Consider the following partially completed flowchart as you respond to the questions:
In the partial flowchart, the “list of finalists” would best be depicted with a ___ symbol.
A. predefined process
B. manual file
C. decision
D. document
Which step in the accounting cycle immediately precedes closing the temporary
accounts?
A. Analyze transactions.
B. Prepare an adjusted trial balance.
C. Prepare financial statements.
D. Record adjusting entries.
Determine whether each of the following items applies to: (a) view-driven systems
only, (b) event-driven systems only, (c) both view- and event-driven systems or (d)
neither view- nor event-driven systems.
1) Capable of generating a balance sheet
2) Captures a more comprehensive data set
3) Comprises five basic parts
4) Converts information into decisions
5) Incorporates data that may not be presented in the general purpose financial
statements
6) Must use information technology
7) Records transactions using the principles of debit and credit
8) Should be designed with the FASB Conceptual Framework in mind
9) Transforms data into information
10) Typically incorporates journals and ledgers
Raul was leading a team charged with developing a new system for budgeting. If he
decides to use the systems development life cycle:
A. The project will fail, since the SDLC cannot be applied to the task.
B. Forming the team is a result of the first step in the SDL
C.
C. The team must completely abandon any elements of the present budgeting system.
D. The project will definitely be completed on time and within budget.
Please refer to the following short case as you respond to the question:
A painter accepts orders for original works from customers in person or via the Internet.
Based on the order, the painter creates an initial sketch, which must be approved by the
customer; the customer may make changes to the initial sketch. After customer
approval, the painter selects appropriate materials and gives the customer a price quote.
If the customer accepts the price quote, the painter creates the original work; if not, the
project is abandoned. The painter stores data about customers, previous orders and
previously completed works in an electronic database.
Which of the following pairs an element from the case with an appropriate symbol in a
data flow diagram of the case?
A. Price quote, parallel lines
B. Initial sketch, rectangle
C. Select appropriate materials, circle
D. Painter, rectangle
In view-driven accounting information systems, internal controls are often:
A. Protective.
B. Expensive.
C. Both protective and expensive.
D. Neither protective nor expensive.
OTH Corporation prepares its general-purpose financial statements with Sage 50
Complete Accounting. If OTH wanted to prepare XBRL instance documents, it must
also use:
A. Spreadsheet software, such as Excel.
B. Relational database software, such as Access.
C. Both spreadsheet software, such as Excel and relational database software, such as
Access.
D. Neither spreadsheet software, such as Excel nor relational database software, such as
Access.
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.
On April 1 of the current year, EPL Corporation accepted a three-page written proposal
from HSO to design and build 10 customized golf carts for EPL’s internal use. The total
price for the order was $3400. Which of the following occurred first?
A. The first step in HSO’s sales/collection process
B. The first step in EPL’s acquisition/payment process
C. EPL’s cash payment to HSO
D. HSO’s receipt of cash from EPL
Match each risk exposure on the left with the most appropriate internal control on the
right. Each item on the left has only one best answer. Each item on the right should only
be used once. 1>mistakes in IPO documents
A.adherence to a cash budget
2>cash embezzlement or larceny
B.documentation of proper storage conditions
3>inability to make payments on long-term debt
C.regularly scheduled audits of payroll and other information systems
4>inability to hire well qualified workers
D.market research on current salary and benefit levels
5> raw material spoilage
E.thorough, specific performance evaluations
6>lawsuit for unfair termination F.internal auditors trained in fraud examination
7>factory equipment breakdowns G.independent review prior to SEC submission
8>too little cash on hand for pension obligations H.regularly scheduled preventive
maintenance
9>logic bomb left by terminated employee I.required training on manufacturing
procedures
10>mistakes made by factory workers J.carefully planned investment of employer and
employee contributions
UMUC identified several criteria for evaluating information. Which of the following
statements is most true?
A. Any piece of information that does not meet all five should be ignored.
B. Meeting any three of the five criteria indicates that information must be considered.
C. Authority and accuracy are more important than the other criteria.
D. The importance of each category depends upon the source and intended use of the
information.
Consider the following short case as you respond to the question:
VLC Corporation sold merchandise with a cost of $200 on account for $300 to PRT
Corporation; credit terms were 2/10, n/30. VLC paid the outgoing freight charge of $10.
PRT paid the invoice within the discount period.
The entries in VLC’s accounting information system to record all the preceding events
will include all of the following except:
A. Debit Accounts Receivable, $300. Credit Sales, $300.
B. Debit Cost of Goods Sold, $200. Credit Inventory, $200.
C. Debit Delivery Expense, $10. Credit Cash, $10.
D. Debit Cash, $294. Debit Inventory, $6. Credit Accounts Receivable, $300.
Consider the following flowchart symbols as necessary as you respond to the remaining
questions in this chapter:
“Prepare purchase order” could be represented in a systems flowchart with any of the
following except:
A. Symbol A
B. Symbol F
C. Symbol G
D. Symbol I
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 the
“prioritizing” step in Steps for Better Thinking, David could:
A. Complete a weighted rating analysis of various software packages.
B. Ask about their familiarity with general ledger software.
C. Both complete a weighted rating analysis of various software packages and ask
about their familiarity with general ledger software.
D. Neither complete a weighted rating analysis of various software packages nor ask
about their familiarity with general ledger software.
OTA Corporation completed the following transactions as part of its sales/collection
process. Record each transaction in general journal format. a. Sold consulting services
for cash, $500. b. Sold merchandise with a cost of $100 on account for $300. c. Paid a
common carrier $50 to ship the merchandise. d. Collected cash for sale on account,
$200. e. Estimated bad debts for the year, $80.
According to COBIT 5, an organization’s information technology governance and
management should meet stakeholder needs. Which of the following best pairs a
stakeholder with an information need?
A. vice president of finance, interest rates on newly acquired debt
B. human resources manager, cost of conducting a new employee search
C. Both vice president of finance, interest rates on newly acquired debt and human
resources manager, cost of conducting a new employee search
D. Neither vice president of finance, interest rates on newly acquired debt nor human
resources manager, cost of conducting a new employee search
According to Carter’s taxonomy, use of a computer to further a criminal end refers to
which of the following categories?
A. Target
B. Instrumentality
C. Incidental
D. Associated
Consider the statements presented below. Choose those that would happen as part of a
financial statement audit, then put them in the proper order based on the steps presented
in the text.
a. Check access to sensitive information and other assets.
b. Consult GAO standards.
c. Convert financial statements to XBRL.
d. Evaluate the organization’s control environment.
e. Interview the CFO as a corroborative witness.
f. Make recommendations for improving business processes.
g. Prepare an unmodified report.
h. Review management’s resumes.
i. Translate financial statements from German to English.
j. Verify the existence of inventory and plant assets.
Enterprise resource planning systems are a sophisticated form of relational database
technology; one common ERP system module is supply chain management. Organize
the field names below into four tables you would expect to find in an ERP system’s
supply chain management module. Indicate primary keys by underlining and foreign
keys with brackets; ensure that each table is in 3NF.
Beginning date
Beginning units on hand
Cost per unit of beginning inventory
Cost per unit purchased
Employee ID
Item description
Item number
Location of supplier
Purchase order number
Quantity purchased
Supplier name
Transaction date
Explain, in your own words, how most organizations create XBRL instance documents.
Specifically address the role of information technology in that process.
COSO’s Internal Control–Integrated Framework comprises five interrelated elements.
List and briefly discuss each of the five elements.
Revise each statement below so that it more clearly upholds the indicated generally
accepted auditing standard.
1) Training: Alexis completed an online course on professional etiquette.
2) Evidence: Allison checked the employment references of an audit client’s CEO as
part of evaluating the CEO’s credentials.
3) Report: Ann used her own words to express a report on the truth of an audit client’s
financial statements.
4) Independence: Blaine accepted an audit engagement with a firm owned by his
mother-in-law.
5) Professional care: Brent randomly selected auditors in his firm as part of developing
an audit team.
6) Internal control: Crystal used expectancy theory to assess internal control as part of
an audit.
7) Supervision: Lindsay, the manager of an audit team, scrutinized the work of all
auditors on her team equally, regardless of their experience or the tasks they were
completing.
8) Consistency: Louis explained a change between the applications of GAAP in 2008
and 2011.
9) Disclosure: Nicole personally prepared the footnotes for an audit client’s financial
statements to ensure all disclosures were properly done.
10) GAAP: Ralph determined that a client’s financial statements were truthfully and
accurately presented in accordance with generally accepted auditing standards.
List and briefly discuss five major forms of e-business.