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Accounting Information Systems > Final exam > Flashcards

Final exam Flashcards

0
Q

There are six characteristics that make information both useful and meaningful. If information is free from error or bias and accurately represents the events or activities of the organization, it is representative of the characteristic of?

A

Reliability

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1
Q

An AIS must be able to perform which of the following tasks?

A

Collect transaction data
Provide adequate controls
Process transaction data
ALL OF THE ABOVE

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2
Q

Transactions can be summarized n a high level as “give-get” transactions. A example of give-get in the expenditure cycle would be?

A

Give cash, get goods

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3
Q

Which documentation tool listed below provides a graphical description of the sources and destinations of data as well as dT flow within the organization and the process that transform and store at data?

A

Data flow diagram

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4
Q

All of the information (name,GPA, major, etc.) about a particular student is stored in the same?

A

Record

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5
Q

The Sarbanes-Oxley Act requires the client’s external auditors to:

A

understand a client’s system of IC’s

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6
Q

A flowchart is:

A

an analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner

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7
Q

A well-designed AIS can improve the decision-making function within the organization. Which statement below would describe a limitation, rather than a benefit of, an efficient AIS?

A

an AIS provides to its users an abundance of information without any filtering or condensing of such information

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8
Q

In transaction processing, generally which activity comes first?

A

capturing data on source documents

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9
Q

An audit trail:

A

provides the means to check the accuracy and validity of ledger postings

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10
Q

Data flow diagrams depict:

A

processes, but not who is performing the processes

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11
Q

Long explanation… Awarding bonuses to subsidiary managers based on ROI could result in:

A

goal conflict

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12
Q

Which of the following characteristics of useful information is absent in the situation described above?

A

Timely

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13
Q

Which statement below regarding the AIS and managerial reports is false?

A

The AIS is best utilized for financial data while the management is best used for operational data

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14
Q

Pay off mortgage on factory:

A

financing cycle

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15
Q

Sell concert tickets:

A

revenue cycle

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16
Q

Hire a new assistant controller:

A

Human resources/payroll cycle

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17
Q

Pay for raw materials:

A

expenditure cycle

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18
Q

Decide how many units to make next month:

A

Production cycle

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19
Q

Collect payment on customer accounts:

A

revenue cycle

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20
Q

Which of the following characteristics of useful information is absent in the situation described above?

A

reliable

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21
Q

Which of the following actions would be stored as a record in a transaction file?

A

record production variances

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22
Q

Which of the following is a function of an AIS?

A

Transforming data into useful information

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23
Q

A chart of accounts:

A

Is a list of the numbers and letters assigned to each general ledger account

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24
Q

A document flowchart is particularly useful:

A

in analyzing the adequacy of control procedures

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25
Q

Which of the following is not an element of data processing?:

A

Reconcile

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26
Q

An entity is something about which information is stored. What is the term for the characteristics of interest that are stored about an entity?:

A

Attribute

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27
Q

Briefly, define the terms “data” and “information” in the context of AIS and describe the difference between the two.

A

data are facts that are recorded and stored. Information is processed data used in decision making.

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28
Q

Briefly, define the term “system” in the context of AIS.

A

System is a set of two or more interrelated components interacting to achieve a goal.

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29
Q

What is ERP and what are two advantages and two disadvantages?

A

ERP is Enterprise Resource Planning. It integrates an organization’s information into one overall AIS. Advantages: Data is captured once, Better access controls. Disadvantages: Cost, Time-consuming to integrate.

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30
Q

“Ontology,” “Semantics,” and “Syntax”-define and describe how terms relate to systems documentation techniques.

A

Ontology - The classification of accounting systems. Semantics - The study of meaning. Syntax - The study of the construction of a language.

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31
Q

When a customer places an order for a certain product, what should be done before the order is checked for inventory availability?

A

Customer’s available credit

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32
Q

Which document should always be included with a merchandise shipment to a customer?

A

Packing slip

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33
Q

What must be in place and functioning well for an ERP to fully realize benefits?

A

Adequate controls

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34
Q

This document is a legal contract that defines responsibilities for goods in transit?

A

Bill of Lading

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35
Q

Which scenario poses an internal control problem?

A

Sales representatives have the authority to increase customer’s credit limit in $1000 increments

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36
Q

In a revenue cycle with proper controls the ________ who reports to the _________ is not involved in any cash handling activities.

A

Accounts Receivable Clerks, Controller

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37
Q

What is a turnaround document?

A

A turnaround document contains records of company data and is sent to an external party and then returned to the system as input. Example: Utility Bill

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38
Q

What is the least affective control to prevent ordering goods above the market price?

A

Variance analysis of actual expenses to budgeted expenses

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39
Q

In an EOQ, what is the cost associated with holding inventory?

A

Carrying cost

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40
Q

What is the Reverse Auction Technique?

A

Suppliers compete with one another to meet demand at the lowest price. They are probably best suited for the purchase of commodity items rather than critical components.

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41
Q

MRP will be the preferred method over JIT when?

A

Demand for inventory is fairly predictable

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42
Q

Disbursement voucher and supporting documents are sent to?

A

Cashier

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43
Q

In the expenditure cycle, who has the Authorization function, recording function and cash handling function?

A

Purchasing, Accounts Payable, Cashier

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44
Q

What is not shown on a receiving report?

A

The Price of items

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45
Q

Information about financing and investing activities are provided by?

A

Treasurer

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46
Q

Budgets and performance reports should be developed on the basis of?

A

Responsibility Accounting

47
Q

Which is not a common control for ensuring inventory is secure and counts are accurate?

A

Sending “blind” copies of the purchase order to inventory control for data

48
Q

Which best mitigates the threat of paying an invoice twice?

A

Never authorize the payment of a photocopied invoice

49
Q

Which best prevents the acceptance of unordered goods?

A

Match the packing slip to the purchase order before accepting delivery

50
Q

What are journal vouchers?

A

A form used to document one or more journal entries such as those made to update the general ledger

51
Q

Know threats and controls for loss of assets in revenue cycle.

A

Threat – Inventory theft, Controls – Restrict physical access, document all inventory transfers, Bar Code/RFID chips, Periodic inventory counts. Threat – Shipping errors, Controls – Reconcile documents before shipping, Bar code/RFID chips, Data entry controls, ERP system controls against duplicates

52
Q

What is the open invoice method?

A

Method for maintaining accounts receivable in which customers typically pay according to each invoice

53
Q

What are adjusting journal entries most used for?

A

Reevaluating estimates

54
Q

What is a threat of the sales order entry for the revenue cycle?

A

Uncollectible accounts

55
Q

What are some steps to reduce inventory theft?

A

Restrict physical access, document all inventory transfers, Bar Code/RFID chips, Periodic inventory counts

56
Q

What are some controls for mitigating risks of posting errors?

A

Data entry controls, Reconcile the sub-ledger with the general ledger

57
Q

What is closed loop verification?

A

An input validation method that uses data entered into the system to retrieve and display other related information so the accuracy of the input data can be verified

58
Q

What is the problem with kickbacks?

A

Kickbacks impair the purchasing agent’s ability to purchase the best available products.

59
Q

Which method is used to mitigate the risk of ordering inferior products?

A

Purchase from approved suppliers, Approve purchases from new suppliers, Hold purchase managers accountable, Monitor quality by suppliers

60
Q

Ordering unnecessary items can result from?

A

Supervisor’s not reviewing and approving purchase requisitions that individual employees initiate

61
Q

Which technique is used to minimize the risk of an inaccurate inventory count?

A

Document inventory transfers, Do not inform receiving about quantity

62
Q

Know what an imprest petty cash fund is.

A

An imprest fund is a cash account with two characteristics, 1) it is set at a fixed amount, and 2) vouchers are required for every disbursement

63
Q

What is the best method for reducing risk of theft?

A

Document all inventory transfers, Periodic inventory counts, segregation of duties between physical handling and recording of entries

64
Q

XBRL information

A

The XBRL file containing the tagged data that is delivered to users is called an instance document. The instance document contains facts about specific financial statement line items. Each specific data item in a XBRL document is called an element.

65
Q

What does not make bar graphs easier to read?

A

Something about using greyish colors

66
Q

What are processing controls?

A

Controls that ensure that all transactions are processed accurately and completely and that all files and records are properly updated

67
Q

What is a balanced scorecard?

A

A management report that measures four dimensions of performance: financial, internal operations, innovation and learning, and customer perspectives of the organization

68
Q

What are XBLR basic attributes

A

The XBRL file containing the tagged data that is delivered to users is called an instance document. The instance document contains facts about specific financial statement line items. Each specific data item in a XBRL document is called an element.

69
Q

MRP

A

An approach to inventory management that seeks to reduce required inventory levels by improving the accuracy of forecasting techniques to better schedule purchases to satisfy production needs

70
Q

Debit Memo

A

A document used to record a reduction to the balance due to a vendor

71
Q

Credit Memo

A

A document authorizing the billing department to credit a customer’s account.

72
Q

Back Order

A

A document authorizing the purchase or production of items that is created when there is insufficient inventory to meet customer’s orders.

73
Q

Cycle Billing

A

Producing monthly statements for subsets of customers at different times.

74
Q

JIT Inventory System

A

A system that minimizes or virtually eliminates manufacturing inventories by scheduling inventory deliveries at the precise times and locations needed

75
Q

Picking Ticket

A

A document authorizing the inventory control function to release merchandise to the shipping department.

76
Q

Voucher Package

A

The set of documents used to authorize payment to a vendor. It consists of a purchase order, receiving report, and vendor invoice

77
Q

Credit Limit

A

The maximum allowable credit account balance for each customer, based on past credit history and ability to pay

78
Q

Remittance Advice

A

An enclosure included with a customer’s payment that indicates the invoices, statements, or other items paid

79
Q

Purchase Requisition

A

A document or electronic form that identifies the requisitioner; specifies the delivery location and the date needed; identifies the item numbers, descriptions, quantity, and price of each item requested; and may suggest a vendor

80
Q

Disbursement Voucher

A

A document that identifies the vendor, lists the outstanding invoices, and indicates the net amount to be paid after deducting any applicable discounts and allowances

81
Q

Threat - Orders later repudiated by customers who deny placing them

A

Controls - Digital or written signatures

82
Q

Threat - Theft of inventory by employees

A

Controls - Restrict physical access, document all inventory transfers, periodic inventory count, Bar code/RFID

83
Q

Threat - Paying the same invoice twice

A

Controls - Requiring a complete voucher package for all payments, policy to pay from only original copies of supplier invoices, cancelling all supporting documents when payment is made

84
Q

Threat - Recording and posting errors in accounts payable

A

Controls - Data entry edit controls, Reconciliation of detailed accounts payable records with the general ledger control account

85
Q

Threat - Failing to take available purchase discounts for prompt payment

A

Controls - Filing of invoices by due date for discounts, cash flow budgets

86
Q

Threat - Kickbacks

A

Controls - Requiring purchasing agents to disclose financial and personal interests in suppliers, training employees in how to respond to offers of gifts from suppliers, job rotation and mandatory vacations, supplier audits

87
Q

Threat - Mistakes in shipping orders to customers

A

Controls - Reconciliation of shipping documents with sales orders, picking lists, and packing slips. Bar codes/RFID chips. Data entry edit controls. Configuration of ERP system to prevent duplicate shipments

88
Q

Threat - Errors in customer invoices

A

Controls - Verification of invoice accuracy

89
Q

A simple method for catching many types of employee fraud is

A

Require Vacations

90
Q

Most fraud perpetrators are insiders because

A

Insiders know more about the system and it’s weakness than do outsiders

91
Q

Spyware is

A

Software that monitors computing habits and sends the data to someone else

92
Q

The excuses perpetrators use to justify their actions is

A

Rationalization

93
Q

Which of the following is an opportunity for employee fraud to occur?

A

Close assumption with suppliers or customers

94
Q

If the question talks about movie tickets and fraud, the answer is

A

Some customers presented tickets that were purchased on the previous day (some tickets were torn)

95
Q

According to the ERM, these deal with effectiveness and efficiency of company operations, such as performance and profitability

A

Operations Objectives

96
Q

An audit committee is responsible for

A

All of the Above

97
Q

Which of the following is not a risk in the COSO Event Risk Management Framework?

A

Monitoring

98
Q

The possibility that a material error occur even through the auditors are following audit procedures and using good judgment is

A

Detection Risk

99
Q

The purpose of _________is to determine why, how, where, and who will perform the audit

A

Audit Planning

100
Q

Which of the following is not an example of the Fraud Triangle concerning with easing fraudsters conscience?

A

Revenge against the company

101
Q

Illegally obtaining and using another person’s confidential information for economic gain is

A

Identify Theft

102
Q

An audit committee of board of directors

A

Provides a check and balance on management

103
Q

If a question tells you about a scenario in which a tape was lost but things turned out ok, the answer is

A

The Tape was encrypted and password protected

104
Q

When control deficiency is identified, the author should inquire about

A

Compensation Controls

105
Q

Why is computer fraud harder to detect than other fraud?

A

Computer fraud may leave little or no evidence

106
Q

Which is true?

A

COSO framework has been widely accepted as authority of internal controls

107
Q

All other things being equal, which is true?

A

Preventive controls are superior to detective controls

108
Q

If a question asks you about which statement concerning control environment is false, the answer is

A

Management attitudes toward internal controls have little impact…

109
Q

a review of general controls with a focus….

A

Information systems audit

110
Q

What is the 5 step approach to internal control evaluation that provides a logical framework for carrying out an audit?

A

Risk Based Approach to Auditing

111
Q

What are the 3 C’s?

A

Commit, Conceal, and Convert

112
Q

Know segregation of duties

A

Authorization, recording, Custody

113
Q

Know the 4 stages of the auditing process

A

Planning, Collecting, Evaluating, Communicating

114
Q

What is the main reason why CFO’s commit fraud?

A

Because they feel pressured

115
Q

What is the biggest red flag in catching perpetrators?

A

Living beyond their means

116
Q

Describe how the video that dealt with people giving a person a shock just because the “man in authority” said it was important relates to fraud

A

The people kept going because they were told by a person that was high in rank, so they listened

Accounting Information Systems (1 decks)

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