Test Bank for Accounting Information Systems, 3rd Edition, Vernon Richardson, Chengyee Chang, Rod Sm by StudyGuide

CHAPTER 1 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Accounting and Finance is a primary activity in the value chain. ⊚ true ⊚ false

As of today, Accounting Information Systems are all computerized. ⊚ true ⊚ false

3) Business value includes all those items, events and interactions that determine the financial health and well-being of the firm. ⊚ true ⊚ false

4) The Certified Information Technology Professional (CITP) is a professional designation for those with a broad range of technology knowledge and does not require a CPA. ⊚ true ⊚ false

5) The Certified Information Systems Auditor (CISA) is a professional designation generally sought by those performing IT audits. ⊚ true ⊚ false

6) user.

Information is defined as being data organized in a meaningful way that is useful to the ⊚ ⊚

7) user.

true false

Data is defined as being information organized in a meaningful way that is useful to the

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⊚ ⊚

true false

8) A systems analyst analyzes a business problem that might be addressed by an information system and recommends software or systems to address that problem. ⊚ true ⊚ false

A value chain is defined as the cost of performing various activities inside a firm. ⊚ true ⊚ false

10)

Relevant information’s most defining characteristic is that it is free from bias and error. ⊚ true ⊚ false

11) The characteristics of relevant information include predictive value, feedback value and timeliness. ⊚ true ⊚ false

12) A faithful representation of the underlying event should reflect the bias of the system analyst. ⊚ true ⊚ false

13) Information overload is defined as the difficulty a person faces in understanding a problem and making a decision as a consequence of too much information. ⊚ true ⊚ false

14) The main financial benefit of Customer Relationship Management practices reduces the cost of goods sold. Version 1

⊚ ⊚

true false

15) An efficient Enterprise System can significantly lower the cost of support processes included in sales, general, and administrative expenses. ⊚ true ⊚ false

16) An accounting information system (AIS) is defined as being an information system that records, processes and reports on transactions to provide financial and nonfinancial information for decision making and control. ⊚ true ⊚ false

17) An enterprise system is a centralized database that collects data from throughout the firm. This includes data from orders, customers, sales, inventory and employees. ⊚ true ⊚ false

18) Outbound logistics are the activities associated with receiving and storing raw materials as well as activities that transform these inputs into finished goods. ⊚ true ⊚ false

19) Service Activities as defined in the value chain are those activities that provide the support of customers after the products and services are sold to them (e.g. warranty repairs, parts, instruction manuals, etc.). ⊚ true ⊚ false

20) A well-designed and well-functioning AIS can be expected to create value by providing relevant information helpful to management to increase revenues and reduce expenses. ⊚ true ⊚ false

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21) Production of a 1040 tax form from the AIS to be delivered to the Internal Revenue Service is an example of discretionary information. ⊚ true ⊚ false

22)

Enterprise Systems do not exist to facilitate decision making. ⊚ true ⊚ false

23) The Sarbanes-Oxley Act of 2002 is a federal law in the United States that set new and enhanced standards for all U.S. public companies, their management and public accounting firms. ⊚ true ⊚ false

24) CRM software often includes the use of database marketing tools to learn more about the customers and to develop strong firm-to-customer relationships. ⊚ true ⊚ false

25) The Certified Information Technology Professional is the position created by the AICPA to recognize CPAs who have the ability to provide skilled professional services on Information Technology. ⊚ true ⊚ false

26) Accounting Information Systems which are computerized do not need to maintain internal controls. ⊚ true ⊚ false

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MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 27) Accounting information systems: A) Are always computerized. B) Report only accounting information. C) Include records, processes and reports. D) Are for computer games.

28)

Which of the following is not an attribute of useful information? A) Bias. B) Feedback value. C) Predictive value. D) Verifiability.

29) Which of the following are considered to be mandatory information required by a regulatory body? A) Financial reports for the Securities and Exchange Commission. B) The amount of taxes saved by a merger. C) The total dollar value of fireworks that are sold on July 4. D) The cost to build an all-new Starbucks restaurant in Abu Dhabi.

30)

The correct order of effects in the value chain are: A) Inbound Logistics → Operations → Service. B) Inbound Logistics → Outbound Logistics → Marketing & Sales. C) Inbound Logistics → Operations → Outbound Logistics. D) Inbound Logistics → Operations → Shipping.

31) Which designation would be most appropriate for those professionals possessing IT audit, control and security skills?

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A) Certified Internal Auditor (CIA). B) Certified Public Accountant (CPA). C) Certified Information Technology Professional (CITP). D) Certified Information Systems Auditors (CISA).

32) Which designation is for CPAs with a broad range of technology knowledge and experience? A) Certified Internal Auditor (CIA). B) Certified Public Accountant (CPA). C) Certified Information Technology Professional (CITP). D) Certified Information Systems Auditors (CISA).

33)

A supply chain: A) Refers to the supplies needed to build products. B) Refers to the flow of materials, information, payments and services. C) Refers to how costs are tracking in an AIS. D) Does not apply to a service firm like an accounting firm.

34)

A supply chain system does not include information about: A) Current customers. B) Prospective customers. C) Availability of inventory. D) Current suppliers.

35) The income statement line item most likely affected by an AIS investment in enterprise systems would be:

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A) Revenues. B) Cost of Goods Sold. C) Selling, General and Administrative Expenses. D) Unearned Revenue.

36) The income statement line item most likely affected by an AIS investment in supply chain that would interface with suppliers would be: A) Revenues. B) Cost of Goods Sold. C) Selling, General and Administrative Expenses. D) Research and Development Expenses.

37)

The IT strategic roles of AIS investments are classified as: A) Automate, Informate, Transform. B) Value creation, Value Destruction, Value Neutral. C) Digitize, Report, Transform. D) Automate, Digitize, Transport.

38)

According to a recent study, the transform IT strategic role is defined as systems that: A) Replace human labor in automating business processes. B) Provide information about business activities to all employees. C) Provide information about business activities to senior management. D) Fundamentally redefine business processes and relationships.

39)

According to a recent study, the informate-up IT strategic role is defined as systems that:

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A) Replace human labor in automating business processes. B) Provide information about business activities to all employees. C) Provide information about business activities to senior management. D) Fundamentally redefine business processes and relationships.

40) The income statement account most likely affected by an AIS investment in customer relationship management (CRM) would be: A) Revenues. B) Cost of Goods Sold. C) Selling, General and Administrative Expenses. D) Unearned Revenue.

41) Many fast food restaurants now have kiosks where customers can order without speaking to an employee. This is an example of the _____ strategic role. A) Automate B) Informate– up C) Transform D) Informate– down

42) When Uber (a ride sharing application) developed their unique platform to match drivers with riders, this was an example of _____ with IT Investments which fundamentally changed how people use car services. A) Automating B) Informating – up C) Transforming D) Informating – down

43)

The Information Value Chain is defined as:

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A) The flow of materials, information, payments, and services. B) The use of computer technology to provide information about business activities to employees across the firm. C) The overall transformation of data from a business need to the ultimate decision. D) A centralized database that collects data from throughout the firm.

44)

Customer Relationship Management is best defined as:

A) A system used to manage and nurture a firm's interactions with its current and potential customers. B) A system used to track a customer's past purchases. C) A system used to connect a firm's suppliers with a firm's customers. D) A system used to advertise current items on sale to customers.

45)

The role of accountants in accounting information systems include all except: A) User. B) Manager. C) Coder. D) Evaluator.

46)

A simple information system includes all of the following elements except:

A) Processing. B) Storage. C) Input. D) Reporting.

47)

Branch profitability is an example of:

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A) Information overload. B) Mandatory information. C) Discretionary information. D) Enterprise System.

48) Bob’s manager complains that Bob suffers from “Analysis Paralysis;” that is, he spends too much time reviewing endless reports and is reluctant to make decisions. Bob most likely suffers from _____. A) Data gridlock. B) Discretionary information. C) Information overload. D) Data redundancy.

49) Which of the following systems would a company be most likely to employ for the primary purpose of generating additional sales revenue? A) MDBMS. B) CRM. C) SCM. D) OCR.

50) The primary transformation of data into information takes place in which of the following activities? A) Input. B) Storage. C) Processing. D) Output.

51)

Discretionary information is most likely to be used in which of the following activities?

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A) Preparing required Environmental Protection Agency emissions reports. B) Filing a 10-K with the SEC. C) Management decision-making. D) Payroll tax reporting.

52)

Which of the following is not a primary activity in the Value Chain? A) Outbound Logistics. B) Marketing. C) Inbound Logistics. D) Information Technology.

53) One of the most important ways that ERPs benefit organizations and their business processes is: A) Current information is made available to all users involved in the activities and decisions associated with a company’s business processes. B) Information is stored in many specialized, distributed databases that each serve separate business processes. C) Reducing the amount of time to complete business processes by eliminating all controls associated with the processes. D) Preventing external business partners from accessing the organization’s data.

54) Investors reward companies most that announce IT initiatives with which type of strategic role? A) Automate. B) Informate – up. C) Transform. D) Informate – down.

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55) A dental practice implemented an upgrade to its AIS that provides the dentists with daily and weekly patient and financial summaries. The practice’s upgrade is an example of which IT strategic role? A) Automate. B) Informate – up. C) Transform. D) Informate – down.

56)

Which of the following diagrams most accurately illustrates an information system?

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57) The Sarbanes-Oxley Act of 2002 requires that a company’s attest auditors be able to perform which of the following activities?

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A) Evaluate the internal controls in an AIS. B) Assess the value of a company’s IT assets. C) Take over the company’s AIS if necessary. D) Design and implement the controls used in the AIS.

58) Consider the non-profit organization Doctors without Borders (Médecins Sans Frontières), a Nobel Peace Prize winning organization that provides medical services in war zones and developing countries. For this type of organization, which of the following would likely be the best measure of business value? A) Fund balance (i.e., the net of revenues less expenditures). B) Lives saved. C) Donations raised. D) Volunteers deployed.

59) Effective use of Supply Chain Management software is generally expected to provide all of the following benefits except: A) Reduced inventory carrying costs. B) Lower production costs. C) Lower payroll costs. D) Better communications with suppliers.

60) Which of the following is usually the primary objective for companies when creating mandatory information? A) Increase stock price. B) Minimize cost. C) Improve business decisions. D) Ensure proper controls over business processes.

61)

Which of the following is an example of information as opposed to just data:

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A) Number of dresses sold. B) Color of dresses sold. C) Dress sales in Michigan at Walmart Store #3458. D) Types of dresses sold per region and season.

62)

Which of the following statements is most true:

A) Relevant information does not help predict the future. B) There are sometimes tradeoffs between information that is relevant and a faithful representation. C) Information must always be audited to be insightful an organization. D) Information does not need to be neutral or free from bias.

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 63) After a college football game, a box score is produced detailing the number of yards passing and running, receptions made and the number of interceptions and fumbles lost (among other statistics). Using the characteristics of useful information (including relevance and reliability), please explain how this box score meets (or does not meet) the characteristics of useful information. How would the football coach use this information to prepare for the next game, decide which players to start, etc.?

64) List and explain three ways that AIS affects the income statement and the firm’s profitability.

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65) Some would argue that the role of accounting is simply as an information provider. Others suggest that accountants serve the role of business analyst. Which role produces more value for a company like Starbucks? In the area of accounting information systems, what specifically can the accountant do to serve as a business analyst to help address business opportunities?

66) Explain the types of discretionary information a company like Google would collect from its accounting information system.

67) Why would the transform IT strategic role be more impactful on stock price than the automate IT strategic role?

68) Stephen Gillett, Starbucks CIO, argues that his most crucial duty is to enhance Starbucks’ ability to mine its customer data to help “reignite our passion with our customers.” Starbucks used loyalty cards (Starbucks’ Reward cards) and surveys to track its customers’ purchases and build profiles of their customers as mentioned in the opening chapter vignette. Why is this a good example of customer relationship management (CRM)?

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69) Michael Dell of Dell Computer explained: “We tell our suppliers exactly what our daily production requirements are so it is not, "Well, every two weeks deliver 5,000 to this warehouse, and we'll put them on the shelf, and then we'll take them off the shelf." It is, "Tomorrow morning we need 8,562, and deliver them to door number seven by 7 am." How does the supply chain management software allow this to happen? And how does it save Dell money?

70) Amazon.com is one of the best at fostering its interaction with their customers by keeping a record of their past purchases and product searches and using that information to recommend other similar products for the customer to consider. How can they use that information to help them in their marketing efforts?

71) The Certified Information Systems Auditors (CISA) designation identifies those professionals possessing IT audit, control and security skills. How do you think a professional designation is helpful for IT auditors?

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72) The American Institute of Certified Public Accountants (AICPA) and International Federation of Accountants (IFAC) assumes that, at a minimum, all accountants will be proficient in the AIS user role and at least one other role listed above (manager or designer or evaluator). Why would the AICPA and IFAC expect this proficiency?

73) The International Federation of Accountants says: “IT has grown (and will continue to grow) in importance at such a rapid pace and with such far reaching effects that it can no longer be considered a discipline peripheral to accounting. Rather, professional accounting has merged and developed with IT to such an extent that one can hardly conceive of accounting independent from IT.” In your opinion, why is accounting now interdependent with IT?

74) Wal-Mart’s Retail Link database is one of the world’s largest databases and allows many of their suppliers to view real-time sales data of their products for each store. This allows suppliers to assess the demand for their products and to optimize their own level of inventory and related logistics costs. How is this cost savings ultimately passed on to Wal-Mart and its customers?

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75) Business value is defined as all items, events and interactions that determine the financial health and well-being of the firm. This value may come from suppliers, customers or employees or even information systems. How would a not-for-profit group like the International Red Cross define business value for its group?

76) Google is known for gathering large quantities of data on its users. Describe what types of data may be gathered on a user and how that data is transformed into useful information. Include in your answer why the information may be useful to Google.

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Answer Key Test name: Chap 01_3e 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) TRUE 9) FALSE 10) FALSE 11) TRUE 12) FALSE 13) TRUE 14) FALSE 15) TRUE 16) TRUE 17) TRUE 18) FALSE 19) TRUE 20) TRUE 21) FALSE 22) FALSE 23) TRUE 24) TRUE 25) TRUE 26) FALSE Version 1

27) C 28) A 29) A 30) C 31) D 32) C 33) B 34) B 35) C 36) B 37) A 38) D 39) C 40) A 41) A 42) C 43) C 44) A 45) C 46) D 47) C 48) C 49) B 50) C 51) C 52) D 53) A 54) C 55) B 56) C Version 1

57) A 58) B 59) C 60) B 61) C 62) B 63) Answers will vary, especially with respect to their knowledge of American Football! The instructor may wish to include other sports or other activities where a box score might be produced. In American Football, yards per carry, turnover margin, interceptions, fumbles, run vs. pass plays, 3rd down plays and success, yards per catch, yards after catch, number of tackles, etc. would all be useful. 64) Income Statement Revenues

Effect of AIS on Income Statement Customer Relationship Management techniques could attract new customers, generating additional sales revenue.

Less: Cost of Goods Sold

Supply Chain Management Software allows firms to carry the right inventory and have it in the right place at the right time. This, in turn, will lower obsolescence as well as logistics and procurement costs.

Gross Margin Less: Selling, General and Administrative Expenses (SG&A)

An efficient Enterprise System can significantly lower the cost of support processes included in sales, general, and administrative expenses.

Less: Interest Expense

Supply Chain Management Software allows the firm to carry less inventory. The less inventory the firm has to carry

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leaves less assets to finance, and may possibly reduce debt and its related interest.

Net Income

All combined, a well-designed and wellfunctioning AIS with investments in Enterprise Systems, Supply Chain Management and/or Customer Relationship Management can be expected to improve net income.

65) Answers will vary! Accountants carry out an important function by providing information. However, it is arguable that accountants can add value to a company by serving as a business analyst; that is, understand what information needs to be collected and then help in its interpretation. 66) Answers will vary! Google might want some managerial accounting information about how various products and lines of business have done, the cost of production for various advertising products, the cost of employee incentives (stock options, etc.) that would all be useful in helping it manage its business. 67) Answers will vary! A potential answer might include that automate IT strategic role just automates something that was done before by hand. This generally represents a cost reduction rather than a new revenue opportunity. The transform IT strategic involves using technology to establish a new business model. New business models, while fraught with risk, often suggest new ways to make money that were not envisioned before and thus might encourage shareholders to pay more for a company’s stock. 68) Answers will vary. Using loyalty cards will help Starbucks understand its customers; that is, what they buy, when they buy it, where they buy it, in what quantities, etc., which is exactly the role of CRM. Version 1

69) Answers will vary. The supply chain allows Dell to forecast demand for its various products and share that demand with its suppliers. Suppliers will know the long-term plan and thus not be surprised when an actual order arrives. Dell saves money by not having to hold inventory too long saving investment dollars and warehouse space. 70) Answers will vary. By getting this information, Amazon understand its customers; that is, what they buy, when they buy it, in what quantities, etc., and can use it to encourage its customers to buy more products that computer models suggest they might be interested in. 71) Answers will vary. The answer should emphasize the need for specialized skills in order to fully understand and audit an AIS and the technology surrounding it. The CISA designation recognizes that the IS auditor has demonstrated those skills through demonstration of knowledge and practical experience. 72) Answers will vary. A potential answer might indicate that all accountants are users in some sense; at a minimum, they will request and use information in the AIS to perform their jobs, no matter which role they play. The additional role they play will depend on the function being performed, whether as an employee of a company, an auditor for a CPA firm, a tax advisor, an AIS consultant, or other some other function. 73) Answers will vary. A potential answer might reflect information presented in the class or textbook about the IT nature of accounting and the importance of accountants being proficient in roles associated with IT. 74) Answers will vary. A potential answer might reflect that Retail Link saves Wal-Mart and its supplier’s money due to its assessment of what sells and what does not sell. This helps suppliers to save money and Wal-Mart thus requires that this savings be shared between suppliers, Wal-Mart, and Wal-Mart suppliers. Version 1

75) Answers will vary. A not-for-profit group like the International Red Cross might define value by the number of lives saved, the number of liters of blood in storage, its ability to react to a disasters, etc. 76) Answers will vary. Google collects search history data for users of their search engine. This data is then analyzed and transformed into information concerning a users interests. Google can monetize the information on interests by selling it to companies wishing to market a related product.

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CHAPTER 2 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Accountants now face a challenge of helping businesses optimize processes. ⊚ true ⊚ false

Every diagram must contain at least two pools. ⊚ true ⊚ false

A business process does not contain activities. ⊚ true ⊚ false

4) A business model is typically a graphical depiction of the essential business process information. ⊚ true ⊚ false

5) Documentation can be thought of as a tool for information transmission and communication. ⊚ true ⊚ false

Documentation is not used to assess internal controls. ⊚ true ⊚ false

Models should be simpler than the processes and systems they depict. ⊚ true ⊚ false

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8) Business models are often more difficult to understand than written descriptions of activities. ⊚ true ⊚ false

Activity models are a relatively new process modeling tool. ⊚ true ⊚ false

10) In Business Process Modeling Notation (BPMN), activities are named with a short verb phrase placed within the rectangle. ⊚ true ⊚ false

11) Business Process Modeling Notation (BPMN) activity models typically show the sequence of flow from right to left and top to bottom. ⊚ true ⊚ false

12)

Business Process Modeling Notation (BPMN) activity diagrams depict events as circles. ⊚ true ⊚ false

13) Business Process Modeling Notation (BPMN) activity diagrams depict activities as circles. ⊚ true ⊚ false

14) An activity can depict a single action or some logical combination of actions depending on the required level of detail to achieve the objectives of the business process analysis. ⊚ true ⊚ false

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15)

Gateways depict branching of sequence flows but do not depict merging of those flows. ⊚ true ⊚ false

16) Swimlanes (or lanes) identify participants, e.g., functions or departments, within an organization in a process. ⊚ true ⊚ false

17) Business Process Modeling Notation (BPMN) activity diagrams are conceptually similar to process maps. ⊚ true ⊚ false

18) Business Process Modeling Notation (BPMN) start events are shown using ovals and flowchart start events are shown using circles. ⊚ true ⊚ false

19)

Activity models can be used after a new system is implemented. ⊚ true ⊚ false

20)

Data Flow Diagrams start with a circle indicating the start event. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 21) Which of the following is not a Stewardship and Reporting role of the Accounting/Finance Function in Business?

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A) Human Resource management. B) Regulatory compliance. C) Tax returns. D) Statutory reporting.

22) Which of the following is not a Business Management Support role of the Accounting/Finance Function in Business? A) Management information. B) Planning, budgeting and forecasting. C) Customer support. D) Investment appraisal.

23)

Which of the following is not a characteristic of a business model? A) Simple. B) Always refers to only one business process. C) Graphical. D) Contains business process information.

24)

Which of the following is not part of the business analysis process? A) Ascertaining information about current and future business processes. B) Using business process modeling tools. C) Auditing business processes. D) Documenting current and future business processes.

25)

Which of the following best describes a business model?

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A) A simple, abstract representation of a business process or processes. B) A sequence of business activities. C) An evaluation of potential business process improvements. D) None of the choices are correct.

26)

Process documentation does not include which of the following? A) Process models. B) Business rules. C) User manuals. D) External audit workpapers.

27)

Which of the following is not a purpose of documentation? A) Training. B) Determining staffing. C) Describing current processes. D) Establishing accountability.

28)

Business models provide value in all of the following areas except which one? A) Employee performance appraisal. B) Managing complexity. C) Specifying systems requirements. D) Eliciting requirements for new systems.

29)

Which of the following best describes the purpose of an activity model? A) An activity model describes the sequence of workflow in a business process. B) An activity model constrains and guides process operations. C) An activity model depicts data structures. D) None of the choices are correct.

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30) Which of the following is not a common element of activity models regardless of the specific modeling notation? A) Events to start and stop the workflow. B) Sequence of flow between tasks. C) Multiplicities. D) Decision points that affect the process flow.

31) Which of the following is not a building block for Business Process Modeling Notation (BPMN) diagrams? A) Swimlanes. B) Events. C) Gateways. D) Sequence flows.

32) Which of the following is not an example of a good Business Process Model Notation (BPMN) model? A) They are correct. B) They are clear. C) They are cohesive. D) They are consistent.

33) Which of the following best describes the purpose of a gateway in a Business Process Modeling Notation (BPMN) activity diagram? A) Shows where the work takes place. B) Describes the sequence of workflow. C) Affects the flow of the business process. D) Controls branching and merging.

34)

Which of the following symbols depicts an intermediate event?

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A) An arrow. B) A circle with a double line perimeter. C) A rectangle. D) A circle with a wide single line perimeter.

35)

Which of the following symbols depicts an activity? A) An arrow. B) A circle with a double line perimeter. C) A rectangle. D) A circle with a wide single line perimeter.

36) Which of the following notations is used to depict different organizations in one Business Process Modeling Notation (BPMN) diagram? A) Gateway. B) Message flow. C) Pool. D) Intermediate event.

37)

Which of the following best describes the purpose of swimlanes (or lanes)? A) Depict different elements of timing involved in a process. B) Depict different departments of the same organization in a process. C) Depict interactions between organizations in a process. D) Depict the sequence of tasks in a process.

38) Which of the following best describes a Business Process Modeling Notation (BPMN) message flow?

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A) Shows the sequence of activities in a process. B) Shows interactions between participants in a process. C) Affects the flow of a business process. D) Shows branching and merging in a business process.

39) Which of the following best describes the difference between a Business Process Modeling Notation (BPMN) gateway and a flowcharting decision diamond? A) Only the decision diamond shows branching of the sequence flow. B) The gateway ony represents branching and not the decision that results in branching. C) Only the gateway shows branching of the sequence flow. D) The decision diamond can depict more branching options.

40)

Which of the following represents a parallel multi-instance task? A) One employee taking an order while another collects payment in a drive-through. B) Many customers watching one movie. C) Two baristas working at a Starbucks counter. D) One employee taking pizza orders.

41) In order to perform their required roles and be valuable business partners, accountants must understand all of the following except: A) How the business identifies and designs its products and services. B) How the business collects data, summarizes it, and communicates business information. C) How the business delivers value, interacts with other businesses, and is a good corporate citizen. D) What risks the business faces, and how internal controls can mitigate those risks.

42) Which of the following best describes why the Sarbanes-Oxley Act of 2002 (SOX) made documentation of business processes essential for businesses?

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A) SOX mandates that accountants create the business rules and documenation associated with a company’s business processes. B) SOX requires managers to assess and attest to the company’s internal controls structures and procedures. C) SOX explicitly states that all business processes must be documented. D) SOX allows thorough documentation of business processes to act as a substitute for a full review of internal control structures and procedures.

43) Which of the following best describes how business models help companies manage complexity? A) Because business models can’t exceed one page, managers can understand how the business works at a glance. B) Although business models are a simplification of the actual processes they represent, they incorporate the processes’ essential elements. C) Business models’ limitations force managers to simplify the company’s actual processes. D) Business models must display every detailed task and activity, which allows managers to visualize the complexity inherent in its business processes.

44)

Activity models are analagous to which of the following? A) The prototype for a new car model. B) A blueprint. C) The instructions in a recipe. D) A car’s steering system.

45)

When creating a BPMN activity model, which of the following is most accurate?

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A) Modeling is an artistic endeavor; therefore different modelers given the same set of facts about a business process will likely develop very different models of the process. B) The resulting BPMN activity model should closely match the structure of the subsequent database. C) All activity models should include gateways. D) Different modelers given the same set of facts about a busines process should develop similar models of the process.

46)

A pool in a BPMN activity model represents: A) An organization/entity. B) A department or functional area. C) A specific individual. D) A logical activity.

47)

Message flows in BPMN activity diagrams indicate an exchange between: A) Activities in the same swimlane. B) Participants in a process C) Gateways in different swimlanes. D) Events in the same pool.

48)

An opaque external pool in a BPMN activity diagram is typically used becasue: A) The external pool event is not important for the model. B) It hides confidential information. C) It involves external parties. D) The external pool event contains a gateway that is addressed later.

49)

Which of the following is not a valid BPMN gateway type?

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A) Parallel gateway. B) Serial gateway. C) Inclusive gateway. D) Exclusive gateway.

50)

Which of the following BPMN shapes represents a Parallel Gateway?

51)

Which of the following BPMN shapes represents an Error Event?

A) B) C) D)

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52)

A boundary event in a BPMN activity model: A) Moves messages between pools. B) Occurs for all errors. C) Is attached to the edge of an activity. D) Occurs as a message leaves a pool.

53)

Which of the following BPMN shapes represents a parallel multi-instance task?

54)

Which of the following BPMN shapes represents a data object?

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55)

Which of the following BPMN shapes represents a data store?

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Answer Key Test name: Chap 02_3e 1) TRUE 2) FALSE 3) FALSE 4) TRUE 5) TRUE 6) FALSE 7) TRUE 8) FALSE 9) FALSE 10) TRUE 11) FALSE 12) TRUE 13) FALSE 14) TRUE 15) FALSE 16) TRUE 17) TRUE 18) FALSE 19) TRUE 20) FALSE 21) A 22) C 23) B 24) C 25) A 26) D Version 1

27) B 28) A 29) A 30) C 31) A 32) C 33) D 34) B 35) C 36) C 37) B 38) B 39) B 40) B 41) A 42) B 43) B 44) C 45) D 46) A 47) B 48) A 49) B 50) B 51) D 52) C 53) B 54) A 55) C

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CHAPTER 2 : PROBLEM MATERIAL ESSAY. Write your answer in the space provided or on a separate sheet of paper. 1) Use the following description to create a Business Process Modeling Notation (BPMN) activity diagram of Nora’s process. Nora accesses the Amazon.com website to purchase a favorite musician’s latest album. She searches for the musician’s name. Amazon displays the results of the search, and she selects the correct entry. She samples the music and then decides whether to purchase the album. If she decides to purchase the album, then she must decide whether to purchase a physical CD or just download the MP3 files. If she decides to purchase the CD, she clicks on the buy now button. Since she is an Amazon Prime member, she automatically receives free 2-day delivery and the item is charged to her credit card. She then waits 2 days for the delivery of the CD. When it arrives, she can enjoy the music. If she decides to purchase the MP3, she selects that option and again clicks on the buy now button. She is charged for the item and taken to a page to download her music. She downloads the album, and then she can enjoy her music.

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2) Use the following description to create a Business Process Modeling Notation (BPMN) activity diagram of Jeremy’s process. Jeremy is using his bank’s online banking site to pay for his new phone. He logs onto the bank’s website by entering his user name and password, confirming his SiteKey. After access to his account, he selects the Bill Pay tab. He searches to see of the phone company is already listed in the “Pay To Accounts.” If the phone company is not listed, he clicks on the option to “Add a New Pay To Account.” He fills in the information for the phone company, including the name, address, account number, and phone number. After completing the entry, he is taken back to the list of “Pay To Accounts.” If the phone company is listed (or if he just completed entering the new account), he enters the amount of the payment. Then, he selects the option to set up a recurring payment. He enters the number of payments. Then, he selects the date that the payment should be sent each month. He then logs out of the banks online banking site and closes his browser.

3) Use the following description to create a Business Process Modeling Notation (BPMN) activity diagram of Caitlin’s process. Caitlin is planning to run in the local July 4th 5K run. She wants to register online, but she forgot the websites URL. So, she navigates to Google and starts a search for the site. She selects the registration site from the search results. Once at the site, she selects the option to register for the 4th of July run. She fills in the registration form and provides her credit card information for payment. After completing her own registration, she decides to register the other members of her team. One-by-one, she enters the registration information for the team member and pays for their entry. After completing all the registrations, she provides a user name and password so she can return to the site to see their results after the race. She logs out of the site and closes her browser.

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Answer Key Test name: Chap 02_3e_Problem Materials 1) There could be several similar answers, but this is a basic solution:

2) There could be several similar answers, but this is a basic solution:

3) There could be several similar answers, but this is a basic solution:

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CHAPTER 3 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) The Object Management Group maintains the standard for Unified Modeling Language (UML) Class diagrams. ⊚ true ⊚ false

2) Unified Modeling Language (UML) Class diagrams describe the logical structure of a database system. ⊚ true ⊚ false

A Class is a separately identifiable collection of business relationships. ⊚ true ⊚ false

4) In Unified Modeling Language (UML) Class diagrams, a Class is represented by a rectangle. ⊚ true ⊚ false

5) In Unified Modeling Language (UML) Class diagrams, Associations are represented by dashed lines. ⊚ true ⊚ false

6) In Unified Modeling Language (UML) the options for minimum multiplicity values are 0, 1, and 2. ⊚ true ⊚ false

7) In Unified Modeling Language (UML) the options for maximum multiplicity values are 1 and *.

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⊚ ⊚

true false

8) In Unified Modeling Language (UML) the options for maximum multiplicity values are 0 and *. ⊚ true ⊚ false

9) In Unified Modeling Language (UML) the options for minimum multiplicity values are 1 and *. ⊚ true ⊚ false

10) In Unified Modeling Language (UML) attributes are characteristics of individual instances of a Class. ⊚ true ⊚ false

11)

In Unified Modeling Language (UML) primary keys cannot by NULL. ⊚ true ⊚ false

12)

In Unified Modeling Language (UML) primary keys may be blank. ⊚ true ⊚ false

13) In Unified Modeling Language (UML) foreign keys allow tables to be linked together in a database. ⊚ true ⊚ false

14) A generalization relationship models a grouping of things that share common characteristics.

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⊚ ⊚

15)

true false

An aggregation relationship is a form of generalization relationships. ⊚ true ⊚ false

16) Associations can indicate the roles that one Class takes in its business relationship with another Class. ⊚ true ⊚ false

17) A database should have exactly the same number of tables as there are Classes in the Unified Modeling Language (UML) Class diagram from which the database is developed. ⊚ true ⊚ false

18) When building a database from Unified Modeling Language (UML) Class diagrams, each instance of each Class becomes a row in the corresponding table. ⊚ true ⊚ false

19)

Obligatory business rules state what should not occur. ⊚ true ⊚ false

20)

Business rules set criteria for branching in activity models. ⊚ true ⊚ false

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MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 21) Which of the following is not something a model of database structures must be able to describe? A) The entities or things in the domain of interest. B) The sequence that entities are accessed. C) The cardinalities that describe how many instances of one entity can be related to another. D) The attributes or characteristics of the entities and relationships.

22) Which of the following would be least likely to be represented with a Unified Modeling Language (UML) Class? A) Trucks B) Currency C) Employees D) Bank Account

23)

Which of the following is the best description of an association? A) A group of classes. B) Grouping of items. C) The relationship between two classes. D) The number of times one class is related to another.

24)

Which of following are possible options for minimum multiplicities? A) 0 and 1. B) 0 and *. C) * and 1. D) 0, 1, and *.

25)

Which of the following best describes the purpose of a primary key?

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A) Allows linking two or more tables. B) Indicates the minimum multiplicities for an association. C) Matches values of foreign keys in other classes. D) Uniquely identifies each instance of the class.

26)

Which of the following statements about foreign keys is not true? A) A foreign key can be a combination of attributes. B) A foreign key should never be linked to a primary key in another table. C) Foreign key must match values of the linked primary key. D) Foreign keys support a defined association.

27)

Which of the following is not a criterion for selection of a primary key? A) The primary key cannot be NULL (blank). B) The primary key should be controlled by the organization assigning it. C) Primary keys with sequential values make it easier to spot gaps in the data. D) The primary key should always be numeric.

28) Which of the following is not a best practice in preparing Unified Modeling Language (UML) Class diagrams? A) Opt for simplicity. B) Use various size class rectangles. C) Avoid crossing lines whenever possible. D) Avoid confusing abbreviations.

29) Which of the following is not a step in using a Unified Modeling Language (UML) Class model to prepare a database?

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A) Map Classes to Tables. B) Map Attributes to Table Fields. C) Map Associations to Primary Keys. D) Map Associations to Foreign Keys.

30)

Which of the following is not a form of business rules? A) Compulsory. B) Obligatory. C) Prohibited. D) Allowed.

31)

Which of the following is a well-formed business rule? A) Customers must be over 18 years of age. B) Customers may not be under 18 years of age. C) Customers must pay in U. S. dollars. D) All of these are well-formed business rules.

32) Which of the following best represents a business rule in a decision table where the decision table relates to shipping rules? A) Customer status in a rewards program. B) What to charge the customer for shipping based on location. C) Type of payment for the shipping. D) Choice of shipping carrier.

33) Consider an association between a Customers class and a Sale class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Customers class are 1..1 and the multiplicities next to the Sale class are 0..*. Which of the following is the best way to implement that association in your database?

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A) Post the primary key of Customers as a foreign key in Sales. B) Post the primary key of Sales as a foreign key in Customers. C) Create a linking table. D) None of these choices are correct.

34) Consider an association between a Sales class and an Inventory class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Sales class are 0..* and the multiplicities next to the Inventory class are 1..*. Which of the following is the best way to implement that association in your database? A) Post the primary key of Sales as a foreign key in Inventory. B) Post the primary key of Inventory as a foreign key in Sales. C) Create a linking table. D) None of these choices are correct.

35) Consider an association between a Cash Disbursements class and a Cash Accounts class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Cash Disbursements class are 0..* and the multiplicities next to the Cash Accounts class are 1..1. Which of the following is the best way to implement that association in your database? A) Post the primary key of Cash Disbursements as a foreign key in Cash Accounts. B) Post the primary key of Cash Accounts as a foreign key in Cash Disbursements. C) Create a linking table. D) None of these choices are correct.

36) Consider an association between a Pet Owners class and a Pets class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Pet Owners class are 1..1 and the multiplicities next to the Pets class are 1..*. Which of the following is the best way to implement that association in your database? A) Post the primary key of Pet Owners as a foreign key in Pets. B) Post the primary key of Pets as a foreign key in Pet Owners. C) Create a linking table. D) None of these choices are correct.

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37) Consider an association between a Cities class and a Neighborhoods class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Cities class are 1..1 and the multiplicities next to the Neighborhoods class are 1..*. Which of the following is the best way to implement that association in your database? A) Post the primary key of Cities as a foreign key in Neighborhoods. B) Post the primary key of Neighborhoods as a foreign key in Cities. C) Create a linking table. D) None of these choices are correct.

38) Consider an association between a Deliveries class and a Shipping Companies class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Deliveries class are 0..* and the multiplicities next to the Shipping Companies class are 1..1. Which of the following is the best way to implement that association in your database? A) Post the primary key of Deliveries as a foreign key in Shipping Companies. B) Post the primary key of Shipping Companies as a foreign key in Deliveries. C) Create a linking table. D) None of these choices are correct.

39) Consider an association indicating professional licensing status between an Accountant class and a States class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Accountants class are 0..* and the multiplicities next to the States class are 0..*. Which of the following is the best way to implement that association in your database? A) Post the primary key of Accountants as a foreign key in States. B) Post the primary key of States as a foreign key in Accountants. C) Create a linking table. D) None of these choices are correct.

40) Consider an association between a Cash Disbursements class and a Vendors class in a Unified Modeling Language (UML) Class diagram. The multiplicities next to the Cash Disbursements class are 0..* and the multiplicities next to the Vendors class are 1..1. Which of the following is the best way to implement that association in your database?

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A) Post the primary key of Cash Disbursements as a foreign key in Vendors. B) Post the primary key of Vendors as a foreign key in Cash Disbursements. C) Create a linking table. D) None of these choices are correct.

41) Logical database structure models, including UML Class Diagrams, must be able to describe which of the following? A) The attributes of the entities B) The activities performed in the business process. C) The operations performed on the database. D) The Bachman diagram.

42) Which of the following is not one of the building blocks used for creating UML Class Diagrams? A) Classes. B) Events. C) Associations. D) None of these other choices are used in UML Class Diagrams.

43) A database being built to support customer purchase information would likely have the following classes except: A) Customer B) Order C) Inventory D) Color

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44) What is the best description of the relationship between employee and vehicle in the following UML class diagram?

A) Zero-to-one. B) Zero-to-zero. C) One-to-one. D) One-to-many.

45) What is the best description of the relationship between employee and vehicle in the following UML class diagram?

A) One-to-one. B) One-to-many. C) Zero-to-many. D) One-to-zero.

46) What is the best description of the relationship between instructor and course in the following UML class diagram?

A) One-to-zero. B) One-to-many. C) Zero-to-many. D) Many-to-many.

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47)

Which attribute in the following class would make the best primary key?

Customer Customer Name Street City State Postal Code Customer ID Phone Number E-mail Address Credit Limit

A) Customer B) Customer Name C) E-mail address D) Customer ID

48)

Which of the following UML class diagrams depicts an aggregation relationship?

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49) Which of the following is most similar to the relationship between the UML class diagram and the database? A) The relationship between a blueprint and building. B) The relationship between driving directions and a map. C) The relationship between raw materials and finished goods. D) The relationship between cooking instructions and ingredients.

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50) When implementing the database from a UML class diagram, attributes should be mapped to which of the following? A) Tables. B) Relationships. C) Fields. D) Indexes.

51) When implementing the database from a UML class diagram, associations should be mapped to which of the following? A) Tables. B) Fields. C) Relationships. D) Foreign keys.

52) The following UML class diagram should result in how many tables in the relational database?

A) 4 B) 5 C) 6 D) 7

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53) The following UML class diagram should result in how many tables in the relational database?

A) 4 B) 5 C) 6 D) 7

54) Which situation best exemplifies why anaylsts must understand process decision requirements? A) A business accepts cash, checks and all major credit cards B) A business can only transact with retailers who have a valid business license C) A business sells multiple types of widgets D) A business has three bank accounts

55)

Which of the following is not a valid enforcement level for business rules? A) Segregation. B) Pre-override. C) Strict Enforcement. D) Post-override.

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ESSAY. Write your answer in the space provided or on a separate sheet of paper. 56) List the tables with primary keys, attributes, and foreign keys that implement the following UML Class diagram given the accompanying list of attributes. Identify primary keys with PK and foreign keys with FK. {MISSING IMAGE}

Attributes: Field ID Field Location Field Name Game Date Game Number League ID League Name League Sport Number of fields assigned to this league

Number of players on team Player Age Player Average Player ID Player Name Score of this team in this game Team ID Team Name

57) List the tables with primary keys, attributes, and foreign keys that implement the following UML Class diagram given the accompanying list of attributes. {MISSING IMAGE}

Attributes: Bicycle color Bicycle product number Bicycle quantity on hand Bicycle size

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Geographic region description Geographic region identifier Number of bicycles of this type on hand Price of this bicycle sold on this invoice

Bicycle Type Bicycle Type Description Customer address Customer name Customer number

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Quantity of this bicycle sold on this invoice Sale total $ amount Sales invoice date Sales invoice number Year-to-date sales $ for this region

Answer Key Test name: Chap 03_3e 1) TRUE 2) TRUE 3) FALSE 4) TRUE 5) FALSE 6) FALSE 7) TRUE 8) FALSE 9) FALSE 10) TRUE 11) TRUE 12) FALSE 13) TRUE 14) TRUE 15) FALSE 16) TRUE 17) FALSE 18) TRUE 19) FALSE 20) TRUE 21) B 22) B 23) C 24) A 25) D 26) B Version 1

27) D 28) B 29) C 30) A 31) D 32) B 33) A 34) C 35) B 36) A 37) A 38) B 39) C 40) B 41) A 42) B 43) D 44) C 45) B 46) D 47) D 48) C 49) A 50) C 51) D 52) B 53) C 54) B 55) A

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56) Fields = Field ID (PK), Field Location, Field Name Games = Game Number (PK), Field ID (FK), Game Date Teams = Team ID (PK), League ID (FK), Team Name, Number of Players on this Team Players = Player ID (PK), Player Name, Player Age, Player Average Leagues = League ID (PK), League Name, League Sport (Linking Tables) Games− Teams = Game Number/Identifier + Team ID (PK), Score of this team in this game Leagues − Fields = League ID + Field ID (PK), Number of fields assigned to this league Players-Teams = Player ID + Team ID (PK) 57) Types of Bicycles = Bicycle Type (PK), Bicycle Type Description, Number of bicycles of this type on hand Bicycles = Bicycle Product Number (PK), Bicycle Type (FK), Bicycle Size, Bicycle Color, Bicycle Quantity on Hand Sales = Sales Invoice Number (PK), Customer Number (FK), Sales Invoice Date, Sale Total $ Amount Customers = Customer Number (PK), Geographic Region Identifier (FK), Customer Name, Customer Address Geographic Region = Geographic Region Identifier (PK), Geographic Region Description, Year-to-date Sales $ for this Region (Linking Tables) Sales - Bicycles = Sales Invoice Number + Bicycle Product Number (PK), Price of this Bicycle Sold on this Invoice, Quantity of this Bicycle Sold on this Invoice

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CHAPTER 3 : PROBLEM MATERIAL ESSAY. Write your answer in the space provided or on a separate sheet of paper. 1) Identify the classes and associations in the following narrative and draw a class diagram with multiplicities: Dr. Jeff runs Fountain Valley Veterinary Clinic. He treats many animals and each animal is usually a pet belonging to one owner; however, Dr. Jeff sometimes treats injured animals even if the owner is unknown. In a typical visit to the clinic, each animal could receive one or more clinic services (such as tests, shots, and surgical treatments). The clinic collects one payment from the owner for all the clinic services performed in each visit. The owners pay for the visit when they pick up their pet, so the clinic does not track cash receipts separately. It only tracks pet visits and whether or not payment was received for that visit. Each payment is deposited into one clinic bank account. The clinic does not track which employee performs the services or collects payments. The clinic records information about the pets and their owners on their first visit.

2) Identify the classes and associations in the following narrative and draw a class diagram with multiplicities: To put himself through school, Zach operates an ice cream truck that travels through neighborhoods, ringing a bell to attract kids that want a cold ice cream treat. Zach’s inventory includes many ice cream products and he tracks which items are sold in each sale. He occasionally adds new items to his list of ice cream products for sale. Zach only accepts cash for each sale. To identify the routes that generate the most sales, Zach summarizes sales by neighborhood but he only tracks neighborhoods with at least one sale. Zach deposits the cash received in his bank account at the end of each day.

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3) Identify the classes and associations in the following narrative and draw a class diagram with multiplicities: Barb maintains a real estate tracking system for Orange County. There are currently 34 incorporated cities and 15 unincorporated communities in the county. Barb tracks all of these as cities. Within each city, there is at least one and could be many neighborhoods. Within each neighborhood, there is at least one and likely many houses. For each house, Barb tracks information for all the sales in the last 20 years, although some houses have not been sold in the last 20 years.

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Answer Key Test name: Chap 03_3e_Problem Material 1){MISSING IMAGE} 2){MISSING IMAGE} 3){MISSING IMAGE}

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CHAPTER 4 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Three types of data models used today are: the hierarchical model, the network model and the relational model. ⊚ true ⊚ false

In a hierarchical data model, data elements are related in many-to-many relationships. ⊚ true ⊚ false

3) Classes could be grouped into Resources (R), Entities (E), and Assets (A) in data modeling. ⊚ true ⊚ false

Queries in Access are utilized by users to enter data into tables and view existing records. ⊚ true ⊚ false

The SQL command "Group by" can be used to order an amount in a descending order. ⊚ true ⊚ false

6) The asterisk (*) following the SELECT SQL statement is a wild card indicating all columns should be selected. ⊚ true ⊚ false

The "Where" SQL clause can be used to link two tables. ⊚ true ⊚ false

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8) Access offers modules, which are defined by users to automate processes like opening a specific form. ⊚ true ⊚ false

In Access, users can edit database information in reports. ⊚ true ⊚ false

10) Cloud computing is an internet-based computing where shared resources, software, and information is provided to firms on demand. ⊚ true ⊚ false

11) While hierarchical and network data models require relationships to be formed at the database creation, relational data models allow relationships to be created and updated as needed. ⊚ true ⊚ false

12)

Each attribute in a table can have several names. ⊚ true ⊚ false

13) Access is a simple database management system that can be used to run databases for individuals and small firms. ⊚ true ⊚ false

14)

SQL is based on relational algebra and allows a user to query and update the database. ⊚ true ⊚ false

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15) In a database, while queries allow the user to access, read and report on desired data, the responsibility of actually making physical changes to the relational database belongs to the Database Management System (DBMS). ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 16) Which type of data models allows each record to have multiple parent and child records? A) The hierarchical mode. B) The network model. C) The relational model. D) None of these choices is correct.

17)

Which of the following correctly describes the Referential Integrity Rule? A) The primary key of a table must have data values (cannot be null). B) Each attribute in a table must have a unique name. C) The data value for a foreign key could be null. D) Values of a specific attribute must be of the same type.

18)

Which of the following tasks cannot be performed through queries in access? A) Retrieve and display data. B) Calculations of data. C) Data sorting. D) Create and update relationships.

19)

In Microsoft Access, we use tables in a database for:

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A) Data entry. B) Data storage. C) Data retrieval. D) Two of these choices are correct.

20) A company would like to implement a management information system that integrates all functional areas within an organization to allow information exchange and collaboration among all parties involved in business operations. Which of the following systems is most effective for this application? A) A decision support system. B) A Structured Data system. C) A Microsoft database. D) An enterprise resource planning system.

21) An enterprise resource planning system has which of the following advantages over multiple independent functional systems? A) Modifications can be made to each module without affecting other modules. B) Increased responsiveness and flexibility while aiding in the decision-making process. C) Increased amount of data redundancy since more than one module contains the same information. D) Data can be accessed through Structured Query Language (SQL).

22)

What kind data model is most commonly used as a basis for today's enterprise systems? A) The hierarchical mode. B) The network model. C) The relational model. D) None of these choices is correct.

23)

The property of the primary key in a table in Microsoft Access should be set to:

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A) The Required field = "Yes", the Indexed field = "Yes (No Duplicates)". B) The Required field = "NO" and the Indexed field = "Yes (No Duplicates)". C) The Required field = "Yes" and the Indexed field = "Yes (Duplicated)". D) The Required field = “NO” and the Indexed field = “Yes (Duplicated)”.

24)

Which of the following is not a construct in a relational database? A) Tables B) Attributes C) Records D) Forms

25)

Which of the following is not a likely module of an Enterprise Reporting System (ERP)? A) Financial Accounting. B) Cloud based computing. C) Payroll. D) Sales and Distribution.

26)

Which of the following statements about the requirements of table design is incorrect?

A) Each attribute in a table must have a unique name. B) Values of a specific attribute must be of the same type. C) Each attribute (column) of a record (row) must be single-valued. D) All other non-key attributes in a table must describe a characteristic of the class (table) identified by the foreign key.

27) To convert a conceptual model with a maximum Multiplicities relationship of "many to many" into relationship database tables, one must:

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A) Create a foreign key in one of the tables to link the two tables. B) Create a relation with no attributes of its own. C) Create a relationship table to handle the many-to-many relationship. D) Many-to-many relationship cannot be represented in Access.

28) Which set of multiplicities correctly shows the relationship between the Cash Collection table and the Sales table in modeling cash sales? A) Cash Collection (1..1) – Sale (1..N). B) Cash Collection (1..N) – Sale (1..N). C) Cash Collection (1..N) – Sale (1..1). D) Cash Collection (1..1) – Sale (1..1).

29)

A Query in a program language such as Structured Query Language (SQL) can be used to A) Update data. B) Report data. C) Retrieve data. D) All of the choices are correct.

30)

In Microsoft Access, we use "Forms" for: A) Data entry. B) Data storage. C) Date retrieve. D) Two of the choices are correct.

31)

The most likely user of a Microsoft Access Report:

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A) Data input clerk. B) Store manager. C) Systems analyst. D) System coder.

32)

Which of the following is not a type of data model? A) Hierarchical data model. B) Network data model. C) Normalization data model. D) Relational data model.

33)

What kind of data model has the greatest ability to scale? A) Hierarchical data model. B) Network data model. C) Relational data model. D) All of the choices are correct.

34)

Which of the following about cloud computing is incorrect?

A) Cloud computing is Internet-based computing where shared resources, software, and information are provided to firms on demand. B) Cloud computing can easily host enterprise system applications. C) If the internet connection goes down the system will not function. D) Data stored in a cloud computing system is always secure.

35)

What is the main purpose of using foreign keys in a relational database design?

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A) It provides useful financial data value in the table. B) It is required in all tables. C) It is used to link tables. D) It is required for forms.

36)

Which of the following about SQL is incorrect?

A) SQL is a language designed to query data in a relational database. B) SQL is based on relational algebra and allows a user to query and update the database. C) SQL uses the PIVOT function to insert data. D) SQL uses SELECT statement to tell the query which columns (or attributes) of a table should be included in the query.

37) Which of the following items can best be described as a “Resource” in the REA data model? A) Cashier. B) Sales. C) Cash. D) Two of the above are correct.

38) Which of the following items can best be described as an “Event” in the REA data model? A) Cash. B) Cashier. C) Cash collection. D) Customer.

39) Which of the following items can best be described as an “Agent” in the REA data model?

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A) Purchases. B) Purchasing manager. C) Raw material inventory. D) Purchase returns.

40)

Which of the following is not accurate? A) Columns in a table are called fields. B) Fields represent attributes of a class. C) Records represent attributes of a table. D) Rows in a table are called records.

41) Which of the following is not one of the advantages relational data models have over other data models? A) Exclusively uses parent/child relationships. B) Increased flexibility and scalability. C) Simplicity. D) Reduced information redundancy.

42)

Which of the following best describes a DBMS? A) The manager(s) in charge of a company’s databases. B) Software that can create, modify and query databases. C) A language used to retrieve data from databases. D) A database created using Microsoft software.

43) Classes in a relational database model for AISs are typically grouped into all of the following categories except:

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A) Events. B) Agents. C) Resources. D) Activities.

44) Which of the following items does not represent a UML class diagram object and its resulting database object? A) Classes → Tables. B) Attributes → Fields. C) Multiplicities → Records. D) Associations → Relationships.

45)

A foreign key in a database table is always: A) A unique identifier for a record in that table. B) A numeric field. C) The name of a UML class. D) A primary key in a related table.

46)

Which of the following statements best describes the entity integrity rule? A) A database entity must fit within the REA model. B) A record’s foreign key value must be null. C) A record’s primary key must have a data value. D) All values of an attribute must be of the same data type.

47)

Which of the following is not one of the objects used in Microsoft Access?

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A) Tables. B) Sites. C) Forms. D) Macros.

48) Which of the following Microsoft Access objects is used to integrate data from one or more queries and/or tables in order to present information useful to decision makers? A) Tables. B) Reports. C) Forms. D) Macros.

49) Which set of multiplicities correctly shows the relationship between the Cash Receipts table and the Sale table for an organization that allows customers to buy on credit and pay in multiple installments? A) Cash Receipts (1..1) – Sale (1..1). B) Cash Receipts (1..N) – Sale (0..N). C) Cash Receipts (1..1) – Sale (N..M). D) Cash Receipts (0..N) – Sale (1..1).

50) Which of the following operators would be used in a SQL query designed to simply display database records? A) SELECT. B) INSERT. C) DISPLAY. D) VIEW.

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51) Consider the following SQL query. Which item best describes the results of the query? SELECT VendorID, Sum(POTotal) FROM [Purchase Orders] GROUP BY VendorID A) Displays all purchase order lines for all vendors. B) Adds new purchase order information to the purchase orders table. C) Displays the vendor ID and all purchase order totals in the purchase orders table. D) Displays the vendor ID and the sum of all purchase order totals for that vendor.

52) Using the following table what will result from the SQL command “SELECT Item SKU, Price”? Item SKU 651 546 876 165

Price $ 5.00 $ 4.00 $ 5.00 $ 10.00

Manufacturer Nike Nike Under Armour Addidas

A) All rows but only the 1st and 2nd column. B) All rows but only columns with numerical data. C) All data in the 1st and 2nd columns for the first and last row. D) All data in the table.

53) Using the following table what will result from the SQL command “SELECT *, WHERE [Price] = $5”? Item SKU 651 546 876 165

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Price $ 5.00 $ 4.00 $ 5.00 $ 10.00

Manufacturer Nike Nike Under Armour Addidas

A) All columns, row 1. B) Price column, row 1. C) All columns, rows 1 & 3. D) Price column, row 3.

54)

ERPs are useful to auditors for which of the following reasons?

A) ERPs use cloud computing technology, which allows auditors to review transactions from anywhere. B) ERPs track details regarding creation, modification, and use of transactions throughout the organization in a single system. C) ERPs are required by the Sarbanes-Oxley Act of 2002. D) ERPs are spread across multiple logical databases, allowing auditors to minimize disruption to processing when reviewing ERP activity.

55) Which of the following is not one of the typical challenges organizations face when implementing an ERP? A) Integrating with external business partners’ information systems. B) Converting data from legacy systems to the ERP. C) Installing the ERP software. D) Successfully completing a large project in an organization.

56)

Which of the following best describes cloud computing?

A) Internet based computing where an ERP system is shared amongst multiple firms. B) Internet based computing where shared resources, software and information are provided to firms on demand. C) Internet based software which is used to run SQL queries. D) Internet based software that helps monitor the security of a firm’s resources.

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ESSAY. Write your answer in the space provided or on a separate sheet of paper. 57) List the seven objects and their functions that are used to implement relational databases using Microsoft Access.

58)

What are the three main advantages of relational databases?

59)

Discuss the challenges of enterprise system implementation?

60)

Explain the three main types of classes in data modeling.

61)

What are the benefits of implementing enterprise systems in companies?

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62) Search for a case in which a company’s ERP implementation would be considered a failure (other than those presented in the text). Summarize the case and explain the primary reasons that the implementation was a failure.

63) Using the Cash Receipt Table below, show the output if the following SQL command is given: Cash Receipt: Remittance Advice# RA-1 RA-2 RA-3 RA-4 RA-5

Amount

1,666 10,000 72,000 32,600 1,669

Bank Account# BA-6 BA-7 BA-7 BA-7 BA-6

Date 25-JUL-2014 26-JUL-2014 15-AUG-2014 15-AUG-2014 25-AUG-2014

Customer Number

Cashier Number

C-2 C-2 C-1 C-5 C-2

E-39 E-39 E-39 E-39 E-39

SELECT SUM (Amount) FROM [Cash Receipt] Where [Customer Number] =’C-2’;

64) Using the Cash Receipt Table in the previous question, show the SQL command which will return the result table below. Remittance Advice#

Amount

RA-3 RA-4

72,000 32,600

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Bank Account# BA-7 BA-7

Date 15-AUG-2014 15-AUG-2014

Customer Number

Cashier Number

C-1 C-5

E-39 E-39

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Answer Key Test name: Chap 04_3e 1) TRUE 2) FALSE 3) FALSE 4) FALSE 5) FALSE 6) TRUE 7) TRUE 8) FALSE 9) FALSE 10) TRUE 11) TRUE 12) FALSE 13) TRUE 14) TRUE 15) TRUE 16) B 17) C 18) D 19) B 20) D 21) B 22) C 23) A 24) D 25) B 26) D Version 1

27) C 28) D 29) D 30) A 31) B 32) C 33) C 34) D 35) C 36) C 37) C 38) C 39) B 40) C 41) A 42) B 43) D 44) C 45) D 46) C 47) B 48) B 49) D 50) A 51) D 52) A 53) C 54) B 55) C 56) B Version 1

57) ● Tables are used to store data. ● Queries are a tool used to retrieve and display data derived from records stored within the database. ● Forms are utilized to enter data into tables and view existing records. ● Reports are used to integrate data from one or more queries and tables to provide useful information to decision makers. ● Pages allow data to be entered into the database in real time from outside of the database system. ● Macros are defined by users to automate business processes. 58) ● Flexibility and Scalability: relational data models are able to handle changes in business world quickly and easily. ● Simplicity: A relational data model is a relatively simple model that is easy to communicate to both database users and database developers. ● Reduced Information Redundancy: A relational data model requires each piece of data to be recorded only in one place eliminating the need for information to be stored in multiple places in the organization. 59) ● Integrating various modules within the enterprise system, ● Integrating with external systems such as the information system of a supplier and/or customer, ● Integrating with the firm’s own existing legacy systems, ● Converting data from existing legacy systems to the enterprise system, and ● Getting any big project implemented at a firm.

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60) ● Resources (R), events (E), and agents (A) ● Resources are those things that have economic value to a firm, such as cash and products. ● Events are the various business activities conducted in a firm’s daily operations, such as sales and purchases. ● Agents are the people who participate in business events, such as customers and salespeople. 61) Managers (and auditors) can trace the creation of information throughout business processes, and also identify the participants in each process. Therefore, ES has a higher level of internal transparency compared to the typically isolated legacy systems. Other benefits include: ● Availability of information across business functions ● Provides greater capability for analysis of business ● Improved management decision making ● Coordinates business process activities and information collection for those processes and activities across business functions ● Reduces data redundancy in the organization ● Others?

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62) Following is an example. Students’ answer may vary. A case in which a company failed to implement the ERP systems is Nike’s supply chain disaster (http://www.cio.com/article/32334/Nike_Rebounds_How_and_Why_Ni ke_Recovered_from_Its_Supply_Chain_Disaster). In this occurrence, Nike had a problem which is now referred to as ‘the i2 problem’ in which a software glitch cost Nike over $100 million in lost sales. Furthermore, Nike’s stock price was depressed by 20 percent and many class action lawsuits followed. In the year 2000, Nike implemented an i2 demand-planning engine which computed orders for thousands more Air Garnett sneakers than market demand and computed orders for thousands fewer Air Jordan’s than market demand. One of the main reasons that caused the failure and why Nike could recover was that Nike had a business plan which was widely understood. The software problem, which was related to factory orders in Nike’s case, sends a ripple through the product delivery which results into a much larger effect that eventually crashes on the balance sheet. In the end, this effect was so large that Nike had to reveal its losses at analysts in order to prevent confusion from the end of SEC and its shareholders. Nike ended up stopping the use of the i2 demand planner in favor of using the SAP ERP system, which relies on orders and invoices rather than what the i2 relied on, which was predictive algorithms. Nike had been attempting to integrate the i2 demand planning software as part of a wider strategy to implement ERP, supply chain planning, and CRM software onto a single platform shared by Nike operations in areas all over the world. The reason that the i2 problem emerged was that Nike decided to install i2 while still using its legacy systems rather than adhering to their original plan which was to deploy i2 as part of its SAP ERP project. This caused some problems, such as the problem of heavy customization of i2 Version 1

software with Nike’s legacy systems. This spilled over into factory orders, in which the i2 system duplicated some orders and ignored other orders. Nike had felt a false sense of security when they decided to install i2 due to the fact that it was a much smaller project when compared to the SAP plan. They felt that they could use i2 without changing much of the other business software, but they were incorrect in regards to integration complications. Essentially, the installation of the i2 software was too rushed, and there was not enough training for the employees. 63) 13,335 64) SELECT * FROM [Cash Receipt] WHERE Date = ‘15-AUG-2014’; Or, SELECT * FROM [Cash Receipt] WHERE Amount > 32000; (or other valid expression for Amount)

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CHAPTER 5 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Type images can be used to allow process information to be summarized by category. ⊚ true ⊚ false

BPMN models can describe the collaboration between two organizations using pools. ⊚ true ⊚ false

A BPMN process flow can start in one pool and end in the collaborating pool. ⊚ true ⊚ false

4) In a collaboration model using BPMN, the interaction between participants is called orchestration. ⊚ true ⊚ false

A pool in a BPMN model does not actually have to display any activities. ⊚ true ⊚ false

An intermediate error event can be used to model process exceptions. ⊚ true ⊚ false

Application controls limit who can change records in a system. ⊚ true ⊚ false

Segregation of duties is an example of a COSO control activity.

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⊚ ⊚

true false

9) Business rules are unrelated to COSO control activities, although they serve an important purpose. ⊚ true ⊚ false

10)

One-to-many relationships are implemented by posting a foreign key. ⊚ true ⊚ false

11)

Many-to-many relationships are implemented by posting a foreign key. ⊚ true ⊚ false

12)

One-to-one relationships are implemented by creating a linking table. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 13) Which of the following best describes the purpose of a BPMN collapsed sub-process? A) A series of events is hidden from view as the information is not well controlled. B) The collapsed process will be modeled at a later time. C) A series of events is hidden from view as the information is not necessary to the model. D) The collapsed process contains too many errors.

14)

Which of the following best describes the purpose of an intermediate error event?

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A) Shows the interchange between two pools. B) Depicts the sequence of activities in one pool. C) Contains a series of activities that are hidden from view. D) Illustrates the process flow when an exception occurs.

15) Which of the following best describes the difference between access controls and application controls? A) Access controls limit who can change records and application controls ensure data integrity and provide an audit trail of any changes. B) Access controls limit how many records can be changed and application controls ensure segregation of duties. C) Access controls are "prohibited" business rules and application controls are "allowed" business rules. D) There is no difference between access and application controls.

16) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Quote class and the Order class?

A) Quotes and orders are entered into the system at the same time. B) Each quote may result in many future Orders. C) The same Sunset Partner both prepares quotes and records orders. D) Each order must result from a prior quote.

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17) Refer to the following diagram. Which of the following answers provides the best interpretation of the multiplicities for the association between the Order class and the Products class?

A) Each order must specify the same products as the previous quote. B) Each product has been ordered at least once. C) An order does not have to include a product. D) An order may include many products.

18) Refer to the following diagram. Which of the following answers provides the best interpretation of the multiplicities for the association between the Cash Receipt and Cash classes?

A) Each cash receipt is deposited into one bank account. B) Each order increases accounts receivable. C) The company only has one bank account. D) Some cash receipts are not deposited into a bank account.

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19) Refer to the following diagram. Which of the following answers provides the best interpretation of the multiplicities for the association between the Orders and Cash Receipt classes?

A) Some customers pay for their orders in advance. B) Some orders result in several payments from the customers. C) Each cash receipt pays for at least one order, but it could pay for many orders. D) Each cash receipt pays for a minimum of 0 orders and a maximum of 1 order.

20) Refer to the following diagram. Which of the following answers provides the best interpretation of the multiplicities for the association between the Employees and the Product Categories classes?

A) Each employee must be assigned to manage at least one product category. B) Each product category has one manager. C) Each product category can have no managers or multiple managers. D) Each employee can manage only one product category.

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21) Refer to the following diagram. Which of the following answers does not provide a valid interpretation of the multiplicities for the association between the Employees and the Sales classes?

A) Only one employee participates in each sale. B) Several employees participate in each sale. C) Some employees do not participate in sales. D) Some employees participate in several sales.

22) Refer to the following diagram. Which of the following answers does not provide a valid interpretation of the multiplicities for the association between the Inventory and the Product Category classes?

A) Every product category is managed by one employee. B) Every product category includes at least one inventory item. C) Some product categories do not include inventory items. D) Every inventory item is in at most one product category.

23) Which of the following activities is not associated with the sales and collection business process?

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A) Recording customer payments. B) Maintaining vendor records. C) Selling products and services. D) Billing customers.

24) Which of the following accounts is generally not impacted as part of the Sales and Collections process? A) Cash B) Accounts Receivable C) Inventory D) Accounts Payable

25)

Which of the following best describes the purpose of an intermediate timer event? A) Shows the timing of messages between two pools. B) Determines when the business process begins. C) Illustrates the process flow when a delay occurs. D) Contains a series of activities that are hidden from view.

26)

Which of the following is not an example of a business rule? A) Managers must approve orders over $10,000 B) The credit department must approve all sales on account C) Inventory must be maintained in a secure location D) Employee who receives checks can not change invoices

27)

Which of the following best describes the choreography in a BPMN activity diagram?

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A) Shows the interaction of messages between participants in the business process. B) Hides activities that are not of interest in the analysis of the business process. C) Shows the sequence of activities within one pool. D) Follows the sequence flow from start to end.

28)

Which of the following best describes the orchestration in a BPMN activity diagram? A) Shows the interaction of messages between participants in the business process. B) Hides activities that are not of interest in the analysis of the business process. C) Shows the sequence of activities within one pool. D) Follows the sequence flow from start to end.

29)

Which of the following is not something a busines rule would implement? A) Segregation of Duties B) Authorization C) Notifications D) Approval

30)

Business rules are an example of which COSO concept? A) Internal control B) Control activities C) Control environment D) Activity models

31)

Which of these database requirements would be solved with a type image?

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A) Allow companies to include graphic images in class models. B) Used to enumerate a many-to-many association between two REA classes. C) Allow modelers to note types of controls. D) Allow products to be grouped into categories.

32) Consider the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Sales Orders class and the Cash Receipts class?

A) A single cash receipt may apply to only one sales order. B) Sales orders and cash receipts must be entered into the system at the same time. C) Customers may pay for sales orders in multiple payments. D) An employee might never record a sales order.

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33) Consider the following diagram. How will the database relationship between Customers and Sales Orders be implemented?

A) The Sales Order ID will be included as a foreign key in the Customers table. B) The Customer ID will be included as a foreign key in the Sales Orders table. C) The Customer ID will be included as a primary key in the Customer table. D) The Sales Order ID will be included as a primary key in the Customer table.

34) Consider the following diagram. Which of the following best describes how the relationship between Sales Orders and Products will be implemented in the resulting database?

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A) A new table will be created that contains both Sales Order ID and Product ID as its composite primary key. B) The Product ID will be included as a foreign key in the Sales Orders table. C) The Sales Order ID will be included as a foreign key in the Products table. D) The Quantity Ordered field will be included as a foreign key in the Products table.

35) What step should be taken when designing a relational database when a many-to-many relationships exists? A) No action is needed. B) Create a boundary event. C) Create two one-to-many relationships. D) Recreate the foreign key.

36) Consider the following diagram. How will the database relationship between Employees and Sales Orders be implemented?

A) The Sales Order ID will be included as a foreign key in the Employees table. B) The Employee ID will be included as a primary key in the Employees table. C) The Sales Order ID will be included as a primary key in the Employees table. D) The Employee ID will be included as a foreign key in the Sales Orders table.

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37) Consider the following diagram. Which of the following best describes how the relationship between Sales Orders and Cash Receipts will be implemented in the resulting database?

A) The Sales Order ID will be included as a foreign key in the Cash Receipts table. B) A new table will be created that contains both Sales Order ID and Cash Receipt ID as its composite primary key. C) The Cash Receipt ID will be included as a foreign key in the Sales Orders table. D) The Cash Receipt Amount field will be included as a foreign key in the Cash Receipts table.

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Answer Key Test name: Chap 05_3e 1) TRUE 2) TRUE 3) FALSE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) TRUE 9) FALSE 10) TRUE 11) FALSE 12) FALSE 13) C 14) D 15) A 16) B 17) D 18) A 19) C 20) B 21) B 22) B 23) B 24) D 25) C 26) C Version 1

27) A 28) C 29) C 30) B 31) D 32) C 33) B 34) A 35) C 36) D 37) B

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CHAPTER 5 : PROBLEM MATERIAL ESSAY. Write your answer in the space provided or on a separate sheet of paper. 1) La Jolla Management Company (LJMC) manages several apartment complexes and earns revenues by renting out the apartments in those complexes. LJMC assigns an agent/manager (employee) to each complex (one manager can manage several complexes) to handle day-to-day operations, such as maintaining the property, advertising, and signing rental contracts. This case describes the rental (sales) process. Complexes and apartments. LJMC has acquired fifteen and built several more new apartment complexes over the last two years. It identifies complexes by unique name and apartments by the combination of the complex name and apartment#. LJMC categorizes each apartment according to the number of bedrooms and bathrooms, as well as other factors. There are more than 20 apartment categories at present, each identified by unique category #. Since each complex presents a unique set of luxury appointments and amenities, LJMC determines the standard monthly rental fee by considering both the apartment category and complex, for example 2 bedroom 1 bath apartments (category 21) rent for $1850 per month in the El Dorado Arms complex (where there is no view and the complex is close to a freeway) but the same category apartments rent for $2850 per month in the La Jolla Cove complex (where there is a view of the ocean from most apartments in the complex). Rentals. LJMC managers negotiate rental contracts with tenants. Rental contract duration is 12 months from the designated apartment availability date (the date the apartment is available to the tenants). Although there is a standard monthly rental fee for each apartment in each building, agents may negotiate higher or lower rents if they see the need to do so. It is important to have a full record of the actual rent for all apartments. When there is more than one tenant per apartment, LJMC requires every tenant to sign the rental contract. LJMC assigns a unique tenant ID# to each tenant and issues them ID cards to control access. Cash Receipts. LJMC collects the first month rent in advance from the tenants when the rental contract is signed and then collects payments monthly for the life of the contract. Assume that LJMC does not receive cash from other sources. Other Information. Agents, resources, and type images may be recorded in the database before they are linked to other entities. LJMC tracks all its employees in one employee class. Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support La Jolla Management Company’s process using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no entities without attributes). Attributes

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employee# appartment square footage

apartment# date complex was constructed total complex square footage cash receipt# cash receipt date cash receipt amount bank account# bank account balance apartment complex name apartment complex address apartment category# number of bedrooms for apartments in this category

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number of bathrooms for apartments in this category count of available apartments in this category

count of rooms in apartment actual monthly rent tenant ID# tenant name rental contract# rental contract date tenant credit rating employee hire date employee name standard monthly rent date apartment available to tenant count of apartments in this complex

2) Pacific Green Company (PGC) provides landscaping services to individual and corporate customers in southern California. Heather F originally founded PGC as a lawn mowing service while she attended graduate school. It became so successful that she delayed her teaching career to concentrate on building the company. This case describes PGC’s landscaping jobs (sales) process. PGC maintains an inventory of trucks of all sizes to support various landscaping requirements (the acquisition of trucks are outside the scope of this case). PGC tracks the trucks by vehicle identification numbers (VINs) and keeps meticulous records on each truck. For example, they track the mileage for each truck on each landscaping job. Additionally, they track the maintenance history for each truck (maintenance is outside the scope of this case). Each type of truck has a different use and hauling capacity, but each truck in a particular truck type has the same use and hauling capacity. PGC also maintains an extensive inventory of plants, ranging from colorful flowers to large trees, so they can address almost any landscaping requirement on short notice. Since the common name of many plants vary by region, PGC tracks its plant inventory by scientific names (i.e., the Latin names). To manage the plant inventory and ensure that the best plants are applied to job conditions, Heather categorizes all plants by plant type. PGC performs landscaping jobs for individual and corporate customers. Before performing any job, Heather prepares a quote describing the scope of service and the price. Sometimes, the customer will elect to perform pieces of the overall quote, so one quote may result in several landscaping jobs. The landscaping quote presents a price estimate based on the types of plants and types of trucks required and the overall time involved. Each quote involves at least one truck type and one plant type. PGC tracks landscaping jobs by job #. Each landscaping job may require many plants and several trucks. PGC typically assigns multiple employees to each job as follows: (1) one supervisor, (2) one truck drivers per truck, and (3) landscaping laborers. PGC specifically tracks which employees perform which of these functions on specific jobs, since they pay employees according to the work performed on each landscaping job. Customers must pay a 10% deposit when the job begins, another 50% when the job is half completed, and the final 40% within two weeks after the job is fully completed. Customer payments are made by check or credit card and processed for daily deposit by a PGC cashier. PGC keeps all employee information together (your model should show one Employee class). They track each employee’s qualifications according to category: purchasing agent, cashier, landscaping laborer, truck driver, supervisor, etc. An employee is considered qualified when he or she reaches the number of training hours required for that category. However, each employee can hold qualifications for several categories, for example an employee qualified as a purchasing agent could also be qualified as a truck driver. You may assume that all agent, resource, and type image information is entered into the database before any process activity takes place. You may also assume that PGC only receives cash from landscaping jobs.

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Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support PGC’s process using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no entities without attributes). Attributes:

Average price of plants in this category

Landscaping quote amount

Average daily charge to use a truck of this type

Landscaping quote date

Cash account #

Landscaping quote expiration date Light required for plants in this category Number of employees qualified for this employee type Number of plants in this category bid on this quote

Cash account balance Cash receipt # Cash receipt amount

Cash receipt date

Number of training hours to qualify for this employee type

Count of this plant used on this job

Number of trucks of this type bid on this quote

Customer #

Plant category name

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Customer name

Plant common name

Date this employee qualified for this employee type

Plant scientific name

Employee #

Quantity on hand of this plant

Employee hire date

Truck acquired year

Employee name

Truck make

Employee Type Expected maximum size of plants in this category Hours this truck driver worked on this job

Truck mileage to date Truck type

Hours this truck used on this job

Truck type hauling capacity

Truck type use

Landscaping job price

Truck VIN

Landscaping job #

YTD sales $ to this customer

Landscaping job start date

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Landscaping quote #

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3) Pacific Green Company (PGC) provides landscaping services to individual and corporate customers in southern California. Heather F originally founded PGC as a lawn mowing service while she attended graduate school. It became so successful that she delayed her teaching career to concentrate on building the company. This case describes PGC’s landscaping jobs (sales) process. After the customer contacts PGC about a landscaping project, a PGC manager prepares a quote describing the scope of service and the price. After reviewing the quote and comparing PGC’s quote to other landscapers, customers may 1) accept the quote, 2) notify PGC that they did not get the job, or 3) request that the quote be modified. If the customer accepts the quote, they sometimes request that the project be completed in a series of jobs. Each job is handled separately. Jobs are then performed according to an agreed upon schedule until the overall project is complete. Each landscaping job generally proceeds as follows after the contract for the job is signed. The PGC manager responsible for the quote assigns the trucks and selects the plants for the job. Then, the manager assigns the job team: the job supervisor, truck drivers, and landscaping laborers, to the job. At that point, the PGC job team performs the job. Customers must pay a 10% deposit when the job begins (that payment is made when they sign the job contract) and the final 90% is due when the job is completed. Customer payments are made by check or credit card and processed for daily deposit by a PGC cashier. After PGC starts the job, the cashier bills the customer for remaining 90% due. Customers either make the final payment or demand rework to bring the job up to the contract requirements. When the job is completed satisfactorily, the customers then pay the amount due. Occasionally, some deadbeat customers withhold further payment for unknown reasons. In that case, PGC either refers the debt to a collection agency or writes off the remainder of the amount due. Of course, PGC does not perform the remainder of the jobs in the project when the customer fails to pay. Required: Using the description above, prepare a BPMN activity diagram with pools (customer and PGC) and swimlanes that accurately depicts the PGC sales process.

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Answer Key Test name: Chap 05_3e_Problem Material 1)

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Resources Apartment Complex = apartment complex name (PK), apartment complex address, date constructed, total square footage, count of apartments in this complex, employee# (FK) (agent/manager) Apartments = complex name + apartment# (PK), apartment square footage, count of rooms in apartment, apartment category (FK) Cash = bank account# (PK), bank account balance) Events Rental Contract = rental contract# (PK), actual monthly rent, rental contract date, employee # (FK), complex address + apt # (FK) Cash Receipt = cash receipt# (PK), cash receipt date, bank account# (FK), employee# (FK), tenant ID# (FK), rental contract# (FK) Agents Employee = employee# (PK), employee name, employee monthly salary Tenant = tenant ID# (PK), tenant name, tenant credit rating Type Images Apartment Category = apartment category# (PK), number of bedrooms for apartments in this category, number of bathrooms for apartments in this category, count of available apartments in this category Linking

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Rental Contract–Tenants = rental contract# + tenant# (PK) Apartment Category – Complex = apartment category# + complex name (PK), standard monthly rent) 2)

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Resources Cash = cash account # (PK), cash account balance Plants = plant scientific name (PK), plant common name, quantity on hand, plant category name (FK) Trucks = truck VIN (PK), truck make, truck acquired year, truck mileage to date, truck type (FK) Events Cash receipt = cash receipt # (PK), cash receipt date, cash receipt amount, cash account # (FK) employee # (FK), customer # (FK), landscaping job # (FK) Landscaping job = landscaping job # (PK), start date, price, customer#, landscaping quote # (FK), employee # (supervisor) (FK) Landscaping quote = landscaping quote # (PK), quote date, quote expiration date, quote amount, customer # (FK), employee # (FK) Agents Employee = employee # (PK), employee name, employee hire date Customer = customer # (PK), customer name, YTD sales $ to this customer Type Images

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Employee type = employee type (PK), number of training hours to qualify, number of employees qualified Plant category = plant category name (PK), expected maximum size of plants in this category, light required for plants in this category, average cost of plants in this category Truck type = truck type (PK), truck type use, truck type hauling capacity, average daily cost to use trucks of this type Linking Tables Quote - Plant Categories = landscaping quote # + plant category name (PK), number of plants in this category bid on this quote Quote - Truck Types = landscaping quote # + truck type (PK), number of trucks of this type bid on this quote Job - Trucks = landscaping job # + truck VIN (PK), hours this truck used on this job Job - Plants = landscaping job # + plant scientific name (PK), count of this plant used on this job Truck Drivers = landscaping job # + employee # (PK), hours this truck driver worked on this job Landscape Laborers = landscaping job # + employee # (PK), hours this landscape laborer worked on this job Employee - Employee Types = employee # + employee type (PK), date this employee qualified for this type 3)

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The activity is a slightly more complicated version of the diagrams shown for Sunset in chapter 6. Here is a simple activity diagram with the basic steps.

The use of pools and addition of different paths make the solution more complicated. The solution should look something like this, although a variety of solutions are possible.

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CHAPTER 6 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Refer to the following UML class diagram to answer questions 1 to 5 below about the relational database based on this model.

The Purchase Orders table would have five foreign keys. ⊚ true ⊚ false

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2) Refer to the following UML class diagram to answer questions 1 to 5 below about the relational database based on this model.

The Cash Disbursements table would have three foreign keys. ⊚ true ⊚ false

3) Refer to the following UML class diagram to answer questions 1 to 5 below about the relational database based on this model.

The association between Purchase Orders and Products would be implemented with a linking table. Version 1

⊚ ⊚

true false

4) Refer to the following UML class diagram to answer questions 1 to 5 below about the relational database based on this model.

The association between Purchase Orders and Cash Disbursements would be implemented with a linking table. ⊚ true ⊚ false

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5) Refer to the following UML class diagram to answer questions 1 to 5 below about the relational database based on this model.

The Purchase Orders table would contain two foreign keys to implement the associations with Employees. ⊚ true ⊚ false

6) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The Purchases table would have four foreign keys.

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⊚ ⊚

true false

7) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The associate between Purchase Orders and Purchases would be implemented with a linking table. ⊚ true ⊚ false

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8) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The Purchase Orders table would have the same foreign keys as the Purchases table. ⊚ true ⊚ false

9) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

Each Purchase Order would be ultimately linked to one cash disbursement. ⊚ true ⊚ false Version 1

10) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The Cash Disbursements table would have three foreign keys. ⊚ true ⊚ false

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11) Refer to the following UML class diagram to answer questions 11 to 15 below about the relational database based on this model.

The Products table would include a foreign key to link it to Product Categories. ⊚ true ⊚ false

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12) Refer to the following UML class diagram to answer questions 11 to 15 below about the relational database based on this model.

The association between Purchase Orders and Cash Disbursements could be implemented with a foreign key in either table but not both. ⊚ true ⊚ false

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13) Refer to the following UML class diagram to answer questions 11 to 15 below about the relational database based on this model.

The linking table between Supplier Categories and Product Categories would likely contain the attribute summarizing year-to-date purchases for each supplier category and product category combination. ⊚ true ⊚ false

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14) Refer to the following UML class diagram to answer questions 11 to 15 below about the relational database based on this model.

The linking table between Purchase Orders and Products would likely indicate the quantity of each product ordered and the quantity of each product received. ⊚ true ⊚ false

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15) Refer to the following UML class diagram to answer questions 11 to 15 below about the relational database based on this model.

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 16) Many companies record both purchase orders and purchases; when would such a company recognize in the financial statements the purchase? A) When the purchase order is issued. B) When the supplier receives the purchase order. C) When the products are received from the supplier and accepted. D) When the products are sold.

17) In a BPMN collaboration model of the purchase process, one pool describes the focal organization's activities and the other pool describes what?

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A) The supplier's activities B) The customer's activities C) The sequence of steps in the process D) The message flows between the pools

18) In a BPMN collaboration model of the purchase process, which of the following is the appropriate term for the message flows between pools? A) Orchestration B) Choreography C) Collaboration D) Intermediate events

19) In a BPMN collaboration model of the purchase process, which of the following best describes the purpose of swimlanes? A) Capturing the process complexity B) Clarifying the interaction between pools C) Showing the sequence of activities in a pool D) Showing different jobs in the purchase process

20) In a BPMN activity diagram, which of the following represent a valid use for an intermediate timer event? A) Represent a time delay B) Indicates a delay to a specific date/time C) Indicates a delay to a relative date, such as next Thursday D) All of these choices are correct

21) Which of the following least reflects the purpose of a business rule in the purchase process?

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A) Ensure suppliers are paid on time B) Require segregation of order, receiving, and payment duties C) Ensure suppliers are satisfied D) Ensure an audit trail

22) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Purchases and Cash Disbursements classes?

A) Each supplier must be paid for the purchases from that supplier B) Disbursements are made after the purchases are recorded C) One purchase can result in multiple payments to the supplier D) Each check written to the supplier is for one specific purchase

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23) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Purchases and Products classes?

A) Each purchase order specifies many products B) Each purchase is for one product C) Each purchase can include many products D) Checks are written after products are added to inventory

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24) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Sunset Partners and Supplier Categories classes?

A) Each partner can be assigned to manage many supplier categories B) Each partner can only purchase products from one supplier category C) Each supplier category is managed by several partners D) Each supplier is linked to one partner

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25) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Product Categories and Supplier Categories classes?

A) Each partner can only purchase products from one supplier category and for one product category. B) Every supplier and product category can be managed by several partners, but no partner manages both. C) Some partners may manage several product categories, and some partners may manage several supplier categories, but there is no direct link between supplier and product categories. D) Supplier and product category information can be used to calculate year-to-date sales for each product/supplier category combination.

26) Which of the following activities is not associated with the purchase and payments business process?

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A) Recording payments to vendors B) Selling products and services C) Buying products and services D) Receiving goods

27) The purchase is generally recorded in the financial statements when which of the following activities takes place? A) Place purchase order. B) Request prices and availability. C) Send payment. D) Receive items.

28) A BPMN activity diagram that contains two blank pools would typically be created in order to highlight which of the following? A) The orchestration of the business process. B) The activities in the business process. C) The choreography of the business process. D) The decisions made in the business process.

29) When documenting a purchases and payments business process, which of the following BPMN activity diagram symbols should be used to indicate that accounts payable waits until the end of the month to pay vendors? A) Intermediate timer event. B) Collapsed subprocess. C) Delay mode gateway. D) Pause activity.

30)

Which of the following is not an application control when placing a purchase order?

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A) System provided purchase order number. B) System provided type image. C) System provided default values. D) System provided range and limit checks.

31) Which of the following is not a desired access control when developing a purchases and payments business process? A) The person placing the purchase order must not receive the items. B) The person returning items to the supplier must not view the original purchase order. C) The person receiving the order must not see the original purchase order quantities. D) The person paying the supplier must not be able to modify the purchase order.

32) Which of the following is an example of an application control for the purchases and payments business process? A) Management approval is required for large purchases. B) The employee who receives supplier goods must not be the same employee who ordered the goods. C) Defective items should be returned to suppliers promptly. D) The purchase order number is automatically assigned.

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33) In the following diagram, which of the following provides the best interpretation of the multiplicities for the association between the employees and purchases classes?

A) A single purchase can be made by a combination of several employees. B) An employee can make a maximum of one purchase. C) Each purchase must be made by one employee. D) Each product should be received by an employee.

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34) In the following diagram, which of the following provides the best interpretation of the multiplicities for the association between the cash disbursements and employees classes?

A) A cash disbursement must be made by the employee who made the purchase. B) A cash disbursement can be made by a combination of several employees. C) An employee can make a maximum of one cash disbursement. D) Each cash disbursement must be made by one employee.

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35) In the following diagram, which of the following provides the best interpretation of the multiplicities for the association between the employees and product categories classes?

A) Each product category may be managed by several employees. B) Each employee is only authorized to purchase products from a single category. C) Each employee may be assigned to manage many product categories. D) Each product category includes many products.

36)

Which of the following best describes a type image?

A) A description attached to a UML association when there are multiple associations between classes. B) A UML class added to collect management information, such as category. C) A BPMN activity that allows a business process to branch based on type. D) A description attached to a BPMN gateway that clarifies the nature of the gateway.

37)

Which of the following would likely be a foreign key in a purchases table?

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A) Purchase_Order_Date. B) Purchase_Order_Number. C) Supplier_Number. D) Product_Description.

38)

Which of the following would likely be a primary key in a purchases table? A) Purchase_Order_Date. B) Purchase_Order_Number. C) Supplier_Number. D) Product_Description.

39) Which of the following two tables would likely result in a many-to-many relationship in a purchases and payments class diagram?

A) Purchase Order and Products. B) Products to Product Categories. C) Sunset Partner to Purchases. D) Suplier to Purchases.

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40)

The following diagram would result in a database with how many tables?

A) 6. B) 8. C) 10. D) 12.

41) Which of the following general ledger accounts would likely not be impacted in a purchases and payments process? A) Accounts Receivable. B) Inventory. C) Purchase Discounts. D) Cash.

42)

Which of the following is the most likely order of a basic purchases activity model?

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A) Analyze Inventory→Place Purchase Order→Send Payment. B) Request prices and availability→Receive Items→Record Accounts Payable. C) Request prices and availability→Place Purchase Order→Receive Items→Send Payment. D) Create Purchase Order→Create Journal Entry→Receive Items→Send Payment.

43) A well controlled purchases and payments process would likely have which of the following roles seperated into swimlanes? A) Accounts Payable, Receiving & Buyer. B) Supplier, Receiving & Buyer. C) Supplier, Accounts Payable & Receiving. D) Accounts Payable, Receiving & Shipping.

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Answer Key Test name: Chap 06_3e 1) FALSE 2) TRUE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) FALSE 10) TRUE 11) TRUE 12) TRUE 13) TRUE 14) TRUE 15) TRUE 16) C 17) A 18) B 19) D 20) D 21) C 22) B 23) C 24) A 25) C 26) B Version 1

27) D 28) C 29) A 30) B 31) B 32) D 33) C 34) D 35) C 36) B 37) C 38) B 39) A 40) C 41) A 42) C 43) A

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CHAPTER 6 : PROBLEM MATERIAL ESSAY. Write your answer in the space provided or on a separate sheet of paper. 1) La Jolla Management Company (LJMC) manages several apartment complexes and earns revenues by renting out the apartments in those complexes. LJMC assigns an agent/manager (employee) to each complex (one manager can manage several complexes) to handle day-to-day operations, such as maintaining the property, advertising, and signing rental contracts. This case describes the purchase of maintenance service process. Complexes and apartments. LJMC has acquired fifteen and built several more new apartment complexes over the last two years. It identifies complexes by unique name and apartments by the combination of the complex name and apartment#. LJMC categorizes each apartment according to the number of bedrooms and bathrooms, as well as other factors. There are more than 20 apartment categories at present, each identified by unique category #. Since each complex presents a unique set of luxury appointments and amenities, LJMC determines the standard monthly rental fee by considering both the apartment category and complex, for example 2 bedroom 1 bath apartments (category 21) rent for $1850 per month in the El Dorado Arms complex (where there is no view and the complex is close to a freeway) but the same category apartments rent for $2850 per month in the La Jolla Cove complex (where there is a view of the ocean from most apartments in the complex). Maintenance Jobs. LJMC keeps its apartments and complexes in top condition. The LJMC complex managers monitor the condition of the facilities. Whenever the condition falls below LJMC standards, the managers hire contractors to bring the apartment back up to specification. LJMC classifies each maintenance job by job type, and the managers match the job type to the contractor type that can best perform the job. The LJMC manager then selects one specific contractor for the job from that contractor type. Each contractor may belong to several contractor types. Each maintenance job involves either one apartment or the common areas of the complex. LJMC tracks the maintenance performed on apartments and complex common areas. LJMC pays its contractors in full at the end of the month for all jobs that the contractor performed during the month. Other Information. Agents, resources, and type images may be recorded in the database before they are linked to other classes. LJMC tracks all its employees in one employee class. Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support La Jolla Management Company’s process using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no classes without attributes). Attributes

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actual completion date of job actual cost of this job actual monthly rent apartment # apartment category # apartment complex address apartment complex name apartment square footage bank account balance bank account# check # check amount check date contractor # contractor name contractor phone number contractor quality rating

count of rooms in apartment count of this type of contractor date complex was constructed date job ordered employee # employee hire date employee name job type maintenance job # number of available apartments in this category number of bathrooms for apartments in this category number of bedrooms for apartments in this category projected completion date of job standard cost for this job type total complex square footage YTD $ spent on this job type YTD $ spent on this job type in this complex

contractor type

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2) Pacific Green Company (PGC) provides landscaping services to individual and corporate customers in southern California. Heather F originally founded PGC as a lawn mowing service while she attended graduate school. It became so successful that she delayed her teaching career to concentrate on building the company. This case describes PGC’s processes for leasing trucks, maintaining trucks, and purchasing plants. Inventories. PGC maintains an inventory of trucks of all sizes to support various landscaping requirements (the acquisition of trucks are outside the scope of this case). PGC tracks the trucks by vehicle identification numbers (VINs) and keeps meticulous records on each truck. For example, they track the mileage for each truck on each landscaping job. Additionally, they track the maintenance history for each truck. Each type of truck has a different use and hauling capacity, but each truck in a particular truck type has the same use and hauling capacity. PGC also maintains an extensive inventory of plants, ranging from colorful flowers to large trees, so they can address almost any landscaping requirement on short notice. Since the common name of many plants vary by region, PGC tracks its plant inventory by scientific names (i.e., the Latin names). To manage the plant inventory and ensure that the best plants are applied to job conditions, Heather categorizes all plants by plant type. Truck Leases. PGC leases all its trucks from local dealers. PGC purchasing agents negotiate the leases. Each lease involves only one truck due to the state registration requirements. The dealers require a down payment at the time a lease is signed, and then PGC makes payments monthly over the life of the lease. Although PGC usually turns in the trucks at the end of the lease, occasionally, PGC will sign a new lease for an existing truck when that truck provides unusual capability or has relatively low mileage. Truck Maintenance. PGC contracts for truck maintenance with local truck repair shops. A purchasing agent will negotiate a truck maintenance contract for each type of truck with a truck repair shop that specializes in those types of trucks. Then, PGC takes its trucks to the contracted shops when maintenance is required. A PGC purchasing agent approves each maintenance invoice after carefully checking it against the contract terms and assigns a purchase number to track the purchase of maintenance. A PGC cashier pays the truck maintenance vendors monthly for all the maintenance invoices received during the month. Plant purchases. PGC buys its plants in bulk to keep its plant inventory well stocked. Because PGC has an excellent relationship with its plant vendors, it places informal orders by phone. When the plants are delivered and accepted, PGC assigns a purchase number to each receipt. PGC cashiers pay for plant purchases within 30 days of the delivery. PGC cashiers occasionally combine payments if there are multiple deliveries from the same vendor within a short period of time. Employees. PGC keeps all employee information together (your model should show one Employee class). They track each employee’s qualifications according to category: purchasing agent, cashier, landscaping laborer, truck driver, supervisor, etc. An employee is considered qualified when he or she reaches the number of training hours required for that category. However, each employee can hold qualifications for several categories, for example an employee

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qualified as a purchasing agent could also be qualified as a truck driver. Vendors. PGC keeps all vendor information together (your model should show one Vendor class). However, they classify the vendors by type: truck dealer, truck repair shop, plant vendor, etc. Miscellaneous. You may assume that all agent, resource, and type image information is entered into the database before any process activity takes place. Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support PGC’s processes using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no classes without attributes).

Average price of plants in this category Average daily charge to use a truck of this type Check # Check amount Check date

Cash account # Cash account balance

Truck VIN Truck maintenance contract # Truck maintenance contract start date Date this employee qualified for this Truck maintenance contract end employee type date Employee # Truck maintenance purchase # Employee hire date Truck maintenance vendor's invoice # Employee name Truck maintenance date Employee Type Truck maintenance amount Expected maximum size of plants in Truck lease # this category Light required for plants in this Truck lease start date category Number of employees qualified for Truck lease end date this employee type Number of training hours to qualify Truck lease down payment for this employee type amount Plant category name Truck lease monthly payment amount Plant common name Plant purchase # Plant scientific name Plant purchase date

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Quantity on hand of this plant Truck acquired year Truck make Truck mileage to date Truck type Truck type hauling capacity Truck type use

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Quantity of this plant received on this purchase Price of this plant received on this purchase Vendor type Vendor type description Count of vendors of this type Vendor # Vendor name Vendor account payable amount

3) Pacific Green Company (PGC) provides landscaping services to individual and corporate customers in southern California. Heather F originally founded PGC as a lawn mowing service while she attended graduate school. It became so successful that she delayed her teaching career to concentrate on building the company. This case describes PGC’s processes for maintaining trucks. PGC contracts for truck maintenance with local truck repair shops. A purchasing agent will negotiate a truck maintenance contract for each type of truck with a truck repair shop that specializes in those types of trucks. If the purchasing agent cannot negotiate satisfactory contract terms, the contracting process terminates. The process then starts over until contracts are in place. When trucks are due for maintenance or repair, a PGC truck driver takes its trucks to the contracted shops. A PGC purchasing agent approves each maintenance invoice after carefully checking it against the contract terms and to confirm that the required maintenance or repairs are made. If the maintenance complies and the repairs were satisfactorily performed, PGC assigns a purchase number to track the purchase of maintenance. A PGC cashier then pays the truck maintenance vendors. If the invoice does not comply with the terms of the contract, the PGC purchasing agent returns the invoice for correction. If the repairs are not satisfactory, the purchasing agent takes the truck back so the shop can perform the repairs or maintenance satisfactorily. Required: Using the description above, correct the following BPMN activity diagram to accurately depict the PGC truck contracting and maintenance process.

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4) Integrated Case combining both sales and purchases processes. Background: When Arnold retired from politics after the state budget crises of 2008, 2009, and 2010 he found that the downturn in the overall economy had affected his retirement plans. Plus, he needs money for his divorce from Maria while his new movies are still in production. So, he decided to open a unique health spa that will cater to movie stars and other wealthy clients. Taking advantage of the historically low mortgage rates, he acquired an impressive estate in Rancho Palos Verdes overlooking the Pacific Ocean and converted it into an expensive spa. After some extensive market research and a number of personal visits to other spas (it was a tough job but someone had to do it), he opened Arnold’s California Spa offering a variety of activities (such as golf, Pilates, yoga, massage, mud baths, aerobics, weight lifting, dodge ball, etc.) so clients have the option of either 1) getting physically fit with the latest in exercise technology or 2) just relaxing in luxury. His spa quickly became extremely successful and he plans to expand to other cities. Arnold realizes that his business needs an accounting system, and he has asked you to analyze his requirements and help him design a system that can grow along with his business. Arnold’s business requirements: During your interview with Arnold, he describes his business requirements for his purchasing and sales processes as follows: Spa Packages. We offer our clients a selection of spa packages that changes according to the time of year and customer demand. For example, we might offer the Spring Getaway Package, the Relaxing Escape from the Economy Package, the Pure Indulgence Package, the Sports Package, and the Steroid-Free Bodybuilding Package. Each package includes several activities, such as weight lifting, aerobics, Pilates, mountain biking, yoga, tennis, golf, various skin care therapies, hydrotherapies, body therapies, and massage. The price of each spa package depends on the specific activities included in the package. For example, the Steroid-Free Bodybuilding Package includes weight lifting, yoga, dodge ball, and scientifically designed ice baths to restore the muscles. Each activity could appear multiple times in each spa package, for example we could include two rounds of golf in one package. Of course, each activity is included in multiple spa packages. We set the price of each spa package by first determining what we want to charge for each of the activities depending on the time of year, the products used in the activity, and expected popularity. We then add up the charges for each activity to form the overall price for the spa package; however, the clients only see one single price for the whole package. To monitor profitability, we track year-to-date sales information for each activity included in any spa package. Sales process (spa visits): Arnold’s California Spa emphasizes customer service, of course. Each client makes reservations in advance, and one reservation could schedule several future spa visits (each individual spa visit involves only one spa package, but the client could select a different spa package for each visit). When the client arrives for a spa visit, we assign one of our employees to be responsible for the client and direct all the client’s activities for that visit. This responsibility only applies to the specific visit. Other employees will also be involved in the spa

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visit depending upon the activities included in the specific spa package that the client selected. For example, the visit director may conduct a golf lesson for the client while an assisting employee may provide a therapeutic massage for the client’s guest (to maintain appropriate discretion, we don’t track clients’ guests). We expect our employees to provide the highest quality customer service and we plan to hold them accountable. Since all of our employees will be able to be visit directors, we want to track who directs and who assists with each specific visit as well as the number of hours they spend with the client. Since most clients love their experience and want to return, we offer them an opportunity to become members of Arnold’s Entourage. Entourage members earn membership rewards based on the number of visits and the amounts spent. Entourage members also get priority reservations and can pay for visits over time with regular monthly payments, where the number of payments depends on their membership group: bronze, silver, or gold. Since an Entourage member could visit several times while also making payments for prior visits, each client payment could apply to several spa visits. Clients that are not Entourage members must pay for each spa visit in full at the time of the visit. To plan for future marketing, we track year-to-date spending for each combination of Entourage Group and activity, so we can see which activities appeal to which membership group. Product Inventory and purchasing. We maintain an inventory of products—such as sports gear, towels, robes, shampoos, golf balls, body-wrap material, seaweed, massage oils, bodybuilding supplements, raw fruit juices, and vitamins— that we use in the spa visits. We record the quantity and cost of each product used in a spa visit as well as the total costs for each visit to determine profitability. For planning, we also track which products are used in each activity, although many products are used in multiple activities. We estimate the quantity and cost of each product used in each activity, which then allows us to estimate the overall cost of each activity, so we can decide what to charge for the activity when it is offered in any spa package. We buy our products from a number of vendors. We’ve already worked out agreements for them to deliver products on a regular basis. We record purchases by purchase number when they deliver the products. All our vendors require payment in full within 30 days after we receive the products, but depending on timing, we may issue one check to pay for multiple purchases from a vendor. Other information. We record information about activities before they are offered in any spa package, and we add new spa packages before any client purchases them. We have a payroll service that handles all our payroll needs, so you don’t need to consider payroll in your analysis. We assign each employee an employee number and a job title, like “master masseuse”, “yoga instructor supervisor”, “hair styling specialist” and “the guy who will pump you up.” However, every employee can perform several different jobs at the spa, so we keep all the employee information in one set of records. We only use the title to impress our clients and not for any real business purpose (we don’t categorize employees by employee types). We record information about all agents, resources, and type images before they are linked to other classes. Version 1

Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support Arnold’s California Spa processes using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no classes without attributes). Attributes

Activity description Activity name Amount of this cash receipt applied to this spa visit Cash account # Cash account balance Cash receipt # Cash receipt amount Cash receipt date Check # Check amount

Client # Client contact hours for this employee in this spa visit Client name Cost of this product received on this purchase Cost of this product used in this spa visit Employee # Employee name Employee title Entourage Group Months to pay for members in this Entourage level

Check date Number of times this client enjoyed this activity Planned cost of this activity Price of this activity in this spa package Product # Product description Product standard cost Purchase # Purchase date

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Quantity of this product planned for use in this activity Quantity of this product received on this purchase Quantity of this product used in this spa visit Quantity on hand (QOH) of this product Spa package begin offering date Spa package end offering date Spa package name Spa package price Spa reservation # Spa reservation date Spa visit # Spa visit date Total labor hours for this spa visit Vendor # Vendor name Year-to-date (YTD) purchases of this product from this vendor Year-to-date (YTD) sales $ for this activity Year-to-date (YTD) sales $ for this client Year-to-date (YTD) sales $ for all clients in this Entourage level Year-to-date (YTD) sales $ for this activity and Entourage Group

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Integrated case involving sales and purchases processes.

Required: Using the narrative and the attributes below, prepare: 1) a UML class diagram (with classes, associations, and multiplicities) and 2) a list of corresponding relational tables (list the tables with all their attributes, identify the primary keys [with PK or underline], and indicate the foreign keys [with an asterisk or FK]). The table definitions should only use the attributes listed at the end of this case (remember that there should be no entities without attributes). You may abbreviate attribute names if the abbreviation is clear. List the tables in the following order: Resources, Events, Agents, Types, and Linking tables. Apply the standard REA patterns wherever the narrative does not clearly specify otherwise but avoid adding extra relationships that are not discussed. If you believe the narrative is not clear, you may make assumptions as necessary to clarify. However, you must write down any assumptions that you make on your diagram/tables for them to be considered. Background Titanic Tours was formed almost 10 years ago to foster interest in environmental issues while delivering luxury experiences to its customers. They conduct a variety of oceangoing yachtbased tours to explore current issues related to ocean pollution, climate change, and sustainable use of ocean resources. This case describes their processes for conducting tours (sales) and purchasing provisions for those tours (purchasing). Watercraft Inventory Titanic has assembled an extensive inventory of the finest watercraft, from express yachts to mega-yachts as well as various smaller boats, such as personal watercraft (wave runners and jet skis) and support boats (zodiacs, dinghies, and other small boats). Each of their yachts is set up to be a floating classroom, so they can entertain and educate their guests. They track each yacht, boat, etc., by watercraft number. They carefully plan the daily cost of operation for each boat, so they can plan how much to charge for each tour package. Each watercraft could be planned for use in many tour packages. Of course, the costs include all maintenance and safety features necessary to receive Coast Guard certifications. They then carefully track the number of hours/days that each watercraft is used in each tour, so they can continually update their plans. Provisions Inventory Provisions include anything that Titanic needs to support its tours, such as food, beverages, gear, etc. They pride themselves on their luxury experience, so the quality of provisions is critical. They track provisions by provision number. In many cases, Titanic doesn’t purchase the provisions until right before a tour departs. However, they need to plan the costs carefully, so they estimate the cost of each provision and the quantity of that provision needed for any tour package. Of course, each provision could be planned for use in many tour packages. They then carefully track the quantity and cost of each provision used on each tour, so they can continually update their plans.

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Tours Titanic sells tours, so they offer customers a list of available tour packages. Each tour package is offered at one all-inclusive price for one or more watercraft, necessary crew, and appropriate provisions. Titanic changes its list of tour packages depending on the time of year and customer interest. Tour packages are tracked by tour package number. Customers call Titanic to reserve one or more tour packages. A Titanic employee takes the reservation and confirms available dates. Titanic requires that the customer provides a credit card number at the time of the reservation but they do not charge the credit card at that time. Titanic tracks reservations by tour reservation number. Titanic records revenue when the customer takes the tour. Titanic tracks each tour by tour number. If the customer brings guests, Titanic adds each guest to its customer list so it can account for every passenger on each tour (and market future tours to those customers). Titanic charges the customer after the tour (or tours if the customer planned multiple tours). It either charges the credit card that the customer provided or accepts other form of payment. One payment could apply to multiple tours if the customer reserved multiple packages and those tours were taken within the month. In most cases, customers make one payment for one tour (to include payment for all their guests). Titanic assigns one employee as the captain and other employees as crew for each tour. Since employees receive compensation based on the time worked and job performed on the tour, Titanic carefully tracks the number of hours each employee works on each tour. All Titanic employees are highly trained and can perform many different assignments. Employees can also earn a special bonus for the number of tours they work during any month. Purchasing Provisions Titanic has good relationships with its vendors. When it needs provisions, a Titanic employee calls the vendor to place the order. Titanic doesn’t track purchase orders, since all vendors deliver the same day. Titanic tracks each delivery by purchase number. A Titanic employee receives the provisions, checks them for quality, and puts them in inventory. Provision inventory is updated to reflect the latest cost for all accepted items. Titanic pays its vendors by check at the end of the month. One check can pay for several purchases from that vendor during the month. General Titanic assigns each employee an employee number. It tracks all employees in one class and does not categorize employees, since all employees can perform multiple assignments. Titanic also records information about all agents, resources, and type images before those classes are linked to other entities or engage in processes.

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Attributes

Cash account balance Cash account# Cash receipt amount Cash receipt date Cash receipt# Check amount Check date Check# Customer name Customer# Employee background check completion date Employee hire date Employee name Employee# Individual accounts payable to this vendor Number of customers on this tour Number of hours this employee worked on this tour Number of tours this employee worked this month Number of hours this watercraft used in this tour Vendor name Vendor# Watercraft daily billing charge

Provision description Provision expected cost Provision quantity on hand (QOH) Provision# Purchase date Purchase total amount $ Purchase# Quantity of this provision planned for this tour package Quantity of this provision used on this tour Tour date Tour package available date Tour package description Tour package duration in days Tour package price Tour package# Tour reservation credit card# Tour reservation date Tour reservation# Tour total cost for provisions Tour total cost for watercraft use Tour#

Watercraft description Watercraft#

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Answer Key Test name: Chap 06_3e_Problem Material

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1) Resources: Apartment Complex = apartment complex name (PK), address, date constructed, total square footage, employee # (manager) Apartments = complex name + apartment # (PK), apartment square footage, count of rooms in apartment, apartment category (FK) Cash = bank account # (PK), bank account balance Events: Maintenance Job = maintenance job # (PK), projected completion date of job, actual completion date of job, actual cost of this job, job type (FK), employee # (FK), contractor # (FK), complex name (FK), apartment # (FK), check # (FK) Cash disbursement = check # (PK), check date, check amount, bank account # (FK), employee # (FK), contractor # (FK) Agents: Contractor = contractor # (PK), contractor name, contractor quality rating, phone Employee = employee # (PK), employee name, employee hire date Type Images: Job Type = job type (PK), standard cost for this job type, YTD $ spent on this job type Contractor Type = contractor type (PK), count of this type of contractor Apartment Category = apartment category# (PK), number of bedrooms for apartments in this category, number of bathrooms for apartments in this category, count of available apartments in this category Linking Tables: Job Type − Contractor Type = job type + contractor type (PK) Contractor Type − Contractor = contractor type + contractor # (PK) Apartment Category − Complex = apartment category # + apartment complex name (PK) Job Type − Complex = apartment complex name + job type (PK), YTD $ spent on this job type in this complex

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2) Resources: Cash = cash account # (PK), cash account balance Trucks = truck VIN (PK), truck make, truck acquired year, truck mileage to date, truck type (FK) Plants = plant scientific name (PK), plant common name, quantity on hand, plant category name (FK) Events: Truck maintenance contracts = truck maintenance contract # (PK), truck maintenance contract start date, truck maintenance contract end date, vendor # (FK), employee # (FK), truck type (FK) Truck maintenance = truck maintenance purchase # (PK), truck maintenance vendor's invoice #, , maintenance date, maintenance amount, vendor # (FK), employee # (FK), truck VIN (FK), check # (FK) Truck leases = truck lease # (PK), truck lease start date, truck lease end date, truck lease down payment amount, truck lease monthly payment amount, vendor # (FK), employee # (FK), truck VIN (FK) Plant purchases = plant purchase # (PK), plant purchase date, check # (FK), employee # (FK), vendor # (FK) Cash disbursements = check # (PK), check date, check amount, cash account # (FK), employee # (FK), vendor # (FK), truck lease # (FK) Agents: Employee = employee # (PK), employee name, employee hire date Vendor = vendor # (PK), vendor name, vendor account payable amount Version 1

Type Images: Plant category = plant category name (PK), expected maximum size of plants in this category, light required for plants in this category, average cost of plants in this category Truck type = truck type (PK), truck type use, truck type hauling capacity, average daily cost to use trucks of this type Employee type = employee type (PK), number of training hours to qualify, number of employees qualified Vendor type = vendor type (PK), vendor type description, count of vendors of this type Linking tables: Plant purchases - plants = plant purchase # + plant scientific name (PK), quantity received, price Employee - employee type = employee # + employee type (PK), date this employee qualified for this type

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4) Resources: Products = Product # (PK), Product description, standard cost, quantity on hand Cash = Cash account # (PK), Cash account balance Events: Purchase = Purchase # (PK), Purchase date, Employee # (FK), Vendor# (FK), Check# (FK) Cash Receipt = Cash receipt # (PK), Cash receipt amount, Cash receipt date, Cash account# (FK), Employee # (FK), Client # (FK) Cash Disbursement = Check # (PK), Check amount, Check date, Employee # (FK), Vendor # (FK), Cash account # (FK) Spa Visit = Spa visit # (PK), Spa visit date, Total labor hours for this spa visit, client contact hours for this employee in this spa visit, Employee # (director) (FK), Client # (FK), Spa Package Name (FK), Spa Reservation# Spa Reservation = Spa Reservation # (PK), Spa Reservation Date, Client# (FK), Employee# (FK) Agents: Clients = Client # (PK), Client name, Year-to-Date (YTD) Sales $ For This Client, Entourage Group (FK) Employees = Employee # (PK), Employee name, Employee title Version 1

Vendor = Vendor # (PK), Vendor name Type Images: Activities = Activity name (PK), Activity description, Planned cost of this activity, Year-todate (YTD) sales $ for this activity Spa package = Spa package name (PK), Spa package begin offering date, Spa package end offering date, Spa package price Entourage Group = Entourage Group (PK), Months to pay for members in this Entourage level, YTD Sales $ for clients in this Entourage Group Linking Tables: Spa Package − Activities = Spa Package Name + Activity Name (PK), Price of this activity in this spa package Product − Vendor = Product # + Vendor # (PK), YTD purchases for this product with this vendor Spa Visit − Employee = Spa Visit # + Employee # (PK), client contact hours for this employee in this spa visit Product − Spa Visit = Product # + Spa Visit # (PK), Cost of this product used in this spa visit, Quantity of this product used in this spa visit Purchase − Product = Purchase #, Product #, Quantity of this product received on this purchase, Cost of this product received on this purchase Product − Activity = Product # + Activity Name (PK), Quantity of this product planned for use in this activity Entourage Group − Activity = Entourage Group+ Activity Name (PK), YTD Sales $ for this Entourage Group and activity Spa Reservation − Spa Package = Spa Reservation# + Spa Package Name (PK) Spa Visit − Cash Receipt = Visit# + Cash Receipt # (PK), Amount of this cash receipt applied to this spa visit

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5) Resources: Cash = Cash account# (PK), cash account balance Watercraft = Watercraft# (PK), Watercraft daily billing charge, Watercraft description Provisions = Provision# (PK), Provision description, Provision expected cost, Provision quantity on hand (QOH) Events: Purchases = Purchase# (PK), Vendor# (FK), Employee# (FK), Check# (FK), Purchase date, Purchase total amount $ Cash disbursements = Check# (PK), Vendor# (FK), Employee# (FK), Cash account# (FK), Check amount, Check date Cash receipts = Cash Receipt# (PK), Employee# (FK), Customer# (FK), Cash account# (FK), Cash receipt amount, Cash receipt date Tours = Tour# (PK), Tour package# (FK), Employee# (FK) Tour reservation# (FK), Cash Receipt# (FK), Tour date, Number of hours this employee worked on this tour (captain), Number of customers on this tour, Tour total cost for provisions, Tour total cost for watercraft use Tour reservations = Tour reservation# (PK), Employee# (FK), Customer# (FK), Tour reservation credit card#, Tour reservation date Agents: Vendors = Vendor# (PK), Vendor name, Individual accounts payable to this vendor Employees = Employee# (PK), Employee background check completion date, Employee hire date, Employee name, Number of tours this employee worked this month Customers = Customer# (PK), Customer name Type Images: Tour packages = Tour Package# (PK), Tour package available date, Tour package description, Tour package duration in days, Tour package price Linking tables: Tour Package − Provisions = Tour Package# + Provision# (PK), Quantity of this provision planned for this tour package Tour Package − Watercraft = Tour Package# + Watercraft# (PK) Tours − Provisions = Tour# + Provision# (PK), Quantity of this provision used on this tour Tours − Watercraft = Tour# + Watercraft# (PK), Number of hours this watercraft used in this tour Crew = Tour# + Employee# (PK), Number of hours this employee worked on this tour Tours − Customers = Tour# + Customer# (PK) Purchase − Provisions = Purchase# + Provisions# (PK) Tour Reservations − Tour Packages = Tour reservation# + Tour package# (PK)

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CHAPTER 7 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Conversion labor costs become part of cost of goods sold. ⊚ true ⊚ false

Gateways can direct sequence flow to support looping. ⊚ true ⊚ false

Business rules describe appropriate actions to take based on process conditions. ⊚ true ⊚ false

Application controlscan limit access to viewing and changing records in a system. ⊚ true ⊚ false

A labor plan class would establish standard overhead allocation rates. ⊚ true ⊚ false

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6) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The primary key of the Production Authorization table would be posted in the Production Steps table as a foreign key. ⊚ true ⊚ false

7) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The primary key of the Employees table would be posted in the Production Steps table as a foreign key. ⊚ true ⊚ false

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8) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The primary key of the Production Steps table would be posted in the Production Plan table as a foreign key. ⊚ true ⊚ false

9) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The link between the Products and Production Plan tables would be implemented as a linking table. ⊚ true ⊚ false

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10) Refer to the following UML class diagram to answer questions 6 to 10 below about the relational database based on this model.

The link between the Production Plan and Materials tables would be implemented as a linking table. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 11) Which of the following types of business is least likely to employ a conversion process? A) Restaurant B) Retail store C) Bakery D) Machine shop

12)

Which of the following is not a basic activity in the conversion process? A) Issue raw material B) Perform work and account for labor C) Ship products to stores D) Authorize production

13)

Which of the following best describes the purpose of an intermediate error event?

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A) Interupts the normal flow of the process B) Alerts users to control risks C) Waits for external messages D) Directs a sequence to repeat

14) Consider the following BPMN diagram of a subprocess. Which of the following is required to correct an error in the diagram?

A) Change the intermediate event to a start event. B) Change the intermediate error event to an exclusive gateway. C) Add a sequence flow to an end event after the discard errors activity. D) Drop the activity named Discard Errors.

15) Which of the following is the best reason that a collaboration model would not be used to diagram the conversion process? A) All conversion activities are internal to the organization. B) A collaboration model does not include swimlanes. C) The orchestration of the activities is not shown in a collaboration model. D) The choreography between pools is not shown in a collaboration model.

16) Which of the following least reflects the purpose of a business rule in the conversion process?

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A) Segregating authorizing, issuing, and conversion work duties. B) Limiting who can view and change records in the system. C) Return defective items to suppliers promptly. D) Assuring that all products meet quality standards.

17) In a basic UML diagram of the conversion process, which of the following best describes the purpose of a duality association? A) Shows the participation of employees in the process. B) Links work in process events to the original production authorization. C) Indicates issue of raw material into the process. D) Tracks completion of work in process and increase to finished goods inventory.

18) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Employees and Production Authorization classes?

A) The employee records the completion of a job and updates finished goods. B) Each production authorization results in the increase to the quantity on hand of one product. C) Employees manage multiple products. D) One employee can authorize production multiple times.

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19) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Products and Production Authorization classes?

A) The employee records the completion of a job and updates finished goods. B) Each production authorization is related to one product. C) Each product is related to one production authorization. D) One employee can authorize production multiple times.

20)

Which of the following best describes the purpose of a bill of material class? A) Links each raw material item to one or more finished good items. B) Shows the issues of raw material items into work in process. C) Links finished goods to production. D) Shows the raw material usage variance.

21) Which of the following not one of the reasons that the conversion process is typically considered more complicated than the sales and collections and the purchases and payments processes? A) The conversion process has greater record-keeping requirements. B) Many companies do not have a conversion process. C) The sophistication of the conversion process may vary greatly among different companies. D) All three of the other answers are reasons that the conversion process is more complicated.

22) In the conversion process, indirect labor is first recorded to which of the following accounts?

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A) Finished Goods. B) Raw Material Inventory. C) Work-in-Process Inventory. D) Manufacturing Overhead.

23) Review the following BPMN activity diagram. In this conversion process, the quantities of raw materials to be released is calculated based on which information?

A) Work-in-Process. B) The Bills of Materials. C) The quantities of raw materials purchased. D) Economic order quantities.

24)

<p>Review the conversion process BPMN activity diagram presented below. In the

diagram, the symbol

indicates which of the following?

A) Gateway. B) Activity loop. C) Exception event. D) Collapsed subprocess.

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25)

In a BPMN activity diagram, what does the following symbol represent?

A) A looping collapsed subprocess. B) An exception event. C) A connection made to another swimlane in the process. D) An expanded subprocess.

26)

Which of the following is the primary overall objective of the conversion process? A) Issue raw materials efficiently. B) Ensure that enough finished products are available to meet anticipated demand. C) Make finished products to order. D) Transfer finished goods to warehouse inventory accurately.

27) Which of the following business rules illustrates a proper implementation of internal control? A) The employee that orders manterials can’t also inspect the work. B) The employee that performs part of the conversion work can’t also perform other work in the conversion process. C) The employee that authorizes production can’t be the same employee that issues raw materials. D) The person that receives the finished items can’t also place them into their assigned warehouse location.

28) When creating a UML class diagram to support the conversion process, which of the following approaches provides a way to meet both accounting and general management information requirements?

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A) The COSO framework. B) BPMN guidelines. C) A star schema. D) The REA framework.

29) Using a generic conversion UML class diagram as a starting point, which of the following best describes how to find work-in-process inventory? A) It is displayed in the UML class diagram as a Resource class. B) It is calculated based on accumulated materials issued, labor and overhead. C) It is displayed in the UML class diagram as a Type Image class. D) It is not displayed in the UML class diagram, but will become a table in the relational database as a result of a many-to-many association in the UML class diagram.

30) The duality associations between the events in the generic conversion UML class diagram illustrate which of the following? A) The participation of both supervisors and employees in the conversion process. B) The looping approach required for conversion processes that include multiple batches. C) The capture of actual material and labor costs for comparison with the original plan. D) The need for multiple raw materials to be included in the conversion process.

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31) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Materials and the Materials Issue classes?

A) A Material Issue must include at least one material, but may include many materials. B) When a material is issued, it is transferred into the Material Issue class. C) Each material is included in at least one material issue, but may be included in many material issues. D) A material issue might not include a material.

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32) Review the following diagram. Which answer provides the best interpretation Bill of Materials class and its associations?

A) A material might not be included in any Bills of Materials. B) The Bill of Materials determines which product should be produced. C) Bills of Materials act as a type image class that specifies the details of the implied association between products and materials. D) A Bill of Materials may be associated with many different products.

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33) Review the following diagram. Which answer provides the best interpretation of the multiplicities for the association between the Employees and the Labor Operations classes?

A) Each employee that creates a Material Issue must record at least one Labor Operation. B) At least one production worker and one supervisor must perform labor operations for each production run. C) The association between Labor Operations and Employees will be implemented in the database with a Type Image class. D) An employee may not perform any labor operations.

34)

Which of the following is the most likely foreign key for the Bill of Materials table? A) Prod_auth_ID B) Product_ID C) Issue_Sequence D) Material_description

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35) Which of the following is the recommended data type for the Product_number field in the conversion database? A) Integer B) Memo C) Text D) Double

36)

Which of the following is the most likely primary key for the Materials table? A) Product_ID B) Materials_number C) Materials_issue_number D) Product_category_number

37) Which of the following is the most likely foreign key for the Production_Authorizations table? A) Special_handling B) Product_Number C) Product_unit_of_sale D) Materials_issue_number

38) Which of the following general ledger accounts would likely not be impacted in a conversion process? A) Sales Revenue. B) Inventory. C) Cost of Goods Sold. D) Work-in-Process.

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39)

Which of the following is the most likely order of a basic conversion activity model?

A) Authorize Production→Issue Raw Materials→Perform Work→Complete Production. B) Customer Order→Perform Work→Review Work→Ship Product. C) Authorize Production→Order Materials→Apply Overhead→Complete Production. D) Customer Order→Issue Raw Materials→Apply Overhead→Ship Product.

40) A well controlled conversion process would likely have which of the following roles seperated into swimlanes? A) Accounts Payable Manager and Receiving Employee. B) Inventory Manager and Receiving Manager. C) Inventory Manager and Conversion Employee. D) Conversion Employee and Overhead Employee.

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Answer Key Test name: Chap 07_3e 1) TRUE 2) TRUE 3) TRUE 4) TRUE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) FALSE 10) TRUE 11) B 12) C 13) A 14) C 15) A 16) C 17) B 18) D 19) B 20) A 21) B 22) D 23) B 24) C 25) A 26) B Version 1

27) C 28) D 29) B 30) C 31) A 32) C 33) D 34) B 35) C 36) B 37) B 38) A 39) A 40) A

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CHAPTER 7 : PROBLEM MATERIAL

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ESSAY. Write your answer in the space provided or on a separate sheet of paper. 1) Integrated Case Serena’s Tennis Togs, Inc., was founded by one of the world famous women’s tennis players to produce tennis and other sports clothing for the many women that appreciate Serena’s unique fashion sense. Serena’s Tennis Togs, Inc. (STTI) makes and markets multiple types of recreational clothing lines for women. This case focuses on STTI’s acquisition/payment and conversion processes. STTI Conversion cycle. When STTI gets an order from one of their distributors (sales orders are not modeled in this case), a manufacturing supervisor issues one or more production orders to authorize production of the clothing items. Each production order applies to only one finished clothing item. For cost accounting purposes, STTI determines the total standard labor and material cost for each production order. STTI has carefully planned the material and labor required for each of its finished clothing items. Its master assembly plan specifies the sequence of steps (assembly operations) as well as the raw materials required to produce each finished clothing item. The master assembly plan also specifies the standard labor and material cost for each step. Each step in the master assembly plan is identified with a master assembly number. The actual manufacturing process occurs in a series of assembly steps (each step is identified by control # in the production control records). Each step may use several types of material. STTI tracks the actual material and labor costs for each step in their production control records. STTI also tracks the total standard and actual costs for each production order. The STTI manufacturing process employs two classes of employees: crafters and supervisors (model separately). Crafters get the raw materials from inventory and use them in the assembly steps. Each assembly step may involve several crafters, and crafters may work on several assembly steps. The crafters are paid on an hourly basis. Production supervisors are paid salaries and bonuses. (Model them separately). STTI Purchases. STTI’s financial success depends on the quality of their products, so the company buys only the highest quality raw materials and follows a structured acquisition process. First, the buyers issue purchase orders to vendors for one or more required raw material items. Second, the vendor ships the products to STTI, and STTI records purchases upon receipt and acceptance of the items. In some cases, vendors fulfill several purchase orders with one shipment. STTI takes advantage of all prompt payment discounts. If multiple vouchers are due to the same vendor on a certain day, the cashier combines those into one payment. STTI pays for each purchase in full, less any applicable discount, on the day that the payment is due. After receipt and acceptance, each raw material item is stored in its designated bin to facilitate its issue to the production process, although each bin may hold several different types of raw material. Each bin is color-coded for easy identification. General. All economic agents, resources, and types are put into the database before any Version 1

relationships with other entities are instantiated. STTI tracks its employees in separate classes according to their particular job, although each internal agent is keyed by employee#. (So, don't model one Employee agent; model separate internal agents, e.g., buyers, crafters, cashiers, supervisors.) Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support STTI’s processes using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no classes without attributes). Attributes

actual $ amount paid for this production supervisor salary purchase actual quantity of raw material finished clothing item price received actual time for this crafter in this finished clothing item # assembly step standard unit price for this raw (assembly step) control # material standard labor cost for assembly production order due date step buyer rating production order # cash account balance purchase order (PO) total dollar amount cash account# purchase order date cashier bond status purchase order # check amount finished clothing item quantity on hand (QOH) check# actual quantity of this raw material used in this assembly step accounts payable to this vendor raw material description total purchase $ amount raw material QOH crafter hourly wage standard quantity of this raw material for assembly step employee name production order standard material cost employee# vendor name raw material # vendor#

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receiving report # (purchase) YTD bonus for this supervisor scheduled delivery date master assembly # sequence in which assembly step is bin # scheduled to be performed (1st, 2nd, etc.) assembly step date bin color production order actual labor cost percent on-time deliveries for this vendor production order actual material percent on-time payments to cost this vendor production order standard labor cost

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2) Integrated Case Gary Cooper (yes - that is his real name, and his nickname is Coop) loves classic cars, but he knows he will never be able to afford most of them. He also knows that most classics are unreliable and expensive to own. Plus, they do not have the features and comforts of modern cars. So, he created a company that constructs custom replicas of classic cars. His replicas have modern mechanical parts and many of the features that can be found in todays’ cars. More importantly, they meet modern safety and emission requirements. This case describes Coop’s sales and production processes. Coop’s Cars: Coop developed a list of replicas for the most sought-after classic cars. He sells replica European Sports Cars, such as Porsche, Ferrari, and Jaguar, as well as some American muscle cars. Coop tracks each car, engine, and color combination with a custom car product number. The customer gets to select among the various engine and color options for his/her car. Customers typically order one car (one product number), but some customers love the cars so much that they order several at once. Customers must provide at least a 25% deposit with the order, but they can pay the balance after they take delivery of the car. Car chassis: Coop maintains an inventory of car chassis with body shells, interior, seats, etc. Consequently, he can deliver a custom car in just a few days. When the inventory of car chassis gets low, an employee issues a chassis production order. The chassis assembly plan describes the specific parts that go into each chassis as well as the specific chassis assembly operations required. Coop’s employees then conduct the assembly operations to assemble the new chassis. Customizing: After the customer places an order and selects the chassis, engine, and color combination, Coop’s employees start the customizing operations. The engine is placed in the car and the car is painted. Then, after some initial testing, the car is placed in inventory, ready for delivery to the customer. Although several employees work on the customizing operations, Coop also designates one employee to supervise the process and assure a high quality finished car. Miscellaneous: Coop keeps all his employee records in one table, but he also categorizes employees according to their specialty. He records information about employees, customers, employee types, custom cars, and classic parts before they are linked to other classes. Required: 1) use the information above and the list of attributes below to draw a UML class diagram showing the classes, associations, and multiplicities, 2) prepare a listing of the tables necessary to support Coop’s processes using all the attributes. Name each table and clearly identify primary keys with PK and foreign keys with FK. List your tables in the following order: RESOURCES, EVENTS, AGENTS, TYPE IMAGES, and LINKING. Use only the following list of attributes (remember that there should be no classes without attributes). Attributes HTML Table EditorNew TableGet CodeHelp undo redo format_align_left format_align_center format_align_right vertical_align_top vertical_align_center vertical_align_bottom format_bold format_italic format_underline border_left border_right border_bottom border_bottom border_clear format_indent_increase format_indent_decrease format_indent_increase Version 1

format_indent_decrease Merge UnMerge Header Table with grid lines Actual cost of this chassis part Chassis assembly planned sequence Actual qty of this part in this chassis Chassis description Cash account # Chassis quantity on hand Cash account balance Chassis standard cost Cash receipt # Chassis part description Cash receipt date Chassis part # Chassis # Chassis part quantity on hand (QOH) Chassis actual cost Custom car actual cost Chassis assembly operation # Custom car price Chassis assembly operation date Custom car product # Chassis assembly order # Custom car standard cost Chassis assembly order date Customer # Chassis assembly plan # Customer address Customer name Number of hours this employee worked on this customizing operation Customer order # Customer order date Quantity of this custom car ordered on this order Customer order delivery date Customer order total $ amount Standard cost of this part in this chassis Customizing operation # Standard qty of this part in this chassis Customizing operation date Total actual cost of this assembly operation Employee # Total actual cost of this chassis assembled on this order Employee Hire Date Employee Name Total standard cost of this assembly operation Employee Pay Rate Total standard cost of this chassis assembled on this order Employee type Engine # Engine cylinders Engine horsepower Number of employees of this type Number of hours this employee worked on this assembly operation HTML Table EditorNew TableGet CodeHelp undo redo format_align_left format_align_center format_align_right vertical_align_top vertical_align_center vertical_align_bottom format_bold format_italic format_underline border_left border_right border_bottom border_bottom border_clear format_indent_increase format_indent_decrease format_indent_increase format_indent_decrease Merge UnMerge Header Table with grid lines Actual cost of this chassis part Chassis quantity on hand Actual qty of this part in this chassis Chassis standard cost Cash account # Chassis part description Cash account balance Chassis part # Cash receipt # Chassis part quantity on hand (QOH) Cash receipt date Custom car actual cost Chassis # Custom car price Chassis actual cost Custom car product # Chassis assembly operation # Custom car standard cost Chassis assembly operation date Customer # Chassis assembly order # Customer address Chassis assembly order date Customer name Chassis assembly plan # Customer order # Chassis assembly planned sequence Customer order date Chassis description Customer order delivery date Customer order total $ amount Number of hours this employee worked on this customizing operation Customizing operation # Customizing operation date Quantity of this custom car ordered on this order Employee # Employee Hire Date Standard cost of this part in this chassis Employee Name Standard qty of this part in this chassis Employee Pay Rate Total actual cost of this assembly operation Employee type Total actual cost of this chassis assembled on this order Engine # Engine cylinders Total standard cost of this assembly operation Engine horsepower Total standard cost of this chassis assembled on this order Number of employees of this type Number of hours this employee worked on this assembly operation ×

Actual cost of this chassis Chassis quantity on hand part Actual qty of this part in Chassis standard cost

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this chassis Cash account # Chassis part description Cash account balance Chassis part # Cash receipt # Chassis part quantity on hand (QOH) Cash receipt date Custom car actual cost Chassis # Custom car price Chassis actual cost Custom car product # Chassis assembly operation Custom car standard cost # Chassis assembly operation Customer # date Chassis assembly order # Customer address Chassis assembly order date Customer name Chassis assembly plan # Customer order # Chassis assembly planned Customer order date sequence Chassis description Customer order delivery date Customer order total $ Number of hours this employee worked on amount this customizing operation Customizing operation # Quantity of this custom car ordered on this order Customizing operation date Standard cost of this part in this chassis Employee # Standard qty of this part in this chassis Employee Hire Date Total actual cost of this assembly operation Employee Name Total actual cost of this chassis assembled on this order Employee Pay Rate Total standard cost of this assembly operation Employee type Total standard cost of this chassis assembled on this order Engine # Engine cylinders Engine horsepower Number of employees of this type Number of hours this employee worked on this assembly operation

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3) Correct the BPMN Activity Diagram After a very successful career in business, Ray Robertson decided to leave the rat-race to pursue his life-long (adult life-long) interest in brewing unique, hand-crafted beers. He wanted his business to reflect his passions: beer, football, and the Oregon Ducks, so the name Yellow Duck Brewing Company seemed natural. Since recent medical research has shown that moderate beer consumption is healthy, Ray carefully selected the freshest ingredients for his beer to make his beers even healthier. The unofficial motto of the Yellow Duck Brewing Company became, “the only beer to have when you are having only one!” This case describes the sales and bottling processes for Yellow Duck. Yellow Duck Sales Process Customers order specific bottled beer products when they place their order, and Yellow Duck often rejects orders depending on the availability of that beer. (The availability of any bottled beer depends on what Yellow Duck has brewed recently and the bottles on hand.) Yellow Duck bottles its beers when a customer service employee receives an order for one or more bottled beer products from a customer. Yellow Duck records the sale when the customer picks up the beer from the customer service employee. Yellow Duck only sells its beer to wholesale customers, so each customer pays for all the sales during the month in one payment at the end of the month. Yellow Duck Bottling Process Yellow Duck sells its beer in distinctive bottles, designed by local artists, to stand out from more mundane beers. The bottling process takes place in a series of steps. Each step is authorized by a supervising employee and also involves several other employees who carefully transfer brewed beer into the bottles, apply the labels, and place the bottles in the bottled beer inventory. At that point the beer is ready for sale to the customer. Each bottling step involves only one particular bottle number but may involve several different brewed beers. Required: Using the description above, correct the BPMN activity diagram with shown below so that the diagram accurately depicts Yellow Duck’s sales and bottling process. Incorrect BPMN diagram:

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Answer Key Test name: Chap 07_3e_Problem Material

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1) Resources: Cash = cash account # (PK), cash account balance Raw Material = raw material # (PK), raw material description, raw material QOH, standard unit price for this raw material, bin# (FK) Finished Clothing Items = finished clothing item # (PK), finished clothing item price, finished clothing item quantity on hand = QOH Events: Purchase Orders = purchase order # (PK), purchase order date, purchase order = PO total dollar amount, scheduled delivery date, receiving report# (FK), buyer employee# (FK), vendor# (FK) Purchases = receiving report # (PK), total purchase $ amount, actual $ amount paid for this purchase, buyer employee # (FK), vendor # (FK), check # (FK) Cash Disbursements = check # (PK), check amount, cash account # (FK), cashier employee # (FK), vendor # (FK) Assembly steps = record # (PK), assembly step date, production order # (FK), master assembly list # (FK) Production Order = production order # (PK), production order due date, actual labor cost, actual material cost, standard labor cost, standard material cost, finished clothing item# (FK), supervisor employee# (FK) Agents: Buyer = employee # (PK), employee name, buyer rating Cashier = employee # (PK), employee name, cashier bond status Crafter = employee # (PK), employee name, crafter hourly wage Production supervisor = employee # (PK), employee name, salary, YTD bonus for this Version 1

supervisor Vendor = vendor # (PK), vendor name, individual accounts payable, percent on-time deliveries for this vendor, percent on-time payments to this vendor Type Images: Master Assembly Plan = master assembly # (PK), standard labor cost for assembly step, sequence in which assembly step performed, finished clothing item # (FK) Bin = bin # (PK), bin color Linking Tables: Purchase-Raw Material = receiving report # + raw material # (PK), actual quantity of raw material received Purchase Order-Raw Material = purchase order # + raw material # (PK) Assembly step-Crafter = step record # + crafter employee # (PK), actual time for this crafter in this assembly step Assembly Step-Raw Material = raw material # + step record # (PK), raw material actual quantity used in this assembly step Master Assembly-Raw Material = master assembly list # + raw material # (PK), raw material standard quantity for this assembly step

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2) Resources: Chassis Parts = Chassis Part # (PK), Chassis part description, Chassis part QOH, Actual cost of this chassis part Car Chassis = Chassis # (PK), Chassis description, Chassis QOH, Chassis actual cost, Chassis standard cost Engines = Engine # (PK), Engine cylinders, Engine horsepower Custom Cars = Custom Car Product # (PK), Chassis # (FK), Engine# (FK), Custom car price, Custom car actual cost, Custom car standard cost Cash = Cash Account # (PK), Cash account balance Events: Assembly Operations = Chassis Assembly Operation # (PK), Chassis assembly operation date, Chassis Assembly Plan# (FK), Chassis Assembly Order# (FK), Total actual cost of this assembly operation, Total standard cost of this assembly operation Chassis Order = Chassis Assembly Order # (PK), Chassis assembly order date, Total actual cost of this chassis assembled on this order, Total standard cost of this chassis assembled on this order, Chassis# (FK), Employee # (FK) Customizing Operations = Customizing Operation # (PK), Customizing operation date, Chassis # (FK), Engine # (FK), Employee # (FK), Customer Order # (FK) Version 1

Customer Order = Customer Order # (PK), Customer order date, Customer order delivery date, Customer order total $ amount, Employee # (FK), Customer # (FK) Cash Receipt = C/R # (PK), Cash receipt date, Cash Acct # (FK), Customer Order # (FK), Customer # (FK), Employee # (FK) Agents: Employee = Employee # (PK), Employee Type (FK), Employee hire date, Employee name, Employee pay rate, Customer = Customer # (PK), Customer address, Customer name Type Images: Chassis Assembly Plan = Chassis Assembly Plan # (PK), Chassis# (FK), Chassis assembly planned sequence, Employee Type = Employee Type (PK), Number of employee of this type Linking Tables: Chassis Assembly Plan-Chassis Part = Chassis Assembly Plan # + Chassis Part # (PK), Standard cost of this part in this chassis, Standard qty of this part in this chassis Chassis Parts-Assembly Operations = Chassis Part # + Chassis Assembly Operation # (PK), Actual qty of this part in this chassis Assembly Operations-Employee = Chassis Assembly Operation # + Employee # (PK), number of hours this employee worked on this assembly operation Customizing Operations-Employee = Customizing Operation # + Employee # (PK), number of hours this employee worked on this customizing operation Custom Cars-Customer Order = Custom Car Product # + Customer Order# (PK), Qty of this custom car ordered on this order

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CHAPTER 9 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Data warehouses work together with operational systems to provide necessary insight, particularly in the case of customer relationship management (CRM) and supply chain management (SCM) systems. ⊚ true ⊚ false

2) Data warehouses are often designed to facilitate decision making such as those often used in managerial accounting and facilitate management by exception, such as variance reports, trend reports, variance analysis reports, and reports that show actual performance are compared to budgeted information. ⊚ true ⊚ false

3) If data mining finds a statistical correlation or relationship between two data items, then there exists a plausible relationship between those two data items in the real world. ⊚ true ⊚ false

XBRL is based on the XML language. ⊚ true ⊚ false

XBRL produces standardized reports and is not customizable. ⊚ true ⊚ false

6) XBRL GL (also known as XBRL Global Ledger Taxonomy) serves as a means to facilitate efficient communication within a firm. ⊚ true ⊚ false

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7) XBRL serves as a means to electronically communicate business information to facilitate business reporting of financial and nonfinancial data to users. XBRL greatly enhances the speed and accuracy of business reporting. ⊚ true ⊚ false

8) XBRL instance documents describe each key data element (e.g., total assets, accounts, payable, net income, etc.). ⊚ true ⊚ false

9) XBRL allows highly disaggregated data so not only is it possible to know the level of sales, but it is possible to know sales revenue in much more detail. ⊚ true ⊚ false

10) Data warehouses gather information from external databases, but not from internal databases. ⊚ true ⊚ false

11) XBRL style sheets take the instance documents and add presentation elements to make XBRL filings readable by humans. ⊚ true ⊚ false

12) Bank loan officers and the IRS will likely have different XBRL style sheets for the various XBRL filings. ⊚ true ⊚ false

13) Since both are regulators, the SEC and the IRS will likely have similar XBRL style sheets for the various XBRL filings.

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⊚ ⊚

true false

14) XBRL (eXtensible Business Reporting Language) is an open, global standard for exchanging financial reporting information. ⊚ true ⊚ false

15) Data Mining is a process of using sophisticated statistical techniques to extract and analyze data from large databases to discern patterns and trends that were not previously known. ⊚ true ⊚ false

16) XBRL Instance Documents define and describe each key data element (e.g., total assets, accounts, payable, net income, etc.). ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 17) Data mining is considered a technique of: A) Data Warehousing B) Project Management C) Data Martian D) Business Intelligence

18)

A data warehouse may include: A) An XBRL style sheet B) General Economic Information C) A digital Dashboard D) Ciphertext

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19)

Ford may use business intelligence for all of the following except: A) Compare competitor vehicle sales to Ford vehicle sales. B) Review website activity. C) Prepare activity models using BPM. D) Analyze the correlation of gas prices to vehicle sales.

20) A collection of information gathered from an assortment of external and operational (i.e., internal) databases to facilitate reporting for decision making and business analysis is called: A) Business intelligence. B) Data Warehouse. C) Digital Dashboard. D) XBRL.

21)

The steps in business intelligence include: A) Gather Information, Analyze Data for Patterns, Make Decision B) Analyze Data for Patterns, Gather Information, Make Decision C) Create Data Warehouse, Query Data Warehouse, Make Decision D) Create Data Warehouse, Analyze Data for Patterns, Make Decision

22)

Which of the following is least likely to appear in a Digital Dashboard: A) Website clicks B) Current month sales C) Expected Fed Fund rate changes D) Store openings

23) Which type of company does the Securities and Exchange Commission (SEC) require to format their financial statements using XBRL?

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A) Financial institutions B) Large accelerated filers C) Brokerage firms D) All public companies

24) XBRL GL, or XBRL Global Ledger Taxonomy, is different from XBRL US GAAP because it facilitates: A) Efficient communication between the firm and financial analysts. B) Efficient communication within a firm. C) Efficient communication between the firm and its suppliers. D) Efficient communication between the firm and its customers.

25)

The stated advantages of XBRL GL include: A) Flexibility B) SEC approval C) Less costly D) Network Effects

26)

XBRL assurance is generally expected to include all of the following except:

A) Assurance that the most current, standardized XBRL taxonomy is used. B) Assurance that the underlying financial and nonfinancial data that is used in XBRL tagging is reliable. C) Assurance that the XBRL tagging is accurate and complete. D) Assurance that reports include all relevant financial and nonfinancial information.

27)

XBRL stands for

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A) eXtensible Business Reporting Language B) eXtensible Behavioral Reporting Language C) eXtensible Book Reporting Language D) eXtensible Basic Reporting Language

28)

Which of the following roles is least likely to use data in XBRL format: A) Financial analysts. B) Loan officers. C) Marketing officers. D) Regulatory bodies.

29) In February 2009, the _____ passed the rule requiring all large domestic publicly traded firms to begin formatting their financial statements using XBRL. A) Financial Accounting Standards Board. B) International Accounting Standards Board. C) American Institute of Certified Public Accountants. D) Securities and Exchange Commission.

30)

A document containing XBRL elements is called a(n): A) XBRL Instance Document. B) XBRL Style Sheet. C) XBRL Report. D) XBRL Taxonomy.

31) The process of using sophisticated statistical techniques to extract and analyze data from large databases to discern patterns and trends that were not previously known is called:

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A) Data Mart B) Data Mining C) Data Warehouse D) Business Intelligence

32) The tool that defines and describes each key data element (e.g., total assets, accounts, payable, net income, etc.) in XBRL is called _____: A) XBRL specification. B) XBRL taxonomy. C) XBRL style sheet. D) XBRL instance document.

33)

Which of the following does not facilitate businessdecision-making activities? A) Data Warehouse. B) Digital Dashboard. C) UML Class Diagram. D) Decision Support System.

34) Which of the following is often used as the main repository of a company’s historical data (i.e., its corporate memory)? A) The UML Class Diagram. B) The data warehouse. C) The XBRL instance document. D) Its digital dashboard.

35) Before data from multiple sources can be loaded into the data warehouse, which of the following activities must be performed?

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A) The company must obtain explicit permission from all public and private data sources before their data can be used in the data warehouse. B) Operational system reports must be run, as the extraction process that loads the data warehouse usually deletes the data from the operational system. C) Data inconsistencies must be removed so that the warehouse has homogeneous data for analysis and reporting purposes. D) The operational system must create and file the appropriate XBRL instance document with the SEC.

36) Data warehouses that focus on facilitating managerial accounting needs and/or management by exception, can be called: A) Financial Reporting Systems. B) Data Mining. C) Customer Relationship Management Systems. D) Decision Support Systems.

37) Business Intelligence is a technique that frequently makes use of all of the following except: A) Spear Phishing. B) Databases. C) Web crawlers. D) Data warehouses.

38) Data Mining uses which of the following approaches to analyze data and find new patterns and trends? A) Data normalization. B) Data scrubbing. C) Decision Support Systems. D) Sophisticated statistical techniques.

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39) When using a Data Mining approach for business analysis, it is important to remember which of the following? A) All relationships between data items mean that one item has an impact on the other. B) Data patterns and trends must be obvious before we can consider them in the business decision making process. C) Relationships between data items do not necessarily mean that one causes the other. D) Data mining should be performed in the operational system, not the data warehouse.

40) In addition to finding statistical correlations, proper application of Data Mining techniques should include which of the following? A) Good use of the REA framework. B) Professional judgment. C) Use of the most current XBRL taxonomy. D) Digital dashboards.

41) Data mining may uncover relationships in which no causality should be implied. In these cases, which of the following phases would be most appropriate? A) “A improves B.” B) “A has an impact on B.” C) “A is associated with B.” D) “A enhances B.”

42)

Which of the following metrics would be least likely to show up on a Digital Dashboard? A) Accumulated depreciation for the previous year. B) Month-to-date sales. C) Budget variances. D) Number of accident-free days.

43) Which of the following metrics would be most likely to show up on a Digital Dashboard for a retail organization? Version 1

A) Abandoned Shopping Carts for retailer’s website. B) Weather forecast. C) Account Reconciliations. D) Work in process.

44) Which of the following is the least likely example of how a specialized digital dashboard might be used? A) To track construction projects. B) To track network security. C) To track manufacturing operations. D) To track fixed asset depreciation.

45) The SEC’s rule titled “Interactive Data to Improve Financial Reporting” resulted in which of the following? A) XBRL International now creates yearly taxonomies for XBRL filing. B) Large accelerated filers must now format their financial statements using XBRL. C) U.S. banks must submit their quarterly “Report of Condition and Income” using XBRL. D) Updated the XBRL specification to the most current version.

46)

Which of the following best describes the use of XBRL style sheets?

A) Style sheets determine which elements may be used when companies submit their XBRL filing. B) Style sheets are another name for XBRL instance documents. C) Style sheets allow for presentation of selected data from XBRL documents in a way that humans can read. D) Style sheets determine the formatting of numbers and text in the XBRL taxonomy.

47)

Which of the following may be the result of data mining?

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A) Digital Dashboards. B) Competitor sales by region. C) Weather forecasts. D) Items frequently bought in combination.

48) Which of the following is not an example of how a company may use business intelligence? A) XBRL data. B) Customer demographic information. C) Product quality issues. D) Customer credit history.

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 49) Name three internal and three external databases that you think should be included in a data warehouse for Ford, Chrysler or General Motors. Support your answer.

50) Name three internal and three external databases that you think should be included in a data warehouse for Apple or Google. Support your answer.

51) Name five items that you think would be included in a digital dashboard for your university. Why are these critical business processes for them?

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52) Name five items that you think would be included in a digital dashboard for an organization that you are familiar with (church, sorority, local not-for-profit, etc.) Why are these critical business processes for them?

53) Why would general economic information (GDP, interest rates, etc.) be included in a data warehouse? Would they be more helpful for some companies than for others?

54) How would Apple Computer use a data mart in its marketing area? How does that help designers of the data warehouse know what to include?

55) Why would competitor information be included in a data warehouse? How would it be used?

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56) Name five items that you think would be included in a digital dashboard for EBay. Why are these critical business processes for them?

57) Why is assurance needed on XBRL data? Why will financial analysts need assurance that the XBRL data is correct? Support your answer.

58) Why would the company want XBRL assurance if the IRS or SEC were going to be using its data?

59) There is a different XBRL taxonomy for each country, including XBRL Australia, XBRL Canada, XBRL Germany, XBRL Japan, XBRL-Netherlands, XBRL-US, and XBRL-UK. What would happen if there were only one XBRL taxonomy for all countries?

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60) How would the XBRL style sheets be different for financial analysts as compared to the Internal Revenue Service?

61) Why is XBRL needed in the financial community? In your opinion, why did the Securities and Exchange Commission mandate its usage? What does it provide that was not available before XBRL

62)

How would XBRL GL be used for internal uses such as management accounting?

63) How would XBRL GL facilitate the SEC-required XBRL submission of a company’s regulatory filings?

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64) Data mining is often used to find patterns in stock prices to assist technical financial stock market analysts, or in commodities or currency trading. What are the benefits and concerns with using data mining to find patterns in stock prices? What would you need to feel comfortable enough to trade on these patterns?

65) Data warehouses often serve as the main repository of the firm's historical data, or in other words, its corporate memory, and will often serve as an archive of past firm performance. Besides past financial performance, what historical data would a firm like McDonald’s be interested in archiving in its data warehouse?

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Answer Key Test name: Chap 09_3e 1) TRUE 2) TRUE 3) FALSE 4) TRUE 5) FALSE 6) TRUE 7) TRUE 8) FALSE 9) TRUE 10) FALSE 11) TRUE 12) TRUE 13) FALSE 14) TRUE 15) TRUE 16) FALSE 17) D 18) B 19) C 20) B 21) A 22) C 23) B 24) B 25) A 26) D Version 1

27) A 28) C 29) D 30) A 31) B 32) B 33) C 34) B 35) C 36) D 37) A 38) D 39) C 40) B 41) C 42) A 43) A 44) D 45) B 46) C 47) D 48) A 49) Answers will vary depending on the student knowledge of a car company, but could include supplier info, financial statements and other financial reporting, general economics info, past car buying behavior, buyer demographics, etc.

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50) Answers will vary depending on the student knowledge of Apple and Google, but could include supplier info, financial statements and other financial reporting, general economics info, past smartphone buying behavior, media purchasing info, computer purchasing info, buyer demographics, advertising models, etc. 51) Answers will vary depending on the student knowledge of the university. Universities always seem interest in total student credit hours, retention rate, recruiting information, high school GPA of incoming students, etc. 52) Answers will vary depending on the student knowledge of the organization. 53) Answers will vary! All companies and their business models are affected by the general economic performance. Some businesses do better in a poor economy, but the majority has worse performance. Some are tightly correlated to the economy and others are not; therefore, some companies will have more interest in general economic information in their data warehouse than others. 54) Answers will vary! Designers of the data warehouse need to carefully query users of Apple’s data mart to see what information is needed and what information might potentially be useful to know what to include. 55) Answers will vary! Generally, companies generally cannot get too much information about their competitors. Any prior trends or information that might be useful to predict competitor (and/or industry) performance might be useful. Companies may also subscribe to data feeds from information suppliers specializing in that industry, such as Nielson/IRI, Nielson Audio, etc.

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56) Answers will vary! EBay might want to know information about its daily sales, the daily average dollar amount of each sale, some measure of its product mix, the number of new listings, referrals from its web site to other websites, etc. These all seem like critical data for its object of selling products and scooping up margins. 57) Answers will vary! A potential solution might include that since XBRL can be quickly edited, changed and manipulated; it would be nice to have some assurances as to what standards were followed and that the numbers that come out of the XBRL have assurances associated with them. 58) Answers will vary! A potential solution might include why the company wants to ensure that its information is getting to banks, shareholders, potential investors, financial analysts in a way that provides assurance would be very useful to the company even if the IRS and SEC are using that data. 59) Answers will vary! A potential solution might include a discussion of the differences in accounting standards between countries and even that tagging/wording for a very similar account might be quite different due to culture and language. 60) Answers will vary! A potential solution might include of the different roles of the IRS and financial analysts. The IRS is primarily interested in whether firms are paying sufficient taxes. Financial analysts are interested in earnings prediction and stock market valuation which often requires very different information; hence, a very different style sheet. 61) Answers will vary! A potential solution might include a discussion of the SEC and its role in establishing a level playing field for all investors.It might also include a discussion of the efficiencies gained by the SEC.

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62) Answers will vary! A potential answer might include a discussion of how XBRL GL might be used to quickly and efficiently share financial and managerial information throughout the organization. 63) Answers will vary! A potential answer might include a discussion of how XBRL GL might be used to quickly and efficiently transmit information required by the SEC. 64) Answers will vary! A potential answer might include a discussion of the power of data mining in finding patterns. However, to the extent that these patterns of past performance do not correlate with future performance, an investor may not feel comfortable trading based on those patterns. 65) Answers will vary! A potential answer might include discussion of how data warehouses might detail past special promotions, special products, details on store locations that worked well, customer demographics, customer eating palette information, employee incentive programs, customer satisfaction, etc.

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CHAPTER 10 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Datasets that are too large and complex for businesses’ existing systems utilizing traditional capabilities are refered to as big data. ⊚ true ⊚ false

The four Vs of big data are volume, vector, velocity, and veracity. ⊚ true ⊚ false

Data analytics is used to publish historical information. ⊚ true ⊚ false

4) The process of scrubbing raw data to remove extraneous data and other noise in order to increase its usefulness is known as extract, transform and load. ⊚ true ⊚ false

5) According to the results of the PWC’s 18th Annual Global CEO Survey, CEO’s aren’t yet ready to place a high value on data analytics. ⊚ true ⊚ false

6) Data analytics can provide deep insight into financial data, but is not particularly useful when evaluating non-financial data such as social media. ⊚ true ⊚ false

Data analytics are likely to play a significant role in future audit activities. ⊚ true ⊚ false

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8) Audit data standards (ADS) are standards for data files and fields typically needed to support an external audit in a given financial business process area. ⊚ true ⊚ false

The “M” in the AMPS model stands for “Manipulate the Data”. ⊚ true ⊚ false

10) During the second stage of the AMPS model a business analyst would likely only gather data meeting Audit Data Standards. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 11) Which of the following is the best definition of the term big data? A) Databases measured in terms of zettabytes. B) Datasets that are too large and complex for businesses’ existing systems utilizing traditional capabilities. C) Databases for businesses that generate more than one million electronic transactions per month. D) Datasets generated by social media applications such as Facebook, Twitter, Tencent QQ, and Instagram.

12)

How does data analytics play a vital role in today’s business world?

A) By allowing data to be organized into predefined tables and fields. B) By defining three main categories of classes that help organize a company’s data structure models. C) By examining data to generate models for predictions of patterns and trends. D) By capturing the ever-increasing transaction activity of large companies.

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13) The four Vs are considered a defining feature of big data. Which of the following is the best definition of the term big data? A) Volition, veracity, velocity & variety. B) Variety, visibility, volocity & valuation. C) Volume, veracity, velocity, & variety. D) Volume, variability, variety & veracity.

14)

As described in the text, which of the following best defines the term data analytics?

A) The ability extra and load large datasets. B) The science of moving data from Access to Enterprise Reporting Tools to draw conculsions for decision making. C) The process of organizing extremely large datasets to create more managability. D) The science of examining raw data, removing excess noise, and organizing it in order to draw conclusions for decision making.

15) At its core, data analytics fits into the information value chain in which of the following ways? A) The process of data analytics aims at transforming raw data into valuable information. B) Data analytics aims to make an organization’s conversion process more efficient. C) Data analytics requires organizations to share synced data with upstream and downstream business partners. D) The process of data analytics is geared toward providing additional insight into customer activities and preferences.

16) Raw data often must be scrubbed to remove extraneous data and other noise in order to become useful. This technique is known as:

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A) Process, Scrub, and Import. B) Extract, Transform, and Load. C) Evaluate, Depopulate, and Finalize. D) Filter, Coordinate, and Upload.

17) Data analytics professionals estimate that they spend how much of their time cleaning data in order to perform analysis on it? A) 10-15%. B) 20-30%. C) 50-90%. D) 99+%.

18) Which of the following best summarizes the two key limiting factors for business systems when dealing with Big Data? A) Data storage capacity and processing power. B) Data availability and software tools. C) Database organization and transaction volume. D) Analytic skills and software tools.

19)

Which of the following is not one of the skill sets often associated with data analytics? A) Mining and analyzing data. B) Creating data structures and models. C) Bifurcating data. D) Acquiring and cleansing data.

20) The insight provided through data analytics can help companies in all of the following ways except:

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A) Dictate the policies of external business partners. B) Create more directed marketing campaigns. C) Identify future opportunities and risks. D) Affect internal business processes in order to improve productivity, utilization and growth.

21)

Which type of question would accountants most likely use data analytics to answer? A) Posting journal entries. B) Account reconciliation. C) Control framework definitions. D) Collectibility of Loans Receivable.

22) Which of the following areas of financial reporting is most suitable for applying data analytics techniques? A) Evaluation of estimates and valuations. B) Variance reporting. C) Calculating the components of equity. D) Depreciation.

23)

Which of the following best describes the skill sets used in data analytics?

A) Building data warehouses; Populating data structures; Mining the data. B) Acquiring/cleansing data; Creating data structures/models; Mining/analyzing data. C) Developing data structures/models; Acquiring storage capacity; Analyzing the data. D) Creating data; Building data structures; Piloting data studies.

24) The use of data analytics will likely result in significant changes to clients’ expectations of their auditors. Which of the following is most likely not one of those expected changes?

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A) More innovative thinking. B) More time spent gathering and testing data. C) Deeper and broader insights. D) Faster and more efficient delivery of audit findings.

25) Which of the following is not a good example of how accountants might use data analytics to help evaluate estimates used to value financial statement accounts? A) Assess the likelihood and level of expected warranty claims. B) Estimate the collectibility of accounts receivable balances. C) Automate the order entry process for online customers. D) Assess property, plant & equipment values based on current comparable prices.

26) Which of the following best describes how external auditors’ interactions with their clients is likely to change due to the use of data analytics in the audit process? A) External auditors will spend less time on audits and will not need to spend time with clients outside the audit. B) External auditors will spend more time on detailed audit tasks, resulting in longer audit engagements. C) External auditors will only interact with their clients virtually. D) External auditors will stay engaged with clients beyond the audit.

27) Data analytics can help in accurately identifying organizational risks. All of the following are examples of such risk except: A) “What-if” business forecasting. B) Identifying security breaches. C) Identifying flawed business processes. D) Monitoring compliance with regulatory requirements.

28)

Which of the following best describes the AICPA’s Audit Data Standards (ADS)?

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A) The base level of testing procedures that should be performed on AIS data. B) A set of analytic procedures designed to be used with modern ERPs’ large datasets. C) A set of standards for data files and fields designed to support external audits. D) The codification of all auditing guidelines pertaining to the data generated by AISs.

29) Which of the following is a set of standards created by the AICPA for data files and fields in order to support external audits? A) Extract, Transform & Load (ETL). B) Online Analytical Processing (OLAP). C) Audit Control Language (ACL). D) Audit Data Standards (ADS).

30)

Which of the following is not a part of the AMPS model? A) Ask the right questions. B) Share the story. C) Master the data. D) Parse the data.

31)

Which of the following does not desribe characteristics of the AMPS model? A) Iterative. B) Can lead to asking deeper questions. C) Binary. D) Leaves the decision maker more knowledgable.

32)

When using an analytical mindset which of the following is the first task?

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A) Master the data. B) Share the story. C) Ask the right question. D) Request data.

33) Which of the following is an example of an appropriate question to begin analyzing a business problem? A) Why is our newest product not selling as expected in Kentucky? B) Why is net income declining? C) How can we increase employee morale in North Carolina? D) Can we use confidential data?

34) Which of the following would not help create a appropriate question in the AMPS model? A) Ensuring the data has integrity. B) Making the statement succinct. C) Narrowing the scope of the question. D) Knowledge of business processes.

35) Which of the following should an analyst not do when on the second step of the AMPS model, mastering the data? A) Analyze the data. B) Analyze the cost versus the value of obtaining needed data. C) Ensure the data is not outdated. D) Assess privacy concerns with the data.

36) Which of the following is not an example of data questions which arise during the second step of the AMPS model, mastering the data?

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A) Data reliability. B) Data integrity. C) Data serviceability. D) Data accessibility.

37) Which of the following is not a type of analyses performed during the third step of the AMPS model, performing the analysis? A) Descriptive. B) Predictive. C) Prescriptive. D) Reductive.

38) Which type of analysis assists with understanding why something happened during the third step of the AMPS model, performing the analysis? A) Descriptive. B) Diagnostic. C) Predictive. D) Prescriptive.

39) Which type of analysis assists with defining how to optimize performance based on a potential constraint? A) Descriptive. B) Diagnostic. C) Predictive. D) Prescriptive.

40)

Which type of analysis assists with understanding what is happening right now?

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A) Descriptive. B) Diagnostic. C) Predictive. D) Prescriptive.

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Answer Key Test name: Chap 10_3e 1) TRUE 2) FALSE 3) FALSE 4) TRUE 5) FALSE 6) FALSE 7) TRUE 8) TRUE 9) FALSE 10) FALSE 11) B 12) C 13) C 14) D 15) A 16) B 17) C 18) A 19) C 20) A 21) D 22) A 23) B 24) B 25) C 26) D Version 1

27) A 28) C 29) D 30) D 31) C 32) C 33) A 34) A 35) A 36) C 37) D 38) B 39) D 40) A

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CHAPTER 11 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Data visualization presents UML Class diagrams. ⊚ true ⊚ false

Data visualization presents data in tables. ⊚ true ⊚ false

Data visualization is the way we share the story. ⊚ true ⊚ false

Power Point is the most relevant data visualization tool. ⊚ true ⊚ false

Excel supports data presentation. ⊚ true ⊚ false

Data visualization must create or reinforce knowledge. ⊚ true ⊚ false

A common step in preparing data for visualization is setting relationships among tables. ⊚ true ⊚ false

A common step in preparing data for visualization is developing an activity model.

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⊚ ⊚

true false

When creating a data visualization the analyst should never create new fields. ⊚ true ⊚ false

10)

Power BI is a popular data visualization tool as data does not need to be sourced. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 11) Which statement best describes data visualization? A) Data visualization was created to help accessibility issues. B) Data visualization is one way we share the story. C) Data visualization helps users understand a UML diagram. D) Data visualization is they way we input data into tables.

12)

Which of the following is an activity performed as part of data visualization? A) Selecting the data visualization tool. B) Creating a value chain. C) Addressing privacy concerns. D) Asking the appropriate questions.

13)

Which of the following is not considered a data visualization tool? A) Excel. B) Chart Maker. C) Power BI. D) Python.

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14)

Which type of chart is best for categorical data? A) Vertical bar. B) Maps. C) Histogram. D) Pie chart.

15)

Which type of chart is best to describe exam results for a class? A) Treemap. B) Maps. C) Histogram. D) Pie chart.

16)

Which type of chart is best to show a persons’ weight over time? A) Line chart. B) Vertical Bar. C) Scatterplot. D) Pie chart.

17)

Which type of chart is best for time trend data? A) Vertical bar. B) Maps. C) Histogram. D) Line chart.

18)

Which type of chart would best show each division’s relative profit within a corporation?

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A) Pie chart. B) Map. C) Histogram. D) Scatterplot.

19)

Which type of chart would best show outbreaks of the flu by region? A) Pie chart. B) Map. C) Histogram. D) Scatterplot.

20)

Which type of chart would best compare hours studied and test scores? A) Scatter plot. B) Map. C) Histogram. D) Vertical bar.

21)

Which type of chart would best show enrollment between 2005-2020? A) Pie chart. B) Map. C) Line chart. D) Scatterplot.

22)

Which type of chart is best to describe the economic conditions of each country? A) Map. B) Doughnut chart. C) Treemap. D) Pie chart.

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23) Which of the following is not a common step in preparing data and developing visualizations? A) Assess the data cost versus its value. B) Select visualization. C) Set relationships among tables. D) Select attributes.

24) Which of the following best describes the Get Data step in preparing data and developing a visualization? A) Modify data to .csv format. B) Build connections among tables. C) Understand and clean the data for use. D) Select the appropriate chart.

25) Which of the following is not a common element of performing and sharing data analysis amongst visualization tools? A) Get data. B) Set relationships. C) Create data. D) Select and modify the visualization.

26)

Which of the following best describes a difference between Excel and Power BI? A) Power BI can only ingest data from Microsoft Access. B) There are no key differences described in this text. C) Excel can only ingest data from other Excel files. D) Power BI only exists in the cloud.

27)

What is the first step to prepare Excel data?

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A) Select Data>Advanced Filter. B) Select Data>Summarize with Pivot Table. C) Select Insert>Recommended Charts. D) Select Insert>Table.

28)

Which visualization tool creates dashboards and stories? A) Power Point. B) Access. C) Excel. D) Tableau.

29)

What type of tables does Excel use to create data visualization? A) Relational tables. B) Formatted tables. C) Pivot tables. D) Sorted tables.

30)

What is the first step to get data when using Tableau? A) Select File>New. B) Select Dashboard>New Dashboard. C) Select File>Open. D) Select Connect>To a file.

31)

What can users do with Tableau? A) Create calculated fields. B) Build relationships between data sources. C) Create data visualizations. D) All of the other answers are correct.

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32)

Tableau can source data from all of the following except? A) Microsoft Excel. B) Miscrosoft Access. C) .CSV files. D) Microsoft Power Point.

33)

Which of the following is not an example of a dimension in Tableau? A) Property location. B) Sale date. C) Quantity sold. D) Sales manager.

34)

Which of the following is not an example of a measure in Tableau? A) Quantity. B) Price. C) Volume. D) All of these are examples of measures.

35) Which of the following in Tableau allows modification of the visualization by changing color? A) Autofill. B) Pencil. C) Marks. D) Pages.

36) An analyst may use which two features to explain the results of a complex analysis in the most robust manner possible using Tableau?

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A) Story or Show Me. B) Power BI or Pages. C) Dashboard or Story. D) Dashboard or Class diagram.

37)

Power BI can source data from all of the following except? A) All of the following are sources. B) Miscrosoft Excel. C) Text files. D) Power BI datasets.

38)

What must first be added to the page when creating a visualization in Power BI? A) Row. B) Table. C) Column. D) Dashboard.

39)

What Microsoft tool would most likely be used to create a pivot table? A) Word. B) Excel. C) Power BI. D) Powerpoint.

40) What Microsoft tool would most likely be used to create a complex visualization using a large amount of data?

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A) Power BI. B) Excel. C) Access. D) Powerpoint.

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Answer Key Test name: Chap 11_3e 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) TRUE 8) FALSE 9) FALSE 10) FALSE 11) B 12) A 13) B 14) A 15) C 16) A 17) D 18) A 19) B 20) A 21) C 22) A 23) A 24) C 25) C 26) B Version 1

27) D 28) D 29) C 30) D 31) D 32) D 33) C 34) D 35) C 36) C 37) A 38) B 39) B 40) A

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CHAPTER 12 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Machine learning requires less data than general Artificial Intelligence. ⊚ true ⊚ false

Blockchain is a highly regulated technology. ⊚ true ⊚ false

A benefit of blockchain is the lowered cost of processing transactions. ⊚ true ⊚ false

Blockchain is only used for cryptocurrency. ⊚ true ⊚ false

Ethereum is a type of artificial intelligence. ⊚ true ⊚ false

Artificial neural networks are the engines of machine learning. ⊚ true ⊚ false

Smart contracts may be an opportunity for auditors as they contain business rules. ⊚ true ⊚ false

8) Consortium blockchain has no access restrictions in relation to viewing or participating in the blockchain network.

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⊚ ⊚

true false

9) A use case for blockchain may exist wherever there is a significant cross-organization workflow. ⊚ true ⊚ false

10) The key difference between artificial intelligence applications and machine learning is that machine learning involves the computer learning from specific instructions versus experience. ⊚ true ⊚ false

11)

The cost of a false prediction is important to data analysts. ⊚ true ⊚ false

12)

Alexa from Amazon and Siri from Apple are examples of robotic process automation. ⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 13) Blockchain was built to minimize the use of: A) US Dollars. B) Regulators. C) Intermediaries. D) Accountants.

14) Satoshi Nakamoto used all of the following when creating a distributed ledger system except:

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A) Confusion Matrix. B) Resource intensive mining. C) Peer-to-peer transactions. D) Open participation.

15)

Which of the following is not benefit of blockchain? A) Past information is easily edited. B) New transactions are propagated to all participants. C) Consensus must be reached to propagate transactions. D) Participating parties do not need to trust each other.

16)

Which of the following is not accurate regarding blockchain? A) Data is distributed safely. B) The technology uses cryptography. C) Consensus must be reached to propagate transactions. D) Only the administrator keeps a copy of the entire database.

17)

In which of the following situations would blockchain add value? A) Multiple parties that do not trust each other want to collaborate. B) Management would like to automate routine tasks. C) A prediction on weather related losses is needed. D) Contracts need to be reviewed for revenue recognition.

18)

Smart contracts do all of the following except: A) Define terms. B) Define business rules. C) Define miners. D) Define transfer of assets.

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19)

To be considered blockchain a technology must have all of the following except: A) Rewardability. B) Consensus. C) Immutability. D) Decentralization.

20)

Which of the following is not a consensus algorithm? A) Proof of miner. B) Proof of work. C) Proof of authority. D) Proof of stake.

21)

Which of the following is a key difference between Bitcoin and Ethereum? A) Only Bitcoin uses blockchain technology. B) Only Bitcoin provides mining rewards. C) Ethereum employs smart contracts. D) Ethereum has no cryptocurrency.

22)

How often is a block added to Ethereum? A) Every 10 minutes. B) Every 12-15 seconds. C) Every 16-22 minutes. D) Every second.

23) Which type of blockchain would a corporation and their key supplier set up to facilitate transactions?

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A) Private. B) Public. C) Consortium. D) Supply Chain Block.

24) Which type of blockchain would an accounting department of a large international firm set up to track control testing? A) Private. B) Public. C) Consortium. D) Supply Chain Block.

25) Which type of blockchain offers economic reward for the computational proof of work in mining? A) Private. B) Public. C) Consortium. D) Supply Chain Block.

26)

What is not a general function of blockchain technology? A) Transfer digital assets. B) Authenticate identities. C) Generation of bitcoin. D) Ability to create value.

27)

Which of the following is the least likely use case for implementing blockchain?

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A) A grocery store would like to modernize their payroll systems. B) A county would like to modernize how auto titles are transferred. C) A foreign goods importer would like to track their product as they move to the United States. D) American Express would like multiple vendors to allow customers to pay with loyalty points.

28) All of the following are challenges for auditors when auditing records residing in a blockchain network except: A) Programming skills may be needed. B) Complicated protocols may be difficult to understand. C) Smart contracts cannot be used as evidence. D) Converting traditional audit approaches to blockchain technology.

29) One of the largest challenges across the accounting industry for auditing firms which use blockchain is: A) Understanding business activities. B) Continuous monitoring. C) Deciphering cryptocurrency. D) A gap in skillset.

30)

Artificial Intelligence can include all of the following except: A) Database programming. B) Visual perception. C) Logical thinking. D) Language translation.

31) Which statement below describes the relationship between artificial intelligence and machine learning?

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A) Artificial intelligence is like a city and machine learning is like the state. B) Artificial intelligence is like a database and machine learning is like a table in the database. C) Machine learning is like a library and artificial intelligence is like a book. D) Machine learning is like the general ledger and artificial intelligence is like an account.

32)

Which of the following best represents the virtuous cycle of machine learning? A) Input customer purchase data→Predict future purchases→Learn pattern. B) Input customer purchase data→Learn pattern→Predict future purchases. C) Predict pattern→Input purchase data→Learn pattern. D) Predict outcome→Input data→Learn mistakes.

33)

Deep learning is best described as: A) A form of machine learning that involves complex, multilayer neural networks. B) A form of machine learning that involves hidden neural networks. C) A form of learning based on regression analysis. D) A form of reinforcement learning.

34)

Which of the following is the best description of neural networks? A) Mathematical models that convert inputs to outputs/predictions. B) Intelligence exhibited by machines rather than humans. C) A blockchain network where participants need permission to join the network. D) A ledger where individual entries are separate in time and location.

35) When a bank has an input file of FICO scores and uses machine learning to help predict credit losses for each customer, they are likely using which type of learning?

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A) Reinforcement Learning. B) Unsupervised Learning. C) Supervised Learning. D) Matrix Learning.

36)

If a machine learns by trial and error, it is using: A) Reinforcement Learning. B) Confusion Learning. C) Semi-Supervised Learning. D) Matrix Learning.

37)

If a machine is attempting to reduce the dimensions in a dataset it is using: A) Reinforcement Learning. B) Unsupervised Learning. C) Supervised Learning. D) Matrix Learning.

38)

How do data analysts use confusion matrices? A) To predict a non-binary outcome. B) To predict a binary outcome. C) To understand a model’s prediction results. D) To audit artificial intelligence.

39)

When an accounting team automates account reconciliations this is an example of: A) Robotic process automation. B) Spreadsheet automation. C) Natural language automation. D) Internet automation.

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40)

Which of the following is an example of natural language processing? A) A product that creates a language based confusion matrix. B) A product which provides voice and visual communications. C) A product which creates training manuals which are easy to understand. D) A product which reads contracts and helps accountants with revenue recognition.

41)

Which one of the following is not an example of machine learning assisting in an audit? A) Reviewing journal entries. B) Reviewing organization charts. C) Reviewing cash transactions. D) Reviewing journal entry descriptions.

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 42) You have been assigned to audit the work-in-process accounts of a manufacturing firm. What are examples of how you can use machine learning to assist with your validation of balances?

43) You are working on the JPMorgan audit and have been asked to help your manager understand the challenges associated with auditing their use of blockchain technology. Without having a detailed understanding of how JPMorgan uses blockchain, educate your manager on the general issues and challenges for auditors with blockchain technology.

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44) You work at a large financial institution and have recently been tasked to estimate the credit losses on the institutions credit card portfolio? What types of machine learning could you employ and why?

45) You work at a large grocery chain that prides itself on having food that is grown organically by farmers who earn a fair wage. Describe why you believe the concepts in a blockchain network could help validate that all purchases meet these criteria.

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Answer Key Test name: Chap 12_3e 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) FALSE 6) TRUE 7) TRUE 8) FALSE 9) TRUE 10) FALSE 11) TRUE 12) FALSE 13) C 14) A 15) A 16) D 17) A 18) C 19) A 20) A 21) C 22) B 23) C 24) A 25) B 26) C Version 1

27) A 28) C 29) D 30) A 31) B 32) B 33) A 34) A 35) C 36) A 37) B 38) C 39) A 40) D 41) B 42) Answers will vary, especially with respect to their knowledge of Auditing. Answers should include the concepts associated with using machine learning to detect anomalies in an attempt to find unusual transactions.

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43) Answers will vary but could include some of these themes. ● The source document in a blockchain network resides in the chained block ● Records residing in the blockchain network may not provide sufficient information for auditors, ● Illegal, fraudulent, or unauthorized transactions can reside in blockchain ● How auditors access the business information and provide reasonable assurance of financial statements will be challenging ● Complicated protocols ● Lack of skills needed to understand the transactions and/or smart contract 44) Answers will vary however they should include the student’s knowledge of the three various types of machine learning described in this chapter. 45) Answers will vary however they should demonstrate the student understand the basic blockchain concepts described in this chapter.

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CHAPTER 13 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) The Sarbanes-Oxley Act of 2002 (SOX) 2002 requires the management of all companies and their auditors to assess and report on the design and effectiveness of internal control over financial reporting annually. ⊚ ⊚

true false

2) According to the Sarbanes-Oxley Act of 2002, it is the responsibility of the Board of Directors to establish and maintain the effectiveness of internal control. ⊚ ⊚

true false

3) In a computerized environment, internal controls can be categorized as general controls and application controls. ⊚ ⊚

Internal controls guarantee the accuracy and reliability of accounting records. ⊚ ⊚

true false

Segregation of duties reduces the risk of errors and irregularities in accounting records. ⊚ ⊚

true false

The chief executive officer is ultimately responsible for enterprise risk management. ⊚ ⊚

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true false

7) The risk of a company's internal auditing processes failing to catch the misstated dollar amount of revenue on the company's income statement is classified as inherent risk. ⊚ ⊚

true false

Processing controls are IT general controls. ⊚ ⊚

true false

9) COBIT (Control Objectives for Information and related Technology) is a generally accepted framework for IT governance in the U.S. ⊚ ⊚

true false

10) The main objective of the ISO 27000 series is to provide a model for establishing, implementing, operating, monitoring, maintaining, and improving information security. ⊚ ⊚

true false

11) Given the requirement of the Sarbanes-Oxley Act of 2002 (SOX), the Public Company Accounting Oversight Board (PCAOB) established the Securities and Exchange Commission (SEC) to provide independent oversight of public accounting firms. ⊚ ⊚

true false

12) Public Company Accounting Oversight Board (PCAOB) encourages auditors to start from the basic/bottom of financial transaction records to identify the key controls. ⊚ ⊚

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true false

13) Corporate governance is a set of processes and policies in managing an organization with sound ethics to safeguard the interests of its stakeholders. ⊚ ⊚

14)

true false

Internal controls help safeguard an organization’s assets. ⊚ ⊚

true false

15) A firm must establish control policies, procedures, and practices that ensure the firm's business objectives are achieved and its risk mitigation strategies are carried out. ⊚ ⊚

true false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 16) According to COSO 2013, which of the following components of the enterprise risk management addresses an entity’s integrity and ethical values? A) Information and communication. B) Internal environment. C) Risk assessment. D) Control activities.

17) Which of the following items is one of the eight components of COSO’s enterprise risk management 2004 framework?

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A) Operations. B) Reporting. C) Monitoring. D) Compliance.

18)

Which of the following represents an inherent risk for a financial institution? A) Bank reconciliations are not performed on a timely basis. B) The economy goes into a recession. C) Customer credit check not performed. D) An error occurs in a loan loss calculation.

19)

Which of the following represents a control risk for a retail business? A) Bank reconciliations are not performed on a timely basis. B) Two employees are colluding to facilitate theft. C) There are many competitors in the region. D) A bank reconciliation is not performed correctly.

20)

Which of the following represents a residual risk for a services company? A) Two employees are colluding to facilitate theft. B) All checks require two signatures. C) Bank accounts are reconciled weekly. D) A manager reviews all account reconciliations.

21) Which of the following is the best way to compensate for the lack of adequate segregation of duties in a small organization?

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A) Disclosing lack of segregation of duties to external auditors during the annual review. B) Replacing personnel every three or four years. C) Requiring accountants to pass a yearly background check. D) Providing greater management oversight of incompatible activities.

22)

Review of the audit log is an example of which of the following types of security control? A) Governance. B) Detective. C) Preventive. D) Corrective.

23)

Which of the following is not a component of internal control as defined by COSO? A) Control environment. B) Control activities. C) Inherent risk. D) Monitoring.

24)

Which of the following is considered an application input control? A) Run control total. B) Edit check. C) Reporting distribution log. D) Exception report.

25) Which of the following control activities should be taken to reduce the risk of incorrect processing in a newly installed computerized accounting system?

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A) Segregation of duties. B) Ensure proper authorization of transactions. C) Adequately safeguard assets. D) Independently verify the transactions.

26)

Which of the following statement is correct regarding internal control?

A) A well-designed internal control environment ensures the achievement of an entity's control objectives. B) An inherent limitation to internal control is the fact that controls can be circumvented by management override. C) A well-designed and operated internal control environment should detect collusion perpetrated by two people. D) Internal control in a necessary business function and should be designed and operated to detect errors and fraud.

27)

All of the following are the primary functions of internal controls except: A) Prevention. B) Reflection. C) Detection. D) Correction.

28) A manufacturing firm identified that it would have difficulty sourcing raw materials locally, so it decided to relocate its production facilities. According to COSO, this decision represents which of the following response to the risk? A) Risk reduction. B) Prospect theory. C) Risk sharing. D) Risk acceptance.

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29) Each of the following types of controls is considered to be an entity-level control, except those: A) Relating to the control environment. B) Pertaining to the company's risk assessment process. C) Regarding the company's annual stockholder meeting. D) Addressing policies over significant risk management practices.

30) Controls in the information technology area are classified into preventive, detective, and corrective categories. Which of the following is preventive control? A) Contingency planning. B) Hash total. C) Echo check. D) Access control software.

31)

All of the following are examples of internal control procedures except A) Using pre-numbered documents B) Reconciling the bank statement C) Processing customer satisfaction surveys D) Insistence that employees take vacations

32) The Public Company Accounting Oversight Board (PCAOB) is not responsible for standards related to: A) Accounting practice. B) Attestation. C) Auditing. D) Quality control over attestation and/or assurance.

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33)

Which of the following represents an application control for a customer sale? A) The customer name must be populated. B) Accounts are reconciled. C) A manager reviews all return transactions. D) Procedures are documented.

34)

According to COSO which of the following is not a component of internal control? A) Control risk. B) Control activities. C) Monitoring. D) Control environment.

35) The overall attitude and awareness of a firm's top management and board of directors concerning the importance of internal control is often reflected in its: A) Computer-based controls. B) System of segregation of duties. C) Control environment. D) Safeguards over access to assets.

36)

According to AS 5, control risk should be assessed in terms of A) Specific controls. B) Types of potential fraud. C) Financial statement assertions. D) Control environment factors.

37) The framework to be used by management in its internal control assessment under requirements of SOX is the: Version 1

A) COSO internal control framework. B) COSO enterprise risk management framework. C) COBIT framework. D) All of the choices are correct.

38)

The internal control provisions of SOX apply to which companies in the United States?

A) All companies. B) SEC registrants. C) All issuer (public) companies and nonissuer (nonpublic) companies with more than $100,000,000 of net worth. D) All nonissuer companies.

39)

Reconciliation of cash accounts may be referred to as what type of control? A) Detective. B) Preventive. C) Adjustive. D) Non-routine.

40) Sound internal control dictates that immediately upon receiving checks from customers by mail, a responsible employee should A) Add the checks to the daily cash summary. B) Verify that each check is supported by a pre-numbered sales invoice. C) Prepare a summary listing of checks received. D) Record the checks in the cash receipts journal.

41)

Tracing shipping documents to pre-numbered sales invoices provides evidence that:

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A) No duplicate shipments or billings occurred. B) Shipments to customers were properly invoiced. C) All goods ordered by customers were shipped. D) All pre-numbered sales invoices were accounted for.

42) A customer intended to order 100 units of a product A, but incorrectly ordered nonexistent product B. Which of the following controls most likely would detect this error? A) Validity check B) Record count C) Hash total D) Parity check

43)

Which of the following is an example of a validity check?

A) The computer ensures that a numerical amount in a record does not exceed some predetermined amount. B) As the computer corrects errors and data are successfully resubmitted to the system, the causes of the errors are printed out. C) The computer flags any transmission for which the control field value did not match that of an existing file record. D) After data for a transaction are entered, the computer sends certain data back to the terminal for comparison with data originally sent.

44)

Which of the following is a component of COSO ERM 2017? A) Governance and culture. B) Strategy and objective setting. C) Performance. D) Review and revision. E) All of the choices are correct.

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45)

Which of the following is not a component of COSO ERM 2017? A) Information communication and reporting. B) Strategy and objective setting. C) Control activities. D) Review and revision.

46)

Ethical principals are derived from all of the following except: A) Personal attitudes on issues of right and wrong. B) Cost benefit analysis. C) Cultural values. D) Societal traditions.

47)

Which of the following best describes why firms choose to create codes of ethics? A) Because most people will not behave ethically without a written set of guidelines. B) Codes of ethics protect firms against lawsuits that may be filed due to corporate

fraud. C) They allow firms to create a formal set of expectations for employees who may have different sets of personal values. D) Companies must have a written code of ethics in order to conduct interstate commerce in the U.S.

48)

Which of the following best describes what is meant by corporate governance?

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A) The organizational structure and responsibilities of the executive team and board of directors of a corporation. B) Regulatory bodies, such as the SEC and PCAOB, that govern the behavior of corporations. C) The ability of a corporation’s management team to meet earnings forecasts over an extended period of time. D) Management’s processes, policies, and ethical approach to safeguarding stakeholder interests.

49) The Sarbanes-Oxley Act (SOX) was passed as a response to which of the following events? A) The savings & loan scandals of the 1980s. B) The bust of dot-com bubble companies such as pets.com and Webvan. C) Corporate reporting scandals by companies such as WorldCom, Enron, and Tyco. D) Securities manipulation and insider trading in the 1930s.

50) In a computerized environment, internal controls can be categorized into which of the following? A) General controls and application controls. B) Detective controls and protective controls. C) Network controls and transaction controls. D) Preventive controls and mandatory controls.

51) According to COSO ERM, which of the following is not one of the bases that should be used to analyze the risks of an identified event? A) Inherent risk. B) Organizational risk. C) Residual risk. D) Control risk.

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52)

Which of the following is not one of the responses to risk presented in COSO ERM? A) Share the risk. B) Accept the risk. C) Eliminate the risk. D) Reduce the risk.

53) If a Chief Technology Officer wanted to ensure a new system had appropriate processing controls which of the following would he/she require? A) Disposal of excess documents. B) URL Class diagram. C) A record count. D) Password management.

54) If a Chief Technology Officer wanted to ensure a new system had appropriate input controls which of the following would he/she require? A) Disposal of documents. B) Access control. C) Sequence checks. D) URL Class diagram.

55) The COSO ERM framework encourages a review of risks as they apply to achieving firms’ objectives. Which of the following is not one of the listed categories of objectives to be considered? A) Environment. B) Operations. C) Strategic. D) Compliance.

56) In the event identification component of the COSO ERM framework, management must classify events into which of the following? Version 1

A) Weaknesses and vulnerabilities. B) Risks and opportunities. C) Risks and rewards. D) Controls and vulnerabilities.

57) COBIT framework takes the view that all IT processes should provide clear links between all of the following except: A) IT processes. B) IT controls. C) IT components. D) IT governance requirements.

58) In addition to focusing on controls, COBIT 5 expands its scope by incorporating which of the following broad perpsectives? A) How IT brings value to the firm. B) How IT can automate specific business processess. C) IT networking requirements. D) IT cost reductions.

59) Which of the following is not one of the key COBIT 5 principles for governance and amangement of enterprise IT? A) Enabling a holistic approach. B) Meeting stakeholder needs. C) Separating management from shareholders. D) Applying an integrated framework.

60) The IT Infrastructure Libarary (ITIL) is considered a de facto standard in which of the following regions?

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A) Asia and Australia. B) North America. C) The UK. D) Europe.

61)

The ISO 27000 Series of standards are designed to address which of the following? A) Corporate governance. B) Internal controls. C) Information security issues. D) IT value.

62) Which of the following provides the advantage of incorporating other widely accepted standards and frameworks? A) ITIL. B) COBIT 2019. C) COSO 2013. D) ISO 27000.

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 63) What is the impact of the Sarbanes-Oxley Act of 2002 (SOX) on public companies and public accounting firms?

64) Describe the three categories of objectives and five essential components of the COSO 2013 framework.

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65)

What are the three main functions of COSO ERM?

66) What are the definitions of “governance” and “management” in the COBIT 5.0 framework?

67) Discuss the ethical values created in Starbucks. How do they help to form the firm’s control environment?

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68) The information system of Company ABC is deemed to be 90% reliable. A major threat has been identified with an exposure of $5,000,000. Two control procedures exist to deal with the threat. Implementation of control A would cost $140,000 and reduce the risk to 4%. Implementation of control B would cost $100,000 and reduce the risk to 6%. Implementation of both controls would cost $220,000 and reduce the risk to 2%. Given the data and based solely on an economic analysis of costs and benefits, which control procedure should you choose?

69) Which internal control(s) would you recommend to prevent the following situations from occurring? a.While entering the details about a large credit sale, a clerk mistakenly typed in a nonexistent account number. Consequently, the company never received the payment from this customer. b.A customer filled in a wrong account number on the remittance advice. Consequently, a clerk entered the same number into the system, and the payment was credited to another customer’s account. c.After processing a large sales transaction, the inventory records showed negative quantities on hand for several items.

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Answer Key Test name: Chap 13_3e 1) FALSE 2) FALSE 3) TRUE 4) FALSE 5) TRUE 6) TRUE 7) FALSE 8) FALSE 9) TRUE 10) TRUE 11) FALSE 12) FALSE 13) TRUE 14) TRUE 15) TRUE 16) B 17) C 18) B 19) D 20) A 21) D 22) B 23) C 24) B 25) D 26) B Version 1

27) B 28) A 29) C 30) D 31) C 32) A 33) A 34) A 35) C 36) C 37) D 38) B 39) A 40) C 41) B 42) A 43) C 44) E 45) C 46) B 47) C 48) D 49) C 50) A 51) B 52) C 53) C 54) B 55) A 56) B Version 1

57) C 58) A 59) C 60) D 61) C 62) B 63) SOX requires public companies registered with the SEC and their auditors to annually assess and report on the design and effectiveness of internal control over financial reporting. SOX also established the Public Company Accounting Oversight Board (PCAOB) to provide independent oversight of public accounting firms. The PCAOB issues auditing standards and oversees quality controls of public accounting firms.

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64) Objectives: 1.1) Operations Objectives – effectiveness and efficiency of a firm’s operations on financial performance goals and safeguarding assets. 2.2) Reporting Objectives – reliability of reporting, including internal and external financial and non-financial reporting. 3.3) Compliance Objectives – adherence to applicable laws and regulations. Five components of internal control: 1.1) Control Environment — include the management's philosophy and operating style, integrity and ethical values of employees, organizational structure, the role of the audit committee, proper board oversight for the development and performance of internal control, and personnel policies and practices. 2.2) Risk Assessment — Risk assessment involves a dynamic process for identifying and analyzing a firm’s risks from external and internal environments. 3.3) Control Activities — A firm must establish control policies, procedures, and practices that ensure the firm’s objectives are achieved and risk mitigation strategies are carried out. 4.4) Information and Communication — Relevant information should be identified, captured, and communicated in a form and timeframe that enables employees to carry out their duties. 5.5) Monitoring Activities — The design and effectiveness of internal controls should be monitored by management and other parties outside the process in an ongoing basis.

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65) ● Identifies potential events that may affect the firm ● Manages risk to be within the firm’s risk appetite ● Provides reasonable assurance regarding the achievement of the firm’s objectives. 66) COBIT 5.0 defines “governance” as ensuring that firm objectives are achieved by evaluating stakeholder needs; setting direction through decision making; and monitoring performance, compliance and progress. In most firms, the board of directors is responsible for governance. Per COBIT 5, “management” includes planning, building, running and monitoring activities in alignment with the direction in achieving the firm objectives. 67) Students’ answers may vary. 68) Estimated value of control A: 5,000,000*(10%−4%)=$300,000 (problem states that Control A reduces the risk TO 4%) Estimated value of control B: 5,000,000*(10%−6%)=$200,000 (problem states that Control B reduced the risk TO 6%.) Estimated value of control A&B: 5,000,000*(10%−2%)=$400,000 Benefits exceed cost of A: 300,000−140,000=160,000 Benefits exceed cost of B: 200,000−100,000=100,000 Benefits exceed cost of A&B: 400,000−220,000=180,000 Choose Controls A & B.

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69) a. While entering the details about a large credit sale, a clerk mistakenly typed in a nonexistent account number. Consequently, the company never received the payment from this customer. Use Validity check for actual customer records. b. A customer filled in a wrong account number on the remittance advice. Consequently, a clerk entered the same number into the system, and the payment was credited to another customer’s account. Use Closed-loop verification when entering customers’ account numbers. c. After processing a large sales transaction, the inventory records showed negative quantities on hand for several items. Use sign check on quantity on hand.

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CHAPTER 14 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) The fraud triangle includes incentive, opportunity and an attitude to rationalize the fraud. ⊚ true ⊚ false

2) The goal of information security management is to maintain confidentiality, integrity and availability of a firm's information. ⊚ true ⊚ false

3) Encryption is a preventive control ensuring data confidentiality and privacy during transmission and for storage. ⊚ true ⊚ false

Asymmetric-key encryption is suitable for encrypting large data sets or messages. ⊚ true ⊚ false

5) Key distribution and key management are problematic under the symmetric-key encryption. ⊚ true ⊚ false

The symmetric-key encryption method is used to authenticate users. ⊚ true ⊚ false

7) A Certificate Authority (CA) issues digital certificates to bond the subscriber with a public key and a private key. ⊚ true ⊚ false

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A company’s audit committee is solely responsible for fraud risk assessments. ⊚ ⊚

true false

9) One type of fault tolerance is using redundant units to provide a system the ability to continue functioning when part of the system fails. ⊚ ⊚

true false

10)

Disaster recovery planning and business continuity management are unrealted. ⊚ true ⊚ false

11)

Information security is a critical factor in maintaining systems integrity. ⊚ true ⊚ false

12) The goal of information security management is to enhance the confidence, integrity and authority (CIA) of a firm's information. ⊚ true ⊚ false

13) A Trojan Horse is a self-replicating, self-propagating, self-contained program that uses networking mechanisms to spread itself. ⊚ true ⊚ false

14) files.

Spam is a self-replicating program that runs and spreads by modifying other programs or ⊚ ⊚

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true false 2

15)

Encryption and hashing are similar process to maintain data confidentiality. ⊚ true ⊚ false

16)

Hashing process can be reversed and it is used for maintaining data confidentiality. ⊚ ⊚

true false

17) When using asymmetric encryption algorithm, for two trading parties to conduct ebusiness, they need to use two keys. ⊚ ⊚

true false

18) Symmetric-key encryption is rarely used today due to key distribution and key management issues. ⊚ ⊚

true false

19) Most companies use both symmetric-key and asymmetric-key encryption methods when conducting e-business. ⊚ ⊚

20)

true false

The purpose of using a digital signature is for authentication. ⊚ ⊚

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true false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 21) In general, the goal of information security management is to protect all of the following except: A) Confidentiality. B) Integrity. C) Availability. D) Redundancy.

22)

Which of the following statements is incorrect about digital signatures? A) A digital signature can ensure data integrity. B) A digital signature also authenticates the document creator. C) A digital signature is an encrypted message digest. D) A digital signature is a message digest encrypted using the document creator's public

key.

23)

What is the primary objective of data security controls?

A) To establish a framework for controlling the design, security, and use of computer programs throughout an organization. B) To ensure that data storage media are subject to authorization prior to access, change, or destruction. C) To formalize standard, rules, and procedures to ensure the organization's control are properly executed. D) To monitor the use of system software to prevent unauthorized access to system software and computer programs.

24) An entity doing business on the internet most likely could use any of the following methods to prevent unauthorized intruders from accessing proprietary information except:

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A) Password management. B) Data encryption. C) Digital certificates. D) Batch processing.

25) When client's accounts payable computer system was relocated, the administrator provided support through a dial-up connection to server. Subsequently, the administrator left the company. No changes were made to the accounts payable system at that time. Which of the following situations represents the greatest security risk? A) User passwords are not required to the in alpha-numeric format. B) Management procedures for user accounts are not documented. C) User accounts are not removed upon termination of employees. D) Security logs are not periodically reviewed for violations.

26) An information technology director collected the names and locations of key vendors, current hardware configuration, names of team members, and an alternative processing location. What is the director most likely preparing? A) Data restoration plan. B) Disaster recovery plan. C) System security policy. D) System hardware policy.

27) Bacchus, Inc. is a large multinational corporation with various business units around the world. After a fire destroyed the corporation headquarters and largest manufacturing site, plans for which of the following would help Bacchus ensure a timely recovery? A) Daily backup. B) Network security. C) Business continuity. D) Backup power.

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28) Which of the following statements regarding authentication in conducting e-business is incorrect? A) It is a process that establishes the origin of information or determines the identity of a user, process, or device. B) Only one key is used for encryption and decryption purposes in the authentication process. C) Successful authentication can prevent repudiation in electronic transactions. D) We need to use asymmetric-key encryption to authenticate the sender of a document or data set.

29) Which of the following is not included in the remediation phase for vulnerability management? A) Risk Response Plan. B) Policy and procedures for remediation. C) Vulnerability Prioritization. D) Control Implementation.

30)

Which of the following does not represent a viable data backup method? A) Disaster recovery plan. B) Redundant arrays of independent drives. C) Virtualization. D) Cloud computing.

31)

Which of the following statements about asymmetric-key encryption is correct?

A) When using asymmetric-key encryption method, a total of two keys are necessary in electronic communication between two parties. B) Employees in the same company share the same public key. C) Most companies would like to manage the private keys for their employees. D) Most companies would like to use a Certificate Authority to manage the public keys of their employees. E) Two of the above are correct.

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32)

Which of the following statements is incorrect?

A) A fraud prevention program starts with a fraud risk assessment across the entire firm B) The audit committee typically has an oversight role in risk assessment process C) Communicating a firm's policy file to employees is one of the most important responsibilities of management D) A fraud prevention program should include an evaluation on the efficiency of business processes.

33)

A disaster recovery approach should include which of the following elements? A) Encryption. B) Firewalls. C) Regular backups. D) Surge protectors.

34)

Which of the following is a password security weakness? A) Users are assigned passwords when accounts are created, but do not change them. B) Users have accounts on several systems with different passwords. C) Users write down their passwords on a note paper, and carry it with them. D) Users select passwords that are not part of an online password dictionary.

35) To prevent invalid data input, a bank added an extra number at the end of each account number and subjected the new number to an algorithm. This technique is known as: A) A validation check. B) check digit verification. C) A dependency check. D) A format check.

36) Why do Certificate Authority (CA) play an important role in a company's information security management? Version 1

A) Using a CA is required by SOX in managing information security. B) A CA is responsible to generate session keys for encryption purposes. C) Most companies use CA to manage their employees’ public keys. D) CA creates and maintains both the public and private keys for a company’s employees.

37) When computer programs or files can be accessed from terminals, users should be required to enter a(n): A) Parity check. B) Password as a personal identification code. C) Check digit. D) Echo check.

38) Which of the following controls would most likely assure that a company can reconstruct its financial records? A) Security controls such as firewalls. B) Backup data are tested and stored safely. C) Personnel understand the data very well. D) Paper records.

39)

Why would companies want to use digital signatures when conducting e-business? A) They are cheap. B) They are always the same so it can be verified easily. C) They are more convenient than requiring a real signature. D) They can authenticate the document sender and maintain data integrity.

40)

Select a correct statement regarding encryption methods?

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A) To use symmetric-key encryption, each user needs two different keys. B) Most companies prefer using symmetric-key encryption than asymmetric-key encryption method. C) Both symmetric-key and asymmetric-key encryption methods require the involvement of a certificate authority. D) When conducting e-business, most companies use both symmetric-key and asymmetric-key encryption methods.

41)

Select a correct statement regarding a hashing process. A) It is reversible. B) The outcome is a message digest. C) It is not necessary to use a hashing process in creating a digital signature. D) It is used for authentication.

42) Which of the following IT controls would best prevent a developer from inappropriately accessing the system? A) Forced password changes. B) Secondary code review. C) Symmetric encryption. D) Lack of authentication.

43) Which of the following IT controls would best prevent a currency trader from concealing his/her trading errors? A) End user access to source code. B) Multifactor authentication. C) Symmetric encryption. D) Use of a private key.

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44)

Which of the following is not an example of a physical security vulnerability? A) Unescorted visitors on the premises. B) Poor choice of passwords. C) Lack of a smoke detector in the room housing servers. D) Lack of disaster recovery plan.

45) Which of the following is not an example of vulnerability within the process of IT operations? A) Software not patched. B) Inappropriate data classification. C) Ineffective training. D) Poor firewall rules.

46) Which of the following is not an example of a vulnerability within an Information System? A) Outdated intrusion detection/prevention system. B) Lack of a disaster recovery plan. C) Improper system configuration. D) Failure to audit and terminate unused accounts in a timely manner.

47) What could result from the failure to audit and terminate unused accounts in a timely manner? A) A disgruntled employee may send out phishing emails. B) A SOC 1 report will be generated. C) Computer hardware may be taken off premises. D) A disgruntled employee may tamper with company applications.

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48) Which of the following describes the primary goals of the CIA approach to information security management? A) Controls, Innovation, Analysis. B) Confidentiality, Integrity, Availability. C) Convenience, Integrity, Awareness. D) Confidentiality, Innovation, Availability.

49) Which of the following is not one of the common techniques for information security risks and attacks? A) Spam. B) Botnet. C) TraceRT. D) Social Engineering.

50)

Encryption is a control that changes plain text into which of the following? A) Cyberspace. B) Cryptext. C) Mnemonic code. D) Cyphertext.

51) Asymmetric-key encryption uses which of the following techniques to allow users to communicate securely? A) A message digest. B) A 16-bit encryption key. C) A public key and a private key. D) A digital signature.

52)

A Public Key Infrastructure (PKI) provides the ability to do which of the following?

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A) Encrypt messages using a private key. B) Enable debit and credit card transactions. C) Read plaintext. D) Issue, maintain, and revoke digital certificates.

53)

Which of the following best illustrates the use of multifactor authentication?

A) Requiring password changes every 30, 60, or 90 days. B) Requiring the use of a smart card and a password. C) Requiring the use of upper case, lower case, numeric, and special characters for a password. D) The use of a fingerprint scanner for access to a device.

54) Both ISACA and the GTAG define vulnerability. Which of the following does not represent one of these definitions? A) The nature of IT resources that can be exploited by a threat to cause damage. B) An organizations’ exposure to disaster. C) Weaknesses or exposures in IT assets that may lead to business, compliance, or security risk. D) All of the other items represent the definitions of vulnerability stated by ISACA and the GTAG.

55) Which of the following statements is true regarding risk management and vulnerability management? A) They both have the objective of reducing the likelihood that detrimental events occur. B) Risk management is often conducted using an IT asset-based approach. C) Vulnerability management is more complex and strategic. D) Both approaches involve processes that typically take many months or years to complete.

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56) Which of the following describes the recommended prerequisites for managing vulnerabilities? A) Implement the COSO ERM framework, and identify key vulnerabilities. B) Determine the main objective of vulnerability management, and assign roles and responsibilities. C) Identify the key vulnerabilities, and implement appropriate controls to minimize the vulnerabilities. D) Implement suitable controls, and assess those controls for potential vulnerabilities.

57) Which of the following is not one of the main components of vulnerability management and assessment? A) Identification. B) Remediation. C) Internalization. D) Maintenance.

58) For businesses considering a cloud computing solution, which of the following should they ask the cloud vendor to provide before entering into a contract for critical business operations? A) FASB 51 Report. B) Audit Report. C) SAS 3 Report. D) SOC 2 Report.

59) Which of the following statements is most accurate with regard to business continuity management (BCM) and disaster recovery planning (DRP)? A) DRP is an important component of BCM. B) BCM and DRP should be considered independently of each other. C) BCM is an important component of DRP. D) DRP should be considered as optional, while BCM should be considered as necessary.

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60)

A RAID array implemented in a data center is an example of which of the following? A) Virtualization. B) Uninterruptible power supply. C) Fault tolerance. D) SOC 3.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 61) A magnetic tape used to store data backups was lost while it was being transported to an offsite storage location. The data on the tape includes customers’ credit card and personal information. Which preventive control(s) should have been used to minimize the potential loss?

62) List the following steps regarding computer fraud risk assessments in sequence. 1.(a) Assessing the likelihood and business impact of a control failure and/or a fraud incident. 2.(b) Mapping existing controls to potential fraud schemes and identifying gaps. 3.(c) Identifying potential IT fraud schemes and prioritizing them based on likelihood and impact. 4.(d) Identifying relevant IT fraud risk factors. 5.(e) Testing operating effectiveness of fraud prevention and detection controls.

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 63) Describe the process of using asymmetric-key encryption to authenticate the trading partner involved in e-business.

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64)

What are the two prerequisites for vulnerability management?

65)

Describe the framework for vulnerability assessment and vulnerability management.

66) What are included in disaster recovery planning and business continuity management? Are these concepts related?

67) What is a digital signature? How could a digital signature ensure data integrity when conducting e-business?

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Answer Key Test name: Chap 14_3e 1) TRUE 2) TRUE 3) TRUE 4) FALSE 5) TRUE 6) FALSE 7) TRUE 8) FALSE 9) TRUE 10) FALSE 11) TRUE 12) FALSE 13) FALSE 14) FALSE 15) FALSE 16) FALSE 17) FALSE 18) FALSE 19) TRUE 20) FALSE 21) D 22) D 23) B 24) D 25) C 26) B Version 1

27) C 28) B 29) C 30) A 31) D 32) D 33) C 34) A 35) B 36) C 37) B 38) B 39) D 40) D 41) B 42) B 43) A 44) B 45) A 46) B 47) D 48) B 49) C 50) D 51) C 52) D 53) B 54) B 55) A 56) B Version 1

57) C 58) D 59) A 60) C 61) The tape needs to be encrypted and password protected. 62) d, c, b, e, a 63) To authenticate a trading partner (TP), the contact person (CP) of a company sends a challenge message to TP. TP uses her private key to encrypt the challenge message and send it to CP. If CP is able to use TP’s public key to decrypt and get the plaintext of the challenge message, CP has authenticated TP successfully. 64) First, determine the main objectives of its vulnerability management. In some case, the firm should determine which laws, regulations, and standards it should comply with. Second, a firm should assign roles and responsibilities for vulnerability management. The management may designate a team to be responsible for developing and implementing the vulnerability management program.

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65) The components of vulnerability assessment include identification and risk assessment. ● Identification process: identifying all critical IT assets, threats and vulnerabilities. ● Risk assessment process: assessing vulnerabilities and prioritizing vulnerability issues. The components of vulnerability management include remediation and maintenance. ● Remediation process: making a risk response plan, preparing the policy and requirements for remediation, as well as control implementation. ● Maintenance: monitoring, ongoing assessment and continuous improvement. 66) Disaster recovery planning (DRP) must include a clearly defined and documented plan that covers key personnel, resources including IT infrastructure and applications, and actions required to be carried out in order to continue or resume the systems for critical business functions within planned levels of disruption. Business continuity management (BCM) includes the activities required to keep a firm running during a period of displacement or interruption of normal operations. DRP is a key component of the BCM. BCM is broader than DRP and is concerned about the entire business processes rather than particular assets, such as IT infrastructure and applications.

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67) Digital signature is a message digest (MD) of a document (or data file) that is encrypted using the document creator’s private key. 1.1) Both the sender (A) and receiver (B) use an asymmetric-key encryption method to authenticate each other. 2.2) Sender A makes a copy of the document and uses SHA-256 to hash the copy and get an MD. 3.3) Sender A encrypts the MD using Sender A’s private key to get Sender A’s digital signature. 4.4) Sender A uses Receiver B’s public key to encrypt the original document and Sender A’s digital signature (for confidentiality). 5.5) Sender A sends the encrypted package to Receiver B. 6.6) Receiver B receives the package and decrypts it using Receiver B’s private key. Receiver B now has the document and Sender A’s digital signature. 7.7) Receiver B decrypts Sender A’s digital signature using Sender A’s public key to get the sent-over MD. Receiver B also authenticates that Sender A is the document creator. 8.8) Receiver B makes a copy of the received document and uses SHA-256 to hash the copy and get a calculated MD. 9.9) If the sent-over MD is the same as the calculated MD, Receiver B ensures data integrity.

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CHAPTER 15 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Data mining is the process of searching for patterns in the data in a data warehouse and to analyze the patterns for decision making. ⊚ true ⊚ false

The data in a data warehouse are updated when transactions are processed. ⊚ true ⊚ false

3) Parallel simulation uses an independent program to simulate a part of an existing application program, and is designed to test the validity and to verify the accuracy of an existing application program. ⊚ true ⊚ false

4) Data governance is the convergence of data quality, data management, data policies, business process management, and risk management surrounding the handling of data in a company. ⊚ true ⊚ false

5) Computer-assisted audit techniques (CAAT) are often used when auditing a company's IT infrastructure. ⊚ true ⊚ false

6) Firewalls are security systems comprised of hardware and software that is built using routers, servers, and a variety of software. ⊚ true ⊚ false

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7) The Generally Accepted Auditing Standards (GAAS) issued by PCAOB provide guidelines for conducting an IS/IT audit. ⊚ true ⊚ false

8) A Virtual private network (VPN) is a private network, provided by a third party, for exchanging information through a high capacity connection. ⊚ true ⊚ false

9) A wireless network is comprised of access points and stations. Access points logically connect stations to a firm’s network. ⊚ true ⊚ false

10) An Integrated test facility (ITF) is an automated technique that enables test data to be continually evaluated during the normal operation of a system. ⊚ true ⊚ false

11) Accountants increasingly participate in designing internal controls and improving business and IT processes in a database environment. ⊚ true ⊚ false

12) A data warehouse is for daily operations and often includes data for the current fiscal year only. ⊚ true ⊚ false

13)

Parallel simulation attempts to simulate the firm's key features or processes. ⊚ true ⊚ false

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14) An embedded audit module is a programmed audit module that is added to the system under review. ⊚ true ⊚ false

15) A continuous audit allows companies to perform audit-related activities on a continuous basis. ⊚ ⊚

true false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 16) Which of the following is not an approach used for online analytical processing (OLAP)? A) Exception reports. B) What-if simulations. C) Consolidation. D) Data mining.

17)

The purpose of a company's firewall is to: A) Guard against spoofing. B) What-if simulations. C) Deny computer hackers access to sensitive data. D) All of the choices are correct.

18)

Which of the statements regarding a data warehouse is incorrect?

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A) It is a centralized collection of firm-wide data. B) The purpose of a data warehouse is to provide a rich data set for management to identify patterns and to examine trends of business events. C) Includes data for the current fiscal year only. D) The data in a data warehouse is pulled from each of the operational databases periodically.

19)

Which of the following statements about switches is correct?

A) A hub is smarter than Switch. B) Switches provide more security protections than hubs do for a company's internal network. C) Switches are widely used in WANs. D) A Switch contains multiple ports.

20) Which of the following describes a group of computers that connects the internal users of a company distributed over an office building? A) Internet. B) LAN. C) Virtual private network (VPN). D) Decentralized network.

21)

Which of the following is not a management control for wireless networks? A) Assigning roles and responsibilities of employees for access control. B) Conducting risk assessment on a regular basis. C) Conducting appropriate awareness training on wireless networks. D) Creating policies and procedures.

22)

What is the man-in-the-middle threat for wireless LANs?

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A) The attacker impersonates an authorized user and gains certain unauthorized privileges to the wireless network. B) The attacker passively monitors wireless networks for data, including authentication credentials. C) The attacker steals or makes unauthorized use of a service. D) The attacker actively intercepts communications between wireless clients and access points to obtain authentication credentials and data.

23) Which of the following statements regarding the black-box approach for systems auditing is correct? A) The auditors need to gain detailed knowledge of the systems' internal logic. B) The black-box approach could be adequate when automated systems applications are complicated. C) The auditors first calculate expected results from the transactions entered into the system. Then, the auditors compare these calculations to the processing or output results. D) All of the choices are correct.

24) Which of the following is a key reason an operating system is the most important system software? A) It is the centralized collection of firmwide data. B) It manages computer-assisted audit techniques (CAATs). C) It manages interfaces with the computer. D) None of the choices are correct.

25)

What is the test data technique?

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A) It uses a set of input data to validate system integrity. B) It requires auditors to prepare both valid and invalid data to examine critical logics and controls of the system. C) It is an automated technique that enables test data to be continually evaluated during the normal operation of a system. D) "It uses a set of input data to validate system integrity" and "It requires auditors to prepare both valid and invalid data to examine critical logics and controls of the system" are correct. E) None of the choices are correct.

26)

Within a WAN, a router would perform which of the following functions? A) Provide the communication within the network. B) Select network pathways within a network for the flow of data packets. C) Amplify and rebroadcast signals in a network. D) Forward data packets to their internal network destination.

27) Which of the following strategies will a CPA most likely consider in auditing an entity that processes most of its financial data only in electronic form, such as a paperless system? A) Continuous monitoring and analysis of transaction processing with an embedded audit module. B) Increased reliance on internal control activities that emphasize the segregation of duties. C) Verification of encrypted digital certificates used to monitor the authorization of transactions. D) Extensive testing of firewall boundaries that restrict the recording of outside network traffic.

28) An auditor reviewing the risks associated with a firm’s Wide area network (WAN) should pay particular attention to which of the following?

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A) Operating systems. B) Computer-assisted auditing techniques (CAATs). C) Segregation of duties. D) Routers and firewalls.

29) The results of a generalized audit software simulation of the aging of accounts receivable revealed substantial differences in the aging contribution, even though grand totals reconciled. Which of the following should the IS auditor do first to resolve the discrepancy? A) Recreate the test, using different software. B) List a sample of actual data to verify the accuracy of the test program. C) Ignore the discrepancy because the grand totals reconcile and instruct the controller to correct the program. D) Create test transactions and run test data on both the production and simulation program.

30) An auditor should be most concerned about which of the following when reviewing the risks of a company’s wireless network: A) Confidentiality. B) Integrity. C) Availability. D) All of the choices are correct.

31)

Which statements are incorrect about virtual private network (VPN)?

A) It is a way to use the public telecommunication infrastructure in providing secure access to an organization’s network. B) It enables the employees to work remotely by accessing their firm’s network securely using the Internet. C) The packets sent through VPN are encrypted and with authentication technology. D) The VPN model requires leased lines.

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32)

LAN is the abbreviation for: A) Large Area Network. B) Local Area Network. C) Longitudinal Analogue Network. D) Low Analytical Nets.

33) Which of the following is least likely to be considered a component of a computer network? A) Application programs. B) Computers. C) Servers. D) Routers.

34) Which of the following statements regarding the purposes of an operating system is correct? A) To ensure the integrity of a system. B) To control the flow of multiprogramming and tasks of scheduling in the computer. C) To allocate computer resources to users and applications. D) All of the choices are correct.

35)

Which of the following is not a benefit of using wireless technology? A) Mobility. B) Rapid deployment. C) Flexibility and Scalability. D) Security.

36)

The masquerading threat for wireless LANs is:

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A) The attacker actively intercepts communications between wireless clients and access points to obtain authentication credentials and data. B) The attacker alters a legitimate message sent via wireless networks by deleting, adding to, changing, or reordering it. C) The attacker passively monitors wireless networks for data, including authentication credentials. D) The attacker impersonates an authorized user and gains certain unauthorized privileges to the wireless network.

37) Most threats involving a wireless local area network (LAN) involve which of the following? A) The attacker has access to the operating system. B) The attacker has access to the radio link between a station and an access point. C) The attacker has accessed the premises of the company. D) The attacker has access to the virtual private network (VPN).

38)

Which of the following is not a use of CAATs in auditing? A) Test of details of transactions and balances. B) Analytical review procedures. C) Fraud examination. D) Automated generation of final audit report.

39) Which type of audit test would utilize the computer-assisted audit technique (CAATs) white-box approach? A) Test hubs and switches. B) Compare expected results to output results. C) User acceptance testing. D) Insertion of test transactions.

40)

Which of the following statements about firewalls is wrong?

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A) A firewall is a security system comprised of hardware and software that is built using routers, servers, and a variety of software. B) A firewall allows individuals on the corporate network to send and receive data packets from the Internet. C) A firewall can filter through packets coming from outside networks to prevent unauthorized access. D) A firewall connects different LANs, software-based intelligent devices, and examines IP addresses.

41) One control objective for an operating system is that it must be protected from itself. Which of the following statements best explains this concept? A) The operating system should be able to gracefully terminate activities, and later recover to its previous state. B) No operating system module should be allowed to corrupt or destroy another operating system module. C) User applications must not be allowed to gain control of or damage the operating system. D) The operating system must be able to prevent unauthorized users from accessing, corrupting, or destroying other users’ data.

42) IT governance over operating systems includes establishing proper policies and procedures. These policies and procedures over operating systems should cover all of the following except: A) Which computing hardware to use. B) Who can access the operating system. C) Which actions users can take. D) Which resources users can use.

43) Accounting professionals should understand database systems for all of the following reasons except:

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A) Accountants have a strong understanding of risks, controls and business processes. B) Accountants increasingly participate in creating internal control systems. C) Accountants typically manage organizations’ operational databases. D) Accountants frequently help improve business and IT processes.

44)

Which of the following is an example of using the test data technique? A) Create a statistical data sample. B) Embed an audit module in the source system. C) Reprocessing actual data. D) Input both valid and invalid transactions.

45)

Which of the following tool advancements has made continuous auditing more feasable? A) COBIT. B) XBRL. C) OLAP. D) VPN.

46)

Which of the following uses best describes the use of a VPN?

A) Connect computers, printers, and file servers in an office building. B) Lease dedicated communication lines to guarantee connection performance between remote office locations. C) Allow employees traveling for business to connect to home office computing resources. D) Allocates computing resources among multiple processors and operating systems.

47)

Which of the following is not one of the benefits of using a wireless network?

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A) Flexibility and scalability. B) Mobility. C) Greater security. D) Rapid deployment.

48) Which of the following is not one of the categories of security controls for wireless networks? A) Operational controls. B) Application controls. C) Management controls. D) Technical controls.

49) Which of the following is not one of the reasons auditors should consider the use of CAATs? A) ISACA standards require IS auditors to obtain sufficient, reliable, and relevant evidence, and should perform appropriate analysis of this evidence. B) GAAP stipulates that audits should be performed using tools and techniques appropriate to the evidence being reviewed. C) The IIA professional practices state that auditor must consider the use of technologybased auditing tools when conducting audits. D) GAAS requires auditors to gather sufficient and appropriate evidence in the course of audit field work.

50)

CAATs are commonly used in all of the following situations except: A) Transaction testing. B) Network penetration testing. C) Encryption testing. D) Operating system vulnerability assessments.

51)

Which of the following is not considered one of the primary CAAT approaches?

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A) The black-box approach. B) Encryption testing. C) Auditing through the computer. D) The white-box approach.

52) Which of the following approaches and/or tools are not typically used as part of a CAAT approach to auditing? A) Integrated testing facility (ITF). B) Generalized audit software (GAS). C) Audit calculation engine (ACE). D) Embedded audit module (EAM).

53)

Which of the following would not assist in continuous auditing? A) Transactions can be tested and analyzed closer in time to when they actually occur. B) Better compliance with laws and regulations. C) It can reduce the effort required for routine testing. D) It can be costly and time consuming to set up continuous auditing processes.

54)

Which of the following best describes continuous auditing?

A) Audit-related activities are peformed throughout the period under review. B) The full audit team remains on the client site for the entire fiscal year. C) The database extracts every 10th transaction and flags it for audit review. D) Auditors can generate greater fees by increasing the amount of manual testing performed for the client.

55)

ACL and IDEA are two prominent examples of which of the following?

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A) ITF. B) GAS. C) EAM. D) DBMS.

56)

Which of the following is not a use of generalized audit software (GAS)? A) Substantive testing. B) Security testing. C) Control testing. D) Transaction data analysis.

57) If an auditor wanted to test the accuracy of a computer generated report they might use which of the the following approaches? A) An access point approach. B) The black-box approach. C) A continuous audit. D) A pentration test.

58)