ACCt3110 final exam

Question 1 (3 points)

The ability to find, evaluate, use and communicate information in all its various formats is known as:

Question 1 options:

	The purpose of accounting.
	Internal control.
	Both A and B
	Neither A nor B

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Question 2 (3 points)

Which of the following steps in the accounting cycle occurs first?

Question 2 options:

	Analyze transactions.
	Record transactions in the journal.
	Post to the ledger.
	Prepare financial statements.

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Question 3 (3 points)

Which of the following correctly pairs an element of the COSO internal control framework with an example of the element?

Question 3 options:

	Control environment: The CEO reviews and monitors internal control breaches on a monthly basis.
	Financial risk: A company assesses its liquidity risk as "high."
	Control activities: The CEO and CFO control the results of a risk assessment.
	Monitoring: A company uses electronic monitoring devices to track the location of employees.

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Question 4 (3 points)

Systems designers should consult system users in which steps of the systems development life cycle?

Question 4 options:

	Requirements analysis
	Design
	Both A and B
	Neither A nor B

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Question 5 (3 points)

Columns in a systems flowchart depict:

Question 5 options:

	Organizational structure.
	Internal controls.
	Processing steps
	Areas of responsibility

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Question 6 (3 points)

MGC Corporation was converting its AIS from general ledger software to an ERP system. The change, which had been initiated by the chief financial officer on the basis of a recommendation from an external consultant, was going to follow the steps in the systems development life cycle. Employees throughout MGC expected to have much more free time on their hands, as the ERP system would automate many tasks they had previously completed manually. Once the system was in place, MGC planned to shut down the general ledger system immediately and simultaneously implement the ERP system.

TSW Corporation was chartered in July 2011; its corporate executives, including the CEO and CFO, wanted to implement an ERP system right away to get the corporation's information system off to a good start. After issuing a Request for Proposals from various ERP consultants, TSW narrowed the submissions down to three finalists. The CFO chaired an ERP implementation team comprising employees from all five TSW departments; the implementation team chose one of the finalists based on interviews, presentations and results from a weighted-rating analysis of the software.

Which of the following statements about MGC's project is most true?

Question 6 options:

	The project will succeed because it was initiated by the CFO, a member of top management.
	MGC's employees have realistic expectations about the system.
	Both A and B are true.
	Neither A nor B is true.

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Question 7 (3 points)

According to Carter’s taxonomy, use of a computer to further a criminal end refers to which of the following categories?

Question 7 options:

	Target
	Instrumentality
	Incidental
	Associated

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Question 8 (3 points)

Consider the following examples of computer crime as you answer the next question:

i. Social Security numbers are stolen from a company’s database.

ii. A fraudster uses a computer to identify people over the age of 80 with annual incomes of $250,000 or more

iii. An employee receives threats from a co-worker via e-mail

iv. An unhappy customer launches a denial-of-service attack

Carter’s taxonomy of computer crime comprises four categories. Which of the following pairs includes two items from the same category?

Question 8 options:

	I and II
	II and III
	II and IV
	I and IV

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Question 9 (3 points)

George received an e-mail that threatened to release his personal financial data unless he paid a fee. That situation is an example of:

Question 9 options:

	Extortion
	Intrusion
	Information manipulation
	Error

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Question 10 (3 points)

A firewall is an example of which type of control?

Question 10 options:

	Physical security
	Technical security
	Administrative security
	Enterprise security

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Question 11 (3 points)

The fundamental purpose of the sales / collection process is to:

Question 11 options:

	Provide goods and services to clients.
	Collect payment from them.
	Both A and B.
	Neither A nor B.

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Question 12 (3 points)

Consider the following statements as you answer the next question:

i. Felix, a cash receipts clerk, applied Allison’s payment to the invoices indicated on her remittance advice.

ii. In purchasing books, Allison filled out a form on a bookstore’s web site.

iii. The bookstore’s web site verified Allison’s credit limit.

iv. William, a warehouse worker, prepared Allison’s books for shipment.

All of the following steps in the sales / collection process are represented in the four statements except:

Question 12 options:

	The first step.
	The second step.
	The sixth step.
	The last step.

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Question 13 (3 points)

A remittance advice is an example of which generic element of an accounting information system?

Question 13 options:

	Document
	Storage
	Both A and B
	Neither A nor B

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Question 14 (3 points)

Consider the following short case as you respond to the next question:

SPC Corporation sells computer security software. They maintain their AIS using general ledger software; data files are backed up twice a day. Sales staff can access the customer database, inventory files and general ledger, as well as sales-related documents such as invoices and sales orders. Newly hired sales staff members at SPC receive the company procedures manual which explains the process used to complete the steps in the sales / collection process. To minimize costs, SPC designates up to five sales staff members each month who can do credit checks for all new customers in addition to processing sales. SPC bills its clients monthly and uses the balance forward method of accounting for receivables; all cash receipts from clients are processed using a lockbox procedure. The lockbox firm’s fee is 3% of all collections. SPC’s accounting department estimates bad debts at the end of each fiscal year; they are normally about 1% of total sales.

Internal control weaknesses for SPC are indicated by which of the following?

Question 14 options:

	Sales staff access to the AIS
	Paying a fee to a lockbox firm
	Estimating bad debts using total sales
	All of the above

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Question 15 (3 points)

The acquisition / payment process:

Question 15 options:

	Helps an organization create value for its stakeholders.
	Can only be applied if an organization sells a product.
	Both A and B.
	Neither A nor B.

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Question 16 (3 points)

Journal entries commonly processed as part of the acquisition / payment process can include:

Question 16 options:

	Debits to inventory.
	Credits to accounts payable.
	Credits to cash.
	All of the above.

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Question 17 (3 points)

Internal controls associated with the acquisition / payment process include:

Question 17 options:

	Separation of duties.
	Adequate documentation.
	Both A and B.
	Neither A nor B.

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Question 18 (3 points)

Consider the following short case as you respond to the next question:

Abruzzi’s Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant’s administrative practices have developed over the ten years of its existence with minimal reliance on information technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a company check. Carlo follows a similar process for dining room supplies, but works with a set of three vendors, none of which sell kitchen supplies.

Which of the following statements about internal control at Abruzzi’s Italian Kitchen is most true?

Question 18 options:

	It has adequate separation of duties because Giuseppi is CEO and Maria is CFO.
	It has adequate separation of duties because Antonio orders kitchen supplies and Carlo orders dining room supplies.
	It does not need to separate duties because it is a family-owned business.
	None of the above statements is true.

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Question 19 (3 points)

Accounting information systems have five basic elements. Within the context of the human resource process, “inputs” include:

Question 19 options:

	Job applications.
	Payroll-related data.
	Both A and B.
	Neither A nor B.

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Question 20 (3 points)

Which of the following internal controls could be applied to processing payroll transactions in the human resources process?

Question 20 options:

	Outsourcing
	Use of information technology
	Both A and B
	Neither A nor B

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Question 21 (3 points)

In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due to poor quality in a recent batch of raw materials, he used an average of four pounds. Mike’s company is therefore exposed to ___ risk.

Question 21 options:

	Hazard
	Human error
	Credit
	Market

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Question 22 (3 points)

Within the context of the financing process, separation of duties means:

Question 22 options:

	The accounting department cannot issue dividend checks without the approval of the board of directors.
	An accountant who prepares dividend checks cannot also prepare checks for repayment of long-term debt.
	Both A and B are true.
	Neither A nor B is true.

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Question 23 (3 points)

Consider the following independent situations as you answer the next seven questions:

a. Irene, a freshman accounting major, thought she would benefit from reading an intermediate accounting text while taking introductory financial accounting.

b. Bradley developed a plan to study for all four parts of the CPA exam during his last semester at college, thus making himself ready to take the exam immediately after graduation.

c. Jorge met weekly with a group of five students, all of whom were preparing their resume for the very first time.

d. Maria planned to use the same strategies in advanced accounting courses that she had used in introductory accounting courses.

Which decision makers are experiencing information overload due to information characteristics?

Question 23 options:

	Irene only.
	Bradley only
	Both Irene and Bradley
	Neither Irene nor Bradley

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Question 24 (3 points)

Consider the following independent situations as you answer the next seven questions:

a. Irene, a freshman accounting major, thought she would benefit from reading an intermediate accounting text while taking introductory financial accounting.

b. Bradley developed a plan to study for all four parts of the CPA exam during his last semester at college, thus making himself ready to take the exam immediately after graduation.

c. Jorge met weekly with a group of five students, all of whom were preparing their resume for the very first time.

d. Maria planned to use the same strategies in advanced accounting courses that she had used in introductory accounting courses.

Jorge and his group would benefit from which of the following countermeasures for information overload?

Question 24 options:

	Focus on creating value-added information.
	Compress, aggregate, categorize and structure information.
	Both A and B.
	Neither A nor B.

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Question 25 (3 points)

Ways to combat information overload include:

Question 25 options:

	Applying effective models for making decisions.
	Managing knowledge.
	Both A and B.
	Neither A nor B.

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Question 26 (3 points)

Objectives of knowledge management include:

Question 26 options:

	Creating knowledge repositories.
	Improving knowledge access.
	Both A and B.
	Neither A nor B.

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Question 27 (3 points)

An auditor is concerned that her company’s purchasing process is not functioning as efficiently as possible. Which type of audit will best address her concern?

Question 27 options:

	Financial
	Operational
	Management
	Purchasing

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Question 28 (3 points)

The text described seven types of audits common in accounting practice. Which of the following statements about them is most true?

Question 28 options:

	Every audit involves some form of information technology.
	Most audits involve some form of human judgment.
	Both A and B are true.
	Neither A nor B is true.

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Question 29 (3 points)

The AICPA’s generally accepted auditing standards are divided into three groups. In which group would you find “internal control?”

Question 29 options:

	General
	Field work
	Reporting
	None of the above

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Question 30 (3 points)

A company’s business processes were at the managed level of the capability maturity model in 2011 and at the optimized level of the capability maturity model in 2012. Which of the following statements is most true?

Question 30 options:

	Based on the generally accepted auditing standard of consistency, the auditors must disclose the change.
	The auditors must issue an unqualified opinion since the organization’s processes are not chaotic.
	Both A and B are true.
	Neither A nor B is true.

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Question 31 (10 points)

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.