Accounting Information Systems, 12E Marshall B. Romney – Test Bank

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Accounting Information Systems, 12E Marshall B. Romney – Test Bank

Accounting Information Systems, 12e (Romney/Steinbart)

Chapter 5   Computer Fraud

 

1) Perhaps the most striking fact about natural disasters in relation to AIS controls is that

  1. A) many companies in one location can be seriously affected at one time by a disaster.
  2. B) losses are absolutely unpreventable.
  3. C) there are a large number of major disasters every year.
  4. D) disaster planning has largely been ignored in the literature.

 

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2) Which of the following best describes lapping?

  1. A) Applying cash receipts to a different customer’s account in an attempt to conceal previous thefts of cash receipts.
  2. B) Inflating bank balances by transferring money among different bank accounts.
  3. C) Increasing expenses to conceal that an asset was stolen.
  4. D) Stealing small amounts of cash, many times over a period of time.

 

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3) Which of the following is the greatest risk to information systems and causes the greatest dollar losses?

  1. A) human errors and omissions
  2. B) physical threats such as natural disasters
  3. C) dishonest employees
  4. D) fraud and embezzlement

 

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4) All of the following could lead to computer fraud except

  1. A) allowing computer operators full access to the computer room.
  2. B) releasing data to unauthorized users.
  3. C) allowing computer users to test software upgrades.
  4. D) storing backup tapes in a location where they can be quickly accessed.

 

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5) Which of the following is not an example of the fraud triangle characteristic concerned with easing a fraudster’s conscience?

  1. A) Revenge against the company
  2. B) Sense of entitlement as compensation for receiving a lower than average raise
  3. C) Intent to repay “borrowed” funds in the future
  4. D) Belief that the company won’t suffer because an insurance company will reimburse losses

 

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6) Most fraud perpetrators are insiders because

  1. A) insiders are more dishonest than outsiders.
  2. B) insiders know more about the system and its weaknesses than outsiders.
  3. C) outsiders are more likely to get caught than insiders.
  4. D) insiders have more need for money than outsiders.

 

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7) Most frauds are detected by

  1. A) external auditors.
  2. B) internal auditors.
  3. C) accident.
  4. D) hotline tip.

 

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8) Amy wants to open a floral shop in a downtown business district. She doesn’t have funds enough to purchase inventory and pay six months rent up front. Amy approaches a good friend, Coleen, to discuss the possibility of Coleen investing funds and becoming a 25% partner in the business. After a lengthy discussion Coleen agrees to invest. Eight months later, Coleen and Amy have a falling out. In order for Coleen to sue Amy for fraud, all the following must be true except

  1. A) Amy told Coleen she had worked at a floral shop for several years, when in fact she did not have any prior experience in floral retail.
  2. B) Coleen’s decision to invest was primarily based on Amy’s assertion that she had prior floral retail experience.
  3. C) Coleen’s 25% share of the business is worth substantially less than her initial investment.
  4. D) Before Coleen invested, Amy prepared a detailed business plan and sales forecasts, and provided Coleen with copies.

 

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9) Perpetrators of theft of company assets typically exhibit all the following characteristics except that they

  1. A) attempt to return or pay back stolen amounts soon after the initial theft, but find they are unable to make full restitution.
  2. B) use trickery or lies to gain the confidence and trust of others at the organization they defraud.
  3. C) become bolder and more greedy the longer the theft remains undetected.
  4. D) begin to rely on stolen amounts as part of their income.

 

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10) “Cooking the books” is typically accomplished by all the following except

  1. A) inflating accounts payable.
  2. B) accelerating recognition of revenue.
  3. C) delaying recording of expenses.
  4. D) overstating inventory.

 

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11) SAS No. 99 requires that auditors

  1. A) plan audits based on an analysis of fraud risk.
  2. B) detect all material fraud.
  3. C) alert the Securities and Exchange Commission of any fraud detected.
  4. D) take all of the above actions.

 

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12) Which of the following is not a management characteristic that increases pressure to commit fraudulent financial reporting?

  1. A) Close relationship with the current audit engagement partner and manager
  2. B) Pay for performance incentives based on short-term performance measures
  3. C) High management and employee turnover
  4. D) Highly optimistic earnings projections

 

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13) Intentional or reckless conduct that results in materially misleading financial statements is called

  1. A) financial fraud.
  2. B) misstatement fraud.
  3. C) fraudulent financial reporting.
  4. D) audit failure fraud.

 

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14) Researchers have compared the psychological and demographic characteristics of white-collar criminals, violent criminals, and the general public. They found that

  1. A) few differences exist between white-collar criminals and the general public.
  2. B) white-collar criminals eventually become violent criminals.
  3. C) most white-collar criminals invest their illegal income rather than spend it.
  4. D) most white-collar criminals are older and not technologically proficient.

 

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15) Which of the following is an opportunity that could contribute to employee fraud?

  1. A) an employee’s spouse loses their job
  2. B) an employee suddenly acquires lots of credit cards
  3. C) an employee is upset that he was passed over for a promotion
  4. D) close association with suppliers or customers

 

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16) Which of the following is a financial pressure that could cause an employee to commit fraud?

  1. A) a feeling of not being appreciated
  2. B) failing to receive a deserved promotion
  3. C) believing that their pay is too low relative to others around them
  4. D) having a spouse injured in a car accident and in the hospital for several weeks

 

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17) Opportunity to commit fraud is comprised of three stages. The stage that often takes most time and effort would include

  1. A) stealing inventory from the warehouse.
  2. B) selling stolen inventory to get cash.
  3. C) lapping accounts receivable.
  4. D) creating false journal entries to overstate revenue.

 

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18) In many cases of fraud, the ________ takes more time and effort than the ________.

  1. A) concealment; theft
  2. B) theft; concealment
  3. C) conversion; theft
  4. D) conversion; concealment

 

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19) Which of the following is the best way to hide theft of assets?

  1. A) Creating “cash” through the transfer of money between banks
  2. B) Conversion of stolen assets into cash
  3. C) Stealing cash from customer A and then using customer B’s balance to pay customer A’s accounts receivable
  4. D) Charging the stolen asset to an expense account

 

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20) In a ________ scheme, customer receipts are stolen and then subsequent payments by other customers are misapplied to cover the theft of the original receipts.

  1. A) kiting
  2. B) laundering
  3. C) bogus expense
  4. D) lapping

 

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21) One fraudulent scheme covers up a theft by creating cash through the transfer of money between banks. This is known as

  1. A) lapping.
  2. B) misappropriation of assets.
  3. C) kiting.
  4. D) concealment.

 

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22) Which characteristic of the fraud triangle often stems from a lack of internal controls within an organization?

  1. A) pressure
  2. B) opportunity
  3. C) rationalization
  4. D) concealment

 

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23) Which situation below makes it easy for someone to commit a fraud?

  1. A) placing excessive trust in key employees
  2. B) inadequate staffing within the organization
  3. C) unclear company policies
  4. D) All of the above situations make it easy for someone to commit a fraud.

 

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24) What is the most prevalent opportunity within most companies to commit fraud?

  1. A) lack of any internal controls
  2. B) failure to enforce the internal controls
  3. C) loopholes in the design of internal controls
  4. D) management’s failure to believe employees would commit fraud

 

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25) Which characteristic of the fraud triangle relates to excuses that perpetrators use to justify their illegal behavior?

  1. A) pressure
  2. B) opportunity
  3. C) rationalization
  4. D) concealment

 

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26) The US Justice Department defines computer fraud as

  1. A) any crime in which a computer is used.
  2. B) an illegal act in which knowledge of computer technology is essential.
  3. C) any act in which cash is stolen using a computer.
  4. D) an illegal act in which a computer is an integral part of the crime.

 

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27) The most efficient way to conceal asset misappropriation is to

  1. A) write-off a customer receivable as bad debt.
  2. B) alter monthly bank statements before reconciliation.
  3. C) alter monthly physical inventory counts to reconcile to perpetual inventory records.
  4. D) record phony payments to vendors.

 

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28) Computer fraud is often much more difficult to detect than other types of fraud because

  1. A) perpetrators usually only steal very small amounts of money at a time, thus requiring a long period of time to have elapsed before they’re discovered.
  2. B) massive fraud can be committed in only seconds, leaving little or no evidence.
  3. C) most perpetrators invest their illegal income rather than spend it, thus concealing key evidence.
  4. D) most computer criminals are older and are considered to be more cunning when committing such a fraud.

 

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29) Why is computer fraud often more difficult to detect than other types of fraud?

  1. A) Rarely is cash stolen in computer fraud.
  2. B) The fraud may leave little or no evidence it ever happened.
  3. C) Computers provide more opportunities for fraud.
  4. D) Computer fraud perpetrators are just more clever than other types of criminals.

 

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30) Why do many fraud cases go unreported and unprosecuted?

  1. A) Major fraud is a public relations nightmare.
  2. B) Fraud is difficult, costly, and time-consuming to investigate and prosecute.
  3. C) Law enforcement and the courts are often so busy with violent crimes that little time is left for fraud cases.
  4. D) all of the above

 

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31) The fraud that requires the least computer knowledge or skill involves

  1. A) altering or falsifying source data.
  2. B) unauthorized use of computers.
  3. C) tampering with or copying software.
  4. D) forging documents like paychecks.

 

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32) The simplest and most common way to commit a computer fraud is to

  1. A) alter computer input.
  2. B) alter computer output.
  3. C) modify the processing.
  4. D) corrupt the database.

 

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33) Downloading a master list of customers and selling it to a competitor is an example of

  1. A) data fraud.
  2. B) output theft.
  3. C) download fraud.
  4. D) fraudulent financial reporting.

 

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34) Which of the following will not reduce the likelihood of an occurrence of fraud?

  1. A) encryption of data and programs
  2. B) use of forensic accountants
  3. C) adequate insurance coverage
  4. D) required vacations and rotation of duties

 

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35) Which of the following is not an example of one of the basic types of fraud?

  1. A) While straightening the store at the end of the day, a shoe store employee finds and keeps an expensive pair of sunglasses left by a customer.
  2. B) An executive devised and implemented a plan to accelerate revenue recognition on a long-term contract, which will allow the company to forestall filing for bankruptcy. The executive does not own any stock, stock options or grants, and will not receive a bonus or perk because of the overstated revenue.
  3. C) A purchasing agent places a large order at higher-than-normal unit prices with a vendor that gave the agent tickets to several football games.
  4. D) A salesperson approves a large sales discount on an order from a company owned partially by the salesperson’s sister.

 

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36) On Monday morning, Janet Pillsner, Chief Information Officer at International Securities Corporation (ISC), got some bad news. A tape used to store system data backups was lost while it was being transported to an offsite storage location. She called a meeting of her technical staff to discuss the implications of the loss. Which of the following is most likely to relieve her concerns over the potential cost of the loss?

  1. A) The shipper has insurance that will reimburse ISC for the cost of the tape.
  2. B) ISC has a copy of the tape onsite, so a new copy for storage offsite can easily be prepared.
  3. C) The tape was encrypted and password protected.
  4. D) ISC has a comprehensive disaster recovery plan.

 

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37) A simple method for catching or preventing many types of employee fraud is to

  1. A) monitor all employee behavior using video cameras.
  2. B) require all employees to take annual vacations.
  3. C) explain to employees that fraud is illegal and that it will be severely punished.
  4. D) monitor employee bank accounts and net worth.

 

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38) Describe two kinds of fraud.

 

39) What are the actions recommended by the Treadway Commission to reduce the possibility of fraudulent financial reporting?

 

40) Explain the impact of SAS No. 99 on auditors’ responsibilities.

 

 

41) Why is computer fraud on the rise?

 

42) Describe at least four ways a company can make fraud less likely to occur.

 

43) Describe four ways companies can reduce losses from fraud.

 

44) What are some of the distinguishing characteristics of fraud perpetrators?

 

45) Why do fraudulent acts often go unreported and are therefore not prosecuted?

 

46) A teller at a savings and loan drive-through accepted a cash payment from customer #1 for an auto loan. The teller appeared to process the payment, but told the customer the printer was jammed and she can’t print a receipt. The customer accepted the excuse and drove away. The teller pocketed the cash and wrote down customer #1’s loan number and payment amount for future reconciling. A couple of days before customer #1’s monthly statement was printed, the teller recorded a cash payment from customer #2 as if it were made by customer #1. The teller pocketed the difference between the two payments. The teller continued to steal and misapply customer payments for the next two years without detection.

 

Identify the type of fraud scheme described. Describe five controls you would implement to address the fraud risk, and label each control as preventive or detective.

Accounting Information Systems, 12e (Romney/Steinbart)

Chapter 7   Control and Accounting Information Systems

 

1) What is one reason why AIS threats are increasing?

  1. A) LANs and client/server systems are easier to control than centralized, mainframe systems.
  2. B) Many companies do not realize that data security is crucial to their survival.
  3. C) Computer control problems are often overestimated and overly emphasized by management.
  4. D) Many companies believe that protecting information is a strategic requirement.

 

 

 

 

 

2) Which of the following is not one of the risk responses identified in the COSO Enterprise Risk Management Framework?

  1. A) Monitoring
  2. B) Avoidance
  3. C) Acceptance
  4. D) Sharing

 

 

 

 

 

3) A control procedure designed so that the employee that records cash received from customers does not also have access to the cash itself is an example of a(n)

  1. A) preventive control.
  2. B) detective control.
  3. C) corrective control.
  4. D) authorization control.

 

4) At a movie theater box office, all tickets are sequentially prenumbered. At the end of each day, the beginning ticket number is subtracted from the ending number to calculate the number of tickets sold. Then, ticket stubs collected at the theater entrance are counted and compared with the number of tickets sold. Which of the following situations does this control detect?

  1. A) Some customers presented tickets purchased on a previous day when there wasn’t a ticket taker at the theater entrance (so the tickets didn’t get torn.)
  2. B) A group of kids snuck into the theater through a back door when customers left after a show.
  3. C) The box office cashier accidentally gives too much change to a customer.
  4. D) The ticket taker admits his friends without tickets.

 

 

 

 

 

 

5) At a movie theater box office, all tickets are sequentially prenumbered. At the end of each day, the beginning ticket number is subtracted from the ending number to calculate the number of tickets sold. Cash is counted and compared with the number of tickets sold. Which of the following situations does this control detect?

  1. A) Some customers presented tickets purchased on a previous day when there wasn’t a ticket taker at the theater entrance (so the tickets didn’t get torn.)
  2. B) A group of kids snuck into the theater through a back door when customers left after a show.
  3. C) The box office cashier accidentally gives too much change to a customer.
  4. D) The ticket taker admits his friends without tickets.

 

 

 

 

 

 

6) Which of the following is an example of a preventive control?

  1. A) approving customer credit prior to approving a sales order
  2. B) reconciling the bank statement to the cash control account
  3. C) counting inventory on hand and comparing counts to the perpetual inventory records
  4. D) maintaining frequent backup records to prevent loss of data

 

 

 

 

 

7) Independent checks on performance include all the following except

  1. A) data input validation checks.
  2. B) reconciling hash totals.
  3. C) preparing a trial balance report.
  4. D) supervisor review of journal entries and supporting documentation.

 

 

 

 

8) A computer operator is allowed to work as a programmer on a new payroll software project. Does this create a potential internal control problem?

  1. A) Yes, the computer operator could alter the payroll program to increase her salary.
  2. B) Yes, this is a potential problem unless the computer operator is supervised by the payroll manager.
  3. C) No, ideal segregation of duties is not usually possible, and operators are often the best at programming changes and updates.
  4. D) No, as long as the computer operator separately accounts for hours worked in programming and in operations.

 

 

 

 

 

9) One of the objectives of the segregation of duties is to

  1. A) make sure that different people handle different parts of the same transaction.
  2. B) ensure that no collusion will occur.
  3. C) make sure that different people handle different transactions.
  4. D) achieve an optimal division of labor for efficient operations.

 

Page Ref: 196

 

 

 

10) Pam is a receptionist for Dunderhead Paper Co., which has strict corporate policies on appropriate use of corporate resources. The first week of August, Pam saw Michael, the branch manager, putting pencils, pens, erasers, paper and other supplies into his briefcase on his way out the door. This situation best reflects a weakness in which aspect of internal environment, as discussed in the COSO Enterprise Risk Management Framework?

  1. A) Integrity and ethical values
  2. B) Risk management philosophy
  3. C) Restrict access to assets
  4. D) Methods of assigning authority and responsibility

 

Page Ref: 189

 

 

 

 

11) Which of the following statements is true?

  1. A) Internal auditors, rather than external auditors, can conduct evaluations of effectiveness of Enterprise Risk Management processes.
  2. B) Re-adding the total of a batch of invoices and comparing the total with the first total you calculated is an example of an independent check.
  3. C) Requiring two signatures on checks over $20,000 is an example of segregation of duties.
  4. D) Although forensic specialists utilize computers, only people can accurately identify fraud.

 

Page Ref: 201

 

 

 

 

12) Of the following examples of fraud, which will be the most difficult to prevent and detect? Assume the company enforces adequate segregation of duties.

  1. A) Jim issues credit cards to him and Marie, and when the credit card balances are just under $1,000, Marie writes off the accounts as bad debt. Jim then issues new cards.
  2. B) An employee puts inventory behind the dumpster while unloading a vendor’s delivery truck, then picks up the inventory later in the day and puts it in her car.
  3. C) A mail room employee steals a check received from a customer and destroys the documentation.
  4. D) The accounts receivable clerk does not record sales invoices for friends or family, so they can receive free goods.

 

Page Ref: 197

 

 

 

13) According to The Sarbanes-Oxley Act of 2002, the audit committee of the board of directors is directly responsible for

  1. A) hiring and firing the external auditors.
  2. B) performing tests of the company’s internal control structure.
  3. C) certifying the accuracy of the company’s financial reporting process.
  4. D) overseeing day-to-day operations of the internal audit department.

 

Page Ref: 186

 

 

 

 

 

14) Go-Go Corporation, a publicly traded company, has three brothers who serve as President, Vice President of Finance and CEO. This situation

  1. A) increases the risk associated with an audit.
  2. B) must be changed before your audit firm could accept the audit engagement.
  3. C) is a violation of the Sarbanes-Oxley Act.
  4. D) violates the Securities and Exchange Act.

 

Page Ref: 193

 

 

 

 

15) Which of the following is a control related to design and use of documents and records?

  1. A) Sequentially prenumbering sales invoices
  2. B) Comparing physical inventory counts with perpetual inventory records
  3. C) Reconciling the bank statement to the general ledger
  4. D) Locking blank checks in a drawer or safe

 

Page Ref: 199

 

 

 

16) Which of the following duties could be performed by the same individual without violating segregation of duties controls?

  1. A) Approving accounting software change requests and testing production scheduling software changes
  2. B) Programming new code for accounting software and testing accounting software upgrades
  3. C) Approving software changes and implementing the upgraded software
  4. D) Managing accounts payable function and revising code for accounting software to more efficiently process discount due dates on vendor invoices

 

Page Ref: 198

 

 

 

 

17) With a limited work force and a desire to maintain strong internal control, which combination of duties would result in the lowest risk exposure?

  1. A) Updating the inventory subsidiary ledgers and recording purchases in the purchases journal
  2. B) Approving a sales return on a customer’s account and depositing customers’ checks in the bank
  3. C) Updating the general ledger and working in the inventory warehouse
  4. D) Entering payments to vendors in the cash disbursements journal and entering cash received from customers in the cash receipts journal

 

Page Ref: 196-197

 

 

 

 

18) Which of the following is not a factor of internal environment according to the COSO Enterprise Risk Management Framework?

  1. A) Analyzing past financial performance and reporting
  2. B) Providing sufficient resources to knowledgeable employees to carry out duties
  3. C) Disciplining employees for violations of expected behavior
  4. D) Setting realistic targets for long-term performance

 

Page Ref: 188

 

 

 

19) Which of the following suggests a weakness in a company’s internal environment?

  1. A) The audit committee regularly meets with the external auditors.
  2. B) The Board of Directors is primarily independent directors.
  3. C) The company has an up-to-date organizational chart.
  4. D) Formal employee performance evaluations are prepared every three years.

 

Page Ref: 191

 

 

 

 

20) Which of the following statements about internal environment is false?

  1. A) Management’s attitudes toward internal control and ethical behavior have only minimal impact on employee beliefs or actions.
  2. B) Supervision is especially important in organizations that cannot afford elaborate responsibility reporting or are too small to have adequate segregation of duties.
  3. C) An overly complex or unclear organizational structure may be indicative of more serious problems.
  4. D) A written policy and procedures manual is an important tool for assigning authority and responsibility.

 

Page Ref: 189

 

 

 

 

21) Which of the following is not a reason for the increase in security problems for AIS?

  1. A) Confidentiality issues caused by interlinked inter-company networks
  2. B) Difficult to control distributed computing networks
  3. C) Increasing efficiency resulting from more automation
  4. D) Increasing numbers of information systems and users

 

 

 

22) One reason why many organizations do not adequately protect their systems is because

  1. A) control problems may be overestimated by many companies.
  2. B) productivity and cost cutting cause management to forgo implementing and maintaining internal controls.
  3. C) control technology has not yet been developed.
  4. D) all of the above

 

 

 

 

 

 

23) Accountants must try to protect the AIS from threats. Which of the following would be a measure that should be taken?

  1. A) Take a proactive approach to eliminate threats.
  2. B) Detect threats that do occur.
  3. C) Correct and recover from threats that do occur.
  4. D) All of the above are proper measures for the accountant to take.

 

 

 

 

 

 

24) The process that a business uses to safeguard assets, provide accurate and reliable information, and promote and improve operational efficiency is known as

  1. A) a phenomenon.
  2. B) internal control.
  3. C) an AIS threat.
  4. D) a preventive control.

 

 

 

 

 

25) Safeguarding assets is one of the control objectives of internal control. Which of the following is not one of the other control objectives?

  1. A) providing accurate and reliable information
  2. B) promoting operational efficiency
  3. C) ensuring that no fraud has occurred
  4. D) encouraging adherence to management policies

 

 

 

 

 

 

26) Internal control is often referred to as a(n) ________, because it permeates an organization’s operating activities and is an integral part of management activities.

  1. A) event
  2. B) activity
  3. C) process
  4. D) system

 

 

 

 

 

 

27) Which of the following is accomplished by corrective controls?

  1. A) Identify the cause of the problem.
  2. B) Correct the resulting errors.
  3. C) Modify the system to prevent future occurrences of the problem.
  4. D) All of the above are accomplished by corrective controls.

 

 

 

 

 

 

28) Duplicate checking of calculations is an example of a ________ control, and procedures to resubmit rejected transactions is an example of a ________ control.

  1. A) corrective; detective
  2. B) detective; corrective
  3. C) preventive; corrective
  4. D) detective; preventive

 

 

 

 

 

29) What is not a corrective control procedure?

  1. A) Identify the cause of a problem.
  2. B) Deter problems before they arise.
  3. C) Correct resulting errors or difficulties.
  4. D) Modify the system so that future problems are minimized or eliminated.

 

 

 

 

 

 

 

30) ________ controls are designed to make sure an organization’s control environment is stable and well managed.

  1. A) Application
  2. B) Detective
  3. C) General
  4. D) Preventive

 

 

 

 

 

 

31) ________ controls prevent, detect and correct transaction errors and fraud.

  1. A) Application
  2. B) Detective
  3. C) General
  4. D) Preventive

 

 

 

 

 

 

32) The primary purpose of the Foreign Corrupt Practices Act of 1977 was

  1. A) to require corporations to maintain a good system of internal control.
  2. B) to prevent the bribery of foreign officials by American companies.
  3. C) to require the reporting of any material fraud by a business.
  4. D) All of the above are required by the act.

 

 

 

 

 

33) Congress passed this federal law for the purpose of preventing financial statement fraud, to make financial reports more transparent and to strengthen the internal control of public companies.

  1. A) Foreign Corrupt Practices Act of 1977
  2. B) The Securities Exchange Act of 1934
  3. C) The Sarbanes-Oxley Act of 2002
  4. D) The Control Provision of 1998

 

 

 

 

 

 

 

34) Which of the following is not one of the important aspects of the Sarbanes-Oxley Act?

  1. A) The creation of the Public Company Accounting Oversight Board
  2. B) New rules for auditors and management
  3. C) New roles for audit committees
  4. D) New rules for information systems development

 

Page Ref: 186

 

 

 

 

35) A(n) ________ helps employees act ethically by setting limits beyond which an employee must not pass.

  1. A) boundary system
  2. B) diagnostic control system
  3. C) interactive control system
  4. D) internal control system

 

 

 

 

 

36) A(n) ________ measures company progress by comparing actual performance to planned performance.

  1. A) boundary system
  2. B) diagnostic control system
  3. C) interactive control system
  4. D) internal control system

 

 

 

 

 

 

37) A(n) ________ helps top-level managers with high-level activities that demand frequent and regular attention.

  1. A) boundary system
  2. B) diagnostic control system
  3. C) interactive control system
  4. D) internal control system

 

 

 

 

 

 

 

38) This control framework addresses the issue of control from three vantage points: business objectives, information technology resources, and information technology processes.

  1. A) ISACA’s control objectives for information and related technology
  2. B) COSO’s internal control framework
  3. C) COSO’s enterprise risk management framework
  4. D) none of the above

 

Page Ref: 186

 

 

 

39) This control framework’s intent includes helping the organization to provide reasonable assurance that objectives are achieved and problems are minimized, and to avoid adverse publicity and damage to the organization’s reputation.

  1. A) ISACA’s control objectives for information and related technology
  2. B) COSO’s internal control framework
  3. C) COSO’s enterprise risk management framework
  4. D) none of the above

 

Page Ref: 187

 

 

 

 

40) The COSO Enterprise Risk Management Framework includes eight components. Which of the following is not one of them?

  1. A) control environment
  2. B) risk assessment
  3. C) compliance with federal, state, or local laws
  4. D) monitoring

 

Page Ref: 188

 

 

 

 

41) Which of the following is not one of the eight interrelated risk and control components of COSO Enterprise Risk Management Framework?

  1. A) Internal environment
  2. B) Monitoring
  3. C) Risk response
  4. D) Event assessment

 

Page Ref: 188

 

 

42) The COSO Enterprise Risk Management Integrated Framework stresses that

  1. A) risk management activities are an inherent part of all business operations and should be considered during strategy setting.
  2. B) effective risk management is comprised of just three interrelated components; internal environment, risk assessment, and control activities.
  3. C) risk management is the sole responsibility of top management.
  4. D) risk management policies, if enforced, guarantee achievement of corporate objectives.

 

Page Ref: 187

 

 

 

 

43) Which of the following would be considered a “red flag” for problems with management operating style if the question were answered “yes”?

  1. A) Does management take undue business risks to achieve its objectives?
  2. B) Does management attempt to manipulate performance measures such as net income?
  3. C) Does management pressure employees to achieve results regardless of the methods?
  4. D) All of the above statements would raise “red flags” if answered “yes.”

 

Page Ref: 189

 

 

 

 

44) Which component of the COSO Enterprise Risk Management Integrated Framework is concerned with understanding how transactions are initiated, data are captured and processed, and information is reported?

  1. A) Information and communication
  2. B) Internal environment
  3. C) Event identification
  4. D) Objective setting

 

Page Ref: 201

 

 

 

45) The COSO Enterprise Risk Management Integrated Framework identifies four objectives necessary to achieve corporate goals. Objectives specifically identified include all of the following except

  1. A) implementation of newest technologies.
  2. B) compliance with laws and regulations.
  3. C) effective and efficient operations.
  4. D) reliable reporting.

 

Page Ref: 192

 

 

 

 

46) The audit committee of the board of directors

  1. A) is usually chaired by the CFO.
  2. B) conducts testing of controls on behalf of the external auditors.
  3. C) provides a check and balance on management.
  4. D) does all of the above.

 

Page Ref: 189

 

 

 

 

47) The audit committee is responsible for

  1. A) overseeing the internal control structure.
  2. B) overseeing the financial reporting process.
  3. C) working with the internal and external auditors.
  4. D) All of the above are responsibilities.

 

Page Ref: 189

 

 

 

 

48) The definition of the lines of authority and responsibility and the overall framework for planning, directing, and controlling is laid out by the

  1. A) control activities
  2. B) organizational structure
  3. C) budget framework
  4. D) internal environment

 

Page Ref: 190

 

 

 

49) Reducing management layers, creating self-directed work teams, and emphasizing continuous improvement are all related to which aspect of internal environment?

  1. A) Organizational structure
  2. B) Methods of assigning authority and responsibility
  3. C) Management philosophy and operating style
  4. D) Commitment to competence

 

Page Ref: 190

 

 

50) Personnel policies such as background checks, mandatory vacations, and rotation of duties tend to deter

  1. A) unintentional errors.
  2. B) employee fraud or embezzlement.
  3. C) fraud by outsiders.
  4. D) disgruntled employees.

 

Page Ref: 190-191

 

 

 

 

51) The SEC and FASB are best described as external influences that directly affect an organization’s

  1. A) hiring practices.
  2. B) philosophy and operating style.
  3. C) internal environment.
  4. D) methods of assigning authority.

 

Page Ref: 192

 

 

 

52) Which attribute below is not an aspect of the COSO ERM Framework internal environment?

  1. A) Enforcing a written code of conduct
  2. B) Holding employees accountable for achieving objectives
  3. C) Restricting access to assets
  4. D) Avoiding unrealistic expectations

 

Page Ref: 188

 

 

 

 

53) The amount of risk a company is willing to accept in order to achieve its goals and objectives is

  1. A) Inherent risk
  2. B) Residual risk
  3. C) Risk appetite
  4. D) Risk assessment

 

Page Ref: 189

 

 

 

 

 

54) The risk that remains after management implements internal controls is

  1. A) Inherent risk
  2. B) Residual risk
  3. C) Risk appetite
  4. D) Risk assessment

 

Page Ref: 193

 

 

 

 

55) The risk that exists before management takes any steps to control the likelihood or impact of a risk is

  1. A) Inherent risk
  2. B) Residual risk
  3. C) Risk appetite
  4. D) Risk assessment

 

Page Ref: 193

 

 

 

56) When undertaking risk assessment, the expected loss is calculated like this.

  1. A) Impact times expected loss
  2. B) Impact times likelihood
  3. C) Inherent risk times likelihood
  4. D) Residual risk times likelihood

 

Page Ref: 194

 

 

 

 

57) Generally in a risk assessment process, the first step is to

  1. A) identify the threats that the company currently faces.
  2. B) estimate the risk probability of negative events occurring.
  3. C) estimate the exposure from negative events.
  4. D) identify controls to reduce all risk to zero.

 

Page Ref: 194

 

 

 

 

 

58) Store policy that allows retail clerks to process sales returns for $300 or less, with a receipt dated within the past 60 days, is an example of

  1. A) general authorization.
  2. B) specific authorization.
  3. C) special authorization.
  4. D) generic authorization.

 

Page Ref: 196

 

 

 

 

59) Corporate policy that requires a purchasing agent and purchasing department manager to sign off on asset purchases over $1,500 is an example of

  1. A) general authorization.
  2. B) specific authorization.
  3. C) special authorization.
  4. D) generic authorization.

 

Page Ref: 196

 

 

 

60) A document that shows all projects that must be completed and the related IT needs in order to achieve long-range company goals is known as a

  1. A) performance evaluation.
  2. B) project development plan.
  3. C) data processing schedule.
  4. D) strategic master plan.

 

Page Ref: 198

 

 

 

 

61) A ________ is created to guide and oversee systems development and acquisition.

  1. A) performance evaluation
  2. B) project development plan
  3. C) steering committee
  4. D) strategic master plan

 

Page Ref: 198

 

 

 

 

 

62) A ________ shows how a project will be completed, including tasks and who will perform them as well as a timeline and cost estimates.

  1. A) performance evaluation
  2. B) project development plan
  3. C) steering committee
  4. D) strategic master plan

 

Page Ref: 198

 

 

 

63) Which of the following is not a violation of the Sarbanes-Oxley Act (SOX)? The management at Folding Squid Technologies

  1. A) asked their auditors to make recommendations for the redesign of their information technology system and to aid in the implementation process.
  2. B) hired the manager from the external audit team as company CFO twelve months after the manager had worked on the audit.
  3. C) selected the company’s Chief Financial Officer to chair the audit committee.
  4. D) did not mention to auditors that the company had experienced significant losses due to fraud during the past year.

 

Page Ref: 186

 

 

 

 

64) The Sarbanes-Oxley Act (SOX) applies to

  1. A) all companies with gross annual revenues exceeding $500 million.
  2. B) publicly held companies with gross annual revenues exceeding $500 million.
  3. C) all private and publicly held companies incorporated in the United States.
  4. D) all publicly held companies.

 

 

 

 

 

 

 

65) Chuck Hewitt was relaxing after work with a colleague at a local watering hole. Well into his second martini, he began expressing his opinions about his company’s budgeting practices. It seems that, as a result of “budget handcuffs” that require managers to explain material deviations from budgeted expenditures, his ability to creatively manage his department’s activities have been curtailed. The level of control that the company is using in this case is a

  1. A) boundary system.
  2. B) belief system.
  3. C) interactive control system.
  4. D) diagnostic control system.

 

 

 

 

 

66) Chuck Hewitt was relaxing after work with a colleague at a local watering hole. Well into his second martini, he began expressing his opinions about his work environment. It seems that, as a result of “feminazi” interference, the suggestive banter that had been prevalent in the workplace during his youth was no longer acceptable. He even had to sit through a sexual harassment workshop! The level of control that the company is using in this case is a

  1. A) boundary system.
  2. B) belief system.
  3. C) interactive control system.
  4. D) diagnostic control system.

 

 

 

 

 

 

67) River Rafting Adventures of Iowa provides rafts and tour guides to tourists eager to ride the wild rivers of Iowa. Management has determined that there is one chance in a thousand of a client being injured or killed. Settlement of resulting lawsuits has an average cost of $650,000. Insurance with a $50,000 deductible is available. It covers the costs of lawsuits, unless there is evidence of criminal negligence. What is the impact of this risk without insurance?

  1. A) $50,000
  2. B) $650,000
  3. C) $650
  4. D) $50

 

Page Ref: 194

 

 

 

 

 

68) River Rafting Adventures of Iowa provides rafts and tour guides to tourists eager to ride the wild rivers of Iowa. Management has determined that there is one chance in a thousand of a client being injured or killed. Settlement of resulting lawsuits has an average cost of $650,000. Insurance with a $50,000 deductible is available. It covers the costs of lawsuits, unless there is evidence of criminal negligence. What is the expected loss without insurance?

  1. A) $50,000
  2. B) $650,000
  3. C) $650
  4. D) $50

 

Page Ref: 194

 

 

 

69) River Rafting Adventures of Iowa provides rafts and tour guides to tourists eager to ride the wild rivers of Iowa. Management has determined that there is one chance in a thousand of a client being injured or killed. Settlement of resulting lawsuits has an average cost of $650,000. Insurance with a $50,000 deductible is available. It covers the costs of lawsuits, unless there is evidence of criminal negligence. What is the expected loss with insurance?

  1. A) $50,000
  2. B) $650,000
  3. C) $650
  4. D) $50

 

Page Ref: 194

 

 

 

 

70) River Rafting Adventures of Iowa provides rafts and tour guides to tourists eager to ride the wild rivers of Iowa. Management has determined that there is one chance in a thousand of a client being injured or killed. Settlement of resulting lawsuits have an average cost of $650,000. Insurance with a $50,000 deductible is available. It covers the costs of lawsuits, unless there is evidence of criminal negligence. Based on cost-benefit analysis, what is the most that the business should pay for the insurance?

  1. A) $500
  2. B) $650
  3. C) $600
  4. D) $50

 

Page Ref: 194

 

 

 

 

71) Due to data errors occurring from time to time in processing the Albert Company’s payroll, the company’s management is considering the addition of a data validation control procedure that is projected to reduce the risk of these data errors from 13% to 2%. The cost of the payroll reprocessing is estimated to be $11,000. The cost of implementing the data validation control procedure is expected to be $700. Which of the following statements is true?

  1. A) The data validation control procedure should be implemented because its net estimated benefit is $510.
  2. B) The data validation control procedure should be implemented because its cost of $700 is less than the payroll reprocessing cost of $1,430.
  3. C) The data validation control procedure should not be implemented because its cost of $700 exceeds the expected benefit by $480.
  4. D) The data validation control procedure should not be implemented because its net estimated benefit is a negative $1,210.

 

Page Ref: 194

 

 

 

 

72) The organization chart for Geerts Corporation includes a controller and an information processing manager, both of whom report to the vice president of finance. Which of the following would be a control weakness?

  1. A) Assigning the programming and operating of the computer system to an independent control group which reports to the controller
  2. B) Providing for maintenance of input data controls by an independent control group which reports to the controller
  3. C) Periodically rotating assignment of application processing among machine operators, who all report to the information processing manager
  4. D) Providing for review and distribution of system-generated reports by an independent control group which reports to the controller

 

Page Ref: 198

 

 

 

 

73) Global Economic Strategies, L.L.D., has been diligent in ensuring that their operations meet modern control standards. Recently, they have extended their control compliance system by incorporating policies and procedures that require the specification of company objectives, uncertainties associated with objectives, and contingency plans. They are transitioning from a ________ to a ________ control framework.

  1. A) COSO-Integrated Framework; COBIT
  2. B) COBIT; COSO-Integrated Framework
  3. C) COBIT; COSO-ERM
  4. D) COSO-Integrated Framework; COSO-ERM
  5. E) COSO-ERM; COBIT

 

Page Ref: 187-188

 

 

 

 

74) FranticHouse Partners, L.L.C., does home remodeling and repair. All employees are bonded, so the firm’s risk exposure to employee fraud is

  1. A) reduced.
  2. B) shared.
  3. C) avoided.
  4. D) accepted.

 

Page Ref: 193

 

 

 

 

75) FranticHouse Partners, L.L.C., does home remodeling and repair. The firm does not accept jobs that require the installation of slate or copper roofing because these materials often require costly post-installation services. The firm’s risk exposure to costly post-installation services is

  1. A) reduced.
  2. B) shared.
  3. C) avoided.
  4. D) accepted.

 

Page Ref: 193

 

 

 

 

76) According to the COSO Enterprise Risk Management Framework, the risk assessment process incorporates all of the following components except

  1. A) reporting potential risks to auditors.
  2. B) identifying events that could impact the enterprise.
  3. C) evaluating the impact of potential events on achievement of objectives.
  4. D) establishing objectives for the enterprise.

 

Page Ref: 193

 

 

 

 

77) Ferdinand Waldo Demara was known as the great imposter. He had an astounding ability to convince people that he was who he truly was not. He worked as a naval officer, physician, college teacher, prison warden, and other jobs without any of the prerequisite qualifications. By not diligently checking references, the organizations fooled by Demara (including the Canadian Navy) apparently chose to ________ the risk of fraud.

  1. A) reduce
  2. B) share
  3. C) avoid
  4. D) accept

 

Page Ref: 193

 

 

 

 

78) Which of the following is an independent check on performance?

  1. A) The Purchasing Agent physically reviews the contents of shipments and compares them with the purchase orders he has placed.
  2. B) Production teams perform quality evaluations of the products that they produce.
  3. C) The General Manager compares budgeted amounts with expenditure records from all departments.
  4. D) Petty cash is disbursed by Fred Haynes. He also maintains records of disbursements, places requests to finance to replace expended funds, and periodically reconciles the petty cash balance.

 

Page Ref: 200

 

 

 

 

79) Petty cash is disbursed by the Fred Haynes in the Cashier’s Office. He also maintains records of disbursements, places requests to the Finance Department to replace expended funds, and periodically reconciles the petty cash balance. This represents a(an) ________ segregation of duties.

  1. A) effective
  2. B) ideal
  3. C) ineffective
  4. D) limited

 

Page Ref: 196

 

 

 

 

80) Hiring decisions at Frazier’s Razors are made by Sheila Frazier, the Director of Human Resources. Pay rates are approved by the Vice President for Operations. At the end of each pay period, supervisors submit time cards to Sheila, who prepares paycheck requisitions. Paychecks are then distributed through the company’s mail room. This represents a(an) ________ segregation of duties.

  1. A) effective
  2. B) partial
  3. C) ineffective
  4. D) limited

 

Page Ref: 196

 

 

 

 

81) Change management refers to

  1. A) disbursement controls on petty cash.
  2. B) operational controls applied to companies after mergers or acquisitions.
  3. C) replacement of upper management and their introduction to the organization.
  4. D) controls designed to ensure that updates in information technology do not have negative consequences.

 

Page Ref: 199

 

 

 

 

82) The Director of Information Technology for the city of Bumpkiss, Minnesota, formed a company to sell computer supplies and software. All purchases made on behalf of the City were made from his company. He was later charged with fraud for overcharging the City, but was not convicted. The control issue in this case arose because the Director had both ________ and ________ duties.

  1. A) custody; authorization
  2. B) custody; recording
  3. C) recording; authorization
  4. D) management; custody

 

Page Ref: 196

 

 

 

 

83) According to the ERM, these help the company address all applicable laws and regulations.

  1. A) Compliance objectives
  2. B) Operations objectives
  3. C) Reporting objectives
  4. D) Strategic objectives

 

Page Ref: 192

 

 

 

 

84) According to the ERM, high level goals that are aligned with and support the company’s mission are

  1. A) compliance objectives.
  2. B) operations objectives.
  3. C) reporting objectives.
  4. D) strategic objectives.

 

Page Ref: 192

 

 

 

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

  1. A) Compliance objectives
  2. B) Operations objectives
  3. C) Reporting objectives
  4. D) Strategic objectives

 

Page Ref: 192

 

 

 

86) According to the ERM, these objectives help ensure the accuracy, completeness and reliability of internal and external company reports.

  1. A) Compliance objectives
  2. B) Operations objectives
  3. C) Reporting objectives
  4. D) Strategic objectives

 

Page Ref: 192

 

 

 

 

87) Which of the following is not a risk reduction element of a disaster recovery plan?

  1. A) Identification of alternate work site
  2. B) Off-site storage of backup files and programs
  3. C) Documentation of procedures and responsibilitie
  4. D) Adequate casualty insurance

 

Page Ref: 193

 

 

 

88) Describe the differences between general and specific authorization.

 

89) Explain how a company could be the victim of fraud, even if ideal segregation of duties is enforced.

 

90) Classify each of the following controls as preventive, detective, or corrective.

Periodic bank reconciliation

Separation of cash and accounting records

Maintaining backup copies of master and transaction files

Pre-numbering of sales invoices

Chart of accounts

Retina scan before entering a sensitive R & D facility

Resubmission of error transactions for subsequent processing

Internal auditor rechecking the debits and credits on the payment voucher

Depositing all cash receipts intact

Hiring qualified accounting personnel

 

91) Discuss four reasons why AIS threats are increasing.

 

92) Explain why the Foreign Corrupt Practices Act was important to accountants.

 

93) Discuss the internal environment and identify the elements that comprise the internal environment.

 

94) Explain why management’s philosophy and operating style are considered to be the most important element of the internal environment.

 

95) What are some of the ways to assign authority and responsibility within an organization?

 

96) Discuss the weaknesses in COSO’s internal control framework that led to the development of the COSO Enterprise Risk Management framework.

Accounting Information Systems, 12e (Romney/Steinbart)

Chapter 21   AIS Development Strategies

 

1) Which statement below regarding the development of an AIS is false?

  1. A) A newly designed AIS always meets user needs for a time period.
  2. B) Changes to the AIS are often difficult to make after requirements have been frozen into specifications.
  3. C) The development process can take so long that the system no longer meets company needs.
  4. D) Users are sometimes unable to specify their needs adequately.

 

13

 

 

 

 

2) When canned software is used for systems acquisition, the conceptual design phase of the SDLC

  1. A) involves a make-or-buy decision.
  2. B) is combined with the physical design phase.
  3. C) is eliminated.
  4. D) is the same.

 

14

 

 

 

 

3) When canned software is used for systems acquisition, the physical design phase of the SDLC

  1. A) does not involve designing and coding, although modifications may be made.
  2. B) is combined with the conceptual design phase.
  3. C) is eliminated.
  4. D) is the same as for developing custom software.

 

14

 

 

 

4) When canned software is used for systems acquisition, the implementation and conversion phase of the SDLC does not

  1. A) involve the documentation step.
  2. B) require the company to have trained IS personnel.
  3. C) require the develop and test software step.
  4. D) include A and C above.

 

 

 

5) When canned software is used for systems acquisition, the maintenance aspect of the operations and maintenance phase of the SDLC

  1. A) is more costly.
  2. B) is not necessary and is eliminated.
  3. C) is usually the responsibility of the vendor.
  4. D) requires trained personnel.

 

14

 

 

 

 

6) Software development companies write commercial software that can be used by a variety of organizations. Sometimes these companies combine both software and hardware together to sell as one package. Such a package is commonly referred to as

  1. A) a turnkey system.
  2. B) a value-added system.
  3. C) an application service package.
  4. D) canned software.

 

14

 

 

 

7) What is a major problem with “canned software”?

  1. A) A commercial software development company has developed it.
  2. B) Canned software is sold on the open market to a broad range of users with similar requirements.
  3. C) Canned software may not meet all of a company’s information or data processing needs.
  4. D) Canned software may offer easy availability and lower costs.

 

14

 

 

 

 

8) Which statement is true regarding canned software and the SDLC?

  1. A) Canned software cannot be modified to meet unique user needs.
  2. B) Companies that buy, rather than develop, AIS software can still follow the SDLC process.
  3. C) Most canned software meets all of a company’s information or data processing needs.
  4. D) The SDLC process does not apply to purchasing canned software.

 

14

 

 

 

 

 

9) The reasons for ________ are to simplify the decision-making process, reduce errors, provide timesavings, and avoid potential disagreements.

  1. A) leasing
  2. B) outsourcing
  3. C) prototyping
  4. D) sending out a request for a proposal

 

14

 

 

 

10) Total costs are usually lower, and less time is required for vendor preparation and company evaluation, when requests for proposal are solicited based on

  1. A) exact equipment needs.
  2. B) generalized software needs.
  3. C) specific hardware and software specifications.
  4. D) None of the above are correct.

 

15

 

 

 

 

11) Information provided on a Request For Proposal given to vendors should include

  1. A) a budget for software and hardware.
  2. B) detailed specifications for the AIS.
  3. C) timeframe required for completion of the project.
  4. D) All of the above are correct.

 

15

 

 

 

 

12) The system performance evaluation approach that evaluates systems based on the weighted score of criteria and points totaled is called

  1. A) benchmark problem.
  2. B) point scoring.
  3. C) prototyping.
  4. D) requirements costing.

 

16

 

 

 

 

 

13) The approaches to evaluating vendor proposals that do not incorporate dollar estimates of costs or benefits are known as

  1. A) benchmark problem and point scoring.
  2. B) point scoring and requirement costing.
  3. C) requirement costing and benchmark problem.
  4. D) All methods mentioned above include dollar estimates.

 

16

 

 

 

14) A request for proposal sent to software vendors is an important tool since it can reduce errors. Which statement below supports this reason?

  1. A) All responses are in the same format and based on the same information.
  2. B) Both parties possess the same expectations and pertinent information is captured in writing.
  3. C) The chances of overlooking important factors are reduced.
  4. D) The same information is provided to all vendors.

 

14

 

 

 

 

15) What is the first step a company should take when evaluating requests for proposals?

  1. A) Carefully compare proposals against the proposed AIS requirements.
  2. B) Determine how much of a given proposal meets the desired AIS requirements.
  3. C) Eliminate proposals that are missing important information or fail to meet minimum requirements.
  4. D) Invite vendors to demonstrate their systems.

 

15

 

 

 

 

16) The ________ method calculates and compares the processing times of different AIS to compare system performance.

  1. A) benchmark problem
  2. B) mandatory requirements
  3. C) point scoring
  4. D) requirements costing

 

16

 

 

 

 

17) What is a drawback to using the requirement costing method of software and hardware evaluation?

  1. A) Dollar estimates of costs and benefits are not included.
  2. B) Intangible factors such as reliability and vendor support are overlooked.
  3. C) The weights and points used are assigned subjectively.
  4. D) There is no drawback to using the requirements costing method.

 

16

 

 

 

 

18) A costly and labor-intensive approach to systems acquisition is creating

  1. A) canned software.
  2. B) custom software.
  3. C) modified software.
  4. D) turnkey software.

 

17

 

 

 

 

19) Which of the following is not appropriate for end user development?

  1. A) performing statistical analyses
  2. B) preparing schedules and lists
  3. C) retrieving information from databases
  4. D) updating database records

 

18

 

 

 

 

20) What is the basic function of a help desk?

  1. A) control access to corporate data
  2. B) provide technical maintenance and support
  3. C) train end users and assist with application development
  4. D) All of the above are basic functions of a help desk.

 

19

 

 

 

 

21) Why do so many organizations develop their own software, when many canned software packages are available?

  1. A) An organization may have unique requirements.
  2. B) Canned software packages are often less expensive than software developed in house.
  3. C) The organization’s size and complexity necessitates the in-house development of software.
  4. D) A and C above are correct.

 

17

 

 

 

 

22) Which of the following is not a guideline used to select an outside developer for custom system?

  1. A) The outside developer should have an in-depth understanding of how the company conducts its business.
  2. B) The outside developer should have experience in the company’s industry.
  3. C) The outside developer should possess a good understanding of business in general.
  4. D) The outside developer should be able to complete the system independently, without requiring frequent contact to ask questions.

 

17

 

 

 

 

23) What term is used to refer to users becoming involved in the hands-on development, control, and employment of information systems?

  1. A) amateur user computing (AUC)
  2. B) competitive intra-organization systems development approach (CIOSDA)
  3. C) end-user computing (EUC)
  4. D) novice information systems development (NISD)

 

17

 

 

 

24) End-user development is inappropriate for some types of systems. What is an example of a system that end users should not be allowed to develop?

  1. A) a payroll processing program
  2. B) a program that performs “what-if” statistical modeling
  3. C) developing an application using prewritten software such as a spreadsheet or database system
  4. D) preparing a schedule or list such as a depreciation schedule

 

18

 

 

25) What is an important risk to be considered when allowing end users to develop a system?

  1. A) IS personnel may not have enough work to do.
  2. B) Systems are implemented that have not been adequately tested.
  3. C) Systems are usually easy to use and modify.
  4. D) Users control development process and decide what systems are created and implemented.

 

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26) Which of the following about end-user computing is true?

  1. A) System users know best what they need, so should be able to create their own applications.
  2. B) End-users, while knowledgeable about their job, are not trained to create systems applications, and should not be allowed to do so.
  3. C) It is inefficient and costly to ask the IS department to create basic applications that only a few users need to use.
  4. D) In most companies, the IS department doesn’t want end-users to create their own applications, for fear IS won’t have enough work to do.

 

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27) What would be one duty of second-line help desk personnel?

  1. A) handling complicated queries requiring research
  2. B) provide callers with scripted answers
  3. C) using expert systems to quickly find answers
  4. D) None of the duties listed above pertain to second-line help desk personnel.

 

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28) How does outsourcing improve an organization’s utilization of assets?

  1. A) by allowing a company to completely eliminate its IS department, which will reduce its payroll costs
  2. B) by allowing the company to sell assets to outsourcers and improve their cash position
  3. C) by eliminating the expense of keeping up with the latest technology and, thus, eliminate the drain on cash reserves
  4. D) Both B and C above are correct.

 

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29) Which of the following is not a benefit of outsourcing?

  1. A) access to greater expertise and more advanced technology
  2. B) greater control
  3. C) improved development time
  4. D) lower costs

 

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30) A company that has outsourced its AIS function can lose a fundamental understanding of its AIS needs and the strategic uses of AIS with the passing of time. What is this risk called?

  1. A) focus reduction
  2. B) loss of control
  3. C) reduced competitive advantage
  4. D) unfulfilled goals

 

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31) Which advantage of outsourcing, given below, may tend to cause resistance on the part of in-house IS staff and other organization employees?

  1. A) Outsourcing allows a company to better use its assets and scarce resources.
  2. B) Outsourcing can lower a company’s overall IS costs.
  3. C) Outsourcing facilitates downsizing.
  4. D) Outsourcing helps eliminate the peaks and valleys of system usage.

 

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32) The risk of outsourcing concerned with unauthorized disclosure of sensitive information is the risk of

  1. A) a locked-in system.
  2. B) a loss of control.
  3. C) a reduced competitive advantage.
  4. D) inflexibility.

 

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33) Business Process Management views business processes as

  1. A) strategic organizational assets.
  2. B) a series of small tasks to be closely managed.
  3. C) related activities that, once perfected, should be managed on an exception basis.
  4. D) subsets of organizational strategy that should not be owned by any specific person or department.

 

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34) Which of the following is not an element of managing a business process “end to end”?

  1. A) identifying process experts to oversee specific functions across units
  2. B) designating a process owner
  3. C) setting performance standards
  4. D) establishing control and monitoring processes

 

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35) Which of the following is not true about business process management (BPM) and enterprise resource planning (ERP) systems?

  1. A) ERP systems encompass all functions and processes in an organization, but BPM systems are implemented at process or unit levels in an organization.
  2. B) BPM systems are process-centered, but ERP systems are data-centered.
  3. C) Organizations can use both ERP and BPM systems at the same time.
  4. D) ERP and BPM systems rely heavily technology for communication and coordination.

 

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36) Which of the following is not one of the ways in which a Business Process Management System can improve internal control?

  1. A) Innovative technology allows access and authorization controls to be programmed at the transaction level.
  2. B) Documents or transactions that require approval can be electronically routed to a manager.
  3. C) Process rules are used to alert users when actions must be taken.
  4. D) All actions and processes are monitored and documented in a process log for periodic review.

 

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37) The basic premise of ________ is that it is easier for people to express what they like or dislike about an existing system than to imagine what they would like in a system.

  1. A) modified software
  2. B) outsourcing agreements
  3. C) prototyping
  4. D) turnkey systems

 

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38) Which statement below regarding prototyping is false?

  1. A) Prototypes are considered “first drafts,” which are quickly built and intended to be discarded when the real system is finished.
  2. B) Developers who use prototyping still go through the systems development life cycle.
  3. C) Prototypes help developers and end users make conceptual and physical design decisions.
  4. D) Prototyping allows developers to condense and speed up parts of the analysis and design phases.

 

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39) What is the emphasis of the first step involved in developing a prototype?

  1. A) develop a good prototype into a fully functional system
  2. B) speed and low cost rather than efficiency of operation
  3. C) users identify changes to be made in an iterative process
  4. D) what output should be produced rather than how it should be produced

 

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40) The development of which type of system listed below would not benefit from the creation of a prototype?

  1. A) decision support systems
  2. B) executive information systems
  3. C) expert systems
  4. D) systems that cross a number of organizational boundaries

 

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41) What is a disadvantage to prototyping?

  1. A) developers may shortchange the testing and documentation process
  2. B) errors are likely to be detected and eliminated early in the development process
  3. C) prototyping may be less costly than other approaches
  4. D) prototyping usually produces a better definition of user needs than other approaches

 

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42) Which is not a problem with CASE technology?

  1. A) cost
  2. B) incompatibility
  3. C) lack of system documentation
  4. D) unmet expectations

 

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43) Which of the following were CASE tools not designed to do?

  1. A) replace skilled designers
  2. B) plan, analyze, design, program, and maintain an information system
  3. C) automate important aspects of the software development process
  4. D) enhance the efforts of managers in understanding information needs

 

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44) Benathir Donathat, director of the project committee, has received approval from management for implementation of a new accounting information system. After putting out an RFP, the committee settled on a vendor that will deliver all hardware and software required on a lease basis. The committee decided to go with

  1. A) canned software.
  2. B) a turnkey system.
  3. C) an outsourced system.
  4. D) an end-user developed system.

 

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45) Benathir Donathat, director of the project committee, has received approval from management for implementation of a new accounting information system. After putting out an RFP, the committee settled on a Web-based application service provider that will manage all hardware and software required by the system, with fees based on usage. The committee decided to go with

  1. A) canned software.
  2. B) a turnkey system.
  3. C) an outsourced system.
  4. D) an end-user developed system.

 

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46) Benathir Donathat, director of the project committee, has received approval from management for implementation of a new accounting information system. After putting out an RFP, the committee settled on a vendor that will provide an industry standard software package and post-sale technical support. The committee decided to go with

  1. A) canned software.
  2. B) a turnkey system.
  3. C) an outsourced system.
  4. D) an end-user developed system.

 

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47) Firms should consider developing custom software only if

  1. A) it will be used for critical functions like accounts receivable.
  2. B) it will contribute to development of a significant competitive advantage.
  3. C) the firm has the necessary expertise available in-house.
  4. D) the available canned software is very expensive.

 

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48) End-user computing is likely to result in a(n)

  1. A) well tested system.
  2. B) well documented system.
  3. C) rapidly developed system.
  4. D) efficient system.

 

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49) What is a benchmark problem?

  1. A) A difficulty encountered when attempting to bring an accounting information system up to industry best practices
  2. B) A method used to compare the efficiency of alternative accounting information systems
  3. C) The cost-benefit tradeoff defined by the relationship between increased costs and increased benefits from a system
  4. D) A method used to test the compatibility of a new accounting information system with existing hardware and software

 

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50) Which of the following is a method for comparing alternative vendor proposals for development of an accounting information system when the vendors differ with regard to their ability to meet the project criteria?

  1. A) Point scoring
  2. B) Resource clearing
  3. C) Requirements costing
  4. D) Multi-objective optimization.

 

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51) Where is the responsibility for the development of end-user computing applications typically placed?

  1. A) End users
  2. B) Help desk
  3. C) Information Technology Services Department
  4. D) Programmers

 

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52) Callow Youth Clothing (CYC) declared bankruptcy in 2007 and has since closed 27 stores, which amounts to over half of its retail outlets. One of the conditions specified for emergence from bankruptcy is a reduction in the cost of operating the firm’s accounting information system. Which of the following may be recommended?

  1. A) Replace the existing system with one of a smaller scale.
  2. B) Customize the existing system.
  3. C) Outsource system operations.
  4. D) Purchase a canned software system.

 

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53) Software as a Service (SaaS) refers to Web-based computing services provided by a(an)

  1. A) application service provider (ASP).
  2. B) Internet service provider (ISP).
  3. C) end-user system (EUS).
  4. D) help desk.

 

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54) Firms should consider preparing a software prototype if the software

  1. A) will be used for a critical function like accounts receivable.
  2. B) automates an unstructured or semi-structured task.
  3. C) can be produced using expertise available in-house.
  4. D) is available as a canned package.

 

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55) Firms should consider preparing a software prototype if the application

  1. A) will be used for a critical function like inventory management.
  2. B) automates a structured task.
  3. C) can be produced using outside developers.
  4. D) inputs and outputs are not clearly defined.

 

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56) Which of the following is an advantage of CASE?

  1. A) It exhibits a high degree of cross-system compatibility.
  2. B) It is an inexpensive technology that is accessible to small businesses.
  3. C) Documentation is generated automatically.
  4. D) It enhances the congruence between user expectations and the final system.

 

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57) As part of the development process for a new job bidding software system for Halide Construction, LLC, Jon Chelide prepared and distributed diagrams that represent input and output screenshots. The diagrams are an example of

  1. A) CASE.
  2. B) an operational prototype.
  3. C) a RFP.
  4. D) a nonoperational prototype.

 

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58) As part of the development process for a new job bidding software system for Halide Construction, LLC, Jon Chelide prepared and distributed functional programs that simulate the system’s input and output interface. These programs are an example of

  1. A) CASE.
  2. B) an operational prototype.
  3. C) a RFP.
  4. D) a nonoperational prototype.

 

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59) In which of the following cases is outsourcing likely to be the best solution to the firm’s data processing needs?

  1. A) Sad Clown Pajamas produces and wholesales clothing products to retailers worldwide. Eighty percent of its sales orders are taken during the months of October and November. Sad Clown requires a system that will manage online ordering and fulfillment.
  2. B) Modest Expectations Investment Services manages highly diverse portfolios and provides personal services to high income investors worldwide. The firm needs a system that will pull together selected investment data from a large variety of sources and allow account managers to prepare customized reports for customers.
  3. C) J.D. Yacht is in the business of buying businesses, managing them for no more than two years, and then selling them at a profit. The firm requires a flexible system that will allow them to effectively manage the various types of businesses it controls.
  4. D) Halide Construction, LLC, manages the design and construction of desalinization plants and requires a system that will allow it to manage the process from bid to billing.

 

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60) Describe the difficulties that could be encountered when developing an AIS.

 

61) What are the three methods to obtain a new information system? What is a turnkey system?

 

62) What guidelines should be followed when contracting with an outside developer to create custom software?

 

63) Describe the purposes of a help desk.

 

64) Describe outsourcing and identify the two types of outsourcing agreements.

 

65) Describe computer-aided software (or systems) engineering (CASE) and identify the advantages and disadvantages of CASE?

 

66) Explain the concept of an application service provider.

 

67) Identify the ways an organization can gain full advantage of using a Request For Proposal (RFP).

 

68) Discuss how an organization can develop custom software.

 

69) What are the advantages and disadvantages of custom software and of canned software for meeting application software needs?

 

70) Describe end-user computing and the advantages and risks involved.

 

71) Describe prototyping and identify when prototyping is appropriate. Identify the steps involved in prototyping. Discuss the advantages and disadvantages of prototyping.

 

72) Discuss how information system outsourcing can provide the organization with both a business solution and asset management.

 

73) Describe each of the four important principles underlying Business Process Management (BPM).

 

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