ACCOUNTING 417N - REVIEWER-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------1. Which of the following is not a financial transaction?

a) Purchase or products b) Cash receipts c) Updated valid vendor filed) Sale of inventory

2. The following are subsystems of the accounting information system, except

a) Transaction processing systemb) Human resource systemc) General ledger/ financial reporting systemd) Management reporting system

3. Which of the following is not a purpose of the transaction processing system?

a) Managing and reporting on the status of financial investmentsb) Converting economic events into financial transactionsc) Distributing essential information to operations personnel to support their daily operationsd) Recording financial transaction the accounting records

4. The objectives of the data collection activity of the general model for AIS are to collect data that are:

a) Relevant and redundantb) Efficient and objectivec) Efficient and relevant d) Efficient and redundant

5. Which of the following is not a characteristic of effective information?

a) Retrievalb) Storagec) Summarizationd) Precision

6. When viewed from the highest to most elemental level, the data hierarchy is:

a) Attribute, record fileb) Record, attribute, keyc) File record, attributed) File, record, keye) Key, record, file

7. Which is not an accountant’s primary role in information systems?

a) System userb) System auditorc) System designerd) System programmer

8. Which of the following is not an objective of all information systems?

a) Support for the stewardship function of managementb) Support for management decision makingc) Support for the day to day operations of the firmd) All of the above are the objectives

9. Which of the following best describes the activities of the material management function?

a) Purchasing, receiving and inventory controlb) Receiving, sales, distribution and purchasing and accounts payablec) Receiving, storage, purchasing and accounts payabled) Purchasing, receiving and storagee) Purchasing, storage and distribution

10. Which of the following best describes the activities of the production function?

a) Maintenance, inventory control and production planningb) Production planning, quality control, manufacturing and cost accountingc) Quality control, production planning, manufacturing and payroll

d) Maintenance, production planning, storage and quality controle) Manufacturing, quality control and maintenance

11. Which of the following best describes the activities of the accounting function?

a) Inventory control, accounts payable, fixed assets and payrollb) Fixed assets, accounts payable cash disbursements and cost accountingc) Purchasing, cash receipts, accounts payable, cash disbursements and payrolld) Inventory control, cost accounting, accounts payable, cash disbursements and payroll

12. Which statement is not true?

a) Business activities begin with acquisition of materials, property and labour in exchange for cashb) The conversion rule includes the task of determining raw materials requirementsc) Manufacturing firms have a conversion cycle but retail firms do notd) A payroll check is an example a product documents of the payroll systeme) A journal voucher is actually a special source document

13. A documentation tool that depicts the physical flow of information relating o particular transaction through an organization is a:

a) Document flowchartb) Program flowchartc) Decision taled) Work distribution analysise) Systems survey

14. Sequential file processing will not permit

a) Data to be edited on separate computer runb) The use of a database structurec) Data to be edited in an off line moded) Batch reprocessing to be initiated from a terminale) Data to be edited on a real time basis

15. The production subsystem of the conversion cycle includes all of the following, except:

a) Determining raw materials requirementsb) Make or buy decisions on component partsc) Release of new materials into productiond) Scheduling the goods to be produced

16. Which of the following is a temporary file?

a) Transaction fileb) Master filec) Reference filed) Journal file

17. A documentation tool used to represent the logical elements of a system is a (an)

a) Programming flowchartb) Entity relationship diagramc) Document flowchartd) Dataflow diagram

18. Which of the following is not an advantage of real time processing files over batch processing?

a) Shorter transaction processing timeb) Reduction of inventory stocksc) Improved customer serviced) All are advantages

19. Which statement is not correct?

a) Legacy systems may process financially significant transactionsb) Some legacy systems use database technologyc) Mainframes are exclusive to legacy systems, while modern systems use only the client – server modeld) All of the above are true

20. Which of the following is not true of a turnaround document?

a) They may reduce the number of errors made by external partiesb) They are commonly used by utility companiesc) They are documents used by internal parties onlyd) They are both input and output documents

21. Which of the following is not a true statement?

a) Transactions are recorded on source documents and are posted to journalsb) Transactions are recorded in journals and are posted to ledgersc) Infrequent transactions are recorded in the general journald) Frequent transactions are recorded in special journals

22. Which of the following is true of the relationship between subsidiary ledgers and general ledger accounts?

a) The two contain different and unrelated factsb) All general ledger accounts have subsidiariesc) The relationship between the two provides an audit trail from the financial statements to the source documentsd) The total of subsidiary ledger accounts usually exceeds the total in the related general ledger account

23. Real time systems might be appropriate for all of the following, except:

a) Airline reservationsb) Payrollc) Point of sale transactionsd) Traffic control systems

24. The fraud scheme hat is familiar to the borrowing from Peter to pay Paul scheme is:

a) Expense account fraudb) Briberyc) Lapping d) Transaction fund anomaly

25. Which of the following transaction is often called a compensating control?

a) Transaction authorizationb) Supervisionc) Accounting recordsd) Independent verification

26. Ensuring that all materials transactions processed by the information system are valid and in accordance with management’s objectives is an example of:

a) Transaction authorizationb) Supervisionc) Control over accounting recordsd) Independent verification

27. Which of the following is not a necessary condition under to constitute a fraudulent act?

a) Injury or lossb) Material factc) Written documentationd) Justifiable reliance

28. Management can expect various benefits to follow from implementing a system of strong internal control. Which of the following benefits is likely to occur?

a) Reduction of cost of an external auditb) Prevention of employee collusion to commit fraudc) Availability of reliable data for decision-making purposesd) Some assurance of compliance

29. Providing timely information about transaction in sufficient detail to permit proper classification and financial reporting is an example of:

a) The control environment b) Risk assessmentc) Information and communicationd) Monitoring

30. To conceal the theft of cash receipts from customers in payment of their accounts, which of the following journal entries should the bookkeeper make?

a) Dr miscellaneous expense, Cr cashb) Dr petty cash, Cr cashc) Dr cash, CR accounts receivabled) Dr sales returns, CR accounts receivable

31. The underlying assumption of reasonable assurance regarding implementation of internal control means that:

a) By the control that fraud has both occurred in the periodb) Auditors are reasonably assured that employee carelessness can weaken an internal control structurec) Implementation of the control procedure should not have a significant adverse effect on efficiency or profitabilityd) Management assertions about control effectiveness should provide auditors with reasonable assurancee) A control applies reasonably well to all forms of computer technology.

32. The primary purpose of establishing a code of conduct within a professional organization such as PICPA is to

a) Reduce the likelihood that members of the profession will be sued for substandard workb) Ensure that all members of the profession perform at approximately the same level of competencec) Promote an ethical culture among professions who serve othersd) Require members of the profession to exhibit loyal in all matters pertaining to the affairs of their organization.

33. An accounting association established code of ethics for all members. What is one of the association’s primary purpose of establish the code of ethics?

a) To outline criteria for professional behaviour to maintain standards of integrity and objectivityb) To establish standards to follow for effective accounting practicec) To provide framework within which accounting policies could be effectively developed and executedd) To outline criteria that can be used in conducting interviews of potential new accountants.

34. A review of an organization’s code of conduct revealed that it contained comprehensive guidelines designed to inspire high level of ethical behaviour. The reviews also revealed that employees were knowledgeable of its provisions. However, some of employees still did not comply with the code. What element should a code of conduct contain to enhance its effectiveness?

a) Periodic review and acknowledgement by all employeesb) Employee involvement in its developmentc) Public knowledge of its contents and purposed) Provisions for disciplinary action in the event of violations

35. The best reason for establishing a code of conduct within an organization is that such codes

a) Are typically required by the governmentb) Express standards of individual behaviour for members of the organizationc) Provide a quantifiable basis for personnel evaluationd) Have tremendous public relations potential

36. Which of the following statements is/ are true regarding the prevention of fraud?

I – the primary means of preventing fraud is through internal control established and maintained by managementII – internal auditors are responsible for assisting in the prevention of fraud by examining and evaluating the adequacy of internal control systemIII – internal audits should assess the operating effectiveness of fraud – related communication systems

a) I onlyb) II and III onlyc) II onlyd) I, II and III

37. The internal audit activity’s responsibility for preventing fraud is to

a) Establish internal controlb) Maintain internal controlc) Evaluate the system of internal controld) Exercise operating authority over fraud prevention activities.

38. An internal auditor who suspects fraud should

a) Determine that a loss has been incurredb) Interview those who have been involved in the control of assetsc) Identify the employees who could be implicated in the cased) Recommend an investigation after determining that fraud has occurred

39. Internal auditors are responsible for reporting the fraud to the Board Audit Committee when:

a) The incidence of significant fraud has been established to a reasonable certaintyb) Suspicious activities have been reportedc) Irregular transactions have been indentified and are under investigationd) The review of all suspected fraud – related transactions is complete

40. A fraud report is required:

a) At the conclusion of the detection phaseb) At the conclusion of the investigation phasec) At the conclusion of both the detection and investigation phasesd) Neither at the conclusion of the detection phase nor at the conclusion of the investigation phase

41. Which of the following is the information that must be included in a fraud report at the conclusion of an investigation?

a) Purpose, scope, results and when appropriate, an expression of auditors overall opinionb) Criteria, condition, cause and effectc) Background, observations and recommendationsd) Observations conclusions, recommendations and corrective action

42. Red flags are conditions that indicate a higher likelihood of fraud. Which of the following is not considered a red flag?

a) Management has delegated the authority to make purchases under a certain value to subordinatesb) An individual has held the same cash-handling job for an extended period without any rotation of dutiesc) An individual handling marketable securities is responsible for making the purchases, recording purchases and reporting any discrepancies

and gains/ losses to senior managementd) The assignment of responsibility in the accounts receivable department is not clear.

43. Which of the following is an indicator of possible financial reporting fraud being perpetrated by management of a manufacturer?

a) A trend analysis discloses sales increases of 50% and cost of goods sold increases of 25%b) A ratio analysis discloses cost of goods sold is 50% of salesc) A cross – sectional analysis of common size statements discloses the firm’s percentage of cost of goods sold to sales is 40% and the

industry average percentage of cost of goods sold to sales is 50%d) A cross – sectional analysis of common size statements discloses the firm’s percentage of cost of goods sold to sales in 50% and the

industry average percentage of cost of goods sold to sales is 40%.

44. Which of the following policies is most likely to result in an environment conducive to the occurrence of fraud?

a) Budget preparation input by the employees who are responsible for meeting the budgetb) Unreasonable shares and production goalsc) The division’s hiring process frequently results in the rejection of adequately trained applicantsd) The application of some accounting controls on sample basis.

45. Auditors should have knowledge about red flags that have proven to be associated with management fraud. Which of the following factors have generally both been associated with management fraud?

a) Generous performance-based reward systemsb) A domineering managementc) Regular comparison of actual results with budgetsd) A management preoccupation with increased financial performance.

46. When comparing perpetrators who have embezzled organization funds with perpetrators of financial statement of fraud, those who have falsified financial statement are less likely to

a) Have experienced an autocratic management styleb) Be living beyond their obvious means of supportc) Rationalize fraudulent behaviourd) Use organizational expectations as justifications for the act

47. Which of the following controls if property implemented, is most likely to crease the likelihood of fraud:

a) Require period rotation of purchases among difference vendorsb) Require rotation of duties among the three purchasing agentsc) Require that receivable reports be sent directly to accounts payable requiring that the updated to the perpetual inventory record

be made by the receiving departmentd) Require that the updates to perpetual inventory record be made by the receiving department

48. Management has requested that the internal auditor investigate the possibility that a purchasing agent is receiving kickbacks. Which of the following procedures is least effective in addressing managements concern?

a) Confirm all contract terms with vendorsb) Analyze, by purchasing agent, all increases in cost of procured goods from specific vendorsc) Take statistical sample of goods purchased and compare purchase prices for goods with those of other sources of similar such as other

organizations or catalogued) Observe any changes in the lifestyles or individual consumption habits of the purchasing agents involved

49. Which of the following controls is the least effective in preventing a fraud conducted by sending purchase order to bogus vendors?

a) Require that all purchases be made from an authorized vendor list be maintained independently by the individual placing the purchase order.

b) Require that only approved vendors e paid for purchases, based on actual producingc) Require contract with all major vendors from whom production components are purchased.d) Require that total purchases for a month not exceed the total budgeted purchases for that month

50. A potential problem for a manufacturer is that purchasing agents may take kickbacks or receive gifts from vendors in exchange for favourable contracts. Which of the following is the lease effective in preventing this problem?

a) A specific organizational policy prohibiting the acceptance of anything of value from a vendorb) An organization code of ethics that prohibits such activityc) A requirement for the purchasing agent to develop a profit of all vendors before the vendors is added to the authorized vendor list.d) The establishment of long-term contracts with major vendors, with the contract terms approved by senior management

51. A purchasing agent receive expensive gifts from a vendor in return for directing a signify ant amount of business to that vendor. Which of the following organizational policies most effectively prevents such an occurrence?

a) Purchases exceeding specified monetary amounts should be approved by an official who determines compliance with budgetary requirements.

b) Important high-volume materials sold regularly is purchased from at least two different sources in order to afford supply protection.c) The purchasing function should be decentralized and each department manager or supervisor does his/ her own purchasing.d) Competitive bids should be solicited on purchases to the maximum extent that is practicable.

52. A programmer’s accumulation of round-off errors into one account, which is later, accessed by the programmer, is a type of computer fraud. The best way to prevent this type of fraud is to

a) Built in judgement with reasonableness testsb) Independently test programs during development and limit access to the programc) Segregate duties of systems development and programmingd) Use control totals and check the results of the computer

53. Which of the following is a red flag that an organization may be engaging in fraudulent activity?

a) Financial statement results that are above the results for the industry and operations are slightly more efficient that the average for the industry

b) Lack of earnings growth despite large reserves of cashc) Existence of complex transactions that are difficult to understand and appear to have little business purposed) Strong internal reporting in a company with decentralized operations.

54. Controls should be designed that

a) Operations are performed efficientlyb) Management’s plans have not been circumvented by worker collusionc) The internal audit activity guidance and oversight of managements performance is accomplished economically and efficientlyd) Managements planning, organizing and directing processes are property evaluated.

55. Which of the following best defines control?

a) Control is the result of proper planning, organizing and directing by managementb) Controls are statements of what the organization chooses to accomplishc) Control is provided when cost-effective measures are taken to restrict deviations to a tolerable leveld) Control accomplishes objects and goals in an accurate, timely and economical fashion

56. Controls that are designed to provide management with assurance of the realization of specified minimum margin of sales are:

a) Directive controlsb) Preventive controlsc) Detective controlsd) Output controls

57. The procedure requiring preparation of a prelisting of incoming cash receipts, with copies of the prelist going to the cashier and to account, is an example of which type or control?

a) Preventiveb) Correctivec) Detectived) Directive

58. Controls may be classified according to the function they are intended to perform, for example, detective, preventive or directive. Which of the following is a directive control?

a) Monthly bank statement reconciliationb) Dual signatures on all disbursements over a specific amount c) Recording every transition on the day it occursd) Requiring all members of internal audit activity to be CPAs

59. Internal auditors regularly evaluate controls. Which of the following best describes the concept of control as recognized by internal auditors?

a) Management regularly discharges personnel who do not perform up to expectationsb) Management takes action to enhance the likelihood that established goals and objectives will be achieved.c) Control represents specific procedures that accountants and auditors design to ensure the correctness of processingd) Control procedures should be designed from the bottom up to ensure attention to detail

60. The internal audit service typically provides which of the following to the Board Audit Committee?

a) Overall evaluation of the adequacy and effectiveness of internal control processesb) A conclusion about the coverage and adequacy of the internal auditing report.c) The internal audit activity’s working papersd) The committee’s report to the governing board.

61. Because of the increased in published reports of corporate governance failures, senior management and the Board Audit Committee are requesting additional services from internal auditors. This most likely includes evaluation of the:

a) Reliability of external auditorsb) Integrity of senior managementc) Internal controlsd) Accountability of senior management

62. The most effective internal control guides available today is the COSO internal control integrated framework. Which of the following is one of its conclusions?

a) Only management’s participation is needed for control to be effectiveb) The control framework is tied to the business objectives, so it is not flexible enough to be adapted without a major undertakingc) Internal control is limited to accounting controlsd) Operating efficiently and effectively are important aspects of the business

63. Which of the following is an example of feedback control?

a) Preventive maintenanceb) Inspection of completed goodsc) Close supervision of production on line workersd) Measuring performance against a standard

64. The steps in a typical control process include:

1) Selecting strategic control points at which to gather information about activities being performed2) Accumulating, classifying and recording data samples3) Observing the work or collecting samples of data4) Determining whether performance is satisfactory5) Reviewing and revising standards6) Reporting significant deviations to managers concerned

What is the proper order of these steps?

a) 1,3,2,4,6,5b) 1,2,3,4,5,6c) 1,3,4,2,6,5d) 1,3,4,2,5,6

65. Which of the following statements regarding effective control systems is false?

a) Excessive controls are costly in time and moneyb) Outdated information is inappropriatec) Controls should measure the performance of all areasd) Controls should be simple

66. Which of the following would minimize defects in finished goods caused by poor quality raw materials?

a) Documented procedures for the proper handling of work-in-process inventoryb) Require material specifications for all purchasesc) Timely follow-up on all unfavourable usage variancesd) Determination of the amount of spoilage at the end of the manufacturing process

67. The requirement that purchase be made from supplies on an approved vendor list is an example of

a) Preventive controlb) Detective controlc) Corrective controld) Monitoring control

68. Which of the following are elements included in the control environment?

a) Organization structure, management philosophy and planningb) Integrity and ethical values, assignment of authority and human resource policiesc) Competence of personnel, back up facilities, laws and regularsd) Risk assessment, assignment of responsibility and human resource practices

69. Inadequate system of internal controls is most likely to detect a fraud perpetrated by

a) Group of employees in collusionb) Single employeec) Group of managers in collusiond) Single manager

70. COSO treats internal control a s process designed to provide reasonable assurance regarding the achievement of objective related to

a) Reliability of financial reportingb) Effectiveness and efficiency of operationsc) Compliance with applicable laws and regulationsd) All of the abovee) None of the above

71. Which of the following are elements of the control environment?

a) Integrity and ethical valuesb) Organizational structurec) Assignment of authority and responsibilityd) All of the abovee) None of the above

72. Management has a role in the maintenance of control. In fact, management sometimes is a control. Which of the following involves managerial functions as a control?

a) Monitoring performanceb) Use of an organizational policies manualc) Maintenance of quality assurance programd) Establish of in internal audit activity

73. Which of the following is a factor affecting risk?

a) A new personnelb) New or revamped information systemsc) Rapid growthd) All of the above

74. The policies and procedures helping to ensure that management directives are executed and actions are taken to address risks to achievement of objectives describe:

a) Risk assessmentsb) Control environmentsc) Control activities

d) Monitoring

75. Budgets are necessary component of financial decision-making because the help provide an (an)

a) Efficient allocation of resourcesb) Means to use of the firm’s resourcesc) Automatic corrective mechanism for errorsd) Means to check managerial discretion

76. Which of the following is the principal advantage of budgeting?

a) Employee motivationb) Performance evaluationc) Forced planning d) communication

77. Internal control should following certain basic principles to achieve its objective. One of these principles is the segregation of functions. Which one of the following example does not violate the principle of segregation functions?

a) The treasurer has the authority or sign checks but gives the signature block to the assistant treasurer to run the check-signing machine

b) The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, may authorize disposal of damaged goodsc) The sales manager has the responsibility approve credit and the authority to write off accountsd) The department time clerk is given the undistributed payroll checks o main to absent employees

78. If internal control is well designed, two tasks that should be formed by difference persons are:

a) Approval of bad debt write offs and reconciliation of accounts payable subsidiary ledger and controlling accountb) Distribution f payroll checks and approval of sales returns for creditc) Posing of amounts from both the cash receipts journal and cash payments journal to the general ledgerd) Recording of cash receipts and preparation of bank reconciliations

79. Which of the following situations represents an internal control weakness in the payroll department?

a) Payroll department personnel are rotated in their dutiesb) Pay checks are distributed by the employees’ immediate supervisorc) Payroll records are reconciled with quarterly tax reportsd) The timekeeping function is independent of the payroll department

80. Which of the following activities represents an appropriate personnel department function and deterrent to payroll fraud?

a) Distribution of pay checksb) Authorization of overtimec) Authorization of additions and deletions from the payrolld) Collection and retention of unclaimed pay checks.

81. Which of the following described a control weakness?

a) Purchasing procedures are well designed and followed unless otherwise directed by the purchasing supervisor.b) Pre-numbered black purchase orders are secured within the purchasing departmentc) Normal operational purchases fell in the range from P500 to P1,000 with two signatures required for purchases over P1,000d) The purchasing agent invests in publicly traded mutual fund that lists the stock of one of the organization supplies in its portfolio.

82. A utility with a large investment in repair vehicle would most likely implement which internal control to reduce the risk of vehicle theft or loss?

a) Review insurance coverage for adequacyb) Systematically account for all repair work ordersc) Physically inventory vehicles and reconcile the results with the accounting recordsd) Maintain vehicles in a secured location with release return subject to approval by a custodian

83. A system of internal control includes physical controls over access to and use of asses and record. A departure from the purpose of such procedure is that

a) Access to the safe-deposit box requires two officersb) Only storeroom personnel and line supervisors have access to the raw materials storeroomc) The mailroom compiles a list of the checks received in the incoming maild) Only sales persons and sales supervisors use sales department vehicles

84. Which of the following controls could be used to detect bank deposits that are recorded but never made?

a) Establishing accountability for receipts at the earliest possible timeb) Linking receipts to other internal accountabilities, for example, collections to either accounts receivable or sales

c) Consolidating cash receiving pointsd) Having bank reconciliation performed by a third party.

85. Management can best strengthen internal control over custody of inventory stored in an off-site warehouse by implementing:

a) Reconciliation of transfer slips to/ from the warehouse with inventory recordsb) Increases in insurance overagec) Regular reconciliation of physical inventories to accounting recordsd) Regular confirmation of the amount on hand with the custodian of the warehouse.

86. Which of the following controls would prevent the ordering of quantities in excess of organization’s needs?

a) Review of all purchase requisitions by a supervisor in the user department prior to submitting them to the purchasing departmentb) Automatic reorder by the purchasing department when low inventory level is indicated by the systemc) A policy requiring review of the purchase order before receiving a new shipmentd) A policy requiring agreement of the receiving report and packing slip before storage of new receipt

87. Which function or department stated below, records the decrease in inventory due to a sale?

a) Warehouseb) Sales departmentc) Billing departmentd) Inventory control

88. Which situation indicates a weak internal control structure in these instances?

a) The AR clerk authorizes the write off of bad debtsb) The record-keeping clerk maintains both AR and AP subsidiary ledgersc) The inventory control clerk authorizes inventory purchasesd) The AR clerk prepares customer authorizations every month

89. Which of the following functions should be segregated?

a) Opening the mail and recording cash receipts in the journalb) Authorizing credit and determining reorder quantitiesc) Shipping goods and preparing the bill of ladingd) Providing information on inventory levels and reconciling the bank statement

90. Which document triggers the update of the inventory subsidiary ledger?

a) Bill of ladingb) Stock releasec) Sales orderd) Shipping notice

91. When will a credit check approval most likely require specific authorization by the credit department?

a) When verifying that the current transaction does not exceed the customer’s credit limitb) When verifying that the current transaction is with a valid customerc) When a valid customer places a materially large orderd) When a valid customer returns goods

92. Which of the following functions should be segregated?

a) Opening the mail and recording cash receipts in the journalb) Authorizing credit and determining reorder quantitiesc) Shipping goods and preparing the bill of ladingd) Providing information on inventory levels and reconciling the bank statement

93. Which document would an auditor most likely choose to examine closely to ascertain that all expenditures incurred during the accounting period have been recorded as liability?

a) Invoicesb) Purchase ordersc) Purchase requisitionsd) Receiving reports

94. Which one of the following departments does not have a copy of the purchase order?

a) Purchasing departmentb) Receiving departmentc) Accounts payable department

d) General ledger department

95. Which document typically triggers the process of recording liability?

a) Purchase requisitionb) Purchase orderc) Receiving reportd) Suppliers’ invoice

96. Which of the following is true?

a) Cash disbursement function is part of accounts payableb) Cash disbursements is an independent accounting functionc) Cash disbursements is a treasury functiond) Cash disbursement function in a part of the general ledger department.

97. When goods are received and the receiving report has been prepared, which ledger may be updated?

a) Standard cost inventory ledgerb) Inventory subsidiary ledgerc) General ledgerd) Accounts payable subsidiary ledger

98. Which task must still require human intervention in automated purchases/ cash disbursements system?

a) Determination of inventory requirementsb) Preparation of purchase orderc) Preparation of receiving reportd) Preparation of check register

99. Which of the following tasks should the cash disbursement clerk not perform?

a) Review the supporting documents for completeness and accuracyb) Prepare checksc) Approve the liabilityd) Mark the supporting documents paid

100. Depreciation records include all of the following information about fixed assets except the

a) Economic benefit of purchasing the assetb) Cost of the assetc) Depreciation method being usedd) Location of the asset

101. Which control is not a part of the fixed asset system?

a) Formal analysis of the purchase requestb) Review of the assumptions used in the capital budgeting modelc) Development of an EOQ modeld) Estimates of anticipated cost savings

102. Objectives of the fixed assets system do not include:

a) Authorizing the acquisition of the fixed assetsb) Recording depreciation expensec) Computing gain and/ or loss of the disposal of fixed assetsd) Maintaining a record of the fair market value of al fixed assets.

103. Which of the following is not a characteristic of the fixed asset system?

a) Acquisitions are routine transactions requiring general authorization b) Retirements are reported on an authorized disposal report formc) Acquisition cost is allocated over the expected life of the assetd) Transfer of fixed assets among departments is recorded in the fixed asset subsidiary ledgers,

104. Which department/ or office is responsible for approving pay rate changes?

a) Human resource personnelb) Timekeepingc) Accountingd) Paymastere) Payroll preparation

105. Which internal control is not an important part of the payroll system?

a) Supervisors verify the accuracy of employee time cardsb) Pay checks are distributed by an independent paymasterc) The a/p department verifies the accuracy of payroll register before transferring payroll funds to the general checking accountd) The general ledger department reconciles the labour distribution summary and the payroll disbursement voucher

106. The fundamental EOQ model:

a) Provides for fluctuating lead times during reorder cyclesb) Is relatively insensitive to errors in demand, procurement costs and carrying costsc) Focuses on the trade off between production costs and carrying costsd) Is best used in conjunction with a period inventory systeme) None of the above

107. Which of the following is not an advantageous reason to reduce inventories?

a) Inventories provide a competitive advantageb) Inventories can invite overproductionc) Inventories are expensive to maintaind) Inventories may conceal problemse) All of the above

108. A chart of account would best be coded in an (a) _____ scheme

a) Alphabeticb) Mnemonicc) Blockd) Sequential

109. Which of the following statements is not true?

a) Sorting records that are coded alphabetically tends to be more difficult for users than sorting numeric sequencesb) Mnemonic coding require the user to memorize codesc) Sequential codes carry no information content beyond their order in the sequenced) Mnemonic codes are limited in their ability to represent items within a class

110. Which file has as its primary purpose to present comparative financial reports on historic basis?

a) Journal voucher history fileb) Budget master filec) Responsibility filed) General ledger history file

111. A coding scheme in the form of acronyms with other combinations that convey meaning is a (an):

a) Sequential codeb) Block codec) Alphabetic coded) Mnemonic code

112. Which of the following is not a potential exposure of financial reporting system?

a) A defective audit trailb) General accounts that are out of balance with subsidiary accountsc) Unauthorized access to the check registersd) Unauthorized access to the general ledger

113. Which task should the general ledger perform?

a) Update the general ledgerb) Prepare journal vouchersc) Have custody of physical assetsd) Have record keeping responsibility for special journals of subsidiary ledgers

114. The Ozone Corp uses a performance reporting system that shows on line of data for each subordinate who reports to a supervisor. The data presented show the actual costs incurred during the period, the budgeted costs and all variances over budget for that subordinates department. The name of this system reporting is:

a) Contribution accountingb) Responsibility accounting

c) Flexible budgetingd) Program budgetinge) Cost benefit accounting

115. What type of computer processing system is characterized by data that are assembled from more than one location and records that are updated immediately?

a) Personal computer systemsb) Data compression systemsc) Batch processing systemsd) Online, real time systems

116. Which of the following statements most likely presents a disadvantage for an entity that keeps data files on a server rather than on manual systems?

a) Attention is focused on the accuracy of the programming rather than efforts in individual transactionsb) It is usually easier for unauthorized persons to access and alter the filesc) Random error associated with processing similar transaction in different ways is usually greaterd) It is usually more difficult to compare recorded accountability the physical count of assets.

117. Computers containing more than one central processing unit are increasingly common. This feature enables a computer to execute multiple instructions from multiple programs simultaneously. This process is:

a) Time sharingb) Multitaskingc) Multiprocessingd) Batch processing

118. Which of the following statements about personal computers, midrange computers and mainframe computers is true?

a) Personal computers usually cost more than midrange computers but less than mainframesb) Because of the increased use of personal computers, there will be little need for mainframes in the near futurec) Midrange computers must be programmed indirectly in machine language while mainframes use higher – level languaged) The cost per transaction to process on each type of computer has decreased in recent years.

119. A manufacturer is considering using bar code identification for recording information on parts used by the manufacturer. A reason to use bar codes other than other means of identification is to ensure that:

a) The movement of all parts is recordedb) The movement of parts is easily and quickly recordedc) Vendors use the same part numbersd) Vendors use the same identification methods

120. The installation of a database management system is likely to have the least impact on

a) Data redundancyb) Entity-wide sharing of common datac) Exclusive ownership of datad) The logic needed to solve a problem in an application programe) The internal controls over data access

121. The functions of the database administrator (staff or office) are

a) Database planning, data input preparation and database designb) Data input preparation, database design and database operationsc) Database designing, database operation and equipment operationsd) Database design, database implementation and database planninge) Database operations, database maintenance and data input preparation

122. A relational database system contains the following inventory data: part number, description, and quantity on hand, and reorder point. This individual information of inventory items is called:

a) Occurrencesb) Cardinalityc) Attributesd) Associationse) Relations

123. Which of the following best describes a system of computers that connects the internal users of an organization distributed over a wide geographic area?

a) LANb) Internetc) Decentralized networkd) Multidrop networke) Intranet

124. A digital signature:

a) Is the encrypted mathematical value of the message sender’s nameb) Is derived from the document that has been encrypted with the sender’s private keyc) Is derived from the digest of the sender’s digital certificated) Allows digital messages to be sent over analogue telephone linee) None of the above

125. What is a cookie?

a) It was originally intended to facilitate advertising on the webb) It always contain encrypted datac) It is a text file and never contains encrypted datad) It contains the URL of sites the user visitse) Web browsers cannot function without a cookie

126. Which of the following is not a requirement in managements’ report on the effectiveness of internal controls over financial reporting?

a) A statement of management’s responsibility for establishing and maintaining adequate internal control user satisfaction.b) A statement that the organization’s internal auditors have issued an attestation report on management’s assessment of the

company’s internal controlsc) A statement identifying he framework management uses to conduct its assessment of internal controlsd) An explicit written conclusion as to the effectiveness of internal control over financial reporting.e) None of the above

127. Which of the following is not a task performed in the audit planning phase?

a) Reviewing an organisation’s policies and practicesb) Determining the degree of reliance on controlsc) Reviewing general controlsd) Planning substantive testing procedurese) None of the above

128. Which of the following would strengthen organizational control over a large-scale data processing centre?

a) Require the user departments to specify the general control standards necessary for processing transactionsb) Require that the requests and instructions for data processing services be submitted directly to the computer operator in the data centrec) Having the data base administrator report to the management of computer operationsd) Assigning maintenance responsibility to the original system designer who best knows its logice) None of the above.

129. SAP, one of the leading ERP products, makes several modules available to business. Which of the following is not a SAP module?

a) Business process supportb) Internet development supportc) Logisticsd) e-commerce supporte) human resources

130. There are a number of risks that maybe associated ERP/ SAP implementation. Which of the following could be considered a risk?

a) ERPs are too large, complex and generic for them to be well integrated into most company culturesb) Implementing companies have found that staff members, employed by ERP consulting firms, do not have sufficient experience in

implementing new systemsc) Implementing firms fail to select systems that properly support their business activitiesd) The selected system does not adequately meet the adopting firm’s economic growth.

131. Auditors of ERP systems:

a) Need not be concerned about segregation of duties because these systems possess strong computer controls.b) Should focus on output controls such as independent verification to reconcile batch totalsc) May be concerned that the data in the data warehouse is too clean and free from errorsd) Do not see the data warehouse as an audit or control issue at all because financial records are not stored there

e) Need not review access levels granted to users of the system since these are determined when he system is configured and never changed