Accounting Information Systems The Processes And Control 2nd Edition By Leslie Turner – Test Bank

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INSTANT DOWNLOAD COMPLETE TEST BANK WITH ANSWERS

 

Accounting Information Systems The Processes And Control 2nd Edition By Leslie Turner – Test Bank

 

Sample  Questions    

 

End of Chapter Questions:

 

 

  1. Which of the following statements is not true?
  2. Accounting information systems must maintain both detail and summary information.
  3. Business processes may vary from company to company.
  4. Regardless of the extent of computerization, all accounting information systems must capture data from the transactions within business processes.
  5. Business processes categorized as expenditure processes are not intended to be processes that serve customers.

 

  1. In a manual system, an adjusting entry would most likely be initially recorded in a:
  2. Special journal
  3. Subsidiary ledger
  4. General journal
  5. General ledger

 

  1. Which of the following is not a disadvantage of maintaining legacy systems?
  2. There are fewer programmers available to support and maintain legacy systems.
  3. They contain invaluable historical data that may be difficult to integrate into newer systems.
  4. Hardware or hardware parts may be unavailable for legacy systems.
  5. It can be difficult to integrate various legacy systems into an integrated whole.

 

  1. Which of the following is not an advantage of cloud computing when compared to client-server computing?
  2. It is more calable.
  3. It is less costly.
  4. It increases the amount of computer infrastructure in a company.
  5. It has expanded availability.

 

(Previous #4)

  1. Which of the following is a disadvantage of purchased accounting software, compared with software developed in-house?
  2. It is custom designed for that company.
  3. It is less costly.
  4. The implementation time is shorter.
  5. There are fewer bugs.

(Previous #5)

  1. Which of the following is not a method of updating legacy systems?
  2. Enterprise application integration
  3. Backoffice ware
  4. Screen scraper
  5. Complete replacement

 

(Previous #6)

  1. When categorizing the accounting software market, a company with revenue of $8 million would most likely purchase software from which segment?
  2. Small company
  3. Midmarket
  4. Beginning ERP
  5. Tier 1 ERP

 

(Previous #7)

  1. An IT system that uses touch-screen cash registers as an input method is called:
  2. Electronic data interchange
  3. E-business
  4. Point-of-sale system
  5. Source documents and keying

 

(Previous #8)

  1. When similar transactions are grouped together for a specified time for processing, it is called:
  2. Online processing
  3. Real-time processing
  4. Batch processing
  5. Group processing

 

(Previous #9)

  1. Which of the following is not correct regarding the differences in the ways that real-time systems differ from batch systems?

 

    Real-Time Systems                                                                  Batch Systems

  1. Must use direct access files.                                                Can use simple sequential files.
  2. Processing occurs on demand.                                           Processing must be scheduled.
  3. Processing choices are menu-driven.                              Processing is interactive.
  4. Supporting documents are prepared                              Supporting documents are prepared

as items are processed.                                                        during scheduled runs.

 

(Previous #10)

  1. In documenting systems, which pictorial method is described as a method that diagrams the actual flow and sequence of events?
  2. Systems flowchart
  3. Process map
  4. Data flow diagram
  5. Entity relationship diagram

 

(Previous #11)

  1. (CMA Adapted) A company in Florida provides certified flight training programs for aspiring new pilots of small aircraft.  Although awarding a pilot’s license requires one-on-one flight time, there is also much preparatory training conducted in classroom settings.  The company needs to create a conceptual data model for its classroom training program, using an entity-relationship diagram.  The company provided the following information:

 

Floridian Flight, Inc. has 10 instructors who can tach up to 30 pilot trainees per class. The company offers 10 different courses, and each course may generate up to  eight classes.

Identify the entities that should be included in the entity-relationship diagram:

  1. Instructor, Floridian Flight Inc., Pilot Trainee
  2. Instructor, Floridian Flight Inc., Course, Enrollment, Class
  3. Floridian Flight Inc., Enrollment, Course, Class, Pilot Trainee
  4. Instructor, Course, Enrollment, Class, Pilot Trainee

 

ANSWERS TO QUESTIONS 1-12 (FROM THE TEXTBOOK)

  1. D                     4.    A                     7.    B                   10.    C
  2. C                      5.    A                     8.    C                   11.    B
  3. B                      6.    B                      9.    C                   12.    D

 

 

TEST BANK – CHAPTER 2

 

 

  1. IT systems have dramatically affected many aspects of business.  Which of the following is not one of the changes?
  2. Data input into accounting information systems.
  3. The way that data is processed in the system.
  4. The accounting information that is reported by the system.
  5. The outputs of the system.

 

  1. Which of the following statements is false?
  2. Technology has allowed many industries to provide better, faster, and higher quality information.
  3. Business process must adapt to the new technologies.
  4. Business processes, IT systems, and the accounting information system are inextricably linked.
  5. IT systems have not had a major impact on the input of data into the accounting information system.

 

  1. The system that captures, records, processes, and reports accounting information is referred to as a(n):
  2. Accounting information system
  3. Management information system.
  4. System of business processes.
  5. Client-server system.

 

  1. Information captured by a system is generated by financial transactions:
  2. Within the organization only.
  3. Between an organization and its customers only.
  4. Between an organization and its vendors only.
  5. Within the organization and between an organization and its customers and vendors.

 

  1. A prescribed sequence of work steps completed in order to produced a desired result for an organization is the definition of:
  2. Accounting information system
  3. Business process
  4. Business transaction
  5. Financial statement

 

  1. Which of the following statements, related to a business process, is not a true statement?
  2. It has a well-defined beginning and end.
  3. Usually takes a long-period of time to complete.
  4. Occur so that the organization may serve its customers.
  5. Is initiated by a particular kind of event.

 

  1. When a transaction occurs there are systematic and defined steps that take place within the organization to complete all of the underlying tasks.  These “defined steps” are referred to as:
  2. Business Processes
  3.     Financial Transactions
  4. Accounting Information Systems
  5. Customer Service Arenas

 

  1. The substance of an accounting information system includes:
  2. Initiate an event
  3. Steps taken to create a business process
  4. Capturing, recording, processing and reporting accounting information
  5. Selection of client-server computing

 

  1. Which of the following is not one of the general categories of business processes?
  2. Revenue Processes
  3. Inventory Processes
  4. Expenditure Processes
  5. Conversion Processes

 

  1. Which of the following correctly states the order of steps in a manual accounting system?
  2. Source Documents, Journals, Ledgers, Reports
  3. Journals, Source Documents, Ledgers, Reports
  4. Source Documents, Ledgers, Journals, Reports
  5. Ledgers, Reports, Journals, Source Documents

 

  1. Which of the following statements is true?
  2. Most accounting systems in use today are computerized systems.
  3. All accounting systems, whether computerized or not, must capture data, process the data, and provide outputs
  4. It is not necessary for an accounting system to maintain summary information if it maintains detail information.
  5. The general ledger will be summarized and then posted to the subsidiary ledger.

 

  1. The choice of accounting information system will depend on all of the following except:
  2. The size of the organization
  3. The philosophy of management
  4. The ability of the company to capture information
  5. The nature of its processes

 

  1. The record that captures the key data of a transaction is called:
  2. Turnaround document
  3. Ledger
  4. Journal
  5. Source document

 

  1. In order to organize the study of accounting information systems, the authors divided the systems in place into three categories.  Which of the following is not one of those categories?
  2. Manual Systems
  3. Client-Server Systems
  4. Legacy Systems
  5. Integrated IT Systems

 

  1. Which of the following statements is  true related to manual systems?
  2. Few small organizations use computerized accounting systems.
  3. Computerized systems rely on some manual record keeping.
  4. Most medium sized organizations rely on manual accounting systems.
  5. When using a computerized system, it is not necessary to understand the manual system.

 

  1. Which of the following is an example of a source document?
  2. Purchase order
  3. Employee time card
  4. Cash receipts
  5. All of the above are examples of source documents.

 

  1. A source document serves important functions in the accounting system.  Which of the following is not one of those functions?
  2. Provides the output data for financial reports
  3. Serves as part of the permanent audit trail
  4. Triggers beginning of business processes
  5. Provides the input data to record the transaction

 

  1. An output of the accounting system that can be used as an input in a different part of the accounting system is referred to as:
  2. Round table document
  3. Source document
  4. Turnaround document
  5. Financial report

 

  1. Which of the following provides details for the entire set of accounts used in the organization’s accounting systems?
  2. General Ledger
  3. Special Journal
  4. Subsidiary Ledger
  5. General Journal

 

  1. The book of original entry for any transaction not recorded in a special journal is the:
  2. Special Ledger
  3. General Ledger
  4. General Journal
  5. Subsidiary Journal

 

  1. Special journals are created, or established, to record specific types of transactions.  Which of the following is not one of the special journals?
  2. Fixed Asset Journal
  3. Cash Receipts Journal
  4. Purchases Journal
  5. Payroll Journal

 

  1. The purpose of this item is to maintain the detailed information regarding routine transactions, with an account established for each entity.
  2. Purchases Journal
  3. Subsidiary Ledger
  4. General Journal
  5. General Ledger

 

  1. Which of the following items is not one of the manual records in a manual accounting system?
  2. Journals
  3. Ledgers
  4. Source Documents
  5. Trial Balance

 

  1. Many of the accounting software systems consist of modules. Which of the following statements is false related to these modules?
  2. Are separate programs for different business processes
  3. Include accounts receivable, payroll, and accounts payable
  4. Have essentially the same purpose as special journals and special ledgers
  5. Are referred to as special purpose systems

 

  1. An existing system within the organization that uses older technology is called a(n):
  2. Manual system
  3. Legacy system
  4. Client-server system
  5. Modern integrated system

 

  1. Which of the following statements does not refer to a legacy system?
  2. Includes source documents, journals, and ledgers.
  3. Have been in place for may years.
  4. Much time has been spent developing, maintaining, and customizing the system.
  5. Often based on old or inadequate technology.

 

  1. Organizations are often reluctant to abandon their legacy systems because:
  2. The system was customized to meet specific needs.
  3. The process to replace the systems is inexpensive.
  4. The time involved for replacement is minimal.
  5. Information contained on the system is outdated.

 

  1. Which of the following is not one of the advantages of maintaining the legacy systems?
  2. The system often supports unique business processes not inherent in generic accounting software.
  3. The system contains invaluable  historical data that may be difficult to integrate into a new system.
  4. The system is well supported and understood by existing personnel who are already trained to use the system.
  5. The system has been customized to meet specific needs of the organization.

 

  1. Which of the following is one of the disadvantages of maintaining the legacy systems?
  2. Often support unique business processes not inherent in generic accounting software.
  3. May not easily run on new hardware.
  4. Contain invaluable historical data.
  5. Existing personnel are already trained to use the system.

 

  1. Which of the following is not one of the disadvantages of maintaining the legacy systems?
  2. They become difficult to integrate when companies merge or acquire other companies.
  3. They are often difficult to modify to make them web based.
  4. They are well supported and understood by existing personnel.
  5. They lack adequate, up-to-date supporting documentation.

 

  1. Frontware, which adds modern, user friendly screen interfaces to legacy systems are referred to as:
  2. Turnaround software
  3. Graphical user face
  4. COBOL
  5. Screen scrapers

 

  1. Instead of completely replacing their systems, organizations often try to use new technology to enhance existing systems.  Which of the following is not one of the approaches taken by these organizations?
  2. Enterprise application integration
  3. Screen scrapers
  4. Enterprise resource planning
  5. Using interface bridges

 

  1. A set of processes, software and hardware tools, methodologies, and technologies to integrate software systems is referred to as:
  2. Enterprise application integration
  3. Client-server interface
  4. Screen scrapers
  5. Complete integration

 

  1. An use of enterprise application integration would include:
  2. Bridge the legacy systems to the new hardware and software.
  3. Intended to consolidate, connect, and organize all of the computer applications, data, and business processes.
  4. Allow real-time exchange and management of all the critical information.
  5.     All of the listed items would be included.

 

  1. Which of the following statements is false?
  2. When a modern, integrated system is purchased, they are often modified by the IT staff to meet the needs of the organization.
  3. New programs sold by software development companies are not as user friendly as the legacy systems.
  4. Purchased software has a lower cost, shorter implementation time, and fewer bugs.
  5. The modern, integrated systems typically use the latest technology.

 

35A.   The modern integrated systems discussed by the authors include different types of architectures or model.  Which of the following is not one of those models?

  1. Client-server model
  2. Legacy accounting
  3. Cloud computing
  4. All of the listed are examples of the modern integrated systems.

 

35B.   This type of computing means that there are two types of copmuters networked together to accomplish the application processing.

  1. Cloud computing
  2. IT-Software computing
  3. Client-Server computing
  4. Web-Server computing

 

35C.   The advantage of client-server computing is:

  1. PC clients perform as “smart” terminals that can accomplish some share of the process tasks.
  2. The server is housed at the client’s location and is maintained by the client.
  3. The client PC works with the entire database, whereas the server works with only a portoin of the client data.
  4. Each of the parts – the client PC and the server – work separately and are viewed separately by the users.

 

35D.   Which of the following is not a main characteristic of client-server system?

  1. Client and server computer are networked together.
  2. Individual parts of processing are shared between the server and the client.
  3. The system appears to users to be one integrated whole.
  4. The client does not participate in the processing or data manipulation.

 

35E.    Which of the following statements is false related to client-server computing?

  1. Tasks are assigned to either the server or the client based on the size of the task.
  2. A large number of client-server applications are moving toward a web-based model.
  3. The client is more efficient at manipulating subsets of data.
  4. The server is more efficient in managing large databases.

 

35F.    Which of the following is not an example of cloud computing?

  1. The current method that Apple now uses to manage iTunes.
  2. Google’s Gmail – e-mail software.
  3. Purchasing songs from iTunes and downloading those songs onto your computer.
  4. Email accounts such as Yahoo.

 

35G.   Which of the following is not an advantage to a cloud model of e-mail?

  1. It may be accessed and read from any device you use.
  2. You are not required to maintain e-mail software and data storage.
  3. Costs associated with maintaining are higher but are more controllable.
  4. Fewer IT employees would be needed.

 

35H.   There are a number of cloud computing services, and one of those services is called SaaS.  This acronym stands for:

  1. Software as a Service
  2. Systems at a Server
  3. Server adding another System
  4. Software as actual Services

 

35I.    There are a number of advantages to cloud computing.  Which of the following is one of those advantages?

  1. As a company grows, it can easily purchase new capacity from the cloud provider.
  2. Once the software and data are stored in the cloud, it can be accessed by multiple devices from multiple locations.
  3. The company has a reduced need for servers and data storage.
  4. All of the above.

 

  1. There were four market segments identified by the authors in chapter 2.  Which of the following is not one of those segments.
  2. Small Company Systems
  3. Midmarket Company Systems
  4. Legacy Company Systems
  5. Beginning ERP Systems

 

  1. A company with revenue of $50 million would be most likely to purchase software from which one of the four market segments?
  2. Midmarket Segment
  3. Beginning ERP Segment
  4. Tier 1: ERP Segment
  5. Integrated Segment

 

  1. Quickbooks and Peachtree would be part of which market segment of accounting software?
  2. Small Segment
  3. Midmarket Segment
  4. Beginning ERP Segment
  5. Legacy Segment

 

  1. SAP and PeopleSoft are part of which market segment of accounting software?
  2. Small Segment
  3. Midmarket Segment
  4. Beginning ERP Segment
  5. Tier 1 ERP Segment

 

  1. Five different input methods were identified by the authors.  Which of the following is one of those input methods.
  2. EDI
  3. ERP
  4. EAI
  5. EPS

 

  1. Source documents are usually preprinted and sequentially prenumbered.  Which of the following is not one of the reasons for this prenumbering and preprinting?
  2. To have an established format to capture data
  3. To assure that there are no duplicate source documents
  4. To be sure that all of the documents have been recorded
  5. To be sure that all of the documents are accounted for

 

  1. This method of input for AIS is considered to be time consuming and error prone due to the human effort required to write on some documents and to manually key in the data:
  2. Bar Coding
  3. Key Punching
  4. Source Documents and Keying
  5. Point of Sale Systems

 

  1. The use of employee prepared time cards and the entering of the time worked by the payroll department is a good example of which type of input method for AIS?
  2. EDI
  3. Bar Coding
  4. Point of Use System
  5. Source Documents and Keying

 

  1. A printed code consisting of a series of vertical, machine readable, rectuangular bars and spaces, that vary in width and are arranged in a specific ways to represent letters and numbers are referred to as:
  2. COBOL Coding
  3. Bar Coding
  4. Key Coding
  5. EOS Coding

 

  1. Bar codes can be used in a number of different instances for input:
  2. Products that are sold
  3. Identification of individuals
  4. Track work in process
  5. Prepare financial statements

 

  1. A method of using hardware and software that captures retail sales transactions by standard bar coding is referred to as:
  2. Point of Sale System
  3. COBOL System
  4. Inventory Tracking System
  5. UPC System

 

  1. The letter UPC, when relating to bar codes, stands for:
  2. United Price Code
  3. Universal Product Code
  4. Unity Product Cost
  5. Ulterior Price Company

 

  1. The inter-company, computer-to-computer transfer of business documents in a standard business format is referred to as:
  2. Electronic Data Interchange
  3. E-Business Document Identification
  4. Earned Daily Interest
  5. Electronic Document Idea

 

  1. The major difference between EDI and e-business is:
  2. EDI uses the internet and e-business uses dedicated networks
  3. EDI does not require the use of computers
  4. EDI uses dedicated networks and e-business uses the internet
  5. There is no difference between EDI and e-business

 

  1. After the accounting information has been input into the accounting system, it must be processed.  Process accounting data involves:
  2. Source documents and keying
  3. Bar codes and point of sale
  4. Electronic data interchange and e-business
  5. Calculations, classification, and summarization.

 

  1. In a manual accounting system, the processing of accounting information includes:
  2. Recording in the ledger
  3. Posting to the journal
  4. Closing the necessary ledger accounts
  5. Adjusting the journal

 

  1. When all similar transactions are grouped together for a specified time and then processed together as a group, the process is referred to as:
  2. Grouped processing
  3. Batch processing
  4. Bound processing
  5. Unit processing

 

  1. An organization that has applications having large volumes of similar transactions that can be processed at regular intervals is best suited to use which method of processing?
  2. Real-time processing
  3. Point of sale processing
  4. Batch processing
  5. Sequential processing
  6. Which of the following is not one of the advantages of batch processing?
  7. It is generally easier to control than other types of computerized systems.
  8. It uses less costly hardware and software.
  9. It is very efficient for large volumes of like transactions when most items in the master file are used.
  10. Information can be provided to users on a timely basis.

 

  1. Which of the following is one of the disadvantages to batch processing?
  2. The hardware and software are more expensive.
  3. Integration across business processes is difficult in legacy systems that are batch oriented.
  4. Batch systems can be difficult to audit because of the complexity of the system.
  5. Errors can be corrected immediately because the system checks for input errors as the data is entered.

 

  1. The processing system where transactions are processed immediately and where output is available immediately is referred to as:
  2. Real-time processing
  3. Online processing
  4. Batch processing
  5. Sequential processing

 

  1. The advantages to real-time processing include:
  2. As the data are entered, the system checks for input errors – therefore, errors can be corrected immediately.
  3. Information is provided to users on a timely basis.
  4. All files are constantly up-to-date.
  5. All of the above are advantages.

 

  1. The disadvantages to real-time processing include:
  2. Processing can take longer than normal if the master files are large.
  3. Adding or deleting records takes a considerable amount of time.
  4. The single database that is shared is more susceptible to unauthorized access.
  5. Data duplication is likely because each process uses its own master file.

 

  1. Many different types of output are generated by an accounting information system.  The authors identified general categories of output.  The category that would include credit memorandums, receiving memorandums, and production schedules is:
  2. Internal documents
  3. Internal reports
  4. External reports
  5. Trading partner documents

 

  1. Many different types of output are generated by an accounting information system.  The authors identified general categories of output.  The category that would include any document that management determines would be useful to the business is:
  2. Internal documents
  3. Internal reports
  4. External reports
  5. Trading partner documents
  6. Documentation of the accounting system allows:
  7. The accountant to anaylze and understand the procedures and business process and the systems that capture and record the accounting data.
  8. The non-accountant to create a picture or chart of what should happen within the accounting system.
  9.     The investor to see inside the accounting system so that he / she can better understand the financial statements.
  10. The accountant to determine which financial statements will be necessary to properly report the results of operations.

 

  1. Which of the following is not one of the popular documentation methods for processes and systems presented in the textbook?
  2. Process maps
  3. Document flowcharts
  4. Entity relationship diagram
  5. Document creation map

 

  1. A pictorial representation of business processes in which the actual flow and sequence of events in the process are presented in the diagram form – the start of the process, the steps within the process, and the finish of the process is referred to as:
  2. System flowchart
  3. ER Diagram
  4. Process Map
  5. Data Flow Diagram

 

  1. Which of the process map symbols is used to show the start and / or finish of a process?
  2. Rectangle
  3. Oval
  4. Diamond
  5. Circle

 

  1. Which of the process map symbols is used to show a task or activity in the process?
  2. Rectangle
  3. Oval
  4. Diamond
  5. Circle

 

  1. Which of the process map symbols is used to show a point in the process when a decision must be made?
  2. Rectangle
  3. Oval
  4. Diamond
  5. Circle

 

  1. A process map shows a circle with a letter or number in the middle.  This symbol is used to show:
  2. That there is a break in the process.
  3. That there is a decision to be made.
  4. That a process is starting.
  5. That there is an activity that will take place.

 

  1. This method of system documentation  is intended to show the entire system, including inputs manual and copmuterized processes, and outputs.
  2. Procedure mapping
  3. System flowcharting
  4. Data flow diagramming
  5. Entity relationship diagrams

 

  1. Systems professionals  in the design and maintenance of IT systems use this documentation method.
  2. Document flowcharts
  3. Process maps
  4. Data flow diagrams
  5. System flowcharting

 

  1. Accountants and auditors are less likely to use which of the following system documentation methods?
  2. Process maps
  3. System flowcharting
  4. Document flowcharting
  5. Data flow diagrams

 

  1. When creating or reading a system flowchart, the triangle symbol represents a:
  2. File
  3. Direct access storage
  4. Manual input
  5. Document

 

  1. When creating or reading a system flowchart, the diamond represents a(n):
  2. On-page connector
  3. Decision
  4. Data
  5. Process

 

  1. When creating or reading a system flowchart, the rectangle represents a(n):
  2. Decision
  3. Off-page connector
  4. Document
  5. Process

 

  1. The documenting system that shows the flow of documents and information among departments or units within an organization is called a:
  2. System Flowchart
  3. ER Diagram
  4. Document Flowchart
  5. Data Flow Diagram

 

  1. This document system is used by systems professionals to show the logical design of a system.  The advantage of the method is that it uses only four symbols.
  2. Data Flow Diagram
  3. ER Diagram
  4. System Flowchart
  5. Document Flowchart

 

  1. This document system is used by systems professionals to show the logical design of a system.  The advantage of the method is that it uses only four symbols.  The symbol used to represent both sources and destinations of data is a(n):
  2. Rectangle with rounded corners
  3. Open-ended rectangle
  4. Arrow
  5. Rectangle with squared corners

 

  1. This document system is used by systems professionals to show the logical design of a system.  The advantage of the method is that it uses only four symbols.  The symbol used to represent any task or function performed is a(n):
  2. Rectangle with rounded corners
  3. Open-ended rectangle
  4. Arrow
  5. Rectangle with squared corners

 

  1. This document system is used by systems professionals to show the logical design of a system.  The advantage of the method is that it uses only four symbols.  The symbol used to represent a data store or the storage of data is a(n):
  2. Rectangle with rounded corners
  3. Open-ended rectangle
  4. Arrow
  5. Rectangle with squared corners

 

  1. This document system is used by systems professionals to show the logical design of a system.  The advantage of the method is that it uses only four symbols.  The symbol used to represent the flow of data is a(n):
  2. Rectangle with rounded corners
  3. Open-ended rectangle
  4. Arrow
  5. Rectangle with squared corners

 

80X.   This document system is a pictorial representation of the logical structure of databases.  It identifies the entities, the attributes of the entities, and the relationship between the entities.

  1. ER Diagram
  2. System Flowchart
  3. Entity Flowchart
  4. Process Map

 

81X.   When discussing entity relationship diagrams, this is considered to be a noun, that represents items in the accounting system:

  1. Attribute
  2. Relationship
  3. Entity
  4. Flow

 

  1. When discussing entity relationship diagrams, this is considered to be a characteristic of an entity.
  2. Attribute
  3. Flow
  4. Relationship
  5. Field

 

  1. The rectangle used in an entity relationship diagram is used to represent a(n):
  2. Attribute
  3. Relationship
  4. Entity

 

  1. The diamond used in an entity relationship diagram is used to represent a(n):
  2. Attribute
  3. Relationship
  4. Entity

 

  1. The oval used in an entity relationship diagram is used to represent a(n):
  2. Attribute
  3. Relationship
  4. Entity

 

  1. The term that refers to how many instances of an entity relates to each instance of another entity is:
  2. Supervisor
  3. Symbol
  4. Relationship
  5. Cardinality

 

  1. When an organization has this type of network, there are two types of computers networked together to accomplish the application processing:
  2. Point of sale
  3. Batch processing
  4. Client-server computing
  5. General-subsidiary computing

 

  1. This type of client terminal can accomplish some of the processing tasks in a client-server computing network:
  2. Application terminal
  3. Smart terminal
  4. Subset terminal
  5. Presentation terminal

 

  1. Characteristics of a client-server system include all of the following except:
  2. The client and the server are networked together.
  3. The client computer participates in either the processing or the data manipulation.
  4. Individual parts of processing are shared between the server and the client.
  5. The client normally stores the large database.

 

  1. In this type of client-server computing, the client PC manipulates data for presentation but does not do any other significant processing.
  2. Application presentation
  3. Distributed presentation
  4. Distributed application
  5. ERP application

 

  1. In this type of client-server computing, the client PC participates in application processing – including the updates and changes to data that reside on the server.
  2. Subset application
  3. Distributed presentation
  4. Distributed application
  5. Real-time application

 

  1. Which of the following statements, regarding ethical considerations in an accounting information system is false?
  2. The accounting information system is often the tool used to either commit or cover up unethical behavior.
  3. If there is only one person within the organization with responsibility for maintaining the computer systems, it is not difficult to detect instances of computer fraud.
  4. Fraud could be perpetrated and go undetected for a long time if the accounting information system is not carefully monitored.
  5. If accountants are well informed about the risks of unethical behavior, they will be better prpared to control those risks.End of Chapter Questions:

     

    1. Internal controls that apply overall to the IT system are called:
    2. Overall Controls
    3. Technology Controls
    4. Application Controls
    5. General Controls

     

    1. In entering client contact information in the computerized database of a telemarketing business, a clerk erroneously entered nonexistent area codes for a block of new clients.  This error reentered the block of contact useless to the company.  Which of the following would most likely have led to discovery of this error into the company’s computerized system?
    2. Limit check
    3. Validity check
    4. Sequence check
    5. Record count

     

    3X.    Which of the following is not a control intended to authenticate users?

    1. User log–in
    2. Security token
    3. Encryption
    4. Biometric devices

     

    1. Management of an internet retail company is concerned about the possibility of computer data eavesdropping and wiretapping, and wants to maintain the confidentiality of its information as it is transmitted.  The company should make u se of:
    2. Data encryption
    3. Redundant servers
    4. Input controls
    5.     Password codes

     

    1. An IT governance committee has several responsibilities. Which of the following is least likely to be a responsibility of the IT governance committee?
    2. Develop and maintain the database and ensure adequate controls over the database.
    3. Develop, monitor, and review security policies.
    4. Oversee and prioritize changes to IT systems.
    5. Align IT investments to business strategy.

     

    1. AICPA Trust Principles describe five categories of IT risks and controls.  Which of these five categories would be described by the statement, “The system is protected against unauthorized access”?
    2. Security
    3. Confidentiality
    4. Processing integrity
    5. Availability

     

    1. The risk that an unauthorized user would shut down systems within the IT system is a(n):
    2. Security risk
    3. Availability risk
    4. Processing integrity risk
    5. Confidentiality risk

     

    1. The risk of an unauthorized user gaining access is likely to be a risk for which of the following areas?
    2. Telecommuting workers
    3. Internet
    4. Wireless networks
    5. All of the above

     

    1. Which programmed input validation check compares the value in a field with related fields which determine whether the value is appropriate?
    2. Completeness check
    3. Validity check
    4. Reasonableness check
    5. Completeness check

     

    1. Which programmed input validation check determines whether the appropriate type of data, either alphabetic or numeric, was entered?
    2. Completeness check
    3. Validity check
    4. Reasonableness check
    5. Field check

     

    1. Which programmed input validation makes sure t hat a value was entered in all of the critical fields?
    2. Completeness check
    3. Validity check
    4. Reasonableness check
    5. Field check

     

    1. Which control total is the total of field values that are added for control purposes, but not added for any other purpose?
    2. Record count
    3. Hash total
    4. Batch total
    5. Field total

     

    1. A company has the following invoices in a batch:

     

    Invoice No.                      Product ID                    Quantity                       Unit Price

    401                                    H42                                 150                                 $30.00

    402                                     K56                                 200                                 $25.00

    403                                    H42                                 250                                 $10.00

    404                                     L27                                 300                                 $  5.00

     

    Which of the following numbers represents a valid record count?

    1. 1
    2. 4
    3. 70
    4. 900

     

    ANSWERS TO QUESTIONS 1 – 13 (FROM THE TEXTBOOK)

    1. D                                     6.    A                                   11.    A
    2. B                                      7.    B                                   12.    B
    3. C                                      8.    D                                   13.    B
    4. A                                     9.    D
    5. A                                   10.    D

     

    TEST BANK – CHAPTER 4 – MULTIPLE CHOICE

     

     

    13a1. The average annual cost of cyber crime to U.S. companies is:

    1. $3.8 million
    2. $6.2 million
    3. $1.1 billion
    4. Not determinable

     

    1. Unchecked risks and threats to the IT could result in:
    2. An interruption of the computer operations
    3. Damage to an organization
    4. Incorrect or incomplete accounting information
    5. All of the above

     

    1. In order to master risks and controls and how they fit together, which of the following is NOT one of the areas to fully understand?
    2. The accounting information system.
    3. The description of the general and application controls that should exist in IT system.
    4. The type and nature of risks in IT systems.
    5. The recognition of how controls can be used to reduce risk.

     

    15a1. Internal controls that apply overall to the IT accounting system, that are not restricted to any particular accounting application, are referred to as a(n):

    1. Specific Controls
    2. Application Controls
    3. General Controls
    4. IT Controls

    15a2. Internal controls used specifically in accounting applications to control inputs, processing, and outputs are referred to as a(n):

    1. Specific Controls
    2. Application Controls
    3. General Controls
    4. IT Controls

     

     

    1. General controls in IT systems are divided into five broad categories.  Which of the following is NOT one of those categories?
    2. Authentication of uses and limiting unauthorized access
    3. Output controls
    4. Organization structure
    5. Physical environment and physical security of the system.

     

    1. A process or procedure in an IT system to ensure that the person accessing the IT system is value and authorized is called:
    2. Hacking and other network break-ins
    3. Physical environment and physical security
    4. Authentication of users and limiting unauthorized access
    5. Organizational structure

     

    1. This term relates to making the computer recognize a user in order to create a connection at the beginning of the computer session.
    2. User ID
    3. Password
    4. Smart card
    5. Login

     

    1. Which of the following is NOT one of the rules for the effective use of passwords?
    2. Passwords should not be case sensitive
    3. Passwords should be at least 6 characters in length
    4. Passwords should contain at least one nonalphanumeric character.
    5. Password should be changed every 90 days.

     

    1. Which of the following is not a good example of an effective password?
    2. ABC*$123
    3. a1b2c3
    4. A*1b?2C$3
    5. MSU#Rules$

     

    21X.   This item, that strengthens the use of passwords, is plugged into the computer’s card reader and helps authenticate that the use is valid; it has an integrated circuit that displays a constantly changing ID code.  These statement describe:

    1. Security token
    2. USB control key
    3. Smart card
    4. Biometrics

     

    1. A new technology that is used to authenticate users is one that plugs into the USB port and eliminates the need for a card reader.  This item is called a:
    2. Biometric reader
    3. Smart card
    4. USB smart key
    5. Security token

     

    1. The use of the smart card or security tokens is referred to as a two factor authorization because:
    2. It is based on something the user has, the token or card, and something the user knows, the password.
    3. It requires that the user is granted the card / token in a secure environment and that the user actually uses the card / token.
    4. It requires that the user has two different authorizations: (1) to receive the card / token, and (2) to use the card / token.
    5. It requires the use the card / token to (1) login to the system and (2) access the applications.

     

    1. This type of authentication uses some unique physical characteristic of the user to identify the user and allow the appropriate access to the system.
    2. Nonrepudiation card
    3. Biometric device
    4. Configuration table
    5. Computer log

     

    1. Which of the following is not an example of physical characteristics being used in biometric devices?
    2. Retina scans
    3. Fingerprint matching
    4. Social security number
    5. Voice verification

     

    25a1. This complete records of all dates, times, and uses for each person is referred to as a(n):

    1. User password
    2. Computer log
    3. User profile
    4. Configuration table

     

    25a2. This term means that a user cannot deny any particular act that he or she did on the IT system is referred to as:

    1. Configuration
    2. Proliferation
    3. Verification
    4. Nonrepudiation

     

    1. There are a number of reasons that all access to the IT system be logged – which includes a computer log of all dates, times, and uses for each user.  Which of the following is not one of the reasons for the log to be maintained?
    2. Any login or use abnormalities can be examined in more detail to determine any weaknesses in the login procedures.
    3. A user cannot deny any particular act that he or she did on the system.
    4. To establish nonrepudiation of sales transactions by a customer.
    5. To establish a user profile.

     

    1. This should be established for every authorized user and determines each user’s access level to hardware, software, and data according to the individual’s job responsibilities.
    2. User profile
    3. User password
    4. User ID
    5. User log

     

    1. This table contains a list of valid, authorized users and the access level granted to each one.
    2. User table
    3. Authority table
    4. Authentication table
    5. Configuration table

     

    1. The IT system includes this type of table for software, hardware, and application programs that contain the appropriate set-up and security settings.
    2. Configuration table
    3. Authentication table
    4. User table
    5. Authority table

     

    1. Nonrepudiation means that:
    2. A user is not authorized to change configuration settings.
    3. A user is not allowed access to the authority tables.
    4. A user can prevent the unauthorized flow of data in both directions.
    5. A user cannot deny any particular act that he or she did on the IT system.

     

    1. Hardware, software, or a combination of both that is designed to block unauthorized access to an IT system is called:
    2. Computer log
    3. Biometric device
    4. Firewall
    5. Security token

     

    1. The process of converting data into secret codes referred to cipher text is called:
    2. Deciphering
    3. Encryption
    4. Nonrepudiation
    5. Enciphering

     

    1. This form of encryption uses a single encryption key that must be used to encrypt data and also to decode the encrypted data.
    2. Multiple encryption
    3. Public key encryption
    4. Wired encryption
    5. Symmetric encryption

     

    1. This form of encryption uses a public key, which is known by everyone, to encrypt data, and a private key, to decode the data.
    2. Multiple encryption
    3. Public key encryption
    4. Wired encryption
    5. Symmetric encryption

     

    1. This encryption method, used with wireless network equipment, is symmetric in that both the sending and receiving network nodes must use the same encryption key.  It has been proven to be susceptible to hacking.
    2. Wired Equivalency Privacy (WEP)
    3. Wired Encryption Policy (WEP)
    4. Wireless Protection Access (WPA)
    5. Wired Privacy Authentication (WPA)

     

    1. This encryption method requests connection to the network via an access point and that point then requests the use identity and transmits that identity to an authentication server, substantially authenticating the computer and the user.
    2. Wired Equivalency Privacy (WEP)
    3. Wired Encryption Provider (WEP)
    4. Wireless Provider Authentication (WPA)
    5. Wireless Protection Access (WPA)

     

    1. This security feature, used on wireless networks, is a password that is passed between the sending and receiving nodes of a wireless network.
    2. Secure sockets layer
    3. Service set identifier
    4. Wired provided access
    5. Virtual private network

     

    1. Authorized employees may need to access the company IT system from locations outside the organization.  These employees should connect to the IT system using this type of network.
    2. Secure socket network
    3. Service set identifier
    4. Virtual private network
    5. Wireless encryption portal

     

    1. The type of network uses tunnels, authentication, and encryption within the Internet network to isolate Internet communications so that unauthorized users cannot access or use certain data.
    2. Residential user network
    3. Service internet parameter network
    4. Virtual private network
    5. Virtual public network

     

    1. This communication protocol is built into web server and browser software that encrypts data transferred on that website.  You can determine if a website uses this technology by looking at the URL.
    2. Secure sockets layer
    3. Service security line
    4. Secure encryption network
    5. Secure service layer

     

    1. Which of the following URL’s would indicate that the site is using browser software that encrypts data transferred to the website?
    2. shttp://misu
    3. https://misu
    4. http://smisus
    5. https://smisus

     

    1. A self-replicating piece of program code that can attach itself to other programs and data and perform malicious actions is referred to as a(n):
    2. Worm
    3. Encryption
    4. Virus
    5. Infection

     

    1. A small piece of program code that attaches to the computer’s unused memory space and replicates itself until the system becomes overloaded and shuts down is called:
    2. Infections
    3. Virus
    4. Serum
    5. Worm

     

    1. This type of software should be used to avoid destruction of data programs and to maintain operation of the IT system.  It continually scans the system for viruses and worms and either deletes or quarantines t hem.
    2. Penicillin Software
    3. Antivirus Software
    4. Infection Software
    5. Internet Software

     

    1. The process of proactively examining the IT system for weaknesses that can be exploited by hackers, viruses, or malicious employees is called:
    2. Intrusion detection
    3. Virus management
    4. Vulnerability assessment
    5. Penetration testing

     

    1. This method of monitoring exposure can involve either manual testing or automated software tools.  The method can identify weaknesses before they become network break-ins and attempt to fix these weaknesses before they are exploited.
    2. Vulnerability assessment
    3. Intrusion detection
    4. Encryption examination
    5. Penetration testing

     

    1. Specific software tools that monitor data flow within a network and alert the IT staff to hacking attempts or other unauthorized access attempts is called:
    2. Security detection
    3. Vulnerability assessment
    4. Penetration testing
    5. Intrusion detection

     

    1. The process of legitimately attempting to hack into an IT system to find whether weaknesses can be exploited by unauthorized hackers is referred to as:
    2. Vulnerability assessment
    3. Intrusion detection
    4. Penetration testing
    5. Worm detection

     

    1. The function of this committee is to govern the overall development and operation of IT systems.
    2. IT Budget Committee
    3. IT Audit Committee
    4. IT Governance Committee
    5. IT Oversight Committee

     

    1. Which of the following would normally not be found on the IT Governance Committee?
    2. Computer input operators
    3. Chief Executive Officer
    4. Chief Information Officer
    5. Heads of business units

     

    1. The IT Governance Committee has several important responsibilities.  Which of the following is not normally one of those responsibilities?
    2. Align IT investments to business strategies.
    3. Oversee and prioritize changes to IT systems.
    4. Develop, monitor, and review security procedures.
    5. Investing excess IT funds in long-term investments.

     

    1. The functional responsibilities within an IT system must include the proper segregation of duties.  Which of the following positions is not one of the duties that is to be segregated from the others?
    2. Systems analysts
    3. Chief information officer
    4. Database administrator
    5. Operations personnel

     

    1. The systematic steps undertaken to plan, prioritize, authorize, oversee, test, and implement large-scale changes to the IT system are called:
    2. IT Governance System
    3. Operations Governance
    4. System Development Life Cycle
    5. Systems Analysis

     

    1. General controls for an IT system include:
    2. Controls over the physical environment only.
    3. Controls over the physical access only.
    4. Controls over the physical environment and over the physical access.
    5. None of the above.

     

    55X.   A battery to maintain power in the event of a power outage meant to keep the computer running for several minutes after the power outage is an example of a(n):

    1. Uninterruptible power supply
    2. System power supply
    3. Emergency power supply
    4. Battery power supply

     

    1. An alternative power supply that provides electrical power in the event that a main source is lost is called:
    2. Uninterruptible power supply
    3. System power supply
    4. Emergency power supply
    5. Battery power supply

     

    1. Large-scale IT systems should be protected by physical access controls.  Which of the following is not listed as one of those controls?
    2. Limited access to computer rooms.
    3. Video surveillance equipment.
    4. Locked storage of backup data.
    5.     Encryption of passwords.

     

    1. A proactive program for considering risks to the business continuation and the development of plans and procedures to reduce those risks is referred to as:
    2. Redundant business planning
    3. Business continuity planning
    4. Unnecessary in the current safe environments
    5. Emergency backup power

     

    1. Two or more computer network or data servers that can run identical processes or maintain the same data are called:
    2. Emergency power supply
    3. Uninterruptible power source
    4. Redundant servers
    5. Business continuity planning

     

    1. Many IT systems have redundant data storage such that two or more disks are exact mirror images.  This is accomplished by the use of:
    2. Redundant arrays of independent disks
    3. Redundant mirror image disks
    4. Mirror image independent disks
    5. Redundant mirror image dependent disks

     

    61X.   The AICPA Trust Services Principles categorizes IT controls and risks into categories.  Which of the following is not one of those categories?

    1. Confidentiality
    2. Security
    3. Recovery
    4. Availability

     

    1. The establishment of log-in procedures can help prevent or lessen security risks and are referred to as:
    2. Reactive controls
    3. Preventive controls
    4. Availability controls
    5. Confidentiality controls

     

    1. Availability risks, related to the authentication of users would include:
    2. Shutting down the system and shutting down programs
    3. Altering data and repudiating transactions
    4. Stealing data and recording nonexistent transactions
    5. Sabotaging systems and destroying data

     

    1. The accuracy, completeness, and timeliness of the process in IT systems is referred to as:
    2. Availability Risks
    3. Security Risks
    4. Confidentiality Risks
    5. Processing Integrity Risks

     

    1. The software that controls the basic input and output activities of the computer are called:
    2. Operating System
    3. Application Software
    4. Data Base Management System
    5. Electronic Data Interchange

     

    1. Unauthorized access to the operating system would allow the unauthorized user to:
    2. Browse disk files for sensitive data or passwords
    3. Alter data through the operating system
    4. Alter application programs
    5. All of the above

     

    66a1. A large disk storage for accounting and operating data is referred to as a(n):

    1. Operating system
    2. Application software
    3. Database
    4. Binary monetary system

     

    66a2. The database is an exposure area, and is susceptible to many types of risk.  Which of the following is not one of those risk areas?

    1. Hacking
    2. Security
    3. Availability
    4. Confidentiality

     

    1. A software system that manages the interface between many users and the database is called:
    2. Database security system
    3. Database management system
    4. Database binary monetary system
    5. Database assessment

     

    1. A computer network covering a small geographic area, which, in most cases, are within a single building or a local group of buildings is called a:
    2. Land area network
    3. Local access network
    4. Local area network
    5. Locality arena network

     

    1. A group of LANs connected to each other to cover a wider geographic area is called a:
    2. Connected local network
    3. Wide area network
    4. Connected wide area
    5. Wide geographic network

     

    1. A popular activity is to find a company whose network signal bleeds outside the building to the sidewalk around it.  Abusers of this network then make identifiable chalk marks on the sidewalks so that others can find the network access.  This process is referred to as:
    2. Chalkwalking
    3. Netwalking
    4. Network Warring
    5. Warchalking

     

    1. The work arrangement where employees work from home using some type of network connection to the office is referred to as:
    2. Telecommuting
    3. Telemarketing
    4. Network Employment
    5. Electronic working

     

    1. The company-to-company transfer of standard business documents in electronic form is called:
    2. facsimile Transmission
    3. PDF Interchange
    4.     Electronic Data Interchange
    5. Tele-transmission

     

    72A1. Companies who provide mobile devices for employees, normally has a policy that allows the company’s IT professional to remove company data and applications from the mobile device.  This process is referred to as:

    1. Cloud exchange
    2. Operations removal
    3. Data integrity
    4. Remove wipe

     

    72A2. Many companies use a public cloud computing model for software, data storage or both.  Which of the following is an advantage to the public cloud computing model?

    1. Expanded access
    2. Cost savings
    3. Scalability
    4. All of the above are advantages

     

     

    72A3. A company using public cloud computing has the ability to purchase new capacity from the cloud provider, instead of buyer servers or new data storage.  This ability is referred to as:

    1. Scalability
    2. Expanded access
    3. Infrastructure availability
    4. Provider expansion

     

    72A4. The outsourcing of IT infrastructure (hardware), data, and software to a third party describes:

    1. Scalability
    2. Public Cloud Computing
    3. Expansion
    4. Remote Access

     

    72A5. Risks associated with public cloud computing include all of the following, except:

    1. Security
    2. Availability
    3. Processing Integrity
    4. Scalability

     

    72A6. To avoid the risks associated with a public cloud, many companies establish their own computing cloud structure.  The cloud is developed, owned, maintained, and used by the user company.  This cloud is referred to as:

    1. Company cloud
    2. User cloud
    3. Private cloud
    4. Internal cloud

     

    1. The software that accomplishes end user tasks such as work processing, spreadsheets, and accounting functions is called:
    2. Operating Software
    3. Database Software
    4. Application Software
    5. Management Software

     

    1. Internal controls over the input, processing, and output of accounting applications are called:
    2. Accounting Controls
    3. Application Controls
    4. Network Controls
    5. LAN Controls

     

    1. This type of control is intended to ensure the accuracy and completeness of data input procedures and the resulting data:
    2. Input Controls
    3.     Internal Controls
    4. Processing Controls
    5. Output Controls

     

    1. This type of control is intended to ensure the accuracy and completeness of processing that occurs in accounting applications:
    2. Input Controls
    3. Internal Controls
    4. Processing Controls
    5. Output Controls

     

    1. This type of control is intended to help ensure the accuracy, completeness, and security of outputs that result from application processing:
    2. Input Controls
    3. Internal Controls
    4. Processing Controls
    5. Output Controls

     

    1. The process of converting data from human readable form to computer readable form is referred to as:
    2. Transcription
    3. Data Input
    4. Keyboarding
    5. Scanning

     

    1. Which of the following is NOT one of the types of input controls?
    2. Source document controls
    3. Programmed edit checks
    4. Confidentiality check
    5. Control totals and reconciliation

     

    1. The paper form used to capture and record the original data of an accounting transaction is called a(n):
    2. Input control
    3. Source document
    4. Sales invoice
    5. General ledger

     

    1. Which of the following items is not one of the source document controls?
    2. Validity check
    3. Form design
    4. Form authorization and control
    5. Retention of source documents

     

    1. The process where the details of individual transactions at each stage of the business process can be recreated in order to establish whether proper accounting procedures for the transaction were performed is called:
    2. Source document reconciliation
    3. Range check
    4. Validity verification
    5. Audit trail

     

    1. The procedures to collect and prepare source documents are termed:
    2. Input validation procedures
    3. Form authorization procedures
    4. Data preparation procedures
    5. Document retention procedures

     

    1. The data preparation procedures are to be well-defined so that employees will be sure of:
    2. Which forms to use
    3. When to use them
    4. Where to route them
    5. All of the above

     

    1. Field check, limit check, range check and sequence check are all examples of:
    2. Input Validation Checks
    3. Source Document Controls
    4. Control Reconciliation
    5. Application Controls

     

    1. This type of input validation check examines a field to ensure that the data entry in the field is valid compared with a preexisting list of acceptable values.
    2. Field Check
    3. Completeness Check
    4. Validity Check
    5. Range Check

     

    1. This type of input validation check assesses the critical fields in an input screen to make sure that a value is in those fields.
    2. Field Check
    3. Completeness Check
    4. Range Check
    5. Limit Check

     

    1. This type of input check ensures that the batch of transactions is sorted in order, but does not help to find the missing transactions.
    2.     Completeness Check
    3. Range Check
    4. Self-checking Digit Check
    5. Sequence Check

     

    1. An extra digit added to a coded identification number, determined by a mathematical algorithm is called a:
    2. Coded Digit Check
    3. Self-Checking Digit Check
    4. Sequence Check
    5. Run to Run Check

     

    1. Which of the following is NOT one of the types of control totals?
    2. Digit Count
    3. Record Count
    4. Batch Totals
    5. Hash Totals

     

    1. The totals of fields that have no apparent logical reason to be added are called:
    2. Record Totals
    3. Digit Totals
    4. Batch Totals
    5. Hash Totals

     

    1. These controls are intended to prevent, detect, or correct errors that occur during the processing of an application.
    2. Application Controls
    3. Source Document Controls
    4. Processing Controls
    5. Input Controls

     

    1. A primary objective of output controls would be:
    2. Manage the safekeeping of source documents
    3. Assure the accuracy and completeness of the output
    4. Ensure that the input data is accurate
    5. Prevention and detection of processing errors

     

    1. The responsibility of management to safeguard assets and funds entrusted to them by the owners of an organization is referred to as:
    2. Stewardship Responsibility
    3. IT System Controls
    4. Application Controls
    5. Internal Controls

     

    94A1. In addition to fraud, there are many kinds of unethical behaviors related to computers.  Which of the following is one of those behaviors?

    1. Misuse of confidential customer information
    2. Theft of data, such as credit card information, by hackers
    3. Employee use of the IT system hardware and software for personal use or personal gain
    4. All of the above.
    1. IT governance includes all but which of the following responsibilities?
    2. Aligning IT strategy with the business strategy
    3. Writing programming code for IT systems
    4. Insisting that an IT control framework be adopted and implemented
    5. Measuring IT’s performance

     

    1. Which phase of the system development life cycle includes determining user needs of the IT system?
    2. Systems planning
    3. Systems analysis
    4. Systems design
    5. Systems implementation

     

    1. Which of the following is not part of the system design phase of the SDLC?
    2. Conceptual design
    3. Evaluation and selection
    4. Parallel operation
    5. Detailed design

     

    1. Which of the following feasibility aspects is an evaluation of whether the technology exists to meet the need identified in the proposed change to the IT system?
    2. Technical feasibility
    3. Operational feasibility
    4. Economic feasibility
    5. Schedule feasibility

     

    1. The purpose of the feasibility study is to assist in
    2. Selecting software
    3. Designing internal controls
    4. Designing reports for the IT system
    5. Prioritizing IT requested changes

     

    1. Within the systems analysis phase of the SDLC, which of the following data collection methods does not involve any feedback from users of the IT system?
    2. Documentation review
    3. Interviews using structured questions
    4. Interviews using unstructured questions
    5. Questionnaires

     

    1. A request for proposal (RFP) is used during the
    2. Phase-in period.
    3. Purchase of software
    4. Feasibility study
    5. In-house design

     

    1. Which of the following steps within the systems implementation phase could not occur concurrently with other steps, but would occur at the end?
    2. Employee training
    3. Data conversion
    4. Software programming
    5. Post-implementation review

     

    1. Each of the following are methods for implementing a new application system except:
    2. Direct cutover
    3. Parallel
    4. Pilot
    5. Test

     

    1. A retail store chain is developing a new integrated computer system for sales and inventories in its store locations.  Which of the following implementation methods would involve the most risk?
    2. Direct cutover
    3. Phased-in implementation
    4. Parallel running
    5. Pilot testing

     

    1. The use of the SDLC for IT system changes is important for several reasons.  Which of the following is not part of the purposes of the SDLC processes?
    2. As a part of strategic management of the organization
    3. As part of the internal control structure of the organization
    4. As part of the audit of an IT system
    5. As partial fulfillment of management’s ethical obligations

     

    1. Confidentiality of information is an ethical consideration for which of the following party or parties?
    2. Management
    3. Employees
    4. Consultants
    5. All of the above.

     

    ANSWERS TO QUESTIONS 1 – 12  (FROM THE TEXTBOOK)

    1. B                                      5.    D                                     9.    D
    2. B                                      6.    A                                   10.    A
    3. C                                      7.    B                                   11.    C
    4. A                                     8.    D                                   12.    D

     

     

    TEST BANK – CHAPTER 6 – MULTIPLE CHOICE

     

    1. The process of determining the strategic vision for the organization, developing the long-term objectives, creating the strategies that will achieve the vision and objections, and implementing those strategies is referred to as
    2. IT Governance
    3. Strategic Governance
    4. Strategic Management
    5. IT Management

     

    1. A structure of relationships and processes to direct and control the enterprise in order to achieve the enterprises’s goals by adding value while balancing risk versus return over IT and its processes is called:
    2. IT Governance
    3. Strategic Governance
    4. Strategic Management
    5. IT Management

     

    1. To fulfill the management obligations that are an integral part of IT governance, management need not focus on:
    2. Aligning IT strategy with the business strategy
    3. Hiring an acceptable IT manager
    4. Measuring IT’s performance
    5. Insisting that an IT control framework be adopted and implemented

     

    1. Which of the following is not one of the approaches used to achieve the management of an IT control framework?
    2. Information Systems Audit and Control Association control objectives for IT
    3. The International Organization for Standardization 17799, Code of Practice for Information Security Management
    4. The Information Technology Infrastructure Library
    5. Sarbanes-Oxley Act section on IT Controls

     

    17X.   A group of senior managers selected to oversee the strategic management of IT is called:

    1. IT Strategic Committee
    2. IT Governance Committee
    3. Chief Information Officer (CIO)
    4. IT Management

     

    1. The formal process that many organizations use to select, design, and implement IT systems is the:
    2. Systems Development Life Cycle
    3. Control Objectives for IT
    4. Practice for Security Management
    5. Information Technology Development

     

     

    1. The IT governance committee is made up of many different individuals within the organization.  Which of the following would not be one of those individuals?
    2. Chief Information Officer
    3. Chief External Auditor
    4. Chief Executive Officer
    5. Top Managers from User Departments

     

    1. The evaluation of long-term, strategic objectives and prioritization of the IT systems in order to assist the organizations in achieving its objectives is called:
    2. Systems Planning
    3. Systems Analysis
    4. Systems Design
    5. Systems Implementation

     

    1. The phases of the SDLC include all of the following except:
    2. Systems Planning
    3. Systems Implementation
    4. Systems Analysis
    5. Systems Purchasing

     

    1. This phase of SDLC involves the planning and continuing oversight of the design, implementation, and use of the IT systems.
    2. Systems Analysis
    3. Systems Implementation
    4. Systems Planning
    5. Systems Design

     

    1. The study of the current system to determine the strengths and weaknesses and the user needs of that system is called:
    2. Systems Analysis
    3. Systems Design
    4. Systems Planning
    5. Systems Implementation

     

    1. This phase of SDLC requires the collection of data about the system and the careful scrutiny of those data to determine areas of the system that can be improved.
    2. Systems Planning
    3. Systems Implementation
    4. Systems Analysis
    5. Systems Purchasing

     

    1. The creation of the system that meets user needs and incorporates the improvements identified by the systems analysis phase is called:
    2. Systems Planning
    3. Systems Design
    4. Systems Analysis
    5. Operation and Maintenance

     

     

    1. The set of steps undertaken to program, test, and activate the IT system as designed in the system design phase is called:
    2. Systems Planning
    3. Systems Implementation
    4. Systems Design
    5. Systems Analysis

     

    1. The regular, ongoing, functioning of the IT system and the processes to fix smaller problems, or bugs, in the IT system is called:
    2. Systems Analysis
    3. Systems Planning
    4. Operation and Maintenance
    5. Systems Implementation

     

    1. During this phase of the SDLC, management should request and receive ongoing reports about the performance of the IT system.
    2. Operation and Maintenance
    3. System Analysis
    4. Systems Design
    5. Systems Planning

     

    1. The expanded SDLC presented in the textbook expands the processes within the system design phase.  This is necessary because:
    2. It necessary for most companies to create their own software.
    3. The design phase needs to include the programming activities of self-created software.
    4. There is usually more than one software or system type that will meet the needs of the organization.
    5. Many organizations require a change in the type of operating system along with any changes in software.

     

    1. The Evaluation and Selection cycle of the expanded SDLC would not include which of the following steps?
    2. Design or buy the system selected.
    3. Identify the alternative system approaches.
    4. Evaluate the fit of each of the alternatives to company needs.
    5. Implement the alternative selected.

     

    1. The process of matching alternatives system models to the needs identified in the system analysis phase is called:
    2. Conceptual Design
    3. Systems Analysis
    4. Systems Planning
    5. Evaluation and Selection

     

     

    1. The process of assessing the feasibility and fit of each of the alternative conceptual approaches and selecting the one that best meets the organization’s needs is termed:
    2. Conceptual Design
    3. Evaluation and Selection
    4. Systems Analysis
    5. Systems Implementation

     

    1. The process of designing the outputs, inputs, user interfaces, databases, manual procedures, security and controls, and documentation of the new system is referred to as:
    2. Conceptual Design
    3. Software Selection
    4. Systems Design
    5. Detailed Design

     

    1. When attempting to prioritize IT projects, the IT governance committee needs to consider:
    2. The assessment of IT systems and their match to strategic organizational objectives.
    3. The feasability of each of the requested modifications or upgrades.
    4. Both of the above.
    5. None of the above.

     

    1. A company has stated that the main strategic objective is to improve the accounts payable function within the organization.  There are limited resources for IT upgrades and modifications.  The IT governance committee has received IT update requests from the public relations department, human services, and vendor satisfaction department. Given this information, which would be the likely be the first upgrade implemented?
    2. Public relations would be first because it would include all areas of the business – vendors, employees, and customers.
    3. Vendor satisfaction would be first because it would be most in line with the strategic objective of the company.
    4. Human services would be the first because the employees are the ones who are most affected by changes in the IT departments.
    5. It is not possible to make a decision without further information.

     

    1. The need to match IT systems to organizational objectives emphasizes the for the IT governance committee to include top management as its members because:
    2. These managers establish strategic objectives and are in the best position to assess the fit of the IT systems to those objectives.
    3. These managers are in a position to allocate resources and or time to the projects.
    4. Both of the above
    5. None of the above

     

    1. The realistic possibility of affording, implementing, and using the IT systems being considered is referred to as:
    2. Feasibility
    3. Rationality
    4. Sequentiality
    5. Ranking

     

     

    1. The assessment of the realism of the possibility that technology exists to beet the need identified in the proposed change to the IT system is called:
    2. Operational Feasibility
    3. Economic Feasibility
    4. Schedule Feasibility
    5. Technical Feasibility

     

    1. The assessment of the realism of the possibility that the current employees will be able to operate the proposed IT system is referred to as:
    2. Operational Feasibility
    3. Economic Feasibility
    4. Schedule Feasibility
    5. Technical Feasibility

     

     

    1. The assessment of the costs and benefits associated with the proposed IT system is referred to as:
    2. Operational Feasibility
    3. Economic Feasibility
    4. Schedule Feasibility
    5. Technical Feasibility

     

    1. The assessment of the realistic possibility that the proposed IT system can be implemented within a reasonable amount of time is called:
    2. Operational Feasibility
    3. Economic Feasibility
    4. Schedule Feasibility
    5. Technical Feasibility

     

    1. Typical steps within the systems analysis phase of the SDLC would not include which of the following?
    2. Preliminary Investigation
    3. Survey of the Current System
    4. Economic Feasibility
    5. Determination of User Information Needs

     

    1. The purpose of this step in the systems analysis phase is to determine whether the problem or deficiency in the current system really exists and to make a “go” or a “no-go” decision.
    2. Survey of the Current System
    3. Determination of User Information Needs
    4. Business Process Reengineering
    5. Preliminary Investigation

     

    1. A detailed study of the current system to identify weaknesses to improve upon and strengths that should be maintained is referred to as:
    2. Preliminary Investigation
    3. System Survey
    4. Process Reengineering
    5. Determination of User Information Needs

     

    1. Watching the steps that employees take as they process transactions in the system is referred to as:
    2. Investigation
    3. Interrogation
    4. Observation
    5. Interview

     

    1. The detailed examination of documentation that exists about the system to gain an understanding of the system under study is called a(n):
    2. Documentation Review
    3. Systems Audit
    4. System Survey
    5. Records Observation

     

    1. Face-to-face, verbal questioning of users of an IT system to determine facts or beliefs about the system are called:
    2. Interrogation
    3. User Review
    4. Interviews
    5. System Survey

     

    1. This type of question is designed such that the format and range of the answer is known ahead of time.
    2. Structured Question
    3. Oral Question
    4. Unstructured Question
    5. Range Question

     

    1. This type of question is completely op ended, and the respondent is free to answer in any way that he / she feels addresses the question.
    2. Structured Question
    3. Oral Question
    4. Unstructured Question
    5. Range Question

     

    1. A written, rather than an oral, form or questioning of users to determine facts or beliefs about a system is referred to as a(n):
    2. Interview
    3. Questionnaire
    4. Interrogation
    5. System Survey

     

    1. The purpose of this phase is to question the current approaches in the system and to think about better ways to carry out the steps and processes of the system.
    2. Systems Analysis
    3. Systems Survey
    4. Analysis of Systems Survey
    5. Preliminary Investigation

     

    1. The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance is called:
    2. Business Process Reengineering
    3. Process Redesign
    4. Business Analysis and Design
    5. Business Process Design and Analysis

     

    1. The many sets of activities within the organization performed to accomplish the functions necessary to continue the daily operations are referred to as:
    2.     Business Systems
    3. Business Processes
    4. Business Activities
    5. Business Functions

     

    1. The systems analysis report, which is sent to the IT governance committee, will inform the committee of all of the following, except:
    2. The results of the systems survey
    3. User needs determination
    4. Detailed design
    5. Recommendations regarding the continuation of the project

     

    1. This document is sent to each software vendor offering a software package that meets the user and system needs and is sent to solicit proposals.
    2. Requested Software Package
    3. Request for Proposal
    4. System Software Request
    5. Software Vendor Needs

     

    1. When a vendor returns a request for proposal, it will include all of the following, except:
    2. Match of the system and user needs
    3. Description of the software
    4. The technical support it intends to provide
    5. Prices for the software

     

    1. After all of the RFPs have been received, either the IT governance committee or the project team will evaluate the proposals in order to select the best software package.  Things that must be considered would include:
    2. The match of the system and the user needs to the features of the software
    3. Testimonials from other customers who use the software
    4. Reputation and reliability of the vendor
    5. All of the above

     

    1. This phase of the systems design for in-house development of software involves the identifying the alternative approaches to systems that will beet the needs identified in the system analysis phase.
    2. Request for proposal
    3. Conceptual design
    4. Systems concept
    5. Systems analysis

     

    1. The process of assessing the feasibility and fit of each of the alternative conceptual approaches and selecting the one that best fits the organization’s needs is called:
    2. Conceptual Design
    3. Systems Design
    4. Evaluation and Selection
    5. Systems Implementation

     

    1. During this process, the project team must consider the number of employees, their capabilities and expertise, and any supporting systems necessary to operate each alternative design.
    2. Operational feasibility
    3. Technical feasibility
    4. Economic feasibility
    5. Schedule feasibility

     

    1. The purpose of this analysis is to determine which of the alternative designs is the most cost effective.
    2. Operational feasibility
    3. Technical feasibility
    4. Economic feasibility
    5. Schedule feasibility

     

    1. In this feasibility, the project team must estimate the total amount of time necessary to implement the each alternative design.
    2. Operational feasibility
    3. Technical feasibility
    4. Economic feasibility
    5. Schedule feasibility

     

    62A1. Which of the following is NOT one of the approaches to cloud computing?

    1. Software as a Service
    2. Internet Clouds
    3. Platform as a Service
    4. Private Clouds

     

    62A2. Considerations related to adopting or increasing cloud computing usage, include:

    1. The customer support provided by the cloud vendor
    2. The service level agreement with the cloud provider
    3. The manner of monitoring the could service usage
    4. All of the above

     

    1. The purpose of this phase of systems design is to create the entire set of specifications necessary to build and implement the system.
    2. Detailed design
    3. Evaluation and selection
    4. Operational design
    5. Detailed analysis

     

    1. In the detailed design stage of systems design it is necessary that the various parts of the system be designed.  The parts of the system to be designed at this point would include all of the following, except:
    2. Outputs
    3. Inputs
    4. Program Code
    5. Data Storage

     

    1. Reports and documents, such as income statements, aged accounts receivable reports, checks, and invoices are referred to as:
    2. Outputs of the system
    3. Data storage
    4. Internal controls
    5. Inputs of the system

     

    1. The forms, documents, screens, or electronic means used to put data into the accounting system are called:
    2. Outputs of the system
    3. Data storage
    4. Internal controls
    5. Inputs of the system

     

    1. Which of the following is not a method of data input?
    2. Keying in data with a keyboard from data on a paper form
    3. Electronic data interchange
    4. Bar code scanning
    5. Viewed on the screen

     

    1. There are many different types of documentation necessary to operate and maintain an accounting system.  These types of documentation include all of the following, except:
    2. Flowcharts
    3. Operator Manuals
    4. Output Examples
    5. Entity Relationship Diagrams

     

    1. A system conversion method in which the old and the new systems are operated simultaneously for a short time.
    2. Direct cutover conversion
    3. Phase-in conversion
    4. Pilot conversion
    5. Parallel conversion

     

    1. A system conversion method in which on a chose date the old system operation is terminated and all processing begins on the new system.
    2. Direct cutover conversion
    3. Phase-in conversion
    4. Pilot conversion
    5. Parallel conversion

     

    1. A system conversion method in which the system is broken into modules, or parts, which are phased in incrementally and over a longer period.
    2. Direct cutover conversion
    3. Phase-in conversion
    4. Pilot conversion
    5. Parallel conversion

     

    1. A system conversion method in which the system is operated in only one or a few sub-units of the organization.
    2. Direct cutover conversion
    3. Phase-in conversion
    4. Pilot conversion
    5. Parallel conversion

     

    1. When the manager of the primary users of the system is satisfied with the system, an acceptance agreement will be signed , the enforce of which makes it much more likely that project teams will seek user input and that the project team will work hard to meet user needs.
    2. System Conversion
    3.     Post-Implementation Acceptance
    4. User Review
    5. User Acceptance

     

    1. A review of the feasibility assessments and other estimates made during the projects, the purpose of which is to help the organization learn from any mistakes that were made and help the company avoid those same errors in the future.
    2. System Design Life Cycle
    3. Post-Implementation Review
    4. User Acceptance
    5. System Conversion Review

     

    1. During the operation of an IT system, it is necessary that regular reports are received by management to monitor the performance of the system.  These reports would include all of the following, except:
    2. IT Security and Number of Security Problems
    3. IT Customer Satisfaction
    4. Downtime of IT System
    5. User Acceptance of the IT System

     

    1. Which of the following is not a major purpose served by the continual and proper use of the IT governance committee and the SDLC?
    2. The fulfillment of ethical obligations
    3. The strategic management process of the organization
    4. The conversion of the system
    5. The internal control structure of the organization

     

    1. The careful and responsible oversight and use by management of the assets entrusted to management is called:
    2. IT Governance
    3. Stewardship
    4. Fiduciary Control
    5. System Access
    6. Employee Ethical considerations, related to IT governance, would include which of the following?
    7. Maintain a set of processes and procedures that assure accurate and complete records.
    8. Confidentiality for those who serve on the project teams.
    9. Not to disclose proprietary information from the company to clients.
    10. Carefully consider the impact of system changes and to be ethical in the manner it which the changes are processed.

     

    1. When an organization hires consultants to assist with any phase or any phases of the SDLC, there are at least four ethical obligations.  Which of the following is not one of those obligations?
    2. Bid the engagement fairly, and completely disclose the terms of potential cost increases.
    3. Bill time accurately to the client and do not inflate time billed.
    4. Do not oversell unnecessary services or systems to the client.
    5. Make an honest effort to participate, learn the new system processes, and properly use the new system.

     

    1. Which of the following relationships would be allowed for a CPA firm?
    2. Offering IT consulting services and completing the external audit.
    3. Completing the external audit and maintaining the bookkeeping work.
    4. Internal audit outsourcing and financial information systems design and implementation.
    5. Providing fairness opinions and completing the external audit.

     

     

    ANSWERS TO TEST BANK – CHAPTER 6 – MULTIPLE CHOICE:

    1. C                           27.    C                           41.    C                           55.    B                           69.    D
    2. A                           28.    A                           42.    C                           56.    A                           70.    A
    3. B                           29.    C                           43.    D                           57.    D                           71.    B
    4. D                           30.    D                           44.    B                           58.    B                           72.    C
    5. B                           31.    A                           45.    C                           59.    C                           73.    D
    6. A                           32.    B                           46.    A                           60.    A                           74.    B
    7. B                           33.    D                           47.    C                           61.    C                           75.    D
    8. A                           34.    C                           48.    A                           62.    D                           76.    C
    9. D                           35.    B                           49.    C                           63.    A                           77.    B
    10. C                           36.    C                           50.    B                           64.    C                           78.    B
    11. A                           37.    A                           51.    C                           65.    A                           79.    D
    12. C                           38.    D                           52.    A                           66.    D                           80.    C
    13. B                           39.    A                           53.    B                           67.    D
    14. B                           40.    B                           54.    C                           68.    C

     

    ANSWERS TO TEST BANK – CHAPTER 6 – NEW MULTIPLE CHOICE

    62A1.    B

    62A2.    D

     

     

    TEST BANK – CHAPTER 6 – TRUE / FALSE

     

    1. IT governance is an issue for executives and top management.  Lower level managers and the board of directors are outsiders in the process.

    FALSE

     

    1. In order to meets it obligation of corporate governance, the board of directors must oversee IT.

    TRUE

     

    1. In order to match company strategy to IT systems, the company needs to have an IT governance committee and a formal process to select, design, and implement IT systems.

    TRUE

     

    1. Either the IT governance or the system development life cycle are necessary in the strategic management of IT systems.

    FALSE

     

    1. Once the system development life cycle has determined the priority it places on IT systems, the IT governance committee will manage the development, implementation, and use of the systems.

    FALSE

     

    1. The IT governance committee should constantly assess the long-term strategy of the company and determine the type of IT systems to purchase, develop and use.

    TRUE

     

    1. The systems development life cycle is responsible for the oversight and management of the IT governance committee.

    FALSE

     

    1. Accounting software was often not available in the early days of computers which required that the organization would develop, program, and implement their in-house accounting software.

    TRUE

     

    1. Once the systems development life cycle (SDLC) is complete, it is not necessary to restart the cycle unless something is brought to the attention of the IT governance committee to indicate that another cycle is required.

    FALSE

     

    1. It is likely that the IT governance committee will go back through the phases of the SDLC to design new and improved IT systems.

    TRUE

     

    1. In the modern IT environment, it is necessary for an organization to follow each of the steps in the SDLC in the order presented.

    FALSE

     

    1. The exact steps in the SDLC and/or their sequence are not as important as is the need to formalize and conduct those steps completely and consistently.

    TRUE

     

    1. The IT governance committee will be constantly monitoring the IT system to look for fraud and system abuse.

    FALSE

     

    1. If the operational feasibility determines that the operation will require new training of employees, then the proposed upgrade or modification should be rejected.

    FALSE

     

    1. The economic feasibility study would answer the question about whether the benefits of the proposed IT system outweigh the costs.

    TRUE

     

    1. When the IT governance committee uses both the strategic match and the feasibility study, they will be better able to prioritize proposed changes to the IT systems.

    TRUE

     

    1. When the IT governance committee has made the decision as to which IT upgrades and/or modifications are to made, their job is complete.

    FALSE

     

    1. Data collection in the system survey step of systems analysis involves documentation review only.

    FALSE

     

    1. The purpose of observation in the system survey is to enable the project team to gain an understanding of the processing steps within the system.

    TRUE

     

    1. During a documentation review, the team would examine only relevant documentation of the proposed upgrade or modification.

    FALSE

     

    1. In order to gain a complete understanding of the system under study, the project team should seek the opinions and thoughts of those who use the system in addition to observation and documentation review.

    TRUE

     

    1. The face-to-face nature of an interview is advantageous due to the fact that the interviewer can clear up any misunderstandings as they occur and can follow up with more questions, depending on the response of the interviewee.

    TRUE

     

    1. One advantage of the interview process is efficiency.

    FALSE

     

    1. One advantage to the use of questionnaires is that they an be answered anonymously, which allows the respondent to be more truthful without fear of negative consequences.

    TRUE

     

    1. The determination of user requirements is often discovered through the use of observation and documentation review.

    FALSE

     

    1. The analysis phase is the critical-thinking stage of systems analysis.

    TRUE

     

    1. IT and business process reengineering have mutually enhancing relationships.  The business processes should be supported by the IT capabilities.

    TRUE

     

    1. Business process reengineering takes place at the systems design stage of the SDLC.

    FALSE

     

    1. The last step of the systems analysis phase is to prepare a systems analysis report that will be delivered to the IT governance committee.

    TRUE

     

    1. The steps within the design phase of the SDLC is the same, whether the organization intends to purchase software or to design the software in-house.

    FALSE

     

    1. In general, purchased software is more costly but more reliable than software designed in-house.

    FALSE

     

    1. While it is not necessary to hire a consulting firm, many organizations find that the special expertise of consulting firms is most beneficial in the design and implementation of accounting system software.

    TRUE

     

    1. When in the systems design phase and creating an in-house accounting software, the feasibility aspect is the same as in the systems planning stage.

    FALSE

     

    1. In general, designs that require more complex technology have a higher feasibility than designs with less complex technology.

    FALSE

     

    1. When a company is revising systems, there are intangible benefits that are difficult to estimate in dollars.  These intangible benefits should be included in the project team’s report.

    TRUE

     

    115A1.  The incorporation of cloud computing requires a careful, controlled approach to system design related to the costs and benefits.  Other issues are not important.

    FALSE

     

    115A2.  Cloud computing results in greater availability, but also requires greater security and processing integrity.

    TRUE

     

    115A3.  The cost of cloud computing is normally related to a period of time, and not to the use of the service.

    FALSE

     

    1. Because the users of reports need the reports on an ongoing basis as part of their jobs, it is critical to have user feedback in the design of the details of the output reports.

    TRUE

     

    1. In general, the manual input method is less error prone that the electronic methods.

    FALSE

     

    1. In the detailed design phase, all of the individual steps within a process must be identified and designed.

    TRUE

     

    1. The internal controls within a system must be designed in the implementation stage.

    FALSE

     

    1. It would not be necessary for the programming staff to have interaction with the accounting staff during the systems implementation process, as all systems design was previously completed.

    FALSE

     

    1. Software should never be implemented before it is tested.

    TRUE

     

    1. It is essential that accountants oversee the data conversion from the old system to the new system to make sure that all accounting data is completely and correctly converted.

    TRUE

     

    123X.    The file or database storage for the new accounting system may is always be different from the old system.

    FALSE

     

    1. The longest and most costly part of the SDLC is the operation and maintenance.

    TRUE

     

    1. During the operation phase of the IT system, it is necessary that management receive regular reports that will enable management to determine whether IT is aligned with business strategy and meeting the objectives of the IT system.

    TRUE

     

    1. Once the SDLC has identified which types of IT systems are appropriate for the company, the IT governance committee becomes the mechanism to properly manage the development, acquisition, and implementation of the IT system.

    FALSE

     

    1. Each organization may approach IT governance in a different manner, but each organization should establish procedures for IT governance.

    TRUE

     

    1. The AICPA Trust Principles failed to include any reference to the internal control structure of the IT systems.

    FALSE

     

    1. Diligent adherence to the SDLC process, by management, is part of fulfilling its ethical obligations of stewardship and fraud prevention.

    TRUE

     

    1. As the result of the passage of the Sarbanes-Oxley Act, CPA firms have unlimited ability to provide non-audit services to their audit clients.

    FALSE

End of Chapter Questions:

 

  1. Within the revenue processes, a signed approval of a sales order indicates all of the following except:
  2. The date of delivery.
  3. The sale is to an accepted customer.
  4. The customer’s credit has been approved.
  5. The sales price is correct.

 

  1. An example of an independent verification in the sale process is:
  2. Preparation of packing lists on prenumbered forms.
  3. Initialing the sales order.
  4. Proof of recorded dates, quantities, and prices on an invoice.
  5. Physical controls in record storage areas.

 

  1. The purpose of tracing shipping documents to prenumbered sales invoices would be to provide evidence that:
  2. Shipments to customers were properly invoiced.
  3. No duplicate shipments or billings occurred.
  4. Goods billed to customers were shipped.
  5. All prenumbered sales invoices were accounted for.

 

  1. The purpose of tracing sales invoices to shipping documents would be to provide evidence that:
  2. Shipments to customers were properly invoiced.
  3. No duplicate shipments or billings occurred.
  4. Goods billed to customers were shipped.
  5. All prenumbered sales invoices were accounted for.

 

  1. To ensure that all credit sales transactions of an entity are recorded, which of the following controls wold be most effective?
  2. On a monthly basis, the accounting department supervisor reconciles the accounts receivable subsidiary ledger to the accounts receivable control account.
  3. The supervisor of the accounting department investigates any account balance differences reported by customers.
  4. The supervisor of the billing department sends copies of approved sales orders to the credit department for comparison of authorized credit limits and current customer balances.
  5. The supervisor of the billing department matches prenumbered shipping documents with entries recorded in the sale journal.
  6. Under a system of sound internal controls, if a company sold defective goods, the return of those goods from the customer should be accepted by the:
  7. Receiving Clerk
  8. Sales Clerk
  9. Purchasing Clerk
  10. Inventory Control Clerk

 

  1. The source document that initiates the recording of the return and the adjustment to the customer’s credit status is the:
  2. Pick list
  3. Sales journal
  4. Credit memorandum
  5. Sales invoice

 

  1. Which of the following is not a document that is part of the cash collection process?
  2. Remittance advice
  3. Cash receipts journal
  4. Bank deposit slip
  5. Packing slip

 

  1. Which of the following would represent proper segregation of duties?
  2. The employee who has custody of cash also does accounts receivable record keeping.
  3. The employee who has custody of cash completes the bank reconciliation.
  4. The employee who opens mail containing checks prepares a list of checks received.
  5. The employee who opens mail containing checks records transactions in the general ledger.

 

  1. Immediately upon receiving checks from customers in the mail, a responsible employee working in an environment of adequate internal control should prepare a listing of receipts and forward it to the company’s cashier.  A copy of this cash receipts listing should also be sent to the company’s:
  2. Treasurer for comparison with the monthly bank statement.
  3. Internal auditor for investigation of any unusual transactions.
  4. Accounts receivable clerk for updating of the accounts receivable subsidiary ledger.
  5. Bank for comparison with deposit slips.

 

  1. If a company does not prepare an aging of accounts receivable, which of the following accounts is most likely to be misstated?
  2. Sales revenues
  3. Accounts receivable
  4. Sales returns and allowances
  5. Allowance for uncollectible accounts

 

  1. When a company sells items over the Internet, it is usually called e-commerce.  There are many IT risks related to Internet sales.  The risk of invalid data entered by a customer would be a(n):
  2. Availability risk.
  3. Processing integrity risk.
  4. Security risk.
  5. Confidentiality risk.
  6. When a company sells items over the Internet, there are many IT risks.  The risk of hardware and software failures that prevent website sales would be a(n):
  7. Availability risk.
  8. Processing integrity risk.
  9. Security risk.
  10. Confidentiality risk.

 

  1. The use of electronic data interchange (EDI) to conduct sales electronically has both risks and benefits.  Which of the following is a benefit of EDI, rather than a risk?
  2. Incomplete audit trail
  3. Repudiation of sales transactions
  4. Unauthorized access
  5. Shorter inventory cycle time

 

  1. An IT system that uses touch screens, bar coded products, and credit card authorization during the sale is called a(n):
  2. Electronic data interchange system.
  3. E-commerce system.
  4. Point of sales system.
  5. E-payables system.

 

  1. Which of the following is not a method of unethically inflating sales revenue?
  2. Channel stuffing
  3. Holding sales open
  4. Premature recognition of contingent sales
  5. Promotional price discounts

 

 

ANSWERS TO QUESTIONS 1 – 16  (FROM THE TEXTBOOK)

  1. A                                     5.    D                                     9.    C                                   13.    A
  2. C                                      6.    A                                   10.    A                                   14.    D
  3. A                                     7.    C                                   11.    D                                   15.    C
  4. C                                      8.    D                                   12.    B                                   16.    D

 

 

TEST BANK – CHAPTER 8 – MULTIPLE CHOICE

 

  1. In a large company, there are hundreds, possibly thousands, of sales transactions each day.  The company needs to have in place, systems and processes to:
  2. Capture the results of the sales transactions
  3. Record the proper and complete sales transactions
  4. Summarize and report the results of the transactions
  5. All of the above

 

  1. The policies and procedures that employees follow when completing the sale, capturing customer data and sales quantities, and routing the resulting sales documents to the right departments within the company are referred to as:
  2. Transactions
  3.     Processes
  4. Posting
  5. Systems

 

  1. When a sale occurs, the information resulting from that sale must flow into the sales recording systems, the accounts receivable and cash collection systems, and the inventory tracking systems.  In IT accounting systems, these recording and processing systems are referred to as:
  2. Transaction Processing Systems
  3. Revenue and Cash Processing Systems
  4. Point of Sale System
  5. E-business System

 

  1. The business processes that are common in company-to-company sales business types include all of the following, except:
  2. Collect order data
  3. Record receivable and bill the customer
  4. Update affected records, such as accounts payable and cash
  5. Handle any product returns from the customer

 

  1. The business processes that are common in company-to-company sales business are divided into three groups.  Which of the following is not one of those groups?
  2. Sales processes, including ordering, delivery, and billing
  3. Purchase of inventory, including ordering, delivery, and billing
  4. Sales Returns processes
  5. Cash Collection processes

 

  1. The risks that may affect the revenue and cash collection processes include all of the following, except:
  2. Transactions recorded by the wrong company.
  3. Valid transactions may have been omitted from the records.
  4. Transactions may not have been recorded in a timely manner.
  5. Recorded transactions may not be valid or complete.

 

  1. The risks that may affect the revenue and cash collection processes include all of the following, except:
  2. Transactions may have been recorded in the wrong customer account.
  3. Transactions may be recorded in the wrong amount.
  4. Invalid transactions may have been omitted from the records.
  5. Transactions may not have been accumulated or transferred to the accounting records correctly.

 

  1. Common means of presenting the revenue and cash collections processes pictorially include:
  2. Data Flow Diagram
  3. Document Flowchart
  4.     Business Process Map
  5. All of the above

 

  1. The sales and cash collections process begins when:
  2. Merchandise is shipped to a customer
  3. A customer places an order with the company
  4. Merchandise is purchased
  5. A vendor places an order with the company

 

  1. The form, or source document, that conveys the details about a customer’s order, prepared by the customer, is referred to as:
  2. Sales Order
  3. Sales Invoice
  4. Purchase Order
  5. Purchase Invoice

 

  1. Sales orders are calculated based on current selling prices of the items sold.  The source of these prices, which would include the entire set of preestablished and approved prices for each product, is referred to as a(n):
  2. Price list
  3. Purchase order
  4. Packing slip
  5. Pick list

 

  1. The maximum dollar amount that a customer is allowed to carry as an accounts receivable balance:
  2. Maximum Limit
  3. Credit Balance
  4. Maximum Balance
  5. Credit Limit

 

  1. This item documents the quantities and descriptions of items ordered.  Items from this document should be pulled from the warehouse shelves and packaged for the customer.
  2. Packing Slip
  3. Price List
  4. Pick List
  5. Purchase Order

 

  1. The terms of agreement between the company and the common carrier are documented in a(n):
  2. Pick List
  3. Bill of Lading
  4. Invoice
  5. Packing Slip

 

  1. A chronological listing of shipments that allows management to track the status of sales and to answer customer inquiries regarding order status is called a(n):
  2. Invoice
  3. Bill of Lading
  4. Pick List
  5. Shipping Log

 

  1. This document is prepared and sent to the customer once the shipment has occurred.  The document provides the details of the sale and requests payment.
  2. Sales Invoice
  3. Accounts Receivable Statement
  4. Bill of Lading
  5. Sales Order

 

  1. A special journal that is used to record sales transactions and is periodically posted to the general ledger.
  2. General Journal
  3. Subsidiary Journal
  4. Sales Journal
  5. Accounts Receivable Journal

 

  1. This document is prepared on a regular basis to accumulated and summarize all the transactions that have taken place between the customer and the company within the period.
  2. Accounts Receivable Journal
  3. Sales Invoice
  4. Subsidiary Journal
  5. Customer Account Statements

 

 

34A1. When a sales transaction has been authorized, by the signature of the designated employee, it means that the designated employee has done all of the following, except:

  1. Verified the sale is to an accepted customer
  2. The vendor’s credit has been approved
  3. The price is correct
  4. Approval documented by a signature or initials of the designated employee

 

  1. Which of the following relationships does not violate the rules of segregation of duties?
  2. Credit authorization and preparation of the sales order.
  3. Preparation of the sales order and sales invoice.
  4. Preparing goods for shipment and accounting for inventory.
  5. Entering sales in the sales journal and handling the inventory.

 

  1. The internal control activity related to the adequate records and documents, related to sales, includes which of the following?
  2. Those responsible for recording sales should ensure that the supporting documentation is retained and organized.
  3. Information systems duties included in the revenue process includes the preparation of sales orders and shipping logs.
  4. All records are to be prepared by someone other than the person who has custody of the assets.
  5. The authorization process is to remain separate from the recording process.

 

  1. Which of the following is not one of the stated physical controls for inventory in a warehouse?
  2. Surveillance Cameras
  3. Alarm Systems
  4. Backup Copies
  5. Security Guards

 

  1. In order to protect data files, production programs, and accounting records from unauthorized access, each of the following may be used, except:
  2. Passwords
  3. Physical controls (locked cabinets)
  4. Backup copies
  5. Surveillance cameras

 

  1. Common types of independent checks within the revenue process include all of the following, except:
  2. Verification of information in the sales journal and on sales invoices.
  3. Verification of the bank statement and the cash account in the general journal.
  4. Reconciliation of accounts receivable detail with invoices and with the general ledger.
  5. Reconciliation of inventory records with actual (counted) quantities on hand.

 

  1. Examples of characteristics that indicate a company may be more risky with respect to the revenue process include all of the following, except:
  2. Changes in sales prices or customers are infrequent.
  3. The pricing structure is complex or is based on estimates.
  4. There is a large volume of transactions is carried out.
  5. The company depends on a single or on very few customers.

 

  1. The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of:
  2. Invalid transactions
  3. Fictitious customers
  4. Omitted transactions
  5. Duplicate transactions

 

  1. The preparation of packing lists and shipping records on prenumbered forms will help to minimize the related risk of:
  2. Incorrect amounts
  3. Invalid sales
  4. Wrong customers
  5. Omitted transactions

 

  1. The separation of the responsibility for the authorization of new customers from the custody of inventory will help to minimize the related risk of:
  2. Invalid sales
  3. Fictitious customers
  4. Incorrect amounts
  5. Timing issues

 

  1. A document prepared that lists the chronological sequence of all returned items is referred to as a(n):
  2. Receiving log
  3. Receiving report
  4. Invoice
  5. Packing list

 

  1. A source document prepared by the personnel in the receiving dock that documents the quantity and condition of the items received is called a(n):
  2. Invoice
  3. Receiving log
  4. Receiving report
  5. Credit memorandum

 

46X.   A document completed to prepare a record of the sales return and to adjust the amount of the customer’s credit status is called a(n):

  1. Receiving log
  2. Credit memorandum
  3. Sales invoice
  4. Sales journal

 

  1. The authorization of sales returns requires that certain individuals within the company be assigned the authority for all of the following, except:
  2. Authorize Sales Returns
  3. Approve Credit Memos
  4. Develop Sales Return Policies
  5. Record the Credit Memos

 

  1. The segregation of duties related to sales returns would ideally separate the function of performing the credit memo activity and all of the following, except:
  2. Credit approval
  3. Approve the credit memos
  4. Billing
  5. Data entry

 

  1. Circumstances within a company, related to sales returns, that indicate a high level of risk include all of the following, except:
  2. Returns are received a one location with credit memos issued at the same location.
  3. Quantities of products returned are often difficult to determine.
  4. There is a high volume of credit memo activity.
  5. Returns are received by consignees or under other arrangements not directly controlled by the company.

 

  1. Differences between a sales return and a sales allowance include:
  2. The issuance of a credit memorandum
  3. The existence of defective merchandise
  4. The documentation in a receiving report
  5. All of the above

 

  1. The separation of the custody of inventory from the accounts receivable record keeping will help to minimize the related risk of:
  2. Incorrect amounts
  3. Invalid returns
  4. Fictitious customers
  5. Timing issues

 

  1. The documentation accompanying payment that identifies the customer account number and invoice to which the payment applies is referred to as a(n):
  2. Cash Receipts Journal
  3. Promissory Note
  4. Deposit List
  5. Remittance Advice

 

  1. A special journal used to record all cash collections is called a(n):
  2. Cash Receipts Journal
  3. Remittance Advice
  4. Check Register Journal
  5. Customer Subsidiary Journal

 

  1. In order to ensure that all records are updated only for authorized transactions, appropriate individuals should be assigned all of the following duties, except:
  2. Opening and closing all bank accounts.
  3. Preparing the bank reconciliation.
  4. Approving bank deposits.
  5. Approving electronic transfers of funds.

 

  1. The recording responsibilities for cash receipts includes all of the following, except:
  2. Maintaining a cash receipts journal
  3. Updating accounts receivable records for individual customers
  4. Posting subsidiary ledger totals to the general ledger
  5. Preparing bank deposits

 

  1. The custody responsibilities for cash receipts includes all of the following, except:
  2. Updating accounts receivable records
  3. Opening mail
  4. Preparing a list of collections
  5. Handling receipts of currency and checks

 

  1. The internal control of cash receipts related to adequate records and documents would include which of the following?
  2. Cash receipts listings prepared on a daily basis and reconciled to supporting documentation from the bank deposit.
  3. Bank deposit receipts should be retained and filed chronologically.
  4. Detailed customer accounts should also be maintained and reconciled with customer statements regularly.
  5. All of the above.

 

  1. Independent checks and reconciliations, related to cash receipts, include all of the following, except:
  2. Cash counts should occur on a surprise basis and be conducted by someone not responsible for cash receipts functions.
  3. Cash collections should be deposited in the bank in a timely manner to prevent the risk of theft.
  4. Physical count of cash needs to be conducted from time to time in order to compare actual cash on hand with the amounts in the accounting records.
  5. Daily bank deposits should be compared with the detail on the related remittance advice and in the cash receipts journal.

 

  1. Bank reconciliation tasks include:
  2. Procedures to ensure that deposits are examined for proper dates
  3. Procedures to ensure that all reconciling items are reviewed and explained
  4. Both of the above
  5. None of the above

 

  1. The following circumstances may indicate risks related to cash collections, except:
  2. High volume of cash collections
  3. Centralized cash collections
  4. Lack of consistency in the volume or source of collections
  5. Presence of cash collections denominated in foreign currencies

 

  1. Whenever a company grants credit to customers, there is a danger that customers will not pay.  In fact, most companies have occasional problems with customers who fail to pay which leads to writing off the accounts receivable.  Proper controls related to these uncollectible accounts include all of the following, except:
  2. Segregation of responsibilities so that no one has the opportunity to write off an account to cover up stolen cash.
  3. Thorough guidelines are to be established for determining the amount of an allowance for uncollectible accounts.
  4. An accounts receivable aging report should be generated to analyze all customer balances and the lengths of time that have elapsed since the payments were due.
  5. Mathematical verification of the cash receipts journal and the accounts receivable ledger.

 

62X.   The separation of the responsibility for custody of cash from the responsibility for reconciling the bank accounts will help to minimize the related risk of:

  1. Wrong customers
  2. Incorrect amounts
  3. Invalid bank account
  4. Invalid transactions

 

  1. The separation of the custody of cash from the accounts receivable record keeping will help to minimize the related risk of:
  2. Invalid cash receipts
  3. Incorrect amounts
  4. Invalid transactions
  5. Duplicate transactions

 

  1. The preparation of deposit slips on prenumbered forms will help to minimize the related risk of:
  2.     Invalid transactions
  3. Incorrect amounts
  4. Duplicate transactions
  5. Omitted transactions

 

  1. The security of having cash receipts deposited in the bank on a daily basis will help to minimize the related risk of:
  2. Invalid receipts
  3.     Invalid bank account
  4. Lost or stolen cash
  5. Duplicate transactions

 

66X.   General controls of the IT system would include all of the following, except:

  1. Authentication of users
  2. Accuracy
  3. Physical access controls
  4. Business continuity planning

 

  1. Application controls of the IT system would include:
  2. Availability
  3. Accuracy and Completeness
  4. Security
  5. Processing Integrity

 

  1. This type of highly integrated IT system incorporates electronic processing of sales-related activities and, generally, the sales processes are transacted over the internet.
  2. E-commerce
  3. Virtual commerce
  4. Electronic data interchange
  5. Point of sale

 

  1. This type of highly integrated IT system, inter-company, computer-to-computer, communicates sales documents electronically with a standard business format.
  2. E-commerce
  3. Virtual commerce
  4. Electronic data interchange
  5. Point of sale

 

  1. This type of highly integrated IT system processes sales at a cash register in retail stores.
  2. E-commerce
  3. Virtual commerce
  4. Electronic data interchange
  5. Point of sale

 

  1. The advantages of e-commerce, or e-business, include all of the following, except:
  2. Reduced cost through lower marketing, employee, and paperwork costs.
  3. Shorter sales cycles
  4. Repudiation of sales transactions
  5. Increased accuracy and reliability of sales data

 

  1. The risks of e-commerce, or e-business, include all of the following, except:
  2. Confidentiality
  3. Accuracy
  4. Security
  5. Processing Integrity

 

  1. Availability risks of e-commerce, or e-business, include all of the following, except:
  2. Hardware and software system failures
  3. Virus and work attacks
  4. Denial-of-service attacks by hackers
  5. Incomplete audit trail

 

  1. Important characteristics of electronic data interchange (EDI) include all of the following, except:
  2. Sales register is used to record all transactions.
  3. Inter-company refers to two or more companies conducting business electronically.
  4. Computer-to-computer aspect indicates that each company’s computers are connected via a network.
  5. A standard business format is necessary so that companies can interact and trade with a variety of buyers and sellers.

 

75X.   The standard format used with electronic data interchange (EDI)  allows all vendors and buyers to speak the same language.  This group has developed the standard format for the common documents used in the sales process:

  1. Electronic Data Systems
  2. American Common Forms Institute
  3. Association of Naturalized Documents
  4. American National Standards Institute

 

76X.   The standard format for common forms used in the United States for electronic data interchange (EDI) data transmission is divided into three parts.  Which of the following is one of those “parts”?

  1. Availability Segment
  2. Labeling Interchanges
  3. Security Trailer
  4. Processing Data

 

  1. This section of the common forms used as the standard format in EDI data transmission contains data about the file or transmission and identify the end of a particular transaction.
  2. Header and Trailer Data
  3. Labeling Interchanges
  4. Data Segments
  5. Footer Data

 

78X.   Because it can be expensive to develop and maintain a system that links two companies directly, the companies often use a third-party network.  This third-party network provides other valuable services such as translation and encryption of the EDI data and authentication of a valid and authorized training partner.  These third-party networks are called:

  1. EDI Mailboxes
  2. American National Standards Provider
  3. Value Added Networks
  4. Secured EDI Networks

 

  1. EDI systems have many advantages within the revenue and cash collection processes.  Which of the following is not one of those benefits?
  2. Reduction or elimination of data keying.
  3. Trading partners gaining access to data.
  4. Elimination of postage costs.
  5. Competitive advantage through better customer service.

 

  1. The process of user identification to ensure that only authorized users are accessing the IT system, which occurs through the use of user ID, password, and other unique identifiers, is called:
  2. Processing Integrity
  3. Virtualization
  4. Availability
  5. Authentication

 

  1. A control that limits the risk of network break-ins is the coding of data that makes data unreadable to those without the appropriate key.  This process does not stop the breaches, but will make the data useless.
  2. Encryption
  3. Encoding
  4. Repudiation
  5. Hacking

 

  1. This occurs when the IT system automatically makes a list of users and the actions they take within the IT system.
  2. Control Totals
  3. Transaction Logging
  4. Encryption Keys
  5. Acknowledgment

 

  1. The Point-of-sales (POS) systems capture all relevant sales data at the point of sale – the cash register.  The data that is captured includes all of the following, except:
  2. Prices are determined by accessing inventory and price list data
  3. Sales revenue is recorded
  4. Ordering for low-inventory items
  5. Inventory values are updated

 

84X.   Features that assist management and accountants, as the result of the point-of-sale systems, include all of the following, except:

  1. Bar code scanning eliminates the need to manually enter product codes, quantities, or prices.
  2. Real-time update of cash, sales, and inventory records allows for immediate analysis of sales trends, inventory needs, and cash on hand.
  3. List prices can be changed by the check-out clerks to take advantage of any price changes.
  4. Credit card authorization during the sale save time and help prevent credit card fraud.

 

85X.   This term refers to moving the current accounting period’s cut-off date forward to include sales that correctly occur in a future period.  This activity occurs so that the selling company can inflate their sales in the current period.

  1. Channel stuffing
  2. Leaving sales open
  3. Shipping reversal

D.            Sales deferral

  1. Which of the following statements about payroll and fixed asset processes is true?
  2. Both have only routine processes
  3. Both have only non-routine processes
  4. Both have routine and non-routine processes
  5. Payroll has only routine processes, while fixed assets has only non-routine processes

 

  1. For a given pay period, the complete listing of paychecks for the pay period is a:
  2. Payroll register
  3. Payroll ledger
  4. Payroll journal
  5. Paymaster

 

  1. A payroll voucher
  2. Authorizes an employee paycheck to be written
  3. Authorizes the transfer of cash from a main operating account to a payroll account
  4. authorizes the transfer of cash from a payroll account to a main operating account
  5. Authorizes the paymaster to distribute paychecks

 

  1. For proper segregation of duties, the department that should authorize new employees for payroll would be:
  2. Payroll.
  3. Human resources.
  4. Cash disbursements.
  5. General ledger.

 

  1. Which of the following is not an independent check within payroll processes?
  2. Time sheets are reconciled with production records.
  3. Time sheets are reconciled with the payroll register.
  4. Paychecks are prepared on prenumbered checks.
  5. The payroll register is reconciled with the general ledger.

 

  1. An integrated IT system of payroll and human resources may have extra risks above those of a manual system. Passwords and access logs are controls that should be used in these integrated systems to lessen the risk of:
  2. Hardware failures.
  3. Erroneous data input.
  4. Payroll data that does not reconcile to time cards.
  5. Unauthorized access to payroll data.

 

  1. Internal control problems would be likely to result if a company’s payroll department supervisor was also responsible for:
  2. Reviewing authorization forms for new employees.
  3. Comparing the payroll register with the batch transmittal.
  4. Authorizing changes in employee pay rates.
  5. Hiring subordinates to work in the payroll department.

 

  1. Which of the following procedures would be most useful in determining the effectiveness of a company’s internal controls regarding the existence or occurrence of payroll transactions?
  2. Observe the segregation of duties concerning personnel responsibilities and payroll disbursement.
  3. Inspect evidence of accounting for prenumbered payroll checks.
  4. Recompute the payroll deductions for employee fringe benefits.
  5. Verify the preparation of the monthly payroll account bank reconciliation.

 

  1. In meeting the control objective of safeguarding of assets, which department should be responsible for distribution of paychecks ad custody of unclaimed paychecks, respectively?

 

Distribution of                                        Custody of

                                    Paychecks                               Unclaimed Paychecks

  1. Treasurer                                            Treasurer
  2. Payroll                                                  Treasurer
  3. Treasurer                                            Payroll
  4. Payroll                                                  Payroll

 

  1. A company’s internal controls policies may mandate the distribution of paychecks by an independent paymaster in order to determine that:
  2. Payroll deductions are properly authorized and computed.
  3. Pay rates are properly authorized and separate from the operating functions.
  4. Each employee’s paycheck is supported by an approved time sheet.
  5. Employees included in the period’s payroll register actually exist and are currently employed.

 

  1. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the:
  2. Authorization of transactions from the custody of related assets.
  3. Operational responsibility from the record keeping responsibility.
  4. Human resources function from the controllership function.
  5. Administrative controls from the internal accounting controls.

 

  1. Which of the following departments or positions most likely would approve changes in pay rates and deductions from employee salaries?
  2. Personnel
  3. Treasurer
  4. Controller
  5. Payroll

 

13X.   The purchase of fixed assets is likely to require different authorization processes than the purchase of inventory.  Which of the following is not likely to be part of the authorization of fixed assets?

  1. Specific authorization.
  2. Inclusion in the capital budget.
  3. An investment analysis or feasibility analysis of the purchase.
  4. Approval of the depreciation schedule.

 

  1. Which of the following is not a part of “adequate documents and records” for fixed assets?
  2. Fixed asset journal
  3. Fixed asset subsidiary ledger
  4. Purchase order
  5. Fixed asset tags

 

  1. Which of the following questions would be least likely to appear on an internal control questionnaire regarding the initiation and execution of new property, plant, and equipment purchases?
  2. Are requests for repairs approved by someone higher than the department initiating the request.
  3. Are prenumbered purchase orders used and accounted for?
  4. Are purchase requisitions reviewed for consideration of soliciting competitive bids?
  5. Is access to the assets restricted and monitored?

 

  1. Which of the following reviews would be most likely to indicate that a company’s property, plant, and equipment accounts are not understated?
  2. Review of the company’s repairs and maintenance expense accounts.
  3. Review of supporting documentation for recent equipment purchases.
  4. Review and recomputation of the company’s depreciation expense accounts.
  5. Review of the company’s miscellaneous revenue account.

 

  1. Which of the following is not an advantage of fixed asset software systems when compared with spreadsheets?
  2. Better ability to handle non-financial data such as asset location.
  3. Easier to apply different depreciation policies to different assets.
  4. Manual processes to link to the general ledger.
  5. Expanded opportunities for customized reporting.

 

  1. The term “ghost employee” means that:
  2. Hours worked has been exaggerated by an employee.
  3. False sales have been claimed to boost commission earned.
  4. Overtime hours have been inflated.
  5. Someone who does not work for the company receives a paycheck.

 

ANSWERS TO QUESTIONS 1 – 18  (FROM THE TEXTBOOK)

  1. C                                      5.    C                                      9.    A                                   13.    D                                   17.    C
  2. A                                     6.    D                                   10.    D                                   14.    A                                   18.    D
  3. B                                      7.    C                                   11.    A                                   15.    D
  4. B                                      8.    A                                   12.    A                                   16.    A

 

TEST BANK – CHAPTER 10 – MULTIPLE CHOICE

 

  1. Routine business transactions would include which of the following?
  2. Purchase of merchandise inventory.
  3. Payment of principal on a note.
  4. Purchase of fixed asset.
  5. Paying wages and salaries to employees.

 

  1. This type of transaction is one that a business encounters on a regular, recurring basis.  The volume of the transactions is so large that transactions and the related accounting activities become second nature to the employees responsible for handling them.  Specific authorization for each of these transactions is not necessary.  The type of transaction referred to is:
  2. Non-routine transaction
  3. Payroll transaction
  4. Fixed asset transaction
  5. Routine transaction

 

  1. Which of the following is a characteristic of a non-routine transaction?
  2. A business encounters this type of transaction on a regular, recurring basis.
  3. Required to have specific authorization.
  4. Volume of transactions become second nature to the employees responsible.
  5. Specific authorization for the specific transaction is not necessary.

 

  1. A company must have systems in place to take care of all activities related to both routine and non-routine processes.  The activities would include all of the following, except:
  2. Record
  3. Summarize
  4. Review
  5. Report

 

  1. The policies and procedures that employees following in acquiring and maintaining human resources, capturing and maintaining employee data, paying employees for time worked, and recorded the related cash payroll liabilities and expenses are collectively referred to as:
  2. Payroll processes
  3. Human resources
  4. Salary administration
  5. Administrative procedures

 

  1. The policies and procedures involved in purchasing property; capturing and maintaining relevant data abut the assets; paying for and recording the related assets; depreciation and other expenses; and gains or losses are collectively referred to as:
  2. Capital resources
  3. Fixed asset processes
  4. Property administration
  5. Capital procedures

 

  1. There are many risks that may affect the payroll and fixed asset transactions.  Which of the following is not one of those risks?
  2. Recorded transactions may not be valid.
  3. Expenditure transactions may be recorded in the wrong account.
  4. Valid expenditures recorded properly by the wrong employee.
  5. Transactions may not be recorded in a timely manner.

 

  1. This department is responsible for maintaining records for each job and each employee within the organization , as well as tracking job vacancies and supporting the company’s recruitment efforts.
  2. Salary and Wage Administration Department
  3. Vice President for Employees Department
  4. Employee Services Department
  5. Human Resources Department

 

  1. The document is prepared in order to map out the jobs and reporting relationships within an organization.  This may include only top branches of an organization or may include all positions within the company.
  2. Employee List
  3. Organization Chart
  4. Hierarchy Tree
  5. Human Resources Listing

 

  1. This item would include explanations concerning the qualifications and responsibilities of each position shown on organization chart.  The item is also supported by policies and procedures manuals that outline specific activities performed by each position.
  2. Job profile
  3. Human resources listing
  4. Organization chart description
  5. Position description

 

  1. Personnel records will typically include all of the following, except:
  2. Documentation related to the initial hiring
  3. Personal information, such as the employee address
  4. Medical history subsequent to hiring
  5. Social security number

 

  1. Each of the following items would likely be found in an employee’s personnel records related to the initial hiring, except:
  2. Employment application
  3. Recommendation letters
  4. Background investigation results
  5. Overtime and commission rates

 

  1. It is necessary for employees to maintain adequate records of the hours worked and the projects worked on.  The record of hours worked by an employee for a specific payroll period is reported on a document called:
  2. Time ticket
  3. Time sheet
  4. Salary document
  5. Wage report

 

  1. Which of the following would be a correct way to compute the gross pay for an employee?
  2. Hours Worked times Authorized Pay Rate
  3. Hours Worked times Authorized Pay Rate minus Withholding Taxes
  4. Net Pay minus Authorized Deductions
  5. Net Pay times Withholding Taxes

 

  1. Which of the following would be a correct way to compute the net pay for an employee?
  2. Hours Worked times Authorized Pay Rate
  3. Gross Pay minus Withholding Taxes
  4. Gross Pay minus Authorized Deductions
  5. Hours Worked times Withholding Tax Rate

 

  1. This record, prepared by the payroll department, is a complete listing of salary or wage detail for all employees for a given time.
  2. Payroll journal
  3. General ledger
  4. Employee record
  5. Payroll register

 

  1. When accounting software is used to prepare the periodic payroll, which of the following items is necessary to input for each employee?
  2. Employee Name
  3. Hours Worked
  4. Pay Rate
  5. Social Security Number

 

  1. This document authorizes the transfer of cash from the company’s main operating account into the payroll cash account.
  2. Payroll register
  3. Payroll disbursements journal
  4. Payroll voucher
  5. Paycheck

 

  1. This record, prepared by the cash disbursements department, provides a listing of al paychecks written, in check-number sequence, with the total supporting the amount of payroll funds to transfer to the payroll bank account.
  2. Payroll Disbursements Journal
  3. Payroll Register
  4. Payroll Journal
  5. Cash Disbursements Journal

 

  1. This individual is responsible for distributing the signed paychecks on the designated pay day.
  2. Human Resources Director
  3. Department Supervisor
  4. Payroll Department Manager
  5. Paymaster

 

  1. Types of fraud that may occur in the payroll function includes all of the following, except:
  2. Overstated hours
  3. Incorrectly computed tax withholdings
  4. False claims of sick leave
  5. Pay claims made by ghost employees

 

40X.   Which of the following correctly states a reconciliation process to be completed related to payroll?

  1. Time sheets reconciled to the payroll register.
  2. Payroll register to the general ledger.
  3. Time sheets to the production reports.
  4. Production reports to the general ledger.

 

 

  1. The internal control activity requiring that the manager approves payroll prior to signing paycheck is intended to minimize the risk of:
  2. Omitted paychecks
  3. Incorrect amounts
  4. Fictitious employee
  5. Stolen paychecks

 

  1. The internal control process of requiring an independent paymaster, will help to minimize the risk of:
  2. Fictitious employees
  3. Incorrect amounts
  4. Omitted paychecks
  5. Timing issues

 

  1. The internal control process of requiring the payroll register to be reconciled with the time sheets, will help to minimize the risk of:
  2. Invalid payroll transactions
  3. Omitted paychecks
  4. Duplicate paychecks
  5. Fictitious employees

 

  1. Internal control activities within the payroll process, identified as adequate records and documents, would include which of the following?
  2. Manager approval of payroll prior to signing checks
  3. Independent paymaster
  4. Physical controls in areas where cash and paychecks are held
  5. Paychecks are prepared on prenumbered checks

 

  1. Internal control activities within the payroll process, identified as authorization, would include which of the following?
  2. Preparation of a bank reconciliation
  3. Independent paymaster
  4. Manager approval of payroll prior to signing checks
  5. Physical controls in areas where cash and paychecks are held

 

  1. Internal control activities within the payroll process, identified as segregation of duties, would include which of the following?
  2. Payroll preparation, authorization of new hiring and pay rates, information systems, and general accounting should all be performed by different departments and / or different people.
  3. IT controls over computer records and physical controls in records storage areas.
  4. The payroll register is checked for mathematical accuracy and agreement with authorized pay rates and deductions.
  5. Supervisor approval of time sheets prior to preparation of payroll documents.

 

  1. Internal control activities within the payroll process, identified as independent checks and reconciliations, would include which of the following?
  2. IT controls over computer records and physical controls in records storage area.
  3. Time sheets reconciled with the payroll register.
  4. The payroll register is checked for mathematical accuracy and agreement with authorized pay rates and deductions.
  5. Supervisor approves time sheets prior to preparation of payroll documents.

 

48X.   When payroll is processed using batch processing, which of the following would not be part of the payroll process?

  1. Human resources department would be responsible for keying employee information into the master file.
  2. The timekeeper will accumulate all time sheets and enter them into the computer system in batches.
  3. The timekeeper should prepare control totals and hash totals in order to check the system before the paychecks are generated.
  4. Human resources should prepare control totals and hash totals in order to check the system before the paychecks are generated.

 

  1. An electronic payroll time keeping device that collects time and attendance data when employees enter their time sheets is called:
  2. Timekeeper
  3. Paymaster
  4. Electronic time clock
  5. Badge readers

 

  1. An electronic payroll time keeping device that collects data when employee identification badges are swiped through an electronic reader are called:
  2. Timekeeper
  3. Badge reader
  4. Paymaster
  5. Electronic time clock

 

  1. In order to smooth out the payroll process and avoid the heavy workload that falls at the end of the payroll period, many companies will use this type of system – one that integrates their human resources and payroll functions.  This system makes real-time personnel data available and the general ledger and production system can be automatically updated at the end of the payroll period.
  2. Online Software Systems
  3. Batch Processing
  4. Electronic Timekeeping
  5. Outsourcing of Payroll Services

 

  1. Many companies use independent, internet-based service providers to handle their payroll processing.  These payroll providers specialize in offering solutions and constant access to payroll information.
  2. Online Software Systems
  3. Batch Processing
  4. Electronic Timekeeping
  5. Outsourcing of Payroll Services

 

  1. There are many uses of electronic funds transfer related to the payroll process.  Which of the following is not one of those uses?
  2. Payments to the employees.
  3. Payments to the federal taxing agencies.
  4. Transfers to the payroll checking account.
  5. All of the above are uses of electronic funds transfer.

 

  1. Assets to be included in the fixed asset pool would include all of the following, except:
  2. Vehicles
  3. Furniture
  4.     Office Supplies
  5. Real Estate

 

  1. The fixed assets owned by a company are considered to be long-term because:
  2. The high cost of the fixed assets demands that they not be considered short term.
  3. They are purchased with the intent of benefitting the company for a long period of time.
  4. The assets will last for a long period of time.
  5. All of the above are reasons the fixed assets are considered to be long-term.

 

  1. The three phases of fixed assets processes, that span the entire useful life of the assets, include all of the following, except:
  2. Depreciation
  3. Acquisition
  4. Disposal
  5. Continuance

 

  1. Notable differences between the acquisition of fixed assets and the acquisition of inventory includes:
  2. The placement of the acquired assets – user department for fixed assets, warehouse for inventory.
  3. The inclusion of a fixed asset department instead of the inventory control department.
  4. Both of the above.
  5. None of the above.

 

  1. This document is a financial plan detailing all of the company’s investments in fixed assets and other investments.
  2. Investment Analysis
  3. Feasibility Study
  4. Operating Budget
  5. Capital Budget

 

  1. A detailed listing of the company’s fixed assets, divided into categories consistent with the general ledger accounts is called a:
  2. Fixed Asset Journal
  3. Fixed Asset Subsidiary Ledger
  4. Fixed Asset Schedule
  5. Fixed Asset Budget

 

60X.   This phase of the fixed asset processes relates to those required to maintain accurate and up-to-data records regarding all fixed assets throughout their useful lives.

  1. Depreciation
  2. Acquisition
  3. Disposal
  4. Continuance

 

  1. Activities involved with the fixed assets continuance phase of the fixed assets processes include all of the following, except:
  2. Updating depreciation prior to the disposal of fixed assets
  3. Updating cost data for improvements to assets
  4. Adjusting for periodic depreciation
  5. Keeping track of the physical location of the assets

 

62X.   The record detailing the amounts and timing of depreciation for all fixed asset categories, except land and any construction-in-progress accounts, is called:

  1. Fixed asset subsidiary ledger
  2. Capital budget
  3. Depreciation schedule
  4. Depreciation method

 

  1. This phase of the fixed asset processes relates to discarding fixed assets when they become old, outdated, inefficient, or damaged.
  2. Depreciation
  3. Acquisition
  4. Disposal
  5. Continuance

 

  1. Activities involved with the fixed assets disposal phase of the fixed assets processes include all of the following, except:
  2. Adjusting periodic depreciation
  3. Disposed assets are removed from the fixed asset subsidiary ledger
  4. Gains or losses resulting from disposal are computed
  5. The depreciation amounts related to the disposed assets are removed from the depreciation schedule and the fixed asset subsidiary ledger

 

  1. Disposing of a fixed asset could include all of the following methods, except:
  2. Throwing it away
  3. Sending it to another department
  4. Exchanging it for another asset
  5. Donating it to another party

 

  1. When high-dollar fixed assets are purchased, there should be a strict approval process which would include three formal steps.  Which of the following is not one of those steps?
  2. Review of the proposal and specific approval by the appropriate level of management.
  3. Investment analysis.
  4. Comparison with the capital budget.
  5. Feasibility study.

 

  1. The first part of the strict approval process for high-dollar fixed assets is the investment analysis.  Which of the following is part of that analysis?
  2. Capital budget comparison
  3. Review of the proposal
  4. Financial justification
  5. Written requisition

 

  1. Which of the following is a correct statement related to segregation of duties related to fixed assets?
  2. Custody of fixed assets is to be separate from the related record keeping
  3. Custody of fixed assets need not be separate from the purchasing of fixed assets
  4. The IT function of programming need not be separated from the accounting for fixed assets.
  5. All of the above are correct statements related to the segregation of duties.

 

  1. The security of assets and documents would include all of the following, except:
  2. Supervisors need to make certain that the assets are being used for their intended purpose.
  3. Designated members of management should be assigned responsibility for the disposal of any assets
  4. Maintaining adequate insurance coverage
  5. Electronic controls are needed to control access to automated records

 

  1. Which of the following independent checks would be part of the internal controls for fixed assets?
  2. Comparing actual fixed asset expenditures with the capital budget.
  3. Periodic counts of fixed assets should be made by someone not otherwise responsible for fixed asset related activities.
  4. Physical counts should be reconciled with the accounting records.
  5. Book value of the assets should be compared to the insurance records.

 

  1. The internal control process of requiring management approval of fixed asset changes prior to recording the transaction, will help to minimize the risk of:
  2. Incorrect amounts
  3.     Lost or stolen assets
  4. Duplicate transactions
  5. Omitted transactions

 

  1. The internal control process of requiring physical controls in place in areas where fixed assets are held, will help to minimize the risk of:
  2. Incorrect amounts
  3.     Lost or stolen assets
  4. Duplicate transactions
  5. Omitted transactions

 

  1. The internal control process of requiring the check of the fixed asset subsidiary ledger and depreciation schedule for mathematical accuracy and agreement with authorized documentation, will help to minimize the risk of:
  2. Incorrect amounts
  3. Lost or stolen assets
  4. Duplicate transactions
  5. Omitted transactions

 

  1. Factors that indicate the need for internal controls over fixed assets processes include all of the following, except:
  2. General nature of fixed assets makes the susceptible to theft because they are distributed throughout the business and are in the hands of many
  3. Large quantities of fixed assets
  4. High likelihood of obsolescence due to technological changes
  5. The high cost of assets

 

  1. Most companies can justify the use of specialized asset management software programs instead of the spreadsheets or traditional manual systems for all of the following reasons, except:
  2. The abundance of fixed asset data
  3. The time-consuming and tedious requirements for tracking changes
  4. The number of different methods of accounting for depreciation
  5. The intricacy of the tax laws

 

  1. The shortcomings of a spreadsheet-based system include all of the following, except:
  2. The design of spreadsheets is very time consuming
  3. The abundance of fixed asset data
  4. It is difficult to apply varying depreciation policies within spreadsheets
  5. It is difficult to establish an audit trail with spreadsheets

 

  1. The control environment related to the fixed asset processes can be enhanced through the implementation of various access controls, such as:
  2. Passwords
  3. Number of employees who have access to the system
  4. Limits on the number of computer workstations where information may be entered
  5. All of the above

 

  1. An entity who receives a paycheck, but who does not actually work for the company is called:
  2. Ghost employee
  3. Shell employee
  4. Abundant employee
  5. Absent employee

 

  1. There are a number of ways that frauds may be carried out to try to receive excess compensation.  Which of the following is not one of those methods?
  2. Exaggeration of hours worked
  3. Falsification of overtime or holiday time worked, payable at a higher rate
  4. Understatement of job related expenses
  5. Falsification of sales in order to increase commission payouts

 

  1. Clues that a ghost employee may exist in the company would include all of the following, except:
  2. Payroll register identifies paychecks without adequate tax withholdings
  3. The personnel file contains no duplicate addresses
  4. Payroll expenses are over budget
  5. Paychecks were not claimed when the paymaster distributed them  1X.    Which of the following is NOT part of an administrative process?
    1. The sale of stock
    2. The sale of bonds
    3. The write-off of bad debts
    4. The purchase of marketable securities

     

    2X.    Which of the following statements is NOT true regarding source of capital transactions?

    1. These processes should not be initiated unless there is specific authorization by management at a top level.
    2. Source of capital processes will result in potential dividend or interest payments.
    3. Retirement of debt is a source of capital process.
    4. The fact that these transactions and processes cannot occur without oversight by top management means other controls are not necessary.

     

    1. The officer within a corporation that usually has oversight responsibility for investment processes is the
    2. Controller.
    3. Treasurer.
    4. Chief executive officer (CEO).
    5. Chief accounting officer (CAO).

     

    4X.    Which of the following statements is NOT true regarding internal controls of capital and investment processes?

    1. Internal controls aimed at preventing and detecting employee fraud in capital and investment processes are not as effective.
    2. Top management fraud, rather than employee fraud, is more likely to occur.
    3. Any fraud is likely to involve manipulating capital and investment processes.
    4. Because of top management oversight, the auditor need not review these processes.

     

    1. Which of the following statements is true?
    2. Routine transactions are recorded in the general journal.
    3. Nonroutine transactions are entered in the general journal.
    4. Nonroutine transactions are recorded in a subsidiary ledger.
    5. Nonroutine transactions are recorded in a special journal.

     

    6X.    Regarding subsidiary ledgers and general ledger control accounts, which of the following is NOT true?

    1. Total balances in a subsidiary ledger should always equal the balance in the corresponding general ledger account.
    2. The general ledger maintains details of subaccounts.
    3. Control is enhanced by separating the subsidiary ledger from the general ledger.
    4. Reconciling a subsidiary ledger to the general ledger can help to detect errors or fraud.

     

    7X.    Which of the following statements regarding the authorization of general ledger posting is NOT true?

    1. Posting to the general ledger always requires specific authorization.
    2. User IDs and passwords can serve as authorization to post transactions to the general ledger.
    3. A journal voucher serves as authorization for manual systems.
    4. As IT systems become more automated, the authorization of general ledger posting is moved to lower levels of employees.

     

    1. In a manual system with proper segregation of duties, an employee in the general ledger department should only
    2. Authorize posting to the general ledger.
    3. Post transactions to the general ledger.
    4. Reconcile the subsidiary ledger to the general ledger.
    5. Post transactions to the subsidiary ledger.

     

    1. Which of the following statements about reporting is true?
    2. External users need detailed, rather than summarized, information.
    3. All reports, internal and external, are derived only from general ledger data.
    4. All organizations need similar internal reports.
    5. Internal reports are tailored to the specific needs of each management level and function.

     

    10X.   Which of the following is NOT generally an area of measure in a balanced scorecard?

    1. Vendor
    2. Customer
    3. Financial
    4. Learning and growth

     

    ANSWERS:

    1. C                                      3.    B                                      5.    B                                      7.    A                                     9.    D
    2. D                                     4.    B                                      6.    B                                      8.    B                                   10.    A

     

    TEST BANK – CHAPTER 12 – MULTIPLE CHOICE

     

    1. Capital or investment processes:
    2. Is a regular and frequent event.
    3. Only requires the specific approval of someone such as a senior accountant.
    4. Requires the specific approval of top management or board of directors.
    5. Can be considered revenue since it results in cash inflows.

     

    1. Capital or investment processes:
    2. Is a regular and frequent event.
    3. Do not require established procedures or internal controls due to their infrequency.
    4. Require established procedures and internal controls even though they are considered infrequent events.
    5. Do not involve the company’s own bond issues.

     

    13X.   Conversion processes, systems and controls result from transactions that are:

    1. Large volumes of daily materials transactions.
    2. Large volumes of daily sales and cash inflow transactions.
    3. Periodic.
    4. Infrequent.

     

    14X.   Revenue and return processes, systems and controls result from transactions that are:

    1. Large volumes of daily materials transactions.
    2. Large volumes of daily sales and cash inflow transactions.
    3. Periodic.
    4. Infrequent.

     

    15X.   Administrative processes, systems and controls result from transactions that are:

    1. Large volumes of daily materials transactions.
    2. Large volumes of daily sales and cash inflow transactions.
    3. Periodic.
    4. Infrequent or intermittent.

     

    1. External reports do not include:
    2. Balance sheets.
    3. Income statements.
    4. Sales reports.
    5. Cash flows.

     

    1. Internal reports do not include:
    2. Balance sheets.
    3. Sales reports.
    4. Cash flows.
    5. Inventory status reports.

     

    1. Select the answer that contains only external reports.
    2. Balance sheet, income statement, cash flow statement.
    3. Sales, balance sheet, income statement.
    4. Balance sheet, income statement, aged receivables.
    5. Sales, inventory, aged receivables.

     

    1. Select the answer that contains only internal reports.
    2. Balance sheet, income statement, cash flow statement.
    3. Sales, balance sheet, income statement.
    4. Balance sheet, income statement, aged receivables.
    5. Sales, inventory, aged receivables.

     

    1. Payroll transactions are considered:
    2. Large volume daily events.
    3. Small volume daily events.
    4. Periodic events.
    5. Intermittent or infrequent events.

     

    1. Raw material events can be found in which two processes?
    2. 1) Revenue and return processes, systems & controls and 2) expenditures and return processes, systems & controls.
    3. 1) Expenditures and return processes, systems & controls and 2) conversion processes, systems & controls.
    4. 1) Conversion processes, systems & controls and 2) Administrative processes, systems & controls.
    5. 1) Administrative processes, systems & controls and 2) Revenue and return processes, systems & controls.

     

    1. Capital is/are the funds:
    2. Utilized to acquire long-term and short-term or current assets.
    3. Received from customers from accounts receivable.
    4. Utilized to acquire long-term assets
    5. That are cash inflows regardless of source.

     

    1. The decision to raise or acquire capital funds is:
    2. The responsibility of contract stock underwriters.
    3. The responsibility of contract bond underwriters.
    4. Affects only bonds.
    5. Is the responsibility of the board of directors.

     

    24X.   Capital funds are acquired through the issuance of:

    1. Bonds only.
    2. Stocks and/or bonds.
    3. Stocks only.
    4. Debt instruments only.

     

    25X.   Long-term debt results from borrowing funds via:

    1. Bonds and loans with payment schedules several years in the future.
    2. Stocks.
    3. Loans with payment due in the near future.
    4. All of the above, A, B, and C, are examples of long-term debt.

     

    1. Equity is considered:
    2. Bonds and loans with payment schedules several years in the future.
    3. Stocks.
    4. Loans with payment due in the near future.
    5. All of the above, A, B, and C, are examples of long-term debt.

     

    27X.   The transactions and resulting processes related to loans, bonds payable, and stock should be executed only when

    1. Received funds have been expended through the purchase of fixed assets.
    2. The transactions are completed.
    3. Top supervisors authorize them
    4. Top management or the board of directors authorize them.

     

    1. Select the correct statement from those listed below.
    2. Issuance of bonds and the origination of loans are considered debt while the issuance of stock is considered equity.
    3. Issuance of bonds and the origination of loans are considered debt while the issuance of stock is considered revenue.
    4. Issuance of bonds, the origination of loans, and the issuance of stock are all considered debt.
    5. Issuance of bonds, the origination of loans, and the issuance of stock are all considered equity.

     

    29X.   Items associated with debt do NOT include:

    1. Interest.
    2. Maturity date.
    3. Dividends.
    4. Changes in stockholders’ equity.

     

    1. Items associated with equity include all but:
    2. Interest.
    3. Maturity date.
    4. Dividends.
    5. Changes in stockholders’ equity.

     

    1. Investment processes:
    2. Issue stock.
    3. Issue bonds.
    4. Purchase of fixed assets.
    5. Invest excess funds.

     

    32X.   Which of the following, within the corporation, has the responsibility for making investment decisions?

    1. Board of directors.
    2. Chief financial officer.
    3. Treasurer.
    4. President/CEO.

     

    33X.   Which of the following, withing the corporation, usually has physical custody of securities held as investments?

    1. Treasurer.
    2. President/CEO.
    3. Board of directors.
    4. Chief financial officer.

     

    1. Corporations with complex IT systems:
    2. May automate their investment process.
    3. Still handle all investment processes manually.
    4. Generally isolate the investment process from their accounting application.
    5. Cannot forecast surplus cash levels.

     

    1. Select the true statement from those given below.
    2. Capital processes require top management approval while investment processes only require treasurer approval.
    3. Both the capital process and the investment process require only treasurer approval.
    4. Both the capital process and the investment process require top management approval.
    5. Neither the capital process nor the investment processes require top management approval.

     

    1. Fraud associated with the capital and investment process is:
    2. Is generally the actions of the employees handling the cash associated with transactions.
    3. Usually related to management fraud.
    4. Prevented by the use of electronic funds transfers.
    5. Usually not pursued by the Securities and Exchange Commission.

     

    1. The proper sequence of events for the accounting cycle is:
    2. Journalize, post, trial balance, adjusting entries, financial statements, and closing entries.
    3. Journalize, post, trial balance, adjusting entries, closing entries, and financial statements.
    4. Journalize, post, adjusting entries, trial balance, closing entries, and financial statements.
    5. Trial balance, adjusting entries, journalize, post, closing entries, and financial statements.

     

    1. Special journals include:
    2. Accounts receivable journal, cash receipts journal, payroll journal, purchases journal, and sales journal.
    3. Accounts payable journal, cash disbursements journal, payroll journal, purchases journal, and sales journal.
    4. Cash disbursements journal, cash receipts journal, general journal, payroll journal, purchases journal, and sales journal.
    5. Cash disbursements journal, cash receipts journal, payroll journal, purchases journal, and sales journal.

     

    39X.   Which of the following is NOT a special journal?

    1. Sales journal
    2. Inventory journal.
    3. Cash receipts journal.
    4. Payroll journal.

     

    1. Special journals include the:
    2. Accounts receivable journal.
    3. Accounts payable journal.
    4. Purchases journal.
    5. Inventory journal.

     

    1. Select the correct statement from the following.
    2. To review purchases from a vendor inspect the purchases journal, to review payments to a vendor inspect the cash receipts journal.
    3. To review purchases from a vendor and review payments to a vendor inspect the cash disbursements journal.
    4. To review the purchases from a vendor inspect the purchases journal, to determine inventory levels of a specific item inspect the inventory journal.
    5. To review the payments to a vendor inspect the cash receipts journal, to determine inventory levels of a specific item inspect the inventory journal.

     

    42X.   Select the correct statement from the following:

    1. The accounts payable journal will not show detail of purchases from a vendor.
    2. Details of amounts owed by a customer in are the accounts payable journal.
    3. The sales journal contains all sales information.
    4. Details of amounts owed to a vendor are contained in the purchases journal.

     

    1. Select the correct statement from the following:
    2. If the trial balance debits equal the trial balance credits, adjusting entries are not necessary.
    3. Adjusting entries are made after the adjusted trial balance report is printed.
    4. Accounts payable information in detail can be found in both the general ledger and the accounts payable subsidiary ledger.
    5. Financial statements must be prepared before the closing entries are journalized.

     

    1. Sales and sales returns can affect which journals?
    2. Accounts receivable, accounts payable, inventory, and sales.
    3. Accounts receivable, cash, inventory, and sales.
    4. Accounts receivable, accounts payable, purchases, and inventory.
    5. Sales, cash receipts, cash disbursements, inventory, and purchases.

     

    1. Special journals are:
    2. Utilized for infrequent special journal entries.
    3. For regular and recurring transactions.
    4. Not utilized in automated accounting processes.
    5. Oten the source of information regarding a specific customer.

     

    46X.   The sales journal would have columns for a:

    1. Debit to sales, a credit to accounts receivable.
    2. Debit to cash, a debit to accounts receivable, and a credit to sales.
    3. Debit to accounts receivable and a credit to cost of goods sold.
    4. Debit to accounts receivable and a credit to sales.

     

    1. Subsidiary ledgers:
    2. Would not contain the detailed information of a customer’s account.
    3. Would contain the detailed information of a customer’s account.
    4. Would contain only information related to secondary interests of the organization.
    5. Would not be utilized in automated accounting processes.

     

    1. When special journals are utilized:
    2. A general journal is not required.
    3. Segregation of duties is required.
    4. A general journal is still utilized for infrequent and unique journal entries.
    5. A general ledger is not required.

     

    1. Corrections to posting errors are made:
    2. Before the first trial balance.
    3. Only after the first trial balance.
    4. When discovered.
    5. Only when directed by top management.

     

    1. Closing entries are:
    2. Journalized in all of the special journals.
    3. Journalized in the general journal.
    4. Journalized in the subsidiary ledgers.
    5. Journalized in the general ledger.

     

    1. Closing entries:
    2. Close all of the general ledger accounts.
    3. End the fiscal period.
    4. Close all of the subsidiary ledger accounts.
    5. Are journalized in the subsidiary ledgers.

     

    1. Today’s automated accounting process:
    2. Is built on a structure independent of manual accounting.
    3. Does not require special journals or subsidiary ledgers.
    4. Is built on an operational structure similar to manual accounting.
    5. Eliminate errors in the accounting process.

     

    1. Today’s automated accounting process:
    2. Helps the user by identifying modules for activities.
    3. Precludes the use of subsidiary ledgers.
    4. Requires manual posting of general journal transactions.
    5. All of the above, A, B, and C, are correct.

     

    1. Transactions are recorded in the special journals and subsidiary ledgers:
    2. At the time of the transaction.
    3. Only when approved by top management.
    4. Only during the adjusting process.
    5. Only during the closing process.

     

    1. Posting to the general ledger occurs:
    2. As the transaction is recorded in the special journals.
    3. Is not required if special journals are utilized.
    4. Automatically at the end of each business day.
    5. Only when proper authorization has been given.

     

    1. In automated accounting:
    2. Paper vouchers are still required before the posting process is started.
    3. Transaction information may be held in a special module awaiting posting.
    4. General ledger accounts are updated as transactions are recorded in special journals.
    5. Authorization is required for each specific transaction.

     

    1. As computerized accounting systems get more and more complex and integrated:
    2. The level of authorization for posting gets higher in the level of responsibilities.
    3. The level of authorization for posting has not changed.
    4. The level of authorization for posting gets lower in the level of responsibilities.
    5. More levels of authorization are required.

     

    1. Select the correct statement from the following.
    2. General ledger employees should have custody of any assets that they record in the general ledger.
    3. General ledger employees should never be given responsibility for authorizing any journal vouchers.
    4. General ledger employees should record journal vouchers from any operational departments when received.
    5. All of the above, A, B, and C, are correct.

     

    1. Select the correct statement from the following.
    2. General ledger employees should not have custody of any assets that they record in the general ledger.
    3. General ledger employees should never be given responsibility for authorizing any journal vouchers.
    4. General ledger employees should only record journal vouchers that have been authorized by the appropriate manager.
    5. All of the above, A, B, and C, are correct.

     

    1. General ledger employees should record journal vouchers, but they should not
    2. Have recording responsibility for any special journals or subsidiary ledgers.
    3. Authorize journal vouchers.
    4. Have custody of assets.
    5. All of the above, A, B, and C, are correct.

     

    1. Segregation of duties:
    2. Remains unchanged between computerized and manual accounting.
    3. May be more difficult in less complex computerized accounting systems.
    4. Is not a factor with computerized accounting systems.
    5. Is not a factor with manual accounting systems.

     

    62X.   When transactions are posted in a computerized accounting system:

    1. The user must post all transactions awaiting in the module.
    2. Segregation of duties is not a factor.
    3. The user can select which batches of transactions to post.
    4. Anyone with general ledger access can post the transactions.

     

    1. Within ERP systems:
    2. A single user with a password may be authorized to purchase and receive the item.
    3. Segregation of duties and responsibilities allows incompatible privileges.
    4. Purchasing requires a different approval than receiving.
    5. User profiles are not recorded within the system.

     

    1. While using a manual general ledger system, the audit trail could consist of:
    2. general ledger
    3. electronic images.
    4. journal vouchers.
    5. paper documents.
    6. source documents.
    7. special journals.
    8. subsidiary ledgers.
    9. 1, 2, 3, 4, 5, 6, and 7.
    10. 1, 3, 4, 5, 6, and 7.
    11. 1, 2, 4, 5, 6, and 7.
    12. 1, 2, 4, 6, and 7.

     

    1. While using a computerized IT accounting system, the audit trail could consist of:
    2. general ledger.
    3. electronic images.
    4. journal vouchers.
    5. paper documents.
    6. source documents.
    7. special journals.
    8. subsidiary ledgers.
    9. 1, 2, 3, 4, 5, 6, and 7.
    10. 2.
    11. 2, 4, 5, and 7.
    12. 1, 4, 6, and 7.

     

    1. Audit trails:
    2. Can proceed only from the source document to the journal entry.
    3. Can proceed only from the journal entry to the source document.
    4. Is only utilized by the CPA auditors.
    5. Can be from the source document to the journal entry or from the journal entry to the source document.

     

    1. Security of source documents:
    2. Is essential for both manual general ledger systems and IT accounting systems.
    3. Is not a factor with IT accounting systems since the source documents are electronic images.
    4. Is not a factor with manual general ledger systems since they are printed documents in archive files.
    5. None of the options, A, B, or C, are correct.

     

    1. Select the correct statement from those listed below.
    2. Investors and creditors use nonfinancial feedback to evaluate business performance.
    3. Internal managers need only nonfinancial feedback for proper planning and control of operations.
    4. Internal managers need reports at the same frequency as external users.
    5. Internal managers need much more frequent and detailed reports than external users.

     

    1. Internal users:
    2. Need more frequent reports than external users.
    3. Need the same reports as external users to manage the operation.
    4. Do not utilize nonfinancial information in the planning and control of operations.
    5. Utilize nonfinancial information in the planning and control of operations.
    6. Only 1.
    7. Only 1 and 4.
    8. Only 1 and 2.
    9. Only 4.

     

    1. The external general purpose financial statements/reports are the:
    2. Aged accounts payable report.
    3. Aged accounts receivable report.
    4. Balance sheet.
    5. Income statement.
    6. Inventory statement.
    7. Statement of cash flows.
    8. Statement of retained earnings.
    9. 1, 2, 3, 4, 5, 6, and 7.
    10. Only 1, 2, 3, 4, 6, and 7.
    11. Only 3, 4, 6, and 7.
    12. Only 1, 3, 4, 6, and 7.

     

    1. Financial statements:
    2. Are generated from the values of the special journals and subsidiary ledgers.
    3. Are presented with complete chart of account detail.
    4. May contain condensed data from the general ledger.
    5. Show units in inventory and dollar value of those units.

     

    72X.   The four general purpose financial statements are:

    1. Generated at the end of each month.
    2. Generated at the end of each fiscal period.
    3. Distributed only to external users.
    4. Distributed only to internal users.

     

    1. Internal reports of financial information:
    2. Are standardized by the AICPA.
    3. Are the same as those distributed to the external users.
    4. Vary by the user.
    5. Are distributed on the same time schedule as external reports.

     

    74X.   The factor that does NOT affect internal reports is:

    1. The type of organization.
    2. The audit status of the organization.
    3. The underlying function being managed.
    4. The time horizon.

     

    75X.   The account that a manufacturing operation and a retail firm would have in common would be:

    1. Raw materials.
    2. Work in process.
    3. Manufacturing Labor.
    4. Inventory.
    5. A service firm would focus on:
    6. Raw materials and work in process.
    7. Sales and project status.
    8. Work in process and labor.
    9. Raw materials and labor.

     

    1. A common interest for manufacturing, retail, and service firms is:
    2. Inventory.
    3. Revenues.
    4. Profitability.
    5. Both B and C.

     

    1. Not-for-profit organizations would be interested in:
    2. Cash flows, revenues, and expenditures.
    3. Cash flows, funding sources, and expenditures.
    4. Revenues, expenses, and funding sources.
    5. Cash inflows, cash outflows, and profits.

     

    1. Select the true statement from those listed below.
    2. Managers only need reports showing dollar values.
    3. Managers only need reports showing unit data.
    4. All managers need the same information.
    5. Managers need the information associated with their area of responsibility.

     

    1. Studies show:
    2. That for day-to-day operations unit data is the critical element.
    3. That for day-to-day operations general ledger dollar value is the critical element.
    4. That the general ledger dollar values have little impact on long-term time horizons.
    5. Both A and B are correct.

     

    81X.   Unethical or fraudulent behavior

    1. Can occur in administrative processing of an organization.
    2. Can occur in the reporting functions of an organization.
    3. Are much more likely to be initiated by management.
    4. Are much more likely to be initiated by employees.
    5. Only 1, 2, and 3 are correct.
    6. Only 1, 2, and 4 are correct.
    7. Only 1 and 3 are correct.
    8. Only 2 and 4 are correct.

     

    1. Select the true statement from the following.
    2. Employee fraud is more prevalent in the routine processes. Management fraud is more prevalent in administrative processes and reporting.
    3. Employee fraud is less prevalent in the routine processes and administrative processes. Management fraud is more prevalent in operational processes and reporting.
    4. Employee fraud is less prevalent in the administrative processes. Management fraud is more prevalent in operational processes and reporting.
    5. Employee and managerial fraud is prevalent in the routine processes as well as the administrative processes and reporting equally.
    6. in a properly controlled system of administrative and reporting functions,
    7. Employees have access to related assets or source documents.
    8. Administrative processes are tightly controlled by supervisors.
    9. Employees have the authority to initiate processes such as investing.
    10. On processes such as sales and cash receipts employees are given general authorization to initiate and process transactions.
    11. Only 1 and 4 are true.
    12. Only 1, 2, and 4 are true.
    13. Only 4 is true.
    14. Only 1, 3, and 4 are true.

     

    84X.   Examples of employee initiated fraud would NOT include:

    1. The writing off uncollectible accounts of a friend even when it could be collected.
    2. The inflation of hours worked on time card
    3. The theft of cash or checks from the mailroom.
    4. The release of false or misleading general purpose financial statements.

     

    85X.   Fraud is:

    1. Harder to conceal in the routine events of conversion and sales.
    2. Harder to conceal in the administrative processes such as investments because the are nonroutine and the number of transactions varies.
    3. Harder to conceal when initiated by top management due to limited access to the records.
    4. Precluded by proper internal control processes.

     

    1. The raising of capital:
    2. Requires the complete and honest details of the utilization of the funds.
    3. Should be supported by correct and factual financial statement values.
    4. Should be supported by correct and factual financial statement footnotes.
    5. All of the above, A, B, and C, are correct.

     

    1. The four primary functions of corporate governance do not include:
    2. Management oversight.
    3. Inventory control.
    4. Financial stewardship.
    5. Ethical conduct.

     

    1. A proper corporate governance structure must be in place in order to properly deter instances of:
    2. Fraud.
    3. Theft.
    4. Misuse or manipulation of administrative resources.
    5. All of the above, A, B, and C, are correct.

     

    1. When management designs and implements effective administrative processes:
    2. Delegation of responsibility is prohibited.
    3. The ability to steal or misuse capital is eliminated.
    4. Constant monitoring is necessary.
    5. The responsibility of executing related capital functions to employees is prohibited.

     

    1. When management designs and implements effective administrative processes:
    2. Delegation of responsibility is prohibited.
    3. A budgeting process is a method of corporate governance.
    4. The responsibility of executing related capital functions to employees is prohibited.
    5. The ability to steal or misuse capital is eliminated.

     

    90A.   There are a number of increased reporting requirements as the result of Sarbanes-Oxley and IFRS.  These requirements include:

    1. Adjust the systems and controls
    2. Collect additional information needed for compliance.
    3. Well organized with the right resources to carry out the new tasks.
    4. All of the above are required.
    1. Which of the following statements is true?
    2. E-business is a subset of e-commerce.
    3. E-commerce is a subset of e-business.
    4. E-business and e-commerce are exactly the same thing.
    5. E-business and e-commerce are not related.

     

    2X.    An electronic hardware device that is located at the gateway between two or more networks is a(n):

    1. Packet switch.
    2. URL.
    3. Router.
    4. Protocol.

     

    1. The type of organization that serves as the main trunk line of the Internet is called a
    2. Local ISP.
    3. Regional ISP.
    4. Global ISP.
    5. Backbone provider.

     

    4X.    Which of the following is NOT a direct advantage for the consumer from e-commerce?

    1. Access to a broader market
    2. More shopping convenience
    3. Reduced order-processing cost
    4. Information sharing from the company

     

    5X.    Each of the following represents a characteristic of B2B commerce EXCEPT:

    1. Electronic data interchange.
    2. Electronic retailing.
    3. Data exchanges.
    4. Preexisting business relationships.

     

    6X.    Each of the following represents an application of B2C commerce EXCEPT:

    1. Software sales.
    2. Electronic retailing.
    3. Data exchanges.
    4. Stock trading.

     

    1. Before forwarding customer data, an organization should receive explicit or implicit consent of the customer. This describes which of the AICPA Trust Services Principles online privacy practices?
    2. Consent
    3. Use and retention
    4. Access
    5. Onward transfer and disclosure

     

    1. Which of the following process within a supply chain can benefit from IT enablement?
    2. All process throughout the supply chain
    3. Only internal process within the supply chain
    4. Only external process within the supply chain
    5. Exchange process between a company and its suppliers

     

    1. When a company has an e-business transaction with a supplier, it could be using
    2. The Internet.
    3. An intranet.
    4. An extranet.
    5. Either the Internet or an extranet.

     

    10X.   Intranets are used for each of the following EXCEPT

    1. Communication and collaboration.
    2. Business operations and managerial monitoring.
    3. Web publishing.
    4. Customer self-service.

     

    11X.   When there is no necessity for a preexisting relationship between buyer and seller, that transaction is more likely to be classified as

    1. B2B.
    2. B2C.
    3. B2E.
    4. Either B2B or B2C.

     

    12X.   Which of the following IT controls would NOT be important in an extranet?

    1. Encryption
    2. Password
    3. Antivirus software
    4. Penetration testing
    5. All of the above are important IT controls.

     

    1. A company’s computer network uses web servers, HTML, and XML to serve various user groups. Which type of network best serves each of the following users?

     

    Employees                            Suppliers

    1. Intranet Extranet
    2. Intranet Internet
    3. Internet Extranet
    4. Internet Internet

     

    1. An extensible markup language designed specifically for financial reporting is:
    2. Internet DI
    3. XML
    4. XBRL
    5. XFRL

     

    ANSWERS TO TEXTBOOK – CHAPTER 14 – END OF CHAPTER QUESTIONS

    1. B                                      4.    C                                      7.    D                                   10.    A                                   13.    A
    2. C                                      5.    B                                      8.    A                                   11.    B                                   14.    C
    3. D                                     6.    C                                      9.    D                                   12.    E

     

    TEST BANK – CHAPTER 14 – MULTIPLE CHOICE

     

    15X.   E-commerce is:

    1. Business-to-business electronic trading and process integration.
    2. Electronically enabled transactions between a business and its vendors.
    3. Electronic recording and control of internal processes.
    4. Electronically enabled transactions between a business and its customers.

     

    1. E-business:
    2. Is a narrower concept than e-commerce.
    3.                         Services the customers and the vendors.
    4. Is electronic recording and control of internal processes.
    5. Uses electronic means to enhance business processes.
    6. 1 only.
    7. 2 and 3 only.
    8. 2, 3, and 4 only.
    9.             1, 2, 3, and 4.

     

    17X.   The internal processes of e-business do NOT include:

    1. Access to personnel records.
    2. Access to fringe benefit information.
    3. On-line sales to customers.
    4. Travel and expense reporting.

     

    1. E-commerce:
    2. Sales will usually be large dollar amounts with only a few items are sold.
    3. Is the sale of goods or services from a business to retailers.
    4. Is the sale of goods or services to an end-user consumer.
    5. Both A and B are correct answers.

     

    1. E-business
    2. Includes the sale of raw materials between companies.
    3. Includes using the Internet as an electronic network.
    4. Sales will usually be smaller dollar amounts with many sales.
    5. Is a broader concept than e-commerce.
    6. 1, 2, 3, and 4.
    7. 2, 3, and 4 only.
    8. 1, 3, 4 only.
    9. 1, 2, and 4 only.

     

    1. Packet switching is a method of:
    2. Turning routers off and on to send messages between computers.
    3. Dividing large messages into bundles for transmission over a network.
    4. Isolating computers connected to the network by disconnecting them.
    5. Keeping all associated bundles of the message on one network path.

     

    1. The transmission of packets:
    2. Must be determined by the sender manually.
    3. Must be accomplished via the same network path.
    4. Allows great versatility in the transmission of data.
    5. Has diminished because of advances in connectivity.

     

    1. The transmission of packets:
    2. Are usually sent in sequential order.
    3. Must be received in sequential order.
    4. Must follow the same network path.
    5. Will bundle small messages into larger bundles for transmission.

     

    23X.   A router:

    1. Is a software application that creates path instructions for packets.
    2. Is hardware that connects two or more networks.
    3. Must receive its instructions from the user manually.
    4. Both B and C are correct.

     

    1. The proper actions and capabilities is:
    2. Packet switching bundles small messages into large messages for transmission while routers determine the best path through the network.
    3. Packet switching replaces the need for routers to determine the best path for the message through the network.
    4. Packet switching and routers both bundle small messages into large messages for transmission.
    5. Packet switching divides large messages into small bundles for transmission while routers determine the best path through the network.

     

    1. A protocol is required so that:
    2. Computers from the same manufacturer can communication with each other.
    3. Computers from different manufacturers can communicate with each other.
    4. So that communications within the network can be routed properly.
    5. Answers A, B, and C are all correct.
    6. Protocols can be considered:
    7. A proprietary language to a specific computer manufacturer.
    8. A language native to the network so all computers can translate it.
    9. Unnecessary if the computer is communicating on a LAN.
    10. Unnecessary if the computer is using packet switching and routers.

     

    1. TCP/IP is:
    2. Trunk controlling protocol/intranet protocol.
    3. Transmission control protocol/intranet protocol.
    4. Trunk controlling protocol/Internet protocol.
    5. Transmission control protocol/Internet protocol.

     

    28X.   During the 1970s and 1980s, the ARPANET was:

    1. Restricted to universities, libraries, research organizations, and commercial carrier access.
    2. Was designed in the 1990s to augment the growing Internet and intranet systems.
    3. Does not require the use of protocols such as TCP/IP because of the limited access.
    4. Restricted to universities, libraries, and research organizations.

     

    29X.   The Internet:

    1. Is a series of LANs connected together to increase their local capability.
    2. Is a series of networks connected to provide a global connectivity.
    3. Is generally restricted to universities, libraries, and research organizations.
    4. Comes from the concept of international networks.

     

    30X.   The Internet:

    1. Utilizes LANs as a backbone to increase connectivity.
    2. Is a system of unconnected networks.
    3. Utilizes the World Wide Web as a backbone.
    4. Is not compatible with graphic user interface tools.

     

    31X.   The growth of the Internet over its life has:

    1. Been exponential during the early 1990s.
    2. Been slowing down since 2006.
    3. Seen a few periods of decline in the number of web servers.
    4. Seen an overall trend showing growth of approximately 10 percent per year.

     

    1. The proper sequence of Internet connectivity between users is:
    2. Regional ISP to national backbone provider to regional ISP.
    3. Local ISP to national backbone provider to network access point to national backbone provider to local ISP.
    4. Regional ISP to national network access points to regional ISP.
    5. Local ISP to regional ISP to national backbone provider to network access points to national backbone provider to regional ISP to local ISP.

     

    33X.   A backbone provider is an organization that provides:

    1. Direct Internet access to the end users.
    2. Regional ISPs direct access to the Internet.
    3. High-speed access to local ISP users.
    4. High-speed access to regional ISP users.

    34X.   The Internet backbone is the network between:

    1. The local ISP and the regional ISP.
    2. The regional ISP and the local ISP.
    3. The local ISP and the national backbone provider.
    4. National backbone providers.

     

    1. Regional ISPs:
    2. Connect directly to the Internet backbone through network access points.
    3. Connect to the Internet backbone through local ISPs utilizing network access points.
    4. Provide the connection between local ISPs and national backbone providers.
    5. Provide end users direct connects to the Internet backbone through network access points.

     

    36X.   Regional ISPs do NOT include:

    1. EarthLink.
    2. BellSouth.
    3. MCI.
    4. America Online.

     

    37X.   Backbone providers would NOT include:

    1. MCI.
    2. Sprint.
    3. America Online.
    4. BBN.

     

    1. Local ISPs would include:
    2. MCI and Sprint.
    3. America Online and EarthLink.
    4. BBN and a local cable company.
    5. Television and cable companies.

     

    39X.   A web server is:

    1. Always located at national backbone provider levels.
    2. Always located at regional ISP provider levels.
    3. A computer and hard drive space that stores web pages and data.
    4. Always the access between the national backbone provider and the backbone.

     

    40X.   HTML is:

    1. A language which allows computers to connect to the Internet and WWW.
    2. A protocol language allowing user level computers to connect to local ISPs.
    3. A language utilized to present website words, data, and pictures.
    4. Used for information sharing between the Internet and WWW.

     

    1. HTML allows:
    2. User level computers to connect to the Internet through an ISP.
    3. User level computers a way to display information the way it was intended to be displayed.
    4. Local and regional ISPs to interact with national backbone providers.
    5. National backbone providers to exchange information about trunk traffic.

     

    1. An example of a URL is:
    2. cjb@jhs-email.com.
    3. http://www.cjb.org.
    4. jhs-email.com.
    5. All of the above, A, B, and C, are examples of URLs.

     

    1. Select the true statement from the following.
    2. URL stands for uniform real-time locator while http stands for hypertext transmission protocol.
    3. URL stands for uniform resource location while http stands for hypertext translation protocol.
    4. URL stands for uniform resource locator while http stands for hypertext transmission protocol.
    5. URL stands for uniform real-time location while http stands for hypertext transmission protocol.

     

    44X.   When a valid URL is entered into your web browser:

    1. Your computer will send a network access protocol (NAP) command to your network server.
    2. Your computer will send an http command to a web server, directing the server to find and transmit the web page requested.
    3. Your command will be translated into TCP/IP and sent directly to a national backbone provider.
    4. Your computer will directly access the Internet and WWW in its search for the information.

     

    44A.   The current standard HTML 5 has the following benefits over previous versions:

    1. Allows a much richer use of video and audio
    2. Improved connectivity
    3. Better security
    4. Both A and C

     

    1. HTTP stands for:
    2. Hypertext transmission protocol.
    3. Hypertransmission terminal protocol.
    4. Hypertext terminal protocol.
    5. Hypertext translation protocol.

     

    1. An example of a domain name is:
    2. jhs-email.com.
    3. cjb@jhs-email.com.
    4. http://www.cjb.org.
    5. All of the above, A, B, and C, are examples of domain names.

     

    46A.   The unique name that identifies the internet site is referred to as:

    1. URL
    2. HTTP
    3. Domain name
    4. HTML

     

    46B.   The suffix of the domain name will identify the type of organization that owns the rights to that domain.  Which of the following is a correct example of the suffix and related organization type?

    1. .gov = governmental organization or unit
    2. .net = television network
    3. .com = community
    4. .org = organization

     

    47X.   A URL is converted to an IP by:

    1. TCP/IP capabilities of the user level computer.
    2. A DNS accessed when the browser sends the command.
    3. The local ISP provider.
    4. The national backbone provider.

     

    47A.   This type of address is the unique information that allows a specific website or server to be located.

    1. URL
    2. DNS
    3. IP
    4. HTML

     

    48X.   SSL – secure sockets layering:

    1. Reduces the frequency of Internet connection disconnects.
    2. Ensures that TCP/IP is correctly configured for Internet browsing.
    3. Is an encryption system in which the web server and the user’s browser exchange data in encrypted form.
    4. Is an encryption system which eliminates the probably of improper use of transmitted data.

     

    49X.   The ways to determine a secure sockets layering connection is:

    1. The “s” at the end of “www”.
    2. The “s” at the end of “http.”
    3. The padlock on the lower bar of most web browsers.
    4. Both answers, B and C, are correct.

     

    1. Select the correct statement from the following.
    2. B2C and B2B are both considered e-commerce.
    3. B2C is considered e-commerce while B2B is considered e-business.
    4. B2B is considered e-commerce while B2C is considered e-business.
    5. B2C and B2B are both considered e-business.

     

    1. The common element in B2B and B2C is:
    2. Both require a physical selling point.
    3. A downloadable product.
    4. Both require access to the business’s website.
    5. Both require SSL (secure sockets layering) to complete the transaction.

     

    52X.   Advantages of e-commerce include all EXCEPT:

    1. A narrower market for goods and services.
    2. Increased access to information.
    3. The lack of geographic constraints.
    4. All of the answers, A, B, and C, are advantages of e-commerce.

     

    53X.   All of the following are true statements about e-commerce EXCEPT:

    1. E-commerce sites normally conduct sales 24 hours a day, 7 days a week, 12 months a year.
    2. E-commerce sales reduce the opportunity for fraud, theft of assets, and theft of data.
    3. E-commerce consumers can search for better prices and more information easily.
    4. E-commerce consumers may incur shipping and handling charges not incurred by retail customers.

     

    1. E-commerce sites may:
    2. Provide access to manufacturer information on the product.
    3. May provide tax free sales of retail goods.
    4. Require shipping and handling fees to be paid.
    5. Provide links to live or video presentations of product information.
    6. Not provide as quick order processing as the company’s retail locations.
    7. 1, 2, 3, 4, and 5 are correct.
    8. 1, 3, 4, and 5 are correct.
    9. 1, 2, 4, and 5 are correct.
    10. 1, 2, 3, and 4 are correct.

     

    1. Select the true statements from the following.
    2. Fraud, theft, or theft of data on the Internet and WWW are reduced by its regulated and controlled state.
    3. A customer may feel isolated from the product because of the inability to touch or handle the product.
    4.             E-commerce customers may be targeted for solicitations based on their purchasing history.
    5. E-commerce customers will often incur a shipping and handling charge with purchases.
    6. E-commerce customers will always find the best product at the best price.
    7. 1, 2, 3, 4, and 5 are all true statements.
    8. 2, 3, and 4 are all true statements.
    9. 1, 3, 4, and 5 are all true statements.
    10. 1, 4, and 5 are all true statements.

     

    56X.   E-commerce business benefits include all EXCEPT:

    1. A lower cost of advertising per customer reached.
    2. More interaction with video and audio product comparisons.
    3. More rigid advertising and product presentation requirements.
    4. All of the above, A, B, and C, are benefits of e-commerce.

     

    57X.   E-commerce businesses:

    1. Are normally confined to more restrictive marketing due to the larger market.
    2. Experience dramatically reduced marketing costs as the rsult of the expanded market.
    3. Requires longer period for delivery of a product due to the processing time of e-commerce.
    4. Less flexible in pricing structures due to WWW and Internet distribution of information.

     

    58X.   All of the following are disadvantages of e-commerce EXCEPT:

    1. Faster order processing prevents good assurance of order correctness.
    2. Greater probability of fraud or compromised customer privacy.
    3. The inability to handle or try out the product.
    4. All of the above, A, B, and C, are disadvantages of e-commerce.

     

    1. With the advent of technology, the Internet, and the WWW:
    2. Commerce is moving only from physical to electronic positioning.
    3. Commerce has maintained its stance of physical and electronic.
    4. Commerce is moving both from electronic to physical and from physical to electronic.
    5. No notable trends have been identified.

     

    1. Select the correct statement from those below.
    2. Bricks and mortar refer to traditional stores while e-tailers are both brick and mortar and e-commerce businesses.
    3. Bricks and mortar refer to stores with both physical and electronic presences while e-tailers are e-commerce businesses only.
    4. Bricks and mortar refer to traditional stores while brick and click businesses are both brick and mortar and e-commerce businesses.
    5. Bricks and mortar refer to traditional stores while brick and click refers to e-commerce businesses.

     

    1. The AICPA’s Trust Services Principles state that online privacy focuses on:
    2. Name
    3. Address
    4. Social Security number
    5. Government ID numbers
    6. Employment history
    7. Personal health conditions
    8. Personal financial information
    9. History of purchases
    10. Credit records
    11. 1, 2, 3, 4, 5, 6, 7, 8, and 9.
    12. 1, 2, 3, 4, 6, 7, 8, and 9 only.
    13. 1, 2, 3, 4, 5, 6, 7, and 9 only.
    14. 1, 2, 3, 4, 5, 6, 7, and 8 only.

     

    1. The AICPA’s Trust Services Principles practice that states a specific person or persons should be assigned the responsibility to insure that privacy practices are followed by employees is under the title of:
    2. Monitoring and enforcement.
    3. Security for privacy.
    4. Management.
    5. Choice and consent.

     

    1. The AICPA’s Trust Services Principles practice that states a company should have policies and practices to maintain the privacy of customer data is under the title of:
    2. Choice and consent.
    3. Collection.
    4. Use and retention.
    5. Notice.

     

    1. The AICPA’s Trust Services Principles practice that states the organization should provide the choice to its customers regarding the collection of data is under the title of:
    2. Choice and consent.
    3. Collection.
    4. Use and retention.
    5. Notice.

     

    1. The AICPA’s Trust Services Principles practice that states the organization should ask about the collection, retention, and of the use is under the title of:
    2. Use and retention.
    3. Access.
    4. Choice and consent.
    5. Disclosure to third parties.

     

    1. The AICPA’s Trust Services Principles practice that states that only the data that is necessary for the purpose of conducting the transaction should be collected is under the title of:
    2. Use and retention.
    3. Collection.
    4. Choice and consent.
    5. Security for privacy.

     

    1. The AICPA’s Trust Services Principles practice that states the organization should use customers’ personal data only in the manner described in “notice” is under the title of:
    2. Security for privacy.
    3. Monitoring and enforcement.
    4. Use and retention.
    5. Choice and consent.

     

    1. The AICPA’s Trust Services Principles practice that states that customers should have access to the data provided so that the customer can view, change, delete, or block further use of the data provided is under the title of:
    2. Access.
    3. Choice and consent.
    4. Security for privacy.
    5. Use and retention.

     

    1. The AICPA’s Trust Services Principles practice that states that organizations should receive explicit or implicit consent of the customer before providing information to third parties is under the title of:
    2. Choice and consent.
    3. Security for privacy.
    4. Monitoring and enforcement.
    5. Disclosure to third parties.

     

    1. The AICPA’s Trust Services Principles practice that states that the organization has the necessary protections to try to insure that customer data is not lost, destroyed, altered, or subject to unauthorized access is under the title of:
    2. Choice and consent.
    3. Security for privacy.
    4. Monitoring and enforcement.
    5. Disclosure to third parties.

     

    1. The AICPA’s Trust Services Principles practice that states that all customer data collected remains “accurate, complete, current, relevant, and reliable” is under the title of:
    2. Choice and consent.
    3. Quality.
    4. Monitoring and enforcement.
    5. Use and retention.

     

    1. The AICPA’s Trust Services Principles practice that states that the organization should have procedures to address privacy related inquiries or disputes is under the title of:
    2. Choice and consent.
    3. Quality.
    4. Monitoring and enforcement.
    5. Use and retention.

     

    73X.   Internal processes of the organization include all of the following EXCEPT:

    1. Transactions involving suppliers.
    2. Movement of raw materials.
    3. Timekeeping and labor management.
    4. Sharing of data files among workers.

     

    1. The supply chain:
    2. Is usually smaller at the customer end.
    3. Is usually more complex for service firms.
    4. Includes manufacturing facilities.
    5. Does not include any internal resources.

     

    1. The supply chain:
    2. Ends once the raw materials arrive at the manufacturing facility.
    3. Is an external process only.
    4. Is both an internal and external process.
    5. Ends once the product is manufactured and ready for sale.

     

    1. The correct sequence of the supply chain is:
    2. Secondary suppliers, suppliers, manufacturer, warehouses, distributors, retailers, and customers.
    3. Suppliers, secondary suppliers, manufacturer, warehouses, distributors, retailers, and customers.
    4. Suppliers, secondary suppliers, manufacturer, distributors, warehouses, customers, and retailers.
    5. Suppliers, secondary suppliers, manufacturer, distributors, warehouses, retailers, and customers.

    77X.   The correct statement regarding the supply chain and B2C is the supply chain extends from the secondary supplier and ends with the:

    1. Retailer while B2C is from the manufacturer to the final consumer.
    2. Retailer while B2C is from the customer to the manufacturer.
    3. Manufacturer while B2C is from the retailer to the final consumer.
    4. Final customer while B2C is from the retailer to the final consumer.

     

    78X.   The correct statement regarding the supply chain and B2B is the supply chain extends from the secondary supplier and ends with the:

    1. Retailer while B2B is from the manufacturer to the final consumer.
    2. Final customer while B2B is from the secondary supplier to the distributor.
    3. Manufacturer while B2B is from the supplier to the retailer.
    4. Final customer while B2B is from the retailer to the final consumer.

     

    1. Vertical integration of the supply chain occurs when:
    2. One organization owns all of the companies capable of accomplishing a specific task.
    3. All of the organizations that can accomplish a specific task are located in one geographic region.
    4. Several organizations agree to produce a single product under a common label.
    5. One organization owns the supply chain from raw materials through distribution and sales.

     

    1. Select the correct statement from the following:
    2. B2C is typically many line items per order while B2B is typically few line items per order.
    3. B2C is typically few line items per order while B2B is typically many line items per order.
    4. B2C uses purchase order forms while B2B utilizes credit card purchasing.
    5. B2C buyers usually have a relationship with the seller while B2B do not have a prior relationship.

     

    81X.   An intranet is a:

    1. Private network accessible only to the employees of a company.
    2. Public network accessible by the customers and vendors of a company.
    3. Public network accessible by the entire supply chain of a company.
    4. Private network accessible by the entire supply chain of a company.

     

    1. B2C e-commerce requires:
    2. Access to the intranet.
    3. Access to the extranet.
    4. Access to the Internet.
    5. All of the above, A, B, and C.

     

    83X.   An extranet is a:

    1. Private network accessible only to the employees of a company.
    2. Public network accessible by the customers and vendors of a company.
    3. Public network accessible by the entire supply chain of a company.
    4. Private network accessible by select members of the supply chain.

     

    1. Select the correct statement from those provided below.
    2. Intranet access is generally open to select members of the supply chain.
    3. Internet access is generally open to select members of the supply chain.
    4. Extranet access is generally restricted to company employees.
    5. Extranet access is generally open to select members of the supply chain.

     

    1. When a company uses the:
    2. Intranet for exchanges such as B2C transactions, it must give access to potential customers.
    3. Internet for exchanges such as B2C transactions, it must give access to potential customers.
    4. Internet for exchanges such as B2C transactions, it must preclude potential customers default access.
    5. Extranet for exchanges such as B2C transactions, it must preclude potential customers default access.

     

    1. Firewalls:
    2. Prevent internal users from accessing unacceptable web sites through the intranet.
    3. Permit internal users direct access to the Internet to accomplish B2B transactions.
    4. Prevent vendors from viewing inventory levels via the intranet.
    5. Prevent external users from accessing the extranet or intranet.

     

    1. Select the correct statement from the following.
    2. XML is extensible markup language while XBRL is extensible business reporting language.
    3. XML is extensive markup language while XBRL is extensive business reporting language.
    4. XML is example markup language while XBRL is example business reporting language.
    5. XML is extensible manipulation language while XBRL is extensible business reporting language.

     

    1. XML:
    2. Allows dynamic financial statements to be published on websites.
    3. Provides standards for the automatic exchange of financial data.
    4. Facilitates the exchange of data between organizations via web pages.
    5. Is based on XBRL language for the construction of business web pages.

     

    1. EDI via ANSI X.12 implementation is hampered by:
    2. High costs.
    3. Usable only on small projects.
    4. Limited transfer of files and data formats.
    5. Both A and C above are correct answers.

     

    90X.   Internet EDI, or EDIINT, features all of the following EXCEPT:

    1. Low cost.
    2. Heavy infrastructure.
    3. Industry standard.
    4. Entire supply chain integration.

     

    91X.   Value added networks or VANs, features all of the following EXCEPT:

    1. Transaction fees.
    2. Complicated.
    3. Industry standard.
    4. Limited access.

     

    1. As a metalanguage, XML:
    2. Places a data tag that the beginning and end of each page identifying the contained data.
    3. Places a data tag that the beginning and end of each data item identifying the contained data.
    4. Places a data tag only at the beginning of the data identifying the following data item.
    5. Is usable on both EDI and EDIINT networks.

     

    1. XBRL:
    2. Is a language that allows data extraction from financial statements.
    3. Is the base or core language for XML, also a metalanguage.
    4. Requires that financial statements be submitted in printed format.
    5. Both answers B and C are correct.

     

    1. Companies that engage in e-commerce, B2C sales with consumers:
    2. Have the legal obligation of complying with the AICPA Trust Services Principles.
    3. Have the same kind of obligations to conduct their business ethically as companies transacting business any other way.
    4. Have legal obligations that suggest that customers should be so informed regarding customer privacy.
    5. Are required by law to have a local presence for the resolution of customer complaints.

     

 

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