Deck 6: Transaction Processing and Financial Reporting Systems Overview

Question 1

An inverted triangle with the letter "N" represents a file in "name" order.

Answer 1

False

Question 2

A control account is a general ledger account which is supported by a subsidiary ledger.

Answer 2

True

Question 3

Data flow diagrams represent the physical system.

Answer 3

False

Question 4

For a given field size, a system that uses alphabetic codes can represent far more situations than a system with that uses numeric codes.

Question 5

The portion of the monthly bill from a credit card company is an example of a turn-around document.

Question 6

Batch processing systems can store data on direct access storage devices.

Question 7

Sequential codes may be used to represent complex items or events involving two or more pieces of related data.

Question 8

Processing more transactions at a lower unit cost makes batch processing more efficient than real-time systems.

Question 9

Program flowcharts are used to describe the logic represented in system flowcharts.

Question 10

The process of acquiring raw materials is part of the conversion cycle.

Question 11

System flowcharts represent the input sources, programs, and output products of a computer system.

Question 12

Auditors may prepare program flowcharts to verify the correctness of program logic.

Question 13

Real time processing is used for routine transactions in large numbers.

Question 14

The box symbol represents a temporary file.

Question 15

Real-time processing in systems that handle large volumes of transactions each day can create operational inefficiencies.

Question 16

Directing work-in-process through its various stages of manufacturing is part of the conversion cycle.

Question 17

Operational inefficiencies occur because accounts common to many concurrent transactions need to be updated in real time.

Question 18

The general journal is used to record recurring transactions that are similar in nature.

Question 19

The block code is the coding scheme most appropriate for a chart of accounts.

Question 20

Document flowcharts are used to represent systems at different levels of detail.

Question 21

System flowcharts

A) depict logical tasks that are being performed, but not who is performing them
B) illustrate the relationship between database entities in systems.
C) represent relationships between key elements of both manual and computer systems.
D) describe the internal logic of computer applications in systems. .

Question 22

Mnemonic codes are appropriate for items in either an ascending or descending sequence, such as the numbering of checks or source documents.

Question 23

Which method of processing does not use the destructive update approach?

A) batch processing using direct access files
B) real-time processing
C) batch processing using sequential files
D) all of the above use the destructive update approach

Question 24

Which symbol represents accounting records?

A)
B)
C)
D)

Question 25

In general, a special journal would not be used to record

A) sales
B) cash disbursements
C) depreciation
D) purchases

Question 26

Data flow diagrams

A) depict logical tasks that are being performed, but not who is performing them
B) illustrate the relationship between processes, and the documents that flow between them and trigger activities
C) represent relationships between key elements of the computer system
D) describe in detail the logic of the process

Question 27

Which symbol represents a manual operation?

A)
B)
C)
D)

Question 28

Which system is not part of the expenditure cycle?

A) cash disbursements
B) payroll
C) production planning/control
D) purchases/accounts payable

Question 29

In contrast to a batch processing system, in a real-time system

A) a lag occurs between the time of the economic event and when the transaction is recorded
B) relatively fewer hardware, programming, and training resources are required
C) a lesser resource commitment per unit of output is required
D) processing takes place when the economic event occurs

Question 30

Which symbol represents a document?

A)
B)
C)
D)

Question 31

Individuals with access authority to general ledger accounts should not prepare journal vouchers.

Question 32

The most common means of making entries in the general ledger is via the journal voucher.

Question 33

Which system produces information used for inventory valuation, budgeting, cost control, performance reporting, and make-buy decisions?

A) sales order processing
B) purchases/accounts payable
C) cash disbursements
D) cost accounting

Question 34

Each account in the chart of accounts has a separate record in the general ledger master file.

Question 35

A journal is used in manual accounting environments. What file is comparable to a journal in a computerized environment?

A) archive file
B) reference file
C) transaction file
D) master file

Question 36

Which symbol represents a decision?

A)
B)
C)
D)

Question 37

The order of the entries made in the general journal is by

A) date
B) account number
C) user
D) customer number

Question 38

Both the revenue and the expenditure cycle can be viewed as having two key parts. These are

A) manual and computerized
B) physical and financial
C) input and output
D) batch and real-time

Question 39

Which of the following is a turn-around document?

A) remittance advice
B) sales order
C) purchase order
D) payroll check

Question 40

All of the following can provide evidence of an economic event except

A) source document
B) turn-around document
C) master document
D) product document

Question 41

The most important advantage of an alphabetic code is that

A) meaning is readily conveyed to users
B) sorting is simplified
C) the capacity to represent items is increased
D) missing documents can be identified

Question 42

XBRL

A) is the basic protocol that permits communication between Internet sites.
B) controls Web browsers that access the Web.
C) is the document format used to produce Web pages.
D) was designed to provide the financial community with a standardized method for preparing
E) is a low-level encryption scheme used to secure transmissions in higher-level (HTTP) format.

Question 43

Which statement is not true?

A) The journal voucher is the only source of input into the general ledger.
B) A journal voucher can be used to represent summaries of similar transactions or a single unique transaction.
C) Journal vouchers are not used to make adjusting entries and closing entries in the general ledger.
D) Journal vouchers offer a degree of control against unauthorized general ledger entries.

Question 44

Which situation indicates an internal control risk in the General Ledger/Financial Reporting Systems (GL/FRS)?

A) the employee who maintains the cash journal computes depreciation expense
B) the cash receipts journal voucher is approved by the Treasurer
C) the cash receipts journal vouchers are prenumbered and stored in a locked safe
D) the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

Question 45

______________________________________ are the two data processing approaches used in modern systems.

Question 46

Real-time processing would be most beneficial in handling a firm's

A) fixed asset records
B) retained earnings information
C) merchandise inventory
D) depreciation records

Question 47

Which accounting application is least suited to batch processing?

A) general ledger
B) vendor payments
C) sales order processing
D) payroll

Question 48

Sequential storage means

A) data is stored on tape
B) access is achieved through an index
C) access is direct
D) reading record 100 requires first reading records 1 to 99

Question 49

Documents that are created at the beginning of the transaction are called __________________________.

Question 50

Risk exposures in the General Ledger and Financial Reporting Systems include all of the following except

A) loss of the audit trail
B) unauthorized access to the general ledger
C) loss of physical assets
D) general ledger account out of balance with the subsidiary account

Question 51

A file that stores data used as a standard when processing transactions is

A) a reference file
B) a master file
C) a transaction file
D) an archive file

Question 52

What type of data is found in the general ledger master file?

A) a chronological record of all transactions
B) the balance of each account in the chart of accounts
C) budget records for each account in the chart of accounts
D) subsidiary details supporting a control account

Question 53

The most important advantage of sequential coding is that

A) missing or unrecorded documents can be identified
B) the code itself lacks informational content
C) items cannot be inserted
D) deletions affect the sequence

Question 54

Which report is not an output of the Financial Reporting System (FRS)?

A) variance analysis report
B) statement of cash flows
C) tax return
D) comparative balance sheet

Question 55

When a firm wants its coding system to convey meaning without reference to any other document, it would choose

A) an alphabetic code
B) a mnemonic code
C) a group code
D) a block code

Question 56

The coding scheme most appropriate for a chart of accounts is

A) sequential code
B) block code
C) group code
D) mnemonic code

Question 57

Give a specific example of a turn-around document.

Question 58

With a limited work force and a desire to maintain strong internal control, which combination of duties performed by a single individual presents the least risk exposure?

A) maintaining the inventory ledger and recording the inventory journal voucher in the general ledger
B) recording the inventory journal voucher in the general ledger and maintaining custody of inventory
C) maintaining the cash disbursements journal and recording direct labor costs applied to specific jobs
D) preparing the accounts payable journal voucher and recording it in the general ledger

Question 59

Operational inefficiencies occur because

A) accounts both common and unique to many concurrent transactions need to be updated in real time.
B) accounts common to many concurrent transactions need to be updated in real time.
C) accounts unique to many concurrent transactions need to be updated in real time.
D) None of the above are true statements

Question 60

List two of the three transaction cycles.

Question 61

Which documentation technique depicts data relationship in databases?

Question 62

Why is the audit trail necessary?

Question 63

Why do many firms no longer use a general journal? What has taken its place?

Question 64

What does an entity-relationship diagram represent? Why do accountants need to understand them?

Question 65

What are the subsystems of the revenue cycle?

Question 66

Describe the key activities in the revenue, conversion, and expenditure cycles.

Question 67

List, in order, the steps in the Financial Accounting Process.

Question 68

What are the subsystems of the expenditure cycle?

Question 69

Explain the purpose and contents of the general ledger master file.

Question 70

Why is the audit trail important?

Question 71

Name four documentation techniques.

Question 72

List two duties that the general ledger clerk should not perform.

Question 73

Only four symbols are used in data flow diagrams. What are they?

Question 74

What is destructive update?

Question 75

What is XML?

Question 76

Time lag is one characteristic used to distinguish between batch and real-time systems. Explain. Give an example of when each is a realistic choice.

Question 77

Categorize each of the following activities into the expenditure, conversion or revenue cycles and identify the applicable subsystem. a. Preparing the weekly payroll for manufacturing personnel.
b. Releasing raw materials for use in the manufacturing cycle.
c. Recording the receipt of payment for goods sold.
d. Recording the order placed by a customer.
e. Ordering raw materials.
f. Determining the amount of raw materials to order.

Question 78

What are the major exposures in the general ledger/financial reporting system?

Question 79

Explain when it is appropriate to use special journals.

Question 80

In one sentence, what does updating a master file record involve?