In contrast with view-driven AIS, event-driven accounting information systems focus
on:
A. Business processes.
B. Journal entries.
C. Ledger accounts.
D. All of these.
George received an e-mail that threatened to release his personal financial data unless
he paid a fee. Which category of computer crime best describes that situation?
A. Target
B. Instrumentality
C. Incidental
D. Associated
“Associated” is the best answer because extortion has been around for many, many
years. “Instrumentality,” while an OK answer, is not the best answer.
Both human judgment and information technology are important in accounting
information systems. In which of the following pairs of tasks will information
technology be more critical than human judgment?
A. Steps 4 and 9 of the accounting cycle
B. Calculating depreciation and creating a new customer order form in Word
C. Step 4 of the accounting cycle and calculating depreciation
D. Step 9 of the accounting cycle and creating a new customer order form in Word
A properly prepared systems flowchart can be used to:
A. Describe an organization’s method of collecting cash from its clients.
B. Train new employees in an organization’s method of collecting cash from its clients.
C. Both describe an organization’s method of collecting cash from its clients and train
new employees in an organization’s method of collecting cash from its clients.
D. Neither describe an organization’s method of collecting cash from its clients nor train
new employees in an organization’s method of collecting cash from its clients.
Samantha and Josephine were preparing to start their own clothing business; they
contacted their friend David, a recent graduate from Big State University’s accounting
program, to learn about setting up their accounting information system. As part of ___
in Steps for Better Thinking, David might ask them whether cost or quality is more
important.
A. Identifying
B. Exploring
C. Prioritizing
D. Envisioning
SBL Corporation is preparing to expand into B2B e-business. It is least likely to need
which of the following database tables as part of its network?
A. Customer
B. Employee
C. Business
D. Order
Company A sells goods to its customers on credit; Company B sells services to its
customers for cash. Which of the following statements is most true?
A. The role and purpose of the sales/collection process will be fundamentally different
between the two companies.
B. Only Company A has a true sales/collection process because it sells goods rather
than services.
C. Only Company B has a true sales/collection process because it sells for cash rather
than on credit.
D. None of these statements is true.
Consider the following partially completed risk/control matrix as you answer the
questions:
Assume the risk/control matrix is organized like the one presented in the chapter. The
best entry for Item C is:
A. Theft of inventory
B. Employee embezzlement
C. Either theft of inventory or employee embezzlement
D. Neither theft of inventory nor employee embezzlement
Number the following steps for creating a knowledge management system in their
correct order.A.Purchase or build appropriate tools.B.Develop a knowledge
management strategy.C.Define the business goals the knowledge management system
will address.D.Perform a knowledge audit.E.Create an organizational culture that
supports the ideas of knowledge sharing and development.
F.Periodically reassess the value of the knowledge management system.
G.Create a visual map.
Fill in the blanks in each statement below based on the flowchart design steps discussed
in the chapter.
a. Establish the ______.
b. Determine ______.
c. List ______ performed within each ______.
d. Select appropriate ______.
e. Prepare a ______.
f. ______ the flowchart with others.
g. ______ as needed.
In a view-driven AIS, where you would expect to see stored data about product quality?
A. In the journal
B. In the ledger
C. Both in the journal and in the ledger
D. Neither in the journal nor in the ledger
COBIT’s enablers include culture, ethics and behavior. Establishing an organizational
culture that values honesty is least likely to prevent which of the following risks to
information systems?
A. error
B. fraud
C. extortion
D. malicious processes
In the systems development life cycle, which step immediately follows requirements
analysis?
A. Design
B. Build
C. Test
D. Operate
The text discussed common internal controls associated with the steps in the accounting
cycle; it also discussed the role of human judgment and information technology in the
cycle. Identify and describe:
a. One way human judgment can improve internal control in the accounting cycle.
b. One way information technology can improve internal control in the accounting
cycle.
c. One way human judgment can create internal control challenges in the accounting
cycle.
d. One way information technology can create internal control challenges in the
accounting cycle.
Missouri Can Corporation (MCC) manufactures and sells a variety of can types, such as
soft drink cans, oil cans and many others. MCC has adopted a functional organization
structure that includes departments for accounting, marketing, manufacturing, human
resources and information systems. MCC has recently decided to complete its IPO.
Which of the following tables would appear in MCC’s relational database after the IPO,
but not before it?
A. Cash table
B. Shareholders table
C. Issue long-term debt table
D. Investment bank table
A well-designed set of internal controls helps a company achieve four main purposes.
Which of the following best pairs two controls related to a single purpose?
A. Adequate documentation and user training
B. Adequate documentation and bank reconciliations
C. User training and bank reconciliations
D. Firewalls and employee bonding
Consider the following REA model as you answer the question:
Based on the preceding REA model, which of the following statements is most true?
A. The inventory table will not have a foreign key.
B. The primary key from the “purchase inventory” table will appear in the supplier
table.
C. The primary key from the “purchase inventory” table will appear in the employee
table.
D. All of these statements are true.
Which of the following statements about the acquisition/payment process is most true?
A. A single document can be either an input or an output, but never both.
B. Many documents from the first step can be combined into a single document in the
second step.
C. Both a single document can be either an input or an output, but never both, and many
documents from the first step can be combined into a single document in the second
step are true.
D. Neither a single document can be either an input or an output, but never both, nor
many documents from the first step can be combined into a single document in the
second step is true.
Consider the following short case as you respond to the next nine questions:
ABC Consulting’s employees include management, consultants and office staff. The
company accepts engagements related to internal control design and evaluation, as well
as enterprise risk management plans. A customer can purchase the two services
independently of one another. The office staff bills clients on a monthly basis with
terms of 2/10, n/30. All consulting clients must sign a contract, which is also signed by
an ABC manager. One member of ABC’s management team assigns at least one
consultant to work with the customer until the engagement is complete. Consultants can
be assigned to multiple engagements simultaneously, but every consultant must always
be working on at least one engagement. Each client may have only one contract with
ABC at a time.
How many agents would be depicted in the rightmost column of a REA model of the
case?
A. One
B. Two
C. Three
D. None. Agents do not appear in the rightmost column of a REA model.
Information technology:
A. Has replaced human judgment in accounting.
B. Has cut down on the tedium associated with many steps in the accounting cycle.
C. Is an essential element of any AIS.
D. Is the defining feature of the AIS.
Nestor and Maureen are partners in a small consulting firm located in the Republic of
Bufflufia; the firm has six employees. For the last five years, the firm has focused on
tax planning and tax return preparation. But, Nestor and Maureen are now interested in
expanding the firm’s scope of services. They are considering risk management
consulting, fraud examination and business valuation as potential areas to expand the
firm. They are sure at least three of their six employees would put effort into at least
one of those three areas, but expanding the firm’s services would require additional
training for everyone.
Use the COSO enterprise risk management framework to develop a risk management
plan for the expansion. Then, use the elements of expectancy theory to suggest ways
Nestor and Maureen can motivate their employees to put effort into the expansion.
Analyze the following narrative. Identify five risk exposures PTW faces in its
acquisition/payment process; for each exposure, recommend two internal controls.
PTW Corporation sells computer peripherals and related devices, such as printers, ink,
flash drives and cables. PTW has a staff of three purchasing agents, each of whom is in
charge of a specific set of inventory items. Each purchasing agent uses his/her
discretion in making decisions about when to order inventory, how much inventory to
order and which vendor to purchase from. When ordered inventory arrives at PTW, one
of two receiving clerks matches the items, quantities and vendors against a copy of the
purchase order, then either stocks the merchandise on the shelves or puts it in the
storeroom. PTW’s accountant receives a copy of the invoice from the vendor, as well as
an e-mail from one of the receiving clerks indicating that merchandise has been
received. The e-mail also includes the relevant purchase order number. The accountant
files the invoice by date in a filing cabinet; once a week, the accountant removes
invoices from the filing cabinet and pays them by check. To cut down on clutter in the
office, the accountant shreds the vendor invoice after the check has been paid by the
bank. The accountant also completes a bank reconciliation within two weeks of
receiving the bank statement in the mail.
Create specifications (table names and field names) for all database tables indicated by
the REA model below.
Miguel had just been promoted to Director of Accounts Receivable in the accounting
department of TPC Corporation. His first responsibility was to develop and explain a
better system for estimating and writing off bad debts. Without referring to the technical
aspects of those tasks, discuss four things Miguel should do based on Bell’s
characteristics of a professional.
A private university maintains sensitive information about its donors in both a paper file
and an electronic database. Using the three-part control taxonomy discussed in the
chapter, identify and describe two controls in each category that should be implemented
to prevent/detect/correct the risk that such information might be compromised.
You have been asked to develop a system that will track your company’s short-term
investments. Outline and discuss, in a general way, the steps you would use to
accomplish that goal.
Indicate the effect (increase, decrease or no change) the indicated transaction would
have on the specified ratio in each of the following independent situations.
Consider the independent statements below. Organize them in three groups based on the
generally accepted auditing standards discussed in the text; also indicate the name of
each group based on the standards.
1) Bradley completed a continuing education program on auditing mortgage companies.
2) Cameron completed a risk/control matrix as part of an audit.
3) Elijah determined that a client’s financial statements were fairly presented in
accordance with GAAP.
4) Elizabeth noted that footnotes to the financial statements needed some improvement.
5) Jessica reviewed the background and experience of auditors in her firm as part of
developing an audit team.
6) Luke refused to accept an audit engagement because his friend was CEO of the
company.
7) Milton e-mailed an audit client’s vendors to help determine the client’s accounts
payable balances.
8) Owen, the manager of an audit team, reviewed the work of inexperienced auditors
closely.
9) Ryan prepared a disclaimer of report on an audit client’s financial statements.
10) Sandra explained a change between the applications of GAAP in two successive
years.
Explain how Brown’s risk taxonomy, discussed in the chapter on internal control,
relates to COSO’s enterprise risk management framework. You do not need to list the
elements of Brown’s taxonomy.