Pre-Assessment Flashcards
Which information flow supports preparing the financial statements of an organization?
Internal vertical Internal horizontal External horizontal External vertical
Internal vertical
What is the relationship between the transaction processing system (TPS) and the general ledger system (GLS)?
-The GLS captures TPS transactions.
-Data from the TPS are input for the GLS.
-Data from the GLS are summarized in the TPS.
-The GLS and TPS have operational interdependency.
Data from the TPS are input for the GLS.
Which accounting information system (AIS) component provides information to external users?
-General ledger system (GLS)
-Financial reporting system (FRS)
-Management information system (MIS)
-Transaction processing system (TPS)
Financial reporting system (FRS)
Useful information has the following characteristics: relevance, timeliness, accuracy, completeness, and summarization.
What happens if the information is irrelevant?
The decision maker receives outdated information.
The decision maker analyzes material information.
The decision maker receives inaccurate information.
The decision maker wastes time analyzing the information.
The decision maker wastes time analyzing the information.
A grocery store updates its inventory levels in the accounting information system in real time. However, the store frequently reports petty theft and has trouble locating inventory on the shop floor.
Which characteristic of useful information is missing from this scenario?
-Timely
-Reliable
-Complete
-Relevant
Reliable
Which component of an information system is used to produce an operational budget?
-Transaction processing system (TPS)
-Financial reporting system (FRS)
-Management reporting system (MRS)
-General ledger system (GLS)
Management reporting system (MRS)
Why would an organization decide to buy a turnkey information system (IS)?
-The organization has an in-house team of qualified IT professionals.
-The organization has a generous budget and timeline.
-The organization can implement it with little or no modification.
-The organization needs an IS addressing a specific business need.
The organization can implement it with little or no modification.
What are the advantages of using data coding in accounting information systems?
-Providing a means of accountability over the incompleteness of the transactions processed
-Misidentifying unique transactions and accounts within a file
-Supporting the audit function by providing an ineffective audit trail
-Concisely representing large amounts of complex information that would otherwise be unmanageable
Concisely representing large amounts of complex information that would otherwise be unmanageable
How is the digital audit trail like the paper audit trail?
-The digital audit trail is unable to contact customers for verification.
-The digital audit trail uses only hard copies.
-The digital audit trail allows transaction tracing.
-The digital audit trail is unable to find errors.
The digital audit trail allows transaction tracing.
What does an external auditor’s responsibility involve?
-Encouraging incomplete work
-Hiding invalid accounts
-Camouflaging instances of inaccurate reporting
-Determining validity, accuracy, and completeness
Determining validity, accuracy, and completeness
Which type of digital computer file stores payroll programs and other data that are used as standards for processing?
-Master file
-Transaction file
-Archive file
-Reference file
-Reference file
With which cycle does the fixed asset system share some characteristics?
-Conversion cycle
-Revenue cycle
-Development cycle
-Expenditure cycle
Expenditure cycle
Which company cycle transforms or converts input resources; such as raw materials, labor, and overhead; into finished products or services for sale?
-Expenditure cycle
-Revenue cycle
-Development cycle
-Conversion cycle
Conversion cycle
Data coding involves creating simple numeric or alphabetic codes to represent complex economic phenomena that facilitate efficient data processing.
Which problem does data coding solve?
-Items sold can be properly identified and entered onto source documents.
-An entry takes a great deal of recording space, is time-consuming to record, and is prone to many types of errors.
-Postings to ledger accounts require minimal searching through the subsidiary files using small descriptions as the key.
-Locating and picking goods for shipment is efficient, and shipping errors are unlikely.
An entry takes a great deal of recording space, is time-consuming to record, and is prone to many types of errors.
Which items are included in the subsidiary ledger?
-Tracking information of the outstanding orders with inventory on the backorder
-The account number and name with a description of items purchased
-The quantities of items shipped and whether the customer received the correct merchandise
-Customer name, customer address, current balance, available credit, transaction dates, invoice numbers, credit for payments, returns
Customer name, customer address, current balance, available credit, transaction dates, invoice numbers, credit for payments, returns
What are the duties of the mail room clerk?
-The mail room clerk prepares a summary of changes to account balances.
-The mail room clerk submits cash receipt journals to the bank.
-The mail room clerk prepares the journal voucher daily.
-The mail room clerk opens the envelopes and reconciles checks and remittances.
The mail room clerk opens the envelopes and reconciles checks and remittances.
What is a method for verification control?
-A copy of the signature to verify the signature
-A written authorization via the internet
-Direct access to inventory to shop
-A verbal authorization for the credit transaction
A copy of the signature to verify the signature
What is the purpose of a purchase requisition?
-The purchase requisition assists with reconciling goods.
-The purchase requisition is a formal entry of the sold products to an accounting department.
-The purchase requisition allows customers to make requests for new items.
-The purchase requisition ensures items purchased are only from authorized vendors.
-The purchase requisition ensures items purchased are only from authorized vendors.
What are the accounting functions for the accounts payable?
-Identify low-level conditions and interject new activities to follow
-Record the standard cost of items
-Review all the bills
-Collect data and invoices to properly complete transactions
Collect data and invoices to properly complete transactions
How do internal controls affect daily activities?
-They compromise the integrity of an organization.
-They conclude that employees that steal from a job can go undetected.
-They are designed for accounting departments only.
-They protect an organization from risk, and therefore, physical controls and IT controls are used.
They protect an organization from risk, and therefore, physical controls and IT controls are used.
Which items make up the three-way match?
-Purchase order, reports and blind copy
-Supplier’s invoice, receiving report and purchase order
-Purchase requisition, vendor invoice and packing slips
-Reports, blind copy and purchase requisition
Supplier’s invoice, receiving report and purchase order
Which items does a payroll department need in order to prepare the payroll register?
-Hours worked, voucher packet, and withholding information
-Voucher packet, pay rate, and hours worked
-Pay rate, withholding information, and hours worked
-Hours worked, bank automated clearing house information, and pay rate
Pay rate, withholding information, and hours worked
Which document contains details on the acquisition of a fixed asset?
-Inventory report
-Journal voucher report
-Payroll report
-Depreciation report
Depreciation report
Which process represents proper design for funding a payroll imprest account?
-The Cash Disbursements department creates a check at the beginning of the year based on the estimated amount of payroll from last year to fund the payroll imprest account.
-The Cash Disbursements department creates a single check to fund the payroll imprest account for the company payroll disbursement.
-The Cash Disbursements department funds the payroll imprest account for whatever cleared in the prior month’s payroll disbursement.
-Each division is designated a payroll imprest account, and checks for each division are deposited for each division’s payroll expense.
-The Cash Disbursements department creates a single check to fund the payroll imprest account for the company payroll disbursement.
Who are the primary recipients of financial information?
-Investors and employees
-Investors and creditors
-Employees and creditors
-The public and government agencies
Investors and creditors
Which item represents a characteristic of a detailed and rich audit trail for a general ledger?
-Providing the ability to refer inquiries
-Providing a means for detecting errors
-Providing a way to completely destroy files
-Providing data to the public
Providing a means for detecting errors
Which risk does automating general ledger (GL) postings pose to a company?
-Numerous automated transactions need more time to process and update financial data.
-Real-time transaction processing requires reconciliation and review of journal vouchers.
-Having no human intervention means the company could have errors in the data.
-Batched transactions need complex application logic to process.
Having no human intervention means the company could have errors in the data.
What describes the network of information that can be used as an audit trail?
-Adjusted trial balance, ledgers, and journals
-Adjusted trial balance, closing entries, and ledgers
-Documents, journals, and ledgers
-Journals, ledgers, and special journals or subsidiary ledgers
-Documents, journals, and ledgers
What is a consequence of the task-data dependency of a flat-file approach?
-As users’ needs change, additional data need to be gathered or recreated.
-As users’ needs change, additional data are readily available.
-As users’ needs change, additional data need to be filtered.
-As users’ needs change, additional data are properly disseminated.
-As users’ needs change, additional data need to be gathered or recreated.
Some companies pool their data to be shared by all users.
Where would this data be located?
In a flat file
In a program
In a transaction
In a database
In a database
An organization uses improperly normalized tables. Every inventory item also includes the following information about the vendor: name, address, telephone number.
Which anomaly does this scenario reflect?
Insert anomaly
Delete anomaly
Update anomaly
Key anomaly
Update anomaly
Enterprise resource planning (ERP) system functionalities fall into general groups of applications.
Which applications operationally support the day-to-day activities of a business?
Business analysis applications
Core applications
Sales and distribution applications
Online analytical processing (OLAP) applications
Core applications
What makes an enterprise resource planning (ERP) system more than simply an elaborate transaction processing system?
It is a decision support tool.
It is a large database.
It is an incomplete record of accounting activity.
It is a research-only application.
It is a decision support tool.
What can be accomplished through the use of enterprise resource planning (ERP)?
-Multiple computer systems can serve the unique needs of each functional area.
-A single computer system can serve the unique needs of each functional area.
-A single computer system can serve the basic needs of an individual functional area.
-Multiple computer systems can serve the basic needs of an individual functional area.
-A single computer system can serve the unique needs of each functional area.
Why is there a lack of effective communication between systems in the traditional, non-ERP model?
-It is the consequence of a fragmented systems design process.
-Systems develop quickly.
-Systems are constructed on similar and compatible technology platforms.
-Systems develop working together.
-It is the consequence of a fragmented systems design process.
How many surprise checks must an organization undergo annually to maintain the International Computer Security Association seal?
One
Two
Three
Four
Two
Which changes to mission-critical functions such as procurement and cash disbursements by electronic commerce are affecting the control environment?
-Transactions are performed automatically and in real time.
-Customer identification is simpler and performed annually.
-Authentication is supported with physical forms and documents.
-Transmissions are verified by accountants before proceeding.
-Transactions are performed automatically and in real time.
What are the key problems an organization faces when trying to convey competence and conduct business fairly with customers, trading partners, and employees?
-Establishing what is deemed an adequate level of privacy protection and abiding by the privacy regulations
-Implementing the technological infrastructure and assuring partner’s safeguards are in place and working
-Assessing the quality of encryption tools used and the effectiveness of key management procedures
-Performing risk assessments and estimating the organization’s liability related to the e-commerce systems process
-Implementing the technological infrastructure and assuring partner’s safeguards are in place and working
Which activity represents electronic commerce?
-Correcting journal vouchers (JVs)
-Trading stocks
-Selling real estate
-Receiving merchandise
-Trading stocks
Which topics create new challenges for the accounting profession because of a changing legal environment?
-Intellectual property rights, privacy, and security
-Revenue recognition, cloud storage, and access
-Deferred taxes, management reporting, and inventory
-Procurement, sales, and human resources
-Intellectual property rights, privacy, and security
What must a business do to qualify for the Better Business Bureau (BBB) seal (BBBOnLine)?
-Be a BBB member for at least two years
-Respond promptly to customer complaints
-Agree to litigation for unresolved disputes
-Start a new business
-Respond promptly to customer complaints
Why are accountants and auditors concerned with computer systems that emerge from the systems development process and the financial data produced by these systems?
-The accuracy of an organization’s financial statements is based on an application that cannot corrupt financial data.
-The quality of an organization’s financial statements is directly related to the quality of the accounting information systems that process and report the financial statements.
-Formal and controlled systems development processes are unlikely to produce accounting information systems applications that are free from internal control weaknesses.
-Stronger application controls translate to higher financial reporting risks.
-The quality of an organization’s financial statements is directly related to the quality of the accounting information systems that process and report the financial statements.
How would systems engineers, database designers, and programmers who actually build a system be classified as participants in systems development?
-End users
-Stakeholders
-Systems professionals
-Management
-Systems professionals
Which activity represents electronic commerce?
-Correcting journal vouchers (JVs)
-Trading stocks
-Selling real estate
-Receiving merchandise
-Trading stocks
What is a factor that has contributed to the growth of the commercial software market?
-The availability of industry-specific software has declined in the software market.
-The commercial market is attempting to accommodate a growing number of small businesses that can afford in-house systems-development staff.
-The commercial software market is taking advantage of upsizing organizational units and the move toward distributed data processing, which is appealing to larger organizations.
-General commercial software has a relatively low cost as compared to customized software.
-General commercial software has a relatively low cost as compared to customized software.
Which type of commercial system is completely finished, tested, and ready for implementation?
-Turnkey system
-Backbone system
-Vendor-supported system
-Custom system
-Turnkey system
Which systems are software as a service (SaaS), infrastructure as a service (IaaS), and platform as a service (PaaS), which are offered by cloud-based service providers, examples of?
-Backbone systems
-Turnkey systems
-Vendor-supported systems
-General accounting systems
Vendor-supported systems
What is a systems analyst classified as within systems development?
-Systems professional
-Systems end user
-Systems stakeholder
-Systems merchandiser
-Systems professional
Which type of commercial system would an organization choose if it wanted its office staff to be more productive?
-Enterprise resource planning (ERP) system
-Office automation system
-Special-purpose system
-In-house system
-Office automation system
Which turnkey system is a spreadsheet program an example of?
-Special-purpose system
-Office automation system
-Legacy system
-Industry-specific system
-Office automation system
Which software option is mass-produced and designed to serve a wide variety of user needs, enabling the vendor to reduce development cost?
-Custom in-house systems
-Vendor-supported systems
-Backbone systems with customization
-General accounting systems
-General accounting systems
Which commercial system creates a dependency for maintenance?
-Office automation system
-In-house system
-General accounting system
-Vendor-supported system
-Vendor-supported system
Which phases of the system development life cycle are associated with both in-house development and systems that are purchased from an outside vendor?
-Phases involving the production of several alternative conceptual systems that satisfy system requirements
-Phases involving a system being physically constructed
-Phases involving needs analysis and system specification
-Phases involving selecting a programming language
-Phases involving needs analysis and system specification
Why might a medical firm decide to purchase a commercial system after having chosen an in-house system in the past?
-The decrease in cost of a commercial system is worth the inconvenience of purchasing a commercial system.
-It is no longer possible to create in-house systems.
-The commercial system will have a longer integration time.
-Special-purpose commercial systems are available for the medical field.
-Special-purpose commercial systems are available for the medical field.
Workers in an office need to update their ability to produce professional documents.
Which type of system should the firm purchase?
-General accounting system
-Special purpose system
-Office automation system
-Backbone system
-Office automation system
What is a characteristic of general accounting systems?
They serve a narrow diversification of user needs.
They are individually produced.
They are a standard system.
They provide rigidity and structure.
They are a standard system.
What does the Sarbanes-Oxley Act require as part of the annual reporting on internal controls for an organization?
-A statement regarding management’s responsibility for establishing and maintaining internal controls
-A statement regarding the efficiency of the company’s internal controls and procedures
-A statement regarding the internal auditors’ report on management’s assessment of internal control
-A statement regarding all key controls related to financial reporting
-A statement regarding management’s responsibility for establishing and maintaining internal controls
What is the most efficient type of control in the preventive-detective-corrective (PDC) control model?
Detective
Preventive
Corrective
Monitoring
Preventive
An organization uses a grandfather-father-son (GFS) backup system.
Which type of file will require the fewest number of backup versions in a year?
Sales journal
Biweekly payroll journal
Cash disbursements journal
Depreciation journal
Depreciation journal
Anika, an experienced programmer, takes a job with a small company in her hometown. In the first few days, it is apparent that the system she inherited maintenance responsibility for is poorly documented and, therefore, difficult to interpret, test, and debug. She concludes that the organization does not have adequate segregation of duties in place.
Which kind of segregation of duties could have prevented this problem?
-Separating new systems development from maintenance
-Separating the database administrator (DBA) from systems development
-Separating systems development from computer operations
-Separating programming from accounting
Separating new systems development from maintenance
Which controls do organizations use to ensure the completeness, accuracy, and validity of financial transactions?
General controls
Information technology controls
Application controls
Segregation-of-duties controls
Application controls
Which outcome can occur if systems development is not separated from a database administrator (DBA)?
Access to make unauthorized changes to applications
Insufficient systems documentation
Errors in data entry
Deficient database access controls
Deficient database access controls
What can an organization use to address the risk of a perpetrator inserting a fraudulent payroll transaction along with legitimate transactions directly into the information system?
Internal controls to prevent all access to the database
Stronger access controls to the database
Employee background checks
Internal controls to detect unauthorized changes
Internal controls to detect unauthorized changes
What is used to convert a high-level language into machine-level language for execution?
Partitions
Compiler
Privileges
Administrator
Compiler
Which control strengthens the use of reusable passwords?
-A system uses a database of known strong passwords to validate new passwords.
-A software automatically scans password files and notifies users that their passwords have expired and need to be changed.
-A microprocessor programmed with an algorithm generates a new and unique password every 60 seconds.
-An internal algorithm generates a response to a network authentication software–issued challenge.
A software automatically scans password files and notifies users that their passwords have expired and need to be changed.
What is programmed into a network-level firewall to accept or deny access requests?
Privileges list
Filtering rules
Password rules
Access control list
Filtering rules
Which reconciliation is tested in a three-way match?
Quantities ordered with quantities requested
Invoice amount with invoice sales price
Quantities ordered with quantities received
Invoice amount with requisitioned price
Quantities ordered with quantities received
What do validity tests ensure data values conform to?
Accuracy
Sequence
Unlimited range
Specified tolerances
Specified tolerances
Why are knowledgeable personnel in a client’s organization interviewed as part of the black box approach?
To understand functional characteristics
To create master test files
To analyze input transactions
To document processing logic
To understand functional characteristics
What should an auditor request to gain an understanding of an application and construct an accurate simulation?
Complete and current documentation
Current and prior year financial statements
Master files and production data
Account balances and chart of accounts
Complete and current documentation
