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/ 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 external agents would be depicted in the first column of a REA model of the
case?
A. Zero
B. One
C. Two
D. Three
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. How will EPL account for the design cost in its
accounting information system?
A. It will be expensed in the period incurred.
B. It will be expensed when cash is paid.
C. It will be capitalized to inventory.
D. It will be capitalized to some other asset.
Consider the table below as you respond to the questions:
Which of the following is the best choice for Item F in the table?
A. Initiation/planning
B. Build
C. Implementation
D. Operations and maintenance
A data flow diagram can be used:
A. Instead of a systems flowchart in AIS work.
B. In addition to a systems flowchart in AIS work.
C. Both instead of a systems flowchart in AIS work and in addition to a systems
flowchart in AIS work.
D. Neither instead of a systems flowchart in AIS work nor in addition to a systems
flowchart in AIS work.
SCP Corporation purchased inventory on account from OBP Corporation. Which of the
following happens immediately after the first step in SCP’s acquisition/payment
process?
A. The first step in OBP’s sales/collection process
B. The second step in SCP’s acquisition/payment process
C. The second step in OBP’s sales/collection process
D. An internal audit of the transaction by OBP
Flowcharts should have plenty of white space. Which of the following statements is
most true?
A. To ensure a flowchart has plenty of white space, it must have no more than three
columns per page.
B. To ensure a flowchart has plenty of white space, it must have no more than three
symbols per column.
C. Both to ensure a flowchart has plenty of white space, it must have no more than three
columns per page and to ensure a flowchart has plenty of white space, it must have no
more than three symbols per column.
D. Neither to ensure a flowchart has plenty of white space, it must have no more than
three columns per page nor to ensure a flowchart has plenty of white space, it must have
no more than three symbols per column.
Examples of XBRL instance documents include:
A. Statement of cash flows
B. Balance sheet
C. Income statement
D. All of these
On May 1, CGI Corporation declared cash dividends on its common stock. The
dividend was payable on May 15 to shareholders of record on May 5. Which of the
following entries will CGI make on May 5 in its accounting information system?
A. Debit retained earnings, credit dividends payable
B. Debit dividends payable, credit cash
C. Debit retained earnings, credit cash
D. None of these
The third generic step in a financial statement audit could benefit from:
A. Interviews.
B. Flowcharts.
C. Both interviews and flowcharts.
D. Neither interviews nor flowcharts.
The purpose of the conversion process is to transform material, labor and overhead into
a finished product. To accomplish that purpose, organizations can use one of three
systems. Which of the following pairs would be accounted for using a job costing
system?
A. Decks of playing cards, compact discs
B. Plastic bottles, aluminum cans
C. Custom-built homes, original works of art
D. Decks of playing cards, made-to-order smoothies
Plant assets, such as equipment, are reported on financial statements at their book value,
thus exemplifying:
A. The measuring process in accounting only.
B. The measuring process in bookkeeping only.
C. The measuring process in both accounting and bookkeeping.
D. Informed judgments as part of the definition of bookkeeping.
Some payroll forms include employee identification data. List three such forms
commonly associated with the human resource business process.
Consider the flowcharting symbols shown below and the flowchart depicted above as
you answer the question:
Symbol D could be appropriately included in which column(s) of the flowchart?
A. General manager only
B. Inventory manager only
C. Both general manager only and inventory manager only
D. Neither general manager only nor inventory manager only