NCD Corporation pays annual dividends to its shareholders. A REA model of that
process is likely to include which of the following as internal agents?
A. Shareholders
B. Board of directors
C. Both shareholders and board of directors
D. Neither shareholders nor board of directors
ABT Corporation uses block coding for its chart of accounts, which includes Cash
(101), Land (201), Accounts payable (301) and Retained Earnings (501). Which of the
following account numbers is most likely associated with an account that will appear on
the income statement?
A. 101
B. 102
C. 401
D. 601
In a conversation about risk management, Miguel and Rafaela produced a ranked list of
their company’s risk exposures. The ranked list is most closely related to which element
of the COSO framework?
A. Information and communication
B. Risk assessment
C. Risk response
D. Monitoring
JPS Corporation’s accounting information system includes sales invoices, general
ledger software, spreadsheets and customer files. JPS is careful to maintain adequate
separation of duties as well. To provide one example of each generic element of the
AIS, that list should replace ___ with ___.
A. Spreadsheets; operational budgets
B. Customer files; sales transaction files
C. General ledger software; satellites
D. Adequate separation of duties; regular AIS data backup
Jon is a new employee at ADX Corporation. He was working late one night when he
saw Beatrice, a long-time ADX employee, leaving the building with a company
computer. All of the following are relevant to the fourth step of the Langenderfer and
Rockness model except:
A. Say nothing.
B. Tell Beatrice’s supervisor.
C. Consult ADX’s code of ethics.
D. Ask Beatrice why she was leaving the building with a company computer.
Task and process parameters can contribute to information overload. All of the
following are task and process parameters except:
A. Doing a Google search.
B. Taking on a task for the first time.
C. Being interrupted by a phone call.
D. Waiting for a team member to complete the first part of a task.
In the Audit Clarity Project, the ___ explains when the standard applies in an audit
engagement.
A. requirements section
B. guidance and explanatory material
C. introduction
D. definitions
The CoBIT framework can be used to strengthen internal controls against computer
crime in various ways. Indicate whether each statement below is (a) always true, (b)
sometimes true or (c) never true.
1> As a form of internal control, each step of the systems development life cycle
focuses on one of CoBIT’s enablers.
2> CoBIT can be used in conjunction with the COSO internal control framework to
identify appropriate control activities.
3> CoBIT’s principles provide detailed standards for evaluating information inputs and
outputs that can help strengthen internal control.
4> As defined in CoBIT, organizational stakeholders include management and
employees.
5> The COSO enterprise risk management framework requires the use of CoBIT to
identify risks.
At the end of 2014, CNC Corporation’s accounting information system produced the
following trial balance:
CNC completed the following transactions in January 2015:
a. Purchased inventory on account, $300.
b. Collected cash from customers for prior year sales, $500.
c. Paid current month’s wages, $900.
d. Had land appraised. Cost of doing the appraisal (paid in cash), $700. Appraised value
of land, $3,000.
e. Sold inventory with a cost basis of $200 on account, $800.
f. Declared dividends, $50.
g. Hired additional sales staff. Expected monthly salaries, $80.
h. Purchased supplies for cash, $150.
i. Paid creditors for previous purchases, $150.
j. Signed a contract for annual employee retreat, $450.
The sixth step in the accounting cycle involves six broad types of entries. Which of the
indicated transactions is likely to lead to the specified type?A. Transaction D, change in
market value
B. Transaction H, prepaid expense
C. Transaction D, depreciation
D. Transaction I, uncollectible accounts
Bumble Beasley was attempting to improve internal controls over his firm’s
sales/collection process. He completed the following tasks in the order listed, but made
several errors. Revise each statement based on Steps for Better Thinking.
a. Read one general article about the importance of internal control.
b. Focus on the costs of physical and technical controls in the sales/collection process.
c. Make a list of three cost categories common to physical and technical controls in the
sales/collection process.
d. Implement the two least expensive physical and two least expensive technical
controls.
e. Write a report summarizing his work; store it in a three-ring binder on his office
bookshelf.
Consider the following REA model as you answer the question:
A field labeled “inventory ID” is likely to appear in which of the following tables? (i)
inventory table, (ii) purchase inventory table, (iii) inventory/purchase inventory table.
A. I and II only
B. I and III only
C. II and III only
D. I, II and III
Because of the relationship between the variables in expectancy theory:
A. All three must have positive values for someone to be motivated.
B. All three must have negative values for someone to be motivated.
C. No more than two of the variables can be positive for someone to be motivated.
D. Up to two variables can be zero with no effect on motivation.
Sienna used a stack of sales invoices to record journal entries in the AIS. She used those
entries and others to prepare an income statement that was later reviewed by her
supervisor. All the generic elements of the AIS are represented in Sienna’s actions
except:
A. Internal controls
B. Outputs
C. Storage
D. Inputs
Which of the following best pairs a COBIT enabler with a broad category of
information technology controls?
A. processes, process controls
B. policies, administrative controls
C. behavior, behavioral controls
D. information, C-I-A triad controls
One of the basic principles of business process management discussed in the text states:
“When using consultants, make sure the task is well defined, with specific deliverables
defined by the company.” Which of the following actions applies that principle?
A. Requiring a consultant to prepare and submit a budget before starting work on the
BPM project.
B. Dividing the project into phases with firm deadlines.
C. Both requiring a consultant to prepare and submit a budget before starting work on
the BPM project and dividing the project into phases with firm deadlines.
D. Neither requiring a consultant to prepare and submit a budget before starting work
on the BPM project nor dividing the project into phases with firm deadlines.
The AICPA Core Competency framework comprises three parts. All of the following
competencies belong to the same part except:
A. Problem solving
B. Decision making
C. Communication
D. Research