General Accounting T/F and MC

True / False

1.___The acronym AIS stands for "Accounting Information Standards."

2.___ AISs often create information that is useful to non-accountants.

3.___The acronym ERP stands for "enterprise reporting system."

4.___A good audit trail within the financial accounting system should allow a manager or auditor to trace any source document back from a report to the original data entry.

5.___One reason why AISs fail is because they do not adequately perform the processing tasks required of them.

Multiple Choice

1. Documentation includes:
a) All flowcharts, narratives, and other written communications associated with the information system
b) All written communications associated with an accounting information system except flowcharts and data flow diagrams
c) All flowcharts, narratives, and other written communications associated with an accounting information system, except for program flowcharts, decision tables, and pseudocode
d) Flowcharts and data flow diagrams only

2. This is the document flowcharting symbol for a source document such as a purchase order:
a) b) c) d)

3. Data flow diagrams:
a) Accomplish the same purpose as system flowcharts
b) Are different from system flowcharts since they focus on a logical view of the information system
c) Are useless for planning a new system
d) Are never used in analyzing an existing system

4. Avoiding a conflict of interest means:
a) Not working for a new company in a job similar to your last job
b) Not talking to outsiders about general business concerns
c) Avoiding decisions where personal and corporate goals conflict
d) Avoiding new computers if your colleagues are not provided similar systems

5. Three objectives of a company's internal control system should be safeguarding assets, checking the accuracy and reliability of accounting data, and promoting operational efficiency. A fourth objective of a company's internal control system should be:
a) Preventing embezzlement of assets
b) Encouraging adherence to prescribed managerial policies
c) Avoiding the payment of overtime to company employees
d) Revising standards for production costs on a weekly basis

6. Which of the following statements is true?
a) The COSO report failed to define internal control
b) The COSO report emphasized that an internal control system is a tool of management
c) SAS 78 rejected the definition of internal control provided in the COSO report
d) COBIT concluded that a company's management is not responsible for establishing and monitoring a company's internal control system

7. The COSO report stresses that:
a) Internal control is a process
b) An internal control system, if properly designed, can become a substitute for management
c) People only at high levels of an organization are an important part of an internal control system
d) An internal control system should consist of three interrelated components: the control environment, risk assessment, and control activities

8. A very effective ID approach for safeguarding logical computer access bases user recognition on:
a) IDA
b) Biometric identifications
c) Message acknowledgment procedures
d) Routing verification procedures

9. The magnetic tape containing accounts receivable transactions could not be located. A data processing supervisor said that it could have been put among the scratch tapes available for use in processing. The best control procedure would be a(an):

a) Header label
b) Trailer label
c) External label
d) File protection ring

10. The financial accounting cycle ends with:
a) The production of financial statements
b) Closing journal entries
c) The production of an adjusted trial balance
d) Development of cash forecasts

11. Business organizations are recognizing the value of sales data and are purchasing software solutions to gather, maintain, and use these data to provide better service and promote customer loyalty. These software solutions are called:
a) Customer relations data solutions
b) Customer relationship management solutions
c) Sales data management solutions
d) none of the above

12. Networked enterprises and globalization have enabled a new business model called "business-without-boundaries." Which of the following statements describes this business model?
a) Companies no longer have all of their employees in one location
b) It is called off shoring and companies contract with firms in other countries to do such business processes as human resources, payroll, and accounting
c) Companies are under a great deal of scrutiny to manage costs and generate revenue so they contract with foreign firms to do various business processes at a lower cost to the company
d) all of the above statements describe this model

13. Which of the following is normally more important for a not-for-profit organization compared to a profit-oriented organization?
a) Long-range goals
b) Earning an adequate level of income each accounting period
c) Long-range budgetary planning and controlling system
d) Short-range budgetary planning and controlling system

14. Business process reengineering, as it relates to an enterprise system implementation:
a) Always precedes the implementation
b) May precede or be concurrent with implementation depending on the need to conform with industry best practices
c) May precede or succeed an implementation depending on the need to conform with industry best practices
d) Always succeeds the implementation

15. Components of an ERP's architecture typically include:
a) A centralized database and application interfaces
b) Internet portals and multiple databases
c) A centralized database running on a mainframe computer
d) A UNIX operating system

16. Which of the following is considered an integrated software system?
a) Material requirements planning systems (MRP I)
b) Manufacturing resource planning systems (MRP II)
c) Enterprise resource planning systems (ERP)
d) all of the above

17. Which of these is not a phase in the life cycle of an information system?
a) Planning
b) Analysis
c) Control
d) Implementation

18. Which of these is most likely to be the first task in a systems study?
a) Systems analysis
b) Systems design
c) Preliminary investigation
d) any of these are possible?it depends upon the system under study

19. The systems approach encompasses two major aspects, which are:
a) Approaching a specific organizational problem(s) from a specific point of view; utilizing a consulting team to perform a systems study
b) Approaching a specific organizational problem(s) from a broad point of view; utilizing the cheapest consultant for the job
c) Approaching a specific organizational problem(s) from a broad point of view; using an interdisciplinary study team to perform the study
d) none of the above

20. When analyzing a company's current information system, which of the following is true?
a) Understanding the current internal control procedures is not important
b) Controls cannot be counted as "weaknesses" in the current system
c) Interviewing operational employees is the best way to discover internal control weaknesses
d) none of these is true

21. A useful tool for evaluating an information reporting system is a document flowchart. The term "document" applies to:
a) Computer printouts
b) Interdivisional correspondence
c) Purchase orders, sales invoices, and petty cash vouchers
d) all of the above

22. This technique enables a systems study team to assess employee productivity:
a) Average turnover
b) Work measurement
c) Analysis of variance
d) Salary analysis

23. Methods that can be used for systems survey data gathering include all of the following except:
a) Work distribution allocation
b) Observation
c) Interviews
e) Review of documentation

24. A systems survey involves the process of obtaining an accurate perspective on the existing system in order to identify weaknesses that can be corrected in the new system. Which one of the following steps is not considered part of this systems survey?
a) Interviews are conducted with operating people and managers
b) Complete documentation of the system is obtained and reviewed
c) Measures of processing volume are obtained for each operation
d) The equipment sold by various computer manufacturers is reviewed in terms of capability, cost, and availability
e) Work measurement studies are conducted to determine the time required to complete various tasks or jobs

25. Which of the following is not true?
a) An internal audit is never performed by external auditors
b) The primary goals of an internal audit and an external audit are somewhat different
c) Both internal and external audits are similar in their insistence upon objectivity in the performance of the audit evaluation
d) Both the internal audit and the external audit rely heavily upon the audit trail of transactions in an accounting system

26. A computerized AIS is harder to audit than a manual system for all of the following reasons except:
a) The file information is not human readable
b) The volume of transaction records and master file records is usually much larger in computerized systems than in manual systems
c) An audit trail does not exist in a computerized AIS
d) Computerized systems often use remote real-time data processing, thus complicating the tracing of transaction records to their sources

27. The advantages of around-the-computer auditing include:

a) The emphasis which is placed on testing data processing exceptions
b) Use of live data
c) The minimal disturbance of a company's records
d) both b and c

28. If an auditor were to audit a payroll application using around-the-computer auditing techniques, the individual would:
a) Use test data
b) Verify that the output from the computerized processing was correct for the input data used to generate it
c) Never use a surprise audit because of the amount of time and work involved
d) Prepare a profile of a computer file and check the processed data with the profile thus obtained

29. The letter "p" in the acronym http stands for:
a) Page
b) Provider
c) Protocol
d) Parity

30. All of the following are examples of EDI "documents" except:
a) Purchase orders
b) Sales invoices
c) Customs documents
d) Payroll checks

31. The purpose of a company firewall is to:
a) Guard against spoofing
b) Assist the IETF
c) Deny computer hackers access to sensitive data
d) all of the above

32. A proxy server is:
a) A type of computer network often used by companies with many employees
b) An alternate for a company mainframe computer
c) A substitute for a good waiter at a restaurant
d) A computer dedicated to Internet access and transfers

33. The term data encryption refers to:
a) Storing data in safe places called "crypts"
b) Transforming data into secret codes
c) Scrambling data in random ways that cannot be unscrambled
d) none of these

34. A digital signature:
a) Is the same as a hand-written signature
b) Is a bitmapped representation of a hand-written signature
c) Is encrypted data that authenticates a transmitted message
d) none of these

35. Third party assurance:
a) Provides online purchasers with some assurance regarding the security and privacy of a web site
b) Is unlikely to concern auditors
c) Is a service offered only by the American Institute of Certified Public Accountants
d) Is a service offered only by the Better Business Bureau

36. All of the following are normally associated with the Internet except:
a) IP addresses
b) URL addresses
c) http
d) MICR coding

37. All of the following are benefits of XBRL except:
a) Companies can file financial information in one format, avoiding the errors that may come from reentering data multiple times
b) The SEC accepts XBRL-format for electronic filing of financial statement reports
c) XBRL permits the automatic and reliable exchange of financial information across all software formats and technologies, including the Internet
d) all of the above are benefits of XBRL
e) none of the above are benefits of XBRL

38. A disadvantage of a manually-prepared source document is that it:
a) Is not a good backup for damaged files
b) Cannot serve as evidence of authenticity
c) Is of no use tracing an audit trail
d) Is not machine readable

39. Plastic cards with magnetic strips are examples of:
a) Optical character recognition
b) An output device
c) Magnetic ink character recognition
d) An input medium that represents data already in machine readable form

40. The three major components of a CPU are:
a) Input device, processing device, output device
b) Arithmetic-logic unit, primary memory, control unit
c) Primary memory, secondary memory, arithmetic logic unit
d) Control unit, processor, input device

41. A megabyte of computer storage is equal to:
a) One thousand bytes
b) One million bytes
c) One billion bytes
d) One trillion bytes

42. The control unit of a computer system:
a) Is responsible for manipulating data
b) Is where all the application programs are stored
c) Is where the operating system instructions are stored
d) Determines the sequence in which computer program instructions are executed

43. Two advantages of source documents are that they can be completed manually and
a) Are also usually machine-readable
b) Cannot be read by computers
c) Completed onsite
d) Require data transcription

44. All of these are examples of source documents except a:
a) Time card
b) Survey form
c) Travel reimbursement form
d) Payroll check

45. This term refers to entering data into a computer from a remote site:
a) POS
b) RJE
c) ALU
d) CPU

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