University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment

in preparation for Mid Term Exam

CHAPTER 1 INTRODUCTION TO AIS 1. When a customer returns goods that were purchased, the business process to accept the return would most likely be a(n) a. administrative process b. conversion process c. expenditure process d. revenue process Which of the following is least likely to be an output of the accounting information system? a. a check b. a report c. an invoice d. a bar code Which of the following is not true of the supply chain? a. The supply chain includes vendors b. The supply chain excludes customers c. The Supply chain includes information flows d. The supply chain includes secondary suppliers Which of the following is not an objective of IT enablement? a. increased accuracy of data b. reduced cost c. reduced security problems d. increased efficiency An IT enabled system for purchasing that is an invoice-less system is called a(n) a. automated matching system b. evaluated receipt settlement c. e-payable d. point of sale system The COSO report written for the purpose of assisting managers in the challenge of managing risk in their organizations is entitled a. Internal Controls-Integrated Framework b. Enterprise Risk Management-Integrated Framework c. Corporate Governance d. IT Governance Accountants have some form of use of the AIS in all but which role? a. user Page 1 of 10

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University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
b. programmer c. auditor d. designer 8. Which of the following is not true of unethical behavior? a. The only category of unethical behavior for accountants is inflating revenue b. Accountants are often pressured to help commit or cover up unethical behavior c. Hacking is an unethical behavior that accountants should be concerned about d. An accounting information system can be used to cover up unethical behavior

CHAPTER 2 FOUNDATIONAL CONCEPT OF AIS 9. Which of the following statements is not true? a. Accounting information systems must maintain both detail and summary information b. Business processes may vary from company to company c. Regardless of the extent of computerization, all accounting information systems must capture data from the transactions within business processes d. Business processes categorized as expenditure processes are not intended to be processes that serve customers In a manual system, an adjusting entry would most likely be initially recorded in a a. special journal b. subsidiary ledger c. general journal d. general ledger Which of the following is not a disadvantage of maintaining legacy systems? a. There are fewer programmers available to support and maintain legacy systems b. They contain invaluable historical data that may be difficult to integrate into newer systems c. Hardware or hardware parts may be unavailable for legacy systems d. It can be difficult to integrate various legacy systems into an integrated whole Which of the following is a disadvantage of purchased accounting software, compared with software developed in-house? a. It is custom designed for that company b. It is less costly c. The implementation time is shorter Page 2 of 10

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University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
d. There are fewer bugs 13. Which of the following is not a method of updating legacy systems? a. Enterprise application integration b. Backoffice ware c. Screen scraper d. Complete replacement When categorizing the accounting software market, a company with revenue of $8 million would most likely purchase software from which segment? a. Small company b. Midmarket c. Beginning ERP d. Tier 1 ERP An IT system that uses touch-screen cash registers as an input method is called a. Electronic data interchange b. E-business c. Point of sale system d. Source documents and keying When similar transactions are grouped together for a specified time for processing, it is called a. Online processing b. Real-time processing c. Batch processing d. Group processing In documenting systems, which pictorial method is described as a method that diagrams the actual flow and sequence of events? a. System flowchart b. Process map c. Data flow diagram d. Entity relationship diagram In a clientserver system, when the client PC manipulates data for presentation, but does not do any other significant processing, it is called a. Distributed presentation b. Distributed application c. Distributed database d. Distributed processing Page 3 of 10

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University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
CHAPTER 3 CORPORATE AND ACCOUNTING GOVERNANCE Turner: Chapter 5 Corporate Governance and Sarbenes Oxley 19. Which of the following is not considered a component of corporate governance? a. Board of directors oversight b. IRS audits c. Internal audits d. External audits Good corporate governance is achieved when the interests of which of the following groups are balanced? a. Internal auditors and external auditors b. Shareholders and regulators c. Shareholders, the corporation, and the community d. Regulators and the community Corporate governance is primarily concerned with a. enhancing the trend toward more women serving on boards of directors b. promoting an increase in hostile takeovers c. promoting the legitimacy of corporate charters d. emphasizing the relative roles, rights, and accountability of a companys stakeholders When financial information is presented properly and its correctness is verifiable, it is a. transparent b. Compliant c. Accurate d. accountable In the corporate governance chain of command, the audit committee is accountable to a. b. c. d. 24. The companys vendors and other creditors Management and employees Governing bodies such as the SEC and PCAOB The external auditors

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Many corporate frauds involve a. Managers soliciting assistance from their subordinates b. A small deceptive act that intensifies into criminal behavior c. An earnings management motive d. All of the above Page 4 of 10

University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
25. Which of the following can ensure better controls in an entity a. code of conduct b. purchasing procedures manual c. administrative procedures d. all of the above.

CHAPTER 4 FRAUD, ETHICS AND INTERNAL CONTROLS 26. The careful and responsible oversight and use of the assets entrusted to management is called: a. Control environment. b. Stewardship. c. Preventive control. d. Security. Which of the following is not a condition in the fraud triangle? a. Rationalization b. Incentive c. Conversion d. Opportunity There are many possible indirect benefits to management when management fraud occurs. Which of the following in not an indirect benefit of management fraud? a. Delayed exercise of stock options. b. Delayed cash flow problems. c. Enhanced promotion opportunities. d. Increased incentive-based compensation. Which of the following is not an example of employee fraud? a. Skimming b. Larceny c. Kickbacks d. Earnings management The most difficult type of misstatement to discover is fraud that is concealed by: a. Over-recording the transactions. b. Non-recorded transactions. c. Recording the transactions in subsidiary records. d. Related parties. The review of amounts charged to the company from a seller that is purchased from is called Page 5 of 10

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University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
a: a. Vendor audit. b. Seller review. c. Collusion. d. Customer review. 32. Which of the following is generally an external computer fraud, rather than an internal computer fraud? a. Spoofing b. Input manipulation c. Program manipulation d. Output manipulation Which control activity is intended to serve as a method to confirm the accuracy or completeness of data in the accounting system? a. Authorization b. Segregation of duties c. Security of assets d. Independent checks and reconciliations Proper segregation of functional responsibilities calls for separation of the functions of: a. Authorization, execution, and payment. b. Authorization, recording, and custody. c. Custody, execution, and reporting. d. Authorization, payment, and recording. Personal characteristics, opportunity and motivation are all general requirement for a. risk b. fraud c. excessive control d. none of these Audit is a good example of a. preventive control b. detective control c. preventive and detective controls d. none of these A good example of access control is a. terminal lock b. approved the transaction c. review reports Page 6 of 10

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University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
d. none of these 38. Internal control is effective if management and shareholders have reasonable assurance that a. applicable laws and regulations are being compiled b. they understand the extent to which operations objectives are being achieved c. financial statements are being prepared reliably d. all of these
The three conditions that make corruption to happen are: A. Processes, Procedures and Policies B. Ethics, Rules and Regulations C. Motivation, Opportunity and Attitude D. All of the above

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40.The careful and responsible oversight and use of the assets entrusted to management is called: a.Control environment. b.Stewardship. c.Preventive control. d.Security. 41.The most difficult type of misstatement to discover is fraud that is concealed by: a.Over-recording the transactions. b.Non-recorded transactions. c.Recording the transactions in subsidiary records. d.Related parties. 42. Which of the following is not true of unethical behavior? a. The only category of unethical behavior for accountants is inflating revenue b. Accountants are often pressured to help commit or cover up unethical behavior c. Hacking is an unethical behavior that accountants should be concerned about d. An accounting information system can be used to cover up unethical behavior 43.Which control activity is intended to serve as a method to confirm the accuracy or completeness of data in the accounting system? a.Authorization b.Segregation of duties c.Security of assets d.Independent checks and reconciliations 44.Proper segregation of functional responsibilities calls for separation of the functions of: Page 7 of 10

University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
a.Authorization, execution, and payment. b.Authorization, recording, and custody. c.Custody, execution, and reporting. d.Authorization, payment, and recording. CHAPTER 5 ACCOUNTING AND INTERNAL CONTROLS 45. Which of the following statements is true? a. Routine transactions are recorded in the general journal b. Nonroutine transactions are entered in the general journal c. Nonroutine transactions are recorded in a subsidiary ledger d. Nonroutine transactions are recorded in a special journal 46. Regarding subsidiary ledgers and general ledger control accounts, which of the following is not true? a. Total balances in a subsidiary ledger should always equal the balance in the corresponding general ledger account b. The general ledger maintains details of subaccounts. c. Control is enhanced by separating the subsidiary ledger from the general ledger d. Reconciling a subsidiary ledger to the general ledger can help to detect errors or fraud 47. Which of the following statements regarding the authorization of general ledger posting is not true? a. Posting to the general ledger always requires specific authorization b. User IDs and passwords can serve as authorization to post transactions to the general ledger c. A journal voucher serves as authorization for manual systems d. As IT systems become more automated, the authorization of general ledger posting is moved to 48. In a manual system with proper segregation of duties, an employee in the general ledger department should only a. authorize posting to the general ledger b. post transactions to the general ledger c. reconcile the subsidiary ledger to the general ledger d. post transactions to the subsidiary ledger 49. Which of the following statements about reporting is true? a. External users need detailed, rather than summarized, information b. All reports, internal and external, are derived only from general ledger data c. All organizations need similar internal reports d. Internal reports are tailored to the specific needs of each management level and function Page 8 of 10

University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
50. This department or group is responsible to establish, document, implement and maintain

internal controls
A. B. C. D. Internal Audit Department Finance Department Management of the Entity All of the above

CHAPTER 6 BUDGETING AND ACCOUNTING CONTROLS

51. This officer develops procedures for regular analysis of the budget: A. Managing Director B. Financial Controller C. Chief Accountant D. Budget Officer This person or group develops procedures for regular evaluation of the budget: A. Managing Director B. Financial Controller C. Budget Committee D. Board of Directors This officer prepares budget analysis within 5 10 days: A. Managing Director B. Financial Controller C. Chief Accountant D. Budget Officer

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CHAPTER 7 IT SYSTEMS AND ACCOUNTING CONTROLS

54. Internal controls that apply overall to the IT system are called: a. Overall Controls b. Technology Controls c. Application Controls d. General Controls Which of the following is not a control intended to authenticate users? a. Use login b. Security token c. Encryption d. Biometric devices

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University of Liberia College of Business and Public Administration Department of Accounting ACCT403 - Accounting Systems & Controls Assignment in preparation for Mid Term Exam
56. An IT governance committee has several responsibilities. Which of the following is least likely to be a responsibility of the IT governance committee? a. Develop and maintain the database and ensure adequate controls over the database. b. Develop, monitor, and review security policies. c. Oversee and prioritize changes to IT systems. d. Align IT investments to business strategy.

57.Internal controls that apply overall to the IT system are called: a.Overall Controls b.Technology Controls c.Application Controls d.General Controls 58. Which of the following is least likely to be an output of the accounting information system? a. a check b. a report c. an invoice d. a bar code 59. In a manual system, an adjusting entry would most likely be initially recorded in a a. special journal b. subsidiary ledger c. general journal d. general ledger 60.Which of the following is not a control intended to authenticate users? a.Use login b.Security token c.Encryption d.Biometric devices 61. Which of the following is a disadvantage of purchased accounting software, compared with software developed in-house? a. It is custom designed for that company b. It is less costly c. The implementation time is shorter d. There are fewer bugs

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