Which of the following statements about systems flowcharts and data flow diagrams is
most true?
A. Lines are used in both, but they represent different things.
B. Circles are used in both, but they represent different things.
C. Both lines are used in both, but they represent different things and circles are used in
both, but they represent different things are true.
D. Neither lines are used in both, but they represent different things nor circles are used
in both, but they represent different things is true.
Consider the flowchart below as you respond to the question:
Refer to the previously presented set of flowcharting symbols labeled Symbol A
through Symbol J. Which of the following statements about the systems flowchart
above is most true?
A. Symbol A should be inserted after “remit payment.”
B. Symbol A should be inserted before “take order.”
C. Both symbol A should be inserted after “remit payment” and symbol A should be
inserted before “take order” are true.
D. Neither symbol A should be inserted after “remit payment” nor symbol A should be
inserted before “take order” is true.
AIS is an important area of study for future accountants because a well-designed AIS
can respond to many elements of the conceptual framework. Which of the following
statements is most true?
A. Land is reported as an asset on the balance sheet; assets are one element of financial
statements in the conceptual framework.
B. The difference between land’s current market value and its historical cost is reported
as a gain on the income statement; gains are one element of financial statements in the
conceptual framework.
C. Because of the qualitative characteristic of consistency, publicly traded corporations
cannot change their accounting methods.
D. Because of the qualitative characteristic of reliability, publicly traded corporations
cannot change their accounting methods.
Booksellers of Bufluffia is a small, independent bookstore that both publishes and sells
very specialized titles. They currently have about 50 clients; they publish and sell 30
different books at present. The company’s management has asked you to create database
tables to support their operations. Suppose the database includes four tables: clients,
inventory, sales and sales/inventory. In which table would you expect to see a field
titled “total amount billed?”
A. Clients table
B. Sales table
C. Sales/inventory table
D. None of these
The chapter discussed eleven examples of risks and threats to information systems and
seven enablers from the COBIT framework. Consider the items below, each of which
pairs risk with an enabler; explain how the two are related. The first item is done as an
example.
a. Fraud/Processes. Every organization should have a process in place for reporting
suspected fraud.
b. Information theft/Information.
c. Malicious software/Services, infrastructure and applications.
d. Disclosure of confidential information/Culture, ethics and behavior.
e. Service interruptions and delays/Organizational structures.
f. Fraud/People, skills and competencies.
In an AIS, human judgment is important in:
A. The second step of the accounting cycle.
B. The design and implementation of internal controls.
C. Both the second step of the accounting cycle and the design and implementation of
internal controls.
D. Neither the second step of the accounting cycle nor the design and implementation
of internal controls.
The basic principles of business process management discussed in the text include all of
the following except:
A. Always use information technology in BPM projects.
B. Hire people who can see the “big picture.”
C. Communicate early; communicate often.
D. Understand how business processes support organizational strategy.
Consider the following information items as you respond to the question:
i. Customer master file
ii. Journal entry to record the receipt of cash
iii. Pre-numbered documents
iv. Schedule of accounts receivable
Accounting information systems have five generic elements. Which of the following
statements is most true?
A. All five generic elements are represented in the four information items.
B. The information items omit anything related to outputs of the AIS.
C. The information items omit anything related to processing in the AIS.
D. Both the information items omit anything related to outputs of the AIS and the
information items omit anything related to processing in the AIS are true.
Consider the table below as you answer the questions:
The data in the table were part of Microsoft’s filings with the SE
C. Which of the following statements is most true?
A. All publicly traded firms must use the Global Ledger Taxonomy for SEC filings.
B. All publicly traded firms must use XBRL for SEC filings.
C. Firms that are not publicly traded cannot use XBRL.
D. Companies that use the International Financial Reporting Standards cannot use
XBRL.
Generally accepted auditing standards are divided into three groups. In which group
would you find “internal control?”
A. General
B. Field work
C. Reporting
D. None of these
Consider the following case as you respond to the questions:
HSO Corp. designs, manufactures and sells golf carts, scooters and similar vehicles.
When a prospective client contacts one of their seven corporate offices, the office
manager fills out an “intake questionnaire” to determine if HSO can meet the
prospective client’s needs. The office manager assembles a team of employees with
expertise in design, production, marketing and accounting; the team reviews the intake
questionnaire and determines if HSO can take on the order. If so, the office manager
prepares a three-page written proposal for the prospective client; the proposal explains
the responsibilities of both HSO and the client, along with a timeline and a budget. The
proposal is forwarded to the prospective client electronically, and the client has ten
calendar days to accept it. If HSO cannot take on the order, the prospective client
receives an automatically generated form letter; if the prospective client does not accept
the proposal within ten calendar days, they receive a different form letter. The new
client remits half of the fee at the time the proposal is accepted, and HSO prepares
weekly progress reports as the project moves forward. The reports are filed in HSO’s
database; a hard copy is sent to the client. On a monthly basis, HSO’s office manager
prepares a comprehensive status report for all current engagements. One week before
each project is concluded, HSO bills the client for half of the remaining amount due;
after the client has paid all outstanding invoices, HSO completes the work and bills the
client for all remaining amounts. HSO delivers the finished product; the client must pay
the full amount due within 30 days of the final invoice date. If the client pays within 15
days, HSO gives a 3% discount off the amount due.
Porter’s value chain comprises five primary activities and four support activities. Which
of the following pairs a primary activity with an example from the case?
A. operations, the proposal is forwarded to the client electronically
B. infrastructure, HSO bills the client
C. operations, HSO manufactures golf carts
D. infrastructure, HSO designs scooters
The chapter identified seven types of audits you are likely to encounter in your career.
Identify and discuss two similarities and two differences between investigative audits
and financial audits.
Organizations that implement ERP systems bear the risk of project failure for a variety
of reasons, one of which is inadequate education and training. Complete the table below
to develop an enterprise risk management plan that addresses that risk.
XBRL creates risk exposures for organizations that use it; those risk exposures have to
be addressed via various forms of internal control. As discussed previously in the text,
internal controls can be classified by purpose (preventive/detective/corrective) and their
relationship to the organization’s information system (general/application). Consider the
list of risks and controls below; for each item, indicate whether the control is primarily
preventive/detective/corrective. Also indicate whether the control is a general or
application control.
Indicate with “yes” or “no” whether each of the following statements upholds the basic
principles of business process management discussed in the text. You do not need to
identify the BPM principle involved.
1> Brian told employees that all their concerns would be addressed at the end of the
BPM project.
2> Donna considered whether a BPM project required any information technology tools
the company did not already have.
3> Jared, an entry-level employee, suggested changes to his company’s process for
taking inventory as part of a focus group with top management.
4> Julia argued strongly that a proposed BPM project be managed by the firm’s own
employees, with input as needed from an external consultant.
5> Lucius objected to his company’s new approach to training because they had never
used it before.
6> Melinda decided to change her company’s purchasing process because their current
process seemed too cumbersome.
7> Thao planned and presented a suggested timeline to her firm’s external BPM
consultants.
The use of XBRL creates some risk exposures for organizations; those risk exposures
should be addressed via various forms of internal control. Use the COSO internal
control framework to develop a plan specific to the risks associated with XBRL. Ensure
that you discuss all five elements of the COSO framework.
The chapter identified four links between AIS and auditing. Which link is indicated by
each independent description below?
1) Alex prepared a bond discount amortization schedule using Excel.
2) Amy verified an audit client’s process for validating XBRL taxonomy extensions.
3) Joan reviewed the previous year’s risk/control matrix when starting an audit.
4) Josef estimated the useful life of equipment for calculating depreciation.
5) Mark debated which systems development methodology to use in developing an AIS.
6) Members of an audit team discussed a client’s business processes in terms of the
capability maturity model.
7) Nancy used relational database software to sample transactions for an audit.
8) Omar prepared a PowerPoint presentation summarizing the results of an audit.
9) Paul asked employees of an audit client about management’s attitude on various
topics.
10) Will explained the five-part COSO framework to an audit client.
Explain, in your own words, two similarities and two differences between “accounting”
and “bookkeeping.”