Deck 3: Fundamentals I: Accounting Information Systems

Question 1

One traditional approach for designing an AIS is to divide the major operational activities into:

A) business units.
B) four transaction cycles.
C) audit groups.
D) all of the above.

Answer 1

B

Question 2

Your organizations coordinated activities and tasks that accomplish some organizational goal are called:

A) an internal control.
B) a business practice.
C) a business sale.
D) a business process.

Answer 2

D

Question 3

Those controls that are relevant to implementing good internal control processes within specific transaction cycles are called:

A) general controls.
B) transaction processing controls.
C) management controls.
D) all of the above.

Answer 3

B

Question 4

The Foreign Corrupt Practices Act and the Sarbanes-Oxley Act hold whom criminally liable for weak internal control processes?

A) CFO.
B) COO
C) CEO
D) Both A and C

Question 5

The ability to trace all transactions back to its original source document is called:

A) the audit trail.
B) a component of internal control.
C) the audit principle.
D) the fifth step in an ERM.

Question 6

Internal controls can be viewed as:

A) a means to limit the amount of money paid in a fraud suit.
B) a hindrance to productive business practices.
C) loss prevention tools.
D) loss detection tools.

Question 7

Internal controls specific to a simple job-order are part of internal controls in a:

A) production cycle.
B) purchasing cycle.
C) finance cycle.
D) expenditure cycle

Question 8

Internal controls must provide a __________assurance that they achieve their objectives.

A) perfect.
B) reasonable.
C) guaranteed.
D) limited.

Question 9

Events that can adversely affect the company, such as asset losses due to theft or spoilage, accounting errors and their consequences, revenue losses, expense overruns, business interruptions, fraud and embezzlement, fines and penalties, civil liabilities, and losses of competitive advantage are called:

A) risk exposures.
B) loss exposures.
C) internal control areas.
D) audit exposures.

Question 10

Application controls ensure:

A) accuracy.
B) integrity.
C) security.
D) all of the above.

Question 11

Which of the following is an objective of internal control?

A) Promoting strategic, tactical, and operational efficiency and effectiveness.
B) The control environment.
C) Risk assessment and management.
D) All of the above are objectives of internal control.

Question 12

Which of the following is an example of an internal control question that an auditor may ask?

A) Do you make daily intact deposits of each day's receipts?
B) Do you restrictively endorse checks "for deposit only?"
C) Do you reconcile bank deposit receipts against credits to accounts receivables?
D) All of the above.

Question 13

The general plan of organization for data processing should include:

A) general controls.
B) transaction processing controls.
C) segregation of duties.
D) all of the above.

Question 14

The four transaction cycles Financial Supply Chain Management, Procurement and Inbound/Outbound Logistics, Product Manufacturing and Deployment and Sales and Service are a part of:

A) the principles of internal control.
B) the SAP modules.
C) the Just in Time inventory model.
D) total quality management.

Question 15

Ethics and corporate culture, management philosophy and operating style and an effective and independent audit committee are all part of which internal control component?

A) Information and communication.
B) Monitoring.
C) Control activities.
D) Control environment.

Question 16

Application controls can be classified as:

A) general controls.
B) process controls.
C) transaction processing controls.
D) input, processing, and output controls.

Question 17

The golden rule of separation of duties is:

A) that management should never, even temporarily, have control over the employee payroll process.
B) that management should never, as a group, have input on the audit committee.
C) that the accounting staff should never have even temporary control over operational resources.
D) defined in the Generally Accepted Accounting Principles and further refined in several FASB statements.

Question 18

An example of a repetitious transaction cycle that an AIS could be developed for is:

A) expenditure.
B) production.
C) revenue.
D) All of the above.

Question 19

Which of the following is NOT a component of internal control?

A) Promoting strategic, tactical, and operational efficiency and effectiveness.
B) The control environment.
C) Risk assessment.
D) All of the above are objectives of internal control.

Question 20

Who has effect over the internal control of a business?

A) management.
B) board of directors.
C) key personnel within the business.
D) all of the above.

Question 21

Controls in manual systems will be exactly the same as controls in computer-based systems.

Question 22

Offering a reward to customers if they don't get a sales receipt is an example of a:

A) customer complaint.
B) sales audit.
C) customer audit.
D) security monitoring control.

Question 23

If a systems developer is using a pre-developed system as a starting point for the final system, he or she is using the:

A) classical approach.
B) business blueprint approach.
C) ERM approach.
D) Six-Sigma approach.

Question 24

Every time cash changes hands within a business, it should be:

A) audited.
B) counted.
C) rebundled.
D) reconciled to a sales total.

Question 25

If a manager is ensuring accuracy, integrity and security of their processes, then he or she is exercising good applications control.

Question 26

Customer payments received via mail should:

A) be held in the mail room until someone from the receivable s department retrieves them.
B) be signed by the CFO or treasurer.
C) be opened by mailroom staff, bundled and then sent the inter office mail to the receivables department.
D) be immediately endorsed restrictively "for deposit only" to the company's account.

Question 27

Inventories and other physical assets should be:

A) received and counted by the department which initially ordered it.
B) placed in service as soon as received to maximize profit.
C) received in a central receiving department before being routed to their destination.
D) reconciled and paid for prior to being routed to their destination.

Question 28

One specific component of internal control is risk assessment and management.

Question 29

Internal controls over cash involve daily cash receipts and money received in the mail from customers.

Question 30

Transaction processing controls are those controls that are relevant to auditing internal control processes within specific transaction cycles.

Question 31

Audit work is primarily concerned with cash reconciliation.

Question 32

When employees use a cash register, how should each register drawer be maintained?

A) All employees on a shift should work from one register to alleviate multiple reconciliations at the end of the day.
B) Only one employee should work at a specific register and have authority to void sales as they need to for greater customer satisfaction.
C) Only one employee should work at a specific register and have the ability to open the register without a sale to facilitate making change for customers.
D) Only one employee should work at a specific register and they should never have authority for special functions on a register.

Question 33

The SAP module approach is inherently better than the transaction cycle approach.

Question 34

When a systems developer is working with company employees to identify needs and priorities, he or she is using the:

A) classical approach.
B) business blueprint approach.
C) ERM approach.
D) Six-Sigma approach.

Question 35

One specific objective on internal control is ensuring compliance with applicable laws, regulations, professional rules, and contractual obligations.

Question 36

In regards to daily deposits and reconciliations, the deposits should consist of:

A) Intact totals of both cash sales and money received from customers on account.
B) Intact totals from money received from customers, but not cash sales.
C) Intact totals from cash sales, but not money received from customers.
D) A total of all sales and cash receipts, less money used for petty cash.

Question 37

Internal control is very much process oriented.

Question 38

When it comes time to replenish petty cash, how should it occur?

A) It should be replenished in even $100 increments.
B) It should be replenished to the projected amount needed by its manager.
C) It should be replenished by totaling its receipts.
D) It should be replenished during the adjustment process routinely, regardless of its use.

Question 39

The primary control in the purchasing side of the finance cycle is that:

A) only purchasing officials should place the actual order.
B) payments only be made by an independent treasury function based on approved invoices from other departments.
C) payments only be made by the department that placed the order.
D) an audit trail must include a cost justification and vendor selection listing.

Question 40

Accounting Information Systems (AISs) are so simple that accountants never need to work with their components, called business processes.

Question 41

How are internal control objectives and components different?

Question 42

What is an example of a customer audit?

Question 43

Describe what segregation of duties means to you.

Question 44

What does reasonable assurance mean in regards to internal controls?

Question 45

How can management effect the control environment of a company?

Question 46

Explain the Specific objectives of internal control?

Question 47

What are some examples of security measures within an AIS?

Question 48

In terms of application controls, what does accuracy refer to?

Question 49

Provide at least three examples of risk exposures in a business:

Question 50

Explain the special controls needed for cash?