Chap 1 - ACCT information system and the Accountant

Question 1

Accounting Information Systems (AISs)

Answer 1

a collection of data and processing procedures that creates needed information for its users

Question 2

Activity Based Costing (ABC) systems

Answer 2

Page 10 - Assigning overhead costs based on the resources, rather than only direct labor

Question 3

Audit trail

Answer 3

P15 - the path that data follow as they flow through an AIS.

Question 4

balanced scorecard

Answer 4

P10 - measures business performance in four categories:

• Financial Performance
• Customer Knowledge
• Internal Business Processes
• Learning and Growth

Question 5

Big data

Answer 5

a) cloud computing can be used to support data analytics projects
b) a combination of large, complex data sets
c) the definition depends on the capabilities of the organization that manages the data

Question 6

Certified Fraud Examiner (CFE)

Answer 6

P3 - A certification acquired by an accountant by meeting the qualifications of the Association of Certified Fraud Examiners (ACFE)

Question 7

Certified Information System Auditors (CISA)

Answer 7

P5 - A certification given to professional information system auditors by the Information Systems Audit and Control Association (ISACA)

Question 8

Certified Information Technology Professional (CITP)

Answer 8

P2 - A new designation developed by AICPA, can be earned by accountants with business experience and if they pass an examination -> this certification signifies superior knowledge in IT, information system , and specialized information management systems.

Question 9

Cloud computing

Answer 9

P19 - is a way of using business applications over the internet. it is a way to increase IT capacity or add capabilities without investing in new infrastructure, training new people, or licensing new software

Question 10

Cloud computing

Answer 10

P19 - is a way of using business applications over the internet. it is a way to increase IT capacity or add capabilities without investing in new infrastructure, training new people, or licensing new software.

Question 11

Corporate Responsibility Reporting

also called Sustainability Reporting

Answer 11

P20 - voluntary and focuses on non-financial environmental and social measures that might impact an organization’s income, value or future performance.

Question 12

Cost accounting

Answer 12

P9 - part of managerial accounting, assists management in measuring and controlling the costs associated with an organization’s various acquisition, processing, distribution, and selling activities.

Question 13

CPA Trust Services

Answer 13

P12 - a set of professional service areas built around a set of common principles and criteria related to the risks and opportunities presented by IT environments.

Question 14

dashboard

Answer 14

P11 - is a summary screen of key performance metrics typically used by managers

Question 15

data

Answer 15

P15 -

• raw facts about events that have little organization or meaning.
• To be useful or meaningful, most data must be processed into useful information
• not always have to be processed to be meaningful
• mark the starting point of an audit trail.

Question 16

e-business

Answer 16

P18 - Conducting business over the Internet. Increased importance and growth

Question 17

e-commerce

Answer 17

P18 - Subset of e-business. Buying and selling transactions

Question 18

Enterprise Resource Planning (ERP) Systems

Answer 18

Application software that integrates the accounting, production, marketing, human resources, and similar functions of an organization in one large application. It enables businesses and government agencies to transmit and manipulate financial data on an organization-wide basis.

Question 19

Extensible Business Reporting Language (XBRL)

Answer 19

P9 - a language for interactive data. The SEC requires public companies to file their financial reports using this format.
- A language for creating, transforming, and communicating financial information

Question 20

interactive data

Answer 20

P8 - data that can be reused and carried seamlessly among a variety of applications or reports

Question 21

financial accounting information system

Answer 21

P6 - component of AIS where major objective is to provide relevant information to users outside the organization, i.e. investors, federal and state tax agencies, creditors.

Question 22

forensic accounting

Answer 22

P22 -

• Combines skills of investigation, accounting, and auditing
• Provides evidence of criminal activity

Examples of AIS Uses in Forensic Accounting

• Identifying and denying financial aid to terrorists
• Tracing arms and chemical orders to final destination
• Planning for catastrophic events
• Controlling cyber terrorism
• Detecting money laundering and illegal transfers

Question 23

information

Answer 23

Processed data

Meaningful to users

Question 24

information age

Answer 24

P18 - fewer workers actually make products while more of them produce, analyze, manipulate and distribute information about business activities.

Question 25

Information Systems Audit and Control Association (ISACA)

Answer 25

the professional association of information technology auditors

Question 26

Information Technology (IT) auditors

Answer 26

P4 - assess risks associated with automated AIS.

Question 27

Key performance indicator (KPI)

Answer 27

- measure and evaluate activities in each quadrant of the balanced scorecard - a key productivity report

Question 28

knowledge worker

Answer 28

individuals who produce, analyze, manipulate, and distribute information about business activities

Question 29

penetration testing

Answer 29

assessing risk by trying to breach the system

Question 30

Ponzi scheme

Answer 30

Pyramid fraud which new investment funds are used to pay returns to current investors. The fraud relies on new money continuously entering the system so that investors believe their money is actually earning returns. The problem is that when new money stops flowing, the pyramid collapses.

Question 31

predictive analytics

Answer 31

take advantage of data stored in data warehouse and make useful business prediction for clients.

Question 32

responsibility accounting system

Answer 32

- Trace unfavorable performance to responsible department or individuals - Immediate corrective action by managers

Question 33

suspicious activity reporting (SAR)

Answer 33

- Laws that require accountants to report questionable financial transactions to the US Treasury Department. - Examples of such transactions are money laundering, bribes, or wire transfers to terrorist organizations - Federally-mandated reporting of suspicious accounting activities

Question 34

systems consultant

Answer 34

- Designing systems and reengineering processes - Selecting software and hardware - Becoming value-added resellers (VARs)

Question 35

value-added resellers (VARs)

Answer 35

P3 - special types of system consultants who are licensed to sell particular software packages and provide organizations with consulting services related to those packages

Question 36

Sarbanes-Oxley Act

Answer 36

- includes a provision that prohibits corporations from making personal loans to executives - prohibits companies from using the same auditing firms for performing both auditing and management consulting services - It costs some companies over $1 million to comply with the requirements of the Sarbanes-Oxley Act - As a result of corporate bankruptcies in 2002, some of the largest public accounting firms are no longer engaged in any consulting work

Question 37

The purpose of CPA Trust Service

Answer 37

to provide assurance that a company engaged in electronic commerce can provide the goods or services it promises.

Question 38

The CISA is an acronym for a professional accounting certification

Answer 38

True.

Question 39

Which of the following captures the same idea as the term “GIGO?” a) Computers cannot turn straw into gold b) Too much information is the same as garbage c) Great investments lead to great returns d) Too many cooks spoil the broth

Answer 39

A

Question 40

Which of the following best describes a data warehouse? a) A repository of historical information from one accounting application b) A repository of historical information from a set of accounting applications c) A repository of information from many business applications—some not accounting d) A repository of information from many businesses in the same industry

Answer 40

c.

Question 41

Many accountants feel that the most important part of the Sarbanes-Oxley Act is: a) Its anti-terrorist provisions b) Its provisions requiring the reporting of suspicious activities c) Section 404 on internal controls d) Section 505 on money laundering

Answer 41

C

Question 42

The U.S. Patriot act: a) Requires banks to monitor their accounts in foreign institutions for fraud b) Prohibits companies from lending money to corporate executives c) Only applies to publicly-traded companies d) all of these are correct

Answer 42

A

Question 43

A good performance measurement system should evaluate: a) Profitability only b) Customer satisfaction only c) Those aspects of a unit’s performance that are subject to its control d) Those aspects of a unit’s performance whether controllable or not

Answer 43

C

Question 44

For performance reports to achieve their control objectives, they must: a) Include relevant information so that necessary action may be taken to accomplish organizational goals b) Be timely so that minimal time elapses between an activity's occurrence and the feedback reflecting the activity's efficient or inefficient performance c) Provide subsystem managers with suggestions as to how they can operate their subsystems more efficiently d) all of the above e) a and b only

Answer 44

A

Question 45

An example of an assurance service for a company engaged in electronic commerce is: a) XBRL b) Trust US c) CITP d) CPA Trust Services

Answer 45

D

Question 46

Information systems auditors are: a) Auditors who are concerned with analyzing risks associated with computerized information systems b) Individuals who often work closely with financial auditors c) Auditors who have a lot of technical expertise related to information technology d) all of the above

Answer 46

D

Question 47

Which of these is a certification that accountants can earn that focuses on proficiency in information technology? a) CPA b) CMA c) CISA d) CITP

Answer 47

CITP (certified information technology professional)

Question 48

The designation for a licensed information systems audit professional is: a) CPA b) CMA c) CIA d) CISA

Answer 48

CISA (certified information system auditor)

Question 49

The certified information systems auditor (CISA) certification is sponsored by: a) ISACA b) AICPA c) IMA d) none of these

Answer 49

ISACA (Information Systems Audit and Control Association)

Question 50

ISACA

Answer 50

- Information system audit and control association | - A professional auditing organization

Question 51

REA

Answer 51

An important database design approach.

Question 52

A certification that requires individuals to meet certain qualification set by the Association of Certified Fraud Examiner

Answer 52

CFE (certified fraud examiner)

Question 53

Name some business activities that do not require traditional journal entries.

Answer 53

obtaining a line of credit, issuing purchase requisitions or purchase orders, signing contracts, hiring a new executive, and sending financial information to investors or bank loan personnel.

Question 54

HIPAA

Answer 54

- Health Insurance Portability and Accountability Act | - a law involving health assurance and privacy.

Question 55

A certification for information professionals.

Answer 55

CITP (certified information technology professionals)

Question 56

Give three reasons why XBRL formatted documents are useful

Answer 56

they make financial data more searchable, comparable, informative, and therefore useful, it enables companies to use standard tags to identify specific accounting values, the language itself imposes a greater degree of standardization in the informational content of the reports, and XBRL also helps government agencies gather financial data that are more consistent, easier to understand, self-checking, and more quickly communicated.