapping b. Kiting c. Theft of inventory d. None of the above

What are processing controls

1.Data matching Two or more items must be matched before an action takes place 2.File labels Ensures correct and most updated file is used 3.Recalculation of batch totals 4.Cross-footing Verifies accuracy by comparing two alternative ways of calculating the same total 5.Zero-balance tests For control accounts (e.g., payroll clearing) 6.Write-protection mechanisms Protect against overwriting or erasing data 7.Concurrent update controls Prevent error of two or more users updating the same record at the same time

Know the data entry controls

1.Field check Characters in a field are proper type 2.Sign check Data in a field is appropriate sign (positive/negative) 3.Limit check Tests numerical amount against a fixed value 4.Range check Tests numerical amount against lower and upper limits 5.Size check Input data fits into the field 6. Completeness check Verifies that all required data is entered 7. Validity check Compares data from transaction file to that of master file to verify existence 8. Reasonableness test Correctness of logical relationship between two data items 9. Check digit verification Recalculating check digit to verify data entry error has not been made 10.Batch processing - Sequence check Test of batch data in proper numerical or alphabetical sequence - Batch totals Summarize numeric values for a batch of input records Financial total Hash total Record count 11. Prompting System prompts you for input (online completeness check) 12. Closed-loop verification Checks accuracy of input data by using it to retrieve and display other related information (e.g., customer account # retrieves the customer name

What are output controls

1.ser review of output 2.Reconciliation procedures Procedures to reconcile to control reports (e.g., general ledger A/R account reconciled to Accounts Receivable Subsidiary Ledger) External data reconciliation 3.Data transmission controls Checksums Parity bits

10) A payroll clerk accidently entered an employee's hours worked for the week as 380 instead of 38. The data entry control that would best prevent this error would be A) a limit check. B) a check digit. C) batch total reconciliation. D) a field check.

11) The data entry control that would best prevent entering an invoice received from a vendor who is not on an authorized supplier list is A) a validity check. B) an authorization check. C) a check digit. D) closed-loop verification.

11) ________ involves copying only the data items that have changed since the last partial backup. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

11. Failure to make required payments (disburse payroll taxes and miscellaneous deductions)

11.1 Configuration of system to make required payments using current instructions from IRS (Publication Circular E)

11. Kickbacks (ordering)

11.1 Prohibit acceptance of gifts from suppliers 11.2 Job rotation and mandatory vacations 11.3 Requiring purchasing agents to disclose financial and personal interests in suppliers 11.4 Supplier audits

11. Theft of inventory (shipping)

11.1 Restriction of physical access to inventory 11.2 Documentation of all inventory transfers 11.3 RFID and bar-code technology 11.4 Periodic physical counts of inventory and reconciliation to recorded quantities

12) Form design is one example of a(n) A) output control. B) processing control. C) input control. D) data entry control.

12) ________ copies all changes made since the last full backup. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

12. Untimely payments (disburse payroll taxes and miscellaneous deductions)

12.1 Configuration of system to make required payments using current instructions from IRS (Publication Circular E)

12. Shipping errors (delay or failure to ship, wrong quantities, wrong items, wrong addresses, duplication) (shipping)

12.1 Reconciliation of shipping documents with sales orders, picking lists, and packing slips 12.2 Use RFID systems to identify delays 12.3 Data entry via bar-code scanners and RFID 12.4 Data entry edit controls (if shipping data entered on terminals) 12.5 Configuration of ERP system to prevent duplicate shipments

12. Accepting unordered items (receiving)

12.1 Requiring existence of approved purchase order prior to accepting any delivery

13) Sequentially prenumbered forms are an example of a(n) A) data entry control. B) data transmission control. C) processing control. D) input control.

13) The maximum amount of time between backups is determined by a company's A) recovery time objective. B) recovery point objective. C) recovery objective. D) maximum time recovery objective.

13. Mistakes in counting (receiving)

13.1 Do not inform receiving employees about quantity ordered 13.2 Require receiving employees to sign receiving report 13.3 Incentives 13.4 Use of bar codes and RFID tags 13.5 Configuration of the ERP system to flag discrepancies between received and ordered quantities that exceed tolerance threshold for investigation

14) The maximum acceptable down time after a computer system failure is determined by a company's A) recovery time objective. B) recovery point objective. C) recovery objective. D) maximum time recovery objective.

14) Turnaround documents are an example of a(n) A) data entry control. B) output control. C) processing control. D) input control.

14. Not verifying receipt of services (receiving)

14.1 Budgetary controls 14.2 Audits

14. Billing errors (billing)

14.1 Configuration of system to automatically enter pricing data 14.2 Restriction of access to pricing master data 14.3 Data entry edit controls 14.4 Reconciliation of shipping documents (picking tickets, bills of lading, and packing list) to sales orders

15) A validity check is an example of A) a data entry control. B) an output control. C) a data transmission control. D) an input control.

15) The accounting department at Synergy Hydroelectric records an average of 12,500 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 25,000 transactions. If the firm's recovery time objective is 120 minutes, then the worst case recovery time objective is A) 1 hour. B) 2 hours. C) 3 hours. D) 4 hours.

true

24) True or False: It is impossible to eliminate the risk of downtime.

19) Probably the most important change management control is A) monitoring user rights and privileges during the change process. B) testing all changes thoroughly prior to implementation on a stand-alone computer. C) updating all documentation to reflect changes made to the system. D) management's careful monitoring and review.

19. Paying for items not received (cash disbursements)

19.1 Requiring that all supplier invoices be matched to supporting documents that are acknowledged by both receiving and inventory control 19.2 Budgets (for services) 19.3 Requiring receipts for travel expenses 19.4 Use of corporate credit cards for travel expenses

58) The accounting department at Synergy Hydroelectric records an average of 12,500 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 25,000 transactions. The firm's recovery point objective is therefore A) 25,000 transactions B) 12,500 transactions C) 1 hour D) 2 hours

2 hours

25) This determines the correctness of the logical relationship between two data items. A) range check B) reasonableness test C) sign check D) size check

25) With regards to systems availability, deploying and using multiple components provides an AIS with A) fault tolerance. B) cost savings. C) enhanced processing speed. D) maximum sales

26) This determines if characters are of the proper type. A) field check B) alpha-numeric check C) range check D) reasonableness test

27) This tests a numerical amount to ensure that it does not exceed a predetermined value. A) completeness check B) limit check C) range check D) sign check

3. Loss or destruction of data

3.1 Backup and disaster recovery procedures

34) Loreen Tina is the chief lawyer for Tamara Incorporated. The CEO of Tamara Incorporated asks Loreen whether the company should periodically delete all company e-mail. If Loreen is well-versed in AIS best practices, she would mostly likely respond, A) Yes, if we are ever sued, the other attorney will not be able to comb through our e-mail for evidence. B) Yes, since e-mail requires a lot of storage space, deleting it periodically will reduce the amount of information we need to store. C) No, deleting an organization's e-mail is against the law. D) No, if we are ever sued we will not be able to draw upon our e-mail records to defend ourselves

34) What control are file labels an example of? A) data entry controls B) output controls C) processing controls D) source data controls

35) A computer operator accidentally used the wrong master file when updating a transaction file. As a result, the master file data is now unreadable. Which control could best have prevented this from happening? A) Internal header label B) validity check C) check digit D) parity check

35) Identify the most important component of a disaster recovery plan below. A) documentation B) operating instructions C) periodic testing D) on-site and off-site storage

36) Identify one organization that quickly recovered from September 11th, 2001 due to its disaster recovery and business continuity plan. A) New York Stock Exchange B) NASDAQ C) New York Fire Department D) United Airlines

36) Sonja Greer called the IT Help Desk in a bad mood. "I'm trying to open an Excel file, but I get a message that says that the file is locked for editing. Why is this happening to me?" The answer is likely that A) the file is corrupted due to a computer virus. B) Sonja probably opened the file as read-only. C) concurrent update controls have locked the file. D) there is no problem. Sonja is editing the file, so it is locked.

4. Poor performance

4.1 Managerial reports

4. Hiring unqualified or larcenous employees (general issues)

4.1 Sound hiring procedures, including verification of job applicants' credentials, skills, references, and employment history 4.2 Criminal background investigation checks of all applicants for financerelated positions

40) The Spontaneous Combustion Rocket Shoppe in downtown Fargo, North Dakota, generates three quarters of its revenue from orders taken over the Internet. The revenue clearing account is debited by the total of cash and credit receipts and credited by the total of storefront and Internet sales. This is an example of a A) data integrity test. B) zero-balance test. C) trial balance audit. D) cross-footing balance test.

41) This control entails verifying that the proper number of bits are set to the value 1 in each character received. A) echo check B) field check C) parity check D) trailer record

42) Which of the following is not a risk associated with the data input process? A) Data is invalid. B) Data is incomplete. C) Data is inaccurate. D) Data is corrupted.

43) Which of the following is an example of a turnaround document? A) a receipt a customer must use to return the goods purchased B) a telephone bill the customer must return with payment C) a paycheck stub that must be used in the employee's tax return D) a customer loyalty card used every time a customer purchases goods or services

44) Which of the following is a control is an important way to prevent buffer overflow vulnerabilities? A) limit check B) size check C) range check D) field check

7) When a computer system's files are automatically duplicated on a second data storage system as they are changed, the process is referred to as A) real-time mirroring. B) batch updating. C) consistency control. D) double-secure storage.

7) ________ is a data entry input control that involves summing the first four digits of a customer number to calculate the value of the fifth digit, then comparing the calculated number to the number entered during data entry. A) Validity check B) Duplicate data check C) Closed-loop verification D) Check digit verification

7. Unauthorized adjusting entries (Post adjusting entries)

7.1 Access controls 7.2 Reconciliations and control reports 7.3 Audit trail creation and review

7. Uncollectible accounts (sales order entry)

7.1 Credit limits 7.2 Specific authorization to approve sales to new customers or sales that exceed a customer's credit limit 7.3 Aging of accounts receivable

15) The maximum acceptable down time after a computer system failure is determined by a company's A) recovery time objective. B) recovery point objective. C) recovery objective. D) maximum time recovery objective.

42) A computer operator accidentally used the wrong master file when updating a transaction file. As a result, the master file data is now unreadable. Which control could best have prevented this from happening? A) Header record. B) Validity check. C) Trailer record. D) Parity check.

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.

kickbacks

A fraud in which a supplier pays a buyer or purchasing agent in order to sell its products or services.

Which data entry application control would detect and prevent entry of alphabetic characters as the price of an inventory item? a. field check b. limit check c. reasonableness check d. sign check

Which of the following statements is true? a. Incremental daily backups are faster to perform than differential daily back- ups, but restoration is slower and more complex. b. Incremental daily backups are faster to perform than differential daily backups, and restoration is faster and simpler. c. Differential daily backups are faster to perform than incremental daily back- ups, but restoration is slower and more complex. d. Differential daily backups are faster to perform than incremental daily backups, and restoration is faster and simpler.

Backup

A copy of a database, file, or software program.

Archive

A copy of a database, master file, or software that is retained indefinitely as a historical record, usually to satisfy legal and regulatory requirements.

job order costing

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

Parity Checking

A data transmission control in which the receiving device recalculates the parity bit to verify accuracy of transmitted data.

Checksum

A data transmission control that uses a has of a file to verify accuracy.

Hot Site

A disaster recovery option that relies on access to a completely operational alternative data center that is not only prewired but also contains all necessary hardware and software.

Cold Site

A disaster recovery option that relies on access to an alternative facility that is prewired for necessary telephone and Internet access, but does not contain any computing equipment.

purchase requisition

A document only used internally to initiate the purchase of materials, supplies, or services.

production order

A document that authorizes the manufacture of a finished good.

Cost driver

A factor that causes costs to change.

bill of materials

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

throughput

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

48) Which of the following scenarios will not be allowed under IFRS?

A) A landscaping and garden retail store keeps piles of river rock, gravel, paving stones, and small decorative rocks in a fenced area on the side of the store. The store uses the most recent inventory costs when calculating cost of goods sold, since new inventory is piled on top of the older inventory.

1) Requiring all packing slips be reconciled to purchase orders before accepting a delivery of inventory would be most likely to prevent which of the following situations? A) A supplier delivers more inventory than ordered at the end of the year and sends an invoice for the total quantity delivered. B) An employee mails a fake invoice to the company, which is then paid. C) The inventory records are incorrectly updated when a receiving department employee enters the wrong product number on the receiving report. D) Receiving department employees steal inventory and then claim the inventory was received and delivered to the warehouse.

A) A supplier delivers more inventory than ordered at the end of the year and sends an invoice for the total quantity delivered.

22) The receiving clerk at Wattana Technologies examines incoming shipments and reconciles their contents with the relevant purchase orders. A receiving report is then sent to accounts receivable and the vendor's invoice is approved for payment. Which of the following would correct control weaknesses related to these activities? A) Accounts payable should reconcile the purchase order and the receiving report. B) The invoice should be approved for payment by the shipping clerk after the purchase order and receiving report are reconciled. C) Invoices, purchase orders, and receiving reports should be reconciled by the receiving clerk. D) Controls are adequate under the current system.

A) Accounts payable should reconcile the purchase order and the receiving report.

11) Which control would best prevent payments made to fictitious vendors? A) Allow payments only to approved vendors. B) Restrict access to any payment or approval documents. C) Have an independent bank reconciliation. D) Make sure all documents are in order before approving payments.

A) Allow payments only to approved vendors

32) Which of the following statements is not true about an XBRL instance document?

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

45) The legitimacy of customer orders is established by ________ in paper-based customer orders. A) the customer's signature B) the customer's pin number C) the customer's verbal authorization D) prior experience with the customer

A) the customer's signature

47) For strongest segregation of duties, the credit manager should never report to A) the marketing department. B) the accounting department. C) the credit department. D) the IT department.

A) the marketing department.

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

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

1) The best example of a hash total for a payroll transaction file could be

A) total of employees' social security numbers.

56) A JIT inventory system would be especially useful for a company that manufactures A) toys associated with new movie releases. B) toothpaste. C) alarm clocks. D) motor oil.

A) toys associated with new movie releases.

7) Suppose management wanted to increase the speed of processing customer payments. One way to speed up payment transaction processing is to A) use a FEDI. B) use JEDI analysis software. C) eliminate credit sales. D) extend the amount of credit offered to customers.

A) use a FEDI.

34) A type of data entry control that would ensure that adjusting entries are posted to existing general ledger accounts is called a(n) ________ check.

A) validity

What control procedure(s) should be used to reduce the risk of unauthorized disclosure of the financial statements? 1) multifactor authentication 2) physical security 3) encryption 4) All of these

All of these

Which of the following are appropriate controls for the general ledger and reporting system? 1) using well-designed documents and records 2) online data entry with the use of appropriate edit checks 3) prenumbering documents and accounting for the sequence numbers 4) All of these are appropriate.

All of these are appropriate.

Which of the following tasks are facilitated by maintaining a strong and secure audit trail? 1) tracing a transaction from original source document to the general ledger to a report 2) tracing an item in a report back through the general ledger to the original source document 3) tracing changes in general ledger accounts from beginning to ending balances 4) All of these are facilitated by the audit trail.

All of these are facilitated by the audit trail.

6) If invoices are processed in groups of fifty, which fields from the document shown below would not be used to create a hash control total? A) Amount B) Item Number C) Quantity Ordered D) Sales Order number

Amount

blanket purchase order

An agreement to purchase set quantities at specified intervals from a specific supplier.

Uninterruptible Power Supply (UPS)

An alternative power supply device that protects against the loss of power and fluctuations in the power to enable the system to operate long enough to back up critical data and safely shut down.

Reasonableness Test

An edit check of the logical correctness of relationships among data items.

Prompting

An online data entry completeness check that requests each required item of input data and then waits for an acceptable response before requesting the next required item.

Disaster recovery and testing plans should be done:

At least annually.

45) The control that verifies accuracy by comparing two alternative ways of calculating the same total is called A) concurrent update controls. B) cross-footing balance test. C) data conversion controls. D) recalculation of batch totals.

Information that needs to be stored securely for 10 years or more would most likely be stored in which type of file? a. backup b. archive c. encrypted d. log

Which disaster recovery strategy involves contracting for use of a physical site to which all necessary computing equipment will be delivered within 24 to 36 hours? a. virtualization b. cold site c. hot site d. data mirroring

Which of the following is an example of the kind of batch total called a hash total? a. the sum of the purchase amount field in a set of purchase orders b. the sum of the purchase order number field in a set of purchase orders c. the number of completed documents in a set of purchase orders d. all of the above

Which of the following measures the amount of data that might be potentially lost as a result of a system failure? a. recovery time objective (RTO) b. recovery point objective (RPO) c. disaster recovery plan (DRP) d. business continuity plan (BCP)

Which of the following provides detailed procedures to resolve the problems resulting from a flash flood that completely destroys a company's data center? a. backup plan b. disaster recovery plan (DRP) c. business continuity plan (BCP) d. archive plan

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 United stated the default is opt-in. b. The default policy in Europe is opt-in, but in the United States the default is opt-out. c. The default policy in both Europe and the United States is opt-in. d. The default policy in both Europe and the United States is opt-out.

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.

Which of the following statements is true? a. Symmetric encryption is faster than asymmetric encryption and can be used to provide non-repudiation of contracts. b. Symmetric encryption is faster than asymmetric encryption but cannot be used to provide non-repudiation of contracts. c. Asymmetric encryption is faster than symmetric encryption and can be used to provide non-repudiation of contracts. d. Asymmetric encryption is faster than symmetric encryption but cannot be used to provide non-repudiation of contracts.

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

37) Which of the following balanced scorecard dimensions provides measures on how efficiently and effectively the organization is performing key business processes?

B) internal operations

14) The basic document created in the billing process is call a ________. A) bill of lading B) sales invoice C) sales order D) packing list

B) sales invoice

three quarters of its revenue from orders taken over the Internet. The revenue clearing account is debited by the total of cash and credit receipts and credited by the total of storefront and Internet sales. This is an example of a A) data integrity test. B) zero-balance test. C) trial balance audit. D) cross-footing balance test.

If an organization asks you to disclose your date of birth and your address, but refuses to let you review or correct the information you provided, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Collection B) Access C) Security D) Choice and consent

B) Access

11) Special software packages called ________ can help an organization manage customer service. A) EDI systems B) CRM systems C) POS systems D) VMI systems

B) CRM systems

27) This tests a numerical amount to ensure that it does not exceed a predetermined value.

B) Limit check

57) Which of the following factors is not of key importance when selecting inventory suppliers? A) product price B) vendor corporate structure C) product quality D) vendor delivery dependability

B) vendor corporate structure

10) Checking the quantity of inventory available before accepting a sales order is a good practice for all of the reasons except to A) determine which items may need to be back ordered. B) verify the accuracy of the perpetual inventory records. C) inform the customer about availability and delivery times. D) update inventory records to reduce the quantity available by the number of items ordered.

B) verify the accuracy of the perpetual inventory records.

12) When would an MRP inventory approach be a preferred to a JIT inventory approach? A) when a product has a short life cycle B) when demand for inventory is fairly predictable C) when demand for inventory is very unpredictable D) MRP is always a preferred method over JIT.

B) when demand for inventory is fairly predictable

B) zero-balance test.

What are the different types of batch totals

Batch totals Summarize numeric values for a batch of input records -Financial total -Hash total -Record count

Which of the following revenue cycle activities can potentially be eliminated by technology? a. sales order entry b. shipping c. billing d. cash collections

Billing

The benefits of XBRL include 1) organizations can publish financial information only once, using standard XBRL tags. 2) tagged data is readable and interpretable by computers, so users don't need re-enter data into order to work with it. 3) Both are benefits of XBRL.

Both are benefits of XBRL.

36) The batch processing data entry control that sums a non-financial numeric field is called A) record count. B) financial total. C) hash total. D) sequence check.

Confidentiality focuses on protecting _________. a. Personal information collected from customers. b. A company's annual report stored on its website. c. Merger ans acquisition plans. d. All of the above

One of the ten GAAP concerns security. According to GAAP, what is the nature of the relationship between security and privacy? a. Privacy is 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.

Which of the following controls would prevent entry of a nonexistent customer number in a sales transaction? a. field check b. completeness check c. validity check d. batch tota

Which of the following is a control that can be used to verify the accuracy of information transmitted over a network? a. completeness check b. check digit c. parity bit d. size check

30) If available, a 1% discount for payment within 10 days instead of 30 days represents an approximate savings of ________% annually. A) 1 B) 12 C) 18 D) 36

C) 18

56) The accounting department at Synergy Hydroelectric records an average of 10,000 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 20,000 transactions. If the firm's recovery time objective is 60 minutes, then the worst case recovery time objective is

C) 3 hours

30) The benefits of XBRL include:

C) Both are benefits of XBRL.

3) Following is the result of batch control totals on employee Social Security Numbers in a payroll processing transaction: Correct Values From Masterfile Values Entered During Processing 487358796 487358796 534916487 534916487 498374526 498374526 514873420 514873420 534196487 534916487 678487853 678487853 471230589 471230589 3719438158 3720158158 The difference in the control totals is 720,000. Which data entry control would best prevent similar data entry errors in the future?

C) Check digit

If an organization asks you to disclose your social security number, yet fails to permit you to opt-out before you provide the information, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Management B) Notice C) Choice and consent D) Use and retention

C) Choice and consent

50) While this type of backup process takes longer than the alternative, restoration is easier and faster.

C) Differential backup

52) ________ copies all changes made since the last full backup.

C) Differential backup

14) What control should be put in place that assigns responsibility for EFT payments made to vendors? A) Encrypt all EFT transmissions. B) Time stamp all EFT transactions. C) Establish a control group to monitor EFT transactions for validity and accuracy. D) Number all EFT transactions

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

22) This ensures that the input data will fit into the assigned field.

C) Size check

n a private key system the sender and the receiver have ________, and in the public key system they have ________. A) different keys; the same key B) a decrypting algorithm; an encrypting algorithm C) the same key; two separate keys D) an encrypting algorithm; a decrypting algorithm

C) the same key; two separate keys

Using a combination of symmetric and asymmetric key encryption, Sofia Chiamaka sent a report to her home office in Bangalore, India. She received an e-mail acknowledgement that her report had been received, but a few minutes later she received a second e-mail that contained a different hash total than the one associated with her report. This most likely explanation for this result is that A) the public key had been compromised. B) the private key had been compromised. C) the symmetric encryption key had been compromised. D) the asymmetric encryption key had been compromised.

C) the symmetric encryption key had been compromised.

31) Why would a firm perform ABC cost analysis? A) to identify the best inventory supplier B) to reconcile accounts payable C) to prioritize physical inventory counts D) to verify production quality

C) to prioritize physical inventory counts

39) Information about financing and investing activities for use in making general ledger entries is typically provided by the

C) treasurer.

30) Identify one way to improve the accuracy of inventory records that use a perpetual inventory approach A) use of an ERP system B) require the accounting department to calculate cost of goods sold periodically C) use IT to eliminate the need for manual data entry D) use of an MRP inventory system

C) use IT to eliminate the need for manual data entry

15) An effective way an organization can eliminate paper paychecks while maintaining adequate accounting records is to A) pay in cash only. B) pay with money orders. C) use direct deposit. D) use Electronic Funds Transfer.

C) use direct deposit.

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. billing b. accounts receivable c. cashier d. sales

Cashier

Important change management controls would not include

Change requests have to be documented. User rights and privileges should be reviewed after the change process is completed. (This is a change management control.)

Check digit

5) A customer failed to include her account number on her check, and the accounts receivable clerk credited her payment to a different customer with the same last name. Which control could have been used to most effectively to prevent this error? A) Closed-loop verification B) Duplicate values check C) Validity check D) Reconciliation of a batch control total

Closed-loop verification

The following controls checks the accuracy of input data by using it to retrieve and display other related information?

Closed-loop verification.

61) Which of the following is true? A) Cloud computing is a control technique for system availability. B) Cloud computing eliminates the need for backup of applications and data. C) Cloud computing refers to the practice of storing application files and backup data on satellites 'in the clouds'. D) Cloud computing eliminates the need for companies to own their own software and servers.

Cloud computing is a control technique for system availability.

Which disaster recovery strategy involves contracting for use of physical site to which all necessary computing equipment will be delivered within 24 to 36 hours?

Cold Site.

37) This control protects records from errors that occur when two or more users attempt to update the same record simultaneously. A) Concurrent update controls B) Cross-footing balance test C) Data conversion controls D) Recalculation of batch totals

Concurrent update controls

Creation and review of an audit trail is a detective control that can enable organizations to find and correct problems arising from a. Inaccurate updating of the general ledger b. Unauthorized adjusting entries c. Both a and b d. Neither a nor b

For good internal control, who should approve credit memos? a. credit manager b. sales manager c. billing manager d. controller

Credit manager

27) A completeness check is an example of a(n) A) data transmission control. B) output control. C) processing control. D) input control.

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 again using Baker's public key. d. Encrypt the file using Able's private key, and then encrypt it again using Baker's public key.

Employee Name Overtime Hours Mary Jones 10 Tom Davis -5 Amy Dunn 3 Kate Smith 2 Kevin White -4 Jill Brown 800 The total overtime hours is 806. Which data entry control would best prevent similar data entry errors in the future? A) Sequence check. B) Validity check. C) Check digit. D) Reasonableness test.

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

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.

Which of the following statements is true? a. Virtualization significantly reduces RTO for hardware problems. b. Cloud computing reduces the risk that a single catastrophe from either a natural disaster or terrorist attack would result in significant downtime and loss of availability. c. Backups still need to be made when using either virtualization or cloud computing. d. All of the above are true.

15) The average annual management salary at Iyov Management is $80,000. If the average turnover rate for employees is ten per year, what is the approximate average annual cost of turnover? A) $80,000 B) $400,000 C) $800,000 D) $1,200,000

D) $1,200,000

Under CAN-SPAM legislation, an organization that receives an opt-out request from an individual has ________ days to implement steps to ensure they do not send out any additional unsolicited e-mail to the individual again. A) 2 B) 5 C) 7 D) 10

D) 10

D) 2 hours

55) The accounting department at Synergy Hydroelectric records an average of 12,500 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 25,000 transactions. If the firm's recovery time objective is 120 minutes, then the worst case recovery time objective is

D) 4 hours

51) ________ involves copying only the data items that have changed since the last partial backup

D) Incremental backup

The system and processes used to issue and manage asymmetric keys and digital certificates are known as A) asymmetric encryption. B) certificate authority. C) digital signature. D) public key infrastructure.

D) public key infrastructure.

7) During the sales order entry process, a ________ is performed to compare the quantity ordered with the standard amounts normally ordered. A) completeness test B) redundant data check C) field check D) reasonableness test

D) reasonableness test

24) Internal file labels can be used to prevent the loss of data in the revenue cycle since they A) record off-site storage locations. B) keep competitors from accessing files. C) organize the on-site physical storage site. D) reduce the possibility of erasing important files.

D) reduce the possibility of erasing important files.

50) While this type of backup process takes longer than the alternative, restoration is easier and faster. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

Differential backup

52) ________ copies all changes made since the last full backup. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

Differential backup

The following backup procedures copies all changes made since the last full backup?

Differential backup.

picking ticket

Document that authorizes removal of merchandise from inventory

credit memo

Document used to authorize reducing the balance in a customer account

bill of lading

Document used to establish responsibility for shipping goods via a third party

back order

Document used to indicate stock outs exist

Which of the following controls would be most effective in mitigating the risk of inventory theft? a. Reconciling shipping documents to sales orders, picking lists and packing slips. b. Separating the functions of shipping and billing c. Documentation of all transfers of inventory between employees d. Use of lockboxes

Documentation of all transfers of inventory between employees

Full Backup

Exact copy of an entire database.

Which of the following techniques is the most efficient way to process customer payments and update accounts receivable? a. EFT b. UPIC c. FEDI d. ACH

FEDI

36) Best practice requires backups be retained indefinitely

False

Which section of the Balanced Scorecard would benefit most from collecting data from external parties, rather than relying on internally-generated data? a. Financial b. Customer c. Internal Operations d. Innovation and Learning

Financial

28) This batch processing data entry control sums a field that contains dollar values. A) Record count B) Financial total C) Hash total D) Sequence check

Financial total

Preparing batch totals is the ___ step in processing credit sales transactions.

First.

Fraudulent financial reporting is a concern in the GL/reporting cycle. The best control to deal with that potential problem is a. Proper segregation of duties b. Processing integrity controls such as validity checks c. An independent audit of all adjusting entries d. Requiring mandatory vacations for all managers e. Prenumbering of all documents

Which of the following pairs of duties combines the functions of custody and authorization in a manner that would allow an employee to conceal the theft of a customer's payment? a. Handling cash receipts plus maintaining accounts receivable b. Writing checks plus reconciling the bank statement c. Handling cash receipts plus issuing credit memos d. All of the combinations involve custody and authorization in a manner that would enable an employee to conceal theft of a customer's payment e. None of the combinations involve the functions of custody and authorization in a manner that would enable an employee to conceal theft of a customer's payment

Handling cash receipts plus issuing credit memos

Threats to system availability include:

Hardware and software failures, natural disasters, and human error.

A facility that is not only pre-wired for telephone and Internet access but also contains all the computing and office equipment the organization needs to perform its essential business activities.

Hot Site.

Check Digit

ID numbers (such as employee number) can contain a check digit computed from the other digits.

51) ________ involves copying only the data items that have changed since the last partial backup. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

Incremental backup

Which of the following shows the implied causal linkages among the portions of the balanced scorecard? a. Financial Internal Innovation and learning Customer b. Innovation and learning Internal Customer Financial c. Customer Financial Internal Innovation and learning d. Internal Customer Innovation and learning Financial

Innovation and learning Internal Customer Financial

12) Forms design is an example of this type of control. A) Data entry control B) Processing control C) Output control D) Input control

Input control

Internal header label

IFRS is an acronym for what?

International Financial Reporting Standards

Which of the following types of fraud requires access to the accounts receivable master file? a. Lapping b. Kiting c. Theft of inventory d. None of the above

Lapping

27) This tests a numerical amount to ensure that it does not exceed a predetermined value. A) Completeness check B) Limit check C) Range check D) Sign check

Limit check

Which of the following XBRL components contains information about which items should be summed to create a category total (e.g., which items comprise current liabilities)? a. Instance document b. Style sheet c. Taxonomy d. Linkbase e. Schema

Linkbase

Which of the following provides a means to both improve the efficiency of processing customer payments also enhance control over those payments? a. CRM b. lockboxes c. shipping order d. sales invoice

Lockboxes

41) What is the most effective way to ensure information system availability? A) High bandwidth B) Maintain a hot site C) Maintain a cold site D) Frequent backups

Maintain a hot site

Real-Time Mirroring

Maintaining complete copies of a database at two separate data centers and updating both copies in real-time as each transaction occurs.

credit limit

Maximum possible account balance for a customer

Which method is most likely used when a company offers customers discounts for prompt payment? a. open-invoice method b. balance-forward method c. accounts receivable aging method d. cycle billing method

Open-invoice method

open-invoice method

Method of maintaining customer accounts that generates payments for each individual sales transaction

For good internal control in an ERP system, sales staff should be permitted to: a. Adjust customer credit limits b. Issue credit memos c. Both of the above d. Neither of the above

Neither of the above

For effective internal control, which of the following duties can the person who handles customer payments also perform? a. Issue credit memos b. Reconcile the bank account c. Maintain accounts receivable d. All of the above e. None of the above

None of the above

Which of the following violates proper segregation of duties? a. The same person maintains both accounts receivable and accounts payable. b. The same person approves sales orders that exceed a customer's credit limit and processes and reconciles the bank account. c. The same person handles customer payments and has access to blank checks. d. All of the above combinations violate proper segregation of duties. e. None of the above combinations violate proper segregation of duties.

None of the above combinations violate proper segregation of duties.

Which document often accompanies merchandise shipped to a customer? a. picking ticket b. packing slip c. credit memo d. sales order

Packing slip

This control can be used to verify the accuracy of information transmitted over a network?

Parity Bit. (A parity bit is a communications control that counts the number of bits in order to verify the integrity of data sent and received.)

59) This control entails verifying that the proper number of bits are set to the value 1 in each character received. A) Echo check B) Field check C) Parity check D) Trailer record

Parity check

43) Which of the following is not an objective of a disaster recovery plan? A) Minimize the extent of the disruption, damage or loss. B) Permanently establish an alternative means of processing information. C) Resume normal operations as soon as possible. D) Train employees for emergency operations.

Permanently establish an alternative means of processing information.

Which document is used to authorize the release of merchandise from the inventory control [warehousing] to shipping? a. picking ticket b. packing slip c. shipping order d. sales invoice

Picking ticket

lockbox

Post office box to which customers send payments

cycle billing

Process of dividing customer account master file into subsets and preparing invoices for one subset at a time

Online processing data entry controls include:

Prompting and closed loop verification.

23) This tests a numerical amount to ensure that it does not exceed a predetermined value nor fall below another predetermined value. A) Completeness check B) Field check C) Limit check D) Range check

Range check

The following maintains two copies of a database in two separate data centers at all times and updating both copies in real-time as each transaction occurs.

Real-Time Mirroring.

25) This determines the correctness of the logical relationship between two data items. A) Range check B) Reasonableness test C) Sign check D) Size check

Reasonableness test

Check Digit Verification

Recalculating a check digit to verify that a data entry error has not been made.

The least expensive and effective option for replacing and computer equipment lost in a disaster is:

Reciprocal agreements with another organization that has similar equipment.

32) This batch processing data entry control sums the number of items in a batch. A) Financial total B) Hash total C) Record count D) Sequence check

Record count

This measures the amount of data that might be potentially lost as a result of a system failure?

Recovery Point Objective (RPO). The RPO measures the time between the last data backup and the occurrence of a problem.

4) Which of the following data entry controls would not be useful if you are recording the checkout of library books by members? A) Sequence check B) Prompting C) Validity check D) Concurrent update control

Sequence check

22) This ensures that the input data will fit into the assigned field. A) Limit check B) Range check C) Size check D) Validity check

Size check

What is SPAM, cookie, and identify theft

Spam - unsolicited e-mail that contains either advertising or offensive content. Identity theft - assuming someone's identity, usually for financial gain Cookie-A text file created by a Web site and stored on a visitor's hard drive. Cookies store information about who the user is and what the user has done on the site.

Identify the most correct statement with regard to how the various accounting subsystems update the general ledger.

Summary journal entries that represent the results of all transactions for a certain time period are used to update the general ledger.

CRM system

System that contains customer-related data organized in a manner to facilitate customer service, sales, and retention

FEDI

System that integrates EFT and EDI information

34) File labels are an example of A) data entry controls. B) output controls. C) processing controls. D) source data controls.

processing controls.

Recovery Point Objective (RPO)

The amount of data the organization is willing to reenter or potentially lose.

Fault Tolerance

The capability of a system to continue performing when there is a hardware failure.

imprest fund

The method used to maintain the cash balance in the petty cash account.

This is an example of the kind of batch total called a hash total.

The sum of the purchase order number field in a set of purchase orders. (The sum of purchruase order numbers has no intrinsic meaning.)

The balanced scorecard attempts to solve what major issue associated with traditional accounting reports?

Traditional accounting reports focus too narrowly on financial performance.

Who generally is responsible for providing the accounting department with information about financing and investing activities to create the appropriate general ledger journal entries?

Treasurer

16) The recovery point objective is inversely related to the frequency of backups

True

26) It is impossible to eliminate the risk of downtime.

True

27) Training can also reduce the risk of system downtime

True

Header Record

Type of internal label that appears at the beginning of each file and contains the file name, expiration date, and other file identification information.

Trailer Record

Type of internal label that appears at the end of a file; in transaction files, the trailer record contains the batch totals calculated during input.

Which of the following is not one of the principles of proper graph design for bar charts?

Use 3-D rather than 2-D bars to make reading easier.

Which of the following procedures, by itself, is most effective at preventing employees from stealing cash? a. Restrictively endorsing all checks from customers upon receipt b. Having someone who has no access to cash reconcile the bank accounts c. Sending monthly statements to customers d. Using lockboxes for customer remittances e. Creating invoices so that the bottom portion is to be returned as a remittance advice

Using lockboxes for customer remittances

33) This data entry control compares the ID number in transaction data to a master file to verify that the ID number exists. A) Reasonableness test B) User review C) Data matching D) Validity check

Validity check

This controls would prevent entry of a nonexistent customer number in a sales transaction?

Validity check. A validity check compares a customer number entered into a transaction record against the customer numbers that exist in the master file or database.

Online processing controls include:

Validity checks on the customer item numbers. Sign checks on inventory-on-hand balances. Limit checks.

What is a VPN

Virtual Private Network - Securely transmits encrypted data between sender and receiver Sender and receiver have the appropriate encryption and decryption keys

Which of the following XBRL components can, if used too much, limit the potential benefits of comparability across organizations? a. Presentation linkbases b. Taxonomy extensions c. Style sheets d. Schemas

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

XBRL

Which of the following is designed primarily to improve the efficiency of financial reporting? a. XML b. XBRL c. IFRS d. the balanced scorecard

XBRL

Which of the following statements is not true regarding XBRL?

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

Journal entries made by either the treasurer or controller should be subject to input edit and processing controls. A data entry application control that is designed to ensure that the total debits in a journal entry equal the total credits is called a . a. sign check b. equality check c. reasonableness check d. zero-balance check

Zero-balance check

audit trail

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

a validity check.

To maximize effectiveness of internal controls over payroll, which of the following persons should be responsible for distributing employee paychecks? a. departmental secretary b. payroll clerk c. controller d. departmental supervisor

a. departmental secretary

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. accrual b. deferral c. estimate d. revaluation

accrual

Recording interest earned on an investment is an example of which type of adjusting journal entry?

accrual entry

Not all journal entries affect cash flow. Adjusting entries that reflect events that have already occurred, but have no effect on cash, are classified as

accruals

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

all of the above

Which of the following statements is true? a. Financial statements report the value of employee knowledge and skills. b. Turnover and absenteeism are costly. c. All employees must fill out time cards. d. Default configurations of ERP packages typically provide good segregation of duties.

b. Turnover and absenteeism are costly.

Tokenization is a control that mitigates the risk of a. Inaccurate or invalid master data b. Unauthorized disclosure of sensitive data c. Unauthorized changes to payroll master data d. Inaccurate time and attendance data e. Theft of fraudulent distribution of paychecks

b. Unauthorized disclosure of sensitive data

Where should unclaimed paychecks be returned? a. HRM department b. cashier c. payroll department d. absent employee's supervisor

b. cashier

An application control that compares the amount of an employee's raise to that employee's existing salary is called a(n) . a. limit check b. range test c. reasonableness test d. check digit verification e. size check

b. range test

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

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

What control procedure(s) should be used to reduce the risk of the destruction of financial statement master data?

backup and disaster recovery

Which type of graph is the most commonly used to display trends in financial data?

bar chart

As responsibility reports are rolled up into reports for higher level executives, they

become less detailed.

7) A data entry input control in which the application software sums the first four digits of a customer number to calculate the value of the fifth digit and then compares the calculated number to the number typed in during data entry is an example of a A) check digit verification. B) validity check. C) closed-loop verification. D) duplicate data check.

check digit verification.

30) When I enter a correct customer number, the data entry screen displays the customer name and address. This is an example of A) prompting. B) preformatting. C) closed-loop verification. D) error checking.

closed-loop verification.

46) A facility that is pre-wired for necessary telecommunications and computer equipment, but doesn't have equipment installed, is known as a A) cold site. B) hot site. C) remote site. D) subsidiary location.

cold site.

A major way in which IFRS differs from GAAP that will affect the design of a company's general ledger and reporting system is an IFRS principle known as

componentization

36) Chaz Finnerty called the IT Help Desk in a huff. "I'm trying to open an Excel file and I get a message that says that the file is locked for editing. What's going on?" The answer is likely that A) the file is corrupted due to a computer virus. B) there is no problem. Chaz is editing the file, so it is locked. C) concurrent update controls have locked the file. D) Chaz probably opened the file as read

concurrent update controls have locked the file.

Performance reports for cost centers should compare actual versus budget ________ costs.

controllable

From where do adjusting entries usually come? a. treasurer b. controller c. various accounting cycle subsystems, such as sales order entry d. unit managers

controller

What does it mean to encrypt data

convert message into gibberish

Adjusting entries that are made to counteract the effects of errors found in the general ledger are called

corrections.

One way of ensuring that recurring adjusting journal entries are made each month would be to

create a standard adjusting journal entry file.

Which of the following control procedures is designed to reduce the risk of theft of paychecks or fraudulent distribution of paychecks? a. Restriction of access to blank payroll checks b. Prenumbering and periodically accounting for all paychecks c. Redepositing all unclaimed paychecks and investigating the reasons why the paychecks were not claimed d. All of the above e. None of the above

d. All of the above

The purpose of issuing earnings statements to employees is to mitigate the risk of a. Unauthorized changes to payroll master data b. Errors in processing payroll c. Theft or fraudulent distribution of paychecks d. Untimely payments

d. Untimely payments

20) Cancellation and storage of documents means that A) data are copied from a document and stored, after which the document is shredded. B) documents are defaced before being shredded. C) documents are defaced and stored. D) cancellation data are copied from documents before they are stored.

documents are defaced and stored.

Which of the following controls reduce the risk of issuing paychecks to a "phantom" or "ghost" employee? a. Restrict physical access to blank paychecks b. Prenumber all payroll checks c. Use an imprest account to clear payroll checks d. All of the above e. None of the above

e. None of the above

To implement proper segregation of duties, who should have the ability to create new records in the employee master file used for processing payroll? a. A payroll clerk b. Someone in HR c. The new employee's supervisor d. Any of the three people listed above could perform this task e. None of the three people listed above should perform this task

e. None of the three people listed above should perform this task

Which of the following is not a perspective reflected in the balanced scorecard?

efficiency and effectiveness perspective

Each specific data item in an XBRL document is called a(n)

element

Depreciation expense and bad debt expense are examples of which type of adjusting journal entry?

estimates

Which of the following balanced scorecard dimensions provides measures on new products?

innovation and learning

13) Sequentially prenumbered forms is an example of a(n) A) data entry control. B) data transmission control. C) processing control. D) input control.

input control.

14) Turnaround documents are an example of a(n) A) data entry control. B) output control. C) processing control. D) input control.

input control.

21) Check digit verification is an example of a(n) A) data transmission control. B) output control. C) processing control. D) input control.

input control.

Which of the following XBRL documents contains the actual data values for a company's net income for a particular year? a. style sheets b. schema c. linkbases d. instance document

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 scorecard? a. innovation and learning b. customer c. internal operations d. financial

internal operations

Which of the following balanced scorecard dimensions provides measures on how efficiently and effectively the organization is performing key business processes?

internal operations

Which of the following are used to document entries made to update the general ledger?

journal vouchers

What does a digital signature provide

non repudiation or how to create legally binding agreements that cannot be unilaterally repudiated by either party. party. Traditionally, this has been accomplished by physically signing contracts and other documents

What system privileges should an employee involved in the general ledger and reporting system be given?

only the specific privileges necessary to perform an employee's assigned duties

17) User reviews are an example of a(n) A) data entry control. B) data transmission control. C) output control. D) processing control.

output control.

Traditionally, accountants have been most involved with which portion of the HRM/payroll cycle? a. hiring b. payroll c. training d. performance evaluation

payroll

Which item below is not considered a major input to the general ledger and reporting system?

reports from managers

Which of the following graph design principles is most important for ensuring that financial data are accurately interpreted? a. including a title that summarizes the point of the graph b. attaching data values to specific elements in the graph c. starting the y-axis of the graph at zero d. using different colors for different variables

starting the y-axis of the graph at zero

What are the major privacy regulatory acts

the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH), and the Financial Services Modernization Act (commonly referred to as the Gramm-Leach-Bliley Act, representing the names of its three Congressional sponsors), impose specific requirements on organizations to protect the privacy of their customers' personal information

Corrections are entries made to correct errors found in

the general ledger

journal voucher file

the set of journal entries that updated the general ledger

Identify one way "rainbow tables" are often used.

to discover plaintext passwords associated with a hash

Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "Your journal entry must be a numeric value. Please reenter." This is an example of a

field check.

33) This data entry control compares the ID number in transaction data to a master file to verify that the ID number exists.

D) Validity check

What are key processing integrity input controls

- Input Process Stage Forms design Sequentially prenumbered Turnaround documents Cancelation and storage of source documents Data entry controls

What are key availability controls

-Minimize risk of system downtime -Quick and complete recovery and resumption of normal operations

15. Posting errors in accounts receivable (billing)

15.1 Data entry controls 15.2 Reconciliation of batch totals 15.3 Mailing of monthly statements to customers 15.4 Reconciliation of subsidiary accounts to general ledger

Which of the following scenarios will not be allowed under IFRS?

1) A landscaping and garden retail store keeps piles of river rock, gravel, paving stones, and small decorative rocks in a fenced area on the side of the store. The store uses the most recent inventory costs when calculating cost of goods sold, since new inventory is piled on top of the older inventory.

1) The best example of an effective payroll transaction file hash total would most likely be A) sum of net pay. B) total number of employees. C) sum of hours worked. D) total of employees' social security numbers.

1) What is the most effective way to ensure information system availability? A) high bandwidth B) maintain a hot site C) maintain a cold site D) frequent backups

Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "The account number referenced in your journal entry does not exist. Create a new account?" This is an example of a

1) validity check.

1. At which stage of the production process can accountants contribute to significantly reducing the cost of goods sold? a. Product design b. Planning and scheduling c. Production operations d. None of the above

the privacy controls

1. Management -Procedures and policies with assigned responsibility and accountability 2. Notice - Provide notice of privacy policies and practices prior to collecting data 3. Choice and consent Opt-in versus opt-out approaches 4. Collection Only collect needed information 5. Use, retention, and disposal Use the information only for stated business purpose. When no longer useful, dispose in a secure manner 6. Access Customer should be able to review, correct, or delete information collected on them 7. Disclosure to third parties 8. Security Protect from loss or unauthorized access 9.Quality 10. Monitoring and enforcement Procedures in responding to complaints Compliance

1. Move tickets are a control procedure designed to reduce the risk of a. Loss or destruction of production data b. Theft of inventory c. Disruption of operations d. Inappropriate allocation of overhead costs

1. For effective internal control, which of the following duties can the person who handles customer payments also perform? a. Issue credit memos b. Reconcile the bank account c. Maintain accounts receivable d. All of the above e. None of the above

1. For good internal control in an ERP system, sales staff should be permitted to: a. Adjust customer credit limits b. Issue credit memos c. Both of the above d. Neither of the above

the four basic actions that preserve the confidentiality

1. Identify and classify information to protect Where is it located and who has access? Classify value of information to organization 2. Encryption Protect information in transit and in storage 3.Access controls Information Rights Management (IRM) Data loss prevention (DLP) Digital watermarks 4.Training

1. In terms of quality control measures, scrap and rework costs are part of a. Prevention costs b. Inspection costs c. Internal failure costs d. External failure costs

1. In terms of quality control measures, the costs associated with issuing credit memos to customers who return defective products is part of a. Prevention costs b. Inspection costs c. Internal failure costs d. External failure costs e. None of the above

1. Kickbacks are a problem because they increase the risk of a. Purchasing inventory that is not needed b. Purchasing inferior quality items c. Purchasing at inflated prices d. All of the above e. None of the above

1. MRP-II would most likely be used by a company that produces a. Different grades of milk (e.g., whole, 2% and skim) b. Toner cartridges for laser printers c. Toys based on a new movie d. All of the above are equally amenable to MRP-II systems e. None of the above

What are the major generally accepted privacy principles

What determines the strength of encryption

1. Preventative control 2. Factors that influence encryption strength: - Key length (longer = stronger) - Algorithm - Management policies - Stored securely

What does privacy deal with

1. Spam-unsolicited e-mail that contains either advertising or offensive content. 2. Identity theft - assuming someone's identity, usually for financial gain.

What are the types of encryption

1. Symmetric - Uses one key to encrypt and decrypt - Both parties need to know the key Need to securely communicate the shared key Cannot share key with multiple parties, they get their own (different) key from the organization 2. Asymmetric - Uses two keys Public—everyone has access Private—used to decrypt (only known by you) Public key can be used by all your trading partners - Can create digital signatures

1. The CEO is concerned about the possibility of employees stealing inventory. In the formal language used for risk analysis, theft of inventory is referred to as a(n): a. risk b. exposure c. expected loss d. threat e. None of the above

1. The control procedure of cancelling the documents in a voucher package is designed to reduce the risk of a. Making duplicate payments b. Paying for items not received c. Fraudulent cash disbursements d. Failure to take advantage of discounts for prompt payment e. Theft of inventory

1. The control procedure of comparing a voucher package to vendor invoices is designed to reduce the risk of a. Failure to take advantage of discounts for prompt payment b. Mistakes in posting to accounts payable c. Paying for items not received d. Theft of inventory e. Making duplicate payments

1. The control procedure of prohibiting employees from accepting gifts is designed to reduce the risk of a. Theft of inventory b. Kickbacks c. Fraudulent cash disbursements d. Stockouts e. None of the above

1. Which threat is most likely to result in the largest losses in a short period of time? a. Alteration of checks or EFT payments b. Theft of inventory c. Duplicate payments to suppliers d. All of the above e. None of the above

1. Inaccurate or invalid general ledger data (general issues)

1.1 Data processing integrity controls 1.2 Restriction of access to general ledger 1.3 Review of all changes to general ledger data

1. Inaccurate or invalid master data

1.1 Data processing integrity controls 1.2 Restriction of access to master data 1.3 Review of all changes to master data

1. Inaccurate or invalid master data (General issues)

1.1 Data processing integrity controls 1.2 Restriction of access to master data 1.3 Review of all changes to master data

1. Inaccurate or invalid master data (general issues)

1.1 Data processing integrity controls 1.2 Restriction of access to master data 1.3 Review of all changes to master data

1. Which control procedure would be most effective in reducing the risk of over- or under-production? a. Reviewing all changes to master data b. Activity-based costing c. Production planning systems d. Computer-integrated manufacturing e. Reports that highlight the components of throughput

1. Which of the following combinations of duties can the same employee perform without violating the principle of segregation of duties? a. Shipping inventory and billing customers b. Issuing credit memos and maintaining accounts receivable c. Taking customer orders and checking inventory availability d. All three of the listed combinations can be performed by the same person without violating the principle of segregation of duties e. None of the three listed combinations should be performed by the same person because all three combinations violate the principle of segregation of duties

1. Which of the following control procedures is designed to reduce the risk of check alteration fraud? a. ACH blocks on accounts not used for payments b. Use of dedicated computer and browser for online banking c. Establishing "Positive Pay" arrangements with banks d. Access controls for EFT terminals e. Prenumbering all checks

1. Which of the following documents is no longer needed if a company uses the evaluated receipts system (ERS) with its suppliers? a. Purchase Order b. Receiving Report c. Supplier Invoice d. Debit Memo e. None of the above

1. Which of the following is an example of the type of fraud referred to as misappropriation of assets? a. embezzlement b. lapping c. inventory theft d. all of the above e. none of the above

1. Which of the following is most likely the cost driver for accounts payable expenses associated with processing supplier invoices? a. Number of different parts purchased b. Total price of purchases c. Number of suppliers used d. Number of purchases made e. All of the metrics listed above

1. Which part of the throughput formula provides information about the impact of equipment downtime on overall productivity? a. Productive capacity b. Productive processing time c. Yield d. None of the above

How can a company minimize system downtime

1.Preventive maintenance 2.Fault tolerance Use of redundant components 3.Data center location and design Raised floor Fire suppression Air conditioning Uninterruptible power supply (UPS) Surge protection 4.Training 5.Patch management and antivirus software For quick and complete recovery and resumption of normal processing controls include: 1.Backup procedures Incremental Copies only items that have changed since last partial backup Differential backup Copies all changes made since last full backup 2.Disaster recovery plan (DRP) Procedures to restore organization's IT function Cold site Hot site 3.Business continuity plan (BCP) How to resume all operations, not just IT

10) While this type of backup process takes longer than the alternative, restoration is easier and faster. A) archive B) cloud computing C) differential backup D) incremental backup

15. Theft of inventory (receiving)

15.1 Restriction of physical access to inventory 15.2 Documentation of all transfers of inventory between receiving and inventory employees 15.3 Periodic physical counts of inventory and reconciliation to recorded quantities 15.4 Segregation of duties: custody of inventory versus receiving

2) Error logs and review are an example of A) data entry controls. B) data transmission controls. C) output controls. D) processing controls.

2) Which of the following statements is true with regards to system availability? A) Human error does not threaten system availability. B) Threats to system availability can be completely eliminated. C) Proper controls can maximize the risk of threats causing significant system downtime. D) Threats to system availability include hardware and software failures as well as natural and man-made disasters

2. Journal entries made by either the treasurer or controller should be subject to input edit and processing controls. A data entry application control that is designed to ensure that the total debits in a journal entry equal the total credits is called a __________. a. Sign check b. Equality check c. Reasonableness check d. Zero-balance check

2. Unauthorized disclosure of financial statement (general issues)

2.1 Access controls 2.2 Encryption

2. Unauthorized disclosure of sensitive information

2.1 Access controls 2.2 Encryption

2. Unauthorized disclosure of sensitive information (general issues)

2.1 Access controls 2.2 Encryption 2.3 Tokenization of customer personal information

20. Duplicate payments (cash disbursements)

20.1 Requiring a complete voucher package for all payments 20.2 Policy to pay only from original copies of supplier invoices 20.3 Canceling all supporting documents when payment is made

Identify the year the SEC will require American companies to switch from U.S.-based GAAP to IFRS as the basis for preparing financial statements.

2016

3 hours

45) Prompting is a control that helps ensure A) transaction data are not lost. B) transactions data are accurate. C) transactions data are complete. D) transaction data are valid.

5) A customer failed to include her account number on her check, and the accounts receivable clerk credited her payment to a different customer with the same last name. Which control could have been used to most effectively to prevent this error? A) closed-loop verification B) duplicate values check C) validity check D) reconciliation of a batch control total

5) A facility that contains all the computing equipment the organization needs to perform its essential business activities is known as a A) cold site. B) hot site. C) remote site. D) subsidiary location.

5. Unauthorized journal entries (Update general ledger)

5.1 Access controls 5.2 Reconciliations and control reports 5.3 Audit trail creation and review

5. Incomplete/inaccurate orders (sales order entry)

5.1 Data entry edit controls 5.2 Restriction of access to master data

5. Stockouts and excess inventory (ordering)

5.1 Perpetual inventory system 5.2 Bar coding or RFID tags 5.3 Periodic physical counts of inventory

6. Unauthorized changes to payroll master data (update payroll master data)

6.1 Segregation of duties: HRM department updates master data, but only payroll department issues paychecks 6.2 Access controls

7. Purchasing at inflated prices (ordering)

7.1 Price lists 7.2 Competitive bidding 7.3 Review of purchase orders 7.4 Budgets

9) A copy of a database, master file, or software that will be retained indefinitely as a historical record is known as a(n) A) archive. B) cloud computing. C) differential backup. D) incremental backup

9) The inventory tracking system shows that 12 iPods were on hand before a customer brings three iPods to the register for purchase. The cashier accidentally enters the quantity sold as 30 instead of 3. Which data entry control would most effectively prevent this error? A) limit check B) sign check C) field check D) validity check

9. Fraudulent financial reporting (Prepare financial statements)

9.1 Audits

9. Loss of customers (sales order entry)

9.1 CRM systems, self-help websites, and proper evaluation of customer service ratings

9. Errors in processing payroll (prepare payroll)

9.1 Data processing integrity controls: batch totals, cross-footing of the payroll register, use of a payroll clearing account and a zero-balance check 9.2 Supervisory review of payroll register and other reports 9.3 Issuing earnings statements to employees 9.4 Review of IRS guidelines to ensure proper classification of workers as either employees or independent contractors

10) A copy of a database, master file, or software that will be retained indefinitely as a historical record is known as a(n) A) archive. B) cloud computing. C) differential backup. D) incremental backup.

12) ________ is a data entry input control that requests each input data item and waits for an acceptable response, ensures that all necessary data are entered. A) Prompting B) Duplicate data check C) Closed-loop verification D) Check digit verification

13) All of the following controls for online entry of a sales order would be useful except A) check digit verification on the dollar amount of the order. B) validity check on the inventory item numbers. C) field check on the customer ID and dollar amount of the order. D) concurrent update control.

15) A payroll clerk accidentally entered an employee's hours worked for the week as 380 instead of 38. The data entry control that would best prevent this error would be A) a limit check. B) a check digit. C) batch total reconciliation. D) a field check.

16) The data entry control that would best prevent entering an invoice received from a vendor who is not on an authorized supplier list is A) a validity check. B) an authorization check. C) a check digit. D) closed-loop verification.

2) The best example of an effective payroll transaction file financial total would most likely be A) sum of net pay. B) total number of employees. C) sum of hours worked. D) total of employees' social security numbers.

21) A validity check is an example of A) a data entry control. B) an output control. C) a data transmission control. D) an input control.

22) Identify the statement below which is true. A) Cloud computing is a control technique for system availability. B) Cloud computing eliminates the need for backup of applications and data. C) Cloud computing eliminates the need for companies to own their own software and servers. D) Cloud computing refers to the practice of storing application files and backup data on satellites "in the clouds."

25) A hash total is an example of which control below? A) Data entry control. B) Data transmission control. C) Processing control. D) Output control.

25) What is the primary objective of ensuring systems and information are available for use whenever needed? A) To minimize system downtime. B) To minimize system expense. C) To maximize system processing speed. D) To maximize sales.

22) The disbursement voucher and supporting documents are sent to the ________ for payment prior to the due date. A) cashier B) treasurer C) controller D) accounts payable department

A) cashier

26) Cancellation and storage of documents means A) documents are defaced and stored. B) documents are defaced before being shredded. C) cancellation data are copied from documents before they are stored. D) data are copied from a document and stored before it is being shredded.

28) With regards to systems availability, deploying and using multiple components provides an AIS with A) fault tolerance. B) cost savings. C) enhanced processing speed. D) maximum sales.

31) A ________ determines if all required data items have been entered. A) completeness check B) field check C) limit check D) range check

31) Which of the following is a key control regarding the minimization of system downtime? A) fault tolerance B) disaster recovery plans C) backup procedures D) all of the above

33) Which COBIT5 management practice addresses the importance of locating and designing the data centers housing mission-critical servers and databases so as to minimize the risks associated with natural and human-caused disasters? A) DSS01.04 B) DSS04.07 C) DSS03.05 D) DSS04.04

4) Error logs and review are an example of A) data entry controls. B) data transmission controls. C) output controls. D) processing controls.

44) The control that protects records from errors that occur when two or more users attempt to update the same record simultaneously is called A) concurrent update controls. B) cross-footing balance test. C) data conversion controls. D) recalculation of batch totals.

46) Modest Expectations Investment Services (MEIS) allows customers to manage their investments over the Internet. If customers attempt to sell more shares of a stock than they have in their account, an error message is displayed. This is an example of a A) reasonableness test. B) field check. C) validity check. D) limit check.

47) Modest Expectations Investment Services (MEIS) allows customers to manage their investments over the Internet. If customers attempt to spend more money than they have in their account, an error message is displayed. This is an example of a A) reasonableness test. B) field check. C) validity check. D) limit check.

6) A facility that is pre-wired for necessary telecommunications and computer equipment, but doesn't have equipment installed, is known as a A) cold site. B) hot site. C) remote site. D) subsidiary location.

8) ________ enables a system to continue functioning in the event that a particular component fails. A) An incremental backup procedure B) Fault tolerance C) Preventive maintenance D) A concurrent update control

20) When a proper segregation of duties exists in the area of handling cash receipts, the ________, who reports to the ________, actually handles the cash and is not the same person who posts cash receipts to customer accounts. A) cashier; treasurer B) cashier; controller C) accountant; treasurer D) accountant; controller

A) cashier; treasurer

8) All of the following controls for online entry of a sales order would be useful except

A) check digit verification on the dollar amount of the order.

A) check digit verification.

move ticket

A document that tracks the transfer of inventory from one work center to another.

27) A payroll clearing account is used to A) check the accuracy of payroll costs. B) speed up payroll transaction processing. C) reduce the transaction costs associated with payroll transaction processing. D) eliminate the need to manually record payroll transactions.

A) check the accuracy of payroll costs.

job time ticket

A document that records labor costs associated with manufacturing a product.

Master Production Schedule

A document that specifies how much of a finished good is to be produced during a specific time period.

debit memo

A document used to authorize a reduction in accounts payable when merchandise is returned to a supplier.

materials requisition

A document used to authorize removal of raw materials from inventory.

disbursement voucher

A document used to list each invoice being paid by a check.

receiving report

A document used to record the quantities and condition of items delivered by a supplier.

Redundant Arrays of Independent Drives (RAID)

A fault tolerance technique that records data on multiple disk drives instead of just one to reduce the risk of data loss.

46) A facility that is pre-wired for necessary telecommunications and computer equipment, but doesn't have equipment installed, is known as a

A) cold site.

1) Which activity below is not performed by Human Resources management (HRM)? A) compensation B) training C) discharge D) recruitment and hiring

A) compensation

8) During the sales order entry process, a ________ is performed to verify that each transaction record contains all appropriate data items. A) completeness test B) redundant data check C) field check D) reasonableness test

A) completeness test

9) ________ is a plan that specifies how to resume not only IT operations but all business processes in the event of a major calamity. A) Disaster recovery plan B) Business continuity plan C) Real-time monitoring plan D) Business contingency plan

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

B) Electronic time clocks

48) ________ enables a system to continue functioning in the event that a particular component fails.

B) Fault tolerance

28) This batch processing data entry control sums a field that contains dollar values.

B) Financial total

evaluated receipts settlement (ERS)

A process for approving supplier invoices based on a two-way match of the receiving report and purchase order.

Zero-Balance Test

A processing control that verifies that the balance of a control account equals zero after all entries to it have been made.

Cross-Footing Balance Test

A processing control which verifies accuracy by comparing two alternative ways of calculating the same total.

lean manufacturing

A production planning technique that is an extension of the just-in-time inventory control method.

8) How is credit approval generally handled for established customers with a documented payment history? A) A new credit application is requested. B) General authorization by a sales clerk C) Specific authorization by the credit manager D) A formal credit check should be made for each sale.

B) General authorization by a sales clerk

38) Accountants can help executive compensation plan boards A) comply with legal and regulatory requirements. B) by identifying the best ways to keep the details of compensation plans out of the hands of external parties. C) avoid paying excessive amounts of "perks" to executives. D) distribute information regarding how well each executive is performing their job.

A) comply with legal and regulatory requirements.

Turnaround Document

A record of company data sent to an external party and then returned by the external party for subsequent input to the system.

24) Performance reports for cost centers should compare actual versus budget ________ costs.

A) controllable

55) Ideally, inventory purchases occur in response to ________ in a JIT inventory system. A) customer demand B) optimal demand C) forecast demand D) supplier demand

A) customer demand

19) When a customer pays off the balance on an invoice, the payment is credited to the ________ file. A) customer master B) sales transaction C) cash receipts master D) All of the above are correct.

A) customer master

procurement card

A special purpose credit card used to purchase supplies.

15) A validity check is an example of a(n)

A) data entry control.

19) Batch totals are an example of a(n)

A) data entry control.

2) Error logs and review are an example of

A) data entry controls.

37) Evaluated receipt settlement increases efficiency by A) eliminating the need for receiving reports. B) eliminating the need for vendor invoices. C) eliminating the need for purchase orders. D) eliminating the need to prepare and mail checks.

B) eliminating the need for vendor invoices.

35) Ngai Nhung is the sales manager at Hung Technologies. At lunch with the company CEO, Ngai complained that a recent shipment from a vendor had been unsatisfactory and was returned. As a result, Hung's purchasing manager needed to send a ________ to the supplier. A) debit memo B) purchase order C) blanket purchase order D) receiving report

A) debit memo

46) The legitimacy of customer orders is established by ________ in Internet-based customer orders. A) digital signatures B) the customer's pin number C) the customer's credit card number D) prior experience with the customer

A) digital signatures

4) A disaster recovery plan typically does not include A) scheduled electronic vaulting of files. B) backup computer and telecommunication facilities. C) a system upgrade due to operating system software changes. D) uninterruptible power systems installed for key system components.

Identify one weakness of encryption below. A) Encrypted packets cannot be examined by a firewall. B) Encryption provides for both authentication and non-repudiation. C) Encryption protects the privacy of information during transmission. D) Encryption protects the confidentiality of information while in storage.

A) Encrypted packets cannot be examined by a firewall.

26) This determines if characters are of the proper type.

A) Field check

14) A way to incorporate the advantages of Electronic Data Interchange with the Electronic Funds Transfer is A) Financial Electronic Data Interchange. B) e-commerce. C) to use procurement cards. D) an electronic lockbox.

A) Financial Electronic Data Interchange.

vendor managed inventory

A system whereby suppliers are granted access to point-of-sale (POS) and inventory data in order to automatically replenish inventory levels.

47) Which of the following is true about IFRS?

A) Financial statements likely must be prepared using IFRS beginning in 2015

40) Identify one organization that quickly recovered from September 11th, 2001 due to its disaster recovery and business continuity plan. A) New York Stock Exchange B) NASDAQ C) New York Fire Department D) United Airlines

2) The following control can reduce the distribution of fraudulent paychecks. A) Have internal audit investigate unclaimed paychecks. B) Allow department managers to investigate unclaimed paychecks. C) Immediately mark "void" across all unclaimed paychecks. D) Match up all paychecks with time cards.

A) Have internal audit investigate unclaimed paychecks.

computer integrated manufacturing

A term used to refer to the use of robots and other IT techniques as part of the production process.

Identify the first step in protecting the confidentiality of intellectual property below. A) Identifying who has access to the intellectual property B) Identifying the means necessary to protect the intellectual property C) Identifying the weaknesses surrounding the creation of the intellectual property D) Identifying what controls should be placed around the intellectual property

A) Identifying who has access to the intellectual property

Hash Total

A type of batch total generated by summing values for a field that would not usually be totaled.

Record Count

A type of batch total that equals the number of records processed at a given time.

Financial Total

A type of batch total that equals the sum of a field that contains monetary values.

A) Internal header label

46) IFRS is an acronym for what?

A) International Financial Reporting Standards

Differential Backup

A type of partial backup that involves copying all changes made since the last full backup. Thus, each new differential backup file contains the cumulative effects of all activity since the last full backup.

Incremental Backup

A type of partial backup that involves copying only the data items that have changed since the last partial backup. This produces a set of incremental backup files, each containing the results of one day's transaction.

9) ________ attempts to minimize or eliminate carrying and stockout costs. A) Just-in-time inventory B) Materials requirements planning C) Economic order quantity D) Evaluated receipt settlement

A) Just-in-time inventory

41) What control are zero balance tests an example of? A) Data entry controls. B) Output controls. C) Processing controls. D) Source data controls.

If an organization asks you to disclose your social security number, but fails to establish a set of procedures and policies for protecting your privacy, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Management B) Notice C) Choice and consent D) Use and retention

A) Management

3) Which of the following would probably be the least effective control to mitigate the risk of paying a phony invoice payable for inventory purchases that were never made? A) Only pay from original invoices. B) Require three-way match for all inventory purchase invoices. C) Cancel all invoices and supporting documentation when paid. D) Establish strict access and authorization controls for the approved vendor master file.

A) Only pay from original invoices.

25) Which of the following would be the best control to prevent receiving department employees from stealing inventory and claiming the ordered quantity wasn't received from the vendor? A) Reconcile quantity on packing slip to physical count when accepting delivery. B) Restrict physical access to the receiving area. C) Require all deliveries be made at the receiving area. D) Require dual signatures on the move ticket when receiving delivers the inventory to the warehouse.

A) Reconcile quantity on packing slip to physical count when accepting delivery.

6) If invoices are processed in groups of fifty, which fields from the document shown below would not be used to create a hash control total? Invoice Number 34567 Invoice Alpha Omega Electronics 2431 Bradford Lane St. Louis, MO 63105-2311 Sold To: Hardware City 35 Appliance Way Phoenix, AZ 85201 Ship To: Hardware City 6742 Mesa Dr. Mesa, AZ 85264 Customer Order #- 7291 Our Sales Order #- 12345 Date Shipped- March 20, 2009 Shipped Via- Our Truck F.O.B.- 1/10, Net 30 Salesperson-JKL Quantity- 100 Item Number- 2741 Description- Calculator Unit Price- 17.95 Amount- 1795.00 Quantity- 50 Item Number- 3315 Description- Pager Unit Price- 49.95 Amount- 2497. 50 Pay this Amount- 4292.50 Thank You!

A) Amount

A) Closed-loop verification

61) Which of the following is true?

A) Cloud computing is a control technique for system availability.

If an organization asks you to disclose your social security number, but decides to use it for a different purpose than the one stated in the organization's privacy policies, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Collection B) Access C) Security D) Quality

A) Collection

24) This determines if all required data items have been entered.

A) Completeness check

37) This control protects records from errors that occur when two or more users attempt to update the same record simultaneously.

A) Concurrent update controls

21) Anong Mali is the purchasing manager at Wattana Technologies. She has responsibility for reviewing and authorizing purchase orders. Receiving reports are prepared by shipping and receiving based on the relevant purchase order(s). Purchase orders, receiving reports, and vendor invoices are reconciled by accounts payable, which authorizes payment. Which of the following would correct control weaknesses related to these activities? A) Controls are adequate under the current system. B) Accounts payable should authorize purchase orders. C) Receiving reports should be reviewed and corrected by the purchasing manager. D) Vendor invoices should be reviewed by the purchasing manager to ensure that they are correct.

A) Controls are adequate under the current system.

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

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

34) A growing number of companies require some of their upper level executives to spend time performing job duties of rank-and-file employees. When the CEO of Loews Hotels assumed the role of bellman, he discovered A) that the company's polyester uniform caused him to sweat a great deal. B) evidence of fraud in several hotel locations. C) instances where company employees fell asleep on the job. D) situations where employees were not treating customers properly.

A) that the company's polyester uniform caused him to sweat a great deal.

29) When purchasing miscellaneous supplies, companies can reduce costs, improve efficiency, and combat employee fraud by A) using procurement cards. B) implementing a JIT inventory system. C) requiring employees to personally purchase items then reimbursing employees at the end of each month. D) paying amounts out of petty cash.

A) using procurement cards.

42) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message, "The account number referenced in your journal entry does not exist. Do you want to create a new account?" This message was the result of a

A) validity check.

1) Which of the decisions below is not ordinarily found as part of the revenue cycle? A) What credit terms should be offered? B) How often should accounts receivable be subjected to audit? C) How can customer payments be processed to maximize cash flows? D) What are the optimal prices for each product or service?

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

41) What is the most effective way to ensure information system availability?

B) Maintain a hot site

If an organization asks you to disclose your social security number, but fails to tell you about its privacy policies and practices, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Management B) Notice C) Choice and consent D) Use and retention

B) Notice

43) Which of the following is not an objective of a disaster recovery plan?

B) Permanently establish an alternative means of processing information.

25) This determines the correctness of the logical relationship between two data items.

B) Reasonableness test

34) Identify the most accurate statement below. A) Several purchase requisitions are often created to fill one purchase order. B) Several purchase orders are often created to fill one purchase requisition. C) Every purchase requisition should lead to the creation of one purchase order. D) Every purchase order should lead to the creation of one purchase requisition.

B) Several purchase orders are often created to fill one purchase requisition.

43) When opening an Excel file, Sonja received a message saying that the file is locked for editing. This is happening because A) the file is corrupted due to a computer virus. B) Sonja opened the file as read-only. C) concurrent update controls have locked the file. D) there is no problem. Sonja is editing the file, so it is locked.

49) A ________ control entails verifying that the proper number of bits are set to the value 1 in each character received. A) echo check B) field check C) parity check D) trailer record

Sequence Check

An edit check that determines if a batch of input data is in the proper numerical or alphabetical sequence.

Size Check

An edit check that ensures the input data will fit into the assigned field.

Limit Check

An edit check that tests a numerical amount against a fixed value.

Range Check

An edit check that tests whether a data item falls within predetermined upper and lower limits.

Field Check

An edit check that tests whether the characters in a field are of the correct field type (e.g., numeric data in numeric fields).

Completeness Check (or test)

An edit check that verifies that all data required have been entered.

Sign Check

An edit check that verifies that the data in a field have the appropriate arithmetic sign.

Validity Check

An edit test that compares the ID code or account number in transaction data with similar data in the master file to verify that the account exists.

What is a digital certificate

An electronic document that certifies the identity of the owner of a particular public key and contains that party's public key.

9) What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded? A) General authorization to approve the order is given to sales clerks. B) Specific authorization must be granted by the credit manager. C) The sale should be rejected. D) The sales clerk should order a report from a credit bureau before approving the order.

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

Transposition Error

An error that results when numbers in two adjacent columns are inadvertently exchanged.

6) How is general ledger updating accomplished by the various accounting subsystems?

B) Summary journal entries that represent the results of all transactions for a certain time period are used to update the general ledger.

Parity Bit

An extra bit added to every character; used to check transmission accuracy.

38) Which of the following is not one of the principles of proper graph design for bar charts?

B) Use 3-D rather than 2-D bars to make reading easier.

5) Regularly reviewing an accounts receivable aging report can help management do what? A) identify customers who have not purchased anything lately B) determine whether changes are needed in the firm's credit policies C) improve the speed which customers make payments D) determine whether the firm's pricing policy is effective

B) determine whether changes are needed in the firm's credit policies

An independent audit of all adjusting entries

An electronic document that certifies the identity of the owner of a particular public key. A) asymmetric encryption B) digital certificate C) digital signature D) public key

B) digital certificate

7) What is the best control to mitigate the threat of paying prices that are too high for goods ordered? A) Require the receiving department to verify the existence of a valid purchase order. B) Use only approved suppliers and solicit competitive bids. C) Only pay invoices that are supported by the original voucher package. D) Use bar-code technology to eliminate data entry errors.

B) Use only approved suppliers and solicit competitive bids.

40) Adjusting entries that are made to recognize revenue that has been received but not yet earned are classified as

B) deferrals.

Closed-Loop Verification

An input validation method that uses data entered into the system to retrieve and display other related information so that the data entry person can verify the accuracy of the input data.

Which of the following statements is not true about an XBRL instance document?

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

economic order quantity

An inventory control system that seeks to minimize the sum of ordering, carrying, and stockout costs.

materials requirement planning (MRP)

An inventory control system that triggers production based on forecasted sales.

just in time (JIT) inventory

An inventory control system that triggers production based upon actual sales.

51) Explain the purpose of a journal voucher file.

Answer: A journal voucher is a form on which journal entries to update the general ledger are documented. The individual entries are stored in the journal voucher file. This file is equivalent to the general journal in a manual AIS. The journal voucher file forms an important part of the audit trail as well. Various internal controls must be implemented in order to maintain adequate security and access control over the file, because it provides a way to alter and change the data contained in the general ledger.

63) Define and contrast a recovery point objective and a recovery time objective.

Answer: A recovery point objective is the maximum amount of time that a firm is willing to risk the possible loss of transaction data. A recovery time objective is the maximum amount of time that a firm is willing to risk losing access to its accounting information system due to disaster.

54) How is an audit trail used in the general ledger and reporting system?

Answer: An audit trail shows the path of a transaction through the accounting system. It can provide information needed to trace any changes made to the general ledger by tracing either to or from an original source document to the general ledger. It helps in tracing all changes in general ledger accounts from beginning balances to ending balances as well as any adjustments made to the accounts.

Information that needs to be stored securely for 10 years or more would most likely to be stored in which type of file?

Archive.

34) Whose responsibility is it to determine the amount of time an organization can afford to be without its information system? A) The board of directors. B) Senior management. C) External auditors. D) COBIT.

56) Discuss the value and role of budgets as managerial reports.

Answer: Budgets are managerial reports that can be extracted from the general ledger and reporting system. Budgets are used for planning and evaluating the organization's performance. There are several different types of budgets that an organization may use in this regard. The operating budget shows the planned revenues and expenditures for each organizational unit. Cash flow budgets compare the estimated cash inflows from operations with planned expenditures, and they are particularly useful to determine the borrowing needs of the organization. A capital expenditure budget shows the projected cash inflows and outflows for a given project. Budgetary reports should be tailored to the nature of the unit or department being evaluated, and they should show actual versus projected budget amounts. Unfortunately, many budget amounts are viewed as fixed targets, and they are therefore static and inflexible. Such an approach may either reward or penalize managers for factors that are beyond their control. A solution to this problem is to develop a flexible budget, in which variable budgeted amounts change in relation to some measure of organizational activity, such as labor hours, or a percentage of sales. A flexible budget may also break amounts into their respective fixed and variable components. Variable amounts can then be adjusted for fluctuations in sales or production.

52) What is responsibility accounting?

Answer: Responsibility accounting involves the reporting of financial results on the basis of managerial responsibilities within an organization. Reports show actual amounts and variances to budget for the current month and year to date for items controllable at that level.

14) The maximum amount of time between backups is determined by a company's A) recovery time objective. B) recovery point objective. C) recovery objective. D) maximum time recovery objective.

22) Checksums is an example of a(n) A) data entry control. B) data transmission control. C) output control. D) processing control.

28) A ________ ensures input data will fit into the assigned field. A) limit check B) size check C) range check D) field check

29) Which of the following is not a common design feature of housing mission-critical servers and databases? A) Adequate air-conditioning systems to reduce the likelihood of damage due to overheating. B) Overhead sprinklers to provide protection from fire. C) Cables with special plugs that cannot be easily removed. D) Surge-protection devices to provide protection against temporary power fluctuations.

3) The best example of an effective payroll transaction file record count would most likely be A) sum of net pay. B) total number of employees. C) sum of FICA. D) total of employees' social security numbers.

3) Which of the following is not an objective of a disaster recovery plan? A) Minimize the extent of the disruption, damage or loss. B) Establish a permanent alternative means of processing information. C) Resume normal operations as soon as possible. D) Train employees for emergency operations.

32) A ________ determines the correctness of the logical relationship between two data items. A) range check B) reasonableness test C) sign check D) size check

14) Adjusting entries that are made to counteract the effects of errors found in the general ledger are called

B) corrections.

Both a and b

53) Prompting is a control that helps ensure A) transaction data are not lost. B) transactions data are accurate. C) transactions data are complete. D) transaction data are valid.

31) This control ensures that the correct and most current files are being updated.

C) File labels

29) This batch processing data entry control sums a non-financial numeric field.

C) Hash total

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

D) inaccurate calculation of overhead costs

11) While this type of backup process takes longer than the alternative, restoration is easier and faster. A) archive B) cloud computing C) differential backup D) incremental backup

11) ________ is a data entry input control that involves checking the accuracy of input data by using it to retrieve and display other related information. A) Validity check B) Duplicate data check C) Closed-loop verification D) Check digit verification

17) Form design is one example of a(n) A) output control. B) processing control. C) input control. D) data entry control.

18) Cancellation and storage of documents is one example of a(n) A) output control. B) processing control. C) input control. D) data entry control.

18) The accounting department at Aglaya Telecom records an average of 8,000 transactions per hour. A cost-benefit analysis leads management to conclude that the maximum acceptable amount of data loss is 32,000 transactions. If the firm's recovery time objective is 240 minutes, then the worst case recovery time objective is A) 4 hours. B) 8 hours. C) 16 hours. D) 24 hours.

19) The accounting department at Aglaya Telecom records an average of 8,000 transactions per hour and have a recovery time objective of 240 minutes. Aglaya recently suffered a hardware malfunction and it took the company 16 hours to recover their lost data. How many transactions did Aglaya recover? A) 52,000 transactions. B) 5,200 transactions. C) 32,000 transactions. D) 3,200 transactions.

23) Reconciliation procedures is an example of A) a data entry control. B) a data transmission control. C) an output control. D) a processing control.

24) Data matching is an example of a(n) A) data entry control. B) data transmission control. C) processing control. D) input control.

Encryption has a remarkably long and varied history. Spies have been using it to convey secret messages ever since there were secret messages to convey. One powerful method of encryption uses random digits. Two documents are prepared with the same random sequence of numbers. The spy is sent out with one and the spy master retains the other. The digits are used as follows. Suppose that the word to be encrypted is SPY and the random digits are 352. Then S becomes V (three letters after S), P becomes U (five letters after P), and Y becomes A (two letters after Y, restarting at A after Z). The spy would encrypt a message and then destroy the document used to encrypt it. This is an early example of A) a hashing algorithm. B) asymmetric key encryption. C) symmetric key encryption. D) public key encryption.

C) symmetric key encryption.

16) The management at Barks-a-Million is considering a new inventory control system. The current system is inadequate because it frequently causes stockouts that interrupt production and lead to excess stock of other materials — resulting in markdowns and high carrying costs. The new system will focus on ensuring that these costs are minimized. The new inventory control system will likely employ A) a reorder point. B) a just-in-time inventory system. C) the economic order quantity. D) materials requirements planning.

C) the economic order quantity

8) Entries to update the general ledger are often documented by which of the following?

D) journal vouchers

Which activity is part of the sales order entry process? a. setting customer credit limits b. preparing a bill of lading c. checking customer credit d. approving sales returns

Checking customer credit

voucher package

Combination of a purchase order, receiving report, and supplier invoice that all relate to the same transaction.

24) This determines if all required data items have been entered. A) Completeness check B) Field check C) Limit check D) Range check

Completeness check

26) What is not an advantage of using disbursement vouchers? A) Disbursement vouchers reduce the number of checks written. B) Disbursement vouchers can be prenumbered which simplifies the tracking of all payables. C) Disbursement vouchers facilitate separating the time of invoice approval from the time of invoice payment. D) There are no disadvantages to using disbursement vouchers.

D) There are no disadvantages to using disbursement vouchers.

Concurrent Update Controls

Controls that look out users to protect individual records from errors that could occur if multiple users attempted to update the same record simultaneously.

10) ________ is a data entry input control that involves summing the first four digits of a customer number to calculate the value of the fifth digit, then comparing the calculated number to the number entered during data entry. A) Validity check B) Duplicate data check C) Closed-loop verification D) Check digit verification

12) ________ involves copying only the data items that have changed since the last partial backup. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

17) The accounting department at Synergy Hydroelectric records an average of 12,500 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 50,000 transactions. If the firm's recovery time objective is 120 minutes, then the worst case recovery time objective is A) 2 hours. B) 4 hours. C) 6 hours. D) 8 hours.

19) Sequentially prenumbered forms are an example of a(n) A) data entry control. B) data transmission control. C) processing control. D) input control.

20) Turnaround documents are an example of a(n) A) data entry control. B) output control. C) processing control. D) input control.

29) A ________ determines whether the input data are of the proper type. A) limit check B) size check C) range check D) field check

12) Forms design is an example of this type of control.

D) Input control

True or False: The recovery point objective (RPO) represents the length of time that an organization is willing to attempt to function without its information system.

False.

True or False: Data transmission controls are considered to be processing controls.

False. Data transmission controls are output controls.

True or False: Differential daily backups are faster to perform than incremental daily backups, but restoration is slower and more complex.

False. Differential daily backups are slower than incremental daily backups, but restoration is faster and simpler because only the most recent differential daily backup and the last full backup files are required.

True or False: Differential daily backups are faster to perform than incremental daily backups, and restoration is faster and simpler.

False. Differential daily backups are slower to perform than incremental daily backups.

True or False: Incremental daily backups are faster to perform than differential daily backups, and restoration is faster and simpler.

False. Incremental daily backups produce separate backup files for each day since the last full backup, making restoration more complex.

True or False: A limit check has an upper and lower limit.

False. Limit checks do not exceed a predetermined value.

True or False: An incremental backup copies all changes since the last full backup.

False. This describes a differential backup.

48) ________ enables a system to continue functioning in the event that a particular component fails. A) An incremental backup procedure B) Fault tolerance C) Preventive maintenance D) A concurrent update control

Fault tolerance

26) This determines if characters are of the proper type. A) Field check B) Alpha C) Range check D) Reasonableness test

Field check

This data entry application control would detect and prevent entry of alphabetic characters as the price of an inventory item?

Field check. Field checks test whether data are numeric or alphabetic.

Data entry controls do include:

Field checks, sign checks, and range check.

31) This control ensures that the correct and most current files are being updated. A) Cross-footing balance test B) Data matching C) File labels D) Write-protect mechanism

File labels

57) Describe three threats in the general ledger and reporting system and identify corresponding controls for each threat.

THREAT 1: Errors in updating the general ledger because of inaccurate/incomplete journal entries or posting of journal entries Controls: (1) Input, edit, and processing controls over summary entries from subsystems. (a) Validity check over existence of general ledger accounts. (b) Field check over numeric data in amount field. (c) Zero-balance check ensures equality of debits and credits (d) Completeness test all pertinent data are entered (e) Redundant data check closed loop verification to see if on account numbers and descriptions, to ensure that the correct general ledger account is being accessed (f) Standard adjusting entry file for recurring entries improves accuracy of the process (g) Sign check on debit and credit entries (h) Calculation of run-to-run totals can verify the accuracy of journal voucher batch processing (2) Reconciliation and control reports can detect errors made during updating and processing; trial balances, clearing, and suspense accounts are examples (a) Balancing of control and subsidiary accounts (b) Control reports can help identify the source of errors in the general ledger update process listings of journal vouchers and general journal entries will show entries posted to the general ledger and ensures equality of debits and credits (3) The audit trail the path of transactions through the system-should be able to perform the following tasks: (a) Trace any transaction from its original source document to the general ledger; any other document or report using that data (b) Trace any item from a report or an output document to the general ledger and thence to the source document (c) Trace all changes in the general ledger balances from their beginning balance to their ending balance. THREAT 2: Loss or unauthorized disclosure or alteration of financial data Controls: (1) User IDs, passwords, and access controls should be used (2) Enforce segregation of duties (3) Adjusting entries only from the controller's area (4) Valid authorization for journal voucher submission. THREAT 3: Loss or destruction of the general ledger Controls: (1) Use of internal and external file labels to protect from accidental data loss (2) Make regular backup copies of the general ledger, one copy stored off-site (3) A good disaster recovery plan and (4) access and processing integrity controls to ensure confidentiality and accuracy of data transmitted to branch offices or externally. THREAT 4: Poor performance Controls: (1) XBRL, (2) redesign business processes, and (3) redesign metrics used to report results of business activities.

Budgets used for internal planning purposes and performance evaluation should be developed on the basis of

responsibility accounting.

44) Which item below would not typically be part of an adequate disaster recovery plan? A) a system upgrade due to operating system software changes B) uninterruptible power systems installed for key system components C) scheduled electronic vaulting of files D) backup computer and telecommunication facilities

a system upgrade due to operating system software changes

Batch Totals

The sum of a numerical item for a batch of documents, calculated prior to processing the batch, when the data are entered, and subsequently compared with computer-generated totals after each processing step to verify that the data was processed correctly.

instance document

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

XBRL linkbase

a file that defines relationships among XBRL elements

XBRL schema

a file that defines the attributes of XBRL elements

XBRL stylesheet

a file that explains how to display an XBRL instance document

Balanced Scorecard

a multi-dimensional performance report

Which department should have responsibility for authorizing pay-rate changes? a. timekeeping b. payroll c. HRM d. accounting

c. HRM

Which of the following is an important supporting document to authorize the transfer of funds to the payroll bank account? a. earnings statement b. time card c. payroll register d. W-2 form

c. payroll register

Use of a separate checking account for payroll is designed to reduce the risk of the threat of . a. unauthorized changes to the payroll master file b. errors in processing payroll c. theft or fraudulent disbursement of paychecks d. failure to make required payments to government tax agencies e. loss or destruction of payroll data

c. theft or fraudulent disbursement of paychecks

The ________ is the managerial report that shows planned cash inflows and outflows for major investments or acquisitions.

capital expenditures budget

8) All of the following controls for online entry of a sales order would be useful except A) check digit verification on the dollar amount of the order. B) validity check on the inventory item numbers. C) field check on the customer ID and dollar amount of the order. D) concurrent update control.

check digit verification on the dollar amount of the order.

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 document lists the current amount and year-to-date totals of gross pay, deductions, and net pay for one employee? a. payroll register b. time card c. paycheck d. earnings statement

d. earnings statement

Online processing is most useful for which of these tasks? a. preparing payroll checks b. reconciling job-time tickets and time cards c. paying payroll tax obligations d. making changes in employee benefit choices

d. making changes in employee benefit choices

15) A validity check is an example of a(n) A) data entry control. B) data transmission control. C) output control. D) input control.

data entry control.

19) Batch totals are an example of a(n) A) data entry control. B) data transmission control. C) output control. D) processing control.

data entry control.

2) Error logs and review are an example of A) data entry controls. B) data transmission controls. C) output controls. D) processing controls.

data entry controls.

16) Parity checks are an example of a(n) A) data entry control. B) data transmission control. C) output control. D) processing control.

data transmission control.

Identify the adjusting entry that is made at the end of an accounting period to reflect an exchange of cash prior to the performance of a related event is classified as a(n)

deferral entry.

An adjusting entry to record bad debt expense is an example of a(n) . a. accrual b. deferral c. estimate d. revaluation e. correction

estimate

responsibility accounting

evaluating performance based on controllable costs

flexible budget

evaluating performance by computing standards in light of actual activity levels

XBRL stands for

external business reporting language.

45) A facility that contains all the computing equipment the organization needs to perform its essential business activities is known as a A) cold site. B) hot site. C) remote site. D) subsidiary location.

hot site.

60) Probably the most important change management control is A) monitoring user rights and privileges during the change process. B) testing all changes thoroughly prior to implementation on a stand-alone computer. C) updating all documentation to reflect changes made to the system. D) management's careful monitoring and review.

management's careful monitoring and review.

Departments that mostly provide services to other units and charge those units for services rendered should be evaluated as ________ centers.

profit

47) When a computer system's files are automatically duplicated on a second data storage system as they are changed, the process is referred to as A) real-time mirroring. B) batch updating. C) consistency control. D) double-secure storage.

real-time mirroring.

38) Modest Expectations Investment Services (MEIS) allows customers to manage their investments over the Internet. If customers attempt to sell more shares of a stock than they have in their account, an error message is displayed. This is an example of a A) reasonableness test. B) field check. C) validity check. D) limit check.

reasonableness test.

39) Modest Expectations Investment Services (MEIS) allows customers to manage their investments over the Internet. If customers attempt to spend more money than they have in their account, an error message is displayed. This is an example of a A) reasonableness test. B) field check. C) validity check. D) limit check.

reasonableness test.

53) The maximum amount of time between backups is determined by a company's A) recovery time objective. B) recovery point objective. C) recovery objective. D) maximum time recovery objective.

recovery point objective.

54) The maximum acceptable down time after a computer system failure is determined by a company's A) recovery time objective. B) recovery point objective. C) recovery objective. D) maximum time recovery objective.

recovery time objective.

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

responsibility accounting system

Adjusting entries that reflect a change in accounting principle used to value inventories are classified as

revaluations.

Performance reports for sales departments should compare actual revenue versus budgeted

revenue

The definition of an XBRL element, including such information as whether its normal account balance is a debit or a credit, is found in which of the following? a. linkbase b. instance document c. schema d. style sheet

schema

9) A specific inventory record indicates that there were 12 items on hand before a customer brings two of the items to the check stand to be purchased. The cashier accidentally entered quantity 20 instead of 2. Which data entry control would best have prevented this error? A) sign check B) limit check C) validity check D) field check

sign check

10) Just-In-Time (JIT) inventory is best characterized by A) frequent deliveries of large quantities to be held at the work centers. B) frequent deliveries of smaller quantities of items to the work centers. C) less frequent deliveries of large quantities of goods to central receiving. D) infrequent bulk deliveries of items directly to work centers.

smaller quantities of items to the work centers.

13. Inaccurate payments (disburse payroll taxes and miscellaneous deductions)

13.1 Processing integrity controls 13.2 Supervisory review of reports 13.3 Employee review of earnings statement

13. Failure to bill (billing)

13.1 separation of billing and shipping functions 13.2 periodic reconciliation of invoices with sales orders, picking tickets, and shipping documents

21) Check digit verification is an example of a(n) A) data transmission control. B) output control. C) processing control. D) input control.

1. Which of the following pairs of duties combines the functions of custody and authorization in a manner that would allow an employee to conceal the theft of a customer's payment? a. Handling cash receipts plus maintaining accounts receivable b. Writing checks plus reconciling the bank statement c. Handling cash receipts plus issuing credit memos d. All of the combinations involve custody and authorization in a manner that would enable an employee to conceal theft of a customer's payment e. None of the combinations involve the functions of custody and authorization in a manner that would enable an employee to conceal theft of a customer's payment

1. Which of the following procedures, by itself, is most effective at preventing employees from stealing cash? a. Restrictively endorsing all checks from customers upon receipt b. Having someone who has no access to cash reconcile the bank accounts c. Sending monthly statements to customers d. Using lockboxes for customer remittances e. Creating invoices so that the bottom portion is to be returned as a remittance advice

1. Which of the following statements are true? a. Issuing employees procurement cards is an example of the control procedure referred to as "general authorization" b. Organizations can reduce the risk of fraudulent disbursements by sending their bank a list of all checks issued, a process referred to as "Positive Pay" c. Both of the statements above are true d. None of the statements above are true

1. Which of the following violates proper segregation of duties? a. The same person maintains both accounts receivable and accounts payable. b. The same person approves sales orders that exceed a customer's credit limit and processes and reconciles the bank account. c. The same person handles customer payments and has access to blank checks. d. All of the above combinations violate proper segregation of duties. e. None of the above combinations violate proper segregation of duties.

10. Picking the wrong items or the wrong quantity (shipping)

10.1 Bar-code and RFID technology 10.2 Reconciliation of picking lists to sales order details

10. Purchasing from unauthorized suppliers (ordering)

10.1 Maintaining a list of approved suppliers and configuring the system to permit purchase orders only to approved suppliers 10.2 Review and approval of purchases from new suppliers 10.3 EDI-specific controls (access, review of orders, encryption, policy)

10. Poorly designed reports and graphs (Produce managerial reports)

10.1 Responsibility accounting 10.2 Balanced scorecard 10.3 Training on proper graph design

10. Theft or fraudulent distribution of paychecks (disburse payroll)

10.1 Restriction of physical access to blank payroll checks and the check signature machine 10.2 Restriction of access to the EFT system 10.3 Prenumbering and periodically accounting for all payroll checks and review of all EFT direct deposit transactions 10.4 Require proper supporting documentation for all paychecks 10.5 Use of a separate checking account for payroll, maintained as an imprest fund 10.6 Segregation of duties (cashier versus accounts payable; check distribution from hiring/firing; independent reconciliation of the payroll checking account) 10.7 Restriction of access to payroll master database 10.8 Verification of identity of all employees receiving paychecks 10.9 Redepositing unclaimed paychecks and investigating cause

16) Parity checks are an example of a(n) A) data entry control. B) data transmission control. C) output control. D) processing control.

16) The accounting department at Aglaya Telecom records an average of 5,000 transactions per hour. A cost-benefit analysis leads management to conclude that the maximum acceptable amount of data loss is 20,000 transactions. If the firm's recovery time objective is 60 minutes, then the worst case recovery time objective is A) 1 hour. B) 2 hours. C) 3 hours. D) 4 hours.

16. Inaccurate or invalid credit memos (billing)

16.1 Segregation of duties of credit memo authorization from both sales order entry and customer account maintenance 16.2 Configuration of system to block credit memos unless there is either corresponding documentation of return of damaged goods or specific authorization by management

16. Errors in supplier invoices (approving supplier invoices)

16.1 Verification of invoice accuracy 16.2 Requiring detailed receipts for procurement card purchases 16.3 ERS 16.4 Restriction of access to supplier master data 16.5 Verification of freight bill and use of approved delivery channels

17) A user review an example of A) a data entry control. B) a data transmission control. C) an output control. D) a processing control.

17) The accounting department at Aglaya Telecom records an average of 5,000 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 50,000 transactions. The firm's recovery point objective is therefore A) 50,000 transactions. B) 5,000 transactions. C) 10 hours. D) 4 hours.

17. Mistakes in posting to accounts payable (approving supplier invoices)

17.1 Data entry edit controls 17.2 Reconciliation of detailed accounts payable records with the general ledger control account

18) Data matching is an example of a(n) A) data entry control. B) data transmission control. C) processing control. D) input control.

18) The accounting department at Aglaya Telecom records an average of 2,500 transactions per hour. Managers state that the maximum acceptable loss of data in the event of a system failure is 2,500 transactions. The firm's recovery point objective is therefore A) 2,500 transactions. B) 5,000 transactions. C) 1 hour. D) 2 hours.

18. Failure to take advantage of discounts for prompt payment (cash disbursements)

18.1 Filing of invoices by due date for discounts 18.2 Cash flow budgets

19) A batch total is an example of which control below? A) data entry control B) data transmission control C) processing control D) output control

20) Cancellation and storage of documents means A) documents are defaced and stored. B) documents are defaced before being shredded. C) cancellation data are copied from documents before they are stored. D) data are copied from a document and stored, after which the document is shredded.

20) Identify the statement below which is true. A) Cloud computing is a control technique for system availability. B) Cloud computing eliminates the need for backup of applications and data. C) Cloud computing eliminates the need for companies to own their own software and servers. D) Cloud computing refers to the practice of storing application files and backup data on satellites "in the clouds."

21. Theft of cash (cash disbursements)

21.1 Physical security blank checks and check-signing machine 21.2 Periodic accounting of all sequentially numbered checks by cashier 21.3 Access controls to EFT terminals 21.4 Use of dedicated computer and browser for online banking 21.5 ACH blocks on accounts not used for payments 21.6 Separation of check-writing function from accounts payable 21.7 Requiring dual signatures on checks greater than a specific amount 21.8 Regular reconciliation of bank account with recorded amounts by someone independent of cash disbursements procedures 21.9 Restriction of access to supplier master file 21.10 Limiting the number of employees with ability to create one-time suppliers and to process invoices from one-time suppliers 21.11 Running petty cash as an imports fund 21.12 Surprise audits of petty cash fund

22) A ________ ensures input data will fit into the assigned field. A) limit check B) size check C) range check D) validity check

22. Check alteration (cash disbursements)

22.1 Check-protection machines 22.2 Use of special inks and papers 22.3 "Positive Pay" arrangements with banks

23) This tests a numerical amount to ensure that it does not exceed a predetermined value nor fall below another predetermined value. A) completeness check B) field check C) limit check D) range check

23) What is the primary objective of ensuring systems and information are available for use whenever needed? A) to minimize system downtime B) to minimize system expense C) to maximize system processing speed D) to maximize sales

23. Cash flow problems (cash disbursements)

23.1 Cash flow budget

24) This determines if all required data items have been entered. A) completeness check B) field check C) limit check D) range check

26) Which of the following is not a common design feature of housing mission-critical servers and databases? A) adequate air-conditioning systems to reduce the likelihood of damage due to overheating B) overhead sprinklers to provide protection from fire C) cables with special plugs that cannot be easily removed D) surge-protection devices to provide protection against temporary power fluctuations

27) To protect against malware, it is important that antivirus software automatically examine ________ introduced into a system. A) CDs B) e-mail C) flash drives D) all of the above

28) This batch processing data entry control sums a field that contains dollar values. A) record count B) financial total C) hash total D) sequence check

28) Which of the following is a key control regarding the minimization of system downtime? A) fault tolerance B) disaster recovery plans C) backup procedures D) all of the above

29) This batch processing data entry control sums a non-financial numeric field. A) record count B) financial total C) hash total D) sequence check

3) Which of the following is not an objective of a disaster recovery plan? A) Minimize the extent of the disruption, damage or loss. B) Permanently establish an alternative means of processing information. C) Resume normal operations as soon as possible. D) Train employees for emergency operations

3. Loss or destruction of data (General issues)

3.1 Backup and disaster recovery procedures

3. Loss or destruction of data (general issues)

3.1 Backup and disaster recovery procedures

30) Whose responsibility is it to determine the amount of time an organization can afford to be without its information system? A) the board of directors B) senior management C) external auditors D) COBIT

31) Is it best practice for an organization to practice periodically restoring a system from its backup files? A) No, doing so might introduce errors into the system's data. B) No, doing so takes the system offline and prevents customers from being able to access the system. C) Yes, doing so verifies the procedure and backup media are working correctly. D) Yes, doing so improves the efficiency of the system.

31) This control ensures that the correct and most current files are being updated. A) cross-footing balance test B) data matching C) file labels D) write-protect mechanism

32) This batch processing data entry control sums the number of items in a batch. A) financial total B) hash total C) record count D) sequence check

false

32) True or False: Best practice requires backups be retained indefinitely.

33) This data entry control compares the ID number in transaction data to a master file to verify that the ID number exists. A) reasonableness test B) user review C) data matching D) validity check

33) Which of the following is incorrect with regards to a data archive? A) Archives can be a copy of a database. B) Archives should be stored in different locations. C) Archives are usually encrypted. D) Physical and logical controls are the primary means of protecting archive files

37) This control protects records from errors that occur when two or more users attempt to update the same record simultaneously. A) concurrent update controls B) cross-footing balance test C) data conversion controls D) recalculation of batch totals

4 hours

57) The accounting department at Synergy Hydroelectric records an average of 10,000 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 40,000 transactions. The firm's recovery point objective is therefore A) 40,000 transactions B) 10,000 transactions C) 10 hours D) 4 hours

4 hours

4) Which of the following data entry controls would not be useful if you are recording the checkout of library books by members? A) sequence check B) prompting C) validity check D) concurrent update control

4. Inaccurate updating of general ledger (Update general ledger)

4.1 Data entry processing integrity controls 4.2 Reconciliations and control reports 4.3 Audit trail creation and review

4. Poor performance (General issues)

4.1 Managerial reports

5. Violations of employment laws (general issues)

5.1 Thorough documentation of hiring, performance evaluation, and dismissal procedures 5.2 Continuing education on changes in employment laws

6. Inaccurate adjusting entries (Post adjusting entries)

6.1 Data entry processing integrity controls 6.2 Spreadsheet error protection controls 6.3 Standard adjusting entries 6.4 Reconciliations and control reports 6.5 Audit trail creation and review

6. Invalid orders (sales order entry)

6.1 Digital signatures or written signatures

6. Purchasing items not needed (ordering)

6.1 Perpetual inventory system 6.2 Review and approval of purchase requisitions 6.3 Centralized purchasing function

7. Inaccurate updating of payroll master data (update payroll master data)

7.1 Data processing integrity controls 7.2 Regular review of all changes to master payroll data

8. Stockouts or excess inventory (sales order entry)

8.1 Perpetual inventory control system 8.2 Use of bar codes or RFID 8.3 Training 8.4 Periodic physical counts of inventory 8.5 Sales forecasts and activity reports

8. Inaccurate financial statements (Prepare financial statements)

8.1 Processing integrity controls 8.2 Use of packaged software 8.3 Training and experience in applying IFRS and XBRL 8.4 Audits

8. Purchasing goods of inferior quality (ordering)

8.1 Purchasing only from approved suppliers 8.2 Review and approval of purchases from new suppliers 8.3 Tracking and monitoring product quality by supplier 8.4 Holding purchasing managers responsible for rework and scrap costs

8. Inaccurate time and attendance data (validate time and attendance data)

8.1 Source data automation for data capture 8.2 Biometric authentication 8.3 Segregation of duties (reconciliation of job-time tickets to time cards) 8.4 Supervisory review

9. Unreliable suppliers (ordering)

9.1 Requiring suppliers to possess quality certification (e.g., ISO 9000) 9.2 Collecting and monitoring supplier delivery performance data

All of the following are associated with asymmetric encryption except A) speed. B) private keys. C) public keys. D) no need for key exchange.

A) speed.

7) Which of the following data entry controls would not be useful if you are recording the checkout of library books by members? A) Sequence check. B) Prompting. C) Validity check. D) Concurrent update control.

8) A customer forget to include her account number on her check, and the accounts receivable clerk credited her payment to a different customer with the same last name. Which control could have been used to most effectively to prevent this error? A) Closed-loop verification. B) Duplicate values check. C) Reasonableness test. D) Reconciliation of a batch control total.

9) If invoices are processed in groups of fifty, which fields from the document shown below would not be used to create a hash control total? A) Amount. B) Item Number. C) Quantity Ordered. D) Sales Order number.

purchase order

A document that creates a legal obligation to buy and pay for goods or services.

operations list

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

non-voucher system

A method of maintaining accounts payable in which each supplier invoice is tracked and paid for separately.

voucher system

A method of maintaining accounts payable that generates one check to pay for a set of invoices from the same supplier.

Business Continuity Plan (BCP)

A plan that specifies how to resume not only IT operations but all business processes in the event of a major calamity.

Disaster Recovery Plan (DRP)

A plan to restore an organization's IT capability in the event that its data center is destroyed.

17) Consider the following revenue cycle scenario: The company has been exposed to customer dissatisfaction and the suggested control procedure to be implemented is to install and use bar-code scanners. What is the threat? A) The company may be shipping the wrong merchandise. B) The company may be shipping the wrong quantities of merchandise. C) The company may be shipping orders to the wrong address. D) All of the above threats may apply to this scenario.

A) The company may be shipping the wrong merchandise.

23) The receiving clerk at Wattana Technologies examines incoming shipments and checks their purchase order numbers. A receiving report is then sent to accounts payable, where it is reconciled with the relevant purchase orders and invoices and payment is authorized. Which of the following would correct control weaknesses related to the clerk's activities? A) Controls are adequate under the current system. B) Vendor invoices should be approved for payment by the purchasing manager. C) Purchase orders and receiving reports should be reconciled by the purchasing manager. D) Vendor invoices should be approved for payment by the shipping clerk after the purchase order and receiving report are reconciled.

A) Controls are adequate under the current system.

49) Which of the following is true about accounting for fixed assets?

A) Depreciation expense under IFRS will likely be higher than under GAAP, because acquisitions of assets with multiple components must be separately depreciated under IFRS, whereas under GAAP assets could be bundled and depreciated over the longest of the useful life for any of the components.

8) Identify the item below that is not a desired result of an employee bonus systems. A) Employees may recommend unnecessary services to customers in order to exceed set sales quotas and earn a bonus. B) Employees may look for ways to improve service. C) Employees may analyze their work environment and find ways to cut costs. D) Employees may work harder and may be more motivated to exceed target goals to earn a bonus.

A) Employees may recommend unnecessary services to customers in order to exceed set sales quotas and earn a bonus.

30) The accounts receivable clerk destroys all invoices for sales made to family and friends and does not record the sales in the accounts receivable subsidiary ledgers. The family and friends usually give the clerk cash as a "thank you." Which procedure will not prevent or detect this fraud? A) Send monthly statements to all customers with balances owed. B) Reconcile sales invoices in the billing department to the total debits to accounts receivable subsidiary ledgers. C) Sequentially prenumber all invoices and prepare a sequence check at the end of each day. D) Reconcile the accounts receivable control account to the accounts receivable subsidiary ledger.

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

4) Which of the following data entry controls would not be useful if you are recording the checkout of library books by members?

A) Sequence check

24) Direct deposit of employee paychecks is one way an organization can improve efficiency and reduce payroll-processing costs. Which statement regarding direct deposit is false? A) The cashier does not authorize the transfer of funds from the organization's checking account to a payroll checking account. B) The cashier does not have to sign employee paychecks. C) Employees who are part of a direct deposit program receive a copy of their paycheck indicating the amount deposited. D) Employees who are part of a direct deposit program receive an earnings statement on payday rather than a paper check.

A) The cashier does not authorize the transfer of funds from the organization's checking account to a payroll checking account.

12) The ________ is a legal contract that defines responsibility for goods that are in transit. A) bill of lading B) packing slip C) back order D) picking list

A) bill of lading

7) When a customer places an order (on account) for a certain product, what should be done before the order is checked for inventory availability? A) The customer's available credit should be checked. B) The sales order should be created and written to a file. C) Shipping should be notified of an order in process. D) A picking list should be generated for the warehouse.

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

50) Which of the following statements is true about the chart below? Costs- Bar Graph- Bar - X-axis label 345-2011 332-2010 315-2009 278-2008 250-2007

A) The x-axis is in reverse chronological order, which violates a principle of proper graph design.

One way to circumvent the counterfeiting of public keys is by using A) a digital certificate. B) digital authority. C) encryption. D) cryptography.

A) a digital certificate.

8) A listing of journal vouchers by numerical sequence, account number, or date is an example of

A) a general ledger control report.

19) The management at Barks-a-Million is considering a new inventory control system. The current system is inadequate because it frequently causes stockouts that interrupt production and lead to excess stock of other materials — resulting in markdowns and high carrying costs. The new system will focus on reducing or completely eliminating carrying costs, most likely employing A) a just-in-time inventory system. B) a reorder point. C) materials requirements planning. D) the economic order quantity.

A) a just-in-time inventory system.

10) When processing weekly payroll, an employee accidentally entered 400 for hours worked. The best data entry control for this error would be

A) a limit check.

44) Which item below would not typically be part of an adequate disaster recovery plan?

A) a system upgrade due to operating system software changes

11) The data entry control that would best prevent entering an invoice received from a vendor who is not on an authorized supplier list is

A) a validity check.

36) To minimize the number of checks that need to be written to pay vendor invoices, a company should use A) a voucher system. B) a just-in-time inventory system. C) a nonvoucher system. D) an evaluated receipt settlement system.

A) a voucher system.

30) Falk Noam is the internal auditor for Matan Incorporated. Before investigating the HRM / payroll cycle at Matan, Falk decided to read up on the proper segregation of duties regarding payroll disbursement processes. For strongest segregation of duties, the ________ should record payroll. A) accounts payable department B) cashier C) internal audit department D) external auditor

A) accounts payable department

10) Recording interest earned on an investment is an example of which type of adjusting journal entry?

A) accrual entry

9) Adjusting entries that reflect events that have already occurred, but for which no cash flow has taken place are classified as

A) accruals.

16) Immediately after the adjusting entries are posted, the next step in the general ledger and reporting system is to prepare

A) an adjusted trial balance.

49) A copy of a database, master file, or software that will be retained indefinitely as a historical record is known as a(n)

A) archive.

These are used to create digital signatures. A) asymmetric encryption and hashing B) hashing and packet filtering C) packet filtering and encryption D) symmetric encryption and hashing

A) asymmetric encryption and hashing

26) The accounts receivable management method typically used by credit card companies is A) balance forward. B) postbilling. C) monthly statement. D) open-invoice.

A) balance forward.

32) The Gwallter Reece Chihuahua Sweater Co. (GRCCo) was established in 2013. It recently signed a large contract with PetCo pet stores. GRCCo will be required to track and forecast sweater sales. The technology that is used for communication between GRCCo and PetCo is A) electronic data interchange. B) vendor-managed inventory. C) sales force automation. D) optical character recognition.

A) electronic data interchange.

13) Customers that send their payments electronically directly to the billing company's bank are using A) electronic funds transfer (EFT). B) electronic data interchange (EDI). C) procurement cards. D) an electronic lockbox.

A) electronic funds transfer (EFT).

18) Separating the shipping and billing functions is designed to reduce the threat of A) failure to bill customers. B) billing customers for wrong quantities. C) billing customers before merchandise has been shipped. D) shipping the wrong merchandise.

A) failure to bill customers.

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

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

39) Restricting access to the approved supplier list can A) help reduce the risk of fraudulent disbursements. B) cause purchase order approval delays. C) eliminate the risk of duplicate payment. D) improve the efficiency of the expenditure cycle.

A) help reduce the risk of fraudulent disbursements.

34) If a firm does not use an ERP, the best way to mitigate the risk of the destruction of master data is to A) implement backup and disaster recovery procedures. B) use an ERP. C) proper segregation of duties. D) use of multiple master data files.

A) implement backup and disaster recovery procedures.

33) What is the main reason a list of potential alternative suppliers be maintained? A) in case the primary supplier is out of stock B) so the firm can sample different suppliers C) in case the primary supplier is more expensive D) to segregate purchasing suppliers

A) in case the primary supplier is out of stock

41) Which of the following is not a threat to the revenue cycle shipping process? A) incomplete orders B) inventory theft C) picking the wrong items D) wrong shipping address

A) incomplete orders

2) Key differences exist when an integrated Enterprise Resource Planning system (ERP) replaces an existing AIS or legacy system. For example, ________ are more accurate and timely, enabling sales order entry staff to provide customers more accurate information about delivery dates. A) inventory records B) cash receipts C) credit approval decisions D) exception reports

A) inventory records

39) Form 941 A) is filed each quarter to reconcile monthly tax payments with total tax liability for the quarter. B) is used in preparing labor-related reports for government agencies. C) is used for employee information and annual payroll reports. D) is used to document compliance with applicable regulations.

A) is filed each quarter to reconcile monthly tax payments with total tax liability for the quarter.

6) For recording time spent on specific work projects, manufacturing companies usually use a A) job time ticket. B) time card. C) time clock. D) labor time card.

A) job time ticket.

10) What control would best mitigate the threat of paying an invoice twice? A) never authorizing payment of a photocopy of an invoice B) double-checking mathematical accuracy of invoices C) approval of purchase orders D) maintaining adequate perpetual inventory records

A) never authorizing payment of a photocopy of an invoice

23) A(n) ________ system posts an approved invoice to the vendor account and stores it in an open invoice file until payment is made by check. A) nonvoucher B) voucher C) cycle D) evaluated receipt settlement

A) nonvoucher

19) If you believe not all adjusting entries were posted in the general ledger, you should prepare a general ledger control report listing journal vouchers in

A) numerical sequence

50) The first major business activity in the expenditure cycle is A) ordering inventory, supplies, or services. B) a customer sale. C) shipping goods to customers. D) receiving goods from vendors.

A) ordering inventory, supplies, or services

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

A) payroll register

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

A) payroll tax withholdings; voluntary deductions

24) Laz Chance wears roller blades and headphones when he is at work at the Squishy Things Toy Company. He is a product packer. The headphones give him computer-generated instructions so he knows the location of each item and quantity that should be included in the order. These instructions are the equivalent of a A) picking ticket. B) bill of lading. C) packing slip. D) sales order.

A) picking ticket.

17) Which of the following is generally not shown on a receiving report? A) price of the items B) quantity of the items C) purchase order number D) counted and inspected by

A) price of the items

59) MacDougalKids is a mid-sized manufacturer of organic baby food. MacDougalKids uses a JIT inventory management approach. Which of the following factors would likely be least important when selecting inventory suppliers? A) product price B) product quality C) vendor delivery dependability D) All would be equally important

A) product price

54) Although there are some similarities between JIT and MRP, identify one major difference below. A) production scheduling B) reducing the opportunity for inventory theft C) reducing inventory carrying costs D) requires more analysis than EOQ

A) production scheduling

4) A monthly statement sent to customers serves a control purpose by A) providing an opportunity for customers to verify the balance owed and activity on the account. B) triggering the process to record a customer payment. C) summarizing invoices and amounts due for customers. D) reminding customers of the balance due and due date.

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

47) When a computer system's files are automatically duplicated on a second data storage system as they are changed, the process is referred to as

A) real-time mirroring.

25) The manager of Callow Youth Clothing was entering an order online from Sad Clown Pajamas. He ordered 100 one-size fits all pajama bottoms, but when he ordered 1000 one-size fits all pajama tops, the following error message popped up: "Did you mean to enter a quantity of 1000 for your order?" This message is the result of a A) reasonableness test. B) validity check. C) limit check. D) closed-loop verification.

A) reasonableness test.

2) Comparing quantities on a vendor invoice to quantities on the receiving report would not prevent or detect which of the following situations? A) receiving and accepting inventory not ordered B) theft of inventory by receiving department employees C) update of wrong inventory items due to data entry error D) order for an excessive quantity of inventory

A) receiving and accepting inventory not ordered

6) Evaluated receipt settlement approves payment of vendor invoices after reconciling the purchase order and the A) receiving report. B) vendor invoice. C) sales invoice. D) disbursement voucher.

A) receiving report.

54) The maximum acceptable down time after a computer system failure is determined by a company's

A) recovery time objective.

8) Materials requirements planning (MRP) A) reduces the uncertainty about when materials are needed, thereby reducing the need to carry large levels of inventory. B) is able to compute exactly the cost of purchasing by taking into account all costs associated with inventory carrying. C) requires vendors to deliver inventory to the production site exactly when needed and in the correct quantities. D) None of the above is correct.

A) reduces the uncertainty about when materials are needed, thereby reducing the need to carry large levels of inventory.

17) The document a customer returns with their payment and that identifies the source and the amount of the payment is called a A) remittance advice. B) remittance list. C) credit memorandum. D) debit memorandum.

A) remittance advice.

23) Budgets and performance reports should be developed on the basis of

A) responsibility accounting.

25) Performance reports for sales deparments should compare actual versus budget

A) revenue.

) The sales department administrative assistant has been assigning phone order sales to her brother-in-law, a company sales person. Company policy is to pay commissions only on orders directly received by sales people, not on orders received over the phone. The resulting fraudulent commission payments might best have been prevented by requiring that A) sales commission statements be supported by sales order forms signed by the customer and approved by the sales manager. B) sales order forms be prenumbered and accounted for by the sales department manager. C) sales orders and commission statements be approved by the accounting department. D) disbursement vouchers for commission payments be reviewed by the internal audit department and compared to sales commission statements and sales orders.

A) sales commission statements be supported by sales order forms signed by the customer and approved by the sales manager.

21) A document typically encountered in the revenue cycle that is both an output document and a source document is the A) sales invoice. B) customer purchase order. C) sales order. D) packing slip.

A) sales invoice.

23) The activities involved in soliciting and processing customer orders within the revenue cycle are known as the A) sales order entry process. B) shipping order process. C) revenue process. D) marketing process.

A) sales order entry process.

A) sign check

25) The employer pays a portion of some payroll taxes and employee benefits. Both the employee and employer pay which benefit or tax listed below? A) social security taxes B) federal income taxes C) state income taxes D) none of the above

A) social security taxes

4) Regularly reviewing an accounts receivable aging report can help management do what? A) spot firms who are falling behind in their payments B) identify customers who have not purchased anything lately C) improve the speed which customers make payments D) determine whether the firm's pricing policy is effective

A) spot firms who are falling behind in their payments

5) Knowledge management systems (KMS) permit organizations to A) store employee solutions to specific problems in a shared database. B) learn from individuals external to the organization. C) perform background checks on potential employees. D) gain competitive business intelligence on competitors.

A) store employee solutions to specific problems in a shared database.

29) This batch processing data entry control sums a non-financial numeric field. A) Record count B) Financial total C) Hash total D) Sequence check

Hash total

62) Discuss how cloud computing could both positively and negatively affect system availability.

Answer: Cloud computing significantly reduces the risk that a single event would result in system unavailability, since the 'cloud' consists of banks of redundant servers, in multiple locations. However, since users don't own the cloud, if a provider goes out of business, users may find it very difficult to access applications and data stored in the cloud. Additionally, users should evaluate the security and availability controls of the cloud provider before transacting business.

53) How is a balanced scorecard used to assess organizational performance?

Answer: The balanced scorecard contains four perspectives of measurement of the organization. The perspectives are financial, internal operations, innovation and learning, and customer. Together these different perspectives provide a dimensional overview of organizational performance that is greater than financial measures alone. A scorecard that has been properly designed will measure key aspects of the organization's strategy as well as show important links across the perspectives or dimensions.

55) Explain the benefits of XBRL.

Answer: XBRL (Extensible Business Reporting Language) is a variation of XML, which is designed to communicate the content of data. XML improves upon HTML by being able to describe the content of the data presented. However, XML is limited when communicating financial information. For financial purposes, XBRL identifies each piece of data, along with how the data should be processed and how the data relate to other data items. XBRL may soon become the universal standard computer language for communicating financial data. XBRL enables organizations to publish financial information only once, using standard XBRL tags. XBRL tagged information is interpretable and doesn't need to be re-entered by users.

What is hashing

Hashing is a process that takes plaintext of any length and creates a short code called a hash. hash-Plaintext that has been transformed into short code.

1) What is the most effective way to ensure information system availability? A) High bandwidth. B) Maintain a hot site. C) Maintain a cold site. D) Frequent backups.

14) The inventory tracking system shows that 12 laptop were on hand before a customer brings two laptops to the register for purchase. The cashier accidentally enters the quantity sold as 20 instead of 2. Which data entry control would most effectively prevent this error? A) Limit check. B) Sign check. C) Field check. D) Validity check.

32) To minimize the risk of system downtime, Grizzly Corporation stores its data on multiple disk drives simultaneously. This practice is called A) downtime minimization plan. B) redundant arrays of independent drives. C) redundant arrays of independent backups. D) patch backup management.

34) A ________ tests a numerical amount to ensure that it does not exceed a predetermined value. A) completeness check B) limit check C) range check D) sign check

35) The batch processing data entry control that sums a field that contains dollar values is called A) record count. B) financial total. C) hash total. D) sequence check.

51) Which of the following is an example of a turnaround document? A) A receipt a customer must use to return the goods purchased. B) A telephone bill the customer must return with payment. C) A paycheck stub that must be used in the employee's tax return. D) A customer loyalty card used every time a customer purchases goods or services.

52) Which of the following is an important control to prevent buffet overflow vulnerabilities? A) Limit check. B) Size check. C) Range check. D) Field check

44) Which of the following is not a general threat to the revenue cycle? A) inaccurate master data B) loss of customers C) poor performance D) unauthorized disclosure of sensitive information

B) loss of customers

37) An accounts receivable aging report is useful for doing everything except A) estimating bad debts. B) estimating future sales. C) projecting the timing of future cash flows. D) deciding whether to increase a specific customer's credit limit.

B) estimating future sales.

21) In a revenue cycle with proper controls, the ________ who reports to the ________, is not involved in any cash handling activities. A) accounts receivable clerk; treasurer B) accounts receivable clerk; controller C) cashier; controller D) cashier; treasurer

B) accounts receivable clerk; controller

2) Which is the best control to prevent invoicing customers for more than the actual quantity shipped? A) Use the information from the sales order to prepare the sales invoice. B) Use the information from the packing slip to prepare the sales invoice. C) Use the information from the bill of lading to prepare the sales invoice. D) Use the information from the picking ticket to prepare the sales invoice.

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

24) Which of the controls below would be least effective at preventing a company from ordering goods at a price higher than market? A) Only place orders with vendors on an approved vendor list. B) Variance analysis of actual expenses to budgeted expenses C) For high-dollar goods, solicit competitive bids from possible vendors. D) Frequent review of, and update to, vendor price lists stored in the AIS

B) Variance analysis of actual expenses to budgeted expenses

48) EFT payments are generally performed by A) the treasurer. B) a cashier. C) an accounts payable clerk. D) a credit manager.

B) a cashier.

13) Two documents usually accompany goods shipped to a customer. What are the two documents? A) a bill of lading and an invoice B) a packing slip and a bill of lading C) an invoice and a packing slip D) an invoice and a sales order

B) a packing slip and a bill of lading

28) A voucher package should include A) a purchase requisition, vendor invoice, and receiving report. B) a purchase order, vendor invoice, and receiving report. C) a purchase requisition, purchase order, and receiving report. D) a bill of lading and vendor invoice.

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

7) When updating the general ledger, sales, purchases, and production are examples of ________ entries, and issuance or retirement of debt and the purchase or sale of investment securities are examples

B) accounting subsystem; treasurer originated

36) Identify a useful tool for monitoring accounts receivable. A) ERP exception report B) accounts receivable aging report C) accounts receivable tolerance report D) customer credit limit report

B) accounts receivable aging report

13) The results of an internal audit finds that there is a problem with inaccurate time data being entered into the payroll system. What is an applicable control that can help prevent this event from occurring in the future? A) proper segregation of duties B) automation of data collection C) sound hiring procedures D) review of appropriate performance metrics

B) automation of data collection

Which of the following is not one of the basic actions that an organization must take to preserve the confidentiality of sensitive information? A) identification of information to be protected B) backing up the information C) controlling access to the information D) training

B) backing up the information

4) Economic Order Quantity (EOQ) includes several variables that must be taken into consideration when calculating the optimal order size. One variable, the costs associated with holding inventory, is referred to as A) ordering costs. B) carrying costs. C) the reorder point. D) stockout costs.

B) carrying costs.

13) A surprise count of an imprest petty cash fund should find the total of ________ equal to the amount authorized for the fund. A) cash and credit memos B) cash and vouchers C) cash D) cash and checks

B) cash and vouchers

29) Falk Noam is the internal auditor for Matan Incorporated. Before investigating the HRM / payroll cycle at Matan, Falk decided to read up on the proper segregation of duties regarding payroll disbursement processes. For strongest segregation of duties, the ________ should distribute paychecks. A) accounts payable department B) cashier C) internal audit department D) external auditor

B) cashier

19) All of the following edit checks for online editing of accounts receivable transactions would probably be included except A) validity checks on customer ID and invoice numbers. B) check digit verification on the amount of the sale. C) closed loop verification on the customer ID. D) field checks on the values in dollar fields.

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

26) The manager of Cezary Foods was purchasing inventory from Bogumil Distributors online. The manager entered the items and quantities, completed the checkout and payment process, but received the following error message before the order could be processed: "Please enter your phone number." This message is likely the result of a A) validity check. B) completeness test. C) closed-loop verification. D) customer relationship management software application.

B) completeness test.

16) It has been discovered that credit sales have been made to customers with a poor credit rating. If this continues, the company will face increasing uncollectible receivables and losses due to bad debts. Separation of duties between ________ and ________ should help resolve the problem. A) shipping; billing duties B) credit approval; marketing C) billing; credit approval D) marketing; accounts receivable

B) credit approval; marketing

13) Which of the following is least likely to be a major criterion in vendor selection? A) prices of goods B) credit rating of the vendor C) quality of goods D) ability to deliver on time

B) credit rating of the vendor

16) Parity checks are an example of a(n)

B) data transmission control.

13) Which type of payroll report lists the voluntary deductions for each employee? A) payroll register B) deduction register C) earnings statement D) federal W-4 form

B) deduction register

11) An adjusting entry made at the end of an accounting period that reflects the exchange of cash prior to performance of a related event is classified as a(n)

B) deferral entry.

35) Executive immersion experiences are important because A) CEOs often have no idea what rank-and-file employees do on a daily basis. B) employees who have positive attitudes contribute to increasing company profits. C) many employees feel upper management is out of touch. D) it is important for organizations to take social responsibility seriously.

B) employees who have positive attitudes contribute to increasing company profits.

43) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message, "Your journal entry must be a numeric value. Please reenter." This message was the result of a

B) field check.

38) It costs ________ times as much to acquire a new customer as it does to make a sale to an existing customer. A) two B) five C) eight D) ten

B) five

45) A facility that contains all the computing equipment the organization needs to perform its essential business activities is known as a

B) hot site.

35) If a firm uses an ERP, the best way to mitigate the risk of the destruction of master data is to A) frequently update the ERP system. B) implement the ERP system in three separate instances. C) periodically audit the ERP system. D) integrate the ERP system with all IT functions.

B) implement the ERP system in three separate instances.

12) In the expenditure cycle, good control dictates that expenditures should be paid by check. This may not be feasible when minor purchases are made. To facilitate quick payment for minor purchases, a(n) ________ should be set up and maintained using ________. A) special bank account; disbursement vouchers B) imprest fund; vouchers C) cash box; small denomination bills D) petty cash fund; procurement cards

B) imprest fund; vouchers

37) Involving accountants in executive compensation plans is often especially helpful A) in keeping track of the executive compensation plan. B) in identifying the appropriate metrics to use when linking compensation to performance. C) in reducing the total amount of compensation paid to executives. D) in suggesting the appropriate amount of compensation executives should be paid.

B) in identifying the appropriate metrics to use when linking compensation to performance.

18) Which of the following is not a benefit of using a payroll service bureau or a professional employer organization? A) freeing up of computer resources B) increased internal control C) reduced costs D) wider range of benefits

B) increased internal control

Classification of confidential information is the responsibility of whom, according to COBIT5? A) external auditor B) information owner C) IT security professionals D) management

B) information owner

3) The cashier deposits checks for Benedek Incorporated and also prepares payments to vendors. Of the following, who is best able to reconcile the bank statement to Benedek's records on a regular basis? A) cashier B) internal audit department C) treasurer D) external auditor

B) internal audit department

40) A workforce inventory report A) is filed each quarter to reconcile monthly tax payments with total tax liability for the quarter. B) is used in preparing labor-related reports for government agencies. C) is used for employee information and annual payroll reports. D) is used to document compliance with applicable regulations.

B) is used in preparing labor-related reports for government agencies.

38) An important control that can be used to reduce the risk of employee kickbacks is A) surveillance cameras. B) job rotation. C) off-site restrooms. D) use of ID badges.

B) job rotation.

2) Because many HRM / payroll master databases typically contain only descriptive information (such as which employees possess which skills), many firms have deployed ________ to more effectively leverage employees knowledge and skills. A) relational databases B) knowledge management systems C) Resources, Events, and Agents (REA) databases D) cardinality systems

B) knowledge management systems

3) Identify the firm below where employees' knowledge is likely to be more valuable than the value of a company's tangible assets. A) international airline B) law firm C) automobile manufacturer D) railroad

B) law firm

42) Which of the following is not a threat to the revenue cycle billing process? A) accounts receivable errors B) loss of customers C) failure to bill D) inaccurate credit memos

B) loss of customers

43) Which of the following is not a general threat to the revenue cycle? A) inaccurate master data B) loss of customers C) poor performance D) unauthorized disclosure of sensitive information

B) loss of customers

15) A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices. This describes the ________ method. A) monthly statement B) open-invoice C) balance forward D) cycle billing

B) open-invoice

4) The ________ should always be included with a merchandise shipment to a customer. A) picking ticket B) packing slip C) sales invoice D) remittance advice

B) packing slip

16) Companies that specialize in processing payroll are known as A) paycheck distribution companies. B) payroll service bureaus. C) professional employer organizations. D) semi-governmental organizations.

B) payroll service bureaus.

26) Departments that mostly provide services to other units and charge those units for services rendered should be evaluated as ________ centers.

B) profit

15) Which of the following threats is not specific to the purchase requisition process of the expenditure cycle? A) stockouts B) purchasing from unauthorized vendors C) requisitioning goods not needed D) All of the above are threats in the purchase requisition process.

B) purchasing from unauthorized vendors

5) If duties are properly segregated, the authorization function is performed by ________, the recording function is performed by ________, and cash handling is performed by the ________. A) accounts payable; purchasing; cashier B) purchasing; accounts payable; cashier C) purchasing; cashier; accounts payable D) purchasing; accounts payable; treasurer

B) purchasing; accounts payable; cashier

53) The maximum amount of time between backups is determined by a company's

B) recovery point objective.

7) What is a key feature of materials requirements planning (MRP)? A) minimize or entirely eliminate carrying and stockout costs B) reduce required inventory levels by scheduling production rather than estimating needs C) determine the optimal reorder point D) determine the optimal order size

B) reduce required inventory levels by scheduling production rather than estimating needs

5) The ________ specifies the point at which inventory is needed. A) company inventory policies B) reorder point C) economic order quantity D) stockout point

B) reorder point

2) Which item below is not considered a major input to the general ledger and reporting system?

B) reports from managers

20) What is one of the best ways to improve the overall efficiency and effectiveness of the receipt and storage of ordered items? A) requiring all suppliers to have the carrier verify quantities and item numbers before shipment B) requiring all suppliers to include RFID tags on their items C) requiring all suppliers to use EDI to expedite the receiving department function D) requiring all delivery trucks to have satellite data terminals to expedite the receiving department function

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

13) Adjusting entries that are made to reflect differences between the actual and recorded value of an asset or a change in accounting principle are called

B) revaluations.

31) There is a symmetrical interdependence between a firm's expenditure cycle and its suppliers' A) production cycle. B) revenue cycle. C) expenditure cycle. D) general ledger and reporting system.

B) revenue cycle.

40) A picking ticket is generated by the A) shipping process. B) sales order entry process. C) packing process. D) billing process.

B) sales order entry process.

11) The benefits of a lockbox arrangement with a bank are maximized when A) the bank is located nearby to the company, so remittance advices can be delivered to the company every day. B) several banks around the country are used, in order to minimize the time payments spend in the mail. C) an arrangement is made with only one bank, so all remittance advices can be batched for processing. D) the bank deposits the payments and accesses the customer's information system to record the payments.

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

2) One of the basic activities in the expenditure cycle is the receiving and storage of goods, supplies, and services. What is the counterpart of this activity in the revenue cycle? A) sales order entry process B) shipping function C) cash collection activity D) cash payments activity

B) shipping function

11) Which of the following is not classified as a voluntary deduction? A) pension plan contributions B) social security withholdings C) insurance premiums D) deductions for a charity organization

B) social security withholdings

36) A reverse auction would likely be best suited to the purchase of A) central processing units (CPUs). B) soybeans. C) designer clothing. D) automobiles.

B) soybeans

Which systems use the same key to encrypt communications and to decrypt communications? A) asymmetric encryption B) symmetric encryption C) hashing encryption D) public key encryption

B) symmetric encryption

Encryption has a remarkably long and varied history. The invention of writing was apparently soon followed by a desire to conceal messages. One of the earliest methods, attributed to an ancient Roman emperor, was the simple substitution of numbers for letters, for example A = 1, B = 2, etc. This is an example of A) a hashing algorithm. B) symmetric key encryption. C) asymmetric key encryption. D) a public key.

B) symmetric key encryption.

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

B) the payroll register.

22) A serious exposure in the revenue cycle is loss of assets. What is the related threat and applicable control procedure that address this exposure? A) shipping errors; reconciliation of sales order with picking ticket and packing slip B) theft of cash; segregation of duties and minimization of cash handling C) making sales that turn out to be uncollectible; force sales people to make collection calls on customers with past due balances D) poor performance; preparation and review of performance reports

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

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

B) time card data.

28) Variances for variable costs will be misleading when the planned output differs from budgeted output. A solution to this problem would be

B) to use flexible budgeting.

1) Basic segregation of duties requires the credit manager reports to the ________ and the treasurer report to the ________. A) treasurer; controller B) treasurer; vice president of finance C) controller; vice president of finance D) marketing manager; vice president of finance

B) treasurer; vice president of finance

13) ________ copies all changes made since the last full backup. A) Archive B) Cloud computing C) Differential backup D) Incremental backup

35) Is it best practice for an organization to practice periodically restoring a system from its backup files? A) No, doing so might introduce errors into the system's data. B) No, doing so takes the system offline and prevents customers from being able to access the system. C) Yes, doing so verifies the procedure and backup media are working correctly. D) Yes, doing so improves the efficiency of the system.

37) When the staff accountant enters a correct customer number, the data entry screen displays the customer name and address. This is an example of A) prompting. B) preformatting. C) closed-loop verification. D) error checking.

37) Which of the following is incorrect with regards to a data archive? A) Archives can be a copy of a database. B) Archives should be stored in different locations. C) Archives are usually encrypted. D) Physical and logical controls are the primary means of protecting archive files.

38) A ________ control ensures that the correct and most current files are being updated. A) cross-footing balance test B) data matching C) file labels D) write-protect mechanism

39) Identify the most important component of a disaster recovery plan below. A) Documentation. B) Operating instructions. C) Periodic testing. D) On-site and off-site storage.

39) The batch processing data entry control that sums the number of items in a batch is called A) financial total. B) hash total. C) record count. D) sequence check.

5) Following is the result of batch control totals on employee Social Security numbers in a payroll processing transaction: Correct Values From Masterfile Values Entered During Processing 487358796 487358796 534916487 534916487 498374526 498374526 514873420 514873420 534196487 534916487 678487853 678487853 471230589 471230589 3719438158 3720158158 The difference in the control totals is 720,000. Which data entry control would best prevent similar data entry errors in the future? A) Batch check. B) Validity check. C) Check digit. D) Sequence check.

Which of the following is not true regarding virtual private networks (VPN)? A) VPNs provide the functionality of a privately owned network using the Internet. B) Using VPN software to encrypt information while it is in transit over the Internet in effect creates private communication channels, often referred to as tunnels, which are accessible only to those parties possessing the appropriate encryption and decryption keys. C) It is more expensive to reconfigure VPNs to include new sites than it is to add or remove the corresponding physical connections in a privately owned network. D) The cost of the VPN software is much less than the cost of leasing or buying the infrastructure (telephone lines, satellite links, communications equipment, etc.) needed to create a privately owned secure communications network.

C) It is more expensive to reconfigure VPNs to include new sites than it is to add or remove the corresponding physical connections in a privately owned network.

8) What is the best way to prevent the acceptance of goods that were never ordered? A) Order only from approved vendors. B) Enforce an appropriate conflict of interest policy in place. C) Match the packing slip to a purchase order before accepting delivery. D) Require specific authorization from the purchasing manager before accepting any goods. Answer: C

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

59) This control entails verifying that the proper number of bits are set to the value 1 in each character received.

C) Parity check

39) Procurement cards differ from corporate credit cards in which of the following ways? A) Credit limits can be set for procurement cards, but not corporate credit cards. B) Credit cards can be used to make purchases without an explicit sign off by supervisors, but procurement cards require a sign off. C) Procurement cards can only be used with approved vendors, but credit cards can be used anywhere. D) Procurement card invoices are sent separately for each card, whereas corporate credit cards are consolidated into a single invoice.

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

6) ________ is not a basic activity of the revenue cycle. A) Sales order entry B) Shipping C) Receiving D) Billing

C) Receiving

32) This batch processing data entry control sums the number of items in a batch.

C) Record count

31) Which of the following poses an internal control problem? A) Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in this service. B) Products are released from inventory after a warehouse employee and a shipping clerk both sign the pick list. C) Sales representatives have authority to increase customers' credit limits in $1,000 increments. D) When customer payments are received in the mail, checks are sent to the cashier's office and remittance advices are sent to the accounts receivable department.

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

If an organization asks you to disclose your date of birth and your address, but fails to take any steps to protect your private information, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Collection B) Access C) Security D) Quality

C) Security

47) Once a purchase request is approved, what is the next step? A) The system creates a purchase order. B) The accounts payable department approves the purchase request, creating a purchase order. C) The inventory master file is accessed to find the preferred supplier(s). D) The department that created the purchase request may buy the requested item(s).

C) The inventory master file is accessed to find the preferred supplier(s).

16) A major cost in the purchasing function is the number of purchase orders processed. One technique that may reduce purchasing-related expenses is to have suppliers compete with each other to meet demand at the lowest price. The name of this technique is A) an EDI auction. B) a trading exchange. C) a reverse auction. D) a supplier consortium.

C) a reverse auction.

16) Which of the following will limit a firm's potential loss exposure from paycheck forgery? A) segregation of check distribution from payroll duties B) prompt redeposit of unclaimed paychecks C) a separate payroll bank account D) direct deposit of checks

C) a separate payroll bank account

26) Source data automation is often effective in reducing A) unintentional errors. B) intentional errors. C) accuracy. D) theft.

C) accuracy.

48) For strongest segregation of duties, a sales representative should never be allowed to A) discuss the company's products. B) negotiate the sales price. C) approve a sale on credit. D) send a customer a gift.

C) approve a sale on credit.

Information rights management software can do all of the following except A) limiting access to specific files. B) limit action privileges to a specific time period. C) authenticate individuals accessing information. D) specify the actions individuals granted access to information can perform.

C) authenticate individuals accessing information.

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

C) backup and disaster recovery procedures

18) In the ________ method of tracking accounts receivable, customers pay according to the amount showing on their monthly statement and payments are applied against the total account balance. A) specific identification B) open-invoice C) balance forward D) remittance advice

C) balance forward

25) The shipping department at Eka Toys follows policies that determine which carrier will deliver orders according to the size, weight, and destination of the shipment. It maintains standing agreements with shippers that specify legal responsibility for the shipment while it is in transit. The terms of the shipping agreements are documented on A) picking tickets. B) packing slips. C) bills of lading. D) RFID tags.

C) bills of lading.

15) Duc An Incorporated provides free coffee to employees. Starbucks delivers coffee packages, sugar, creamer, and filters each week. Every month, Starbucks sends Duc An an invoice. This arrangement is best described as a A) set purchase order. B) fixed purchase order. C) blanket purchase order. D) standard purchase order.

C) blanket purchase order.

23) As each payroll transaction is processed, the system should also A) allocate labor costs to appropriate general ledger accounts B) use cumulative totals generated from a payroll to create a summary journal entry to be posted to the general ledger C) both A and B above D) The HRM system should not perform either activity A or B.

C) both A and B above

40) Which of the following is not a threat to the revenue cycle sales order entry process? A) incomplete orders B) invalid orders C) cash flow problems D) uncollectible accounts

C) cash flow problems

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

C) checks to insurance and benefits providers

30) When I enter a correct customer number, the data entry screen displays the customer name and

C) closed-loop verification.

36) Chaz Finnerty called the IT Help Desk in a huff. "I'm trying to open an Excel file and I get a message that says that the file is locked for editing. What's going on?" The answer is likely that

C) concurrent update controls have locked the file.

15) To ensure proper segregation of duties, only the ________ has authority to issue credit memos. A) accounts receivable supervisor B) controller C) credit manager D) cashier

C) credit manager

6) Which control would be most appropriate to address the problem of inaccurate payroll processing? A) encryption B) direct deposit C) cross-footing of the payroll register D) an imprest payroll checking account

C) cross-footing of the payroll register

22) A(n) ________ system prepares and mails monthly statements to customers throughout the entire month, instead of just at the end of the month. A) continuous B) open-invoice C) cycle billing D) balance forward

C) cycle billing

22) The operating budget

C) depicts planned revenues and expenditures for each organizational unit.

Information encrypted with the creator's private key that is used to authenticate the sender is A) asymmetric encryption. B) digital certificate. C) digital signature. D) public key.

C) digital signature.

20) Cancellation and storage of documents means that

C) documents are defaced and stored.

14) Which type of payroll report includes the details of the current paycheck and deductions as well as year-to-date totals? A) payroll register B) deduction register C) earnings statement D) federal W-4 form

C) earnings statement

3) The traditional approach to inventory management to ensure sufficient quantity on hand to maintain production is known as A) safety stock. B) just-in-time production. C) economic order quantity. D) optimal inventory quantity.

C) economic order quantity.

12) An ________ is an arrangement where a bank receives customer payments and transmits payment data to the organization. A) e-commerce. B) electronic funds transfer (EFT). C) electronic lockbox. D) electronic data interchange (EDI).

C) electronic lockbox.

19) Many companies offer their employees a "cafeteria" approach to voluntary benefits in which employees can pick and choose the benefits they want. This plan is normally called a(n) A) elective plan. B) menu options benefit plan. C) flexible benefit plan. D) buffet plan.

C) flexible benefit plan.

20) If you believe a general ledger account was not adjusted properly or at all, you should prepare a general ledger control report listing journal vouchers in

C) general ledger account number order.

A process that takes plaintext of any length and transforms it into a short code. A) asymmetric encryption B) encryption C) hashing D) symmetric encryption

C) hashing

11) The threat of violation of employment laws relates directly to which activity? A) payroll processing B) collecting employee time data C) hiring and recruiting D) all of the above

C) hiring and recruiting

1) The general ledger and reporting system consists of the ________ involved in ________ the general ledger and ________ reports.

C) information processing; updating; creating

31) Falk Noam is the internal auditor for Matan Incorporated. Before investigating the HRM / payroll cycle at Matan, Falk decided to read up on the proper segregation of duties regarding payroll disbursement processes. For strongest segregation of duties, the ________ should periodically observe the paycheck distribution process. A) accounts payable department B) cashier C) internal audit department D) external auditor

C) internal audit department

5) According to generally accepted accounting principles, a sale is recognized when A) cash is received from the customer. B) inventory is removed from the warehouse. C) inventory becomes the legal property of the customer. D) a sales order is approved by sales, inventory control, and credit departments.

C) inventory becomes the legal property of the customer.

6) Which electronic files are either read or updated when goods are ordered from a vendor? A) inventory, vendors, and accounts payable B) vendors and accounts payable C) inventory, vendors, and open purchase orders D) open purchase orders and accounts payable

C) inventory, vendors, and open purchase orders

Which of the following descriptions is not associated with symmetric encryption? A) a shared secret key B) faster encryption C) lack of authentication D) separate keys for each communication party

C) lack of authentication

25) Using financial incentives requires organizations to A) pay employees less than they would have to if pay was a fixed salary. B) better monitor employee attendance. C) link the payroll system to other cycles to calculate incentive payments. D) better monitor employee effort.

C) link the payroll system to other cycles to calculate incentive payments.

42) The packing slip A) lists the quantity, price, and description of each item included in the shipment. B) lists the price and description of each item included in the shipment. C) lists the quantity and description of each item included in the shipment. D) lists the quantity and price of each item included in the shipment.

C) lists the quantity and description of each item included in the shipment.

18) The management at Barks-a-Million is considering a new inventory control system. The current system is inadequate because it frequently causes stockouts that interrupt production and lead to excess stock of other materials — resulting in markdowns and high carrying costs. The new system, which will focus on forecasting demand for Sad Clown's products, will likely employ A) a just-in-time inventory system. B) the economic order quantity. C) materials requirements planning. D) a reorder point.

C) materials

5) Experts estimate that, on average, the costs associated with replacing an employee are about ________ the employee's annual salary. A) one-quarter of B) one-half of C) one and one-half times D) twice

C) one and one-half times

17) User reviews are an example of a(n)

C) output control.

2) The ________ normally triggers the billing process in the revenue cycle. A) sales order received from the sales department B) picking ticket received from the sales department C) packing slip received from the shipping department D) journal voucher received from the shipping department

C) packing slip received from the shipping department

28) All of the following regarding payroll checks is correct except A) access to payroll checks should be restricted. B) payroll checks should be sequentially pre-numbered. C) payroll checks should be drawn on the organization's regular bank account(s). D) the cashier should sign payroll checks.

C) payroll checks should be drawn on the organization's regular bank account(s).

1) Before a shipping notice is prepared during the revenue cycle, shipping department personnel should match the inventory received from the warehouse to the A) sales order. B) picking tickets. C) picking ticket and sales order. D) sales order and bill of lading.

C) picking ticket and sales order.

In developing policies related to personal information about customers, Folding Squid Technologies adhered to the Trust Services framework. The standard applicable to these policies is A) security. B) confidentiality. C) privacy. D) availability.

C) privacy.

18) Data matching is an example of a(n)

C) processing control.

34) File labels are an example of

C) processing controls.

5) The general ledger system of an organization should be designed to serve the information requirements of both internal and external users. This means that the system should support

C) producing regular periodic reports and respond to real-time inquiry needs.

17) Which organization provides payroll processing as well as other HRM services, like employee benefit design and administration? A) title companies B) payroll service bureau C) professional employer organization D) paycheck distribution companies

C) professional employer organization

34) Ngai Nhung is the sales manager at Hung Technologies. At lunch with the company CEO, Ngai proudly announced that he had received a ________ from a client. The client had just requested a large quantity of components from Hung. A) blanket purchase order B) voucher C) purchase order D) purchase requisition

C) purchase order

39) Research suggests which of the following is key to improving total customer satisfaction? A) price of product B) speed of shipping C) quality and nature of customer contact after the sale D) quality and nature of customer contact before the sale

C) quality and nature of customer contact after the sale

32) The least effective control for preventing an organization from processing fraudulent credit memo is to A) match each credit memo with a receiving report. B) require approval for each credit memo by the credit manager. C) reconcile total of credit memos to total debits posted to customers' subsidiary ledgers. D) sequentially prenumber all credit memos and perform a sequence check at the end of each day.

C) reconcile total of credit memos to total debits posted to customers' subsidiary ledgers.

3) The ________ normally triggers the customer payment recording process. A) sales invoice B) deposit slip C) remittance advice D) customer monthly statement

C) remittance advice

37) One way a firm could reduce the risk of problems with supplier dependability is to A) purchase inventory from only U.S.-based suppliers. B) use an ERP system for purchases. C) require suppliers to be ISO 9000 certified. D) automate the purchasing function.

C) require suppliers to be ISO 9000 certified

17) Which of the following is a control that addresses the threat of unauthorized changes to the payroll master file? A) field checks B) batch totals C) segregation of duties D) sound hiring procedures

C) segregation of duties

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

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

28) Because it is the most fungible of all assets, the management of cash has always been the most difficult of all control issues. The most important of cash controls is A) minimization of cash handling. B) lockbox arrangements. C) segregation of duties. D) frequent reconciliation of records.

C) segregation of duties.

9) Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate? A) control of physical access to the inventory storage areas B) transfers of inventory with proper documentation C) sending "blind" copies of purchase orders to inventory control for data entry D) making physical counts of inventory at least once per year

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

15) Corrections are entries made to correct errors found in ________.

C) the general ledger

35) Identify item below that is the biggest purchasing function cost driver. A) the number of purchase requisitions processed B) the number of suppliers used C) the number of purchase orders processed D) the quantity of items ordered

C) the number of purchase orders processed

8) A "zero balance check" refers to which of the following control procedures? A) a type of batch total B) cross-footing the payroll register C) the payroll clearing account shows a zero balance once all entries are posted D) trial balance showing that debits equal credits

C) the payroll clearing account shows a zero balance once all entries are posted

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

C) the payroll master file.

6) By using an ERP to merge the billing, sales, and marketing functions, the firm may be able to A) bill the customer right after the sale occurs. B) market products and services on bills sent to customers. C) use customer's past purchase history to send information about related products and services the customer may be interested in. D) eliminate the need for a firm to have a billing, sales, and marketing department.

C) use customer's past purchase history to send information about related products and services the customer may be interested in.

58) MacDougalKids is a mid-sized manufacturer of organic baby food. MacDougalKids uses the EOQ inventory management approach. Which of the following factors would likely be least important when selecting inventory suppliers? A) product price B) product quality C) vendor delivery dependability D) All would be equally important.

C) vendor delivery dependability

44) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message when she tried to save her entry, "The amounts debited and credited are not equal. Please correct and try again." This message was the result of a

C) zero-balance check.

20) The accounting department at Aglaya Telecom records an average of 5,000 transactions per hour and have a recovery time objective of 120 minutes. Aglaya recently suffered a hardware malfunction and it took the company 20 hours to recover their lost data. How many transactions did Aglaya recover? A) 20,000 transactions. B) 30,000 transactions. C) 40,000 transactions. D) 50,000 transactions.

21) Probably the most important change management control is A) monitoring user rights and privileges during the change process. B) testing all changes thoroughly prior to implementation on a stand-alone computer. C) updating all documentation to reflect changes made to the system. D) management's careful monitoring and review.

30) To protect against malware, it is important that antivirus software automatically examine ________ introduced into a system. A) CDs B) e-mail C) flash drives D) all of the above

30) ________ tests a numerical amount to ensure that it does not exceed a predetermined value nor fall below another predetermined value. A) Completeness check B) Field check C) Limit check D) Range check

33) A ________ determines the correctness of the logical relationship between two data items. A) field check B) alpha-numeric check C) range check D) reasonableness test

38) Loreen Tina is the chief lawyer for Tamara Incorporated. The CEO of Tamara Incorporated asks Loreen whether the company should periodically delete all company e-mail. If Loreen is well-versed in AIS best practices, she would mostly likely respond, A) Yes, if we are ever sued, the other attorney will not be able to comb through our e-mail for evidence. B) Yes, since e-mail requires a lot of storage space, deleting it periodically will reduce the amount of information we need to store. C) No, deleting an organization's e-mail is against the law. D) No, if we are ever sued we will not be able to draw upon our e-mail records to defend ourselves.

40) A ________ is a data entry control that compares the ID number in transaction data to a master file to verify that the ID number exists. A) reasonableness test B) user review C) data matching D) validity check

50) Which of the following is not a risk associated with the data input process? A) Data is invalid. B) Data is incomplete. C) Data is inaccurate. D) Data is corrupted.

D) 4 hours

20) Anong Mali is the purchasing manager at Wattana Technologies. She has responsibility for reviewing and authorizing purchase orders. She also reviews receiving reports, approves or corrects them, and authorizes the cashier to pay vendor invoices. Which of the following would correct control weaknesses related to these activities? A) Controls are adequate under the current system. B) Vendor invoices should be reviewed by accounts receivable and then cancelled when paid. C) Vendor invoices should be reviewed by the purchasing manager to ensure that they are correct. D) Accounts payable should reconcile purchase orders, receiving reports, and invoices.

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

33) Which of the following are appropriate controls for the general ledger and reporting system?

D) All of the above are appropriate.

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

D) All of the above are correct.

4) Who does the payroll system issue checks to? A) employees and to banks participating in direct deposit B) a company payroll bank account C) government agencies D) All of the above are correct.

D) All of the above are correct.

36) Which of the following tasks are facilitated by maintaining a strong and secure audit trail?

D) All of the above are facilitated by the audit trail.

19) Identify in which of the following scenarios a company could adjust the balance due the vendor by issuing a debit memo. A) quantity different from that ordered B) damage to the goods C) goods that fail inspection for quality D) All of the above are possible scenarios.

D) All of the above are possible scenarios.

7) Which of the following statements is false regarding the use of incentives, commissions and bonuses in the payroll system? A) Using incentives, commissions, and bonuses requires linking the payroll system and the information systems of sales and other cycles in order to collect the data used to calculate bonuses. B) Bonus/incentive schemes must be properly designed with realistic, attainable goals that can be objectively measured. C) Incentive schemes can result in undesirable behavior. D) All of the above are true.

D) All of the above are true.

4) Which of the following controls would be the least effective in preventing paying the same invoice twice? A) Only pay from original invoices. B) Cancel each document in the voucher package once the check is prepared and mailed. C) Only pay vendor invoices that have been matched and reconciled to a purchase order and a receiving report. D) Allow only the accounts payable department to authorize payment for vendor invoices and allow only the cash disbursements department to cut and mail checks to vendors.

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

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

D) HRM

27) Which of the following is not an advantage of a voucher system? A) Several invoices may be included on one voucher, reducing the number of checks. B) Disbursement vouchers may be pre-numbered and tracked through the system. C) The time of voucher approval and payment can be kept separate. D) It is a less expensive and easier system to administer than other systems.

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

11) What is the key difference between the MRP and JIT inventory management approaches? A) Only JIT reduces costs and improves efficiency. B) MRP is especially useful for products such as fashion apparel. C) JIT is more effectively used with products that have predictable patterns of demand. D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.

D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.

If an organization asks you to disclose your date of birth and your address, but fails to establish any procedures for responding to customer complaints, the organization has likely violated which of the Generally Accepted Privacy Principles? A) Collection B) Access C) Security D) Monitoring and enforcement

D) Monitoring and enforcement

46) Identify the department below that should not be able to submit a purchase requisition. A) Marketing B) Production C) Inventory Control D) None of the above

D) None of the above

14) Which of the following is a control that can be implemented to help prevent paychecks being issued to a "phantom" or "ghost" employee? A) The cashier should sign all payroll checks. B) Sequentially prenumber all payroll checks. C) Use an imprest account to clear payroll checks. D) Paychecks should be physically distributed by someone who does not authorize time data or record payroll.

D) Paychecks should be physically distributed by someone who does not authorize time data or record payroll.

9) The best solution for maintaining accurate automated perpetual inventory system is to use A) closed-loop verification when inventory is received from vendors and recorded. B) point of sale devices integrated with inventory records. C) periodic physical counts to reconcile with perpetual inventory records. D) RFID tags.

D) RFID tags.

23) This tests a numerical amount to ensure that it does not exceed a predetermined value nor fall below another predetermined value.

D) Range check

42) Concerning system availability, which of the following statements is true?

D) Threats to system availability include hardware and software failures as well as natural and man-made disasters.

1) To accomplish the objectives set forth in the expenditure cycle, a number of key management decisions must be addressed. Which of the decisions below is not ordinarily found as part of the expenditure cycle? A) How can cash payments to vendors be managed to maximize cash flow? B) What is the optimal level of inventory and supplies to carry on hand? C) Where should inventories and supplies be held? D) What are the optimal prices for each product or service?

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

3) Which of the following is not a key decision that needs to be made in the revenue cycle? A) How should merchandise be delivered to customers? B) Should credit be extended to customers? C) How can customer payments be processed to maximize cash flow? D) Which vendor should inventory be purchased from?

D) Which vendor should inventory be purchased from?

29) Concerning XBRL, which of the following statements is not true?

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

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

D) XBRL.

25) One objective of accounts payable is to authorize payment only for goods or services actually ordered and received. The best way to process supplier invoices is to use A) electronic funds transfer for small, occasional purchases from suppliers. B) a nonvoucher system. C) EDI for all small, occasional purchases from suppliers. D) a disbursement voucher system.

D) a disbursement voucher system.

17) The management at Barks-a-Million is considering a new inventory control system. The current system is inadequate because it frequently causes stockouts that interrupt production and lead to excess stock of other materials — resulting in markdowns and high carrying costs. The new system will focus on ensuring that orders are placed with sufficient lead time to prevent stockouts by using A) a just-in-time inventory system. B) the economic order quantity. C) materials requirements planning. D) a reorder point.

D) a reorder point.

21) Vendor invoices are approved by the ________, which reports to the ________. A) purchasing department; controller B) accounts payable department; treasurer C) purchasing department; treasurer D) accounts payable department; controller

D) accounts payable department; controller

10) Segregation of duties controls dictates that the collection and recording functions be kept separate from each other. However, the accounts receivable department needs to know when customers pay their invoices. What is a solution to this potential internal control problem? A) Establish a lockbox arrangement with a bank. B) Have customers send a remittance advice with their payment. C) Have mailroom personnel prepare a remittance list which can be forwarded to accounts receivable. D) all of the above

D) all of the above

4) The general ledger and reporting system is designed to provide information for which of the following user groups?

D) all of the above

3) When using electronic documents, ________ increase(s) the accuracy of data entry. A) access controls B) separation of duties C) general controls D) application controls

D) application controls

33) Ngai Nhung is the sales manager at Hung Technologies. At lunch with the company CEO, Ngai proudly announced that he had negotiated a(n) ________ with a client that represented the customer's long-term commitment to buy components from Hung. A) purchase order B) evaluated receipt settlement C) voucher D) blanket purchase order

D) blanket purchase order

21) The managerial report that shows planned cash inflows and outflows for major investments or acquisitions is the

D) capital expenditures budget.

45) Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message when she tried to save her entry, "The data you have entered does not include a source reference code. Please enter this data before saving." This message was the result of a

D) completeness test.

35) One way of ensuring that recurring adjusting journal entries are made each month would be to

D) create a standard adjusting journal entry file.

26) Identify the following item that should contribute to the efficiency of a payroll system. A) segregation of check distribution from payroll duties B) prompt redeposit of unclaimed paychecks C) a separate payroll bank account D) direct deposit of checks

D) direct deposit of checks

Asymmetric key encryption combined with the information provided by a certificate authority allows unique identification of A) the user of encrypted data. B) the provider of encrypted data. C) both the user and the provider of encrypted data. D) either the user or the provider of encrypted data.

D) either the user or the provider of encrypted data.

38) In the expenditure cycle, Financial Electronic Data Interchange (FEDI) increases efficiency by A) eliminating the need for receiving reports. B) eliminating the need for vendor invoices. C) eliminating the need for purchase orders. D) eliminating the need to prepare and mail checks.

D) eliminating the need to prepare and mail checks.

12) Depreciation expense and bad debt expense are examples of which type of adjusting journal entry?

D) estimates

23) Which of the following duties could be performed by the same individual and not violate segregation of duty controls? A) handling cash and posting to customer accounts B) issuing credit memos and maintaining customer accounts C) handling cash and authorizing credit memos D) handling cash receipts and mailing vendor payments

D) handling cash receipts and mailing vendor payments

41) Professional employer organizations (PEOs) are especially attractive to small and mid-sized businesses for all of the following reasons except A) reduced costs. B) wider range of benefits. C) freeing up computer resources. D) improved service quality.

D) improved service quality.

13) Sequentially prenumbered forms is an example of a(n)

D) input control.

14) Once a vendor is selected for a product, the vendor's identity is recorded in the A) purchase requisition transaction file. B) purchase requisition master file. C) inventory transaction file. D) inventory master file.

D) inventory master file

27) Bogumil Distributors is an Internet-based wholesaler. Customers enter their orders online. The manager of Cezary Foods was entering an order when the following error message popped up: "Your order exceeds your available credit. You will be contacted within 8 hours." This message is the result of a A) sign check. B) validity check. C) reasonableness test. D) limit check.

D) limit check.

51) The traditional approach to inventory management generally involves A) high stockout costs. B) minimizing item cost. C) receiving goods or services just prior to the time they are needed. D) maintaining inventory levels so that production can continue even if inventory use is greater than expected.

D) maintaining inventory levels so that production can continue even if inventory use is greater than expected.

60) Probably the most important change management control is

D) management's careful monitoring and review.

16) A method for tracking accounts receivable that matches specific invoices and payments from the customer is called a(n) ________ method. A) specific identification B) balance forward C) cycle billing D) open-invoice

D) open-invoice

Which of the following is not one of the three important factors determining the strength of any encryption system? A) key length B) key management policies C) encryption algorithm D) privacy

D) privacy

5) Which of the following is not one of the controls when customer payments are commingled with other mail? A) preparing a remittance list as mail is opened B) restrictively endorsing checks when received C) requiring two mail room clerks to open mail together D) requiring the controller to be personally present when mail is received and opened

D) requiring the controller to be personally present when mail is received and opened

41) Adjusting entries that reflect a change in accounting principle used to value inventories are classified as

D) revaluations.

49) Which of the following is not an activity performed in the expenditure cycle? A) ordering B) receiving C) cash disbursement D) shipping

D) shipping

Identify the item below which is not a piece of legislation passed to protect individuals against identity theft or to secure individuals' privacy. A) the Health Insurance Portability and Accountability Act B) the Health Information Technology for Economic and Clinical Heath Act C) the Financial Services Modernization Act D) the Affordable Care Act

D) the Affordable Care Act

3) Who provides the adjusting entries for a well-designed general ledger and reporting system?

D) the controller's area

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

D) the purchasing department manager

17) Financial statements are prepared in a certain sequence. Which statement is prepared last in the sequence?

D) the statement of cash flows

27) Which of the following documents would be likely to yield the greatest cost saving by converting from paper to electronic? A) payroll register B) earnings statement C) deduction register D) time card

D) time card

20) A type of business document in which part of the original document is returned to the source for further processing is called a ________ document. A) feedback B) returnable C) closed-loop D) turnaround

D) turnaround

12) What is a potential threat to the specific activity of payroll processing? A) hiring unqualified employees B) poor system performance C) violations of employment laws D) unauthorized changes to the payroll master file

D) unauthorized changes to the payroll master file

29) A clerk at a grocery store scanned the bar code for a low cost bag of frozen chicken wings then gave his friend an expensive brand-name bag of frozen chicken wings.Which of the following controls would best prevent the clerk from getting away with doing this? A) physical inventory count B) segregation of duties C) limited physical access to bar codes D) use of RFID tags

D) use of RFID tags

6) Matching customer account numbers and inventory item numbers to the numbers in the customer and inventory master files is an example of a A) completeness test. B) field check. C) reasonableness test. D) validity check.

D) validity check.

1) The Gwallter Reece Chihuahua Sweater Co. (GRCCo) was established in 2013. It recently signed a large contract with PetCo pet stores. GRCCo will be required to track and forecast sweater sales by linking in to PetCo's sales database. GRCCo will then be responsible for shipping products to PetCo as needed. The relationship between GRCCo and PetCo is an example of A) sales force automation. B) electronic data interchange. C) optical character recognition. D) vendor-managed inventory.

D) vendor-managed inventory.

This provides detailed procedures to resolve the problems resulting from a flash flood that completely destroys a company's data center?

Disaster Recovery Plan (DRP). (A DRP focuses on restoring an organization's IT functionality.)

3. Violating which of the following principles of graph design would result in distorting the magnitude of a trend in sales? a. Displaying trend data in chronological sequence from left-to-right on the x-axis b. Starting the y-axis at zero c. Neither of the above d. Both of the above

Displaying trend data in chronological sequence from left-to-right on the x-axis

Which of the following combinations of duties can the same employee perform without violating the principle of segregation of duties? a. Shipping inventory and billing customers b. Issuing credit memos and maintaining accounts receivable c. Taking customer orders and checking inventory availability d. All three of the listed combinations can be performed by the same person without violating the principle of segregation of duties e. None of the three listed combinations should be performed by the same person because all three combinations violate the principle of segregation of duties

Taking customer orders and checking inventory availability

Taxonomy extensions

The difference in the control totals is 720,000. Which data entry control would best prevent similar data entry errors in the future? A) Modules 11 B) validity check C) check digit D) sequence check

Recovery Time Objective (RTO)

The maximum tolerance time to restore an organization's information system following a disaster, representing the length of time that the organization is willing to attempt to function without its information system.

The CEO is concerned about the possibility of employees stealing inventory. In the formal language used for risk analysis, theft of inventory is referred to as a(n): a. risk b. exposure c. expected loss d. threat e. None of the above

Threat

42) Concerning system availability, which of the following statements is true? A) Human error does not threaten system availability. B) Proper controls can maximize the risk of threats causing significant system downtime. C) Threats to system availability can be completely eliminated. D) Threats to system availability include hardware and software failures as well as natural and man-made disasters.

Threats to system availability include hardware and software failures as well as natural and man-made disasters.

True or False: Backups still need to be made when using either virtualization or cloud computing.

True.

True or False: Cloud computing reduces the risk that a single catastrophe from either a natural disaster or terrorist attack would result in significant downtime and loss of availability.

True.

True or False: Data entry controls do NOT include Parity Check.

True.

True or False: Incremental daily backups are faster to perform than differential daily backups, but restoration is slower and more complex.

True.

True or False: Validity checks are a type of online processing control.

True.

True or False: Virtualization significantly reduces RTO (Recovery Time Objective) for hardware problems.

True.

remittance advice

Turnaround document returned by customers with payments

XBRL extension taxonomy

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

A listing of journal vouchers by numerical sequence, account number, or date is an example of

a general ledger control report.

10) When processing weekly payroll, an employee accidentally entered 400 for hours worked. The best data entry control for this error would be A) a limit check. B) a check digit. C) batch total reconciliation. D) a field check.

a limit check.

XBRL anatomy

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

Which of the following is an example of the type of fraud referred to as misappropriation of assets? a. embezzlement b. lapping c. inventory theft d. all of the above e. none of the above

all of the above

Which of the following user groups generally receive information produced by the general ledger and reporting system?

all of these ( internal external inquirey)

Immediately after the adjusting entries are posted, the next step in the general ledger and reporting system is to prepare

an adjusted trial balance.

XBRL element

an individual financial statement item

49) A copy of a database, master file, or software that will be retained indefinitely as a historical record is known as a(n) A) archive. B) cloud computing. C) differential backup. D) incremental backup.

archive.

18) Data matching is an example of a(n) A) data entry control. B) data transmission control. C) processing control. D) input control.

processing control.

The use of biometrics as part of employee authentication is designed primarily to reduce the risk of which threat? a. Inaccurate updating of the master payroll file b. Inaccurate time and attendance data c. Failure to make required payroll tax payments d. Errors in processing payroll

c. Failure to make required payroll tax payments

Which of the following is an important part of the audit trail? a. journal vouchers b. flexible budgets c. trial balance d. data warehouse

journal vouchers

1) The best example of a hash total for a payroll transaction file could be A) total of employees' social security numbers. B) sum of net pay. C) total number of employees. D) sum of hours worked.

total of employees' social security numbers.

Marina Filimena is an accountant at Jasmina Hair Products. Marina received the following error message while making an adjusting entry to the general ledger: "The amounts debited and credited are not equal. Please correct and try again." This is an example of a

ITAC final 2

Set pelajaran terkait

Data Programming Final

Chief Justices of the U.S. Supreme Court

Options

Marketing Final Quiz Questions

IS 301 FINAL Ch 10-12

Chapter 10 PSY 352 (part2)

Chem Test Review Ch 1-2

Clothing and colors vocab in Spanish

Astronomy Test 3

AP Bio Tri 2 exam

W!SE 2

Chapter 7- HW Practice

American History 2

HEALTH INSURANCE Chapter Quiz Questions

Audit Module E,F,G (Exam 3)

Med-Serg chapter 36

CRM Final

ECON MONOPOLY

unit 5 ap classroom hg

Davis- Ch. 31: Pain