1. In the ________ stage of an operational audit, the auditor measures the actual system against an ideal standard.
evidence collection
evidence evaluation
testing
internal control
2. An auditor finds that employee absentee rates are significantly higher on Mondays and Fridays than on other work days. This is an example collecting audit evidence by
confirmation.
reperformance.
vouching.
analytical review
3. The ________ to auditing provides auditors with a clear understanding of possible errors and irregularities and the related risks and exposures.
risk-based approach
risk-adjusted approach
financial audit approach
information systems approach
4. According to the risk-based auditing approach, when a control deficiency is identified, the auditor should inquire about
tests of controls.
the feasibility of a systems review.
materiality and inherent risk factors.
compensating controls.
5. Control risk is defined as the
susceptibility to material risk in the absence of controls.
risk that a material misstatement will get through the internal control structure and into the financial statements.
risk that auditors and their audit procedures will not detect a material error or misstatement.
risk auditors will not be given the appropriate documents and records by management who wants to control audit activities and procedures.
6. During the sales order entry process, a ________ is performed to verify that each transaction record contains all appropriate data items.
completeness test
redundant data check
field check
reasonableness test
7. The shipping department at Squishy Things Toy Company follows policies that determine which carrier will deliver orders according to the size, weight, and destination of the shipment. It maintains standing agreements with shippers that specify legal responsibility for the shipment while it is in transit. The terms of the agreements are documented on
picking tickets.
bills of lading.
packing slips.
RFID tags.
8. When an ERP is used, it is assumed that there will be increases in efficiency and the effectiveness of the activities related to the revenue cycle. However, what must be in place and functioning well to fully realize these benefits?
an effective marketing staff
all the components of the expenditure cycle
adequate controls
adequate system flowchart documentation
9. Which of the following documents would normally trigger the process to record a customer payment?
Remittance advice
Customer monthly statement
Deposit slip
Sales invoice
10. A type of business document in which part of the original document is returned to the source for further processing is called a ________ document.
feedback
returnable
closed-loop
turnaround
11. Duties in the expenditure cycle should be properly segregated to promote internal control. This means that the authorization function is performed by ________, the recording function is performed by ________, and cash handling is performed by the ________.
A) accounts payable; purchasing; cashier
B) purchasing; accounts payable; cashier
C) purchasing; cashier; accounts payable
D) purchasing; accounts payable; treasurer
12. Procurement cards differ from corporate credit cards in which of the following ways?
A) Credit limits can be set for procurement cards, but not corporate credit cards.
B) Credit cards can be used to make purchases without an explicit sign off by supervisors, but procurement cards require a sign off.
C) Procurement cards can only be used with approved vendors, but credit cards can be used anywhere.
D) Procurement card invoices are sent separately for each card, whereas corporate credit cards are consolidated into a single invoice.
13. What control should be put in place that assigns responsibility for EFT payments made to vendors?
A) Encrypt all EFT transmissions.
B) Time stamp all EFT transactions.
C) Establish a control group to monitor EFT transactions for validity and accuracy.
D) Number all EFT transactions.
14. Economic Order Quantity (EOQ) includes several variables that must be taken into consideration when calculating the optimal order size. One variable, the costs associated with holding inventory, is referred to as
A) ordering costs.
B) carrying costs.
C) the reorder point.
D) stockout costs.
15. The traditional approach to inventory management to ensure sufficient quantity on hand to maintain production is known as
A) safety stock.
B) just-in-time production.
C) economic order quantity.
D) optimal inventory quantity.
16. When using electronic documents, ________ increase the accuracy of data entry.
A) access controls
B) separation of duties
C) general controls
D) application controls
17. Which department should have the sole ability to provide information to the AIS about hiring, terminations, and pay rate changes?
A) payroll
B) timekeeping
C) production
D) HRM
18. The document that lists each employee’s gross pay, payroll deductions, and net pay in a multicolumn format is called
A) an employee earnings statement.
B) the payroll register.
C) a deduction register.
D) an employee time sheet summary.
19. Companies that specialize in processing payroll are known as
A) paycheck distribution companies.
B) payroll service bureaus.
C) professional employer organizations.
D) semi-governmental organizations.
20. Which of the following will limit a firm’s potential loss exposure from paycheck forgery?
A) Segregation of check distribution from payroll duties
B) Prompt redeposit of unclaimed paychecks
C) A separate payroll bank account
D) Direct deposit of checks
21. Recording interest earned on an investment is an example of which type of adjusting journal entry?
A) accrual entry
B) deferral entry
C) revaluation entry
D) correcting entry
22. Departments that mostly provide services to other units and charge those units for services rendered should be evaluated as ________ centers.
A) cost
B) profit
C) investment
D) revenue
23. Cheryl Liao is an accountant at Folding Squid Technologies. While making an adjusting entry to the general ledger, she received the following error message, “Your journal entry must be a numeric value. Please reenter.” This message was the result of a
A) validity check.
B) closed loop verification.
C) zero-balance check.
D) completeness test.
24. Budgets and performance reports should be developed on the basis of
A) responsibility accounting.
B) generally accepted accounting principles.
C) financial accounting standards.
D) managerial accounting standards.
25. An adjusting entry made at the end of an accounting period that reflects the exchange of cash prior to performance of a related event is classified as a(n)
A) accrual entry.
B) deferral entry.
C) revaluation entry.
D) correcting entry.
26. Each event in an REA model will in most cases have at least one ________ agent and one ________ agent involved with the event.
A) internal; resource
B) external; entity
C) internal; employee
D) internal; external
27. The REA data model
A) is used in many areas of business and science.
B) was developed solely for use in designing accounting information systems.
C) classifies data into relationships, entities and accounts.
D) all of the above
28. Which of the following transactions is represented by the diagram below?
A) An automobile salvage business holds weekly auctions at which it sells its entire inventory.
B) A grocery store sells products to consumers.
C) A hobbyist restores antique cars. When a car is finished, she sells it on eBay.
D) A firm sells movies to consumers through an online downloading service.
29. An entity-relationship (E-R) diagram
A) can represent the contents of any database.
B) are only used in conjunction with REA models.
C) can show a limited number of entities and relationships.
D) are used only to design new databases.
30. Relationships that affect the quantity of a resource are sometimes referred to as ________ relationships.
A) commitment
B) exchange
C) stockflow
D) duality
31. Refer to the table below, which shows the results of payback, net present value, and internal rate of return analysis of four projects. Which is preferred by the net present value criterion?
A) Project A
B) Project B
C) Project C
D) Project D
32. When using the payback method to determine economic feasibility of projects, the company usually accepts the project with the
A) longest payback period.
B) mid-range payback period.
C) payback period that is equal to the project’s economic life.
D) shortest payback period.
33. Who is responsible for preparing the specifications that are used to create the programs?
A) management
B) programmers
C) systems analysts
D) the information systems steering committee
34. Refer to the table below, which shows the results of payback, net present value, and internal rate of return analysis of four projects. Which is preferred by the payback criterion?
A) Project A
B) Project B
C) Project C
D) Project D
35. The capital budgeting technique where estimated future cash flows are discounted back to the present is referred to as
A) the future value method.
B) the internal rate of return.
C) the net present value method.
D) the payback method.
36. When canned software is used for systems acquisition, the maintenance aspect of the operations and maintenance phase of the SDLC
A) involves a make-or-buy decision.
B) is combined with the physical design phase.
C) is eliminated.
D) is the same.
37. Benathir Donathat, director of the project committee, has received approval from management for implementation of a new accounting information system. After putting out an RFP, the committee settled on a vendor that will provide an industry standard software package and post-sale technical support. The committee decided to go with
A) canned software.
B) a turnkey system.
C) an outsourced system.
D) an end-user developed system.
38. The ________ method calculates and compares the processing times of different AIS to compare system performance.
A) benchmark problem
B) mandatory requirements
C) point scoring
D) requirements costing
39. End-user computing is likely to result in a(n)
A) well tested system.
B) well documented system.
C) rapidly developed system.
D) efficient system.
40. What would be one duty of second-line help desk personnel?
A) handling complicated queries requiring research
B) provide callers with scripted answers
C) using expert systems to quickly find answers
D) None of the duties listed above pertain to second-line help desk personnel.
41. One process used to uncover and eliminate program errors is known as
A) black box testing.
B) debugging.
C) desk checking.
D) white box testing.
42. Who is responsible for identifying such risk factors in an implementation plan?
A) implementation team
B) steering committee
C) systems analysis team
D) systems development team
43. Which of the following describes a phase-in conversion?
A) Both the old and new AIS are operated simultaneously.
B) Elements of the old AIS are replaced gradually with elements of the new AIS.
C) The new AIS is introduced into a segment, rather than the whole organization.
D) The old AIS is terminated as the new AIS is introduced.
44. Phil in Marketing got a call from Chuck in ITS. “Phil, the system just generated a stock-out report. I wanted to give you a heads up. I’m sending it right over.” This is an example of a
A) scheduled report.
B) special-purpose analysis report.
C) triggered exception report.
D) demand report.
45. Chuck in ITS got a call from Phil in Marketing. “Chuck, I need you to do something for me. Query sales data for the first quarter and pull out all of the invoices that include the snow blower discount. I need a count and the total amount of the discount. Thanks.” This is an example of a
A) scheduled report.
B) special-purpose analysis report.
C) triggered exception report.
D) demand report.
