AIS Exam 3
1. The risks that may affect the revenue and cash collection processes include all of the following, except: a. Transactions recorded by the wrong company b. Valid transactions may have been omitted from the records c. Transactions may not have been recorded in a timely manner d. Recorded transactions may not be valid or complete
A
1. This document is prepared and sent to the customer once the shipment has occurred. The document provides the details of the sale and requests payment. a. Sales Invoice b. Accounts Receivable Statement c. Bill of Lading d. Sales Order
A
1. When a sale occurs, the information resulting from that sale must flow into the sales recording systems, the accounts receivable and cash collection systems, and the inventory tracking systems. In IT accounting systems, these recording and processing systems are referred to as: a. Transaction Processing Systems b. Revenue and Cash Processing Systems c. Point of Sale System d. E-business System
A
1. The business processes that are common in company-to-company sales business are divided into three groups. Which of the following is not one of those groups? a. Sales processes, including ordering, delivery, and billing b. Purchase of inventory, including ordering, delivery, and billing c. Sales Return processes d. Cash Collection processes
B
1. The policies and procedures that employees follow when completing the sale, capturing customer data and sales quantities, and routing the resulting sales documents to the right departments within the company are referred to as: a. Transactions b. Processes c. Posting d. Systems
B
1. The sales and cash collections process begins when: a. Merchandise is shipped to a customer b. A customer places an order with the company c. Merchandise is purchased d. A vendor places an order with the company
B
1. When a sales transaction has been authorized, by the signature of the designated employee, it means that the designated employee has done all of the following, except: a. Verified the sale is to an accepted customer b. The vendor's credit has been approved c. The price is correct d. Approval documented by a signature or initials of the designated employee
B
1. Which of the following relationships does not violate the rules of segregation of duties? a. Credit authorization and preparation of the sales order b. Preparation of the sales order and sales invoice c. Preparing goods for shipment and accounting for inventory d. Entering sales in the sales journal and handling the inventory
B
1. A special journal that is used to record sales transactions and is periodically posted to the general ledger. a. General Journal b. Subsidiary Journal c. Sales Journal d. Accounts Receivable Journal
C
1. The business processes that are common in company-to-company sales business types include all of the following, except: a. Collect order data b. Record receivable and bill the customer c. Update affected records, such as accounts payable and cash d. Handle any product returns from the customer
C
1. The risks that may affect the revenue and cash collection processes include all of the following, except: a. Transactions may have been recorded in the wrong customer account b. Transactions may be recorded in the wrong account c. Invalid transactions may have been omitted from the records d. Transactions may not have been accumulated or transferred to the accounting records correctly
C
1. A chronological listing of shipments that allows management to track the status of sales and to answer customer inquiries regarding order status is called a(n): a. Invoice b. Bill of Lading c. Pick list d. Shipping Log
D
1. Common means of presenting the revenue and cash collections processes pictorially include: a. Data Flow Diagram b. Document Flowchart c. Business Process Map d. All of the above
D
1. In a large company, there are hundreds, possibly thousands, of sales transactions each day. The company needs to have in place, systems and processes to: a. Capture the results of the sales transactions b. Record the proper and complete sales transactions c. Summarize and report the results of the transactions d. All of the above
D
1. The maximum dollar amount that a customer is allowed to carry as an accounts receivable balance: a. Maximum Limit b. Credit Balance c. Maximum Balance d. Credit Limit
D
1. A control that limits the risk of network break-ins is the coding of data that makes data unreadable to those without the appropriate key. This process does not stop the breaches, but will make the data useless. a. Encryption b. Encoding c. Repudiation d. Hacking
a
1. A document prepared that lists the chronological sequence of all returned items is referred to as a(n): a. Receiving log b. Receiving report c. Invoice d. Packing list
a
1. A special journal used to record all cash collections is called a(n): a. Cash Receipts Journal b. Remittance Advice c. Check Register Journal d. Customer Subsidiary Journal
a
1. Circumstances within a company, related to sales returns, that indicate a high level of risk include all of the following, except: a. Returns are received at one location with credit memos issued at the same location b. Quantities of products returned are often difficult to determine c. There is a high volume of credit memo activity d. Returns are received by consignees or under other arrangements not directly controlled by the company
a
1. Examples of characteristics that indicate a company may be more risky with respect to the revenue process include all of the following, except: a. Changes in sales prices or customers are infrequent b. The pricing structure is complex or is based on estimates c. There is a large volume of transactions is carried out d. The company depends on a single or on very few customers
a
1. Important characteristics of electronic data interchange (EDI) include all of the following, except: a. Sales register is used to record all transactions b. Inter-company refers to two or more companies conducting business electronically c. Computer-to-computer aspect indicates that each company's computers are connected via a network d. A standard business format is necessary so that companies can interact and trade with a variety of buyers and sellers
a
1. Sales orders are calculated based on current selling prices of the items sold. The source of these prices, which would include the entire set of preestablished and approved prices for each product, is referred to as a(n): a. Price list b. Purchase order c. Packing slip d. Pick list
a
1. The custody responsibilities for cash receipts includes all of the following, except: a. Updating accounts receivable records b. Opening mail c. Preparing a list of collections d. Handling receipts of currency and checks
a
1. The internal control activity related to the adequate records and documents, related to sales, includes which of the following? a. Those responsible for recording sales should ensure that the supporting documentation is retained and organized b. Information systems duties included in the revenue process includes the preparation of sales orders and shipping logs c. All records are to be prepared by someone other than the person who has custody of the assets d. The authorization process is to remain separate from the recording process
a
1. The internal control process of separating the custody of inventory from the accounts payable record keeping will help to minimize the risk of: A. Fictitious purchases B. Invalid vendors C. Duplicate purchases D. Incorrect amounts
a
1. The internal control process that requires that the bank reconciliation be performed monthly, will help to minimize the risk of: A. Invalid payments B. Invalid vendors C. Incorrect posting D. Duplicate payments
a
1. The separation of the custody of cash from the accounts receivable record keeping will help to minimize the related risk of: a. Invalid cash receipts b. Incorrect amounts c. Invalid transactions d. Duplicate transactions
a
1. This type of highly integrated IT system incorporates electronic processing of sales-related activities and, generally, the sales processes are transacted over the internet a. E-commerce b. Virtual commerce c. Electronic data interchange d. Point of sale
a
1.A tear-off part of a check that has a simple explanation of the reasons for the payment is called: A. Remittance advice B. Disbursement journal C. Transaction description D. Cash register
a
1.Activities involved with the fixed assets continuance phase of the fixed assets processes include all of the following, except: A. Updating depreciation prior to the disposal of fixed assets B. Updating cost data for improvements to assets C. Adjusting for periodic depreciation D. Keeping track of the physical location of the assets
a
1.Activities involved with the fixed assets disposal phase of the fixed assets processes include all of the following, except: A. Adjusting periodic depreciation B. Disposed assets are removed from the fixed asset subsidiary ledger C. Gains or losses resulting from disposal are computed D. The depreciation amounts related to the disposed assets are removed from the depreciation schedule and the fixed asset subsidiary ledger
a
1.An entity who receives a paycheck, but who does not actually work for the company is called: A. Ghost employee B. Shell employee C. Abundant employee D. Absent employee
a
1.In order to help safeguard the security and confidentiality in an electronic business environment, a company should implement controls such as user ID, password, log-in procedures, access levels, and authority tables in order to reduce the risk of: A. Unauthorized access B. Incomplete audit trail C. Virus and worm attacks D. Repudiation of purchase transactions
a
1.In order to smooth out the payroll process and avoid the heavy workload that falls at the end of the payroll period, many companies will use this type of system - one that integrates their human resources and payroll functions. This system makes real-time personnel data available and the general ledger and production system can be automatically updated at the end of the payroll period. A. Online Software Systems B. Batch Processing C. Electronic Timekeeping D. Outsourcing of Payroll Services
a
1.Intentionally attempting to circumvent IT system access controls to determine whether there are weaknesses in any controls is called: A. Penetration testing B. Intrusion detection C. Integrity testing D. Vulnerability testing
a
1.Internal control activities within the payroll process, identified as segregation of duties, would include which of the following? A. Payroll preparation, authorization of new hiring and pay rates, information systems, and general accounting should all be performed by different departments and / or different people. B. IT controls over computer records and physical controls in records storage areas. C. The payroll register is checked for mathematical accuracy and agreement with authorized pay rates and deductions. D. Supervisor approval of time sheets prior to preparation of payroll documents.
a
1.Internal control activities within the purchasing process, identified as adequate records and documents, would include which of the following? A. Files are to be maintained for purchase requisitions, purchase orders, receiving reports, and invoices. B. Periodic physical inventory counts are to be reconciled with the inventory ledger. C. Companies are to implement controls where the corresponding benefit exceeds the related cost. D. Avoid having the same individuals who handle the inventory also have access to the related accounting records.
a
1.Internal controls related to the purchase returns would include all of the following, except: A. The accounts payable employee who prepares the debit memo should also be responsible for handling the inventory and approving the return. B. Special authorization should be required to officially reject and return the items. C. Debit memos should be issued on pre-numbered forms in numerical sequence. D. Accounts payable records and data files should be restricted to those who are specifically authorized to approve or record the related purchase return.
a
1.Routine business transactions would include which of the following? A. Purchase of merchandise inventory. B. Payment of principal on a note. C. Purchase of fixed asset. D. Paying wages and salaries to employees.
a
1.The accounting record that includes the details of amounts owed to each vendor is called the: A. Accounts payable subsidiary ledger B. Purchases journal C. Accounts receivable subsidiary ledger D. Receiving log
a
1.The acquisition of materials and supplies and the related cash disbursements is referred to as: A. The Procurement Process B. Systems and Control Process C. Expenditure and Return Process D. Conversion Process
a
1.The internal control process of requiring an independent paymaster, will help to minimize the risk of: A. Fictitious employees B. Incorrect amounts C. Omitted paychecks D. Timing issues
a
1.The internal control process of requiring the check of the fixed asset subsidiary ledger and depreciation schedule for mathematical accuracy and agreement with authorized documentation, will help to minimize the risk of: A. Incorrect amounts B. Lost or stolen assets C. Duplicate transactions D. Omitted transactions
a
1.The internal control process that requires purchase return records be matched with the original purchase documentation and verified for item descriptions, quantities, dates, and prices, will help to minimize the risk of: A. Incorrect amounts B. Omitted returns C. Fictitious returns D. Invalid vendors
a
1.The policies and procedures that employees following in acquiring and maintaining human resources, capturing and maintaining employee data, paying employees for time worked, and recorded the related cash payroll liabilities and expenses are collectively referred to as: A. Payroll processes B. Human resources C. Salary administration D. Administrative procedures
a
1.The security and confidentiality risks of computer based matching would include: A. Unauthorized access to the system's ordering and matching functions would allow the insertion of fictitious vendors and / or invoices. B. Errors in system logic can cause systematic and repetitive errors in matching. C. The criteria used to identify duplicate payments may be too tightly defined and will overlook duplicate payments. D. System breakdowns or interruptions can stop or slow the processing of invoices and payments.
a
1.The three phases of fixed assets processes, that span the entire useful life of the assets, include all of the following, except: A. Depreciation B. Acquisition C. Disposal D. Continuance
a
1.There are four primary functions of corporate governance. Which of the following is NOT one of those functions? A. Availability B. Management Oversight C. Internal Controls and Compliance D. Financial Stewardship
a
1.This document, prepared by the vendor, is intended to show the quantities and descriptions of items included in the shipment. A. Packing slip B. Sales invoice C. Bill of lading D. Purchase order
a
1.This form is issued by the buyer, and presented to the seller, to indicate the details for products or services that the seller will provide to the buyer. Information included on this form would be: products, quantities, and agreed-upon prices. A. Purchase order B. Purchase requisition C. Purchase invoice D. Purchase journal
a
1.This item would include explanations concerning the qualifications and responsibilities of each position shown on organization chart. The item is also supported by policies and procedures manuals that outline specific activities performed by each position. A. Job profile B. Human resources listing C. Organization chart description D. Position description
a
1.This record, prepared by the cash disbursements department, provides a listing of al paychecks written, in check-number sequence, with the total supporting the amount of payroll funds to transfer to the payroll bank account. A. Payroll Disbursements Journal B. Payroll Register C. Payroll Journal D. Cash Disbursements Journal
a
1.Which of the following is a correct statement related to segregation of duties related to fixed assets? A. Custody of fixed assets is to be separate from the related record keeping B. Custody of fixed assets need not be separate from the purchasing of fixed assets C. The IT function of programming need not be separated from the accounting for fixed assets. D. All of the above are correct statements related to the segregation of duties.
a
1.Which of the following would be a correct way to compute the gross pay for an employee? A. Hours Worked times Authorized Pay Rate B. Hours Worked times Authorized Pay Rate minus Withholding Taxes C. Net Pay minus Authorized Deductions D. Net Pay times Withholding Taxes
a
1. A document completed to prepare a record of the sales return and to adjust the amount of the customer's credit status is called a(n): a. Receiving log b. Credit memorandum c. Sales invoice d. Sales journal
b
1. Application controls of the IT system would include: a. Availability b. Accuracy and completeness c. Security d. Processing integrity
b
1. Common types of independent checks within the revenue process include all of the following, except: a. Verification of information in the sales journal and on sales invoices b. Verification of the bank statement and the cash account in the general journal c. Reconciliation of accounts receivable detail with invoices and with the general ledger d. Reconciliation of inventory records with actual (counted) quantities on hand
b
1. Disposing of a fixed asset could include all of the following methods, except: A. Throwing it away B. Sending it to another department C. Exchanging it for another asset D. Donating it to another party
b
1. EDI systems have many advantages within the revenue and cash collection processes. Which of the following is not one of those benefits? a. Reduction or elimination of data keying b. Trading partners gaining access to data c. Elimination of postage costs d. Competitive advantage through better customer service
b
1. General controls of the IT system would include all of the following, except: a. Authentication of users b. Accuracy c. Physical access controls d. Business continuity planning
b
1. Goods received are unacceptable due to may different situations. Which of the following is not one of those situations? A. Damage or defects B. Changes in the company needs regarding future sales or production C. Errors in the type of goods delivered or ordered D. Timing issues
b
1. In order to ensure that all records are updated only for authorized transactions, appropriate individuals should be assigned all of the following duties, except a. Opening and closing all bank accounts b. Preparing the bank reconciliation c. Approving bank deposits d. Approving electronic transfers of funds
b
1. Independent checks and reconciliations, related to cash receipts, include all of the following, except: a. Cash counts should occur on a surprise basis and be conducted by someone not responsible for cash receipts functions b. Cash collections should be deposited in the bank in a timely manner to prevent the risk of theft c. Physical count of cash needs to be conducted from time to time in order to compare actual cash on hand with the amounts in the accounting records d. Daily bank deposits should be compared with the detail on the related remittance advice and in the cash receipts journal
b
1. It is necessary for employees to maintain adequate records of the hours worked and the projects worked on. The record of hours worked by an employee for a specific payroll period is reported on a document called: A. Time ticket B. Time sheet C. Salary document D. Wage report
b
1. The fixed assets owned by a company are considered to be long-term because: A. The high cost of the fixed assets demands that they not be considered short term. B. They are purchased with the intent of benefitting the company for a long period of time. C. The assets will last for a long period of time. D. All of the above are reasons the fixed assets are considered to be long-term.
b
1. The following circumstances may indicate risks related to cash collections, except: a. High volume of cash collections b. Centralized cash collections c. Lack of consistency in the volume or source of collections d. Presence of cash collections denominated in foreign currencies
b
1. The internal control process of having the receiving reports prepared on pre-numbered forms so that the sequence of receipts can be reviewed for proper recording will help to minimize the related risk of: A. Invalid vendors B. Omitted purchases C. Fictitious purchases D. Timing issues
b
1. The internal control process of requiring the payroll register to be reconciled with the time sheets, will help to minimize the risk of: A. Invalid payroll transactions B. Omitted paychecks C. Duplicate paychecks D. Fictitious employees
b
1. The risks of e-commerce, or e-business, include all of the following, except: a. Confidentiality b. Accuracy c. Security d. Processing Integrity
b
1. The segregation of duties related to sales returns would ideally separate the function of performing the credit memo activity and all of the following, except: a. Credit approval b. Approve the credit memos c. Billing d. Data entry
b
1. The separation of the custody of inventory from the accounts receivable record keeping will help to minimize the related risk of: a. Incorrect amounts b. Invalid returns c. Fictitious customers d. Timing issues
b
1. The separation of the responsibility for custody of cash from the responsibility for reconciling the bank accounts will help to minimize the related risk of: a. Wrong customers b. Incorrect amounts c. Invalid bank accounts d. Invalid transactions
b
1. The separation of the responsibility for the authorization of new customers from the custody of inventory will help to minimize the related risk of: a. Invalid sales b. Fictitious customers c. Incorrect amounts d. Timing issues
b
1. The standard format for common forms used in the United Stated for electronic data interchange (EDI) data transmission is divided into three parts. Which of the following is one of those "parts"? a. Availability Segment b. Labeling Interchanges c. Security Trailer d. Processing Data
b
1. The terms of agreement between the company and the common carrier are documented in a(n): a. Pick List b. Bill of Lading c. Invoice d. Packing Slip
b
1. This document, prepared by the purchasing department, for use by the receiving department, is copy of the purchase order that eliminates all data about the price and quantity of the items ordered. A. Packing slip B. Blind purchase order C. Empty purchase order D. Receiving report
b
1. This form is prepared to document the need to make a purchase and requests that the specific items and quantities be purchased. A. Purchase order B. Purchase requisition C. Purchase invoice D. Purchase journal
b
1. This occurs when the IT system automatically makes a list of users and the actions they take within the IT system. a. Control Totals b. Transaction Logging c. Encryption Keys d. Acknowledgment
b
1. This term refers to moving the current accounting period's cut-off date forward to include sales that correctly occur in a future period. This activity occurs so that the selling company can inflate their sales in the current period. a. Channel stuffing b. Leaving sales open c. Shipping reversal d. Sales deferral
b
1. When goods are received at the end of the accounting period, and the invoice is not received until after the start of the following period, a problem may arise as to when to record the liability. This is referred to as a(n): A. Obligation referral B. Cutoff issue C. Liability deferral D. Channel stuffing
b
1.A chronological listing of all payments is referred to as a(n): A. Remittance Advice B. Cash Disbursements Journal C. Accounts Payable Ledger D. Purchases Journal
b
1.A company may reject goods received due to a number of reasons. The process related to this is referred to as: A. Purchases B. Purchase Returns C. Accounts Payable D. Receiving
b
1.A detailed listing of the company's fixed assets, divided into categories consistent with the general ledger accounts is called a: A. Fixed Asset Journal B. Fixed Asset Subsidiary Ledger C. Fixed Asset Schedule D. Fixed Asset Budget
b
1.Advantages of an automated system includes all of the following, except: A. Reduce time, costs, errors, and duplicate payments. B. Increased cost of the system. C. Provides management more timely information to forecast future cash outflows for payment of invoices. D. Summarized detailed transactions into summary amounts that are posted to the general ledger accounts.
b
1.An electronic payroll time keeping device that collects data when employee identification badges are swiped through an electronic reader are called: A. Timekeeper B. Badge reader C. Paymaster D. Electronic time clock
b
1.Clues that a ghost employee may exist in the company would include all of the following, except: A. Payroll register identifies paychecks without adequate tax withholdings B. The personnel file contains no duplicate addresses C. Payroll expenses are over budget D. Paychecks were not claimed when the paymaster distributed them
b
1.In order to help safeguard the availability in an electronic business environment, a company should implement controls such as business continuity planning, backup data and systems, in order to reduce the risk of: A. Unauthorized access B. System failures C. Repudiation of purchase transactions D. Invalid data entry
b
1.Internal control activities within the payroll process, identified as independent checks and reconciliations, would include which of the following? A. IT controls over computer records and physical controls in records storage area. B. Time sheets reconciled with the payroll register. C. The payroll register is checked for mathematical accuracy and agreement with authorized pay rates and deductions. D. Supervisor approves time sheets prior to preparation of payroll documents.
b
1.It is necessary for a company to maintain good control over their accounts payable and paying by the due date, for all of the following reasons, except: A. Avoid late payment fees B. Maintain relationships with customers C. To take advantage of discounts for early payment D. To stay on good terms with its vendors
b
1.The careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adequate cash balances exist to meed obligations is called: A. Cash disbursements B. Cash management C. Independent checks D. Accounts payable management
b
1.The document is prepared in order to map out the jobs and reporting relationships within an organization. This may include only top branches of an organization or may include all positions within the company. A. Employee List B. Organization Chart C. Hierarchy Tree D. Human Resources Listing
b
1.The internal control process of requiring physical controls in place in areas where fixed assets are held, will help to minimize the risk of: A. Incorrect amounts B. Lost or stolen assets C. Duplicate transactions D. Omitted transactions
b
1.The internal control process that requires the approval of a cash disbursement transaction to take place prior to the preparation of the check, will help to minimize the risk of: A. Fictitious payments B. Invalid payments C. Timing issues D. Stolen cash
b
1.The internal control process that requires the segregation of the authorization of purchase returns and the accounts payable record keeping and the custody of inventory, will help to minimize the risk of: A. Incorrect amounts B. Fictitious returns C. Timing issues D. Duplicate returns
b
1.The policies and procedures involved in purchasing property; capturing and maintaining relevant data abut the assets; paying for and recording the related assets; depreciation and other expenses; and gains or losses are collectively referred to as: A. Capital resources B. Fixed asset processes C. Property administration D. Capital procedures
b
1.The policies and procedures that employees follow when completing the purchase of goods or materials, capturing vendor data and purchase quantities, and routing the resulting purchasing documents to the proper departments within the company are called: A. Systems B. Processes C. Activities D. Requisitions
b
1.The security of assets and documents would include all of the following, except: A. Supervisors need to make certain that the assets are being used for their intended purpose. B. Designated members of management should be assigned responsibility for the disposal of any assets C. Maintaining adequate insurance coverage D. Electronic controls are needed to control access to automated records
b
1.The shortcomings of a spreadsheet-based system include all of the following, except: A. The design of spreadsheets is very time consuming B. The abundance of fixed asset data C. It is difficult to apply varying depreciation policies within spreadsheets D. It is difficult to establish an audit trail with spreadsheets
b
1.There are different ways to issue a purchase order to a vendor. Which of the following is not one of the ways? A. Hard copy via fax or mail B. Hard copy by hand C. Electronically via e-mail D. Directly through the computer network
b
1.This type of software alerts the organization to hacking or other unauthorized use of the system or net work. A. Penetration testing B. Intrusion detection C. Integrity testing D. Vulnerability testing
b
1.Types of fraud that may occur in the payroll function includes all of the following, except: A. Overstated hours B. Incorrectly computed tax withholdings C. False claims of sick leave D. Pay claims made by ghost employees
b
1.When accounting software is used to prepare the periodic payroll, which of the following items is necessary to input for each employee? A. Employee Name B. Hours Worked C. Pay Rate D. Social Security Number
b
1.Which of the following groups has an ethical obligation to establish the proper tone at the top, strong internal controls, and high ethical standards? A. Stockholders B. Board of Directors and Management C. Employees D. Audit Committee
b
1.Which of the following is a characteristic of a non-routine transaction? A. A business encounters this type of transaction on a regular, recurring basis. B. Required to have specific authorization. C. Volume of transactions become second nature to the employees responsible. D. Specific authorization for the specific transaction is not necessary.
b
1.Which of the following would be referred to as a common carrier? A. Taxi-cab B. Trucking company C. City bus D. Fire department vehicle
b
1. The security of having cash receipts deposited in the bank on a daily basis will help to minimize the related risk of: a. Invalid receipts b. Invalid bank account c. Lost or stolen cash d. Duplicate transactions
c
1. This item documents the quantities and descriptions of items ordered. Items from this document should be pulled from the warehouse shelves and packaged from the customer. a. Packing Slip b. Price List c. Pick List d. Purchase Order
c
1. A source document prepared by the personnel in the receiving dock that documents the quantity and condition of the items received is called a(n): a. Invoice b. Receiving log c. Receiving report d. Credit memorandum
c
1. Assets to be included in the fixed asset pool would include all of the following, except: A. Vehicles B. Furniture C. Office Supplies D. Real Estate
c
1. Bank reconciliation tasks include: a. Procedures to ensure that deposits are examined for proper dates b. Procedures to ensure that all reconciling items are reviewed and explained c. Both of the above d. None of the above
c
1. Because it can be expensive to develop and maintain a system that links two companies directly, the companies often use a third-party network. This third-party network provides other valuable services such as translation and encryption of the EDI data and authentication of a valid and authorized training partner. These third-party networks are called: a. EDI Mailboxes b. American National Standards Provider c. Value Added Networks d. Secured EDI Networks
c
1. Differences between a sales return and a sales allowance include: a. The issuance of a credit memorandum b. The existence of defective merchandise c. The documentation in a receiving report d. All of the above
c
1. Features that assist management and accountants, as the result of the point-of-sale systems, include all of the following, except: a. Bar code scanning eliminates the need to manually enter product codes, quantities, or prices b. Real-time update of cash, sales, and inventory records allows for immediate analysis of sales trends, inventory needs, and cash on hand c. List prices can be changed by the check-out clerks to take advantage of any price changes d. Credit card authorization during the sale save time and help prevent credit card fraud
c
1. Notable differences between the acquisition of fixed assets and the acquisition of inventory includes: A. The placement of the acquired assets - user department for fixed assets, warehouse for inventory. B. The inclusion of a fixed asset department instead of the inventory control department. C. Both of the above. D. None of the above.
c
1. The advantages of e-commerce, or e-business, include all of the following, except: a. Reduced cost through lower marketing, employee, and paperwork costs b. Short sales cycles c. Repudiation of sales transactions d. Increased accuracy and reliability of sales data
c
1. The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of: a. Invalid transactions b. Fictitious customers c. Omitted transactions d. Duplicate transactions
c
1. The form, or source document, that conveys the details about a customer's order, prepared by the customer, is referred to as: a. Sales Order b. Sales Invoice c. Purchase Order d. Purchase Invoice
c
1. The security of assets and documents related to cash disbursements would include all of the following, except: A. Access to cash should be limited to the authorized check signers. B. Physical controls should be in place where the cash is retained and disbursed. C. Access to records should be limited to persons with the authority to sign checks. D. The company's stock of unused checks should be protected and controlled.
c
1. This type of highly integrated IT system, inter-company, computer-to-computer, communicates sales documents electronically with a standard business format. a. E-commerce b. Virtual commerce c. Electronic data interchange d. Point of sale
c
1. Which of the following is not one of the stated physical controls for inventory in a warehouse? a. Surveillance Cameras b. Alarm Systems c. Backup Copies d. Security Guards
c
1.A company must have systems in place to take care of all activities related to both routine and non-routine processes. The activities would include all of the following, except: A. Record B. Summarize C. Review D. Report
c
1.An electronic payroll time keeping device that collects time and attendance data when employees enter their time sheets is called: A. Timekeeper B. Paymaster C. Electronic time clock D. Badge readers
c
1.Internal control activities within the payroll process, identified as authorization, would include which of the following? A. Preparation of a bank reconciliation B. Independent paymaster C. Manager approval of payroll prior to signing checks D. Physical controls in areas where cash and paychecks are held
c
1.Most companies can justify the use of specialized asset management software programs instead of the spreadsheets or traditional manual systems for all of the following reasons, except: A. The abundance of fixed asset data B. The time-consuming and tedious requirements for tracking changes C. The number of different methods of accounting for depreciation D. The intricacy of the tax laws
c
1.One of the newest technologies related to payables is one where invoices are exchanged and payments are made via the internet. The name given to this process is: A. Random Array of Invoice and Disbursements (RAID) B. Electronic Invoice Payment Procedures (EIPP) C. Electronic Invoice Presentment and Payment (EIPP) D. Routing Application Invoice Delivery (RAID)
c
1.Personnel records will typically include all of the following, except: A. Documentation related to the initial hiring B. Personal information, such as the employee address C. Medical history subsequent to hiring D. Social security number
c
1.The examination of the system to determine the adequacy of security measures and to identify security deficiencies is called: A. Intrusion detection B. Penetration testing C. Vulnerability testing D. Integrity testing
c
1.The first part of the strict approval process for high-dollar fixed assets is the investment analysis. Which of the following is part of that analysis? A. Capital budget comparison B. Review of the proposal C. Financial justification D. Written requisition
c
1.The internal control activities within the purchasing process, related to authorization of transactions, would include which of the following? A. The accounting duties related to requisitioning, ordering, and receiving goods should be performed by different individuals. B. The custody of inventory and the recording of inventory transactions are required to be maintained. C. Specific individuals are to be authoritative responsibility for preparing purchase requisitions and purchase orders which would include which items to purchase, how many items, and which vendor. D. Periodic physical inventory counts are to be reconciled with the inventory ledger and general ledger.
c
1.The internal control activity requiring that the manager approves payroll prior to signing paycheck is intended to minimize the risk of: A. Omitted paychecks B. Incorrect amounts C. Fictitious employee D. Stolen paychecks
c
1.The internal control process of requiring management approval of fixed asset changes prior to recording the transaction, will help to minimize the risk of: A. Incorrect amounts B. Lost or stolen assets C. Duplicate transactions D. Omitted transactions
c
1.The internal control process that requires purchase records to be matched and verified for item descriptions, quantities, dates, authorized prices, and mathematical accuracy, will help to minimize the risk of: A. Stolen goods B. Omitted transactions C. Invalid purchases D. Incorrect accumulation
c
1.The internal control process that requires the approval of the purchase return transaction take place before the preparation of the debit memo, will help to minimize the risk of: A. Fictitious returns B. Omitted returns C. Invalid returns D. Wrong vendor
c
1.The record detailing the amounts and timing of depreciation for all fixed asset categories, except land and any construction-in-progress accounts, is called: A. Fixed asset subsidiary ledger B. Capital budget C. Depreciation schedule D. Depreciation method
c
1.The textbook referred to the three primary categories of processes in the typical purchasing system. Which of the following in not one of those categories? A. Purchase Processes B. Cash Disbursement Processes C. Receiving Processes D. Purchase Return Processes
c
1.There are a number of ways that frauds may be carried out to try to receive excess compensation. Which of the following is not one of those methods? A. Exaggeration of hours worked B. Falsification of overtime or holiday time worked, payable at a higher rate C. Understatement of job related expenses D. Falsification of sales in order to increase commission payouts
c
1.There are many risks that may affect the payroll and fixed asset transactions. Which of the following is not one of those risks? A. Recorded transactions may not be valid. B. Expenditure transactions may be recorded in the wrong account. C. Valid expenditures recorded properly by the wrong employee. D. Transactions may not be recorded in a timely manner.
c
1.This document authorizes the transfer of cash from the company's main operating account into the payroll cash account. A. Payroll register B. Payroll disbursements journal C. Payroll voucher D. Paycheck
c
1.This document, prepared by the vendor, provides details of the items included in the delivery; and is normally signed by the receiving clerk as verification of receipt. A. Packing slip B. Receiving report C. Bill of lading D. Purchase order
c
1.This phase of the fixed asset processes relates to discarding fixed assets when they become old, outdated, inefficient, or damaged. A. Depreciation B. Acquisition C. Disposal D. Continuance
c
1.This type of system matching takes place without invoices. The receipt of goods is carefully evaluated an, if it matches the purchase order, settlement of the obligation occurs through the system. A. Business Process Engineering B. Controlled Access Invoicing C. Evaluated Receipt Settlement D. Double Matching System
c
1.When a payment has been made, the cash disbursements clerk will clearly mark the invoice with information pertaining to the date an the check number used to satisfy the obligation. This process is called: A. Marking the invoice B. Retiring the invoice C. Cancelling the invoice D. Destroying the invoice
c
1.When purchased goods are received, which of the following tasks should be completed in the receiving area? A. An inspection of the goods - quantity counted and condition assessed. B. Documenting the details of the receipt, before the carrier leaves. C. Match the purchase order, the receiving report, and the purchase invoice to be sure that they agree. D. Preparation of a receiving report detailing the contents and condition of the goods.
c
1.Which department is generally responsible for the notification of the need to make cash disbursements and the maintenance of vendor accounts? A. Accounting department B. Purchasing department C. Accounts payable department D. Shipping department
c
1.Which of the following would be a correct way to compute the net pay for an employee? A. Hours Worked times Authorized Pay Rate B. Gross Pay minus Withholding Taxes C. Gross Pay minus Authorized Deductions D. Hours Worked times Withholding Tax Rate
c
1. A company should study risks common to its system prior to deciding the mix of controls needed. High-risk characteristics that might justify the need for extensive internal controls include all of the following, except: A. Goods received are especially difficult to differentiate, count, or inspect. B. High volumes of goods are often received, or the goods are of high value. C. Receiving and / or record keeping are performed at one centralized location. D. Changes in price or vendors is frequent.
d
1. Availability risks of e-commerce, or e-business, include all of the following, except: a. Hardware and software system failures b. Virus and work attacks c. Denial-of-service attacks by hackers d. Incomplete audit trail
d
1. Common expenditure processes would include all of the following, except: A. Preparation of a purchase requisition B. Receipt of the goods or services C. Recording the liability D. Payment received on account
d
1. Each category of processes in the typical purchasing system would include controls and risks. For each of the categories, the goal of the internal controls system is to reduce specific types of business risks. Which of the following is not one of those risks? A. Recording invalid transactions. B. Recording transactions at the wrong amounts. C. Omitting actual transactions from the accounting records. D. Transactions properly accumulated or transferred to the correct accounting records.
d
1. Factors that indicate the need for internal controls over fixed assets processes include all of the following, except: A. General nature of fixed assets makes the susceptible to theft because they are distributed throughout the business and are in the hands of many B. Large quantities of fixed assets C. High likelihood of obsolescence due to technological changes D. The high cost of assets
d
1. In order to help safeguard the processing integrity in an electronic business environment, a company should implement input controls such as field check, validity check, limit check, reasonableness check, and computer logs in order to reduce the risk of: A. Worm attacks B. Hackers C. Unauthorized access D. Invalid data entry
d
1. In order to protect data files, production programs, and accounting records from unauthorized access, each of the following may be used, except: a. Passwords b. Physical controls (locked cabinets) c. Backup copies d. Surveillance cameras
d
1. It is important that documentation support or agree with an invoice before payment is approved and a check is issued. Which documents should be matched to make sure that the invoice received relates to a valid order that was placed and that the goods were received? A. Purchase requisition, purchase order, and receiving report. B. Purchase order, receiving log, and invoice. C. Purchase requisition, receiving report, and statement. D. Purchase order, receiving report, and invoice.
d
1. The authorization of sales returns requires that certain individuals within the company be assigned the authority for all of the following except: a. Authorize Sales Returns b. Approve Credit Memos c. Develop Sales Return Policies d. Record the Credit Memos
d
1. The date that is the end of the accounting period is referred to as the: A. Fiscal date B. Change off C. Accounting cut D. Cutoff
d
1. The documentation accompanying payment that identifies the customer account number and invoice to which the payment applies is referred to as a(n): a. Cash Receipt Journal b. Promissory Note c. Deposit List d. Remittance Advice
d
1. The information from a purchase must flow into the purchase recording systems, the accounts payable and cash disbursement systems, and the inventory tracking systems. In an IT accounting system, these recording and processing systems are called: A. General Ledger Systems B. Integrated Accounting Systems C. Journal Application Systems D. Transaction Processing Systems
d
1. The internal control of cash receipts related to adequate records and documents would include which of the following? a. Cash receipts listings prepared on a daily basis and reconciled to supporting documentation from the bank deposit b. Bank deposit receipts should be retained and filed chronologically c. Detailed customer accounts should also be maintained and reconciled with customer statements regularly d. All of the above
d
1. The internal control process of requiring physical controls in the warehouse and receiving areas, in order to limit access to inventory items, will help to minimize the risk of: A. Incorrect posting B. Omitted purchases C. Invalid vendors D. Stolen goods
d
1. The preparation of deposit slips on prenumbered forms will help to minimize the related risk of: a. Invalid transactions b. Incorrect amounts c. Duplicate transactions d. Omitted transactions
d
1. The preparation of packing lists and shipping records on prenumbered forms will help to minimize the related risk of: a. Incorrect amounts b. Invalid sales c. Wrong customers d. Omitted transactions
d
1. The process of user identification to ensure that only authorized users are accessing the IT system, which occurs through the use of user ID, password, and other unique identifiers, is called: a. Processing Integrity b. Virtualization c. Availability d. Authentication
d
1. The recording responsibilities for cash receipts includes all of the following, except: a. Maintaining a cash receipts journal b. Updating accounts receivable records for individual customers c. Posting subsidiary ledger totals to the general ledger d. Preparing bank deposits
d
1. The standard format used with electronic data interchange (EDI) allows all vendors and buyers to speak the same language. This group has developed the standard format for the common documents used in the sales process: a. Electronic Data Systems b. American Common Forms Institute c. Association of Naturalized Documents d. American National Standards Institute
d
1. This document, prepared and maintained by the receiving department, is a sequential listing of all receipts. A. Receiving report B. Packing slip C. Bill of lading D. Receiving log
d
1. This type of highly integrated IT system processes sales at a cash register in retail stores. a. E-commerce b. Virtual commerce c. Electronic data interchange d. Point of sale
d
1. When payroll is processed using batch processing, which of the following would not be part of the payroll process? A. Human resources department would be responsible for keying employee information into the master file. B. The timekeeper will accumulate all time sheets and enter them into the computer system in batches. C. The timekeeper should prepare control totals and hash totals in order to check the system before the paychecks are generated. D. Human resources should prepare control totals and hash totals in order to check the system before the paychecks are generated.
d
1. Which of the following correctly states a reconciliation process to be completed related to payroll? A. Time sheets reconciled to the payroll register. B. Payroll register to the general ledger. C. Time sheets to the production reports. D. Production reports to the general ledger.
d
1.A computer software technique in which the computer software matches an invoice to its related purchase order and receiving report is called a(n): A. Three way matching B. Document matching C. Disbursement approval D. Automated matching
d
1.A record keeping tool used to record purchases in a manual accounting system. This "tool" would consist of recording all of the purchased orders issued to vendors in a chronological order. A. Purchase order B. Purchase requisition C. Purchase invoice D. Purchase journal
d
1.Each of the following items would likely be found in an employee's personnel records related to the initial hiring, except: A. Employment application B. Recommendation letters C. Background investigation results D. Overtime and commission rates
d
1.Internal control activities within the payroll process, identified as adequate records and documents, would include which of the following? A. Manager approval of payroll prior to signing checks B. Independent paymaster C. Physical controls in areas where cash and paychecks are held D. Paychecks are prepared on prenumbered checks
d
1.Internal control activities within the purchasing process, identified as segregation of duties, would include all of the following, except: A. Responsibility for authorization, custody, and record keeping are to be assigned to different individuals. B. Duties related to requisitioning, ordering, purchase approval, receiving, inventory control, accounts payable, and general accounting are to be delegated to separate departments or individuals. C. Complete separation of inventory custody from inventory accounting. D. Purchasing records and programs must be protected from unauthorized access.
d
1.Many companies use independent, internet-based service providers to handle their payroll processing. These payroll providers specialize in offering solutions and constant access to payroll information. A. Online Software Systems B. Batch Processing C. Electronic Timekeeping D. Outsourcing of Payroll Services
d
1.The control environment related to the fixed asset processes can be enhanced through the implementation of various access controls, such as: A. Passwords B. Number of employees who have access to the system C. Limits on the number of computer workstations where information may be entered D. All of the above
d
1.The document that identifies the items being returned, along with the relevant information regarding the vendor, quantity and price, is called: A. Credit memo B. Receiving report C. Purchase requisition D. Debit memo
d
1.The internal control process that requires vendor statements to be reviewed monthly and reconciled with accounts payable records, will help to minimize the risk of: A. Invalid returns B. Stolen goods C. Wrong account numbers D. Omitted returns
d
1.There are many uses of electronic funds transfer related to the payroll process. Which of the following is not one of those uses? A. Payments to the employees. B. Payments to the federal taxing agencies. C. Transfers to the payroll checking account. D. All of the above are uses of electronic funds transfer.
d
1.This control requires the approval and signature of two authorized persons, which reduces the risk of significant fraud or error. A. Double Remittance B. Duo-Authorization C. Bi-Sign D. Dual Signature
d
1.This department is responsible for maintaining records for each job and each employee within the organization , as well as tracking job vacancies and supporting the company's recruitment efforts. A. Salary and Wage Administration Department B. Vice President for Employees Department C. Employee Services Department D. Human Resources Department
d
1.This document is a financial plan detailing all of the company's investments in fixed assets and other investments. A. Investment Analysis B. Feasibility Study C. Operating Budget D. Capital Budget
d
1.This individual is responsible for distributing the signed paychecks on the designated pay day. A. Human Resources Director B. Department Supervisor C. Payroll Department Manager D. Paymaster
d
1.This phase of the fixed asset processes relates to those required to maintain accurate and up-to-data records regarding all fixed assets throughout their useful lives. A. Depreciation B. Acquisition C. Disposal D. Continuance
d
1.This record, prepared by the payroll department, is a complete listing of salary or wage detail for all employees for a given time. A. Payroll journal B. General ledger C. Employee record D. Payroll register
d
1.This type of transaction is one that a business encounters on a regular, recurring basis. The volume of the transactions is so large that transactions and the related accounting activities become second nature to the employees responsible for handling them. Specific authorization for each of these transactions is not necessary. The type of transaction referred to is: A. Non-routine transaction B. Payroll transaction C. Fixed asset transaction D. Routine transaction
d
1.When high-dollar fixed assets are purchased, there should be a strict approval process which would include three formal steps. Which of the following is not one of those steps? A. Review of the proposal and specific approval by the appropriate level of management. B. Investment analysis. C. Comparison with the capital budget. D. Feasibility study.
d
1.Which of the following independent checks would be part of the internal controls for fixed assets? A. Comparing actual fixed asset expenditures with the capital budget. B. Periodic counts of fixed assets should be made by someone not otherwise responsible for fixed asset related activities. C. Physical counts should be reconciled with the accounting records. D. Book value of the assets should be compared to the insurance records.
d
