Multiple choice question (MCQ)

1.. People, procedures, and information technology is a component of a ____________________________.*

2 points

Your answer

2. Which one is strategic?

2 points

(A) Variety-based, access-based, and needs-based

(B) Customer-based, product-based, access-based

3. Which one was noted in the text?*

2 points

A) Low-cost producer strategy and product/service differentiation strategy

B) Low-cost producer strategy and high quantity producer strategy

4. British American Tobacco receives raw material to manufacture tobacco*

2 points

Inbound

Outbound

Operation

Marketing and sales

Service

5. Incept pharmaceutical workers are making medicine

2 points

Outbound

Operation

Marketing and sales

Service

All of the above

None

Other:

6. A cigarette company placing an ad with adverse effects of smoking cigarette*

2 points

Inbound

Operation

Marketing and sales

Service

Social awareness campaign

7. Ciba eggy is delivering medicine through a 3rd party

2 points

Inbound

Outbound

Operation

Marketing and sales

Service

8. Dell is repairing computers

2 points

Inbound

Outbound

Operation

Marketing and sales

Service

9. Management's decisions to optimize the profitability of the company are an important function of AIS.

2 points

yes

No

10. While an accounting information system supports each of the organization's primary activities in the value chain as well as many of the support activities, it can only be categorized into one of the activities. Into which activity is the accounting information system categorized?

2 points

Purchasing

Service

Firm infrastructure

Operation

technology

11. List characteristics of information with a brief description and example of each characteristic.*

4 points

ANS: ................

12. A manual AIS begins with the capture of information from source documents. These source documents could vary from scraps of paper to notepads or even blackboards. However, transaction data are most easily and effectively captured if the source documents are well designed. Which of the following is not an element of a well-designed source document?

2 points

Use preprinted data to the maximum extent possible

Minimize the use of codes and checkoffs

13. Numerous journals are available for the recording of transactions. In which journal would one record the purchase of a new piece of equipment for use in production?

2 points

Sales

General

Adjusting

4. The posting process

2 points

never generates more than one posting for each transaction

occurs as needed

is used to place post-it notes on all items that need attention

is used to meter the outgoing mail

summarizes the amounts recorded in the journals to the ledgers

15. One of the three basic functions of an AIS is to collect and store data about the organization's business activities and transactions efficiently and effectively. In a manual system, the process of performing this function follows the order of:

2 points

source documents, journalizing, posting

posting, journalizing, source documents

journalizing, legalizing, posting

source documents, legalizing, journalizing

source documents, legalizing, posting

16. A chart of account is

2 points

is a list of all accounts in the organization with each account identified by a three- or four-digit code

is used to summarize each customer's current balance

provides an audit trail

Is a list of all permanent accounts in the organization? Temporary accounts, such as revenue and expense accounts, are not included in the chart of accounts.

None of the above

17. An accounting information system produces more than financial statements. In fact, it is relied upon to produce detailed operational information about the organization's performance. Where are the data collected from to generate this operational information?

2 points

Customers

Vendors

Revenue Cycle

Expenditure Cycle

Product Cycle

All of the above

18. Management by exception:

2 points

is a technique of hands-off management unless current performance does not meet the expectations established in the budget

is a technique whereby exceptional performance is guaranteed

requires a periodic comparison of each unit's activities with past performance

None of the above

19. The third function of the AIS is to provide adequate internal controls to accomplish three basic objectives. Identify the improper objective.

2 points

Ensure that business activities are performed efficiently and following management's objectives while also conforming to any applicable regulatory policies

Safeguard organizational assets, including its data

Ensure that the information that is produced by the system is relevant

Ensure that the information that is produced by the system is reliable

20. How can management reasonably ensure that business activities are performed following their objectives?

2 points

Oversee each employee sufficiently to ensure that he/she is performing all his/her duties correctly

Spot check each employee to ensure that he/she is performing his/her duties correctly

Provide each employee with written descriptions of company procedures. Periodically evaluate each employee's performance about compliance with company procedures.

None of the above

21. A scheme where the perpetrator steals the cash or check that customer A mails in to pay its accounts receivable, then the perpetrator takes the funds from customer B to later cover that account. And so on with Customer C.

2 points

Computer fraud

Employee fraud

Kiting

Lapping

22. Which of the following creates an environment where computer fraud is less likely to occur?

2 points

Hire employees without adequate security and criminal checks.

Assume that corporate security policies are understood by all employees.

Increase the penalties for committing fraud.

None of the above

25. For an act to be legally considered fraud it must be all of the following except

2 points

A material fact.

Justifiable reliance.

A false statement.

No intent to deceive.

An injury or loss suffered by the victim

26. According to the opportunity part of the fraud triangle, a person may do all of the following acts except:

2 points

Convert the theft or misrepresentation for personal gain.

Control the fraud.

Commit the fraud.

Conceal the fraud.

27. Which of the following pressures are classified as Management Characteristics that can lead to financial statement fraud?

2 points

High management and/or employee turnover

Declining industry

New regulatory requirements that impair financial stability or profitability

Intense pressure to meet or exceed earnings expectations

28. All of the following are classification of computer fraud except:

2 points

Input fraud.

Reconciliation fraud.

Computer instructions fraud.

Processor fraud.

Output fraud.

29. Which of the following actions are used to reduce fraud losses?

2 points

Implement a fraud hotline.

Conduct periodic external and internal audits.

Maintain adequate insurance.

Develop a strong system of internal controls.

30. Which of the following is considered a financial pressure that can lead to employee fraud?

2 points

Gambling habit.

Greed.

Poor credit ratings.

Job dissatisfaction.

31. Which of the following internal control procedures most likely would justify a reduced assessed level of control risk concerning plant and equipment acquisitions?

2 points

Periodic physical inspection of plant and equipment by the internal audit staff.

Comparison of current-year plant and equipment account balances with prior-year actual balances.

The review of pre-numbered purchase orders to detect unrecorded trade-ins.

Approval of periodic depreciation entries by a supervisor independent of the accounting department

32. Which of the following situations represents a limitation, rather than a failure, of internal control?

2 points

A jewelry store employee steals a small necklace from a display cabinet.

A bank teller embezzles several hundred dollars from the cash drawer.

A purchasing employee and an outside vendor participate in a kickback scheme.

A movie theater cashier sells reduced-price tickets to full-paying customers and pockets the difference.

33. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the

2 points

Authorization of transactions from the custody of related assets.

Operational responsibility from the recordkeeping responsibility.

Human resources function from the controllership function.

Administrative controls from the internal accounting controls.

34. Which of the following internal control procedures most likely would be used to maintain accurate inventory records?

2 points

Perpetual inventory records are periodically compared with the current cost of individual inventory items.

A just-in-time inventory ordering system to keep inventory levels to the desired minimum.

Requisitions, receiving reports, and purchase orders are independently matched before payment is approved.

Periodic inventory counts are used to adjust the perpetual inventory records.

35. Tracing shipping documents to pre-numbered sales invoices provides evidence that

2 points

No duplicate shipments or billings occurred.

Shipments to customers were properly invoiced.

All goods ordered by customers were shipped.

All pre-numbered sales invoices were accounted for

36. Which of the following are factors associated with the control environment? 1. Commitment to competence 2.Participation of those charged with governance 3.Ethical values and integrity

2 points

I, II, and III

I and II only

II and III only

I and III only

37. The authority to accept incoming goods in receiving should be based on a (an)

2 points

Vendor's invoice.

Materials requisition.

Bill of lading.

Approved purchase order.

38. Tracing copies of computer-prepared sales invoices to copies of the corresponding computer-prepared shipping documents provides evidence that

2 points

Shipments to customers were properly billed.

Entries in the accounts receivable subsidiary ledger were for sales actually shipped.

Sales billed to customers were actually shipped.

No duplicate shipments to customers were made.

39. Which of the following components of internal control best describes the process of requiring a key card to enter the warehouse?

2 points

Control environment.

Monitoring.

Risk assessment.

Control activities.

40. How do the scope, procedures, and purpose of an examination of internal control compare to those for obtaining an understanding of internal control and assessing the Risk of Material Misstatement as part of an audit?

2 points

Similar scope, different procedures, and similar purpose.

Different scope, similar procedures, and similar purpose.

Different scope, different procedures, and different purposes.

Different scope, similar procedures, and different purposes.

41. In a properly designed internal control structure, the same employee most likely would match vendors' invoices with receiving reports and also

2 points

Post the detailed accounts payable records.

Recompute the calculations on vendors' invoices.

Reconcile the accounts payable ledger.

Cancel vendors' invoices after payment.

42. Write a memo: You have a new client, Ms. Amy Pemberton, who is in the process of forming a new company and has asked for your assistance in developing a system of internal control. She would like to start on a very positive note and is very concerned about promoting ethical behavior within her company. She has been reading about COSO's integrated framework and is curious as to what she should do to make certain that she establishes the appropriate control environment. She would like you to describe the control environment component of internal control and the five principles that relate to it.REMINDER: Your response will be graded for both technical content and writing skills. Technical content will be evaluated for information that is helpful to the intended reader and clearly relevant to the issue. Writing skills will be evaluated for development, organization, and the appropriate expression of ideas in professional correspondence. Use a standard business memo or letter format with a clear beginning, middle, and end. Do not convey information in the form of a table, bullet point list, or other abbreviated presentations. Start by using the following format: Memorandum To: Ms. Amy Pemberton Re: The control environment and its underlying principle

20 points

Your answer