Accounting Information Systems Connecting Careers, Systems, and Analytics, 1st Edition , Alicja Foks by Ace Test Banks

Accounting Information Systems Connecting Careers, Systems, and Analytics, 1st Edition

By Alicja Foksinska, Arline A. Savage, and Danielle Brannock

Email: richard@qwconsultancy.com

Accounting Information Systems, 1e (Savage) Chapter 1 Accounting as Information 1) Accounting communicates to stakeholders A) minimally required public financial data. B) the financial outcomes of operating, investing, and financing activities. C) the sales strategy for the operating, marketing, and sales activities. D) black and white details about the economics of operating activities. Answer: B Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Communication Bloom's: Comprehension AICPA: AC: Reporting 2) Accounting communicates the financial outcomes of a business's activities for A) operating. B) investing. C) financing. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Communication Bloom's: Comprehension AICPA: AC: Reporting 3) In what way do management teams use accounting data? A) Management teams use accounting data to make business decisions. B) Management teams use accounting data to make and execute plans. C) Management teams use economic and accounting data together to make decisions. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

4) Which statement is TRUE? A) Accounting consists of rigid black and white rules. B) Accountants crunch numbers, not make decisions. C) Accounting helps support a prosperous society. D) Accountants focus on debits and credits, not business activities. Answer: C Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Comprehension AICPA: N/A 5) Which of the following is NOT a component of an information system? A) Hardware B) Software C) Input D) Network Answer: C Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 6) Input to an information system consists of A) raw and unorganized data. B) hardware and software. C) reported information. D) processed data. Answer: A Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 7) Which of the following is a definition of output from an information system? A) Output is raw and unorganized data. B) Output is information produced by processing data. C) Output is database facts and figures. D) Output is information collected from users. Answer: B 2

Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 8) Which statement concerning data is TRUE? A) Data is useless to a business until transformed into information. B) Data is the output from an information system. C) Data is organized into understandable formats. D) Data is processed before being input into the information system. Answer: A Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 9) Which of the following activities would NOT result in a transaction in an accounting information system? A) Sell goods to a customer on account B) Purchase supplies on credit C) Prepay for six months of insurance D) Receive a customer order Answer: D Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

10) Which of the following activities results in a transaction an accounting information system? A) Sell goods to a customer B) Submit an order to a vendor C) Create estimates for a customer D) Receive a customer order Answer: A Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 11) A business model is A) a company's plan for operations. B) a company's plan for making a profit. C) a company's plan for identifying customers. D) a company's plan for production. Answer: B Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 12) What kind of business model should an entrepreneurial application developer consider for a new smartphone game that will allow users to pay for additional capabilities and/or lives during the game? A) Franchise B) Subscription C) Freemium D) Peer-to-peer Answer: C Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

13) Samantha's Soy Candles has built a retail location in a seasonally busy tourist town. Samantha has developed a scent of the month that she plans to market to customers as a once per month shipment. The shipment of these candles once per month could help Samantha during the slow months at her retail store. What kind of business model would Samantha employ for her new seasonal candle shipment business line? A) Franchise B) Subscription C) Freemium D) Peer-to-peer Answer: B Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 14) Fast-food chains that allow individuals to purchase and operate a location for that chain are operating under what kind of business model? A) Franchise B) Subscription C) Freemium D) Peer-to-peer Answer: A Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 15) What part of a business model includes using a company's profits to sponsor initiatives where the company and employees work to benefit the community? A) Direct-to-consumer B) Social responsibility C) Investor relations D) Peer-to-peer Answer: B Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 5

16) A ________ is a group of related business events designed to accomplish the business's strategic objectives. A) business model B) business operations C) business process D) conversion process Answer: C Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 17) What are the primary types of business processes in a basic business model? A) Acquisition and Payment Processes B) Conversion Processes C) Marketing, Sales, and Collections Processes D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 18) During what processes does a business add value by converting the resources into goods and services that a customer might want to purchase? A) Acquisition and Payment Processes B) Conversion Processes C) Marketing, Sales, and Collections Processes D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

19) Tina, Tammy, and Toni opened a Pizza Hut franchise in the suburbs of a major metropolitan area. Tina manages the team that takes orders and delivers pizzas. What process area demands most of Tina's focus? A) Acquisition and Payment B) Conversion C) Marketing, Sales, and Collections D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 20) Tina, Tammy, and Toni opened a Pizza Hut franchise in the suburbs of a major metropolitan area. Tammy manages the cash drawer, credit card reconciliation, and payroll. Which of the following type of business events is Tammy's to manage? A) Operating events B) Financing events C) Investing events D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 21) Which type of business event includes paying dividends and paying loan installments? A) Operating events B) Financing events C) Investing events D) Information events Answer: B Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

22) Which type of business event includes interviewing new applicants for employment? A) Operating events B) Financing events C) Investing events D) Information events Answer: D Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 23) Which type of business event includes buying and selling property? A) Operating events B) Financing events C) Investing events D) Information events Answer: C Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 24) Which of the following statements is FALSE? A) Transaction-based accounting information systems record only accounting transactions. B) Transaction-based accounting information systems ignore nonfinancial data. C) Transaction-based accounting information systems are no longer used in business settings. D) Transaction-based accounting information systems ignore the relationships between business events and processes. Answer: C Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

25) Transaction-based accounting systems capture only A) nonfinancial data. B) accounting business events. C) relationships between business events and processes. D) key performance indicators. Answer: B Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 26) What is management's first task before a business can begin operations? A) Produce products B) Create a marketing plan C) Obtain needed resources D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 27) Which of the following is an input for a business that produces products? A) Raw materials B) Production line employees C) Manufacturing equipment D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

28) Which transaction would be recorded in a transaction-based accounting information system? A) Ordering raw materials B) Hiring an employee C) Obtaining a loan D) Receiving goods Answer: D Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 29) Which transaction would NOT be recorded in a transaction-based accounting information system? A) Ordering raw materials from a vendor B) Purchasing office supplies online C) Selling goods to a customer D) Paying employees via direct deposit Answer: A Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 30) Which of the following accounting data components is an acquisition and payment process? A) Expenditures B) Payroll C) Financing D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

31) Which of the following accounting data components is an acquisition and payment process? A) Production B) Revenue C) Financing D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 32) Which statement about the conversion process is FALSE? A) Businesses create value by combining and converting resources to goods and/or services. B) The conversion process includes the acquisition of resources. C) The conversion process includes regulatory compliance. D) Businesses create value by being innovative and efficient in their processing. Answer: B Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 33) A popular fast-food chicken restaurant currently offers only fried chicken tenders and chicken sandwiches made from chicken tenders. The only sides available are bread, slaw, and fries. If the chain were to consider offering grilled chicken on their menu, what would you recommend before considering the change for a national roll-out? A) Determine the kitchen layout and process changes required. B) Test the new product on customers in a small group of restaurants. C) Plan and test the new production process. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

34) What additional data could be captured during the conversion processes to help corporate management improve business efficiency or effectiveness? A) Quality testing data B) Downtime data C) Waste data D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 35) Which of the following benefits may arise from management evaluating conversion process data captured by a process-based accounting information system? A) Reduced downtime B) Reduced employee turnover C) Increased customer satisfaction D) Increased customer engagement Answer: A Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 36) Juan is opening a taco truck. Juan has asked that you review his plans and provide recommendations. Regarding Juan's conversion process, which of the following would you recommend to gain a competitive advantage? A) Juan should make sure to offer the same menu items as the other taco truck in town. B) Juan should have unique product offerings and more efficient processes than the other taco truck in town. C) Juan should follow the same service routes as the other taco truck in town. D) Juan should make sure to serve his food in a manner that is like other food trucks in town. Answer: B Diff: 3 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

37) Which of the following activities is an additional data capture opportunity during the conversion process? A) Compliance with regulations B) Resource acquisition C) Monitor employee performance D) Monitor cash flow Answer: A Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 38) During the acquisition and payment process, which areas are opportunities for additional data capture in the process approach for information systems? A) Monitor supplier performance B) Monitor employee performance C) Monitor cash flow D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 39) Which of the following social responsibility and sustainability data points can be captured through the conversion processes? A) Water usage B) Energy consumption C) Carbon footprint D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

40) Which of the following is NOT a nonfinancial business event that can be captured through the conversion processes in the information system? A) Design product B) Production plan C) Deliver goods D) Package product Answer: C Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 41) After converting resources into products and/or services, the business generates revenue by A) marketing and selling its products or services. B) scheduling production. C) acquiring resources. D) monitoring employee performance. Answer: A Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 42) Which business event during the marketing, sales and collections processes would NOT be captured in a traditional accounting information system? A) Produce product B) Take customer order C) Deliver goods to a customer D) Collect payment from customer Answer: A Diff: 1 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

43) In which of the following process categories would the termination an employee be recorded? A) Acquisition and Payment B) Marketing, Sales, and Collection C) Conversion D) Transaction Answer: A Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 44) In which of the following process categories would the product recycling rate be captured? A) Acquisition and Payment B) Marketing, Sales, and Collection C) Conversion D) Transaction Answer: C Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 45) In which of the following process categories would online search engine rankings be captured? A) Acquisition and Payment B) Marketing, Sales, and Collection C) Conversion D) Transaction Answer: B Diff: 2 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

46) The accounting information system provides financial and other metrics that A) determine how well management is implementing and controlling business processes. B) are used by management for making decisions concerning business processes. C) allow management to assess key performance indicators. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Reflective Thinking Bloom's: Comprehension AICPA: AC: Reporting 47) Which of the following management responsibility areas includes assigning employee tasks? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: B Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 48) Which of the following management responsibility areas includes forecasting future performance? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: A Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

49) Which of the following management responsibility areas includes analyzing financial statements? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: C Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 50) Which of the following management responsibility areas includes identifying opportunities and assessing risk? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: A Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 51) Kobe manages a real-estate company. Recently, Kobe modified the process used to assign a list price by agents in the organization. In which management responsibility area was Kobe operating? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: D Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

52) Amy, an assistant manager at a credit union, added functionality to the deposit software used by tellers in the credit union to detect fraudulent activity before the deposit goes into a customer's account. In which management responsibility area was Amy acting in when she added this functionality? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: B Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 53) Dembe started and manages a transportation company in Kampala, Uganda. Dembe hired an accounting firm to perform an audit of corporate financials. In which management responsibility area was Dembe acting by requesting an audit? A) Planning B) Implementing C) Monitoring D) Changing and Improving Answer: C Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 54) Quantifiable metrics used to measure and evaluate the success of an organization based on its objectives are known as A) data integration metrics. B) business event indicators. C) key performance indicators. D) data quality points. Answer: C Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 18

55) Select which statement concerning key performance indicators (KPIs) is NOT true. A) KPIs for a business are often compared to benchmarks for the industry. B) KPIs include accounting ratios, like net profit, market and return on investment. C) KPIs data comes from the accounting information system for a business. D) KPIs include qualitative data from multiple sources. Answer: D Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 56) Which characteristic refers to the suitability of the information for a particular purpose in a specific task? A) Information integrity B) Information quality C) Data integrity D) Data quality Answer: B Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 57) Which characteristic refers to the completeness, accuracy, reliability, and consistency of data? A) Information integrity B) Information quality C) Data integrity D) Data quality Answer: C Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

58) Which statement is NOT true? A) Business events create information. B) Business events create data. C) Accounting information systems transform data into information. D) Accounting information systems store purchasing and sales data. Answer: A Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 59) To be useful for decision making, information must have what two fundamental characteristics? A) Relevance and Actionability B) Relevance and Faithful Representation C) Reality and Faithful Representation D) Reality and Actionability Answer: B Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 60) Which enhancing characteristic of useful information includes the ability for independent and knowledgeable individuals to reach the same conclusions from the same information? A) Verifiability B) Timeliness C) Understandability D) Comparability Answer: A Diff: 1 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

61) Your organization has been reviewing information from the accounting information system based on weekly reports. You are tasked with designing a digital dashboard to display key performance indicators (KPIs) to management at your organization. Which enhancing characteristic of useful information are you improving for the business by creating a dashboard that is updated in real-time with KPIs? A) Verifiability B) Timeliness C) Understandability D) Comparability Answer: B Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 62) At Jonex Corporation, each location has been responsible for reporting its key performance indicators (KPIs) via email to the home office. As an intern in the home office, you are tasked with compiling the information in the emails into a report for your manager. After performing the process once, you develop a query for the information system that allows you to pull the information directly from the information system and put it into a format that presents the data in a way that makes the different locations KPIs much easier to compare. What enhancing characteristic of information have you improved for Jonex? A) Verifiability B) Timeliness C) Understandability D) Comparability Answer: D Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

63) Aiko joined the Hondo organization recently. Aiko's area of responsibility will be generating visual representations of data for Hondo. Currently, Hondo only has someone to create reports with numerical data presented in tables. What enhancing characteristic of data will be improved for Hondo with Aiko's data visualization skills? A) Verifiability B) Timeliness C) Understandability D) Comparability Answer: C Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 64) Juan, a manager for JK Enterprises, is considering hiring your consulting company to evaluate the usefulness of purchasing software for JK that will improve their information reporting capabilities. The software is complex and would require that JK hire someone knowledgeable or send a current employee for additional training. What kind of analysis will your consulting company perform for Juan to determine if the software is a good purchase? A) Decision context analysis B) Information quality analysis C) Data integrity analysis D) Cost-benefit analysis Answer: D Diff: 3 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management 65) Which of these statements most clearly defines decision context? A) Decision context considers the preferences and constraints that affect how a decision is made. B) Decision context considers the fundamental and enhancing characteristics of data. C) Decision context refers to the relevance and faithful representation of information. D) Decision context refers to the information quality and data integrity of a decision. Answer: A Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 22

66) The responses to which questions lead to determining decision context? A) How fast and what format is the information needed? B) Who will use it, and why is the information needed? C) Who requested the information and what formatting is needed? D) What comparability and understandability characteristics of the information are needed? Answer: B Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 67) Relevant information must A) be applicable to future events. B) have confirmatory value. C) have a significant impact on the decision. D) All of these statements are correct. Answer: D Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 68) Faithfully represented data includes the characteristics of A) being unbiased and accurate. B) having predictive and confirmatory value. C) being classified and presented clearly. D) having comparability and verifiability. Answer: A Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

69) Maria is asked to create a document at the end of each month that displays that month's sales data across divisions. What type of output will Maria need to obtain from the information system to obtain this information? A) Reporting B) Data analytics C) Key performance indicators D) Management insight Answer: A Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 70) Walter, a staff accountant with knowledge of computer programming, works for an accounting firm that is in the process of improving how they use data from their information system. Walter is asked to write the code for the information system that will allow the firm to transform data into useful information. What kind of output will Walter be generating? A) Reporting B) Data analytics C) Key performance indicators D) Management insight Answer: B Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 71) Where does the data originate for data analytics purposes? A) Reports from the information system B) Raw data from the information system C) Business event results D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

72) In what way is reporting different from data analytics? A) Reporting does not seek insight into reasons behind data. B) Reporting uses data from the information system, while data analytics uses data from reports. C) Reporting does not include any calculations like data analytics does. D) Reporting and data analytics are two terms for the same thing. Answer: A Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 73) Which statement is TRUE? A) Management uses data from data analytics to make decisions and from reporting to publish to stakeholders. B) Management uses their individual intuition to make data-driven decisions without regard to reporting or data analytics. C) Management uses historical reports and data analytic insights to understand reasons and context to make decisions. D) Management uses data analytics to calculate historical performance data without regard to the reason or context. Answer: C Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 74) Which statement is FALSE? A) Data analytics is becoming commonplace and even mandated in many industries. B) Accountants have been calculating some of the same information that is now calculated using data analytics manually for years. C) Data analytics allows accountants to generate information more efficiently and effectively. D) Accounting data analytics does not include the vertical analysis of financial statements. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

75) Data analytics uses technology to transform A) data into information. B) information into data. C) event processes into data. D) business processes into information. Answer: A Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 76) In what ways do accounting professionals use accounting ratios to compare a company's performance? A) Across time B) To other companies C) To industry benchmarks D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 77) Accountants using technology to analyze financial statements rather than using a manual process are performing A) data reporting. B) data quality. C) data analytics. D) data capture. Answer: C Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

78) Which of the following statements about the way accountants use data analytics is FALSE? A) Accountants can use data analytics to get more comprehensive results. B) Accountants can use data analytics without technology. C) Accountants can use data analytics to get results faster. D) Accountants can use data analytics to achieve competitive advantage. Answer: B Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 79) Which of the following is NOT an accurate statement about how an accountant can use data analytics? A) Accountants can use data analytics to compare inputs to outputs to identify waste and ordering issues. B) Accountants can use data analytics to calculate the time to pay invoices to determine if the company is missing out on possible discounts. C) Accountants can use data analytics to perform a three-way match between purchase orders, goods received into inventory, and invoices to verify accuracy. D) Accountants can use data analytics to perform vertical analysis of financial statements with either technology or pen and paper. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 80) Which of the following is an example of data analytics? A) A student uses Excel to calculate weights of grades and determine the grade needed on the final. B) A student uses Excel to record their time spent studying for each class and performs statistical analysis on the time spent versus grade earned. C) An accountant uses software to horizontally and vertically analyze financial statements to compare with prior quarters. D) An accountant uses software to generate reports that contain ratios of historical financial data. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

81) Employers in the accounting profession, and other professions, look for candidates who are data minded. What soft skills show an employer that the candidate is data minded? A) Curiosity B) Creative thinking C) Awareness of data analytics D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 82) Which statement about data analytics is TRUE? A) Data analytics is the future of the accounting profession. B) Data analytics terminology is not relevant to most accountants. C) Data analytics skills are not necessary unless you work in IT. D) Data analytics terminology knowledge is important in accounting. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 83) Which of the following is NOT a data analytics skill? A) Clean data B) Identify data C) Report data D) Perform data visualization Answer: C Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

84) One of the most important data analytics skills for all new graduates is the ability to A) identify what data can be used to answer a business question. B) code advanced predictive analytics algorithms. C) manually calculate financial ratios from financial statements. D) identify and categorize accounting reports. Answer: A Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 85) What kind of information do managers use to make decisions? A) Historical performance information B) Data analytics insights C) Key performance indicators D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 86) Concerning data analytics skills that new accounting professionals should learn, which statement is FALSE? A) New accounting professionals should be able to identify data and use case for data analysis. B) New accounting professionals should be able to recognize data quality issues. C) New accounting professionals should be able to code in data analytic languages. D) New accounting professionals should be able to perform data analysis in Excel. Answer: C Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

87) While each of the skills in the statements below are used in data analytics, which is TRUE regarding what is expected of new accounting professionals? A) New accounting professionals should be able to utilize artificial intelligence. B) New accounting professionals should be able to perform predictive modeling. C) New accounting professionals should be able to code in data analytic languages. D) New accounting professionals should be able to perform data analysis in Excel. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 88) While all new accounting professionals should be able to perform data analysis in Excel, what skill related to advanced data analysis is necessary for all new accounting professionals? A) New accounting professionals should be able to utilize artificial intelligence. B) New accounting professionals should be able to recognize when advanced tools are needed. C) New accounting professionals should be able to code in data analytic languages. D) New accounting professionals should be able to perform predictive modeling. Answer: B Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 89) Joy is preparing to begin college with plans to become an accountant. As an accounting student what essential data analytics skills will Joy need to learn during her college career? A) How to identify what data can be used to answer a business question B) How to collect, clean, and prepare data for analysis C) How to perform data visualization and reporting D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

90) Which of the following is the most appropriate definition of data analytics? A) Data analytics is performed by accountants when they compare financial statements and ratios. B) Data analytics is the science of writing code to calculate financial ratios for accounting audits. C) Data analytics is the process of using technology to convert raw data into useful information. D) Data analytics is the process of using technology to report data into information summaries. Answer: C Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 91) Which of the following statements most accurately reflects the relationship between reporting and data analytics? A) Data analytics uses reports and raw data to transform into useful information. B) Reports and data analytics are both created using an information system but are not related. C) Reports are visual displays of the information produced using data analytics. D) Data analytics and reporting both require specialized software to perform and produce similar results. Answer: A Diff: 2 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 92) Explain why and how a company might support social responsibility as part of its business model. Answer: Organizations sponsor social initiatives through their profits. Social responsibility helps a company improve or maintain a positive reputation among stakeholders, including the general public, customers, and employees. Diff: 2 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

93) A Pizza Hut franchise owner wants to categorize business events that occur. As assistant manager, the owner has asked you to list each category of business events and categorize the following events appropriately: Apply for a loan for the business Purchase business location Purchase ingredients Interview candidates for employment Hire and pay employees Take customer orders Make and bake pizzas Deliver pizzas Collect payment from customers Answer: Operating events: Purchase ingredients, Hire and pay employees, Make and bake pizzas, Delivery Pizzas, and Collect payment from customers Financing event: Apply for a loan for the business Investing event: Purchase business location Information events: Interview candidates for employment, Take customer orders Diff: 3 Learning Objective: 1.1 Explain how accounting affects both the demand for and supply of information. Section Reference: Why is Accounting Information Important? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 94) Compare and contrast transaction-based accounting systems to process-based information systems. Answer: Both types of information systems are widely used by accounting professionals to record business transactions. Traditional transaction-based accounting information systems only record accounting transactions where an economic exchange of resources occurs. Process-based accounting information systems will record transactions and other business events, such as customer relationship management, employee data, and order data. Diff: 3 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

95) Jimin, a manager for an online retailer named BTZ, is developing additional data capture points in BTZ's information systems to help the company measure customer satisfaction. BTZ understands that if they lose their customers, it will lose its source of revenue. What types of data might Jimin want to capture for BTZ and why? Answer: Jimin should capture search engine rankings to determine how search engines rank BTZ to potential customers. Jimin could also capture the conversion rate of website visitors who become customers. Jimin could also capture customer satisfaction survey data from customers who make purchases. Other measures of customer satisfaction that should be monitored include customer retention, customer complaints, and customer engagement. Each of these measures will help BTZ understand their customers better which will lead to better customer retention. Diff: 3 Learning Objective: 1.2 Compare traditional transaction-based accounting systems to processbased information systems. Section Reference: How Have Accounting Information Systems Evolved? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 96) The information system for WKRP, Inc., a radio station, is very basic. WKRP management had a former employee who possessed very little accounting knowledge build a report in the information system that generated only key performance indicators (KPIs) from numbers on the balance sheet. WKRP would like to use KPIs to compare their profitability to other radio stations in similar markets. Determine the issues with the current KPIs and propose how to improve the situation. Answer: WKRP's KPIs from the balance sheet do not include any KPIs that explain profitability. WKRP will need to find a way to extract numbers from the income statement to create KPIs that reflect profitability measurements. These KPIs can be compared to KPIs from stations in other markets. Diff: 3 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

97) The information system for WKRP, Inc. is very basic. WKRP management had a former employee with very little accounting knowledge build a report in the information system that generated key performance indicators (KPIs). WKRP's debt-to-equity ratio continues to be generated erroneously because the equation used for the ratio was programmed into the system incorrectly. Explain what key characteristic of data is violated with the error and how this error in data might affect WKRP? Answer: The WKRP KPI report lacks data integrity, which can negatively impact the business. Managers use KPIs and other metrics to make decisions that affect business processes. With incorrect data, management could make an unnecessary or incorrect decision that negatively impacts the business. Diff: 2 Learning Objective: 1.3 Explain management's relationship to information and information systems. Section Reference: How Does Management Use Information? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 98) Kwan purchased a coffee shop franchise that was barely profitable from an owner who had chosen not to use any information systems to assist with managerial decision making. The coffee shop franchise brand is strong nationwide. Kwan predicts that with some minor modification of some business processes, he can turn the coffee shop into a thriving business. Explain how Kwan might use the key performance indicators (KPIs) that he generates from his information system to help him improve business processes. Answer: Kwan could generate KPIs for the business and compare them to industry benchmarks to determine where improvements are needed. Kwan could also compare the KPIs that he generates over time from his business to monitor how the process changes affect business results. Diff: 3 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

99) Compare and contrast reporting and data analytics. Answer: Reporting pulls data together into summaries that give a descriptive view of historic company performance. Reports may be generated using technology or created manually. Like reporting, data analytics uses technology to pull data from the information system. However, data analytics goes beyond summarizing historic data by transforming data into useful information useful for decision making. Diff: 3 Learning Objective: 1.4 Describe the relationship between accounting and data analytics. Section Reference: What is the Relationship between Accounting and Data Analytics? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

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Accounting Information Systems, 1e (Savage) Chapter 2 Risks and Risk Assessments 1) ________ is propelling massive and fast-paced changes in how businesses function. A) Technology B) Accounting C) Sales D) Service Answer: A Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 2) Internal audit departments perform formal risk assessments when A) using technology. B) creating audit plans. C) preparing financial statements. D) preparing budgets. Answer: B Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 3) Financial accountants implement controls including ________ to address risk. A) technology B) general guidelines C) specific procedures D) operational perspective Answer: C Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

4) Choose the best description of risk. A) The estimation of damage that could be caused B) The estimated probability of occurrence C) The high-level business area or department D) The likelihood of an unfavorable event occurring Answer: D Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Importance of Risk AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 5) A risk-aware culture at a business is characterized by A) leadership setting a risk-awareness tone at the top. B) management that encourages employees to discuss risks openly. C) an alignment of risks across all corporate initiatives. D) all the above. Answer: D Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Importance of Risk AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 6) Organize the three tasks below when performing risk assessment. A) Identify, categorize and prioritize B) Prioritize, identify and categorize C) Categorize, prioritize and identify D) Identify, prioritize and categorize Answer: A Diff: 3 Learning Objective: 2.1 Describe the nature of risk Section Reference: Importance of Risk AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management

7) The three primary types of business processes that make up a basic business model include A) acquisition and payment processes. B) conversion processes. C) marketing, sales and collection processes. D) all the above. Answer: D Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 8) A business function is a high-level ________ or ________ that performs business processes to achieve company goals. A) Business area, customer B) Business area, department C) Vendor, department D) Vendor, customer Answer: B Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 9) A business function is a high-level business area or department that performs ________ to achieve company goals. A) financial statement reporting B) auditing C) business processes D) information technology Answer: C Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

10) A business function is a high-level business area or department that performs business processes to achieve A) accounting goals. B) revenue. C) profit. D) company goals. Answer: D Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 11) Just as risk can exist at different levels, ________ can be performed at different levels of the company. A) risk identification B) risk statements C) likelihood D) impact Answer: A Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 12) Just as risk can exist at different levels, risk identification can be performed at ________ of the company. A) the top-level B) different levels C) the bottom level D) the board of directors' level Answer: B Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

13) Choose from the following the best description of enterprise risk management (ERM). A) A narrow process of identifying, categorizing, prioritizing, and ignoring a company's risk B) A narrow process of identifying, grouping, prioritizing, and ignoring a company's risk C) A comprehensive process of identifying, categorizing, prioritizing, and responding to a company's risk D) A comprehensive process of listing, prioritizing, and responding to a company's risk Answer: C Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 14) Choose from the following the best definition of risk identification. A) Decide how the company will address the prioritized risks B) Select which risks are most likely to occur or will have the largest impact C) Categorizing risks based on their types D) Identifying existing risks and their outcomes Answer: D Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 15) Choose from the following the best definition of risk response. A) Decide how the company will address the prioritized risks B) Select which risks are most likely to occur or will have the largest impact C) Categorizing risks based on their types D) Identifying existing risks and their outcomes Answer: A Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

16) Choose from the following the best definition of risk prioritization. A) Decide how the company will address the prioritized risks B) Select which risks are most likely to occur or will have the largest impact C) Categorizing risks based on their types D) Identifying existing risks and their outcomes Answer: B Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 17) Choose from the following the best definition of risk categorization. A) Decide how the company will address the prioritized risks B) Select which risks are most likely to occur or will have the largest impact C) Categorizing risks based on their types D) Identifying existing risks and their outcomes Answer: C Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 18) A risk statement contains two parts A) the improvement and the solution. B) the improvement and the possible outcome. C) the issue and the solution. D) the issue and the possible outcome. Answer: D Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Identifying Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

19) Complete the following statement: A company that takes on significant risk may have a(an) ________ over a company that avoids risk. A) competitive advantage B) unambitious advantage C) competitive handicap D) significant cost advantage Answer: A Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Importance of Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 20) What are some common keywords used in risk statements? A) Because B) Caused C) Possible D) All the above Answer: D Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Identifying Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 21) Complete the following statement: "It is essential for accounting professionals to understand risk — including ________ in risk management. A) emerging trends B) gradual trends C) emerging directions D) gradual directions Answer: A Diff: 1 Learning Objective: 2.1 Describe the nature of risk Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

22) The second step of ERM is A) categorizing risks based on their type. B) identifying risks. C) responding to a company's risk. D) categorizing risks based on response. Answer: A Diff: 1 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 23) An accountant would call the categorization of a risk, external or internal, the ________ of the risk. A) solution B) source C) explanation D) level Answer: B Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 24) Complete the following statement: "Identified risks are most useful when they are mapped to A) external risks." B) internal risks." C) one source category." D) both internal and external categories." Answer: C Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

25) Complete the following statement: "If a risk feels like it can be classified as both internal and external, companies fine-tune their risk statement to make it more ________ until it maps clearly to one source". A) soft B) hard C) smooth D) granular Answer: D Diff: 1 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 26) How many major internal risk categories are there? A) 3 B) 4 C) 5 D) 6 Answer: A Diff: 1 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 27) Choose from the following list a major internal risk category. A) Compliance risk B) Financial risk C) Strategic risk D) Physical risk Answer: B Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

28) Choose from the following list a major internal risk category. A) Compliance risk B) Strategic risk C) Operational risk D) Physical risk Answer: C Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 29) Choose from the following list a major internal risk category. A) Compliance risk B) Strategic risk C) Physical risk D) Reputational risk Answer: D Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 30) Choose from the following list the most important type of risk for an AIS. A) Operational risk B) Financial risk C) Strategic risk D) Physical risk Answer: A Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

31) Choose from the following list the best definition of technology risk. A) When technology failures have the potential of improving business B) When technology failures have the potential of disrupting business C) When technology is deployed to solve business problems D) When technology is removed from business operations Answer: B Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 32) Choose from the following list the best definition of cyber risks. A) A common type of technology risk relating to an internal party accessing the company's financial records B) When technology failures have the potential of disrupting business C) A unique type of technology risk relating to an external party accessing the company's technology assets D) When technology is removed from business operations Answer: C Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 33) Choose from the following list the best definition of financial risk. A) Causes a breakdown in business operations B) When the good name of a company is damaged C) Refers to the potential gain of a substantial sum of money D) Refers to the potential loss of a substantial sum of money Answer: D Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

34) Choose from the following list the best definition of reputational risks. A) Causes a breakdown in business operations B) When the good name of a company is damaged C) Refers to the potential gain of a substantial sum of money D) Refers to the potential loss of a substantial sum of money Answer: B Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 35) With reputational risk comes financial loss through a(n) A) loss of customers and revenue. B) decrease in expenses. C) increase in stock price. D) increase in customers and revenues. Answer: A Diff: 1 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 36) Why has reputation risk grown in importance? A) Fewer people are shopping in stores. B) Fewer people are shopping on-line. C) More people are using and accessing social media. D) More people are shopping on-line. Answer: C Diff: 1 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

37) Choose from the following list a major external risk category. A) Compliance risk B) Operational risk C) Financial risk D) Reputational risk Answer: A Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 38) Choose from the following list a major external risk category. A) Operational risk B) Strategic risk C) Financial risk D) Reputational risk Answer: B Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 39) Choose from the following list a major external risk category. A) Operational risk B) Financial risk C) Physical risk D) Reputational risk Answer: C Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

40) Choose from the following list the best definition of compliance risk. A) Causes a breakdown in business operations B) The threat of adverse weather, crimes, or physical damage C) Is the inevitable risk that comes from a strategy becoming less effective D) It occurs when a company fails to follow regulation and legislation and is subjected to legal penalties, including fines. Answer: D Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 41) Choose from the following list the best definition of strategic risk. A) Causes a breakdown in business operations B) The threat of adverse weather, crimes, or physical damage C) Is the inevitable risk that comes from a strategy becoming less effective D) It occurs when a company fails to follow regulation and legislation and is subjected to legal penalties, including fines. Answer: C Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 42) In September 2000, the CEO of Blockbuster was given the option to purchase Netflix for $50 million. At the time, Netflix was losing money and worried about bankruptcy. The Blockbuster CEO turned down the opportunity. This is an example of what type of risk? A) Strategic risk B) Compliance risk C) Physical risk D) Operational risk Answer: A Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

43) Choose from the following list the best definition of physical risk. A) Causes a breakdown in business operations B) The threat of adverse weather, crimes, or physical damage C) Is the inevitable risk that comes from a strategy becoming less effective D) It occurs when a company fails to follow regulation and legislation and is subjected to legal penalties, including fines. Answer: B Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 44) While ________ is the easiest to understand, it is one of the most important types of risk a company identifies because the impact is usually high. A) strategic risk B) compliance risk C) physical risk D) operational risk Answer: C Diff: 1 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 45) Choose from the following list the best definition of a risk inventory. A) Causes a breakdown in business operations B) The threat of adverse weather, crimes, or physical damage C) Is the inevitable risk that comes from a strategy becoming less effective D) A listing of all the business' known risks Answer: D Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: External Risks AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

46) Founded in 1852, Wells Fargo is one of the largest banks in the United States. When internal fraud at Wells Fargo was exposed to the public in September 2016, what type of risk was increased at Wells Fargo due to this fraud? A) Reputational risk B) Compliance risk C) Physical risk D) Operational risk Answer: A Diff: 2 Learning Objective: 2.2 Classify risks into different risk categories Section Reference: Internal Risks AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 47) Choose the best definition of risk severity from the list below. A) It is the likelihood of risks occurring and the potential impact on the company. B) It is the estimated probability of a risk occurrence. C) It is the estimation of damage that could be caused if the risk occurs. D) It is an estimation of the loss of goodwill. Answer: A Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 48) Choose the best definition of likelihood from the list below. A) Prioritizes risks by ranking their likelihood of occurring and the potential impact on the company B) It is the estimated probability of a risk occurrence. C) It is the estimation of damage that could be caused if the risk occurs. D) It is an estimation of the loss of goodwill. Answer: B Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

49) Choose the best definition of impact from the list below. A) Prioritizes risks by ranking their likelihood of occurring and the potential impact on the company B) It is the estimated probability of a risk occurrence. C) It is the estimation of damage that could be caused if the risk occurs. D) It is an estimation of the loss of goodwill. Answer: C Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 50) Complete the following sentence: "Companies use different methods to calculate likelihood, but likelihood is always ranked on a A) fixed level." B) sliding level." C) fixed scale." D) sliding scale." Answer: D Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 51) Complete this sentence: "In different industries, likelihood can be described as A) probability." B) scarcity." C) insufficient." D) abundant." Answer: A Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

52) What is the abbreviation for Medium High? A) MH B) M C) ML D) H Answer: A Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 53) What is the abbreviation for High? A) MH B) M C) ML D) H Answer: D Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 54) What is the abbreviation for Medium Low? A) MH B) M C) ML D) H Answer: C Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

55) What is the abbreviation for Low? A) MH B) L C) ML D) H Answer: B Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 56) What is the abbreviation for Medium? A) M B) L C) ML D) H Answer: A Diff: 1 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Evaluating Risk Severity AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 57) What is the risk calculation if a company assigns a likelihood of 4 to a particular risk and an impact of 3 to the risk? A) 7 B) 12 C) 4 D) 3 Answer: B Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

58) What is the risk calculation if a company assigns a likelihood of 1 to a particular risk and an impact of 5 to the risk? A) 1 B) 3 C) 5 D) 6 Answer: C Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 59) If a company identifies four risks with a risk score as follows: Risk An oven fire may result in the destruction of a store. A cybersecurity attack may result in the theft of customer data. A store employee getting sick may result in them backing out of their shift last minute. An employee stealing from a cash register may result in loss of cash.

Risk Score 5 15 4 6

Which risk is the highest priority? A) An oven fire may result in the destruction of a store. B) A cybersecurity attack may result in theft of customer data. C) A store employee getting sick may result in them backing out of their shift last minute. D) An employee stealing from a cash register may result in loss of cash. Answer: B Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

60) If a company identifies four risks with a risk score: Risk An oven fire may result in the destruction of a store. A cybersecurity attack may result in the theft of customer data. A store employee getting sick may result in them backing out of their shift last minute. An employee stealing from a cash register may result in loss of cash.

Risk Score 5 15 4 6

Which risk is the lowest priority? A) An oven fire may result in the destruction of a store. B) A cybersecurity attack may result in theft of customer data. C) A store employee getting sick may result in them backing out of their shift last minute. D) An employee stealing from a cash register may result in loss of cash. Answer: C Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 61) Choose the best definition of risk matrices from the list below. A) Risk matrices give a clear picture through the assignment of values to the data. B) Risk matrices are the estimated probability of a risk occurrence. C) Risk matrices are the estimation of damage that could be caused if the risk occurs. D) Risk matrices are an estimation of the loss of goodwill. Answer: A Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 62) Choose the best definition of a heat map from the list below. A) A heat map is the estimated probability of a risk occurrence. B) A heat map uses different colors to represent values of data in a map or diagram format. C) A heat map is the estimation of damage that could be caused if the risk occurs. D) A heat map is an estimation of the loss of goodwill. Answer: B Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

63) Referencing the following risk scale:

What likelihood score would you assign to a risk with an annual occurrence of 7%? A) 1 B) 2 C) 3 D) 4 Answer: C Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 64) Referencing the following risk scale:

What likelihood score would you assign to a risk with an annual occurrence of 3%? A) 1 B) 2 C) 3 D) 4 Answer: B Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

65) Consider the following risk matrix.

What score would a risk have with an impact of M and a likelihood of L? A) 3 B) 4 C) 6 D) 8 Answer: A Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 66) Consider the following risk matrix.

What score would a risk have with an impact of M and a likelihood of H? A) 3 B) 5 C) 15 D) 16 Answer: C Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

67) Consider the following risk matrix.

What score would a risk have with an impact of M and a likelihood of M? A) 3 B) 6 C) 8 D) 9 Answer: D Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 68) If a company identifies four risks with a risk scores as follows: Risk An oven fire may result in the destruction of a store. A cybersecurity attack may result in the theft of customer data. A store employee getting sick may result in them backing out of their shift last minute. An employee stealing from a cash register may result in loss of cash.

Risk Score 5 15 4 6

How would you suggest the management of the company prioritize the identified risks? Answer: Answers may vary. However, most companies prioritize the risks by first taking the highest risk score and working down from there. Diff: 3 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Using Risk Formulas AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management

69) How can someone determine how risky a risk is? Answer: The answer will vary depending on the industry of the business. In the software industry, the biggest risks are probably technology risks since software supports the business and is also the company's product. In farming, the physical risk may be of the most serious concern. Adverse weather could destroy entire crops of produce and put a farm out of business. Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 70) The U.S. Bureau of Labor and Statistics anticipates a ________ percent growth in jobs with the focus of "risk management" between 2018-2026. A) 10 B) 15 C) 18 D) 19 Answer: D Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 71) Accounting professionals are uniquely qualified to work in risk management due to their training in ________, risk identification, and ________. A) budgeting, financial statement preparation B) business processes, tax preparation C) business processes, holistic business operations D) tax preparation, holistic business operations Answer: C Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

72) What is the first step of ERM? A) Risk Identification B) Risk Categorization C) Risk Prioritization D) Risk Response Answer: A Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 73) What is the second step of ERM? A) Risk Identification B) Risk Categorization C) Risk Prioritization D) Risk Response Answer: B Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 74) What is the third step of ERM? A) Risk Identification B) Risk Categorization C) Risk Prioritization D) Risk Response Answer: C Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

75) What is the last step of ERM? A) Risk Identification B) Risk Categorization C) Risk Prioritization D) Risk Response Answer: D Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 76) Choose the best definition of risk appetite from the list below. A) Risk appetite is the amount of risk a company is willing to take on at that time. B) Risk appetite uses different colors to represent values of data in a map or diagram format. C) Risk appetite is the estimation of damage that could be caused if the risk occurs. D) Risk appetite is an estimation of the loss of goodwill. Answer: A Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 77) Choose the phrase that most accurately completes this sentence. "Risk appetite is part of A) a weak manager." B) a company's culture." C) a satisfied customer." D) a strong employee." Answer: B Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

78) Choose the best definition of inherent risk. A) Inherent risk is the risk to a business process of a cybersecurity leak. B) Inherent risk is the remaining risk posed by a process or activity once a plan to respond to the risk is in place. C) Inherent risk is the natural level of risk in a business process if there are no risk responses in place. D) Inherent risk is the risk to a business process of a natural disaster, such as a fire or earthquake. Answer: C Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Assess the Risk AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 79) Inherent risks consist of two parts: ________ and ________. A) severity, financial B) severity, impact C) likelihood, financial D) likelihood, impact Answer: D Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Assess the Risk AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 80) Choose the best definition of residual risk. A) Residual risk is the risk to a business process of a cybersecurity leak. B) Residual risk is the remaining risk posed by a process or activity once a plan to respond to the risk is in place. C) Residual risk is the natural level of risk in a business process if there are no risk responses in place. D) Residual risk is the risk to a business process of a natural disaster, such as a fire or earthquake. Answer: B Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Assess the Risk AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

81) Choose the best definition of target residual risk. A) Target residual risk is the risk to a business process of a cybersecurity leak. B) Target residual risk is the natural level of risk in a business process or activity if there are no risk responses in place. C) Target residual risk is the goal after implementing a risk response. D) Target residual risk is what happens after the risk is addressed. Answer: C Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Assess the Risk AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 82) Choose the best definition of actual residual risk. A) Actual residual risk is the risk to a business process of a cybersecurity leak. B) Actual residual risk is the natural level of risk in a business process or activity if there are no risk responses in place. C) Actual residual risk is the goal after implementing a risk response. D) Actual residual risk is what happens after the risk is addressed. Answer: D Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Assess the Risk AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 83) If a construction worker purchases a heavy-duty case to protect his cell phone and reduces the risk likelihood from a 3 to a 2 and the risk impact from a 4 to a 3, by what percent is the risk score reduced? A) 50% B) 100% C) 25% D) 33% Answer: A Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Assess the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

84) Choose the best definition of risk acceptance. A) Risk acceptance is when an inherent risk is present, but the organization chooses not to act. B) Risk acceptance eliminates the risk by completely avoiding the events causing the risk. C) Risk acceptance is when a company decides to accept the risk but to minimize its impact if it occurs. D) Risk acceptance is the shifting of the risk to a third party. Answer: A Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 85) Choose the best definition of risk avoidance. A) Risk avoidance is when an inherent risk is present, but the organization chooses not to act. B) Risk avoidance eliminates the risk by completely avoiding the events causing the risk. C) Risk avoidance is when a company decides to accept the risk but to minimize its impact if it occurs. D) Risk avoidance is the shifting of the risk to a third party. Answer: B Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 86) Choose the best definition of mitigating the risk. A) Mitigating the risk is when an inherent risk is present, but the organization chooses not to act. B) Mitigating the risk eliminates the risk by completely avoiding the events causing the risk. C) Mitigating the risk is when a company decides to minimize its impact if it occurs through additional business processes or controls. D) Mitigating the risk is the shifting of the risk to a third party. Answer: C Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

87) Choose the best definition of risk transfer. A) Risk transfer is when an inherent risk is present, but the organization chooses not to act. B) Risk transfer eliminates the risk by completely avoiding the events causing the risk. C) Risk transfer is when a company decides to accept the risk but to minimize its impact if it occurs. D) Risk transfer is the shifting of the risk to a third party. Answer: D Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 88) How are you responding to the risk if you purchase a new cell phone and choose not to purchase a phone protection plan? A) Accept the risk B) Avoid the risk C) Mitigate the risk D) Transfer the risk Answer: A Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 89) If a company closes stores in a particularly high-risk geographical location, how are they responding to the risk? A) Accept the risk B) Avoid the risk C) Mitigate the risk D) Transfer the risk Answer: B Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

90) How are you responding to the risk if you purchase a new cell phone and later purchase a screen protector and phone case? A) Accept the risk B) Avoid the risk C) Mitigate the risk D) Transfer the risk Answer: C Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 91) How are you responding to the risk if you purchase a new cell phone and purchase the phone protection insurance? A) Accept the risk B) Avoid the risk C) Mitigate the risk D) Transfer the risk Answer: D Diff: 2 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 92) How many types of risk response are there? A) 4 B) 3 C) 5 D) 6 Answer: A Diff: 1 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

93) Consider the following diagram:

What is the sweet spot? Answer: The sweet spot is the optimal level of risk-taking that yields enough value to make it worth taking the risk. Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Importance of Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 94) Julia's Cookies hires delivery drivers of any age with a state-issued driver's license. Newly hired drivers have one day of training on how to provide the best customer experience. It does not include driver safety training. Delivery drivers use company vehicles. Assess risks related to Julia's Cookies' delivery drivers. Answer: Answers may vary, but one risk would be that drivers do not receive safety training from Julia's Cookies. Diff: 3 Learning Objective: 2.1 Describe the nature of risk Section Reference: Applying Risks to a Business AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management

95) Predict at least one of the outcomes from the following risk statement related to driver safety at Julia's Cookies: "Drivers not receiving road safety training." Answer: Possible answers include: Injuries to drivers and others in an accident, Damages to company vehicles, Julia's Cookies earning a bad reputation, and Julia's Cookies paying monetary fines and damages in lawsuits from victims of accidents. Diff: 3 Learning Objective: 2.1 Describe the nature of risk Section Reference: Identifying Risks AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management 96) Briefly discuss the importance of risk. Answer: Anything that can hinder a business's success in achieving its goals or cause a loss is an unfavorable event, and risk is the likelihood of an unfavorable event occurring. Diff: 2 Learning Objective: 2.1 Describe the nature of risk Section Reference: Importance of Risk AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 97) Consider the following risk matrix.

What score would a risk have with an impact of MH and a likelihood of ML? Answer: 8 Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

98) Consider the following risk matrix.

What score would a risk have with an impact of MH and a likelihood of H? Answer: 20 Diff: 2 Learning Objective: 2.3 Determine the quantitative value of risk Section Reference: Creating Risk Matrices AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 99) Julia's Cookies is concerned about customers being injured while shopping in their stores. What actions could Julia's Cookies take to transfer the risk? Answer: Answers will vary. One answer is that Julia's cookies could purchase a general liability insurance policy to transfer the risk of customers being injured in their store to an insurance company. Diff: 3 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 100) Julia's Cookies is concerned about drivers being injured when delivering cookies. What actions could Julia's Cookies take to mitigate the risk? Answer: Answers will vary. One answer is that Julia's Cookies could provide driver safety training to its drivers. Diff: 3 Learning Objective: 2.4 Explain how businesses respond to risk Section Reference: Respond to the Risk AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management © 2022 John Wiley & Sons, Inc. All rights reserved. Instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. Except as permitted herein or by law, no part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. 35

Accounting Information Systems, 1e (Savage) Chapter 3 Risk Management and Internal Controls 1) What type of process is implemented by management to mitigate risks? A) External controls B) Internal controls C) External regulations D) Internal regulations Answer: B Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 2) A company's process of implementing internal control provides reasonable assurance that A) financial statements are fairly presented. B) operations are efficient and effective. C) laws and regulations are being followed. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 3) In what ways do companies address risk? A) Mitigating it B) Transferring it C) Avoiding it D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

4) Which of the following is the most commonly used response to risk by businesses? A) Accepting it B) Mitigating it C) Transferring it D) Avoiding it Answer: B Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 5) The first consideration for reliable accounting information includes ensuring the A) security of the accounting information system. B) privacy of the accounting information system. C) integrity of the accounting information system. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 6) Proper internal controls can A) safeguard assets from theft and waste. B) increase operating efficiency. C) provide investors with reassurance. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

7) Internal controls A) are mandated for public companies. B) may be adopted voluntarily. C) provide reasonable assurance, not absolute mitigation. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 8) Internal controls A) are defined based on industry specifications. B) are customized to fit a company's unique risks and risk appetite. C) are predefined for public companies. D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 9) Internal controls for accounting information focus on A) safeguarding equity from theft. B) providing quality information to management and stakeholders. C) lessening the risk of fraudulent investor activity. D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

10) The functions of internal controls are to do which of the following? A) Process, defend, correct B) Prevent, detect, control C) Prevent, detect, correct D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 11) Which type of internal control seeks to stop problems from occurring? A) Preventative controls B) Detective controls C) Corrective controls D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 12) Charles audits the internal controls of Devinshire Corporation and finds that Devinshire lacks a robust firewall to prevent unauthorized access to their computer network. Charles recommends that Devinshire research and implement a more robust firewall as a A) preventative control. B) detective controls. C) corrective control. D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

13) The American Institute of Certificate Public Accountants describes this as a basic building block of internal control. A) Preventative controls B) Ensuring the security, privacy, and integrity of the AIS C) Management override D) Separation or segregation of duties Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 14) Segregation of duties ensures that A) one employee authorizes and records data for a transaction to ensure accuracy. B) the work of one employee acts as a check on the work of another employee. C) employees have access to input, approve, and receive goods into the AIS. D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 15) Jon works as a purchasing manager. Jon must approve purchase orders input throughout the company before the order is placed. Which duty is Jon performing in his role? A) Recording B) Authorizing C) Custody D) Segregation Answer: B Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

16) Which type of control monitors business processes to identify problems like fraud risk, quality control, or legal compliance? A) Preventative B) Detective C) Corrective D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 17) Which of the following is NOT an example of a detective control? A) A firm performs a physical inventory count monthly and compares the count to totals in the inventory system. B) Store managers count the cash drawer nightly and reconcile the cash with sales for the day. C) A manufacturing firm requires that purchases are recorded, approved, and received by different employees. D) An accounting firm programs the digital dashboard to show abnormal account balances in bold red to draw attention to them. Answer: C Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 18) Jose requires that the night manager responsible for closing the restaurant count the cash drawer and reconcile the total with cash sales for the day. Which type of control did Jose implement? A) Preventative B) Detective C) Corrective D) All of the answer choices are correct. Answer: B Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

19) Which of the following statements concerning corrective controls is TRUE? A) Corrective controls change undesirable outcomes. B) Corrective controls occur after a risk has become a reality. C) Corrective controls are used as a backup plan when preventative or detective controls fail. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 20) Which of the following reasons can lead to the failure of internal controls? A) Management override B) Human judgment C) Collusion D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 21) Which of the following is an example of a corrective control? A) An employee is disciplined for not following procedures. B) IT updates and patches software regularly. C) Management oversees and updates company policies. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

22) Which of the following represents the time-based model of controls for technology attacks? A) P > (D + C) B) C < (P + D) C) D > (P + D) D) P < (D + C) Answer: A Diff: 1 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 23) Which of the following functions as a preventative, detective, and corrective control simultaneously? A) Locked doors B) Security cameras C) Firewall D) Security guard Answer: D Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 24) Internal controls are classified by A) function and technology. B) physical and computer. C) function and where in a business process the control exists. D) technology and where in a business process the control exists. Answer: C Diff: 1 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

25) Which of the following types of controls governs human activities? A) Physical controls B) IT general controls C) IT application controls D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 26) Which of the following controls is an example of an IT general control? A) Business continuity plan B) Password policy C) Separation of duties D) Motion sensors Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 27) Systems roles that enforce separation of duties is an example of a(n) A) physical control. B) IT general control. C) IT application control. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

28) Which of the following are subject to IT general controls? A) Email B) Benefits management system C) Time-keeping software D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 29) Alfonso is asked to make recommendations on what kinds of IT general controls the company should implement to prevent any disruption of services. How should Alfonso begin his analysis? A) Alfonso should create a detailed list of risks to the system. B) Alfonso should recommend a firewall. C) Alfonso should review the business continuity plan. D) Alfonso should create system roles to enforce separation of duties. Answer: A Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 30) Detective network activity monitoring is an example of a(n) A) physical control. B) IT general control. C) IT application control. D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

31) When a control applies specifically to a software tool and the business processes and accounts that are linked to it, this control is classified as a(n) A) physical control. B) IT general control. C) IT application control. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 32) Cox Enterprises tested a trial of working from home in response to a pending threat. The successful trial became part of Cox's business continuity plan. How would you classify Cox's controls? A) Preventative and physical B) Corrective and physical C) Preventative and IT general D) Corrective and IT general Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 33) Which of the following methods of control yields increased reliability and consistency? A) Manual B) Automated C) IT general D) IT application Answer: B Diff: 1 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

34) Which of the following methods of controls is implemented when human judgment or physical interaction is required? A) Manual B) Automated C) Physical D) IT general Answer: A Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 35) Which type of control has a higher risk of failure? A) Manual B) Automated C) IT general D) IT application Answer: A Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 36) Rural Enterprises raises sheep and cattle for meat production. As a technologically advanced ranching operation, Rural Enterprises has experimented with using drones to capture images of herds grazing to assist employees in obtaining physical inventory counts. Employees then count the animals in the images and record the data in the information system. What type of control classification best characterizes Rural's inventory system? A) Manual control B) Automated control C) Combination of manual and automated controls D) Continuous monitoring Answer: C Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

37) Which type of control is less susceptible to override and judgment errors? A) Manual B) Automated C) Combination of manual and automated D) Continuous Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 38) Fully automated physical inventory controls may prevent errors associated with A) human miscount. B) fraud. C) laziness. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 39) Which of the following statements is TRUE? A) Artificial intelligence can replace human judgment. B) Combining automated and manual controls is not feasible for most solutions. C) Risk response is optimized by combining human expertise with insight from systems. D) Fully automated controls may require human judgment. Answer: C Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

40) Automated controls use technology to implement a control activity. To be classified as automated, the control must A) include an automated component. B) be fully automated. C) reside on the accounting information system. D) utilize robots or drone technology for physical inventory. Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 41) Continuous monitoring technology can be classified as what type of internal control? A) Preventative B) Detective C) Corrective D) Physical Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 42) Continuous monitoring is often programmed to monitor A) key performance indicators. B) gross profit margin. C) fraud risk indicators. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

43) Which of the following statements concerning continuous monitoring is FALSE? A) Data analysts use continuous monitoring technology to create detective controls. B) Continuous monitoring software uses rules-based programming to monitor the business's data for red flags of risks. C) Continuous monitoring can notify management in real-time when risk events occur. D) Continuous monitoring focuses on segregation of duties to prevent fraud. Answer: D Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 44) Africell operates several call centers for customer service. Charles implements a digital dashboard that will display the following: number of rings to answer, number of minutes on hold, and the number of dropped calls. What kind of internal control has Charles implemented for Africell? A) Physical B) IT general C) Continuous monitoring D) Manual Answer: C Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 45) A control is characterized by its A) type, location, and implementation. B) function, location, and implementation. C) location, implementation, and technology. D) type, technology, and location. Answer: B Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

46) Which of the following statements concerning continuous monitoring is FALSE? A) Continuous monitoring uses data stored in the AIS for analysis. B) The continuous monitoring program is often its own system with its own risks. C) Continuous monitoring is an internal control that often uses additional internal controls for its source data and the monitoring program. D) Continuous monitoring programs are kept separate from the AIS to avoid creating its own technology risks. Answer: D Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 47) Who in an organization is responsible for making sure that internal controls are functioning as designed? A) Management B) Internal audit department C) External auditors D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 48) Which of the following statements concerning internal controls is TRUE? A) Internal controls are designed and implemented without the need for assessment. B) Internal controls provide absolute confidence in risk mitigation. C) Internal controls must be continuously assessed. D) Manual internal controls must be assessed but not automated controls. Answer: C Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

49) Internal audit has responsibility for which line of defense? A) First B) Second C) Third D) Fourth Answer: C Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 50) What role in an organization is responsible for enforcing mitigating measures to prevent an identified risks from occurring? A) Management B) Internal Audit C) External Audit D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 51) Enterprise risk management (ERM) provides which line of defense in combating risk? A) First B) Second C) Third D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

52) Internal audit provides the third line of defense by testing internal controls and reporting to A) executive management. B) board of directors. C) external audit. D) both executive management and the board of directors. Answer: D Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 53) Which of the following statements concerning internal audit is TRUE? A) Internal audit is an independent function of the company. B) Internal audit reports both to executive management and the board of directors. C) Internal audit tests internal controls to provide assurance of their effectiveness. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 54) Which of the following statements concerning external audit is TRUE? A) External audit serves as the third line of defense of a company. B) External audit reports directly to stockholders regarding risk mitigation. C) External audit provides additional assurance to the company stakeholders. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

55) What role in a company is responsible for designing and implementing controls? A) Management B) Board of directors C) Internal audit D) External audit Answer: A Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 56) What type of tool is used to measure how far a company is on its journey to reach the ideal state? A) Maturity ruler B) Maturity model C) Optimization ruler D) Optimization model Answer: B Diff: 1 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 57) Which statement concerning maturity models is FALSE? A) Companies use maturity models to measure their current performance. B) Companies use maturity models to create a plan for continuous improvement. C) Companies use custom-designed maturity models from the Institute of Internal Auditors. D) Companies use guidelines from the Institute of Internal Auditors to custom design models. Answer: C Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

58) The Key Company provides staffing services for South Florida. Key has clearly defined processes and controls and employs a top-down, proactive approach to management with clear communication throughout the organization. Based on your review, at which phase of maturity would you classify Key?

A) Phase 1 — Limited B) Phase 2 — Informal C) Phase 3 — Defined D) Phase 4 — Optimized Answer: D Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

59) Inspire Accounting Services operates a regional tax and accounting services for small businesses. Inspire has some processes and controls defined, but documentation is lacking, so Inspire relies on some key individuals to perform these processes and controls. Based on your review, at which phase of maturity would you classify Inspire?

A) Phase 1 — Limited B) Phase 2 — Informal C) Phase 3 — Defined D) Phase 4 — Optimized Answer: B Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

60) Biloxi Bowling Products manufactures bowling lane equipment and accessories. Biloxi has relied on key individuals and has yet to document processes. During your audit, you determine that Biloxi's management seems to be reactive to issues that occur and not proactive with controls. At what phase of maturity would you classify Biloxi?

A) Phase 1 — Limited B) Phase 2 — Informal C) Phase 3 — Defined D) Phase 4 — Optimized Answer: A Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

61) Internal audit adds value to a business by providing A) assurance. B) insight. C) objectivity. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 62) Internal audit provides A) assurance that the organization is operating in accordance with management's plan. B) insight that may improve policies, procedures, controls, and risk management. C) objective assessment of the company through an independent consulting point of view. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 63) Jenna works as an internal auditor for a local bank. Jenna determines that the procedure for counting change in a teller's cash drawer at the end of a shift creates a challenge for the manager checking in the drawers. Jenna designed and tested an alternative procedure. Which of the following roles of internal audit most accurately describes Jenna's added value for the bank? A) Assurance B) Insight C) Objectivity D) Independence Answer: B Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

64) Which characteristic of internal audit must be present to assess the company from an independent point of view? A) Assurance B) Insight C) Objectivity D) Assessment Answer: C Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 65) Which role of internal audit includes the discovery of improvements for risk management? A) Assurance B) Insight C) Objectivity D) Independence Answer: B Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 66) Which of the following statements concerning internal audit is FALSE? A) Internal audit must remain independent of all business functions that they audit. B) Internal auditors have a stake in the outcome of the business processes that they audit. C) Internal audit departments may be in-house employees or contractors. D) Internal audit provides insight to the company leadership, audit committee, and board. Answer: B Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

67) For what reasons do internal audit departments report to an audit committee? A) The audit committee provides objective oversight of a company. B) The audit committee oversees management who may be the subject of an audit report. C) The audit committee includes board members and others with qualifications in accounting. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 68) Internal auditors who are employees of the organization must have no stake in or influence over the outcome of the business processes they are auditing. This principle is known as A) assurance. B) insight. C) objectivity. D) independence. Answer: D Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 69) Which of the following statements concerning internal audit departments is TRUE? A) All companies are required to have an internal audit department. B) Public companies listed on the New York Stock Exchanges are required to have an internal audit department. C) Internal auditors report to the leader of the enterprise risk management team. D) Internal auditors must be employed by the organization. Answer: B Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

70) A published set of specifications and criteria that assists companies in achieving objectives is a(n) A) control. B) framework. C) assessment. D) report. Answer: B Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 71) Frameworks A) provide a set of instructions for a business to follow. B) are often referred to as roadmaps for companies. C) give an outline for companies to follow on how to approach a topic. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 72) What bill was passed by the U.S. government in 2002 to increase the liability of corporate leaders for companies' actions? A) Sarbanes-Oxley Act B) Enron Act C) Risk Management Act D) Financial Trust Act Answer: A Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

73) The goal of the Sarbanes-Oxley Act of 2002 is to A) protect the U.S. government from fraudulent acts committed by U.S. companies. B) protect investors from fraud and other risks by improving the reliability and accuracy of financial statements. C) protect companies from the U.S. government interfering in how they present financial statements. D) protect investors from the risk of increased taxes impacting the financial statements of companies in which they are invested. Answer: B Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 74) The rules enacted with Sarbanes-Oxley (SOX) include which of the following? A) SOX places the responsibility for financial reporting failures on the U.S. government. B) SOX places the responsibility for financial reporting failures on the internal audit team. C) SOX places the responsibility for control failures with managers of the company. D) SOX places the responsibility for control failures with accountants of the company. Answer: C Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 75) Which of the following is an example of a regulatory control? A) Internal controls B) Segregation of duties C) Maturity models D) Sarbanes-Oxley Act Answer: D Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

76) Compliance with the Sarbanes-Oxley Act is required for A) U.S. publicly traded companies. B) private companies planning their initial public offering. C) foreign companies traded in or that do business in the United States. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 77) The Sarbanes-Oxley Act requires that chief executive and chief financial officers of firms are responsible for A) the accuracy of financial statements. B) overall internal control structure reports. C) informing external auditors about issues or concerns. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 78) Which of the following is NOT a Sarbanes-Oxley (SOX) Act requirement? A) An internal control report included in the annual financial statements B) An external audit that includes a disclosure of internal control deficiencies C) An internal audit report that confirms that management did not review financial statements before they were published D) An external audit evaluates management's assessment of the effectiveness of the system of internal control. Answer: C Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

79) Which of the following is NOT a Sarbanes-Oxley (SOX) Act requirement? A) Formal implementation of a maturity model B) Ensuring that financial statements are reviewed by management C) Formal data security policy that is communicated and enforced D) Companies ensure the protection of all financial data in storage and use. Answer: A Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 80) Most publicly traded companies comply with Sarbanes-Oxley requirements by utilizing a framework from the A) Securities and Exchange Commission. B) Committee of Sponsoring Organizations. C) Compliance and Sarbanes-Oxley Organization. D) Company and Securities Organization. Answer: B Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 81) Which of the following statements concerning the COSO Internal Control Integrated Framework is TRUE? A) COSO provides guidance for SOX compliance in the form of the Internal Control Integrated Framework. B) The Internal Control Integrated Framework is a controls-based approach to risk management that is widely accepted. C) The Internal Control Integrated Framework consists of control objectives and components and related principles. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

82) Internal Control Integrated Framework focuses on control objectives in these areas A) internal audit, external audit, and management. B) management, operations, and audit. C) operations, compliance, and audit. D) operations, reporting, and compliance. Answer: D Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 83) Operations objectives relate to the effectiveness and efficiency of an organization's A) prevention of losses. B) allocation of resources. C) operation and financial performance. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 84) Jorge works in the accounting department of a public company. Jorge is tasked with preparing documentation of nonfinancial information for the company. In the COSO Internal Control Integrated Framework, where might Jorge look for guidance on how best to present the information? A) Operations objectives section of the control objectives B) Reporting objectives section of the control objectives C) Compliance objectives section of the control objectives D) Monitoring section of the control components Answer: B Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

85) The key part of the COSO Internal Control Integrated Framework that functions as the steps to implement an effective system of internal control is referred to as the A) control objectives. B) control components. C) framework objectives. D) framework components. Answer: B Diff: 1 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 86) Which of the following is NOT one of the COSO Internal Control Integrated Framework control components? A) Control environment B) Risk assessment C) Information and communication D) Compliance objectives Answer: D Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 87) Which COSO Internal Control Integrated Framework control component deals with the enforcement of accountability? A) Control environment B) Risk assessment C) Information and communication D) Monitoring Answer: A Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

88) Which COSO Internal Control Integrated Framework control component deals with quality information and reporting? A) Control environment B) Risk assessment C) Information and communication D) Monitoring Answer: C Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 89) Which COSO Internal Control Integrated Framework control component deals with the analysis of significant change? A) Control environment B) Risk assessment C) Information and communication D) Monitoring Answer: B Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 90) Which of the following is the best definition of the COSO Cube? A) The COSO Cube is a die rolled to determine which control component to execute for the day. B) The COSO Cube is a diagram used to list control objectives for a firm. C) The COSO Cube is a three-dimensional illustration of how management, internal audit, and external audit work together. D) The COSO Cube is a three-dimensional illustration that depicts how all parts of the Internal Control Integrated Framework are related. Answer: D Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

91) Which of the following statements concerning the COSO Enterprise Risk Management Integrating with Strategy and Performance Framework is TRUE? A) The 2017 release of the framework updated the framework to focus more on strategy and less on risk. B) The 2017 release of the framework updated the framework to reflect the importance of risk management in strategic planning. C) The 2017 release of the framework utilizes the COSO Cube to present and interpret the components. D) The 2017 release of the framework includes four objectives and eight components for firms to reference in regard to risk management. Answer: B Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 92) Which of the following statements concerning the COSO Enterprise Risk Management Integrating with Strategy and Performance Framework is TRUE? A) It embeds risk management throughout the organization as a prime responsibility of management and the board of directors. B) It is more comprehensive than the COSO Internal Control Integrated Framework because it focuses on all types of risks. C) Its principles apply to all functions across all levels of an organization. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 93) Explain the time-based model of controls for technology attacks. Answer: The time-based model of controls measures the residual risk for technology attacks by comparing the relationship of the preventative, detective, and corrective controls. If the time it takes for an intruder to break through preventative controls is greater than the combined time it takes to detect and respond to the attack, then the controls are effective. This is represented by P>(D+C). Diff: 2 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 33

94) Akiko works as an accounts payable manager for True Steel. Explain why True Steel's management has the information system set to prohibit Akiko from inputting data into the system? Answer: Akiko is responsible for authorizing payments in the system. Segregation of duties, an appropriate internal control to prevent errors and fraud, requires that different employees are responsible for separate parts of a business activity. The work of Akiko is a check on the work of the employee who inputs the data into the system. Diff: 3 Learning Objective: 3.1 Distinguish among the three functions of internal controls. Section Reference: How Do Internal Controls Mitigate Risk? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 95) Draw a diagram that accurately depicts how a control is classified based on its function, location, and implementation. Answer:

Diff: 2 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 96) Caio Computers implemented additional functionality in their accounting information system to perform a three-way match on transactions. Classify this control based on function, location, and implementation, and explain your reasoning. Answer: The three-way match is a detective control designed to quickly catch fraudulent activity or errors in the system. The control is an IT application control related to the accounting information systems and the business process associated with it. The control is implemented automatically as the system performs the three-way match using only technology without human interaction. Diff: 3 Learning Objective: 3.2 Characterize a control by its location and implementation method. Section Reference: How Are Controls Classified? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 34

97) Describe the reporting relationship between internal audit and the organization. Answer: Internal audit must remain independent of the business processes being audited with no stake in or influence over the business process outcome. Internal audit reports to both company leadership and the audit committee of the company's board of directors. This dual report provides insight to management and assurance to the board of directors. Diff: 2 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 98) Diagram the three lines of defense to protect organizations against risk. Include the roles of each line of defense. Answer:

Diff: 3 Learning Objective: 3.3 Explain the three lines of defense to ensure the effectiveness of internal controls. Section Reference: How Do We Assess Internal Controls? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

99) Why would a company that is NOT required to comply with the Sarbanes-Oxley (SOX) Act regulations still do so voluntarily? Answer: Private companies and non-profit organizations are generally not required to comply with SOX regulations; however, they are subject to penalties if they intentionally destroy or falsify relevant information. Therefore, many of these organizations find that SOX compliance helps them avoid penalties while enhancing efficiencies and security. Diff: 2 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 100) Numerical Technology (NT) hired your accounting and consulting firm to review and recommend changes to prepare NT to move toward an initial public offering (IPO). Your review suggests that NT could utilize a framework to add structure to their risk management approach. Which framework will you recommend to NT and why? Answer: NT should consider implementing the COSO Enterprise Risk Management Integrating with Strategy and Performance (ERM) Framework. The ERM Framework addresses the risk management approach and aligns with NT's strategic objectives to improve before their IPO. The ERM Framework is more comprehensive than the COSO Internal Control Integrated Framework because it focuses on all types of risk and all functions across all levels of the organization. The ERM Framework will help NT comply with Sarbanes-Oxley and Securities and Exchange Commission requirements for a publicly-traded company. Diff: 3 Learning Objective: 3.4 Describe the importance of frameworks in an internal control environment. Section Reference: Why Are Internal Control Frameworks Important? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 4 Software and Systems 1) An online information system that supports core business functions like handling sales, accounting purchasing and more is considered what type of system? A) An online transaction processing system (OLTP) B) An online analytics processing system (OLAP) C) A batch transaction processing system (BTP) D) A batch analytics processing system (BAP) Answer: A Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 2) An online information system that focuses on leveraging the data for information is considered what type of system? A) An online transaction processing system (OLTP) B) An online analytics processing system (OLAP) C) A batch transaction processing system (BTP) D) A batch analytics processing system (BAP) Answer: B Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 3) An online transaction processing system (OLTP) processes: I. Transactions II. Reports and analytics A) I B) II C) both I and II D) neither I nor II Answer: A Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

4) An online analytics processing system (OLAP) processes: I. Transactions II. Reports and analytics A) I B) II C) both I and II D) neither I nor II Answer: B Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 5) An online transaction processing system (OLTP): I. Modifies the database by adding and changing transaction data II. Queries the database to answer questions A) I B) II C) both I and II D) neither I nor II Answer: A Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 6) An online analytics processing system (OLAP): I. Modifies the database by adding and changing transaction data II. Queries the database to answer questions A) I B) II C) both I and II D) neither I nor II Answer: B Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

7) Which system is used by senior management to determine regions of the world for new investment? A) Executive support system B) Decision support system C) Management information system D) Transaction processing system Answer: A Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 8) Which system is used by management to perform "what-if" analysis to set optimal stock levels by store and warehouse? A) Executive support system B) Decision support system C) Management information system D) Transaction processing system Answer: B Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 9) Which system is used to generate inventory reports and profit and loss statements? A) Executive support system B) Decision support system C) Management information system D) Transaction processing system Answer: C Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

10) Which system is used by the storefront cashiers to check out the customer's purchases? A) Executive support system B) Decision support system C) Management information system D) Transaction processing system Answer: D Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 11) There are four different levels of information systems, each providing information for users at different levels of the company. Match the systems with who uses the system. a) b) c) d)

Executive support system Decision support system Management information system Transaction processing system

I. Executive Leadership II. Upper-level Management III. Middle Management IV. Workers Answer: a and I, b and II, c and II, d and IV Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

12) There are four different levels of information systems, each providing information for users at different levels of the company. Match the systems with why the system is used. a) Executive support system b) Decision support system c) Management information system d) Transaction processing system I. Strategic decisions II. Non-routine decisions III. Routine decisions IV. Capturing data Answer: a and I, b and II, c and II, d and IV Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Information Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 13) In batch processing, data is collected as it is generated and processed later at a scheduled time. Listed below are the five steps in batch processing. Put these steps in correct chronological order. a) Business event b) Create file c) Update file d) Scheduled batch e) Update database Answer: The correct order is: a, b, c, d, e Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Transaction Processing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

14) In batch processing, data is collected as it is generated and processed later at a scheduled time. Listed below are the five steps in batch processing. Which step corresponds to the occurrence of business events and the collection of transactions which are then organized into a batch? A) Business event B) Create file C) Update file D) Scheduled batch E) Update database Answer: A Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Transaction Processing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 15) In batch processing, data is collected as it is generated and processed later at a scheduled time. Listed below are the five steps in batch processing. Which step corresponds to updating the transaction file with additional batch transactions? A) Business event B) Create file C) Update file D) Scheduled batch E) Update database Answer: C Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Transaction Processing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 16) Software is created using programming languages, which are written sets of coded instructions that the system understands. Choose from the list below one of the popular programming languages. A) Assembler B) Fortran C) COBOL D) Python Answer: D Diff: 1 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 6

17) Systems software is specialized software that runs a computer's hardware and other software. It is a platform for other software that coordinates all the activities throughout the system. When you turn on your personal computer, what type of system software is initially loaded? A) Operating System B) Database Management System C) Data communication software D) Utility programs Answer: A Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 18) Systems software is specialized software that runs a computer's hardware and other software. It is a platform for other software that coordinates all the activities throughout the system. A software used to define, manipulate, retrieve, and manage data is what type of system software? A) Operating System B) Database Management System C) Data communication software D) Utility programs Answer: B Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 19) Systems software is specialized software that runs a computer's hardware and other software. It is a platform for other software that coordinates all the activities throughout the system. A software used to provide remote access to exchange data between computers and users is what type of system software? A) Operating System B) Database Management System C) Data communication software D) Utility programs Answer: C Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

20) Systems software is specialized software that runs a computer's hardware and other software. It is a platform for other software that coordinates all the activities throughout the system. A software used for analyzing, configuring, optimizing, and maintaining a computer is what type of system software? A) Operating System B) Database Management System C) Data communication software D) Utility programs Answer: D Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 21) Cloud computing provides a customer with access to shared resources over the internet, like computer processing, software applications, data storage and other services. If a company chooses a cloud option where the hardware and software is dedicated solely to their business, the business is choosing what type of cloud deployment? A) Private cloud B) Public cloud C) Hybrid cloud D) Proprietary cloud Answer: A Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Cloud Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 22) There are three types of cloud service models, each of which provide customers remote access to specific cloud solutions based on the end-user requirements. If a company chooses a cloud service model that utilizes the internet to deliver applications to customers which are managed by a third-party, the business is choosing what type of cloud service model? A) Software as a service (SaaS) B) Platform as a service (PaaS) C) Infrastructure as a service (IaaS) D) Computer as a service (CaaS) Answer: A Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Cloud Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 8

23) There are three types of cloud service models, each of which provide customers remote access to specific cloud solutions based on the end-user requirements. If a company chooses a cloud service model that provides fully self-service computers, networking, storage, and operating systems through virtualized environments, the business is choosing what type of cloud service model? A) Software as a service (SaaS) B) Platform as a service (PaaS) C) Infrastructure as a service (IaaS) D) Computer as a service (CaaS) Answer: C Diff: 2 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Cloud Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 24) One of the most important business processes a company needs technology to support is receiving payments from customers. Julia's Cookies used what payment processing software? A) Square B) QuickBooks C) PayPal Here D) Microsoft Excel Answer: A Diff: 1 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 25) "Square provides a device that attaches to the business owner's ________ to receive payments." A) laptop computer B) phone or tablet C) desktop computer D) Tesla Answer: B Diff: 1 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

26) Companies also need to store information, perform data analytics and calculations, and manage other financial-related functions. What tool did Julia's Cookies use for these data analytics functions? A) Square B) Microsoft Excel C) QuickBooks D) Google Sheets Answer: B Diff: 1 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 27) "Excel is part of the ________ suite and can be purchased as a locally installed software or through a SaaS subscription." A) Numbers for Mac B) QuickBooks C) Microsoft Office D) Google Sheets Answer: C Diff: 1 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 28) Excel is a spreadsheet application software. Choose from the list below one of the business functions that Excel typically supports. A) Advertising B) Recruiting C) Supply chain management D) Budgeting Answer: D Diff: 1 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

29) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to find the smallest value in a range of selected cells. A) MIN B) MAX C) TRIM D) IF Answer: A Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 30) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to find the largest value in a range of selected cells. A) MIN B) MAX C) TRIM D) IF Answer: B Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 31) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to remove leading and trailing spaces in a selected cell. A) MIN B) MAX C) TRIM D) IF Answer: C Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

32) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to apply conditional logic to select cells to determine a true or false outcome. A) MIN B) MAX C) TRIM D) IF Answer: D Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 33) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to calculate the total of a range of cells. A) SUM B) MAX C) TRIM D) IF Answer: A Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 34) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to calculate the average of selected cells. A) MIN B) AVERAGE C) TRIM D) IF Answer: B Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

35) Excel is a spreadsheet application software. Select the Excel function listed below that you would use if you wanted to combine two or more columns into one new column. A) SUM B) MAX C) TRIM D) CONCAT Answer: D Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 36) As companies grow their data storage needs grow more complex and many small businesses soon grow to need a more manageable approach to local data storage. At Julia's Cookies, it only took a few months before they needed a more robust data storage solution than Excel. Choose from the list below a database solution that a small startup company may use. A) Oracle DBMS B) Microsoft Outlook C) Microsoft Access D) MySQL Answer: C Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 37) Companies need more accounting support than just capturing sales data. Businesses need reliable software that provides core accounting functionality and user-friendly reporting capabilities. Julia's Cookies used what accounting software package when they were a startup? A) Oracle DBMS B) Microsoft Outlook C) Microsoft Access D) QuickBooks Answer: D Diff: 1 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

38) The textbook discussed three control activity considerations for small businesses. In a smaller business, incompatible business functions are often combined. A small business may implement a compensating control such as manager supervision. This is an example of what control activity? A) Segregation of duties B) Physical access C) Logical access D) Environmental access Answer: A Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Managing Risks AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 39) The textbook discussed three control activity considerations for small businesses. In a smaller business, incompatible business functions are often combined. A small business may prevent unauthorized individuals from accessing resources like buildings, computers, hard drives, and inventory. This is an example of what control activity? A) Segregation of duties B) Physical access C) Logical access D) Environmental access Answer: B Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Managing Risks AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 40) The textbook discussed three control activity considerations for small businesses. In a smaller business, incompatible business functions are often combined. A small business may prevent unauthorized individuals from accessing systems, databases, or applications. This is an example of what control activity? A) Segregation of duties B) Physical access C) Logical access D) Environmental access Answer: C Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Managing Risks AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 14

41) Companies can grow in two ways, organic growth or acquisition-based growth. Choose the best definition of organic growth. A) Organic growth is the increase in sales, customers, and market share by using the company's own resources and business processes. B) Organic growth occurs as businesses purchase and integrate other companies in the purchasing company's infrastructure. C) Organic growth in the decrease in sales, customers, and market share by using the company's own resources and business processes. D) Organic growth occurs as businesses sell and separate other companies in the purchasing company's infrastructure. Answer: A Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Acquisition-Based Growth AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 42) Companies can grow in two ways, organic growth or acquisition-based growth. Choose the best definition of acquisition-based growth A) Acquisition-based growth is the increase in sales, customers, and market share by using the company's own resources and business processes. B) Acquisition-based growth occurs as businesses purchase and integrate other companies in the purchasing company's infrastructure. C) Acquisition-based growth in the decrease in sales, customers, and market share by using the company's own resources and business processes. D) Acquisition-based growth occurs as businesses sell and separate other companies in the purchasing company's infrastructure. Answer: B Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Acquisition-Based Growth AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

43) Choose the best definition of a merger. A) A merger occurs when one company sells shares of the company on a public exchange. B) A merger is separating one company into two or more separate legal entities. C) A merger is a combination of two separate companies into a new legal entity. D) A merger happens when one company purchases another company to acquire all or most of the shares, and therefore control over that company. Answer: C Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Acquisition-Based Growth AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 44) Choose the best definition of an acquisition. A) An acquisition occurs when one company sells shares of the company on a public exchange. B) An acquisition is separating one company into two or more separate legal entities. C) An acquisition is a combination of two separate companies into a new legal entity. D) An acquisition happens when one company purchases another company to acquire all or most of the shares, and therefore control over that company. Answer: D Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Acquisition-Based Growth AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 45) Choose the best definition of systems integration. A) Systems integration is the process of joining different systems or subsystems into one larger system and ensuring that they function as one system. B) Systems integration is separating one company into two or more separate legal entities. C) Systems integration is a combination of two separate companies into a new legal entity. D) Systems integration happens when one company purchases another company to acquire all or most of the shares, and therefore control over that company. Answer: A Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Acquisition-Based Growth AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

46) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite to manage its inventory. RAM Manufacturing recently acquired Top Automotive LLC. Top Automotive uses Sellbrite to manage its inventory. If RAM Manufacturing decides to allow the Top Automotive operations to continue to run Sellbrite at Top Automotive's facility, which systems integration approach has RAM Manufacturing taken? A) Shut down both systems B) Run both systems in parallel C) Lift and shift, then integrate D) Immediate integration Answer: B Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 47) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite to manage its inventory. RAM Manufacturing recently acquired Top Automotive LLC. Top Automotive uses Sellbrite to manage its inventory. If RAM Manufacturing decides to move the Sellbrite system to RAM Manufacturing's data center, which systems integration approach has RAM Manufacturing taken? A) Shut down both systems B) Run both systems in parallel C) Lift and shift, then integrate D) Immediate integration Answer: C Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

48) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite to manage its inventory. RAM Manufacturing recently acquired Top Automotive LLC. Top Automotive uses Sellbrite to manage its inventory. If RAM Manufacturing decides to immediately move the inventory of Top Automotive only NetSuite after the acquisition closes, which systems integration approach has RAM Manufacturing taken? A) Shut down both systems B) Run both systems in parallel C) Lift and shift, then integrate D) Immediate integration Answer: D Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 49) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include: centralized systems, decentralized systems, and distributed systems. Choose the best definition of a centralized system. A) A centralized system connects all users to one central location built around a server or cluster of servers that all authorized users can access. B) A centralized system utilizes multiple locations connected to a central site. C) A centralized system is like a decentralized system; however, it goes a step further as it no longer has a central site connecting all the system nodes. D) A centralized system allows all users to have access to all data depending on their user access privileges, and all users are connected throughout the business. Answer: A Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

50) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Choose the best definition of a decentralized system. A) A decentralized system connects all users to one central location built around a server or cluster of servers that all authorized users can access. B) A decentralized system utilizes multiple locations connected to a central site. C) A decentralized system is like a decentralized system; however, it goes a step further as it no longer has a central site connecting all the system nodes. D) A decentralized system allows all users to have access to all data depending on their user access privileges, and all users are connected throughout the business. Answer: B Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 51) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Choose the best definition of a distributed system. A) A distributed system connects all users to one central location built around a server or cluster of servers that all authorized users can access. B) A distributed system utilizes multiple locations connected to a central site. C) A distributed system is like a decentralized system; however, it goes a step further as it no longer has a central site connecting all the system nodes. D) A distributed system allows all users to have access to all data depending on their user access privileges, and all users are connected to a central server. Answer: C Diff: 1 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

52) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is a disadvantage of centralized systems? A) The risk of business disruption is greater because any disruption impacts the entire system. B) Since each location has its own system, there is an increase in security risk as more systems must be protected and monitored. C) It is the most expensive option as it involves higher maintenance costs. D) It is more difficult to implement as it is the most complex of the three. Answer: A Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 53) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is a disadvantage of decentralized systems? A) The risk of business disruption is greater because any disruption impacts the entire system. B) Since each location has its own system, there is an increase in security risk as more systems must be protected and monitored. C) It is the most expensive option as it involves higher maintenance costs. D) It is more difficult to implement as it is the most complex of the three. Answer: B Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

54) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is a disadvantage of distributed systems? A) The risk of business disruption is greater because any disruption impacts the entire system. B) Since each location has its own system, there is an increase in security risk as more systems must be protected and monitored. C) It is the most expensive option as it involves higher maintenance costs. D) The cost of installing and maintaining multiple systems across different locations is higher. Answer: C Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 55) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of centralized systems? A) It is the easiest to set up. B) If one system fails, the other systems can still process transactions. C) Communication among the users is increased since they are all connected. D) It promotes easier incremental growth or scalability of systems. Answer: A Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

56) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of centralized systems? A) Data is easy to access for authorized users. B) If one system fails, the other systems can still process transactions. C) Communication among the users is increased since they are all connected. D) It promotes easier incremental growth or scalability of systems. Answer: A Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 57) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of centralized systems? A) Cost is lower, as there is only one central location to be maintained. B) If one system fails, the other systems can still process transactions. C) Communication among the users is increased since they are all connected. D) It promotes easier incremental growth or scalability of systems. Answer: A Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

58) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of decentralized systems? A) Cost is lower, as there is only one central location to be maintained. B) If one system fails, the other systems can still process transactions. C) Communication among the users is increased since they are all connected. D) It promotes easier incremental growth or scalability of systems. Answer: B Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 59) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of decentralized systems? A) Cost is lower, as there is only one central location to be maintained. B) Higher responsiveness from the system at remote locations, as they have their own system to process and retrieve their data. C) Communication among the users is increased since they are all connected. D) It promotes easier incremental growth or scalability of systems. Answer: B Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

60) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of decentralized systems? A) Cost is lower, as there is only one central location to be maintained. B) Reduction in processing bottlenecks as employees aren't competing for processing power. C) Communication among the users is increased since they are all connected. D) It promotes easier incremental growth or scalability of systems. Answer: B Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 61) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of distributed systems? A) Cost is lower, as there is only one central location to be maintained. B) Reduction in processing bottlenecks as employees aren't competing for processing power. C) Communication among the users is increased since they are all connected. D) If one system fails, the other systems can still process transactions. Answer: C Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

62) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of distributed systems? A) Cost is lower, as there is only one central location to be maintained. B) Reduction in processing bottlenecks as employees aren't competing for processing power. C) It promotes easier incremental growth or scalability of systems. D) If one system fails, the other systems can still process transactions. Answer: C Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 63) Businesses typically have many systems, some internally developed, some purchased, and others acquired. Businesses want these systems to communicate with one another and provide users with easier access to data. There are three systems configurations that consolidate and coordinate data across multiple locations. These three include centralized systems, decentralized systems, and distributed systems. Each configuration has advantages and disadvantages. Which of the following is an advantage of distributed systems? A) Cost is lower, as there is only one central location to be maintained. B) Reduction in processing bottlenecks as employees aren't competing for processing power. C) Real-time transaction details are more readily available to users. Access and processing speed are faster because processing workload is spread across the system. D) If one system fails, the other systems can still process transactions. Answer: C Diff: 2 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Configurations AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

64) ERP systems are complex and expensive technology. The integration of all systems into a unified ERP system has certain goals. One goal is improved data transparency and quality. What is the best definition of improved data transparency and quality? A) All the business data resides in one single system, making it accessible to authorized users who need it to perform their tasks. B) While the initial implementation cost and any customization of an ERP system are expensive, the long-term costs may be less associated with owning one system, as opposed to multiple systems. C) With the availability of real-time data all in one place, it simplifies the collection, analysis, and reporting of business data and improves business decisions. D) With the continuous collection, analysis, and reporting of business data, management can better benchmark the business against its competitors. Answer: A Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 65) ERP systems are complex and expensive technology. The integration of all systems into a unified ERP system has certain goals. One goal is future cost savings. What is the best definition of future cost savings? A) All the business data resides in one single system, making it accessible to authorized users who need it to perform their tasks. B) While the initial implementation cost and any customization of an ERP system are expensive, the long-term costs may be less associated with owning one system, as opposed to multiple systems. C) With the availability of real-time data all in one place, it simplifies the collection, analysis, and reporting of business data and improves business decisions. D) With the continuous collection, analysis, and reporting of business data, management can better benchmark the business against its competitors. Answer: B Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

66) ERP systems are complex and expensive technology. The integration of all systems into a unified ERP system has certain goals. One goal is increased business efficiency. What is the best definition of increased business efficiency? A) All the business data resides in one single system, making it accessible to authorized users who need it to perform their tasks. B) While the initial implementation cost and any customization of an ERP system are expensive, the long-term costs may be less associated with owning one system, as opposed to multiple systems. C) With the availability of real-time data all in one place, it simplifies the collection, analysis, and reporting of business data and improves business decisions. D) With the continuous collection, analysis, and reporting of business data, management can better benchmark the business against its competitors. Answer: C Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 67) ERP systems are complex and expensive technology. The integration of all systems into a unified ERP system has certain goals. One goal is quality improvement. What is the best definition of quality improvement? A) All the business data resides in one single system, making it accessible to authorized users who need it to perform their tasks. B) While the initial implementation cost and any customization of an ERP system are expensive, the long-term costs may be less associated with owning one system, as opposed to multiple systems. C) With the availability of real-time data all in one place, it simplifies the collection, analysis, and reporting of business data and improves business decisions. D) With the continuous collection, analysis, and reporting of business data, management can better benchmark the business against its competitors. Answer: D Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

68) ERP systems are complex and expensive technology. The integration of all systems into a unified ERP system has certain goals. One goal is automating routine business processes. What is the best definition of automating routine business processes? A) By embedding best practices within the software infrastructure for accounting, payroll, inventory management, and purchasing, for example, the company can save money and increase efficiency. B) While the initial implementation cost and any customization of an ERP system are expensive, the long-term costs may be less associated with owning one system, as opposed to multiple systems. C) With the availability of real-time data all in one place, it simplifies the collection, analysis, and reporting of business data and improves business decisions. D) With the continuous collection, analysis, and reporting of business data, management can better benchmark the business against its competitors. Answer: A Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 69) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best definition of the financial module? A) The most important ERP module that captures accounting data and generates financial documents, including financial statements, tax forms, and receipts. B) Coordinates the entire supply chain, from purchasing of raw materials and supplies to inventory management and warehousing. C) Manages production activities including machine operations and scheduling. D) Captures and stores all customer information. Answer: A Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

70) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best definition of the supply chain management module? A) The most important ERP module that captures accounting data and generates financial documents, including financial statements, tax forms, and receipts. B) Coordinates the entire supply chain, from purchasing of raw materials and supplies to inventory management and warehousing. C) Manages production activities including machine operations and scheduling. D) Captures and stores all customer information. Answer: B Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 71) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best definition of the production module? A) The most important ERP module that captures accounting data and generates financial documents, including financial statements, tax forms, and receipts. B) Coordinates the entire supply chain, from purchasing of raw materials and supplies to inventory management and warehousing. C) Manages production activities including machine operations and scheduling. D) Captures and stores all customer information. Answer: C Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

72) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best definition of the customer relationships management (CRM) module? A) The most important ERP module that captures accounting data and generates financial documents, including financial statements, tax forms, and receipts. B) Coordinates the entire supply chain, from purchasing of raw materials and supplies to inventory management and warehousing. C) Manages production activities including machine operations and scheduling. D) Captures and stores all customer information. Answer: D Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 73) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best definition of the sales management module? A) Tracks orders from the time they are received from customers through shipment of products. B) Coordinates the entire supply chain, from purchasing of raw materials and supplies to inventory management and warehousing. C) Manages production activities including machine operations and scheduling. D) Captures and stores all customer information. Answer: A Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

74) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. What is the best definition of the human resources management (HRM) module? A) The most important ERP module that captures accounting data and generates financial documents, including financial statements, tax forms, and receipts. B) Manages detailed employee records, training and development, and even time tracking. C) Manages production activities including machine operations and scheduling. D) Captures and stores all customer information. Answer: B Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 75) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the financial module? A) Accounts Receivable B) Receive Payment C) Marketing Management D) Inventory Answer: A Diff: 1 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 76) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the sales management module? A) Accounts Receivable B) Receive Payment C) Marketing Management D) Inventory Answer: B Diff: 1 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 31

77) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the customer relationship management module? A) Accounts Receivable B) Receive Payment C) Marketing Management D) Inventory Answer: C Diff: 1 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 78) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the supply chain management module? A) Accounts Receivable B) Receive Payment C) Marketing Management D) Inventory Answer: D Diff: 1 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 79) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the production module? A) Bill of Material B) Receive Payment C) Marketing Management D) Inventory Answer: A Diff: 1 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 32

80) Successful ERP systems support the core business processes in a company's operations. Every function within the ERP is called a module. Listed below are four key features. Which is a key feature of the human resources management module? A) Accounts Receivable B) Time and Attendance C) Marketing Management D) Inventory Answer: B Diff: 1 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 81) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing recently implemented a new ERP system, NetSuite. You have been asked to perform data analytics to provide information to the firm's auditors. From which ERP module would you pull data to know what were the rent payments for last January? A) Financials B) Supply chain management C) Production management D) Customer relationships management E) Sales management F) Human resources management Answer: A Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

82) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing recently implemented a new ERP system, NetSuite. You have been asked to perform data analytics to provide information to the firm's auditors. From which ERP module would you pull data to know to which vendors do we make the most returns? A) Financials B) Supply chain management C) Production management D) Customer relationships management E) Sales management F) Human resources management Answer: B Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 83) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing recently implemented a new ERP system, NetSuite. You have been asked to perform data analytics to provide information to the firm's auditors. From which ERP module would you pull data to know what materials are required to manufacture our topselling part? A) Financials B) Supply chain management C) Production management D) Customer relationships management E) Sales management F) Human resources management Answer: C Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

84) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing recently implemented a new ERP system, NetSuite. You have been asked to perform data analytics to provide information to the firm's auditors. From which ERP module would you pull data to know what marketing campaigns are planned for next month? A) Financials B) Supply chain management C) Production management D) Customer relationships management E) Sales management F) Human resources management Answer: D Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 85) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing recently implemented a new ERP system, NetSuite. You have been asked to perform data analytics to provide information to the firm's auditors. From which ERP module would you pull data to know how many orders we received last quarter? A) Financials B) Supply chain management C) Production management D) Customer relationships management E) Sales management F) Human resources management Answer: E Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

86) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing recently implemented a new ERP system, NetSuite. You have been asked to perform data analytics to provide information to the firm's auditors. From which ERP module would you pull data to know how many new hires did the company have last quarter? A) Financials B) Supply chain management C) Production management D) Customer relationships management E) Sales management F) Human resources management Answer: F Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 87) Most vendors offer different types of solutions for companies to choose from when selecting an ERP system. Which type of system is pre-configured to work one way and will work that way immediately when implemented? A) Out of the box ERP B) Configurable ERP C) Customizable ERP D) Tailored ERP Answer: A Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: Implementing an ERP System AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

88) Most vendors offer different types of solutions for companies to choose from when selecting an ERP system. Which type of system has some add-ins and features that can be customized for customers' needs? A) Out of the box ERP B) Configurable ERP C) Customizable ERP D) Tailored ERP Answer: B Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: Implementing an ERP System AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 89) Most vendors offer different types of solutions for companies to choose from when selecting an ERP system. Which type of system has features that are fully customized for an individual customer's needs? A) Out of the box ERP B) Configurable ERP C) Customizable ERP D) Tailored ERP Answer: C Diff: 2 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: Implementing an ERP System AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

90) Whether a company needs systems software or application software, they must decide where to acquire it. They can purchase software from a third-party or develop the software in-house. Both methods of software sourcing have risks. Discuss the risks of purchasing third-party software. Answer:

Diff: 3 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 91) Whether a company needs systems software or application software, they must decide where to acquire it. They can purchase software from a third-party or develop the software in-house. Both methods of software sourcing have risks. Discuss the risks of an in-house developed software. Answer:

Diff: 3 Learning Objective: 4.1 Summarize the different types of systems and software Section Reference: Software AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

92) Microsoft sells Excel and Access, two applications that are used to store and analyze data. Discuss how Excel and Access differ. Answer: Access differs from Excel because it can handle larger sets of data in one file. Access can store millions of lines in one table. Just like Excel, Access can be purchased as a software locally installed on a computer or through a SaaS delivery model. Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 93) One of the newer type of technologies that startup companies can leverage is the internet of things (IoT). Discuss some examples of how IoT could be used by a startup company to help them grow and thrive. Answer: There are many examples of IoT technologies that startup companies could use. The book discusses a few including, Google Assistant, Smart locks, Cloud supported smart cameras, Philips Hue, and a Nest thermostat. Diff: 3 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 94) There are several great accounting software products that companies can choose from, including one of the most popular options on the market, QuickBooks. Discuss areas of the business that QuickBooks is used to manage. Answer: QuickBooks is used to manage: • Financial reporting • Time tracking • Payroll • General ledgers • Paying bills Diff: 2 Learning Objective: 4.2 Identify startup and small business technologies Section Reference: Startup Computing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

95) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a large amount of inventory and uses NetSuite as their inventory management system. RAM Manufacturing recently acquired Top Automotive LLC and the acquisition closes at the end of the month. Top Automotive uses Sellbrite to manage its inventory. The inventory numbering system used by RAM Manufacturing is limited to 10 numeric digits. The inventory numbering system at Top Automotive is 12 characters and includes letters and numbers. You are given the responsibility to integrate the two inventory systems. Since the acquisition closes at the end of the month, what approach would you recommend for their inventory systems? Answer: There is no single correct answer. However, since both companies use different lengths and types of characters in their inventory numbering systems, the easiest approach to take, given the limited timeframe, would be to allow both systems to run in parallel or lift and shift. Diff: 3 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Integration AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 96) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a large amount of inventory and uses NetSuite as their inventory management system. RAM Manufacturing recently acquired Top Automotive LLC and the acquisition closes in three months. Top Automotive uses Sellbrite to manage its inventory. Fortunately, you discover that both companies use a 10 numeric digit inventory numbering system and have many similarities in how they manage inventory. You are given the responsibility to integrate the two inventory systems. Since the acquisition closes in three months, what approach would you recommend for their inventory systems? Answer: Since both companies use the same inventory numbering system and run similar inventory management systems and the acquisition doesn't close for 3 months, this may be a good candidate for immediate integration. Diff: 3 Learning Objective: 4.3 Explain how growing businesses enhance their systems Section Reference: Systems Integration AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

97) ERP systems are often described as the "ideal state" of a system. ERP systems integrate multiple systems into a single, cohesive, communicative system. What are some of the characteristics of an ERP system? Answer: ERP systems: • Offer integrated, enterprise-wide systems with a unified interface so businesses can improve operating and financial performance • Provide TPS, MIS, and DSS system functions in a single system • Support multiple business functions, like human resources and accounting • Locations are flexible. They can assist on-site or as a cloud-based solution • Connect to customer and vendor systems to manage supply chain communication • Mitigate risks since internal controls like application controls and ITGCs are embedded into the software Diff: 3 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: A Solution for Systems Integration AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 98) Implementing an ERP system is a complex process. Businesses must select a vendor, assess expected costs including the system itself and implementation related expenses, and convert relevant existing systems to the new ERP system. Due to the complex, expensive nature of this type of system implementation, discuss what businesses considering adopting a new ERP system should do. Answer: • Ensure leadership is willing to intervene when issues impact the implementation project and to champion the system adoption across the company • Choose an ERP solution vendor that has a solid reputation in the industry • Choose an ERP solution that meets company needs with as little customization as possible • Allocate sufficient time and resources for post-implementation training of employees on using the new system • Embed internal controls into the ERP system during implementation to create a cohesive control environment Diff: 3 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: Implementing an ERP System AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

99) Most vendors offer different types of solutions for companies to choose from when selecting an ERP system. There are three common types: Out of the box ERP, Configurable ERP, and Customizable ERP. Describe Configurable ERP and compare it to purchasing a new car. Answer: Configurable ERP has some add-ins and features that can be customized for customers' needs. This is like purchasing a new car but upgrading the stereo and paint color for an additional charge. You will pay more and may wait longer. Diff: 3 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: Implementing an ERP System AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 100) Most vendors offer different types of solutions for companies to choose from when selecting an ERP system. There are three common types: Out of the box ERP, Configurable ERP, and Customizable ERP. Describe Out of the box ERP and compare it to purchasing a new car. Answer: Out of the box ERP is pre-configured to work one way and will work that way immediately when implemented. Customers are expected to adapt their business processes to match the system's existing configuration. This is like purchasing a base model currently available on the local dealership's lot. Diff: 3 Learning Objective: 4.4 Describe the features of and implementation considerations of an enterprise resource planning (ERP) system Section Reference: Implementing an ERP System AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 5 Data Storage and Analysis 1) Unique careers are available to accounting professionals with an interest in data including A) financial crime investigators. B) auditors. C) tax preparation specialists. D) All of these answer choices are correct Answer: D Diff: 1 Learning Objective: 5.1 Chapter Preview Section Reference: What is Data? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 2) Data consists of ________ about a person or object collected for reference or analysis. A) grade point average B) facts and statistics C) height and weight D) age and profession Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 3) For accounting purposes, a system comprises how many data elements? A) Five B) Four C) Six D) Seven Answer: C Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Elements AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

4) Which is one of the six data elements that comprise an IT system? A) Server B) File C) Computer D) Entity Answer: B Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Elements AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 5) Databases are composed of A) tables. B) files. C) attributes. D) bits. Answer: B Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Elements AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 6) Which of the following is TRUE of structured data? A) Structured data is easily stored in tables. B) Structured data is stored using more storage space. C) Structured data doesn't fit into a traditional table. D) Structured data is difficult to manage. Answer: A Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Types AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

7) An example of unstructured data is A) addresses. B) last names. C) PDF files. D) telephone numbers. Answer: C Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Types AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 8) How are meta tags used to identify unstructured data? A) Meta tags are used as the primary key. B) Meta tags are key words that help describe the content. C) Meta tags are used as foreign keys. D) Meta tags represent tables in the database. Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Types AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 9) What is an example of Web 2.0? A) Social media websites B) Podcasts C) User created wiki D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Web 2.0 AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

10) Choose an example of unstructured data from the list below. A) Sales order transaction B) Social media post C) Credit card payment D) Employee record Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Web 2.0 AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 11) Most business decisions are based on only ________ of the company's available data. A) 10% B) 20% C) 30% D) 40% Answer: B Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Web 2.0 AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 12) Choose examples of Web 2.0 from the list below. A) SAP S/4 Hana and Oracle Database B) Oracle Database and Microsoft SQL*Server C) Facebook and Podcasts D) Microsoft SQL*Server and Podcasts Answer: C Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Web 2.0 AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

13) Choose from the following list the best definition of byte. A) A binary digit; the individual 1 or 0 that is seen in binary code B) A group of bits, usually in clusters of eight, that represent alphabetic and numeric characters or symbols C) A group of related fields that describe an individual instance of an entity D) A group of records for one specific entity Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Elements AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 14) Choose the term that best describes static data? A) Static data may change after it is recorded. B) Static data is very difficult to record. C) Static data does not change once it is created. D) Static data is like a website. Answer: C Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data that Changes AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 15) Choose the term that best describes dynamic data. A) Dynamic data may change after it is recorded. B) Dynamic data is very difficult to record. C) Dynamic data does not change once it is created. D) Dynamic data is like a book. Answer: A Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data that Changes AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

16) A Field is a group of A) files. B) bytes. C) bits. D) records. Answer: B Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Elements AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 17) A Record is a group of A) files. B) bytes. C) bits. D) fields. Answer: D Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Elements AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 18) A File is a group of A) records. B) bytes. C) bits. D) fields. Answer: A Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Elements AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

19) Choose the best example of unstructured data from the following list. A) Class Grades B) Customer Names C) Photographs D) Telephone Numbers Answer: C Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Types AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 20) Choose the best example of structured data from the following list. A) Emails B) Customer Names C) Photographs D) Videos Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Types AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 21) What led to the increase of unstructured data? A) The use of static data B) The birth of Web 2.0 C) The use of dynamic data D) The use of databases Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Types AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

22) All information and instructions (recall that software is a set of instructions that tells hardware what to do) are executed on a computer in A) binary code. B) SQL. C) HTML. D) JavaScript. Answer: A Diff: 1 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 23) Choose the best description of a database. A) A database is several interconnected computers, machines, or operations. B) A database is software that acts as a bridge to applications. C) A database is a set of logically related files containing an organized collection of data that is accessible for fast searching and retrieval. D) A database is a program or group of programs designed for end-users. Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 24) Choose the most common type of database that you are likely to encounter. A) Hierarchical B) Relational C) Cloud D) Object Oriented Answer: B Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

25) Choose the term that best describes a Database Management System (DBMS). A) A DBMS is a logical diagram of a database's structure and organization. B) A DBMS is a request for data that is stored within a database. C) A DBMS is a system that manages a database and retrieves data for a user. D) A DBMS is the capability of the database to manage increasing demands. Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 26) Choose the term that best describes queries. A) Queries are a logical diagram of a database's structure and organization. B) Queries are requests for data that is stored within a database. C) Queries are a system that manages a database. D) Queries are the capability of the database to manage increasing demands. Answer: B Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 27) Choose the term that best describes a schema. A) A schema is a logical diagram of a database's structure and organization. B) A schema is a request for data that is stored within a database. C) A schema is a system that manages a database. D) A schema is the capability of the database to manage increasing demands. Answer: A Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

28) Choose the term that best describes database scalability. A) Database scalability is the capability of the database to handle fewer tables. B) Database scalability is the capability of the database to produce fewer errors. C) Database scalability is the capability of the database to manage increasing demands. D) Database scalability is the capability of the database to log more system messages. Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 29) How can a database be scaled vertically? A) A database can be scaled vertically by removing capacity from the existing machine. B) A database can be scaled vertically by consolidating the database onto a single machine. C) A database can be scaled vertically by adding more capacity to the existing machine. D) A database can be scaled vertically by spreading the database across multiple machines that work together to manage the database. Answer: C Diff: 3 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 30) How can a database be scaled horizontally? A) A database can be scaled horizontally by removing capacity from the existing machine. B) A database can be scaled horizontally by consolidating the database onto a single machine. C) A database can be scaled horizontally by adding more capacity to the existing machine. D) A database can be scaled horizontally by spreading the database across multiple machines that all work together to manage the database. Answer: D Diff: 3 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

31) Choose the term that best describes a production database. A) A database used for collecting project data B) A database that is connected to an information system used for business process transactions C) A database that collects test transactions for analysis D) A database that is connected to a census data collection system Answer: B Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 32) Choose the two types of data stores that you are most likely to encounter in your career. A) Databases and data warehouses B) Databases and data lakes C) Data lakes and data warehouses D) Databases and data mines Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Types of Data Storage AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 33) Why don't users running complex queries typically use a production database? A) A complex query would run too fast in the production database. B) A complex query run against the production database would likely speed it up. C) A complex query run against the production database would likely slow it down. D) A complex query run against the production database would return incomplete results. Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Types of Data Storage AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

34) What is one of the key benefits of a data lake? A) Easy to implement B) Structured data C) Cost-effective D) Easy to use Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Types of Data Storage AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 35) Data warehouses are designed specifically for A) speed. B) all of the data in a company. C) reporting and data analysis. D) storage. Answer: C Diff: 1 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Types of Data Storage AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 36) Users who access data in a data lake need to know what they are looking for and how to transform it into a useable format. For this reason, data lakes require someone with a deep technical knowledge of data like a A) data scientist. B) user. C) programmer. D) system administrator. Answer: A Diff: 1 Learning Objective: 5.2 Explain how data is stored Section Reference: How is Data Stored? / Types of Data Storage AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

37) Choose the term that best describes how Relational databases organize data. A) Relational databases organize unstructured data in interrelated tables. B) Relational databases organize structured data in interrelated tables. C) Relational databases organize structured data in unrelated tables. D) Relational databases organize unstructured data in unrelated tables. Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 38) Data within Relational databases are stored in A) bytes. B) fields. C) files. D) tables. Answer: D Diff: 1 Learning Objective: 5.2 Explain how data is stored Section Reference: Introduction to Databases AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 39) A Database Management System (DBMS) includes a user interface. Choose the best term to describe a user interface. A) A user interface is a screen where a user logs in and interacts with the computer system. B) A user interface is a program that loads data into the databases. C) A user interface is a screen where a user can monitor database performance. D) A user interface is a program for optimizing database performance. Answer: A Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

40) Choose one of the commonly used database querying languages. A) SDL B) SQL C) DML D) DDL Answer: B Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Introduction to Databases AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 41) ________ databases are the backbone of a company's operations. A) Sandbox B) Test C) Production D) Development Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Introduction to Databases AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 42) Data in its raw format, before it is cleaned, aggregated, or filtered, is stored in a A) data lake. B) data warehouse. C) production database. D) test database. Answer: A Diff: 1 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

43) Large companies implement data lakes to store all of their data. Therefore, data lakes use a(n) ________ structure. A) fixed B) agile C) anchored D) nimble Answer: B Diff: 1 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 44) Data lake implementation is an enterprise-wide initiative. Companies often set up dedicated teams for these implementations and the project can take A) months. B) weeks. C) years. D) days. Answer: C Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 45) What is a subset of a data warehouse that is designed for a specific business function? A) A database B) A data pond C) A data lake D) A data mart Answer: D Diff: 1 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

46) Choose the types of data stored in a data lake. A) Structured and unstructured data from across the company B) Historical data in a structured format C) Unstructured data from a customer D) Structured data from a vendor Answer: A Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 47) Which of the following is one of the five characteristics of big data? A) Vacancy B) Variety C) Vastness D) Vitality Answer: B Diff: 1 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 48) Apply your knowledge of the five characteristics of big data and choose the term below that best defines the velocity of data. A) Velocity is the diversity of data created or collected. B) Velocity is the accuracy and truthfulness of the data. C) Velocity is the quantity and scale of data generated. D) Velocity is the speed at which data is generated. Answer: D Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Communication Bloom's: Application AICPA: AC: Technology and Tools

49) Choose the term that best describes the variety of data. A) Variety is the diversity of data created or collected. B) Variety is the accuracy and truthfulness of the data. C) Variety is the quantity and scale of data generated. D) Variety is the speed at which data is generated. Answer: A Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Communication Bloom's: Application AICPA: AC: Technology and Tools 50) Choose the term that best describes the veracity of data? A) Veracity is the diversity of data created or collected. B) Veracity is the accuracy and truthfulness of the data. C) Veracity is the quantity and scale of data generated. D) Veracity is the speed at which data is generated. Answer: B Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 51) Apply your knowledge of the five characteristics of big data and choose the term below that best defines the volume of data. A) Volume is the diversity of data created or collected. B) Volume is the accuracy and truthfulness of the data. C) Volume is the quantity and scale of data generated. D) Volume is the speed at which data is generated. Answer: C Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Communication Bloom's: Application AICPA: AC: Technology and Tools

52) Choose the name that best describes extremely large and complex data sets that can be analyzed using recent technological innovations to reveal patterns and associations. A) Production databases B) Test databases C) Big data D) Data lakes Answer: C Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 53) A typical text message is less than one A) terabyte. B) gigabyte. C) megabyte. D) kilobyte. Answer: D Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: Volume AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 54) Most emails allow up to 25 ________ of attached files. A) Megabytes B) Kilobytes C) Gigabytes D) Terabytes Answer: A Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: Volume AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

55) Choose from the following list the best definition of confirmation bias. A) Asking advice from a cross sample of people B) Asking advice only from people who share our world view C) Asking advice only from people who don't share our world view D) Asking advice from everyone Answer: B Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: Veracity AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 56) Choose the term that best defines the value of data. A) Value is the diversity of the data. B) Value is the accuracy and truthfulness of the data. C) Value is the quantity and scale of data generated. D) Value is the usefulness of the data. Answer: D Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: Value AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 57) Choose from the following list one of the five characteristics of big data. A) Vastness B) Vital C) Vanity D) Value Answer: D Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: Value AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

58) Choose from the following list one of the five characteristics of big data. A) Vastness B) Velocity C) Vital D) Vanity Answer: B Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: Velocity AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 59) Data analytics has transformed the accounting profession. Employers are willing to make the technological investment but struggle to find accounting professionals who have the necessary technical skills. Data analytics can help accounting professionals A) work faster and better at higher cost. B) work slower and better at lower cost. C) work faster and better at lower cost. D) work slower and better at higher cost. Answer: C Diff: 1 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 60) Historically, audit testing relied on population sampling. Due to the manual process of testing, auditors were unable to test entire populations. Auditors instead A) selected random samples. B) selected the entire population. C) selected roughly 100 samples. D) selected the first 50 samples. Answer: A Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Audit and Compliance AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

61) Choose the name of Ernest & Young's audit data analytics system from the following list. A) Radon B) Helix C) Square D) Triangle Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Audit and Compliance AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 62) Choose from the following list the appropriate area in which financial accountants focus. A) Performance measurement and analysis B) Collecting and paying sales taxes C) Ensuring compliance with regulatory requirements D) Auditing transactions Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Financial Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 63) Choose from the following list the appropriate area in which management accountants focus. A) Preparing and analyzing financial statements B) Managing financial accounting information systems C) Performance measurement and analysis D) Advising business leaders on best practices and regulatory requirements Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Managerial Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

64) Choose from the following list the appropriate area in which tax accountants focus. A) Managing financial accounting information systems B) Cost management and reporting C) Ensuring compliance with regulatory requirements D) Collecting and paying sales taxes Answer: D Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Tax Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 65) Choose the term that best defines a tax data hub. A) A website for getting answers to tax-related questions B) A specialized database designed to provide a centralized store of tax-related data C) A portal to provide centralized access to tax-related data D) A client-server based system for preparing taxes Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Tax Accounting AACSB: Communication Bloom's: Application AICPA: AC: Technology and Tools 66) Why should accountants understand the difference between structured and unstructured data? A) Structured data is difficult to collect and unstructured data is easy of collect. B) Structured and unstructured data may be used by accountants to support decision making and analysis. C) Unstructured data is often represented with pictures. D) Structured data contains all the data of an organization. Answer: B Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Types AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools

67) Choose which of the 5Vs of big data is most important for accounting professionals. A) Value B) Veracity C) Volume D) Velocity Answer: A Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 68) Arrange the hierarchy of data elements in their correct order. A) Databases, Fields, Files, Bytes, Bits and Records B) Bytes, Bits, Records, Fields, Files and Databases C) Records, Files, Databases, Bits, Bytes and Fields D) Databases, Files, Records, Fields, Bytes and Bits Answer: D Diff: 3 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Elements AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 69) Choose from the following list for the best definition of data analytics. A) Data Analytics is the process of transforming raw data into useful information. B) Data Analytics is the process of transforming information into raw data. C) Data Analytics is the process of transforming decisions into raw data. D) Data Analytics is the process of transforming decisions into information. Answer: A Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

70) Choose from the following list one of the four most widely accepted categories for data analysis. A) Problematic Analytics B) Predictive Analytics C) Historical Analytics D) Cursory Analytics Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 71) Choose from the following list of questions what Descriptive Analytics tell us? A) What is happening? B) Why did it happen? C) What is likely to happen? D) How should we act? Answer: A Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 72) Choose from the following list of questions what Diagnostic Analytics tell us? A) What is happening? B) Why did it happen? C) What is likely to happen? D) How should we act? Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

73) Choose from the following list of questions what Predictive Analytics tell us? A) What is happening? B) Why did it happen? C) What is likely to happen? D) How should we act? Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 74) Choose from the following list of questions what Prescriptive Analytics tells us? A) What is happening? B) Why did it happen? C) What is likely to happen? D) How should we act? Answer: D Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 75) Choose the best definition of a Dashboard. A) Dashboards are interactive, real time reports. B) Dashboards are static, batch reports. C) Dashboards are theoretical, external reports. D) Dashboards are static, internal questions. Answer: A Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

76) Choose the best definition of Visualization. A) Visualizations are verbal representations of information and data. B) Visualizations are graphical representations of information and data. C) Visualizations are graphical representations of questions asked. D) Visualizations are the verbal representations of questions. Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 77) Some of the most valued data analytic skillsets, employers look for, in accounting professionals include: Choose all that apply. A) Knowledge of Word processing and email software tools B) Creative thinking skills C) Ability to use legacy tools, including Excel and Access D) Understanding of historical facts E) Understanding of basic data elements and structures Answer: C, E Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 78) As accounting professionals, data analytics help us: Choose all that apply. A) Generate lower profit margins B) Work faster and better and at lower cost C) Work faster and better and at higher cost D) Get quicker access to information for more timely insights or decision-making E) Get quicker access to data for less timely insights or decision-making Answer: B, D Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

79) Choose from the following list of responsibilities for external auditors, internal auditors, and fraud examiners. A) Advising business leaders on best practices and regulatory requirements B) Dismissing risks, patterns and trends in processes and data C) Performing audit tests to decrease assurance over selected data D) Learning state-of-the-art practices to advise external clients Answer: A Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Audit and Compliance AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 80) Choose from the following list of responsibilities for financial accountants. A) Managing geographic information systems B) Preparing and analyzing financial statements C) Ignoring compliance with regulatory requirements D) Preparing and analyzing game statistics Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Financial Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 81) Choose from the following list of responsibilities for management accountants. A) Managing financial accounting information systems B) Preparing and analyzing financial statements C) Cost management and reporting D) Attending to tax audit issues Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Managerial Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

82) Choose from the following list of responsibilities for tax accountants. A) Managing financial accounting information systems B) Preparing financial statements to minimize tax returns C) Performance measurement and analysis D) Attending to tax audit issues Answer: D Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Tax Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 83) A financial accountant has been asked to predict future financial performance. Which category of data analysis would this type of work be categorized as? A) Descriptive B) Diagnostic C) Predictive D) Prescriptive Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Financial Accounting AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 84) An internal auditor has been asked to calculate an allowance for doubtful accounts. Which category of data analysis would this type of work be categorized as? A) Descriptive B) Diagnostic C) Predictive D) Prescriptive Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Audit and Compliance AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools

85) If an analyst asks: "What is happening?", he or she is asking which category of data analysis? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: A Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 86) If an analyst asks: "Why did it happen?", he or she is asking which category of data analysis? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: B Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 87) If an analyst asks: "What is likely to happen?", he or she is asking which category of data analysis? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: C Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools

88) If an analyst asks: "How should we act?", he or she is asking which category of data analysis? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: D Diff: 2 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 89) Analyze the differences between structured data and unstructured data. Give examples. Answer: Structured data is organized and fits nicely into tables. Unstructured data does not fit into a traditional database table. Structured Data can be stored in a fixed field of a record or file. Unstructured data is any data that is not stored in a fixed field of a record or file. An example of Structured data is a list of names with phone numbers. An example of unstructured data is pictures of your friends. Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Data Types AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 90) Compare and contrast structured and unstructured data. Answer: Structured Data can be stored in a fixed field of a record or file. Unstructured data is any data that is not stored in a fixed field of a record or file. Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Types AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 91) Compare and contrast data lakes and data warehouses. Answer: Data in its raw format, before it is cleaned, aggregated, or filtered, is stored in a data lake. A data warehouse is designed specifically for reporting and data analysis and contains data that is already transformed. Diff: 3 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools 30

92) How is data organized in a relational database? Answer: Relational databases organize structured data in interrelated tables which are connected by similarities between tables. Diff: 2 Learning Objective: 5.2 Explain how data is stored Section Reference: Types of Data Storage AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 93) Compare and contrast static and dynamic data. Answer: Static data doesn't change once it's created. Dynamic data may change after it is recorded and must be updated regularly. Diff: 2 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data that Changes AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 94) Properly arrange the following data elements that comprise an IT system in their proper hierarchy from largest to smallest. • Bits • Files • Records • Bytes • Fields • Databases Answer: Proper Hierarchy: • Databases • Files • Records • Fields • Bytes • Bits Diff: 3 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: Data Elements AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

95) Describe the "value" characteristic of big data with respect to limited resources in a company. Answer: Value is the worth of that data from the decision-making perspective. Value is arguably the most important of the 5Vs because data isn't useful to a business unless it can be converted into valuable information. If a company has limited resources it should consider if the data reliable, of high quality and enough before investing time and money in its collection, storage, and analysis. Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: What Makes Data "Big Data"? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 96) Discuss the five characteristics of big data. Provide an example for each. Answer: The five characteristics of big data are Volume, Variety, Value, Velocity and Veracity. Volume is the quantity and scale of data generated every second. Variety is the diversity of data created or collected. Velocity is the speed at which data is generated. Veracity is the accuracy and truthfulness of the data. Value is how valuable to data is to the business. Diff: 2 Learning Objective: 5.3 Summarize the five characteristics of big data Section Reference: All AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 97) Matching: Match the term with the appropriate definition. Answer: Correct matches given Diff: 3 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Communication Bloom's: Synthesis AICPA: AC: Technology and Tools 98) Recent tax legislation has brought what changes for Tax Accountants? Answer: Sales tax compliance laws are always changing. Online sales by companies like amazon have complicated the collection of sales taxes as these companies must now collect sales taxes for sales in different states, all with their own sales tax rates. Diff: 3 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? / Tax Accounting AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

99) Ezra, a recent accounting graduate with data analytics skills, was hired by Hometown Accounting. The owner of Hometown hired Ezra for his combination of accounting and data analytics skills expecting Ezra to help in the audit department. Hometown has not used data analytics in audits in the past but know that it can be of benefit. How can Ezra use data analytics to improve the manual audit process that Hometown is currently using, and what benefits will data analytics provide in the audit process? Answer: Ezra can set up data analytics to allow Hometown to test the entire population of data instead of the sampling used by manual audit processes. This includes both descriptive and diagnostic three-way matches for purchasing where fraud and control deficiencies are often present. Using data analytics for audits will allow Hometown to provide a higher level of assurance to clients. Diff: 3 Learning Objective: 5.4 Apply data analytics to accounting problems Section Reference: How Do Accounting Professionals Use Data? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 100) Prepare a short narrative on how a system user can use captcha to give meaning to unstructured data. Answer: The captcha presents the user with an image and asks the user to identify all squares that contain a certain image. By performing this exercise, the user is helping to turn unstructured data, the pictures, into structured data. Diff: 3 Learning Objective: 5.1 Differentiate between data elements and data types Section Reference: What is Data? / Web 2.0 AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

Accounting Information Systems, 1e (Savage) Chapter 6 Systems and Database Design 1) Systems development projects can involve risks associated with A) incompatibility between the existing IT infrastructure and the system being developed. B) inadequate design or testing resulting in a final product that functions poorly. C) insufficient end-user training that yields poor adoption of the new system. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 2) The systems development life cycle (SDLC) A) is a project management framework with stages for creating and deploying new systems. B) includes six stages that cover pre-implementation, build, and go-live and beyond. C) provides a standardized process that organizations should use as specified for positive results. D) focuses on the design and development of a new system and which is completed when the system is implemented. Answer: A Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 3) The first stage of a SDLC is the A) planning stage. B) analysis stage. C) design stage. D) development stage. Answer: A Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

4) What is the term associated with a mockup of the screen that will allow users to interact with the system? A) Systems model B) Conceptual design C) Graphical user interface D) Architecture model Answer: C Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 5) The new system moves to production and goes live for company use in the A) development stage. B) implementation stage. C) design stage. D) maintenance stage. Answer: B Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 6) The planning stage of the SDLC includes A) creating a project plan. B) a feasibility study. C) identifying necessary resources. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

7) During the planning phase, a project plan is created that A) determines system requirements. B) analyzes the economic factors that will impact the project. C) decides whether to build or buy the system. D) identifies the scope of the system and project goals. Answer: D Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 8) Which role in the SDLC includes representatives from multiple business areas and is responsible for approval and prioritization of projects? A) IT steering committee B) End users C) Lead systems analyst D) Core application programmers Answer: A Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 9) Which role in the SDLC is responsible for developing the plan for a systems' functionality and logic? A) IT steering committee B) End users C) Lead systems analyst D) Core application programmers Answer: C Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

10) Which role in the SDLC is responsible for identifying business needs and proposing systems to address those needs? A) IT steering committee B) End users C) Lead systems analyst D) Core application programmers Answer: B Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 11) What step in the planning phase occurs to determine if the proposed project is realistic? A) Project plan B) Project scope C) Feasibility study D) Technical study Answer: C Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 12) During the analysis stage of the SDLC, business requirements for a project are determined by A) the IT steering committee reviewing the feasibility study. B) systems analysts meeting with end users. C) the lead system analyst reviewing the project plan. D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

13) Amar is a new systems analyst with Ally Corporation. Amar is tasked with reviewing a requirements definition document for Ally. Which of the following should Amar suggest that Ally should have dealt with before creating the requirements definition? A) Documentation of the final project goal B) Steps needed to achieve the project goal C) An outline of the overall system plan D) Risk and reward list for cloud-based versus local system Answer: D Diff: 3 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 14) The requirements definition that is completed in the analysis stage of the SDLC gets translated during the design stage into A) a systems model. B) a data flow diagram. C) technical specifications. D) a project flow chart. Answer: C Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 15) Davidson Equipment Company is working through the SDLC framework in an effort to successfully build and implement a new parts inventory system. Davidson is unsure what technology will be needed for the system. What element in the design stage needs to be completed to resolve this issue for Davidson? A) Conceptual design B) Technical architecture specifications C) Systems model D) Graphical user interface Answer: B Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

16) Davidson Equipment Company is working through the SDLC framework in an effort to successfully build and implement a new parts inventory system. Davidson is concerned about how the parts inventory system will work with the existing sales system. What element in the design stage needs to be completed to resolve this issue for Davidson? A) Conceptual design B) Technical architecture specifications C) Systems model D) Graphical user interface Answer: C Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 17) At what stage in the SDLC are programmers responsible for testing code? A) Development stage B) Testing stage C) Design stage D) Analysis stage Answer: A Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 18) Why is it important for future accountants to study the SDLC? A) The CPA exam reflects the increased expectations that accounting professionals understand technology. B) Accountants, as end users of accounting systems, often participate in determining requirements for projects. C) Accountants who progress in their career to a director level or higher will see and work with departments throughout the organization, including technology. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

19) Testers evaluate systems to ensure that A) the system meets requirements. B) the systems work together. C) the systems accomplish their purpose. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 20) Dana invites a few customers to test the new parts system at Davidson Equipment. The customers are given a list of tasks to complete on the new system. Observing the testing process and results allows Dana to verify that the system meets the expectations of the customers. What kind of testing did Dana implement? A) Systems model testing B) User acceptance testing C) User verified testing D) Systems congruence testing Answer: B Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 21) Which implementation method moderates risk by implementing a new system with only a small group of users before going live for the entire company? A) Direct cutover B) Parallel implementation C) Phased implementation D) Pilot implementation Answer: D Diff: 1 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

22) Which of the following statements about the Waterfall systems development methodology are TRUE? A) The Waterfall method must be executed in a linear fashion with each step overlapping the next. B) The Waterfall method uses the seven stages of the SDLC framework and is not customizable. C) Each stage in the Waterfall method is completed before continuing to the next stage. D) The first stage in the Waterfall method is planning; the final stage is implementation. Answer: C Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 23) Why have other development methodologies increased in popularity over the Waterfall method in recent years? A) The linear nature of the Waterfall method makes it difficult to respond to risks and changes. B) Companies tend to avoid traditional methods in favor of newer methodologies. C) Waterfall is ineffective as a SDLC methodology and was only used in the past because it was the only option. D) Waterfall is ineffective because it cannot be customized for the specific project. Answer: A Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 24) Risk is created using the Waterfall method when developers do NOT receive feedback until project completion because of A) changes in user expectations. B) changes in requirements. C) changes in business processes. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

25) Which of the following statements concerning the Agile systems development methodology is TRUE? A) Agile involves end-users throughout the SDLC. B) Agile utilizes an iterative development process. C) Agile employs multiple short cycles of work. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 26) Josh is a leader on the new Smart Technology software project. Josh decided on Agile as the systems development methodology of choice for the project. At which stage in the SDLC should Josh include end users? A) Analysis B) Design C) Testing D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 27) A focus of the Agile software development methodology is A) encouraging collaboration between stakeholders and programmers. B) using strong leaders on teams. C) creating well-defined requirements that do not need changes during development. D) All of these answer choices are correct. Answer: A Diff: 3 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

28) What is the most popular project management style for implementing Agile methodology? A) Waterfall B) SDLC C) Scrum D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 29) Which of the following statements about scrum is TRUE? A) Scrum is a set of project management practices that focus on long-term planning. B) Scrum breaks down a systems development project into short cycles of work. C) Scrum development teams are led by the business product owner. D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 30) What is a scrum master? A) Champion of the core development team B) Someone who clears obstacles from the core team's path C) Someone who ensures focus on Agile principles D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

31) Which of the following statements about scrum timeboxing is correct? A) Everything is subject to change in an Agile project except the timeboxing. B) Timeboxing includes the use of sprints to complete multiple iterations on a single SDLC stage in two weeks. C) Timeboxing prevents scope creep by not addressing end-user suggestions until the end of the SDLC. D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 32) Which of the following statements about scrum sprints is TRUE? A) Sprints are single iterations of the systems project. B) Sprints may include multiple SDLC stages. C) Sprints are often two weeks long. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 33) The term associated with a project that evolves during development beyond the original specifications is A) timeboxing. B) sprint. C) scope creep. D) artifact. Answer: C Diff: 1 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

34) Adrian, a scrum master for the company's new project, receives suggestions for features from end users. Which scrum artifact is the appropriate place for Adrian to log the end-user feature requests? A) Product backlog B) Sprint backlog C) Product increment D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 35) Adrian, a scrum master for the company's new project, organized product features by priority and has assembled the list of what the core development team will work on during the next iteration. What scrum artifact is the appropriate item for this list of current tasks for the development team? A) Product backlog B) Sprint backlog C) Product increment D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 36) At the end of the current sprint, Astrid, the product owner, will seek feedback by presenting which scrum artifact to the end users? A) Product backlog B) Spring backlog C) Product increment D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 12

37) Azle Corporation has a new software development project and is evaluating methodologies to determine the best fit for their current situation. Azle employees are currently working from home with some in remote areas with little Internet access. The project has clearly defined requirements and a firm budget. Which software development methodology would you recommend to Azle? A) Waterfall B) Agile C) Scrum D) All of these answer choices are correct. Answer: A Diff: 3 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 38) Examine then select the correct order of data elements by size from smallest to largest. A) Bit, byte, file, field, record, database B) Bit, byte, field, record, file, database C) Byte, bit, field, record, file, database D) Byte, bit, file, field, record, database Answer: B Diff: 2 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 39) Which relational database term is associated with a group of related fields that describe an individual instance of an entity? A) Field name B) Record C) File D) Database Answer: B Diff: 1 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

40) Which relational database term is synonymous with file and is a group of records for a specific entity? A) Field name B) Record C) Table D) Database Answer: C Diff: 1 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 41) In the diagram below, the shaded row represents a FirstName Willie Waylon

MiddleInitial H A

LastName Nelson Jennings

Birthdate April 29, 1933 June 15, 1937

PhoneNumber 123-456-7890 987-654-3210

A) field. B) record. C) column. D) file. Answer: B Diff: 2 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 42) Which type of database stores structured data in two-dimensional tables? A) Relational B) Object-oriented C) NoSQL D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

43) In a relational database, data is stored in tables of related data. The database for Motorcycle Parts Warehouse has the following tables: Items, Employees, Sales, and Customers. Into which table would you insert a field to store the delivery address used to ship a customer their order? A) Items B) Employees C) Sales D) Customers Answer: D Diff: 3 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools 44) An advantage that object-oriented databases have over relational databases are A) that the two-dimensional structure is easy to understand. B) the ability to store both structured and unstructured data. C) its wide adoption for accounting systems. D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 45) Object-oriented databases group similar objects together in a A) class. B) record. C) variable. D) file. Answer: A Diff: 1 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

46) Attributes of an object in an object-oriented database are referred to as A) classes. B) records. C) variables. D) files. Answer: C Diff: 1 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 47) NoSQL databases store data A) individually with key-values. B) in rows and columns. C) in classes. D) in schemas. Answer: A Diff: 1 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 48) What advantages does a NoSQL database have over an object-oriented and relational database? A) NoSQL databases store data in objects that can handle the high velocity of big data generated. B) NoSQL databases allow for faster processing and flexible storage for big, unstructured data. C) NoSQL databases allow for faster processing of unstructured data by using rows and columns to quickly locate data. D) NoSQL databases store data using key-values to categorize into classes and objects for speed of retrieval. Answer: B Diff: 2 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

49) Campbell Marketing Solutions (CMS) has grown in the past few years and is considering upgrading their current database management system. The data that CMS would like to store in the new database includes social media posts, photographs, and videos, though the type of data seems to continually change. CMS knows that they will need to scale often and retrieve large amounts of various data. Which kind of database should CMS use? A) Relational B) Object-oriented C) NoSQL D) Any of these database models could work for CMS. Answer: C Diff: 3 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools 50) Tables in a relational database must be connected in a meaningful order to allow for the retrieval of information. The design process for a database is referred to as A) database diagraming. B) entity modeling. C) data modeling. D) entity diagramming. Answer: C Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 51) The first step in data modeling is to identify the entities or tables that the database will need to capture in a A) conceptual ERD. B) logical ERD. C) physical ERD. D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

52) How do database designers identify the connections between entities? A) Database designers consult with end users to understand how data is used. B) Database designers analyze business events. C) Database designers write statements of relationships based on business events. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 53) Alice, a recent IT graduate, working in the database department is tasked with implementing the newly designed database for the company. Which type of ERD does Alice need to complete the task of database implementation? A) Conceptual ERD B) Logical ERD C) Physical ERD D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 54) Alfred took the conceptual ERD that Alice created and added field names for each table. Alfred's work resulted in a A) physical ERD. B) logical ERD. C) conceptual ERD. D) database ERD. Answer: B Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

55) Which of the following statements is FALSE? A) Data redundancy occurs when the same piece of data is stored in more than one place. B) Data redundancy could result in data integrity issues. C) Relational databases use unique IDs and relationships to eliminate data redundancy. D) Relational databases use cardinality and business rules to eliminate data redundancy. Answer: D Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 56) Data integrity involves A) managing data accuracy in a database. B) managing consistency of data in a database. C) ensuring management receives quality information for decision making from a database. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 57) Relational databases are designed to reduce redundancy by A) not allowing more than 5 fields per table. B) ensuring that the primary key is not null. C) referencing needed data already stored in a different table. D) storing duplicate data in foreign keys. Answer: C Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

58) The unique IDs that identify every record in a relational database are referred to as A) keys. B) data. C) cardinals. D) nulls. Answer: A Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 59) The unique ID for a table is the A) primary key. B) foreign key. C) referential integrity. D) entity integrity. Answer: A Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 60) When a primary key is inserted into another table to create a relationship, the key in the related table is referred to as a A) primary key. B) foreign key. C) relationship key. D) unique key. Answer: B Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

61) Referential integrity states that A) the primary key cannot be null. B) a foreign key cannot be inserted into a table unless it already exists as a primary key. C) relational databases must reduce redundancy. D) relational databases must manage data integrity, accuracy, and consistency. Answer: B Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 62) Entity integrity requires that the A) foreign key exists as a primary key in the related table. B) primary key exists as a foreign key in the related table. C) primary key cannot be null. D) primary key cannot be unique. Answer: C Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 63) Select the term that refers to the numeric relationship between data in one table and data in another table. A) Primary key B) Foreign key C) Referential integrity D) Cardinality Answer: D Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

64) Which kind of cardinality constraint identifies whether the relationship is optional or mandatory? A) Plurality B) Optionality C) Referentiality D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 65) Which cardinality type is represented by this crow's foot cardinality notation?

A) One and only one B) No more than one C) At least one D) Any Answer: D Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

66) Which cardinality type is represented by this crow's foot cardinality notation?

A) One and only one B) No more than one C) At least one D) Any Answer: A Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 67) Julian is designing the physical ERD for a new database. What element must Julian include? A) Tables B) Relationships C) Keys D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 68) SQL stands for A) standard query language. B) standard question language. C) structured query language. D) structured question language. Answer: C Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

69) Which type of SQL language changes the structure of the database? A) Data definition language B) Data manipulation language C) Data control language D) Data querying language Answer: A Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 70) Which type of SQL language grants or removes access from a database user? A) Data definition language B) Data manipulation language C) Data control language D) Data querying language Answer: C Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 71) Which type of SQL language interacts with data manipulation language when transactions are processed within the database and saved or undoes pending transactions? A) Data definition language B) Data manipulation language C) Data control language D) Transaction control language Answer: D Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

72) Dikshya writes a SELECT command to retrieve data from the database. Which type of SQL language is Dikshya using? A) Data definition language B) Data manipulation language C) Data control language D) Data querying language Answer: D Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 73) You need to write a command to update the price in the products table. Which type of SQL language do you need to use? A) Data definition language B) Data manipulation language C) Data control language D) Data querying language Answer: B Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 74) You need to write a command to retrieve all the records in the Products table. Which of the following syntax is the correct command? A) SELECT all FROM Products B) SELECT * FROM Products C) RETRIEVE all FROM Products D) RETRIEVE * FROM Products Answer: B Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

75) You need to write an SQL query to retrieve CustomerFirstName, CustomerLastName, and CustomerEmailAddress from the Customer table for all customers who list "OK" as their state (field name for state is CustomerState). Which SQL statement will yield the results that you need? A) SELECT CustomerFirstName, CustomerLastName, CustomerEmailAddress FROM Customer WHEN CustomerState IS 'OK' B) SELECT CustomerFirstName, CustomerLastName, CustomerEmailAddress FROM Customer WHEN CustomerState = 'OK' C) SELECT CustomerFirstName, CustomerLastName, CustomerEmailAddress FROM Customer WHERE CustomerState = 'OK' D) SELECT CustomerFirstName, CustomerLastName, CustomerEmailAddress FROM Customer WHERE CustomerState IS 'OK' Answer: C Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 76) You need to write a query to retrieve all customer information (table is 'Customer') for customers who do NOT live in Texas ('TX'). Which of the following SQL statements will work for your query? A) SELECT * FROM Customer WHERE State <> 'TX' B) SELECT * FROM Customer WHERE State not = 'TX' C) SELECT all FROM Customer WHERE State <> 'TX' D) SELECT all FROM Customer WHERE State not = 'TX' Answer: A Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

77) You need to write a query to retrieve all customer information (table is 'Customer') for customers who do NOT live in Texas ('TX') and the payment method (field is 'PaymentMethod') is American Express ('AMEX'). Which of the following SQL statements will work for your query? A) SELECT all FROM Customer WHERE State <> 'TX' and PaymentMethod = 'AMEX' B) SELECT all FROM Customer WHERE State not = 'TX' and PaymentMethod = 'AMEX' C) SELECT * FROM Customer WHERE State <> 'TX' and PaymentMethod = 'AMEX' D) SELECT * FROM Customer WHERE State not = 'TX' and PaymentMethod = 'AMEX' Answer: C Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 78) What type of operator allows a SELECT query to retrieve data from more than one related table in the database in one query? A) ALTER B) JOIN C) TRUNCATE D) WHERE Answer: B Diff: 2 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 79) Which type of JOIN operation retrieves record data with a join column value present only in the first table of the join and the results of the inner join? A) Inner join B) Left outer join C) Right outer join D) Full outer join Answer: B Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

80) The diagram shown is a visual representation of which type of join?

A) Inner join B) Left outer join C) Right outer join D) Full outer join Answer: D Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 81) The diagram shown is a visual representation of which type of join?

A) Inner join B) Left outer join C) Right outer join D) Full outer join Answer: C Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

82) A simple event database that tracks acts and the events where they perform has an ERD as illustrated. There are acts entered into the database that have not yet performed at any events. If a left outer join were performed to select all data from each table, what values would be displayed for the event fields for acts who have not yet performed at an event.

A) SELECT B) NULL C) The fields would be blank. D) There can be no empty fields. Answer: B Diff: 3 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

83) Referencing the ERD, what will this SQL command yield: SELECT * FROM Act WHERE ActGenre = 'Pop'

A) The results will include the ActID, ActName, and ActGenre for all Pop acts. B) The results will include the ActID, ActName, EventID, EventDate, EventTime, EventName, and EventLocation for all Pop acts. C) The results will include the ActID and EventID for all Pop acts. D) The results will include the ActID, ActName, and ActGenre for all Acts. Answer: A Diff: 3 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools

84) Which of the following queries would yield results that include all customers and all receipts for those customers, only if they have any receipts?

A) SELECT * FROM Customer RIGHT OUTER JOIN Receipt ON Customer.CustomerID = Receipt.CustomerID B) SELECT * FROM Customer LEFT OUTER JOIN Receipt ON Customer.CustomerID = Receipt.CustomerID C) SELECT * FROM Customer INNER JOIN Receipt ON Customer.CustomerID = Receipt.CustomerID D) SELECT * FROM Customer FULL OUTER JOIN Receipt ON Customer.CustomerID = Receipt.CustomerID Answer: B Diff: 3 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools 85) You need to write a SQL command to delete all the records in a table but NOT remove the table. Which command would you choose? A) DELETE B) TRUNCATE C) DROP D) ALTER Answer: B Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

86) You need to write a SQL command to undo all pending transactions that have NOT yet been saved to the database. Which command would you choose? A) DELETE B) TRUNCATE C) ROLLBACK D) REVOKE Answer: C Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 87) You need to write a SQL command to remove access permissions from a user. Which command would you choose? A) DELETE B) ALTER C) DROP D) REVOKE Answer: D Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 88) You need to write a SQL command to add a new record to a table. Which command would you choose? A) ADD B) INSERT C) ALTER D) CREATE Answer: B Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools

89) You need to write a SQL command to retrieve data from a database. Which command would you choose? A) CREATE B) COMMIT C) SELECT D) RETRIEVE Answer: C Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 90) You need to write a SQL command to delete an existing table and all records that it contains. Which command would you choose? A) DELETE B) DROP C) TRUNCATE D) ROLLBACK Answer: B Diff: 1 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 91) Compare and contrast the options of buying versus building a system. Answer: When an organization needs a new system, they must decide if buying or building the system is the best choice. Buying a system is quicker but lacks customization. A purchased system may offer customization but at increased costs that can add up. Building a system inhouse allows for complete customization. To build a system, the organization must have adequate management support to employ or hire those with the skill set to complete the project, prioritize the project, and invest both time and money to ensure successful completion. Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

92) Explain why all companies would not choose the lowest cost implementation method, direct cutover? Answer: The direct cutover method is the lowest cost because there is cost associated with maintaining both systems during the implementation process. The other three implementation methods, parallel, phased, and pilot, cost more as both systems are functional during the implementation. Having both systems running allows a company to test the new system before the old system is shut off. This greatly reduces risk to the company. Diff: 2 Learning Objective: 6.1 Outline the systems development life cycle (SDLC) stages. Section Reference: How Are Systems Developed? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 93) Antonio, a product owner for the company's new project, receives suggestions for features from end users each time he presents a new product increment. How should Antonio handle these suggestions? Answer: As product owner, Antonio has final authority on the prioritization of features. He should divide the feature suggestions into crucial, fundamental, and additional feature categories. Features that do not get implemented before the end of the project deadline, they become future updates instead of being part of the initial implementation. Diff: 2 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 94) Limestone Partners has been using the Waterfall systems development methodology for projects. The web development team for Limestone will begin a new project soon and would like to utilize an Agile methodology for the project. What considerations should Limestone management consider before allowing the web team to adopt the new methodology for its project? Answer: While Agile development methodologies are gaining in popularity, Limestone should consider how this change will affect the entire company. Best practice is to have the entire IT department or the entire company operating using the same development methodologies. Different units using different methodologies causes coordination difficulties on projects. Switching to Agile from Waterfall will require training and a culture shift for the organization. Diff: 3 Learning Objective: 6.2 Compare and contrast Agile and Waterfall systems development methods. Section Reference: Which Methodologies Should be Used? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

95) Diagram and categorize the following information into database selection considerations: 1. Data will be stored in a data warehouse. 2. Data captured will be structured in nature. 3. The system currently captures 1 megabyte of data per week. 4. In the next year, the system data capture will increase to 2 megabytes per week. 5. The current database can handle 25 concurrent database connections, but the new system could require the database to handle four times the concurrent connections. Answer: Database Selection Considerations Item number Consideration 1 Purpose 2 Data variety 3 Data volume 4 Data volume 5 Scalability Diff: 3 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 96) Allure Technologies assists small business owners with database storage technologies. Allure designs and hosts databases for many small businesses that include transaction data and large unstructured data used for analysis purposes. What kind of database management system will work best for Allure and why? Answer: Allure needs to implement an object-oriented database. An object-oriented database will allow Allure to store both structured and unstructured data in the same system. Allure cannot use a relational database as it will not handle the large unstructured data, and a NoSQL database is not ideal for storing transactional data. Diff: 3 Learning Objective: 6.3 Distinguish among different types of modern databases. Section Reference: Which Database Should Be Used? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools

97) Design a physical ERD for a two-table database to store student contact information and advisor information. The student table should include a student id, first and last name, phone number, and email address. The advisor table should include an advisor ID, first and last name, phone number, and email address. Each student has one advisor. Each advisor has many students. A student is assigned an advisor when entered into the system. Determine the following: • an appropriate primary key for each table and identify it • an appropriate foreign key to create the relationship and identify it • the cardinality of the relationship and note it using crow's foot notation Answer:

Diff: 3 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 98) Explain how business rules are used to define relationships in a database? Answer: Business rules are written statements that capture business events as they relate to the entities in a database. Business rules can help define tables, relationships, constraints, and the cardinality of the database. When one business rule is written from each perspective in a process, it can yield the plurality and optionality of a relationship between the two tables involved in the process. Diff: 2 Learning Objective: 6.4 Design relational database tables using an entity-relationship diagram (ERD). Section Reference: How Are Relational Databases Designed? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

99) Write a SQL statement to retrieve all of the records from the Acts table that have an ActGenre of 'Rock'.

Answer: SELECT * FROM Act WHERE ActGenre = 'Rock' Diff: 3 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools

100) Write a SQL command that will pull all data from the Act table and the Event table only where the Acts have performed at an event.

Answer: SELECT * FROM Act INNER JOIN Event ON Act.ActID = Event.ActID Diff: 3 Learning Objective: 6.5 Construct queries to retrieve data and answer business questions. Section Reference: How Do We Interact with Data in a Database? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools

Accounting Information Systems, 1e (Savage) Chapter 7 Emerging and Disruptive Technologies 1) According to the Rogers' Adoption Curve, ________% of businesses are Innovators. A) 2.5 B) 13.5 C) 34 D) 16 Answer: A Diff: 1 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 2) According to the Rogers' Adoption Curve, ________% of businesses are Early Adopters. A) 2.5 B) 13.5 C) 34 D) 16 Answer: B Diff: 1 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 3) According to the Rogers' Adoption Curve, ________% of businesses are Early Majority. A) 2.5 B) 13.5 C) 34 D) 16 Answer: C Diff: 1 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

4) According to the Rogers' Adoption Curve, ________% of businesses are Laggards. A) 2.5 B) 13.5 C) 34 D) 16 Answer: D Diff: 1 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 5) Choose from the following answers the best description of Innovators in the Rogers' Adoption Curve. A) Join immediately B) Join as soon as they see any benefit C) Join when there is widespread business benefit D) Join only when they must Answer: A Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 6) Choose from the following answers the best description of Early Adopters in the Rogers' Adoption Curve. A) Join immediately B) Join as soon as they see any benefit C) Join when there is widespread business benefit D) Join only when they must Answer: B Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

7) Choose from the following answers the best description of Early Majority in the Rogers' Adoption Curve. A) Join immediately B) Join as soon as they see any benefit C) Join when there is widespread business benefit D) Join only when they must Answer: C Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 8) Choose from the following answers the best description of Laggards in the Rogers' Adoption Curve. A) Join immediately B) Join as soon as they see any benefit C) Join when there is widespread business benefit D) Join only when they must Answer: D Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 9) As companies adopt technologies, the technologies move through phases. Choose from the answers below, to identify the correct order of the phases. A) Emerging, disruptive, widely used, adopted B) Adopted, widely used, disruptive, emerging C) Disruptive, emerging, widely used adopted D) Emerging, disruptive, adopted, widely used Answer: A Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Differentiating Emerging and Disruptive Technology AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

10) While emerging and disruptive technologies can increase efficiencies and make tasks easier, they also bring unpredictable risk to the business. The earlier the stage of adoption, the higher the risk, because unknown variables and a lack of history mean that companies cannot rely on past experiences to perform risk assessments. Choose from the list below, all the risks related to emerging and disruptive technologies. A) Business interruptions B) Security vulnerabilities C) Regulatory risk D) Financial gain E) Business continuity F) Business growth Answer: A, B, C Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 11) Choose, from the following list, a team that is well equipped to help a business manage the risks of emerging and disruptive technologies. A) Sales B) Financial Reporting C) Accounts Payable D) Internal Audit Answer: D Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

12) Choose, from the following list, a team that is well equipped to help a business manage the risks of emerging and disruptive technologies. A) Emerging Technology Center of Excellence B) Financial Reporting C) Accounts Payable D) Accounts Receivable Answer: A Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 13) Choose, from the following list, a team that is well equipped to help a business manage the risks of emerging and disruptive technologies. A) Sales B) Enterprise Risk Management C) Accounts Payable D) Accounts Receivable Answer: B Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 14) If the internal audit team is involved with a review before the new technology is adopted, we call it a A) before-implementation review. B) mid-implementation review. C) pre-implementation review. D) post-implementation review. Answer: C Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

15) If the internal audit team is involved with a review after the new technology is adopted, we call it a A) before-implementation review. B) mid-implementation review. C) pre-implementation review. D) post-implementation review. Answer: D Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 16) Choose the best definition of a Center of Excellence (COE) from the answers below. A) A specialized team in a company dedicated to providing unique support, usually technological, to the entire business B) A specialized team in a company dedicated to providing general support, usually technological, to a particular department C) A general team in a company dedicated to providing unique support, usually technological, to a particular department D) A general team in a company dedicated to providing general support, usually technological, to the entire business. Answer: A Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

17) Over time, companies adopt new technologies. Reviewing the illustration below, what stage of technology adoption is point X?

A) Generally Accepted B) Widely Used C) Disruptive D) Emerging Answer: D Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Differentiating Emerging and Disruptive Technology AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

18) Over time, companies adopt new technologies. Reviewing the illustration below, what stage of technology adoption is point Y?

A) Generally Accepted B) Widely Used C) Disruptive D) Emerging Answer: C Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Differentiating Emerging and Disruptive Technology AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

19) Over time, companies adopt new technologies. Reviewing the illustration below, what stage of technology adoption is point Z?

A) Generally Accepted B) Widely Used C) Disruptive D) Emerging Answer: B Diff: 2 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Differentiating Emerging and Disruptive Technology AACSB: Technology Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 20) What does the acronym IoT stand for? A) Internet of Things B) Internet of Technology C) Interest of Technology D) Interest of Things Answer: A Diff: 1 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

21) Choose from the list below the best definition of Internet of Things (IoT). A) Internet of Things is the collection of electronic devices to the internet through sensors, software, and other technologies. B) Internet of Things takes three forms, which progress from completely real to completely virtual C) Internet of Things is the merger of video game principles and real-world simulations where the user can achieve badges and earn points while they learn new skills. D) Internet of Things are physical devices controlled by computers using complex algorithms. Answer: A Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 22) Choose from the list below the best definition of Extended Reality (XR). A) Extended Reality is the connection of electronic devices to the internet through sensors, software, and other technologies. B) Extended Reality takes three forms, which progress from completely real to completely virtual. C) Extended Reality is the merger of video game principles and real-world simulations where the user can achieve badges and earn points while they learn new skills. D) Extended Reality are physical devices controlled by computers using complex algorithms. Answer: B Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Extended Reality (XR) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 23) Choose from the list below the best definition of Gamification. A) Gamification is the connection of electronic devices to the internet through sensors, software, and other technologies. B) Gamification takes three forms, which progress from completely real to completely virtual. C) Gamification is the merger of video game principles and real-world simulations where the user can achieve badges and earn points while they learn new skills. D) Gamification are physical devices controlled by computers using complex algorithms. Answer: C Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Gamification AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

24) Choose from the list below the best definition of Autonomous Things (AuT). A) Autonomous Things are the connection of electronic devices to the internet through sensors, software, and other technologies. B) Autonomous Things takes three forms, which progress from completely real to completely virtual. C) Autonomous Things are the merger of video game principles and real-world simulations where the user can achieve badges and earn points while they learn new skills. D) Autonomous Things are physical devices controlled by computers using complex algorithms. Answer: D Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Autonomous Things (AuT) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 25) Choose from the list below business opportunities for consumers facing Internet of Things (IoT) products. A) Determine safe driver discounts B) Predict machinery downtime C) Optimize delivery routes D) Manufacturing safety glasses including sensors or extended realities Answer: A Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management 26) Choose from the list below business opportunities for business operations Internet of Things (IoT) products. A) Determine safe driver discounts B) Predict machinery downtime C) Reward safe driving behaviors D) Monitor heart rate, calorie burns, sleep quality and more Answer: B Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management

27) When using IoT products, companies must manage risks related to the 5Vs of big data. Choose the best definition of Volume from the list below. A) Huge amounts of data B) Different formats of data from various sources C) Extract useful data D) High speed of accumulation of data Answer: A Diff: 1 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 28) When using IoT products, companies must manage risks related to the 5Vs of big data. Choose the best definition of Variety from the list below. A) Huge amounts of data B) Different formats of data from various sources C) Extract useful data D) High speed of accumulation of data Answer: B Diff: 1 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 29) When using IoT products, companies must manage risks related to the 5Vs of big data. Choose the best definition of Value from the list below. A) Huge amounts of data B) Different formats of data from various sources C) Extract useful data D) High speed of accumulation of data Answer: C Diff: 1 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

30) When using IoT products, companies must manage risks related to the 5Vs of big data. Choose the best definition of Velocity from the list below. A) Huge amounts of data B) Different formats of data from various sources C) Extract useful data D) High speed of accumulation of data Answer: D Diff: 1 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 31) When using IoT products, companies must manage risks related to the 5Vs of big data. Choose the best definition of Veracity from the list below. A) Inconsistencies and uncertainty in data B) Different formats of data from various sources C) Extract useful data D) High speed of accumulation of data Answer: A Diff: 1 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 32) Extended reality is not a new concept. However, recently this technology has found its way into consumer's devices in an affordable and accessible manner. Choose the correct order from the lists below. A) Virtual Reality, Augmented Reality, Mixed Reality B) Augmented Reality, Mixed Reality, Virtual Reality C) Mixed Reality, Augmented Reality, Virtual Reality D) Augmented Reality, Virtual Reality, Mixed Reality Answer: B Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Extended Reality (XR) AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

33) Extended reality is not a new concept. However, recently this technology has found its way into consumer's devices in an affordable and accessible manner. Choose the best definition of Augmented Reality (AR) from the list below. A) Overlays reality with digital images B) Hybrid combination of real and virtual objects coexisting in real time C) Full immersion into a virtual world with virtual objects D) Creating scenarios for employees to engage in Answer: A Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Extended Reality (XR) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 34) Extended reality is not a new concept. However, recently this technology has found its way into consumer's devices in an affordable and accessible manner. Choose the best definition of Mixed Reality (MR) from the list below. A) Overlays reality with digital images B) Hybrid combination of real and virtual objects coexisting in real time C) Full immersion into a virtual world with virtual objects D) Creating scenarios for employees to engage in Answer: B Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Extended Reality (XR) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 35) Extended reality is not a new concept. However, recently this technology has found its way into consumer's devices in an affordable and accessible manner. Choose the best definition of Virtual Reality (VR) from the list below. A) Overlays reality with digital images B) Hybrid combination of real and virtual objects coexisting in real time C) Full immersion into a virtual world with virtual objects D) Creating scenarios for employees to engage in Answer: C Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Extended Reality (XR) AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

36) Choose from the list below business opportunities for badge achievements in Gamification. A) Earning point for completion B) Responding to high stress scenarios C) Executing daily tasks D) Engaging in health and wellness activities Answer: D Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Gamification AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management 37) Choose from the list below business opportunities for drones in Autonomous Things (AuT). A) Monitor crops for weed contamination B) Security checks in a parking lot C) Delivering medications in hospitals D) Warehouse fulfillment Answer: A Diff: 2 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Autonomous Things (AuT) AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management 38) Choose from the list below the best definition of business process automation. A) Business process automation is the act of managing information, data, costs, resources, and investments by increasing productivity through automating key business processes with computing technology. B) Business process automation is software which automates and manages digital workflows through a drag and drop interface that does not require coding knowledge to establish or maintain. C) Business process automation is comprised of complex algorithms programmed to mimic human cognitive functions to learn and solve a problem independently. D) Business process automation is the process of using an algorithm to encode a plaintext message and to convert the plaintext to something that is seemingly meaningless. Answer: A Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

39) Choose from the list below the best description of the use of software to aid robotic process automation. A) Robotic process automation is the act of managing information, data, costs, resources, and investments by increasing productivity through automating key business processes with computing technology. B) Robotic process automation software helps automates and manages digital workflows through a drag and drop interface that does not require coding knowledge to establish or maintain. C) Robotic process automation is comprised of complex algorithms programmed to mimic human cognitive functions to learn and solve a problem independently. D) Robotic process automation is the process of using an algorithm to encode a plaintext message and to convert the plaintext to something that is seemingly meaningless. Answer: B Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 40) Choose from the list below the best definition of artificial intelligence. A) Artificial intelligence is the act of managing information, data, costs, resources, and investments by increasing productivity through automating key business processes with computing technology. B) Artificial intelligence is software which automates and manages digital workflows through a drag and drop interface that does not require coding knowledge to establish or maintain. C) Artificial intelligence is comprised of complex algorithms programmed to mimic human cognitive functions to learn and solve a problem independently. D) Artificial intelligence is the process of using an algorithm to encode a plaintext message and to convert the plaintext to something that is seemingly meaningless. Answer: C Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

41) Choose from the list below a feature of robotic process automation. A) Simulates human decision-making B) Ideal for eliminating human efforts in complex analysis C) Self-selects appropriate responses D) Follows pre-programmed "rules" Answer: D Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 42) Choose from the list below a feature of robotic process automation. A) Ideal for repetitive tasks B) Simulates human decision-making C) Ideal for eliminating human efforts in complex analysis D) Self-selects appropriate responses Answer: A Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 43) Choose from the list below a feature of robotic process automation. A) Simulates human decision-making B) Smart enough to follow "orders" C) Ideal for eliminating human efforts in complex analysis D) Self-selects appropriate responses Answer: B Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

44) Choose from the list below a feature of robotic process automation. A) Simulates human decision-making B) Ideal for eliminating human efforts in complex analysis C) Initially programmed tasks never change. D) Self-selects appropriate responses Answer: C Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 45) Choose from the list below a feature of artificial intelligence. A) Follows pre-programmed "rules" B) Ideal for repetitive tasks C) Simulates human decision-making D) Initially programmed tasks never change. Answer: C Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 46) Choose from the list below a feature of artificial intelligence. A) Follows pre-programmed "rules" B) Ideal for repetitive tasks C) Initially programmed tasks never change. D) Self-selects appropriate responses in real time Answer: D Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

47) Choose from the list below a feature of artificial intelligence. A) Ideal for eliminating human efforts in complex analysis B) Follows pre-programmed "rules" C) Ideal for repetitive tasks D) Initially programmed tasks never change. Answer: A Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 48) Choose from the list below a feature of artificial intelligence. A) Follows pre-programmed "rules" B) Initially programmed tasks evolve through self-learning. C) Ideal for repetitive tasks D) Initially programmed tasks never change. Answer: B Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

49) Reviewing the illustration below. Which word fits best for A?

A) If B) This C) Then D) That Answer: A Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 50) Reviewing the illustration below. Which word fits best for B?

A) If B) This C) Then D) That Answer: C Diff: 2 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 20

51) "RPA uses ________, in the form of "IF THIS THEN THAT", to pre-program "rules", or decisions, into the software." A) unconditional accounts B) unconditional statements C) conditional accounts D) conditional statements Answer: D Diff: 1 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 52) "In RPA, conditional statements involve a ________, which is a scenario, and a subsequent action, or decision." A) trigger B) cause C) situation D) prompt Answer: A Diff: 1 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 53) "In RPA, conditional statements involve a trigger, which is a ________, and a subsequent action, or decision." A) cause B) scenario C) situation D) prompt Answer: B Diff: 1 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

54) "In RPA, conditional statements involve a trigger, which is a scenario, and a subsequent ________, or decision." A) cause B) situation C) action D) prompt Answer: B Diff: 1 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 55) "A(n) ________ system enables the recording of digital transactions packaged in blocks that form a sequence, like a chain, in a peer-to-peer network." A) blockchain B) RPA C) artificial intelligence D) relational database Answer: A Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Introduction AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 56) "A blockchain system enables the recording of ________ packaged in blocks that form a sequence, like a chain, in a peer-to-peer network." A) analog transactions B) digital transactions C) digital intelligence D) analog intelligence Answer: B Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Introduction AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

57) "A(n) blockchain system enables the recording of digital transactions packaged in ________ that form a sequence, like a chain, in a peer-to-peer network." A) circles B) squares C) blocks D) wedges Answer: C Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Introduction AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 58) "A blockchain system enables the recording of digital transactions packaged in blocks that form a sequence, like a chain, in a ________ network." A) wide area B) local area C) client-server D) peer-to-peer Answer: D Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Introduction AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 59) Choose from the list below the best definition of blockchain nodes. A) Nodes are the computers of participants in the network. B) Nodes are who create the ledgers of transactions in chained blocks. C) Nodes are computer programs that act as intermediaries that contract, execute, and settle contracts. D) Nodes are the algorithms used to encode a message. Answer: A Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: The Basics of Blockchain AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

60) Choose from the list below the best definition of blockchain miners. A) Miners are the computers of participants in the network. B) Miners are who create the ledgers of transactions in chained blocks. C) Miners are computer programs that act as intermediaries that contract, execute, and settle contracts. D) Miners are the algorithms used to encode a message. Answer: B Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: The Basics of Blockchain AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 61) Choose from the list below the best definition of smart contracts. A) Smart contracts are the computers of participants in the network. B) Smart contracts are who create the ledgers of transactions in chained blocks. C) Smart contracts are computer programs that act as intermediaries that contract, execute, and settle contracts. D) Smart contracts are the algorithms used to encode a message. Answer: C Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: The Basics of Blockchain AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 62) Choose from the list below the best definition of cryptology. A) Cryptology are the algorithms used to encode a message. B) Cryptology are the algorithms used to convert an encrypted message back to its original form. C) Cryptology are computer programs that act as intermediaries that contract, execute, and settle contracts. D) Cryptology is the science of using a secret code for secure data communication. Answer: D Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Cryptology AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

63) Choose from the list below the best definition of encryption. A) Encryptions are the algorithms used to encode a message. B) Encryptions are the algorithms used to convert an encrypted message back to its original form. C) Encryptions are the computer programs that act as intermediaries that contract, execute, and settle contracts. D) Encryption is the science of using a secret code for secure data communication. Answer: A Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Cryptology AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 64) Choose from the list below the best definition of decryption. A) Decryptions are the algorithms used to encode a message. B) Decryptions are the algorithms used to convert an encrypted message back to its original form. C) Decryptions are the computer programs that act as intermediaries that contract, execute, and settle contracts. D) Decryption is the science of using a secret code for secure data communication. Answer: B Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Cryptology AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

65) Reviewing the illustration below. Which word fits best for A?

A) Plain text B) Cipher text C) Encrypted text D) Simple text Answer: A Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Cryptology AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 66) Reviewing the illustration below. Which word fits best for B?

A) Plain text B) Cipher text C) Decrypted text D) Simple text Answer: B Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Cryptology AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools

67) Reviewing the illustration below. Which word fits best for C?

A) Encrypted text B) Simple text C) Plain text D) Cipher text Answer: C Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Cryptology AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 68) Which of the following is NOT one of the blockchain ledgers? A) Centralized B) Decentralized C) Distributed D) Dispersed Answer: D Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Blockchain Ledgers AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 69) Choose from the following list the best definition of a centralized ledger. A) In a centralized ledger system, everyone has access to a central ledger. B) In a centralized ledger system, everyone received an electronic copy of the ledger. C) In a centralized ledger system, there are groups of users with access to hubs with copies of the same ledger. D) In a centralized ledger system, there is no ledger. Answer: A Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Blockchain Ledgers AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 27

70) Choose from the following list the best definition of a distributed ledger. A) In a distributed ledger system, everyone has access to a central ledger. B) In a distributed ledger system, everyone received an electronic copy of the ledger. C) In a distributed ledger system, there are groups of users with access to hubs with copies of the same ledger. D) In a distributed ledger system, there is no ledger. Answer: B Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Blockchain Ledgers AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 71) Choose from the following list the best definition of a decentralized ledger. A) In a decentralized ledger system, everyone has access to a central ledger. B) In a decentralized ledger system, everyone received an electronic copy of the ledger. C) In a decentralized ledger system, there are groups of users with access to hubs with copies of the same ledger. D) In a decentralized ledger system, there is no ledger. Answer: C Diff: 2 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Blockchain Ledgers AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 72) Which is NOT one of the three interrelated fundamental principles of blockchain technology that build on one another? A) Decentralization B) Transparency C) Immutability D) Opaqueness Answer: D Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Fundamental Principles AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

73) "In a ________ blockchain the intermediary comes back. A single entity governs the network." A) private B) public C) consortium D) corporate Answer: A Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Types of Blockchain Systems AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 74) "A ________ blockchain allows a group of companies to collaborate and leverage information that improves workflows, accountability, and transparency." A) private B) public C) consortium D) corporate Answer: C Diff: 1 Learning Objective: 7.4 Identify the fundamental principles and technologies of blockchain Section Reference: Types of Blockchain Systems AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 75) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how audit professionals are impacted by the use of blockchain. A) Track and validate cryptocurrency transactions B) Record transactions related to buying and selling cryptocurrencies C) Simplify and automate tax compliance and transparency D) Secured payments are sent to suppliers as soon as materials are received. Answer: A Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools

76) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how audit professionals are impacted by the use of blockchain. A) Record transactions related to buying and selling cryptocurrencies B) Verify ownership of transactions C) Simplify and automate tax compliance and transparency D) Secured payments are sent to suppliers as soon as materials are received. Answer: B Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 77) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how audit professionals are impacted by the use of blockchain. A) Record transactions related to buying and selling cryptocurrencies B) Simplify and automate tax compliance and transparency C) Drill down to the code level to ensure a blockchain system is functioning correctly technologically D) Secured payments are sent to suppliers as soon as materials are received. Answer: C Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 78) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how audit professionals are impacted by the use of blockchain. A) Record transactions related to buying and selling cryptocurrencies B) Simplify and automate tax compliance and transparency C) Secured payments are sent to suppliers as soon as materials are received. D) Acquire sufficient evidence about the nature of blockchain transactions Answer: D Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools

79) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how financial accountants are impacted by the use of blockchain. A) Record transactions related to buying and selling cryptocurrencies B) Simplify and automate tax compliance and transparency C) Secured payments are sent to suppliers as soon as materials are received. D) Acquire sufficient evidence about the nature of blockchain transactions Answer: A Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 80) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how tax accountants are impacted by the use of blockchain. A) Record transactions related to buying and selling cryptocurrencies B) Simplify and automate tax compliance and transparency C) Secured payments are sent to suppliers as soon as materials are received. D) Acquire sufficient evidence about the nature of blockchain transactions Answer: B Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 81) The accounting profession is evolving in response to the use of blockchain technology in business. Choose from the list below how purchasing accountants are impacted by the use of blockchain. A) Record transactions related to buying and selling cryptocurrencies B) Simplify and automate tax compliance and transparency C) Secured payments are sent to suppliers as soon as materials are received. D) Acquire sufficient evidence about the nature of blockchain transactions Answer: C Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools

82) Data integrity is one of the characteristics of good data. Choose from the list below how blockchain systems impact data integrity. A) Data is immutable once entered into a blockchain ledger and cannot be changed or deleted. B) Each node can potentially back up the entire blockchain ledger to provide multiple copies. C) Miners verify validation of transactions by a majority consensus prior to entry. D) A blockchain is widely distributed. Answer: A Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 83) Data retention is one of the characteristics of good data. Choose from the list below how blockchain systems impact data retention. A) Data is immutable once entered into a blockchain ledger and cannot be changed or deleted. B) Each node can potentially back up the entire blockchain ledger to provide multiple copies. C) Miners verify validation of transactions by a majority consensus prior to entry. D) A blockchain is widely distributed. Answer: B Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 84) Data validity is one of the characteristics of good data. Choose from the list below how blockchain systems impact data validity. A) Data is immutable once entered into a blockchain ledger and cannot be changed or deleted. B) Each node can potentially back up the entire blockchain ledger to provide multiple copies. C) Miners verify validation of transactions by a majority consensus prior to entry. D) A blockchain is widely distributed. Answer: C Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

85) Data transparency is one of the characteristics of good data. Choose from the list below how blockchain systems impact data transparency. A) Data is immutable once entered into a blockchain ledger and cannot be changed or deleted. B) Each node can potentially back up the entire blockchain ledger to provide multiple copies. C) Miners verify validation of transactions by a majority consensus prior to entry. D) A blockchain is widely distributed. Answer: D Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 86) Data security is one of the characteristics of good data. Choose from the list below how blockchain systems impact data security. A) A majority of participants must generally collude for fraud to happen. B) Each node can potentially back up the entire blockchain ledger to provide multiple copies. C) Miners verify validation of transactions by a majority consensus prior to entry. D) A blockchain is widely distributed. Answer: A Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Ethics Bloom's: Knowledge AICPA: AC: Technology and Tools 87) Data integrity is one of the characteristics of good data. Choose from the list below how traditional ledgers impact data integrity. A) They have the risk of subsequent manipulation. B) Backups are far more restricted. C) Verification of transactions may be limited to a single person. D) A traditional ledger is not widely distributed. Answer: A Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

88) Data retention is one of the characteristics of good data. Choose from the list below how traditional ledgers impact data retention. A) They have the risk of subsequent manipulation. B) Backups are far more restricted. C) Verification of transactions may be limited to a single person. D) A traditional ledger is not widely distributed. Answer: B Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 89) Data validity is one of the characteristics of good data. Choose from the list below how traditional ledgers impact data validity. A) They have the risk of subsequent manipulation. B) Backups are far more restricted. C) Verification of transactions may be limited to a single person. D) A traditional ledger is not widely distributed. Answer: C Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools 90) Data transparency is one of the characteristics of good data. Choose from the list below how traditional ledgers impact data transparency. A) They have the risk of subsequent manipulation. B) Backups are far more restricted. C) Verification of transactions may be limited to a single person. D) A traditional ledger is not widely distributed. Answer: D Diff: 2 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Improving Data Quality AACSB: Technology Bloom's: Knowledge AICPA: AC: Technology and Tools

91) Not every emerging technology becomes disruptive, as they are not always successful. In 2019 Google stopped supporting Google Glass, a pair of smart glasses they released in 2014. What happened that led Google to stop supporting Google Glass? Answer: After a few years of privacy concerns (cameras captured people around the user without consent) and customer pushback, Google stopped supporting updates for the consumer version of the device in 2019. Diff: 3 Learning Objective: 7.1 Explain how businesses identify risks and opportunities associated with emerging and disruptive technologies Section Reference: Risk and Risk Mitigation AACSB: Technology Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 92) There has been some public pushback against consumer facing IoT products. Runners often use wearable devices like a Fitbit to see if their pace is improving. What are some of the corresponding risks with using a Fitbit? Answer: The collected data stores the GPS location of the runner. An unauthorized user could use the data to analyzes the user's habits and identify opportunities for breaking into their homes while they are away. Diff: 3 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Internet of Things (IoT) AACSB: Technology Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 93) Amazon Prime Air is taking to the sky to make deliveries and Amazon Scout is now roaming the streets also making deliveries. In which of the emerging technologies discussed in the textbook do these new technologies fit? Answer: Amazon Prime Air and Amazon Scout would be considered Autonomous Things (AuT) technology. Diff: 3 Learning Objective: 7.2 Identify business opportunities provided by disruptive technologies Section Reference: Autonomous Things (AuT) AACSB: Technology Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management

94) Read the following current state and discuss why this scenario is highly compatible with RPA: When a vendor sends an invoice, the Accounts Payable Clerk opens the email, reviews the attachment, and saves it to that vendor's folder on the shared network drive. The Accounts Payable Clerk then opens the accounts payable information system and inputs the details of the invoice-vendor, amount, due date — into the system. Answer: This is highly compatible with RPA because: • There is no decision-making that requires judgment • This activity is performed frequently • The same steps recur each time Diff: 3 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 95) To be feasible, a proposed RPA use case must fit into the rigid structure of the rules-based programming RPA uses. Discuss the characteristics of processes that are ideal RPA projects. Answer: Ideal projects are processes that are: • Routine • Consistent • Digital • Time consuming • Performed frequently Diff: 3 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 96) The Roomba robot vacuum has evolved over the years. Briefly discuss how the more recent Roomba models use Artificial Intelligence. Answer: The vacuum scans a room, records the size, marks obstacles on its internal map, and records and processes each route to determine the most efficient route path. If a Roomba encounters a new obstacle, it adds this to its memory and performs new calculations that account for it during its next run. Diff: 3 Learning Objective: 7.3 Apply the principles of robotic process automation to accounting use cases Section Reference: Types of Automation AACSB: Technology Bloom's: Application AICPA: AC: Technology and Tools 36

97) Blockchain has the potential to significantly disrupt the accounting profession. Briefly discuss. Answer: The traditional accounting information system has numerous trusted third-party intermediaries or watchdogs, including the independent auditors, banks, and the government. Accounting processes could become more automated by leveraging blockchain technology for more transparency and immutability, and still comply with regulatory requirements. Progress like this could potentially reduce the need for independent auditors. Diff: 3 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Introduction AACSB: Knowledge Bloom's: Synthesis AICPA: AC: Technology and Tools 98) Accountants are often trusted advisors to small businesses, own their own small businesses, or work for a smaller business. Blockchain systems offer advantages that small business could adopt. Discuss. Answer: Blockchain systems offer: • Increased security with a strong authentication process • All data is distributed to different computers in different locations, vastly mitigating any risk of data manipulation or deletion o Blockchain technology includes programmed self-executing contracts that avoid the need for intermediaries like lawyers, significantly lowering costs o Blockchain-based payment platforms provide alternatives to cash through the option to transfer funds directly, securely, and instantly Diff: 3 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Synthesis AICPA: AC: Technology and Tools 99) In the near future, blockchain is changing the way accounting professionals work. Discuss potential changes for purchasing accountants. Answer: Purchasing accountants are seeing changes in how supply chains are operating. Secured payments sent to suppliers as soon as materials are received — all through real-time scanning and recording using tags. Data on receipts include time received, quality indicators, and even the item's location using GPS. This information is shared through the blockchain distributed ledger to create a transparent supply chain. Diff: 3 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Synthesis AICPA: AC: Technology and Tools

100) In the near future, blockchain is changing the way accounting professionals work. Discuss potential changes for tax accountants. Answer: Tax accountants can use blockchain to simplify and automate tax compliance and transparency. Tax authorities can obtain access to blockchain data to calculate and enforce tax payments, reduce tax fraud opportunities, and lessen the need for labor-intensive tax services. Diff: 3 Learning Objective: 7.5 Explain blockchain's relevance to accounting professionals Section Reference: Evolving Career Opportunities AACSB: Technology Bloom's: Synthesis AICPA: AC: Technology and Tools

Accounting Information Systems, 1e (Savage) Chapter 8 Documenting Systems and Processes 1) Choose the best definition of systems documentation from the list below. A) Overview of the computer system with details of system design and architecture B) Detailed description of the system's programming logic and source code C) Information necessary for technical operators to execute and support the system D) Instructions for system users on how to interact with the system Answer: A Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 2) Choose the best definition of program documentation from the list below. A) Overview of the computer system with details of system design and architecture B) Detailed description of the system's programming logic and source code C) Information necessary for technical operators to execute and support the system D) Instructions for system users on how to interact with the system Answer: B Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 3) Choose the best definition of operator documentation from the list below. A) Overview of the computer system with details of system design and architecture B) Detailed description of the system's programming logic and source code C) Information necessary for technical operators to execute and support the system D) Instructions for system users on how to interact with the system Answer: C Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

4) Choose the best definition of user documentation from the list below. A) Overview of the computer system with details of system design and architecture B) Detailed description of the system's programming logic and source code C) Information necessary for technical operators to execute and support the system D) Instructions for system users on how to interact with the system Answer: D Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 5) Which of the following is an overview of the computer system? A) Systems documentation B) Program documentation C) Operator documentation D) User documentation Answer: A Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Systems Documentation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 6) Identify the primary users of systems documentation from the following list: Choose all that apply. A) Developers B) Auditors C) Programmers D) Computer operators E) End users Answer: A, B Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Systems Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

7) Which of the following is an element captured in systems documentation? A) Programming logic B) Error messages C) Systems architecture D) Instructions for inputting data into the system Answer: C Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Systems Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 8) Which of the following is an element captured in systems documentation? A) Programming logic B) Error messages C) Instructions for inputting data into the system D) Inputs and outputs Answer: D Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Systems Documentation AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 9) Choose from the following list one of the forms of documentation in systems documentation. A) Data flow diagrams B) Source code listings C) Technical manual D) Record layouts Answer: A Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Systems Documentation AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

10) Which of the following is also referred to as software or technical documentation, and describes the detailed analysis of the program and its logic? A) Systems documentation B) Program documentation C) Operator documentation D) User documentation Answer: B Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Program Documentation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 11) Which of the people on the following list is the primary user of program documentation? A) Developers B) Programmers C) Computer operators D) End users Answer: B Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Program Documentation AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 12) Which of the following is one of the elements captured in program documentation. A) Programming logic B) Error messages C) Systems architecture D) Instructions for inputting data into the system Answer: A Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Program Documentation AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

13) Choose from the following list one of the elements captured in program documentation. A) System architecture B) Error messages C) Instructions for inputting data into the system D) Program source code Answer: D Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Program Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 14) Choose from the following list one of the forms of documentation in program documentation. A) Data flow diagrams B) Source code listings C) Technical manual D) Enterprise relationship diagrams Answer: B Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Program Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 15) Which of the following is also often referred to as the "run manual" and provides information necessary to execute the program and make it work? A) Systems documentation B) Program documentation C) Operator documentation D) User documentation Answer: C Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Operator Documentation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

16) Choose from the following list who is the primary user of operator documentation. A) Developers B) Programmers C) Computer operators D) End users Answer: C Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Operator Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 17) Choose from the following list one of the elements captured in operator documentation. A) Programming logic B) Error messages C) Systems architecture D) Instructions for inputting data into the system Answer: B Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Operator Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 18) Choose from the following list one of the elements captured in operator documentation. A) System architecture B) Instructions for inputting data into the system C) Program source code D) Protocols for backup and recovery of data Answer: D Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Operator Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

19) Choose from the following list one of the forms of documentation in operator documentation. A) Data flow diagrams B) Source code listings C) Flowcharts D) Enterprise relationship diagrams Answer: C Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Operator Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 20) Which of the following is the content provided to systems users to ensure they are successful using the system? A) Systems documentation B) Program documentation C) Operator documentation D) User documentation Answer: D Diff: 1 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: User Documentation AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 21) Choose from the following list who is the primary user of user documentation. A) Developers B) Programmers C) Computer operators D) End users Answer: D Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: User Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

22) Choose from the following list one of the elements captured in user documentation. A) Programming logic B) Error messages C) Systems architecture D) Instructions for inputting data into the system Answer: D Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: User Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 23) Choose from the following list one of the elements captured in user documentation. A) System architecture B) Program source code C) Protocols for backup and recovery of data D) System functionalities and features Answer: D Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: User Documentation AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 24) Documentation is used to create, capture, evaluate, and audit processes in the AIS. When an area of the business is well documented, companies benefit through efficient knowledge transfer. Which of the following best defines efficient knowledge transfer? A) New employees can quickly familiarize themselves with the department's work and processes. B) Similar processes throughout the company are performed consistently. C) Documentation empowers thorough reviews of a department and can point directly to areas where efficiencies can be gained. D) Internal and external auditors need detailed information to understand an area of the business they are auditing. Answer: A Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

25) Documentation is used to create, capture, evaluate, and audit processes in the AIS. When an area of the business is well documented, companies benefit through standardized processes. Which of the following best defines standardized processes? A) New employees can quickly familiarize themselves with the department's work and processes. B) Similar processes throughout the company are performed consistently. C) Documentation empowers thorough reviews of a department and can point directly to areas where efficiencies can be gained. D) Internal and external auditors need detailed information to understand an area of the business they are auditing. Answer: B Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 26) Documentation is used to create, capture, evaluate, and audit processes in the AIS. When an area of the business is well documented, companies benefit through process improvements. Which of the following best defines process improvements? A) New employees can quickly familiarize themselves with the department's work and processes. B) Similar processes throughout the company are performed consistently. C) Documentation empowers thorough reviews of a department and can point directly to areas where efficiencies can be gained. D) Internal and external auditors need detailed information to understand an area of the business they are auditing. Answer: C Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

27) Documentation is used to create, capture, evaluate, and audit processes in the AIS. When an area of the business is well documented, companies benefit through effective audits. Which of the following best defines effective audits? A) New employees can quickly familiarize themselves with the department's work and processes. B) Similar processes throughout the company are performed consistently. C) Documentation empowers thorough reviews of a department and can point directly to areas where efficiencies can be gained. D) Internal and external auditors need detailed information to understand an area of the business they are auditing. Answer: D Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Introduction AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 28) In order for documentation to provide benefits to your company, you must know which form of documentation to use. Which of the following best defines documenting the business? A) Documenting the business captures the people who work there or the state of its operations and internal controls. B) Documenting the business can be documented with a narrative description or a more complex flowchart, which can be costly to build and maintain. C) Documenting the business creates documentation that captures both the movement of data within the system and how data is stored in its database. D) Documenting the business creates programs used for moving data into and out of the database. Answer: A Diff: 2 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

29) In order for documentation to provide benefits to your company, you must know which form of documentation to use. Which of the following best defines documenting processes and systems? A) Documenting processes and systems captures the people who work there or the state of its operations and internal controls. B) Documenting processes and systems can be documented with a narrative description or a more complex flowchart, which can be costly to build and maintain. C) Documenting processes and systems creates documentation that captures both the movement of data within the system and how data is stored in its database. D) Documenting processes and systems creates programs used for moving data into and out of the database. Answer: B Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 30) In order for documentation to provide benefits to your company, you must know which form of documentation to use. Which of the following is the best definition of documenting data? A) Documenting data captures the people who work there or the state of its operations and internal controls. B) Documenting data can be documented with a narrative description or a more complex flowchart, which can be costly to build and maintain. C) Documenting data creates documentation that captures both the movement of data within the system and how data is stored in its database. D) Documenting data creates programs used for moving data into and out of the database. Answer: C Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Data AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

31) An organizational chart, often called an "org chart" for short, is a diagram that illustrates the employees in the company and their reporting relationship with one another. Which of the following is a use of org charts? A) Showing table relationships in a relational database B) Visualizing computer connectivity C) Demonstrating customer relationship management D) Visualizing an employee directory Answer: D Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 32) An organizational chart, often called an "org chart" for short, is a diagram that illustrates the employees in the company and their reporting relationship with one another. Which of the following is a use of org charts? A) Showing employee responsibility and how they fit into the overall company structure B) Showing table relationships in a relational database C) Visualizing computer connectivity D) Demonstrating customer relationship management Answer: A Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 33) An organizational chart, often called an "org chart" for short, is a diagram that illustrates the employees in the company and their reporting relationship with one another. Which of the following is a use of org charts? A) Showing table relationships in a relational database B) Depicting reporting relationships C) Visualizing computer connectivity D) Demonstrating customer relationship management Answer: B Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

34) An organizational chart, often called an "org chart" for short, is a diagram that illustrates the employees in the company and their reporting relationship with one another. Which of the following is a use of org charts? A) Showing table relationships in a relational database B) Visualizing computer connectivity C) Showing segregation of duties D) Demonstrating customer relationship management Answer: C Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 35) Which of the following documentation tools can be used for documenting the business? A) Organizational charts B) Narratives C) Flowcharts D) Data flow diagrams Answer: A Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 36) Which of the following documentation tools can be used for documenting the business? A) Narratives B) Checklists and questionnaires C) Flowcharts D) Data flow diagrams Answer: B Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

37) Which of the following documentation tools can be used for documenting processes and systems? A) Organizational charts B) Checklists and questionnaires C) Narratives D) Data flow diagrams Answer: C Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 38) Which of the following documentation tools can be used for documenting processes and systems? A) Checklists and questionnaires B) Organizational charts C) Data flow diagrams D) Flowcharts Answer: D Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 39) Which of the following documentation tools can be used for documenting processes and systems? A) Business process model and notation B) Flowcharts C) Checklists and questionnaires D) Narratives Answer: A Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

40) Which of the following documentation tools can be used for documenting data? A) Data flow diagrams B) Flowcharts C) Checklists and questionnaires D) Narratives Answer: A Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Data AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 41) Which of the following documentation tools can be used for documenting data? A) Flowcharts B) Entity relationship diagrams C) Checklists and questionnaires D) Narratives Answer: B Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Data AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 42) There are four types of flowcharts used depending on the focus of the end user. Which of the following best defines a document flowchart? A) A document flowchart shows the flow of documents, such as checks or requisition documents, through a process. B) A document flowchart illustrates the flow of information through a system. This includes how information is accesses and where data is stored. C) A document flowchart provides the sequence of coded instructions in a computer program that enables it to perform specified logical and arithmetical operations. D) A document flowchart depicts the flow of activity through the company. This includes the key parties and actions they perform. Answer: A Diff: 2 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

43) There are four types of flowcharts used depending on the focus of the end user. Which of the following best defines a systems flowchart? A) A systems flowchart shows the flow of documents, such as checks or requisition documents, through a process. B) A systems flowchart illustrates the flow of information through a system. This includes how information is accessed and where data is stored. C) A systems flowchart provides the sequence of coded instructions in a computer program that enables it to perform specified logical and arithmetical operations. D) A systems flowchart depicts the flow of activity through the company. This includes the key parties and actions they perform. Answer: B Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 44) There are four types of flowcharts used depending on the focus of the end user. Which of the following best defines a program flowchart? A) A program flowchart shows the flow of documents, such as checks or requisition documents, through a process. B) A program flowchart illustrates the flow of information through a system. This includes how information is accesses and where data is stored. C) A program flowchart provides the sequence of coded instructions in a computer program that enables it to perform specified logical and arithmetical operations. D) A program flowchart depicts the flow of activity through the company. This includes the key parties and actions they perform. Answer: C Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

45) There are four types of flowcharts used depending on the focus of the end user. Which of the following best defines a process flowchart? A) A process flowchart shows the flow of documents, such as checks or requisition documents, through a process. B) A process flowchart illustrates the flow of information through a system. This includes how information is accesses and where data is stored. C) A process flowchart provides the sequence of coded instructions in a computer program that enables it to perform specified logical and arithmetical operations. D) A process flowchart depicts the flow of activity through the company. This includes the key parties and actions they perform. Answer: D Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 46) Choose from the list below the best definition of Business Process Model and Notation (BPMN). A) Similar to process flowcharts, BPMN is a documentation method that depicts the steps of a business process from start to finish. B) BPMN is a diagram that illustrates the employees in the company and their reporting relationship with one another. C) BPMN is a graphical illustration of all the tables and their relationships in a database. D) BPMN is the visual representation of an information flow within a system. Answer: A Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Processes and Systems AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 47) Choose from the list below the best definition of Entity Relationship Diagrams (ERDs). A) Similar to process flowcharts, ERDs are a documentation method that depicts the steps of a business process from start to finish. B) An ERD is a diagram that illustrates the employees in the company and their reporting relationship with one another. C) An ERD is a graphical illustration of all the tables and their relationships in a database. D) An ERD is the visual representation of an information flow within a system. Answer: C Diff: 1 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting Data AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 17

48) Referencing the symbols below, which symbol represents a flowline?

A) A B) B C) C D) D Answer: A Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 49) Referencing the symbols below, which symbol represents a decision?

A) A B) B C) C D) D Answer: B Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

50) Referencing the symbols below, which symbol represents a terminator?

A) A B) B C) C D) D Answer: C Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 51) Referencing the symbols below, which symbol represents a process?

A) A B) B C) C D) D Answer: D Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

52) Referencing the symbols below, which symbol represents a manual operation?

A) A B) B C) C D) D E) E Answer: A Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 53) Referencing the symbols below, which symbol represents manual input?

A) A B) B C) C D) D E) E Answer: B Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

54) Referencing the symbols below, which symbol represents data?

A) A B) B C) C D) D E) E Answer: C Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 55) Referencing the symbols below, which symbol represents a document?

A) A B) B C) C D) D E) E Answer: D Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

56) Referencing the symbols below, which symbol represents a database?

A) A B) B C) C D) D E) E Answer: E Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 57) Choose from the list below the best definition for a process flowchart terminator. A) The terminator shape marks the start or end of a process. B) The terminator shape represents an event, or step, within the flow. C) The terminator shape connects shapes together. D) The terminator shape represents a yes/no or true/false question that must be answered for the process to continue. Answer: A Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

58) Choose from the list below the best definition for a process flowchart process shape. A) The process shape marks the start or end of a process. B) The process shape represents an event, or step, within the flow. C) The process shape connects shapes together. D) The process shape represents a yes/no or true/false question that must be answered for the process to continue. Answer: B Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 59) Choose from the list below the best definition for a process flowchart flowline. A) The flowline marks the start or end of a process. B) The flowline represents an event, or step, within the flow. C) The flowline connects shapes together. D) The flowline represents a yes/no or true/false question that must be answered for the process to continue. Answer: C Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 60) Choose from the list below the best definition for a process flowchart decision shape. A) The decision shape marks the start or end of a process. B) The decision shape represents an event, or step, within the flow. C) The decision shape connects shapes together. D) The decision shape represents a yes/no or true/false question that must be answered for the process to continue. Answer: D Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

61) Choose from the list below the best definition of the document shape in the additional flowchart shapes. A) The document shape represents a physical or digital document such as an email, report, purchase order or invoice. B) The document shape represents data or information coming into the process or leaving the process, such as an order incoming to the bakery. C) The document shape represents data storage. Data is input into the database and information is retrieved. D) The document shape depicts data that is manually input into a system, such as a user typing in their username and password to access the system. Answer: A Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 62) Choose from the list below the best definition of the input/output shape in the additional flowchart shapes. A) The input/output shape represents a physical or digital document such as an email, report, purchase order or invoice. B) The input/output shape represents data or information coming into the process or leaving the process, such as an order incoming to the bakery. C) The input/output shape represents data storage. Data is input into the database and information is retrieved. D) The input/output shape depicts data that is manually input into a system, such as a user typing in their username and password to access the system. Answer: B Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

63) Choose from the list below the best definition of the database shape in the additional flowchart shapes. A) The database shape represents a physical or digital document such as an email, report, purchase order or invoice. B) The database shape represents data or information coming into the process or leaving the process, such as an order incoming to the bakery. C) The database shape represents data storage. Data is input into the database and information is retrieved. D) The database shape depicts data that is manually input into a system, such as a user typing in their username and password to access the system. Answer: C Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 64) Which of the following defines what a manual input shape in the additional flowchart shapes represents? A) The manual input shape represents a physical or digital document such as an email, report, purchase order or invoice. B) The manual input shape represents data or information coming into the process or leaving the process, such as an order incoming to the bakery. C) The manual input shape represents data storage. Data is input into the database and information is retrieved. D) The manual input shape depicts data that is manually input into a system, such as a user typing in their username and password to access the system. Answer: D Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

65) Which of the following defines when the manual operation shape is used? A) The manual operation shape represents a physical or digital document such as an email, report, purchase order or invoice. B) The manual operation shape represents data or information coming into the process or leaving the process, such as an order incoming to the bakery. C) The manual operation shape represents data storage. Data is input into the database and information is retrieved. D) The manual operation shape is used if the user physically takes an action such as taking a printout of a report and placing it on someone's desk or physically placing freshly baked cookies on a cooling rack. Answer: D Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 66) "Flowchart ________ are areas within a flowchart that delineate the responsibilities for all activities involved in a business process." A) swim lanes B) swim courses C) race lanes D) process lanes Answer: A Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Swim Lanes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 67) "Designing a flowchart with swim lanes also shows the ________ among different contributors." A) lockdown points B) handoff points C) handoff connections D) lockdown connections Answer: B Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Swim Lanes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

68) "A swim lane within a flowchart provides clarity and accountability for the activities that belong to specific ________ or ________." A) payables, receivables B) vendors, customers C) employees, departments D) shareholders, managers Answer: C Diff: 1 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Swim Lanes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 69) Choose from the list below the shape that represents an external entity. A)

D) Answer: A Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

70) Choose from the list below the shape that represents a process. A)

D) Answer: B Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 71) Choose from the list below the shape that represents a data store. A)

D) Answer: C Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 28

72) Choose from the list below the shape that represents a data flow. A)

D) Answer: D Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 73) What does the following Data Flow Diagramming shape represent?

A) External entity B) Process C) Data store D) Data flow Answer: A Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

74) What does the following Data Flow Diagramming shape represent?

A) External entity B) Process C) Data store D) Data flow Answer: B Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 75) What does the following Data Flow Diagramming shape represent?

A) External entity B) Process C) Data store D) Data flow Answer: C Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

76) What does the following Data Flow Diagramming shape represent?

A) External entity B) Process C) Data store D) Data flow Answer: D Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 77) Complete the following sentence. "to capture the detailed complexities of a process, there are ________ different levels to a DFD diagram." A) 2 B) 3 C) 4 D) 5 Answer: B Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 78) A context diagram is also referred to as a ________ diagram. A) Level 0 B) Level 1 C) Level 2 D) Level 3 Answer: A Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

79) Choose from the list below what type of DFD this diagram represents.

A) Level 0 B) Level 1 C) Level 2 D) Level 3 Answer: A Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

80) Choose from the list below what type of DFD this diagram represents.

A) Level 0 B) Level 1 C) Level 2 D) Level 3 Answer: B Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

81) Choose from the list below what type of DFD this diagram represents.

A) Level 0 B) Level 1 C) Level 2 D) Level 3 Answer: C Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

82) Choose from the list below the level that is usually the most detailed. A) Level 0 B) Level 1 C) Level 2 D) Level 3 Answer: C Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 83) Choose from the list below the level that is the least detailed. A) Level 0 B) Level 1 C) Level 2 D) Level 3 Answer: A Diff: 1 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

84) Reference the Level 0 DFD below. How many processes does this DFD include?

A) 0 B) 1 C) 2 D) 3 Answer: B Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

85) Reference the Level 0 DFD below. How many external entities does this DFD include?

A) 1 B) 2 C) 3 D) 4 Answer: D Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

86) Reference the Level 0 DFD below. How many data stores does this DFD include?

A) 0 B) 1 C) 2 D) 3 Answer: A Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

87) Reference the Level 1 DFD below to answer the following question. Process 1.0: Orders Cookies, would include what from the list below?

A) Customer places order and receives receipt. B) Accesses inventory details from inventory C) Process generates a report. D) Store manager uses the report to create an inventory order. Answer: A Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

88) Reference the Level 1 DFD below to answer the following question. Process 2.0: Generate Reports, would include what from the list below?

A) Customer places order and receives receipt. B) Accesses inventory details from inventory C) Process places inventory order with supplier. D) Store manager uses the report to create an inventory order. Answer: B Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

89) Reference the Level 1 DFD below to answer the following question. Process 2.0: Generate Reports, would include what from the list below?

A) Customer places order and receives receipt. B) Process places inventory order with supplier. C) Sends report to store manager D) Store manager uses the report to create an inventory order. Answer: C Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

90) Reference the Level 1 DFD below to answer the following question. Process 3.0: Orders Inventory, would include what from the list below?

A) Customer places order and receives receipt. B) Accesses inventory details from inventory C) Sends report to store manager D) Store manager uses the report to create an inventory order. Answer: D Diff: 2 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

91) Documentation is a formal record that describes a system or process. Companies use documentation for several reasons. Discuss these reasons. Answer: Companies use documentation for: • Complying with regulation • Troubleshooting and maintenance • Consistency across employees' work and how they are trained • Capturing useable information for process improvements • Documenting and evaluating internal control activities Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Introduction AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 92) Companies maintain four levels of documentation, with each level computing different elements of the system, and together they provide a holistic view of the systems operations. These levels start at the bottom with the most detailed descriptions of the system's design and move up to the highest level of instructions for how a user interacts with the system. List the four levels of documentation. Answer: The four levels of documentation include: • System documentation • Program documentation • Operator documentation • User documentation Diff: 2 Learning Objective: 8.1 Explain the goals of documenting systems and processes Section Reference: Introduction AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 93) An organizational chart can be "tall" (vertical) or "flat" (horizontal). Briefly discuss the differences. Answer: A company is tall when numerous levels of management report to the CEO at the top. Large and complex companies usually have a tall organizational structure to ensure that managers have greater oversight of their employees. An org chart is "flat", or horizontal, when there are fewer levels of management reporting to the CEO at the top, as managers have more employees reporting to them. Diff: 3 Learning Objective: 8.2 Differentiate among different documentation techniques Section Reference: Documenting the Business AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

94) Prepare a flowchart from the following narrative: "A user manually inputs customer records into a database" Answer:

Diff: 3 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 95) Prepare a flowchart from the following narrative: "An inventory report is generated from a database" Answer:

Diff: 3 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

96) Prepare a flowchart from the following narrative: "After Julia's Cookies purchases ingredients for local vendors, the cookie dough is mixed at factories and then frozen. The frozen cookie dough is shipped to regional stores and baked when a customer orders a cookie. If the customer buys the cookie in store, the customer pays for the cookie at the register and receives the cookie at the counter. If the customer orders the cookie through the mobile application, the customer pays for the cookie on the mobile app, and the cookie is delivered to the customer's door by a delivery driver." Answer:

Diff: 3 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Shapes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

97) Prepare a flowchart with swim lanes from the following narrative: "After Julia's Cookies purchases ingredients for local vendors, the cookie dough is mixed at factories and then frozen. The frozen cookie dough is shipped to regional stores and baked when a customer orders a cookie. If the customer buys the cookie in store, the customer pays for the cookie at the register and receives the cookie at the counter. If the customer orders the cookie through the mobile application, the customer pays for the cookie on the mobile app, and the cookie is delivered to the customer's door by a delivery driver."

Answer:

Diff: 3 Learning Objective: 8.3 Show how flowcharts illustrate a system or business process Section Reference: Swim Lanes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

98) In Data Flow Diagramming, for a data flow to be valid it must follow three rules. What are the 3 rules for a data flow? Answer: For a data flow to be valid, it must flow: • Between a process and an external entity (either direction) • Between a process and a data store (either direction) • Between two processes that are guaranteed to be running at the same time Diff: 3 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Shapes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 99) A Level 0 DFD is a summary that gives a high-level overview of data flows. The book lists four rules of Level 0 DFDs. What are they? Answer: Level 0 DFDs must: • Fit to one page. • Provide a snapshot of the data flow designed to be understood by all business audiences — from stakeholders to developers. • Only uses external entities, one process that represents the entire system, and data flows; no data stores appear at this level. • Illustrates the exchange of information between external entities and the system. Diff: 3 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

100) Prepare a Level 0 DFD from the following narrative. "A customer will access our Cookie Ordering system via a browser. The customer places an order, a copy is saved, and a copy is sent to the Smart Cookie Bakery. Inventory reports are sent to the Smart Cookie Store Manager. The Smart Cookie Store Manager then places inventory orders with the Suppliers." Answer: Level 0 DFD:

Diff: 3 Learning Objective: 8.4 Summarize how data flow diagrams show the flow of information in a system Section Reference: Levels AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 9 Human Resources and Payroll Processes 1) Human resources are one of the most important A) outputs from a business. B) inputs into a business. C) collection processes in a business. D) conversion processes in a business. Answer: B Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 2) The human resources department activities are part of the A) acquisition and payment processes. B) conversion processes. C) marketing, sales, and collection processes. D) information processes. Answer: A Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 3) The human resources (HR) business function is responsible for all employees and employeerelated operations, including A) recruiting and hiring employees. B) training and developing employees. C) transitioning employees. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

4) Which of the following activities would be a responsibility of the human resources business function? A) Processing payroll B) Accounting for benefit withholdings C) Financing of inputs D) Performance evaluations Answer: D Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 5) What kind of human resource (HR) model allows for certain administrative tasks to be performed by a third party? A) Outsourced benefits administration B) Insourced benefits administration C) HR service sharing D) HR benefits accounting Answer: A Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 6) Along with raw materials, which of the following is also considered an input to a business? A) Customers B) Employees C) Sales D) Operations Answer: B Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

7) Which of the following would not be considered an input to a business? A) Financial resources B) Human resources C) Equipment D) Design Answer: D Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 8) The Human Resources (HR) department is responsible for determining salaries and benefits. Which of these activities is related to that function? A) Determining paid time off B) Training and development C) Determining promotions D) Updating employee data Answer: A Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 9) Mario works in the human resources (HR) department of the Jimmy Sub Corporation. Mario's focus in HR involves employee hiring and transition. Which of the following employee activities will require Mario's involvement for the HR department? A) April attends company orientation. B) May undergoes an annual performance review. C) June receives a promotion and a raise. D) July gets married and needs to update her W4. Answer: C Diff: 3 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

10) Viktoria suggests that the Well Market human resources (HR) department needs to become more innovative in retaining employees. They suggest that remote work or rotations might entice employees to maintain their status at Well Market and reduce the costs associated with hiring and training new staff. To administer either program, Well Market's HR department needs to either hire more staff or find a way to manage more work with the same sized team. Choose the best option for Viktoria and the Well Market HR team? A) The HR team could work more hours and hope that no one gets burned out. B) The HR team could hire new people and try the new programs once the new team members are trained, which could take months. C) The HR team could outsource some administrative tasks and focus on the retention programs themselves. D) The HR team could not change anything and hope that things work out. Answer: C Diff: 3 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 11) Which of the following human resources activities is frequently outsourced? A) Benefits administration B) Annual performance reviews C) Involuntary termination D) Maintaining employee master data Answer: A Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 12) Which relationship between human resources (HR) and payroll is best for business? A) HR and payroll both deal with employees and should be one department. B) HR and payroll have distinctive functions and should be separate. C) Payroll deals with paychecks. HR deals with employee benefits. D) Payroll is processed by the HR department. Answer: B Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

13) Payroll departments perform which activities? A) Wage calculation B) Commission earnings C) Employee pay D) All of these answers are correct. Answer: D Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 14) Payroll for a business should be processed in which department? A) Accounting B) Human resources C) Sales D) All of these answers are correct. Answer: A Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 15) Which department owns the data used for payroll processing? A) Accounting B) Human resources C) Sales D) All of these answers are correct. Answer: B Diff: 1 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

16) If the accounting department handles payroll, why would a company need a human resources (HR) department? A) HR personnel know and understand labor laws. B) HR personnel are trained to handle sensitive issues. C) HR personnel are trained to deal with and reduce the likelihood of HR legal issues. D) All of these answers are correct. Answer: D Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 17) Employee compensation involves A) the HR department. B) tax regulations. C) pre-tax expense accounts. D) All of these answers are correct. Answer: D Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 18) Which of the following is an example of a deduction from an employee's payroll check? A) Federal and state taxes B) Insurance premiums C) Retirement contributions D) All of these answers are correct. Answer: D Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

19) Which department should an employee consult to ask questions about withholdings on a paycheck? A) Accounting B) Human resources C) Payroll D) All of these answers are correct. Answer: B Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 20) Compensating employees is a business process that results in A) an economic exchange of resources. B) no change in the accounting information system. C) changes to the HR database not the information system. D) All of these answers are correct. Answer: A Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 21) Payroll accounting includes contributions to pre-tax accounts that can be spent on specific expenses. Which of the following is an example of a use for pre-tax account? A) Child care B) Meals C) Entertainment D) PTO Answer: A Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

22) Jonah Brothers Entertainment received a notice of legal action related to a job applicant that was not hired based on his thought that the interviewer asked illegal questions during the interview that caused the interviewer to discriminate against the applicant. What HR activity area should be responsible for making sure this issue does not occur again? A) Updating and maintaining employee data B) Monitoring and evaluation C) Recruiting and hiring employees D) Training and developing employees Answer: C Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 23) JIT Technologies promoted Jorge during his last performance evaluation. The promotion also included a raise. What HR related activity is involved with Jorge's good news? A) Monitoring and evaluation B) Transitioning employees C) Payroll processing D) All of these answers are correct. Answer: D Diff: 2 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 24) Which term is accurately described as the process of establishing new employees in the company's systems and helping them quickly adapt to their positions and the company? A) Employee acquisition B) Employee onboarding C) Employee conversion D) Employee hiring Answer: B Diff: 1 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

25) At what point does employee onboarding begin? A) First day on the job B) At the interview C) When a job offer is extended D) When a position is advertised Answer: C Diff: 1 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 26) Which statement concerning employee onboarding is FALSE? A) Employee onboarding is the process of establishing new employees in the company's systems and helping them quickly adapt to their positions and the company. B) Employee onboarding includes the administrative process of establishing the new employee in the payroll and benefits systems. C) Employee onboarding includes ensuring new hires are comfortable, facilitating socialization, and following up with the new-hire. D) Employee onboarding starts on the employee's first day on the job and continues through the new-hire's first few weeks or months. Answer: D Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 27) A successful employee onboarding program reduces what risks for a company? A) Decreased productivity B) Training expenses C) Diminished company reputation D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

28) Poor employee onboarding leads to high employee turnover. What risks are associated with high employee turnover? A) Expenses of training an ever-changing workforce B) Challenges associated with negative reputation from employees and past employees C) Decreased productivity from employees who are not integrated in the company D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 29) What department is responsible for the employee onboarding process? A) Human resources B) Department manager C) Payroll D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 30) Many large accounting firms onboard groups of new hires together. The onboarding process includes several weeks of training together. In what way can this type of onboarding be beneficial to the firm? A) New hires create relationships with one another that can support them throughout their career. B) New hires learn about the corporate culture during the training process. C) New hires become comfortable and establish relationships, thus increasing retention. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

31) Which statement concerning the evaluation of employee onboarding processes is FALSE? A) To evaluate an onboarding process, you need to understand how responsibilities are divided among responsible parties. B) An onboarding process flowchart is all that must be reviewed as it denotes the order of the steps in the process and who is responsible. C) A thorough evaluation includes talking to employees to find out if the process flowchart is a true reflection of operations. D) The evaluation of an employee onboarding process includes a review of process documentation and employee interviews. Answer: B Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 32) As a risk advisory consultant, you are asked to review a company's employee onboarding process. What should you ask for to begin your evaluation? A) Process flowchart B) Onboarding documentation C) Appointments to meet with employees D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 33) Companies mitigate risks associated with employee onboarding by implementing and enforcing A) external payroll administration. B) control activities. C) background checks. D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

34) Which of the following statements about control activities related to employee onboarding is FALSE? A) The cost of employee onboarding control activities should not exceed the benefit. B) Business processes like HR, payroll, and onboarding do not have a master list of controls. C) Companies should establish and document policies and procedures for hiring. D) Control activities focus on fraud prevention to prevent financial loss for the company. Answer: D Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 35) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's employee data was part of a data breach from a third-party background check provider. What action do you recommend that Swiftly Tech take? A) Swiftly Tech should forgo background checks to avoid sharing confidential employee data with other companies. B) Swiftly Tech should require background check providers to have their own internal controls to ensure confidentiality and security of data. C) Swiftly Tech should require employees to acquire and provide their own background check data. D) All of these answer choices are correct. Answer: B Diff: 3 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

36) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's new hires often fail to understand company policies. What action do you recommend that Swiftly Tech take? A) Swiftly Tech should include an employment agreement in the new hire package that requires that the employee sign that the job description and employee's responsibilities are understood. B) Swiftly Tech should require that new hires attend an employee orientation that includes a review of the employee handbook before beginning their job duties. C) Swiftly Tech should have new hires acknowledge receipt and understanding of company policies. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 37) As a risk advisory consultant, you are asked to evaluate and recommend improvements for the employee onboarding process for Swiftly Tech. During your evaluation you discover that Swiftly Tech's payroll department adds employees based on an email from the HR department. The lack of controls could result in payroll fraud. What do you recommend that Swiftly Tech do to avoid potential payroll fraud? A) Swiftly Tech could require completed new hire documentation paperwork prior to employee record creation in the payroll system. B) Swiftly Tech could require that all employee data be secured and changes are only made by authorized individuals. C) Swiftly Tech could schedule frequent independent reviews of new hire data in the system to ensure validity and accuracy. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

38) What role in a company should be responsible for ensuring that employee onboarding processes are efficient and effective? A) Payroll manager B) Hiring department manager C) Employee relations manger D) Human resources manager Answer: D Diff: 1 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 39) Which employee onboarding action may prevent high employee turnover? A) Individual online training for employees B) Onboard training and engagement with employees after their onboarding C) Emails including policies and procedures D) A first day on the job that gets the employee started in their assigned role Answer: B Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 40) What kind of risk might employee social events prevent? A) High employee turnover B) Employee policy violations C) Payroll fraud D) Low productivity Answer: A Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

41) A violation of employment laws for hiring could result in lawsuits, fines, or reputational damage. What kind of control activity might a company initiate to prevent such a risk? A) Establish a policy that employees complete a new hire package prior to their first day. B) Establish a policy that provides for a comprehensive onboarding week for new hires. C) Establish a policy that only the HR department extend offer letters for employment. D) Establish and maintain a comprehensive employee agreement for all employees. Answer: C Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 42) Which statement concerning employee onboarding analytics is TRUE? A) Employee onboarding analytics focuses on providing context to the mass of historical data generated in the employee onboarding process. B) Employee onboarding analytics includes reports on the number of new hires and number of hiring violations detected. C) Employee onboarding analytics focuses on providing a dashboard of data for HR management to review daily. D) Employee onboarding analytics includes reports on internal control exception reports, hiring issues, and compliance fines and penalties. Answer: B Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 43) What type of employee onboarding analytics may identify issues in the onboarding process? A) Analysis of employee master data B) Analysis of post-onboarding surveys completed by hiring managers C) Analysis of post-onboarding surveys completed by new hires D) Analysis of the percentage of tenured employees versus new hires in each department Answer: C Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

44) Which of the following is an example of employee onboarding analytics? A) Third-party background checks on new hires B) Employee policy receipt acknowledgement and understanding certification C) Ongoing training and engagement with employees D) Comparison of new hire compensation to departmental budgets to identify variances Answer: D Diff: 1 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 45) What type of employee onboarding analytics may identify fictitious employees? A) Analysis of employee master data for nonmatching information B) Analysis of post-onboarding surveys completed by hiring managers C) Analysis of post-onboarding surveys completed by new hires D) Analysis of the percentage of tenured employees versus new hires in each department Answer: A Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 46) What type of employee onboarding analytics may yield identification of skillset gaps among new hires? A) Analysis of employee master data for nonmatching information B) Analysis of post-onboarding surveys completed by hiring managers C) Analysis of post-onboarding surveys completed by new hires D) Analysis of the percentage of tenured employees versus new hires in each department Answer: B Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

47) Which business process manages the removal of an employee from active employment status? A) Employee onboarding B) Employee violation C) Employee termination D) Employee offboarding Answer: C Diff: 1 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 48) Which of the following is the responsibility of HR during the employee termination process? A) HR answers questions from the departing employee. B) HR answers questions from the departing employee's managers. C) HR minimizes potential damage during the termination process. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 49) For which of the following reasons should HR be involved with the process of firing an employee? A) HR is involved to ensure that the situation is handled properly, doesn't escalate, and to mitigate the risk of a retaliatory ex-employee filing a lawsuit. B) HR is involved to prevent the employee manager from having to face the ex-employee and answer questions about why the firing occurred. C) HR is involved to ensure that the ex-employee leaves immediately and has no access to speak with employees about any issues. D) HR is involved to prevent the ex-employee not having access to sabotage the company or steal company property or information. Answer: A Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

50) Public accounting firms often require terminated employees to exit on the same day as a resignation is submitted, even in the event of a voluntary termination. Why is the same-day exit necessary? A) Public accounting firms are required by accounting regulations to not allow employees to work after submitting a resignation. B) Public accounting firms must prevent conflicts of interest if the employee has already accepted a job offer from a direct competitor. C) Public accounting firms are required by HR standards to interview and escort ex-employees from the building and immediately terminate electronic access. D) Public accounting firms must prevent ex-employees from discussing any company matters with others at the company after termination. Answer: B Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 51) Which of the following events constitutes an employee termination? A) Retirement B) Death C) Layoff D) All of these answers are correct. Answer: D Diff: 1 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 52) What department is involved in employee termination administrative processes? A) Human resources B) Ex-employee's department C) Information technology D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

53) Which of the following is the best definition of severance? A) Severance is the process followed by HR when an employee resigns from a position. B) Severance is the policy that managers follow regarding employee resignations. C) Severance is the process of handling corporate layoffs. D) Severance is the pay package for employees involved in layoffs not related to employee performance. Answer: D Diff: 1 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 54) What occurs during an exit interview? A) Employees meet with HR to apply and interview for a different position within the company. B) Employees meet with their former manager to go over details of current projects. C) Employees meet with HR to discuss reasons for leaving and post-termination benefits. D) Employees meet with their former manager to share details about retained employees' conduct. Answer: C Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 55) At what point in the employee termination process is data collected from the exiting employee? A) Submission of resignation letter B) HR notification C) HR exit interview D) No data is collected. Answer: C Diff: 1 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

56) For what reasons do employee terminations present risks to a company? A) Employee onboarding is time-consuming and expensive. B) Changing employees decreases productivity. C) Ex-employees could retaliate with legal or defamatory actions. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 57) What type of control activity is implemented to prevent a terminated employee from using proprietary company information elsewhere? A) All employee issued technology, including storage devices, are collected at the exit interview. B) Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle. C) Employee access to the system is disabled immediately upon termination. D) Terminated employees sign a noncompete agreement during the exit interview. Answer: D Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 58) What type of control activity is implemented to prevent unauthorized expenses related to terminated employees? A) All employee issued technology, including storage devices, are collected at the exit interview. B) Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle. C) Employee access to the system is disabled immediately upon termination. D) Terminated employees sign a noncompete agreement during the exit interview. Answer: B Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

59) What type of HR control activity is implemented to prevent a wrongful termination lawsuit? A) Managers must complete an HR-authorized employee termination checklist and submit to HR. B) Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle. C) Employee access to the system is disabled immediately upon termination. D) Terminated employees sign a noncompete agreement during the exit interview. Answer: A Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 60) What type of control activity is implemented to prevent malicious actions against company systems and data? A) All employee issued technology, including storage devices, are collected at the exit interview. B) Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle. C) Employee access to the system is disabled immediately upon termination. D) Terminated employees sign a noncompete agreement during the exit interview. Answer: C Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 61) What type of control activity is implemented to prevent financial losses related to fraudulent payments to terminated employees? A) All employee issued technology, including storage devices, are collected at the exit interview. B) Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle. C) Employee access to the system is disabled immediately upon termination. D) HR conducts an independent review of the payroll administrator's employee records status to validate it is no longer active. Answer: D Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

62) Highly valuable data is collected during the exit interview. What types of employee termination reports might be valuable for review? A) Number of completed employee terminations B) Number of each type of employee terminations C) Turnover rate D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 63) Henri joined a public accounting firm as an intern for the summer. Henri's final project involved evaluating the firm's employee termination control activities with a goal of developing additional control activities to prevent unnecessary reputation damages for the firm. Which of the following control activities might Henri suggest? A) Complete an HR-authorized employee termination checklist and submit to HR. B) Require HR presence at firings to ensure proper procedures and mitigate risks. C) Remove employee's authority to act on behalf of the firm and conduct firm business. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 64) Employee termination analytics may lead to improvements in business processes and departmental operations. What type of analytics may identify ongoing corporate issues? A) Trend analysis of reasons provided during exit interviews for voluntary terminations B) Comparison of length of employment to feedback from onboarding activities C) Time series analysis of seasonal trends in voluntary terminations D) Drilling into employee termination reports by department and supervisor Answer: A Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

65) Employee termination analytics may lead to improvements in business processes and departmental operations. What type of analytics may identify potential issues with specific managers? A) Trend analysis of reasons provided during exit interviews for voluntary terminations B) Comparison of the length of employment to feedback from onboarding activities C) Time series analysis of seasonal trends in voluntary terminations D) Drilling into employee termination reports by department and supervisors Answer: D Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 66) Employee termination analytics may lead to improvements in business processes and departmental operations. What type of analytics may identify issues between the onboarding experience and retention? A) Trend analysis of reasons provided during exit interviews for voluntary terminations B) Comparison of length of employment to feedback from onboarding activities C) Time series analysis of season trends in voluntary terminations D) Drilling into employee termination reports by department and supervisors Answer: B Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 67) Employee termination analytics may lead to improvements in business processes and departmental operations. What type of analytics may identify issues related to employees leaving after annual reviews, promotions, or bonuses? A) Trend analysis of reasons provided during exit interviews for voluntary terminations B) Comparison of length of employment to feedback from onboarding activities C) Time series analysis of seasonal trends in voluntary terminations D) Drilling into employee termination reports by department and supervisors Answer: C Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 23

68) Machiko joined the HR department at Takano Accounting. Takano has asked Machiko to evaluate the well-documented employee termination process for Takano. Machiko has identified that despite Takano being a public accounting firm, the company often sets exit interviews and final employment dates several days employees voluntarily resign. Takano may be at risk of A) employee retaliation based on wrongful termination. B) the employee acting on a conflict of interest in favor of their new employer. C) increased turnover rates by high-performing employees. D) employee records remaining in the payroll system after termination. Answer: B Diff: 3 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 69) Josephine joined a Big 4 accounting firm as an intern for the summer. Josephine's final project involved evaluating the firm's employee termination control activities with a goal of developing additional control activities to prevent unnecessary financial losses for the firm. Which of the following control activities might Josephine suggest that will prevent financial loss? A) Clear all advances and employee receivables prior to the employee's final paycheck. B) Company credit cards are collected from the employee, paid, and closed at the end of the billing cycle. C) Remove employee's authority to act on behalf of the firm and conduct firm business. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 70) The primary purpose of a company is to A) create products. B) pay their employees. C) please shareholders. D) maximize profits. Answer: D Diff: 1 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

71) What is the primary determinate of the balance between the amount of time an employee spends earning a salary and the satisfaction received during leisure time? A) Salary amount B) Time off C) Job satisfaction D) Personal fulfillment Answer: A Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 72) What is at the heart of a company's payroll business process? A) Payroll accounting B) Employees and their time worked C) Human resources D) Accounting system Answer: B Diff: 1 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 73) What business process calculates wages to compensate employees with their entitled pay? A) Human resources B) Accounting C) Payroll D) Enterprise resource planning Answer: C Diff: 1 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

74) At what phase of maturity would a company be that has implemented a HR and payroll module in a fully integrated enterprise resource planning system? A) Phase 1 — Limited B) Phase 2 — Informal C) Phase 3 — Defined D) Phase 4 — Optimized Answer: D Diff: 1 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 75) Which of the following is NOT a factor to determine a company's degree of integration in HR and payroll systems? A) Cost of an enterprise-wide system B) Size of business C) Reduction of data redundancy D) Ability to generate user buy-in Answer: C Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 76) Which off the following is a factor to consider when determining a company's degree of integration in HR and payroll systems? A) Support from management B) Size of the business C) Ability to generate user buy-in D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

77) Which of the following is an advantage to integrating the information system for HR and payroll processing? A) Reducing data redundancies B) Improving data quality C) Quick access to data D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 78) Which of the following is NOT an advantage to integrating the information system for HR and payroll processing? A) Creating a single source for HR and payroll data B) Minimizing efforts for data collection C) Ability to generate user buy-in D) Providing streamlined access to data Answer: C Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 79) Which of the following statements concerning payroll is TRUE? A) Payroll is a straightforward process of distributing wages to employees. B) Payroll processing occurs at third-party vendors so it is not under control of the company. C) Payroll and HR data remain separate to allow for data control via duplication. D) Payroll is not as straightforward as simply distributing the hourly rate or annual salary to employees. Answer: D Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

80) Payroll includes A) distributing annual salary and hourly wages to employees. B) several financial accounting journal entries. C) calculation and payment of payroll taxes. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 81) Gross pay is comprised of A) salaries and wages expenses. B) salaries and payroll tax expenses C) salaries, payroll taxes, and employee benefits. D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 82) Employee payroll deductions become A) expenses to the company. B) liabilities to the company until paid to third parties. C) employee benefits expense. D) paid-time off liabilities. Answer: B Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

83) Which of the following statements concerning payroll taxes is TRUE? A) Employees are responsible for 100% of employee payroll taxes. B) Employers are responsible for 100% of employee payroll taxes. C) Employees and employers share the costs of Social Security and Medicare taxes equally. D) Employees pay the cost for unemployment taxes. Answer: C Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 84) Employee vacation and paid-time-off benefits accrual include a debit to an expense account and a credit to a(n) A) liability account. B) asset account. C) income account. D) other expense account. Answer: A Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 85) Payroll expenses reduce A) net income on the income statement. B) stockholder's equity on the balance sheet. C) stockholder's equity on the statement of stockholder's equity. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

86) What type of processing accumulates transactions into groups and processes them at regular intervals? A) Real-time B) Journal C) Batch D) Group Answer: C Diff: 1 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 87) What type of payroll processing control is designed to prevent unauthorized payroll transactions being processed? A) Reconcile payroll and employee records. B) Complete a payroll processing checklist for each pay period. C) Controller reviews and signs payroll checks. D) Reconcile payroll withholdings and the general ledger accounts. Answer: C Diff: 3 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 88) What type of payroll processing control is designed to avoid fines associated with noncompliance with statutory requirements? A) Reconcile payroll and employee records. B) Complete a payroll processing checklist for each pay period. C) Controller reviews and signs payroll checks. D) Reconcile payroll withholdings and the general ledger accounts. Answer: D Diff: 3 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

89) What type of payroll processing control is designed to avoid inaccurate payroll data and inappropriate payments to employees? A) Reconcile payroll and employee records. B) Complete a payroll processing checklist for each pay period. C) Controller reviews and signs payroll checks. D) Reconcile payroll withholdings and the general ledger accounts. Answer: A Diff: 3 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 90) As a high fraud-risk area, payroll data is used to conduct fraud tests. Which of the following is a fraud test for ghost employees? A) Comparison of wages earned to employee job classification B) Cumulative payroll journal C) Payroll processed for employees before their start dates or after their termination dates D) Comparison of timecard data to payroll data to identify variances Answer: C Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 91) What type of payroll fraud is analyzed using the comparison of current payroll period wages with previous payroll periods? A) Unauthorized payroll adjustments B) Ghost employees C) Unauthorized payroll deposits D) Duplicate employees Answer: A Diff: 2 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

92) What role in the company should be the control owner to restrict access to employee master data to a limited number of individuals segregated from payroll processing? A) Payroll manager B) HR manager C) Accounts payable manager D) Controller Answer: B Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 93) Yakomoto hired Sumi to review ways the company could use their existing human resource (HR) department, whom all have great relationships with the existing employees, to help Yakomoto grow. Explain how Sumi and the HR department might use an outsourced model to focus on Yakomoto's growth. Answer: Sumi could help Yakomoto find a suitable third-party to outsource benefits administration to free up more time for the Yakomoto HR team to focus on other more important matters. With more time the Yakomoto HR team could develop an in-house workforce training program to build employee competencies and increase efficiency. Additionally, the HR team could focus on promoting innovation, creativity, and flexibility to help Yakomoto grow. A third way the outsourced model could benefit the HR team is by allowing more time to manage an employee rotation program to allow employees to be cross-trained in other areas and help them understand how the business functions. These HR initiatives could help Yakomoto grow. Diff: 3 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 94) International Machine (IM) recently discovered internal fraud related to payroll checks. Currently, IM has the HR department process payroll checks since they possess the data required to accurately calculate the checks. What change would you recommend to IM to prevent payroll check fraud in the future? Answer: IM should process payroll in the accounting department. While HR owns and manages the data necessary for payroll check processing, the accounting department should process the payroll checks to ensure proper segregation of duties between HR and the accounting department. Diff: 3 Learning Objective: 9.1 Explain the relationship between human resources and payroll. Section Reference: How are Human Resources and Payroll Related? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 32

95) A regional accounting firm with locations in 7 states hired Ana as an HR risk advisory consultant. The firm is concerned with the high employee turnover rate in some areas in certain states and has asked Ana to evaluate the situation. List the steps that Ana should take. Answer: 1) Ana should request a process flowchart for the employee onboarding process. 2) Ana should review the process flowchart to see how it works and who the responsible parties are for each step in the process. 3) Ana should interview employees and responsible parties to determine if the flowchart reflects the actual processes are being followed. 4) Ana should evaluate control activities for each step in the process. Diff: 2 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 96) A regional accounting firm with locations in 7 states hired Ana as an HR risk advisory consultant. The firm is concerned with the high employee turnover rate in some areas in certain states and has asked Ana to evaluate the situation. Ana has discovered there is no specified employee onboarding process. List the included elements Ana should provide to the firm for the employee onboarding process. Answer: 1) HR department extends offer letters of employment with detailed job descriptions. 2) Employees receive a new hire package that includes an employment agreement and employment policies. 3) The firm should provide a robust orientation program to each employee about the company and its culture. 4) The HR department should coordinate opportunities to socialize, ongoing training, and engagement after onboarding. Diff: 3 Learning Objective: 9.2 Evaluate the employee onboarding process. Section Reference: How Are New Employees Hired? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

97) Why is it important for a manager to know and follow HR policies and procedures when terminating an employee? Answer: The HR department implements policies and procedures to protect the company and manager from ex-employee legal retaliation. Additionally, following HR policies and procedures and working with the HR department keeps the termination process professional during an oftenstressful situation. HR employees are trained to act efficiently and professionally on short notice when employee terminations are necessary. Diff: 2 Learning Objective: 9.3 Evaluate the employee termination process. Section Reference: What Happens When an Employee is Terminated? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 98) Jameson, an HR employee at TYR Enterprises, recently completed training in data analytics. Jameson wants to use his new skillset to analyze employee exit interview data to discover trends that could be discussed during the quarterly HR trainings conducted with departmental managers. What types of employee termination analytics could Jameson perform that would be beneficial to share with departmental managers? Answer: Jameson could conduct a trend analysis of reasons provided during exit interviews for voluntary terminations to identify ongoing issues. Jameson could also analyze employee termination reports by drilling down into data to create turnover metrics by department and or supervisors. This analysis could help departmental managers understand and prevent employee turnover, thereby reducing overall employee turnover risk for TYR. Diff: 3 Learning Objective: 9.5 How Can Human Resource and Payroll Data Be Used to Identify Risks? Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 99) Discuss the advantages for a company to pursue a higher level of maturity and integrate the information systems for payroll processes. Answer: An integrated system includes a single source for HR and payroll data. The single source reduces redundancy and as a result improves data quality. Efforts are minimized for data collection and entry, and access to data is streamlined providing quick access to the HR department and to department managers and supervisors. Diff: 2 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

100) Evaluate the journal entry below: Employee Benefits Expense Employee Health Insurance Payable

5,000 5,000

When the company pays the health insurance premium to the provider, what journal entry occurs in the information system? Answer: Employee Health Insurance Payable 5,000 Cash 5,000 Diff: 3 Learning Objective: 9.4 Assess the payroll processing process. Section Reference: How Do We Compensate Employees for Their Work? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 10 Purchasing and Payments Process 1) Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction. A) Selecting vendors B) Returning goods or negotiating allowances C) Paying for purchases D) Receiving raw materials Answer: A Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 2) Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction. A) Returning goods or negotiating allowances B) Negotiating contracts and payment terms C) Paying for purchases D) Receiving raw materials Answer: B Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

3) Some business activities in the purchasing and payments processes result in the exchange of economic resources and recording of accounting transactions. Other activities in the processes do not result in an accounting transaction. Choose from the list below the activity that does NOT result in an accounting transaction. A) Returning goods or negotiating allowances B) Paying for purchases C) Ordering raw materials D) Receiving raw materials Answer: C Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 4) In which financial statement is a line item for inventory found? A) Balance sheet B) Income statement C) Cash flow statement D) Statement of shareholder equity Answer: A Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 5) Inventory is a balance sheet line item that includes all items used in the creation of products. Which of the following is classified as an item that is used in the creation of a product? A) Raw materials B) Work in progress C) Finished goods D) Cash Answer: A Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

6) Inventory is a balance sheet line item that includes all items used in the creation of products. Which of the following is classified as products in the process of being manufactured? A) Raw materials B) Work in progress C) Finished goods D) Cash Answer: B Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 7) Inventory is a balance sheet line item that includes all items used in the creation of products. Which of the following is classified as products ready to ship to customers? A) Raw materials B) Work in progress C) Finished goods D) Cash Answer: C Diff: 1 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

8) Review the diagram below:

What business activity does A represent? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: A Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

9) Review the diagram below:

What business activity does B represent? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: B Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

10) Review the diagram below:

What business activity does C represent? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: B Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

11) Review the diagram below:

What business activity does D represent? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: C Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

12) Review the diagram below:

What business activity does E represent? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: D Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

13) Review the diagram below:

Which deliverable is A? A) Purchase Requisition B) Purchase Order C) Receiving Report D) Check or electronic transfer Answer: A Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

14) Review the diagram below:

Which deliverable is B? A) Purchase Requisition B) Purchase Order C) Receiving Report D) Check or electronic transfer Answer: B Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

15) Review the diagram below:

Which deliverable is C? A) Purchase Requisition B) Purchase Order C) Receiving Report D) Check or electronic transfer Answer: C Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

16) Review the diagram below:

Which deliverable is D? A) Purchase Requisition B) Purchase Order C) Receiving Report D) Check or electronic transfer Answer: D Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 17) There are four departments in a company that are directly involved in the purchasing processes. Which department manages inventory and is responsible for ensuring that there is an optimal amount of inventory on hand, issuing requisitions when additional inventory is required? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: A Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

18) There are four departments in a company that are directly involved in the purchasing processes. Which department receives the purchase requisitions and transforms them into purchase orders? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: B Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 19) There are four departments in a company that are directly involved in the purchasing processes. Which department receives the orders along with a supplier-generated packing slip, checks the condition of the shipment and counts the quantities? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: C Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 20) There are four departments in a company that are directly involved in the purchasing processes. Which department receives the vendor invoices? A) Inventory Control B) Purchasing C) Receiving D) Accounts Payable Answer: D Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

21) Choose from the list below the best definition of Inventory management. A) Inventory management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes. B) Inventory management oversees the lifecycle of a product from procuring raw materials through customer sales. C) Inventory management receives the orders along with a supplier-generated packing slip, which shows quantities and descriptions. D) Inventory management are products in the process of being manufactured. Answer: A Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Management AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 22) Choose from the list below the best definition of Supply chain management. A) Supply chain management is the process that coordinates the communication of inventory availability and needs across the purchasing, conversion and sales processes. B) Supply chain management oversees the life cycle of a product from procuring raw materials through customer sales. C) Supply chain management receives the orders along with a supplier-generated packing slip, which shows quantities and descriptions. D) Supply chain management are products in the process of being manufactured. Answer: B Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Supply Chain Management AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 23) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes. A) Purchasing B) Sales C) Operations D) Marketing Answer: A Diff: 1 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Purchasing Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 14

24) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes. A) Sales B) Receiving C) Operations D) Marketing Answer: B Diff: 1 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Purchasing Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 25) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes. A) Sales B) Operations C) Warehouse D) Marketing Answer: C Diff: 1 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Purchasing Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 26) Numerous departments are involved in the purchases and payments processes. Choose from the list below one of the departments that is involved in the purchases and payments processes. A) Sales B) Operations C) Marketing D) Accounts Payable Answer: D Diff: 1 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Purchasing Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

27) Choose from the list below the best control activity to prevent receiving products from unapproved vendors. A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards. B) All purchases routed through the purchasing department C) Segregation of duties D) Implement training for employees who communicate with vendors for purchasing. Answer: A Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 28) Choose from the list below the best control activity to prevent purchases from unapproved vendors which are conflicts of interest or unauthorized related-party transactions that may result in regulatory or reputational damage. A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards. B) All purchases routed through the purchasing department C) Segregation of duties D) Implement training for employees who communicate with vendors for purchasing. Answer: B Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 29) Choose from the list below the best control activity to prevent unauthorized changes to the vendor table that may result in fraudulent purchases or loss of financial assets. A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards. B) All purchases routed through the purchasing department C) Segregation of duties D) Implement training for employees who communicate with vendors for purchasing. Answer: C Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 16

30) Choose from the list below the best control activity to prevent entering oral or written contracts prior to the completion of the vendor onboarding process that may result in a financial obligation to unapproved vendors. A) Regularly review approved vendors and their performance. Update the database to remove inactive vendors and those who do not meet performance standards. B) All purchases routed through the purchasing department C) Segregation of duties D) Implement training for employees who communicate with vendors for purchasing. Answer: D Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 31) Choose from the list below the best control activity to prevent unauthorized purchase requisitions that may result in unauthorized or fraudulent purchases. A) An authorized person from the department making the request must approve the requisition. B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities. C) Match purchase requisitions with purchase orders and generate an exception report investigation. D) Each blanket purchase order must specify monetary limits and have a specified duration. Answer: A Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

32) Choose from the list below the best control activity to prevent unauthorized purchase orders submitted to an unauthorized vendor that may result in unauthorized or fraudulent purchases. A) An authorized person from the department making the request must approve the requisition. B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities. C) Match purchase requisitions with purchase orders and generate an exception report investigation. D) Each blanket purchase order must specify monetary limits and have a specified duration. Answer: B Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 33) Choose from the list below the best control activity to prevent purchase requisitions split into more than one purchase order to circumvent authorized limits that may result in unauthorized or fraudulent purchases. A) An authorized person from the department making the request must approve the requisition. B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities. C) Match purchase requisitions with purchase orders and generate an exception report investigation. D) Each blanket purchase order must specify monetary limits and have a specified duration. Answer: C Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

34) Choose from the list below the best control activity to prevent blanket purchase orders that may result in excessive purchases. A) An authorized person from the department making the request must approve the requisition. B) Separate the duties of ordering goods from receiving, payment, and accounting responsibilities. C) Match purchase requisitions with purchase orders and generate an exception report investigation. D) Each blanket purchase order must specify monetary limits and have a specified duration. Answer: D Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 35) Choose from the list below the best control activity to prevent accepting goods that were not ordered. A) Three-way matching of purchase order, receiving report, and vendor invoice prior to payment B) Implement an e-procurement system that matches the scheduled delivery window period with the delivery date. C) Match goods received data to data on purchase orders. D) Restrict physical access to the receiving department. Answer: A Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 36) Choose from the list below the best control activity to prevent goods accepted earlier or later than the scheduled delivery date that may result in excessive or obsolete inventory. A) Three-way matching of purchase order, receiving report, and vendor invoice prior to payment B) Implement an e-procurement system that matches the scheduled delivery window period with the delivery date. C) Match goods received data to data on purchase orders. D) Restrict physical access to the receiving department. Answer: B Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 19

37) Choose from the list below the best control activity to prevent goods that are received but not recorded. A) Three-way matching of purchase order, receiving report, and vendor invoice prior to payment B) Implement an e-procurement system that matches the scheduled delivery window period with the delivery date. C) Match goods received data to data on purchase order. D) Restrict physical access to the receiving department. Answer: C Diff: 2 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 38) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes. A) Purchasing B) Sales C) Operations D) Marketing Answer: A Diff: 1 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 39) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes. A) Sales B) Receiving C) Operations D) Marketing Answer: B Diff: 1 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

40) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes. A) Sales B) Operations C) Accounts Payable D) Marketing Answer: C Diff: 1 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 41) Numerous departments are involved in the fixed assets purchases and payments processes. Choose from the list below one of the departments that is involved in the fixed assets purchases and payments processes. A) Sales B) Operations C) Marketing D) Fixed Asset Accounting Answer: D Diff: 1 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 42) The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "The department that uses a particular fixed asset generally initiates the purchasing process with a purchase requisition." A) Stage 1: Asset Procurement B) Stage 2: Receiving and Tagging C) Stage 3: Recording Assets D) Stage 4: Asset Reconciliation Answer: A Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

43) The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "Routine purchases of fixed assets follow a common pattern; the fixed asset is inspected, the receiving report is prepared, the fixed asset is delivered to the requesting department for installation and/or use, fixed assets are tagged for future identification purposes." A) Stage 1: Asset Procurement B) Stage 2: Receiving and Tagging C) Stage 3: Recording Assets D) Stage 4: Asset Reconciliation Answer: B Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 44) The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "The accounting for a fixed asset occurs when the asset is recorded." A) Stage 1: Asset Procurement B) Stage 2: Receiving and Tagging C) Stage 3: Recording Assets D) Stage 4: Asset Reconciliation Answer: C Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 45) The textbook discussed four of the stages of the Fixed Asset acquisitions process. Which stage corresponds to the following description? "In addition to the purchasing and payment journal entries, the fixed asset accountant ensures the fixed asset subsidiary ledger is updated." A) Stage 1: Asset Procurement B) Stage 2: Receiving and Tagging C) Stage 3: Recording Assets D) Stage 4: Asset Reconciliation Answer: D Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 22

46) Choose the best definition from the list below of bid rigging. A) Vendors collude with one another and reach advance agreement as to the winning bidder for a particular contract. The winning bidder agrees to compensate the other vendors in some manner. B) An external document used to request a supplier to sell and deliver the products in the quantities and for the prices specified C) A supplier generated document, which shows quantities and descriptions of items delivered to the receiving department at the specified warehouse location D) A document that shows the descriptions and quantities of goods received from vendors Answer: A Diff: 1 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 47) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk. A) Tagging all fixed assets B) Expand the list of bidders to make it more difficult for bidders to collude. C) Regular management review of fixed asset accounting transactions and trends in fixed asset ratios D) Periodically checking fixed assets against the fixed asset records Answer: B Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 48) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk. A) Tagging all fixed assets B) Regular management review of fixed asset accounting transactions and trends in fixed asset ratios C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders. D) Periodically checking fixed assets against the fixed asset records Answer: C Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 23

49) Bid rigging and kickbacks create unfair and uncompetitive bidding processes which may result in financial losses due to paying higher prices in the absence of competition. Choose the best control activity to address this risk. A) Tagging all fixed assets B) Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger C) Periodically checking fixed assets against the fixed asset records D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud. Answer: D Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 50) Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk. A) Tagging all fixed assets B) Expand the list of bidders to make it more difficult for bidders to collude. C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders. D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud. Answer: A Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

51) Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk. A) Expand the list of bidders to make it more difficult for bidders to collude. B) Ensure regular management review of fixed asset accounting transactions and trends in fixed asset ratios. C) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders. D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud. Answer: B Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 52) Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk. A) Expand the list of bidders to make it more difficult for bidders to collude. B) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders. C) Periodically checking physical fixed assets against the fixed asset records D) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud. Answer: C Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

53) Capitalizing items that are not fixed assets may result in inflated net income and assets, financial statement misstatements, fines and penalties, or reputational damage. Choose the best control activity to address this risk. A) Expand the list of bidders to make it more difficult for bidders to collude. B) Require bidders to sign and submit non-collusion affidavits stating the bidder has not colluded with employees or other bidders. C) Have a code of conduct that employees must agree to and sign, as well as training for employees that includes firing and legal actions for engaging in fraud. D) Monthly fixed asset reconciliation and independent review of the subsidiary ledger with the general ledger Answer: D Diff: 2 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Internal Control over Fixed Asset Acquisitions AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 54) The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match. A) Purchasing B) Sales C) Operations D) Marketing Answer: A Diff: 1 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 55) The 3-way match takes documents from 3 departments and matches them before paying a vendor invoice. Choose from the list below one of the departments a document should be received from by accounts payable to perform the match. A) Sales B) Receiving C) Operations D) Marketing Answer: B Diff: 1 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 26

56) The traditional three-way match matches the purchase order, receiving report and what other document? A) Vendor invoice B) Sales order C) Vendor table D) Packing slip Answer: A Diff: 1 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 57) The traditional three-way match matches the purchase order, vendor invoice and what other document? A) Sales order B) Receiving report C) Vendor table D) Packing slip Answer: B Diff: 1 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 58) The traditional three-way match matches the receiving report, vendor invoice and what other document? A) Sales order B) Vendor table C) Purchase order D) Packing slip Answer: C Diff: 1 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

59) Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk. A) Report missing numbers in a sequence of prenumbered checks or ETFs for investigation and resolution. B) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher C) A three-way match against the purchase order, receiving report, and vendor's invoice D) Take advantage of all supplier discounts if favorable to the company. Answer: A Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 60) Unrecorded payments may result in duplicate payments to vendors or misstatement of financial statements by overstating cash and accounts payable. Choose the best control activity to address this risk. A) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher B) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period C) A three-way match against the purchase order, receiving report, and vendor's invoice D) Take advantage of all supplier discounts if favorable to the company. Answer: B Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

61) Payments recorded in the wrong vendor account may result in duplicate payments to vendors. Choose the best control activity to address this risk. A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period B) A three-way match against the purchase order, receiving report, and vendor's invoice C) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher D) Take advantage of all supplier discounts if favorable to the company. Answer: C Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 62) Payments recorded in the wrong vendor account may result in duplicate payments to vendors. Choose the best control activity to address this risk. A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period B) A three-way match against the purchase order, receiving report, and vendor's invoice C) Comparison of vendor ID in cash payments journal with vendor ID on supporting documentation and payments voucher D) Take advantage of all supplier discounts if favorable to the company. Answer: C Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 63) Payments recorded in the wrong vendor account may result in duplicate payments to vendors. Choose the best control activity to address this risk. A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period B) A three-way match against the purchase order, receiving report, and vendor's invoice C) Take advantage of all supplier discounts if favorable to the company. D) Reconciliation of vendor statements with the accounts payable subsidiary ledger Answer: D Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

64) Payments made to unauthorized or nonexistent purchases may result in fraudulent misappropriation of cash. Choose the best control activity to address this risk. A) Apply a three-way match against the purchase order, receiving report, and vendor's invoice. B) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period C) Take advantage of all supplier discounts if favorable to the company. D) Reconciliation of vendor statements with accounts payable subsidiary ledger Answer: A Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 65) Payments made to unauthorized or nonexistent purchases may result in fraudulent misappropriation of cash. Choose the best control activity to address this risk. A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period B) Comparison of payment information with purchase order and receiving report information C) Take advantage of all supplier discounts if favorable to the company. D) Reconciliation of vendor statements with accounts payable subsidiary ledger Answer: B Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 66) Invoices paid twice may result in overpayments to vendors. Choose the best control activity to address this risk. A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period B) Comparison of payment information with purchase order and receiving report information C) Vendor invoice, payment voucher and supporting documentation must be tagged or cancelled to prevent reuse. D) Take advantage of all supplier discounts if favorable to the company. Answer: C Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

67) The use of cash not being optimized may result in loss of assets and poor cash management. Choose the best control activity to address this risk. A) Comparison of the total of the authorized vouchers submitted for payment to the total in the cash disbursements journal for a specific period B) Comparison of payment information with purchase order and receiving report information C) Vendor invoice, payment voucher and supporting documentation must be tagged or cancelled to prevent reuse. D) Take advantage of all supplier discounts if favorable to the company. Answer: D Diff: 2 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Internal Control over Payments to Vendors AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 68) There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below. A) Inventory B) Bill of Material C) Time and Attendance D) Payroll Answer: A Diff: 1 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Database Design AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 69) There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below. A) Bill of Material B) Shipping/Receiving C) Time and Attendance D) Payroll Answer: B Diff: 1 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Database Design AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

70) There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below. A) Bill of Material B) Time and Attendance C) Fixed Assets D) Payroll Answer: C Diff: 1 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Database Design AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 71) There are five modules in the ERP system cloud map that support the specific purchasing and payment business processes. Choose one of the modules from the list below. A) Bill of Material B) Time and Attendance C) Payroll D) Accounts Payable Answer: D Diff: 1 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Database Design AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 72) The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report is summarized to show what products have been received within a period of time? A) Product received — by time B) Purchase requisitions filled and open C) Purchase orders filled and open D) Purchase orders aging Answer: A Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

73) The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists the total number of purchase requisitions that have been purchased or remain outstanding within a period of time? A) Product received — by time B) Purchase requisitions filled and open C) Purchase orders filled and open D) Purchase orders aging Answer: B Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 74) The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists the total number of purchase orders that have been completed by suppliers and vendors or remain outstanding within a period of time? A) Product received — by time B) Purchase requisitions filled and open C) Purchase orders filled and open D) Purchase orders aging Answer: C Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 75) The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists days purchase orders have been outstanding classified in buckets? A) Product received — by time B) Purchase requisitions filled and open C) Purchase orders filled and open D) Purchase orders aging Answer: D Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

76) The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report lists the items on backorder from suppliers and vendors? A) Backorder report B) Purchase requisitions filled and open C) Purchase orders filled and open D) Purchase orders aging Answer: A Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 77) The data collected during the purchasing of raw materials can be converted into several purchasing reports. Below is a list of some of those reports. Which report is a master list of all approved vendors from the vendor master table? A) Product received — by time B) Main vendor table C) Purchase orders filled and open D) Purchase orders aging Answer: B Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 78) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic describes how long it took to receive an order, quantity of goods received, and condition of goods received? A) Vendor performance B) Receiving reconciliation C) Vendor prices D) Vendor frequency Answer: A Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

79) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic compares the goods received to the approved purchase order? A) Vendor performance B) Receiving reconciliation C) Vendor prices D) Vendor frequency Answer: B Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 80) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic analyzes vendor price increases greater than a threshold amount over a period of time? A) Vendor performance B) Receiving reconciliation C) Vendor prices D) Vendor frequency Answer: C Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 81) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic analyzes the frequency of purchasing at a single vendor increasing greater than a threshold over time? A) Vendor performance B) Receiving reconciliation C) Vendor prices D) Vendor frequency Answer: D Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 35

82) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic analyzes vendors with the same telephone number, address, or email? A) Duplicate vendor data B) Receiving reconciliation C) Vendor prices D) Vendor frequency Answer: A Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 83) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic compares vendor telephone numbers, addresses, emails, and bank accounts to the employee master table? A) Vendor performance B) Vendor-employee comparison C) Vendor prices D) Vendor frequency Answer: B Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 84) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic analyzes discount terms given, discounts taken, and discounts forfeited? A) Vendor performance B) Receiving reconciliation C) Discounts D) Vendor frequency Answer: C Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 36

85) The raw material purchasing reports can provide management with insight into how to improve processes. Additional raw materials purchasing analytics can be used for decision making and dashboards. Which raw material purchasing analytic calculates purchasing ratios, such as accounts payable turnover days, purchasing to sales, and purchases growth to sales growth? A) Vendor performance B) Receiving reconciliation C) Vendor prices D) Financial ratios Answer: D Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 86) The data collected during the accounts payable process can be converted into several accounts payable reports. Below is a list of some of those reports. Which accounting journal report captures all payments recorded? A) Cash disbursements journal B) Purchases by vendor C) Accounts payable D) Vendor aging report Answer: A Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 87) The data collected during the accounts payable process can be converted into several accounts payable reports. Below is a list of some of those reports. Which report summarizes purchases by vendor over a specific period of time to look for unusual activity? A) Cash disbursements journal B) Purchases by vendor C) Accounts payable D) Vendor aging report Answer: B Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

88) The data collected during the accounts payable process can be converted into several accounts payable reports. Below is a list of some of those reports. Which report lists outstanding accounts payable balances, which can be summarized by vendor? A) Cash disbursements journal B) Purchases by vendor C) Accounts payable D) Vendor aging report Answer: C Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 89) The data collected during the accounts payable process can be converted into several accounts payable reports. Below is a list of some of those reports. Which report summarizes outstanding accounts payable by vendor and separates them into buckets based on the number of days outstanding? A) Cash disbursements journal B) Purchases by vendor C) Accounts payable D) Vendor aging report Answer: D Diff: 2 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 90) There are five business activities involved in the purchasing process. i. Pay for the inventory received ii. Order the inventory iii. Determine inventory to order iv. Receive the inventory v. Request availability and prices Put these activities in the correct order. Answer: Determine inventory to order, request availability and prices, order the inventory, receive the inventory, pay for the inventory received Diff: 2 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 38

91) Raw materials are purchased from a seller, called a supplier or vendor. While the terms "supplier" and "vendor" may sound interchangeable, there's a subtle difference between them. Briefly describe the differences between suppliers and vendors. Answer: Both supply goods and/or services but are differentiated based on who they supply. • Vendors supply in both B2C and B2B sales relationships • A supplier only enters B2B relationships Diff: 3 Learning Objective: 10.1 Describe the relationship between the inventory purchasing and payments processes, inventory management, and supply chain management. Section Reference: Inventory Purchasing and Payments Processes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 92) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. RAM Manufacturing uses an approved vendor table. Senior management of RAM Manufacturing wants to ensure that only approved vendors are used. Discuss some of the general control activities RAM Manufacturing may want to implement for the approved vendor table. Answer: RAM Manufacturing may want to: • Use automated supplier portals to validate vendors and obtain required documentation before approving and adding them to the vendor table. • Use documented and authorized policies and procedures, with established criteria and screening mechanisms to evaluate vendors. Diff: 3 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

93) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. Senior management of RAM Manufacturing wants to ensure that appropriate controls are used in the purchasing department. Discuss some of the general control activities RAM Manufacturing may want to implement for purchase orders. Answer: RAM Manufacturing may want to: • Implement an e-procurement system, which can integrate with their ERP system, for automation of the purchasing process. • Implement a paperless evaluated receipt settlement (ERS) system between suppliers and the company. • Prenumber and account for purchase requisitions and purchase orders. Diff: 3 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 94) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. Senior management of RAM Manufacturing wants to ensure that appropriate controls are used in the receiving department. Discuss some of the general control activities RAM Manufacturing may want to implement for receiving. Answer: RAM Manufacturing may want to: • Maintain segregation of duties. • Physically segregate receiving employees from warehouse storage areas, production, and shipping. • Ensure that each physical facility should have its own receiving location. • Restrict physical access to the receiving department. • Install cameras in the receiving areas. • Control access to the receiving system. • Implement an e-procurement system. • Ensure that all receiving exceptions are returned to the supplier or else investigated and resolved in a timely manner, with an audit trail of evidence documenting the physical movement of goods. • Ensure that policies and procedures and training for employees in receiving are clearly documented and authorized. • Implement an ongoing performance monitoring program of suppliers using receiving department reports. Diff: 3 Learning Objective: 10.2 Summarize the purchasing process for inventory and other goods or services. Section Reference: Internal Control over Purchasing AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 40

95) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. RAM Manufacturing recently purchased a new warehouse building for $350,000, paid $3,000 in legal fees, $10,000 in agent commissions and $150,000 to remodel the warehouse. The land on which the warehouse sits cost $170,000. RAM Manufacturing took out a mortgage for $500,000 and paid the remainder in cash. Record the journal entry. Answer: The journal entry is: Land 170,000 Building 513,000 Mortgage Loan 500,000 Cash 183,000 Diff: 3 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Synthesis AICPA: AC: Reporting 96) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing maintains a lot of inventory and uses NetSuite as their ERP system. RAM Manufacturing recently purchased a new laser marking machine for $27,500 and a used industrial strength lathe for $25,300. $1,950 worth of cleaning and maintenance was required to get the lathe ready for use. RAM Manufacturing took out an equipment loan for $40,000 and paid the remainder in cash. Record the journal entry. Answer: The journal entry is: Equipment 54,750 Equipment Loan 40,000 Cash 14,750 Diff: 3 Learning Objective: 10.3 Explain the fixed asset acquisitions process. Section Reference: Fixed Asset Acquisitions Process AACSB: Analytic Bloom's: Synthesis AICPA: AC: Reporting

97) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing is considering purchasing and implementing an ERP system but has not yet chosen a vendor. Maeve, an accounts payable clerk, manually recorded a payment in the wrong vendor account and this eventually resulted in duplicate payments to the vendor. What control activity could be implemented to prevent this risk in the future? Answer: Maeve should run a comparison of the Vendor ID in the cash payments journal with the vendor ID on supporting documentation and the payments voucher. Also, she/he should reconcile the vendor statement with the accounts payable subsidiary ledger. Diff: 3 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 98) RAM Manufacturing LLC is a small but rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing is considering purchasing and implementing an ERP system but has not yet chosen a vendor. Maeve, an accounts payable clerk, processes accounts payable twice per month and regularly fails to take advantage of offered vendor payment discounts. What control activity could be implemented to prevent this risk in the future? Answer: Maeve should take advantage of all available supplier discounts if favorable to the company. Diff: 3 Learning Objective: 10.4 Evaluate the credit payments process. Section Reference: Credit Payments Process AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

99) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, an accounts payable analyst, is performing a three-way match before issuing payments to the vendors. RAM Manufacturing recently went live with NetSuite as their ERP system. However, they have not yet started using the receiving system and use Microsoft Excel to track receipts. Therefore, Maeve must match the combined purchase order and invoice with a separate spreadsheet that has the receiving report data. Purchase and invoice data:

Receiving report spreadsheet:

Do all the invoices pass the three-way match? If not, explain why. Answer: Purchase order 100240 does not pass the three-way match because the quantity invoiced and received is greater than the amount purchased. The vendor sent and invoiced more than RAM Manufacturing ordered. Diff: 3 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Database Design AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

100) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, an accounts payable analyst, is performing a three-way match before issuing payments to the vendors. RAM Manufacturing recently went live with NetSuite as their ERP system. However, they have not yet started using the receiving system and use Microsoft Excel to track receipts. Therefore, Maeve must match the combined purchase order and invoice with a separate spreadsheet that has the receiving report data. Purchase and invoice data:

Receiving report spreadsheet:

Do all the invoices pass the three-way match? If not, explain why. Answer: Purchase order 100243 does not pass the three-way match because the quantity invoiced and received is greater than the amount purchased. The vendor sent and invoiced more than RAM Manufacturing ordered. Diff: 3 Learning Objective: 10.5 Use the key data in the underlying database for reporting and insights. Section Reference: Database Design AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 11 Conversion Processes 1) Resources like ________ and ________ are combined and converted into a product that can be purchased and used. A) raw materials, labor B) finished goods, labor C) raw materials, equipment D) equipment, labor Answer: A Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 2) Producing products to sell is the primary objective of a manufacturing business. Doing this successfully depends on an efficient and effective manufacturing conversion process. Manufacturing efficiency is a balance between three goals. These goals include: controlling the costs of resources, the rate of production, and what other goal? A) Finished goods inventory levels B) The quality of finished goods C) The selling price of the finished goods D) The location of production Answer: B Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

3) Producing products to sell is the primary objective of a manufacturing business. Doing this successfully depends on an efficient and effective manufacturing conversion process. Manufacturing efficiency is a balance between three goals. These goals include: controlling the costs of resources, the quality of finished goods, and what other goal? A) Finished goods inventory levels B) The selling price of the finished goods C) The rate of production D) The location of production Answer: C Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 4) Producing products to sell is the primary objective of a manufacturing business. Doing this successfully depends on an efficient and effective manufacturing conversion process. Manufacturing efficiency is a balance between three goals. These goals include: the rate of production, controlling the quality of finished goods, and what other goal? A) Finished goods inventory levels B) The selling price of the finished goods C) The location of production D) Controlling the costs of resources Answer: D Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

5) Overall equipment effectiveness (OEE) is a key performance indicator that measures how well production resources are used by identifying the percentage of productive manufacturing time. An OEE of 100% means that ________, produced at the fastest speeds (100% performance), and manufactured without interruptions in production (100% availability). Management uses OEE to identify process and performance improvements potential. A) all products produced are acceptable (100% quality) B) all products produced are sold (100% sales) C) all products produced are properly inventoried (100% finished) D) all products produced are shipped (100% shipped) Answer: A Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 6) Overall equipment effectiveness (OEE) is a key performance indicator that measures how well production resources are used by identifying the percentage of productive manufacturing time. An OEE of 100% means that all products produced are acceptable (100% quality), ________, and manufactured without interruptions in production (100% availability). Management uses OEE to identify process and performance improvement potential. A) produced and sold (100% sales) B) produced at the fastest speeds (100% performance) C) produced and properly inventoried (100% finished) D) produced and shipped (100% shipped) Answer: B Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

7) Overall equipment effectiveness (OEE) is a key performance indicator that measures how well production resources are used by identifying the percentage of productive manufacturing time. An OEE of 100% means that all products produced are acceptable (100% quality), produced at the fastest speeds (100% performance), and ________. Management uses OEE to identify process and performance improvement potential. A) manufactured and sold (100% sales) B) manufactured and properly inventoried (100% finished) C) manufactured without interruptions in production (100% availability) D) manufactured and shipped (100% shipped) Answer: C Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 8) What is the correct order for the Manufacturing Conversion Processes? A) Product Development, Production Planning, Production Scheduling, Manufacturing Operations, Quality Management B) Production Scheduling, Product Development, Production Planning, Manufacturing Operations, Quality Management C) Product Development, Production Planning, Quality Management, Production Scheduling, Manufacturing Operations D) Production Planning, Production Scheduling, Product Development, Manufacturing Operations, Quality Management Answer: A Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

9) What are the source document output(s) of the Product Development process? A) Bill of materials, operations list B) Production plan C) Production schedule, production orders, material requisitions, move tickets D) Production reports, job time tickets Answer: A Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 10) What are the source document output(s) of the Production Planning process? A) Bill of materials, operations list B) Production plan C) Production schedule, production orders, material requisitions, move tickets D) Production reports, job time tickets Answer: B Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 11) What are the source document output(s) of the Production Scheduling process? A) Bill of materials, operations list B) Production plan C) Production schedule, production orders, material requisitions, move tickets D) Production reports, job time tickets Answer: C Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

12) What are the source document output(s) of the Manufacturing Operations process? A) Bill of materials, operations list B) Production plan C) Production schedule, production orders, material requisitions, move tickets D) Production reports, job time tickets Answer: D Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 13) What are the source document output(s) of the Quality Management process? A) Testing reports B) Production plan C) Production schedule, production orders, material requisitions, move tickets D) Production reports, job time tickets Answer: A Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 14) Choose from the following selections the best definition of the Product Development process. A) Transform product ideas into product specifications B) Develop a long-term outlook of production activities C) Schedule production D) Manufacture the products Answer: A Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management

15) Choose from the following selections the best definition of the Production Planning process. A) Transform product ideas into product specifications B) Develop a long-term outlook of production activities C) Schedule production D) Manufacture the products Answer: B Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 16) Choose from the following selections the best definition of the Production Scheduling process. A) Transform product ideas into product specifications B) Develop a long-term outlook of production activities C) Schedule production D) Manufacture the products Answer: C Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 17) Choose from the following selections the best definition of the Manufacturing Operations process. A) Transform product ideas into product specifications B) Develop a long-term outlook of production activities C) Schedule production D) Manufacture the products Answer: D Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management

18) Choose from the following selections the best definition of the Quality Management process. A) Test products for quality B) Develop a long-term outlook of production activities C) Schedule production D) Manufacture the products Answer: A Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 19) Choose from the following selections the best definition of the bill of materials (BOM). A) A document that specifies the components of a product, including descriptions and quantities of required raw materials and parts B) A document that provides a sequence of production events C) A document that provides a long-term outline of what and when products will be manufactured D) A document that provides a short-term allocation of plant machinery and resources to the manufacturing of products Answer: A Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 20) Choose from the following selections the best definition of an operations list. A) A document that specifies the components of a product, including descriptions and quantities of required raw materials and parts B) A document that provides a sequence of production events C) A document that provides a long-term outline of what and when products will be manufactured D) A document that provides a short-term allocation of plant machinery and resources to the manufacturing of products Answer: B Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 8

21) Choose from the following selections the best definition of a production plan. A) A document that specifies the components of a product, including descriptions and quantities of required raw materials and parts B) A document that provides a sequence of production events C) A document that provides a long-term outline of what and when products will be manufactured D) A document that provides a short-term allocation of plant machinery and resources to the manufacturing of products Answer: C Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 22) Choose from the following selections the best definition of a production schedule. A) A document that specifies the components of a product, including descriptions and quantities of required raw materials and parts B) A document that provides a sequence of production events C) A document that provides a long-term outline of what and when products will be manufactured D) A document that provides a short-term allocation of plant machinery and resources to the manufacturing of products Answer: D Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management

23) Choose from the following selections the best definition of a master production schedule (MPS). A) A document where every production operation is scheduled at a specific calendar time, resources and workers are assigned, and steps are outlined to utilize all resources effectively B) A document that authorizes the movement of raw materials from inventory into production C) A barcode tag to authorize and track movements of a single manufacturing job from one location in production to another D) A document that summarizes the total manufacturing cost of a product, which is important in recording the cost of inventory and cost of goods sold in the general ledger Answer: A Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 24) Choose from the following selections the best definition of a materials requisition request. A) A document where every production operation is scheduled at a specific calendar time, resources and workers are assigned, and steps are outlined to utilize all resources effectively B) A document that authorizes the movement of raw materials from inventory into production C) A barcode tag to authorize and track movements of a single manufacturing job from one location in production to another D) A document that summarizes the total manufacturing cost of a product, which is important in recording the cost of inventory and cost of goods sold in the general ledger Answer: B Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management

25) Choose from the following selections the best definition of a move ticket. A) A document where every production operation is scheduled at a specific calendar time, resources and workers are assigned, and steps are outlined to utilize all resources effectively B) A document that authorizes the movement of raw materials from inventory into production C) A barcode tag to authorize and track movements of a single manufacturing job from one location in production to another D) A document that summarizes the total manufacturing cost of a product, which is important in recording the cost of inventory and cost of goods sold in the general ledger Answer: C Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 26) Choose from the following selections the best definition of a production report. A) A document where every production operation is scheduled at a specific calendar time, resources and workers are assigned, and steps are outlined to utilize all resources effectively B) A document that authorizes the movement of raw materials from inventory into production C) A barcode tag to authorize and track movements of a single manufacturing job from one location in production to another D) A document that summarizes the total manufacturing cost of a product, which is important in recording the cost of inventory and cost of goods sold in the general ledger Answer: D Diff: 1 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 27) Which control activity listed below is a product development control activity? A) Regularly analyze warranty and repair costs. B) Manufacture products according to authorized BOM, BOO, and MPS documents. C) Automate manufacturing operations. D) Adhere to industry regulations and safety standards. Answer: A Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 11

28) Which control activity listed below is a production planning and scheduling control activity? A) Regularly analyze warranty and repair costs. B) Manufacture products according to authorized BOM, BOO, and MPS documents. C) Automate manufacturing operations. D) Adhere to industry regulations and safety standards. Answer: B Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 29) Which control activity listed below is a manufacturing operations control activity? A) Regularly analyze warranty and repair costs. B) Manufacture products according to authorized BOM, BOO, and MPS documents. C) Automate manufacturing operations. D) Adhere to industry regulations and safety standards. Answer: C Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 30) Which control activity listed below is a quality management control activity? A) Regularly analyze warranty and repair costs. B) Manufacture products according to authorized BOM, BOO, and MPS documents. C) Automate manufacturing operations. D) Adhere to industry regulations and safety standards. Answer: D Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

31) Which is the best definition of inventory management? A) Inventory management involves overseeing the processes of ordering, storing, and using a business's inventory. B) Inventory management involves overseeing the life cycle of a product from procuring raw materials through customer sales. C) Inventory management involves testing products to ensure that they meet regulatory and corporate specifications. D) Inventory management involves the research and testing of new products or potential changes to existing products. Answer: A Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Managing Inventory and Product Life Cycle AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 32) Which is the best definition of supply chain management? A) Inventory management involves overseeing the processes of ordering, storing, and using a business's inventory. B) Inventory management involves overseeing the life cycle of a product from procuring raw materials through customer sales. C) Inventory management involves testing products to ensure that they meet regulatory and corporate specifications. D) Inventory management involves the research and testing of new products or potential changes to existing products. Answer: B Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Managing Inventory and Product Life Cycle AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

33) GAAP for financial reporting requires that a manufacturer's inventory on the balance sheet and cost of goods sold on the income statement consist of: ________, the cost of direct labor, and the cost of manufacturing overhead. A) the cost of direct materials B) the cost of shipping C) the cost of sales, general and administration (SG&A) D) the expense of IT Answer: A Diff: 1 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 34) GAAP for financial reporting requires that a manufacturer's inventory on the balance sheet and cost of goods sold on the income statement consist of: the cost of direct materials, ________, and the cost of manufacturing overhead. A) the cost of shipping B) the cost of direct labor C) the cost of sales, general and administration (SG&A) D) the expense of IT Answer: B Diff: 1 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 35) GAAP for financial reporting requires that a manufacturer's inventory on the balance sheet and cost of goods sold on the income statement consist of: the cost of direct materials, the cost of direct labor, and A) the cost of shipping. B) the cost of sales, general and administration (SG&A). C) the cost of manufacturing overhead. D) the expense of IT. Answer: C Diff: 1 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 14

36) Traditional cost accounting assigns production costs differently, depending on the product or service. Which choice below best describes job-order costing? A) Job-order costing assigns costs to products or services that meet specific needs of an individual customer. B) Job-order costing determines the total cost of the production and averages it over the units produced. C) Job-order costing identifies specific business activity pools or fundamental business. processes and then assigns costs based on the resources consumed by that activity or process. D) Job-order costing assigns costs based on the machinery they are manufactured on. Answer: A Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 37) Traditional cost accounting assigns production costs differently, depending on the product or service. Which choice below best describes process costing? A) Process costing assigns costs to products or services that meet specific needs of an individual customer. B) Process costing determines the total cost of the production and averages it over the units produced. C) Process costing identifies specific business activity pools or fundamental business processes and then assigns costs based on the resources consumed by that activity or process. D) Process costing assigns costs based on the machinery they are manufactured on. Answer: B Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

38) Traditional cost accounting assigns production costs differently, depending on the product or service. Which cost accounting method would likely be used for pumps built to specific customer specification? A) Activity-based costing B) Machine setup costing C) Job-order costing D) Process costing Answer: C Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 39) Traditional cost accounting assigns production costs differently, depending on the product or service. Which cost accounting method would likely be used for a mass-produced frozen cookie mix? A) Activity-based costing B) Machine setup costing C) Job-order costing D) Process costing Answer: D Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 40) For accounting purposes, the salaries, wages, and benefit expenses of employees directly involved in the production process are called what? A) Direct labor B) Indirect factory labor C) Direct material costs D) Indirect material costs Answer: A Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

41) For accounting purposes, the salaries, wages, and benefit expenses of an employee who runs a lathe machine on the factory floor would be classified as what? A) Direct labor B) Indirect factory labor C) Direct material costs D) Indirect material costs Answer: A Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 42) For accounting purposes, the salaries, wages, and benefit expenses of a quality control inspector would be classified as what? A) Direct labor B) Indirect factory labor C) Direct material costs D) Indirect material costs Answer: B Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 43) For accounting purposes, the costs of the steel consumed in the manufacture of a brake drum would be classified as what? A) Direct labor B) Indirect factory labor C) Direct material costs D) Indirect material costs Answer: C Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

44) For accounting purposes, the costs of the cleaning supplies to clean the machines used to manufacture the brake drums would be classified as what? A) Direct labor B) Indirect factory labor C) Direct material costs D) Indirect material costs Answer: D Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 45) For accounting purposes, the insurance on the manufacturing facility would be classified as what? A) Manufacturing overhead B) Indirect factory labor C) Direct material costs D) Indirect material costs Answer: A Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

46) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is a newly hired cost accountant. RAM Manufacturing's has developed a new disc brake that lasts longer than brakes from their competitors. After calculating all the direct, indirect and overhead costs, Maeve assigns a cost of $44.50 per disc brake assembly. RAM Manufacturing has manufactured 100,000 of their new disc brake and sold 60,000 to their largest customer. Before shipping any brakes to customers, what is their finished goods inventory? A) $4,450,000 B) $2,670,000 C) $1,780,000 D) $3,570,000 Answer: A Explanation: 100,000 * $44.50 cost per disc brake assembly. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 47) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is a newly hired cost accountant. RAM Manufacturing's has developed a new disc brake that lasts longer than brakes from their competitors. After calculating all the direct, indirect and overhead costs, Maeve assigns a cost of $44.50 per disc brake assembly. RAM Manufacturing has manufactured 100,000 of their new disc brake and sold 60,000 to their largest customer. After shipping the 60,000 disc brakes to this largest customer, what is their cost of goods sold? A) $4,450,000 B) $2,670,000 C) $1,780,000 D) $3,570,000 Answer: B Explanation: 60,000 * $44.50 cost per disc brake assembly. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

48) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is a newly hired cost accountant. RAM Manufacturing's has developed a new disc brake that lasts longer than brakes from their competitors. After calculating all the direct, indirect and overhead costs, Maeve assigns a cost of $44.50 per disc brake assembly. RAM Manufacturing has manufactured 100,000 of their new disc brake and sold 60,000 to their largest customer. After shipping the 60,000 disc brakes to the largest customer, what is their remaining finished goods inventory? A) $4,450,000 B) $2,670,000 C) $1,780,000 D) $3,570,000 Answer: C Explanation: 40,000 * $44.50 cost per disc brake assembly. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 49) Cost accounting assigns production costs differently, depending on the product or service. Which choice below best describes activity-based costing? A) Activity-based costing assigns costs to products or services that meet specific needs of an individual customer. B) Activity-based costing determines the total cost of the production and averages it over the units produced. C) Activity-based costing identifies specific business activity pools or fundamental business processes and then assigns costs based on the resources consumed by that activity or process. D) Activity-based costing assigns costs based on the machinery they are manufactured on. Answer: C Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Activity-Based Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

50) Traditional cost accounting assigns production costs differently, depending on the product or service. Which cost accounting method is made easier by the implementation of an ERP system? A) Activity-based costing B) Machine setup costing C) Job-order costing D) Process costing Answer: A Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Activity-Based Cost Accounting AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 51) The cost accounting function determines product costs, costs of goods sold, and inventory values for financial reporting purposes and management reporting. What is a sample control activity that could be used to control for misstatements in costs that may result in a material misstatement of financial reports? A) Document and authorize product cost accounting procedures that describe costing methods. B) Use a BOM for every product in all steps of production. C) Allocate indirect labor and overhead to products on an approved and consistent basis. D) Ensure that system development is reviewed by appropriate IT and accounting staff. Answer: A Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Product Costing Internal Controls AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 52) The cost accounting function determines product costs, costs of goods sold, and inventory values for financial reporting purposes and management reporting. What is a sample control activity that could be used to control for inadequate product cost recording that may result in error, fraud, or financial losses? A) Document and authorize product cost accounting procedures that describe costing methods. B) Use a BOM for every product in all steps of production. C) Implement change management and supporting IT general controls. D) Ensure that system development is reviewed by appropriate IT and accounting staff. Answer: B Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Product Costing Internal Controls AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 21

53) The cost accounting function determines product costs, costs of goods sold, and inventory values for financial reporting purposes and management reporting. What is a sample control activity that could be used to control for a poorly designed cost accounting system which may result in misallocation of costs to products? A) Document and authorize product cost accounting procedures that describe costing methods. B) Use a BOM for every product in all steps of production. C) Control and account for raw materials issued to production. D) Ensure that system development is reviewed by appropriate IT and accounting staff. Answer: D Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Product Costing Internal Controls AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 54) Choose the best definition of digital manufacturing from the choices below. A) Digital manufacturing involves automated, digital processes using Industrial Internet of Things (IIoT) technologies. B) Digital manufacturing involves manual, digital processes using Industrial Internet of Things (IIoT) technologies. C) Digital manufacturing involves automated, analog processes using Industrial Internet of Things (IIoT) technologies. D) Digital manufacturing involves automated, digital data using Industrial Internet of Things (IIoT) technologies. Answer: A Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 55) Choose the best definition of digital twin from the choices below. A) A digital twin involves using Industrial Internet of Things (IIoT) technologies to virtually manufacture a product. B) A digital twin is a digital duplicate or software model of the physical object. C) A digital twin is manufacturing a duplicate product in clay for testing purposes. D) A digital twin is when an organization tests a product in the field. Answer: B Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Digital Manufacturing Environment AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 22

56) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Employees might be resistant to change if they fear losing their jobs. C) Predicting and preempting machinery and equipment failure by performing functions like self-calibration and self-diagnosis. D) Leadership support plays an essential role in the success of an initiative. Answer: C Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 57) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Employees might be resistant to change if they fear losing their jobs. C) Leadership support plays an essential role in the success of an initiative. D) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model. Answer: D Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

58) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) Connecting equipment and asset sensors to the cloud to improve equipment reliability and reduce unplanned outages. B) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. C) Employees might be resistant to change if they fear losing their jobs. D) Leadership support plays an essential role in the success of an initiative. Answer: A Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 59) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Processing employee performance metrics through machine learning data models to identify at-risk employees and use the data to improve productivity and reduce attrition. C) Employees might be resistant to change if they fear losing their jobs. D) Leadership support plays an essential role in the success of an initiative. Answer: B Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

60) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Employees might be resistant to change if they fear losing their jobs. C) Eliminating manufacturing traffic jams D) Leadership support plays an essential role in the success of an initiative. Answer: C Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 61) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Employees might be resistant to change if they fear losing their jobs. C) Leadership support plays an essential role in the success of an initiative. D) Decreasing manufacturing cycle times, which is the time required to produce an order. Answer: D Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

62) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) Using a digital twin for a product to improve measurement and manufacturing accuracy. B) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. C) Employees might be resistant to change if they fear losing their jobs. D) Leadership support plays an essential role in the success of an initiative. Answer: A Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 63) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Improving production quality and output C) Employees might be resistant to change if they fear losing their jobs. D) Leadership support plays an essential role in the success of an initiative. Answer: B Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

64) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is an advantage that companies see by using digital manufacturing? A) A digital factory requires securing every network, cloud platform, operating system, and application across its supply chain and production network. B) Employees might be resistant to change if they fear losing their jobs. C) Providing more flexibility to meet customer demands D) Leadership support plays an essential role in the success of an initiative. Answer: C Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 65) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) A manufacturer needs to secure every network, cloud platform, operating system, and application across its supply chain and production network. B) Eliminating manufacturing traffic jams C) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model D) Decreasing manufacturing cycle times, which is the time required to produce an order Answer: A Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

66) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) Eliminating manufacturing traffic jams B) IIoT generates huge amounts of data. C) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model D) Decreasing manufacturing cycle times, which is the time required to produce an order Answer: B Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 67) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) Eliminating manufacturing traffic jams B) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model C) Corporate risk appetites may not align with IIoT risks. D) Decreasing manufacturing cycle times, which is the time required to produce an order Answer: C Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

68) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) Eliminating manufacturing traffic jams B) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model C) Decreasing manufacturing cycle times, which is the time required to produce an order D) Immature and fragmented business processes present a barrier to delivering intelligent automation. Answer: D Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 69) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) Employees might resist change if they fear losing their jobs. They might enjoy a comfort level and familiarity with existing processes and systems. B) Eliminating manufacturing traffic jams C) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model D) Decreasing manufacturing cycle times, which is the time required to produce an order Answer: A Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

70) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) Eliminating manufacturing traffic jams B) Leadership support plays an essential role in the success of an initiative. C) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model D) Decreasing manufacturing cycle times, which is the time required to produce an order Answer: B Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 71) A digital factory that is connected, networked, and fully integrated creates opportunities to minimize costs of downtime and underperformance in production and to enable the best output from factory assets and employees. What is a challenge that companies face when using digital manufacturing? A) Eliminating manufacturing traffic jams B) Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model C) Implementing advanced technologies like these can be challenging for many IT departments D) Decreasing manufacturing cycle times, which is the time required to produce an order Answer: C Diff: 2 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

72) The manufacturing conversion and supply chain management processes involve 11 ERP features from the Financial, Production, and Supply Chain Management modules. Which of the following modules is part of the manufacturing conversion and supply chain management processes? A) Production B) Human resources management C) Customer relationship management D) Sales management Answer: A Diff: 1 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 73) The manufacturing conversion and supply chain management processes involve 11 ERP features from the Financial, Production, and Supply Chain Management modules. Which of the following modules is part of the manufacturing conversion and supply chain management processes? A) Human resources management B) Financial C) Customer relationship management D) Sales management Answer: B Diff: 1 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management

74) The manufacturing conversion and supply chain management processes involve 11 ERP features from the Financial, Production, and Supply Chain Management modules. Which of the following modules is part of the manufacturing conversion and supply chain management processes? A) Human resources management B) Customer relationship management C) Supply chain management D) Sales management Answer: C Diff: 1 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 75) What is one of the key tables that store data needed in the manufacturing conversion process? A) Bill of material B) Sales C) Employee D) Customer Answer: A Diff: 1 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Database Design AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management 76) What is one of the key tables that store data needed in the manufacturing conversion process? A) Sales B) Vendor C) Employee D) Customer Answer: B Diff: 1 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Database Design AACSB: None Bloom's: Knowledge AICPA: AC: Systems and Process Management

77) Production reports range from source documents to key metrics. Which is the best description of a production plan? A) A long-term plan depicting what will be produced and when based on customer product demand and allocation of resources B) A list of raw materials, steps, and parts needed to manufacture a product C) A list of sequential steps followed to manufacture a product D) A build plan that compiles planned orders into a short-term schedule Answer: A Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 78) Production reports range from source documents to key metrics. Which is the best description of a bill of materials (BOM)? A) A long-term plan depicting what will be produced and when based on customer product demand and allocation of resources B) A list of raw materials, steps, and parts needed to manufacture a product C) A list of sequential steps followed to manufacture a product D) A build plan that compiles planned orders into a short-term schedule Answer: B Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 79) Production reports range from source documents to key metrics. Which is best description of a bill of operations (BOO)? A) A long-term plan depicting what will be produced and when based on the customer product demand and allocation of resources B) A list of raw materials, steps, and parts needed to manufacture a product C) A list of sequential steps followed to manufacture a product D) A build plan that compiles planned orders into a short-term schedule Answer: C Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 33

80) Production reports range from source documents to key metrics. Which is the best description of a master production schedule (MPS)? A) A long-term plan depicting what will be produced and when based on customer product demand and allocation of resources B) A list of raw materials, steps, and parts needed to manufacture a product C) A list of sequential steps followed to manufacture a product D) A build plan that compiles planned orders into a short-term schedule Answer: D Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 81) Production reports range from source documents to key metrics. Which is the best description of production orders filled and open? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of costs by product within a period of time C) Comparison of the actual production costs to standard production costs D) Revenue from the sales processes showing top-selling products for production management decision making Answer: A Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 82) Production reports range from source documents to key metrics. Which is the best description of total manufacturing costs of products by period? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of costs by product within a period of time C) Comparison of the actual production costs to standard production costs D) Revenue from the sales processes showing top-selling products for production management decision making Answer: B Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 34

83) Production reports range from source documents to key metrics. Which is the best description of actual versus standard or budgeted production costs? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of costs by product within a period of time C) Comparison of the actual production costs to standard production costs D) Revenue from the sales processes showing top-selling products for production management decision making Answer: C Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 84) Production reports range from source documents to key metrics. Which is the best description of top-selling products? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of costs by product within a period of time C) Comparison of the actual production costs to standard production costs D) Revenue from the sales processes showing top-selling products for production management decision making Answer: D Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 85) Production reports range from source documents to key metrics. Which is the best description of production volume by machinery? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of volume produced by machine type C) Summary of machine downtime, including reasons for the downtime D) Summary of customer-returned items, including reasons for the returns Answer: B Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management

86) Production reports range from source documents to key metrics. Which is the best description of downtime causes? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of volume produced by machine type C) Summary of machine downtime, including reasons for the downtime D) Summary of customer-returned items, including reasons for the returns Answer: C Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 87) Production reports range from source documents to key metrics. Which is the best description of return items by reason? A) The total number of orders that have been filled or remain outstanding within a period of time B) Summary of volume produced by machine type C) Summary of machine downtime, including reasons for the downtime D) Summary of customer-returned items, including reasons for the returns Answer: D Diff: 2 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Reporting and Insights AACSB: None Bloom's: Application AICPA: AC: Systems and Process Management 88) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, a recent college graduate, has been hired as a cost accountant. She will be working with a product development team on designing new car parts. She has had a few weeks of training in the department. She has been asked to describe a bill of materials (BOM). Please write a description. Answer: A bill of materials (BOM) is a document that specifies the components of a product, including descriptions of quantities of required raw materials and parts. Diff: 3 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

89) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, a recent college graduate, has been hired as a cost accountant. She will be working with a product development team on designing new car parts. She has had a few weeks of training in the department. She has been asked to describe an operations list or bill of operations (BOO). Please write a description. Answer: An operations list or bill of operations (BOO) is a document that provides a sequence of production events. This list, which the Product design team prepares, includes the locations of raw materials, required production items, equipment needed, and destination of work-in-process and finished goods. Diff: 3 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 90) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, a recent college graduate, has been hired as a cost accountant. She will be working with a product development team on designing new car parts. She has recently seen a list of the parts for a new brake that RAM Manufacturing is planning to build: • Wheel bearing • Wheel studs • Wheel cylinder • Disc rotor • Disc pads • Braking plate • Brake shoes What is this list of brake components called in the conversion process? Answer: This list of components is called a bill of materials (BOM) Diff: 2 Learning Objective: 11.1 Describe the relationship between conversion processes, inventory, and supply chain management. Section Reference: Conversion Processes AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

91) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing is launching a new disc brake product. Maeve, a newly hired cost accountant, has been asked to assign a number of costs incurred in manufacturing the disc brakes to the appropriate cost category. To what product cost category would a manufacturing employees hourly wages be assigned? Answer: A manufacturing employees hourly wages would be assigned to direct labor. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 92) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing is launching a new disc brake product. Maeve, a newly hired cost accountant, has been asked to assign a number of costs incurred in manufacturing the disc brakes to the appropriate cost category. To what product cost category would the grease used to keep the shop-floor machines working properly be assigned? Answer: The grease used on the shop-floor machines would be assigned to manufacturing overhead cost. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 93) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing is launching a new disc brake product. Maeve, a newly hired cost accountant, has been asked to assign a number of costs incurred in manufacturing the disc brakes to the appropriate cost category. To what product cost category would the salary of the CFO be assigned to? Answer: The CFO salary is not a product cost. It is a period cost. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

94) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. RAM Manufacturing is launching a new disc brake product. Maeve, a newly hired cost accountant, has been asked to assign a number of costs incurred in manufacturing the disc brakes to the appropriate cost category. To what product cost category would the steel used in the disc rotor in the new disc brakes be assigned to? Answer: The steel used in the disc rotor in the new disc brakes would be assigned to direct material costs. Diff: 2 Learning Objective: 11.2 Explain how the cost accounting system records conversion expenditures that impact the financial statements. Section Reference: Traditional Cost Accounting AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 95) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Justin, the Chief Financial Officer of RAM Manufacturing, recently read an article titled "Digital Manufacturing and the CFO" in the CMA's Strategic Finance magazine. Justin arranges a meeting with Maeve, head of manufacturing operations to discuss the article. After meeting and discussing digital manufacturing at RAM Manufacturing, they discuss some of the advantages RAM Manufacturing could realize from implementing this initiative. Briefly discuss some of the advantages RAM Manufacturing can expect from this initiative. Answer: Major advantages include: • Predicting and preempting machinery and equipment failure by performing functions like self-calibration and self-diagnosis • Maintaining machinery and equipment using proactive real-time monitoring with a predictive maintenance model • Connecting equipment and asset sensors to the cloud to improve equipment reliability and reduce unplanned outages • Processing employee performance metrics through machine learning data models to identify at-risk factory employees and use the data to improve productivity and reduce attrition • Using a digital twin for a product to improve measurement and manufacturing accuracy • Eliminating manufacturing traffic jams • Decreasing manufacturing cycle times, which is the time required to produce an order • Improving production quality and output • Providing more flexibility to meet customer demands Diff: 3 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

96) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Justin, the Chief Financial Officer of RAM Manufacturing, recently read an article titled "Digital Manufacturing and the CFO" in the CMA's Strategic Finance magazine. Justin arranges a meeting with Maeve, head of manufacturing operations to discuss the article. After meeting and discussing digital manufacturing at RAM Manufacturing, they discuss some of the challenges they may face in implementing this initiative. Briefly discuss some of the challenges RAM Manufacturing can expect to this initiative. Answer: Major challenges include: • Cyber and privacy risks • Data storage • Risk exposure • Process fragmentation • Resistance to change • Limited existing technology support and capabilities • A clear vision and strategy with top management support Diff: 3 Learning Objective: 11.3 Identify opportunities and challenges in digital manufacturing. Section Reference: Opportunities and Challenges AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 97) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Justin, the Chief Information Officer (CIO) of RAM Manufacturing, was recently tasked with leading the implementation of an Enterprise Resource Planning (ERP) system for RAM Manufacturing. One of the key areas of focus for the ERP project is the conversion process. Justin has assigned Maeve, a recently hired systems analyst, to lead the conversion process. What 11 ERP features should be considered by Maeve in the conversion process? Answer: The 11 ERP features include: 1. Budgeting 2. Cost Management 3. Cost Accounting 4. Product Costing 5. Raw Material Management 6. Bill of Materials 7. Production Scheduling 8. Warehouse Management 9. Inventory 10. Stock Control 11. Forecasting Diff: 3 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 40

98) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Justin, the Chief Information Officer (CIO) of RAM Manufacturing, was recently tasked with leading the implementation of an Enterprise Resource Planning (ERP) system for RAM Manufacturing. One of the key areas of focus for the ERP project is the conversion process. Justin has assigned Maeve, a recently hired systems analyst, to lead the conversion process. What are some of the tables that should be considered by Maeve in the conversion process? Answer: The tables that should be considered include: 1. Process 2. Process Requirements 3. Product 4. Bill of Materials 5. Raw Material Requirements 6. Inventory 7. Vendor 8. Supplier Diff: 3 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

99) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. At RAM Manufacturing every production order must be approved by an authorized employee. As part of an internal audit, Joan, a newly hired internal auditor, is checking the list of authorized approvers for production orders approved in January. Which Production order(s) should be investigated further based on the data in the tables below?

Answer: Production orders 4328 and 4331 have not been approved by an authorized approver. Diff: 3 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

100) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. At RAM Manufacturing every production order must be approved by an authorized employee. As part of an internal audit, Joan, a newly hired internal auditor, is checking the list of authorized approvers for production orders approved in January. Joan finds that production orders 4328 and 4331 were not approved by an authorized approver. Joan wants to find of the name of the employee who approved those production orders. Which module in the ERP system does Joan need to access to extract this information?

Answer: Joan needs information from the employee table in the Human Resources ERP module. Diff: 3 Learning Objective: 11.4 Explain how data generated by the AIS is converted to reporting and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management © 2022 John Wiley & Sons, Inc. All rights reserved. Instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. Except as permitted herein or by law, no part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. 43

Accounting Information Systems, 1e (Savage) Chapter 12 Marketing, Sales, and Collection Processes 1) Robert & Son's Sunglasses, Inc. has been designing and manufactures sunglasses for sale through numerous independent retail outlets and also on their website: www.robertandsonsglasses.com. The sale of sunglasses through Robert and Son's website is an example of: I. Business-to-consumer II. Business-to-business A) I is correct. B) II is correct. C) Neither I or II is correct. D) Both I and II are correct. Answer: A Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 2) Robert & Son's Sunglasses, Inc. has been designing and manufactures sunglasses for sale through numerous independent retail outlets and also on their website: www.robertandsonsglasses.com. The sale of sunglasses to the independent retail outlets is an example of: I. Business-to-consumer II. Business-to-business A) I is correct. B) II is correct. C) Neither I or II is correct. D) Both I and II are correct. Answer: B Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

3) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.

What is the activity labeled as A called? A) Marketing B) Sales C) Cash collections D) Delivery Answer: A Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

4) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.

What is the activity labeled as B called? A) Marketing B) Sales C) Cash collections D) Delivery Answer: B Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

5) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.

What is the activity labeled as C called? A) Marketing B) Sales C) Cash collections D) Delivery Answer: C Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

6) Diagrammed below are the high-level Business-to-Consumer activities for Julia's Cookies.

What is the activity labeled as D called? A) Marketing B) Sales C) Cash collections D) Delivery Answer: D Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 7) Julia's Cookies has identified the following B2C marketing control activity risk: "An unauthorized user posting inappropriate content to the corporate social media accounts may result in legal or reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Password logs only available to authorized users B) Only cashless payments accepted in stores C) Security cameras covering cash registers D) Food tampering stickers or seals on delivery containers Answer: A Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 5

8) Julia's Cookies has identified the following B2C marketing control activity risk: "An unauthorized user posting inappropriate content to the corporate social media accounts may result in legal or reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Only cashless payments accepted in stores B) Social media posts subject to review and approval before posting C) Security cameras covering cash registers D) Food tampering stickers or seals on delivery containers Answer: B Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 9) Julia's Cookies has identified the following B2C cash collections control activity risk: "Cash passing between customers and cashiers may result in cashiers pocketing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Password logs only available to authorized users B) Social media posts subject to review and approval before posting C) Only cashless payments accepted in stores D) Food tampering stickers or seals on delivery containers Answer: C Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 10) Julia's Cookies has identified the following B2C cash collections control activity risk: "Cash passing between customers and cashiers may result in cashiers pocketing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Password logs only available to authorized users B) Social media posts subject to review and approval before posting C) Food tampering stickers or seals on delivery containers D) Security cameras covering cash registers Answer: D Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 6

11) Julia's Cookies has identified the following B2C delivery control activity risk: "Unprotected food during delivery may result in delivering a subpar product to customers, food contamination, or theft of product." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Password logs only available to authorized users B) Social media posts subject to review and approval before posting C) Only cashless payments accepted in stores D) Food tampering stickers or seals on delivery containers Answer: D Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 12) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims packages were not received may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Delivery drivers take photos of packages in their delivery locations which are sent to customers via email or text message. B) Social media posts subject to review and approval before posting C) Only cashless payments accepted in stores D) Food tampering stickers or seals on delivery containers Answer: A Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

13) Julia's Cookies has identified the following B2C delivery control activity risk: "Customers filing fictitious claims that products were damaged upon receipt may result in fraudulent refunds to customers." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Refunds and returns require customers to submit a photo of the product condition. B) Social media posts subject to review and approval before posting C) Only cashless payments accepted in stores D) Food tampering stickers or seals on delivery containers Answer: A Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 14) Cash collections for B2C customers usually occurs A) at the time the sale is made. B) on credit. C) one week later. D) one month later. Answer: A Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 15) B2C payments can be made with cash, checks, mobile payment apps, or credit cards, but they are referred to as ________ because the accounting transactions are all recorded to the ________ account on the balance sheet. A) credit, debit B) cash, cash C) debit, cash D) debit, credit Answer: B Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

16) ________ is the oversight of the inventory lifecycle from purchase to sales. A) Inventory management B) Supply chain management C) Customer relationship management D) Enterprise resource planning Answer: A Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Managing Inventory and Product Flow AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 17) ________ oversees the lifecycle of a product from procuring raw materials through customer sales. A) Inventory management B) Supply chain management C) Customer relationship management D) Enterprise resource planning Answer: B Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Managing Inventory and Product Flow AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 18) Inventory management is important because ________ and ________ determine inventory requirements, which in turn drives purchases of raw materials and supplies. A) forecasts, raw materials B) purchase orders, demand C) sales orders, forecasts D) raw materials, supplies Answer: C Diff: 1 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Managing Inventory and Product Flow AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

19) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.

What is the activity labeled as A called? A) Marketing B) Pricing and contracts C) Sales D) Shipping E) Accounts Receivable Answer: A Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

20) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.

What is the activity labeled as B called? A) Marketing B) Pricing and contracts C) Sales D) Shipping E) Accounts Receivable Answer: B Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

21) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.

What is the activity labeled as C called? A) Marketing B) Pricing and contracts C) Sales D) Shipping E) Accounts Receivable Answer: C Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

22) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.

What is the activity labeled as D called? A) Marketing B) Pricing and contracts C) Sales D) Shipping E) Accounts Receivable Answer: D Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

23) Diagrammed below are the high-level Business-to-Business activities for Julia's Cookies.

What is the activity labeled as E called? A) Marketing B) Pricing and contracts C) Sales D) Shipping E) Accounts Receivable Answer: E Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 24) Julia's Cookies has identified the following B2B marketing control activity risk: "Inconsistent marketing materials that provide unclear messaging, which may result in loss of customers and leads." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Standardized scripts and templates for marketing materials B) Master marketing schedule is maintained and communicated to employees. C) Independent checks on pricing and sales team member's work D) Defined roles and responsibilities for pricing functions Answer: A Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Marketing AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

25) Julia's Cookies has identified the following B2B marketing control activity risk: "An unauthorized user may access the marketing database causing inappropriate access to sensitive data related to business customers and leads, resulting in legal and reputational damage." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Standardized scripts and templates for marketing materials B) Policies and procedures for user access are clearly documented and authorized. C) Independent checks on pricing and sales team member's work D) Defined roles and responsibilities for pricing functions Answer: B Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Marketing AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 26) Julia's Cookies has identified the following B2B pricing control activity risk: "Collusion between an employee and a buyer may result in fraud activity and financial loss." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Standardized scripts and templates for marketing materials B) Policies and procedures for user access are clearly documented and authorized. C) Independent checks on pricing and sales team member's work D) Defined roles and responsibilities for pricing functions Answer: C Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 27) Julia's Cookies has identified the following B2B pricing control activity risk: "Inappropriately given or unauthorized customer discounts may result in financial loss." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Standardized scripts and templates for marketing materials B) Policies and procedures for user access are clearly documented and authorized. C) Independent checks on pricing and sales team member's work D) Defined roles and responsibilities for pricing functions Answer: D Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 15

28) ________ are dependent on the customers' creditworthiness. A) Credit terms B) Debit terms C) Sales orders D) Purchase orders Answer: A Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 29) The determination and recording of ________, based on credit checks and payment history, must be checked before accepting an order from a customer. A) credit terms B) credit limits C) debit terms D) debit limits Answer: B Diff: 1 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 30) Julia's Cookies has identified the following B2B credit customer control activity risk: "Inadequate or inconsistently applied creditworthiness checking may result in excessive bad debts and a wide variety of credit terms." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Follow documented and authorized credit policies and procedures for all customers. B) Review credit limits periodically and adjust if required. C) Use standardized, authorized sales contracts that are legally enforceable. D) Employee training covering appropriate and inappropriate wording when speaking with customers Answer: A Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

31) Julia's Cookies has identified the following B2B credit customer control activity risk: "Sales made to unreliable customers may result in unacceptable credit risks and excessive bad debts." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Clear communication notifying customers all agreements must be in writing to be legally binding B) Review credit limits periodically and adjust them if required. C) Use standardized, authorized sales contracts that are legally enforceable. D) Employee training covering appropriate and inappropriate wording when speaking with customers Answer: B Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 32) Julia's Cookies has identified the following B2B sales contracts control activity risk: "Different prices for the same products sold to similar customers may result in customer dissatisfaction or be illegal and result in loss of reputation and penalties." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Follow documented and authorized credit policies and procedures for all customers. B) Review credit limits periodically and adjust if required. C) Use standardized, authorized sales contracts that are legally enforceable. D) Employee training covering appropriate and inappropriate wording when speaking with customers Answer: C Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

33) Julia's Cookies has identified the following B2B sales contracts control activity risk: "Verbal agreements may result in a legally binding agreement with unfavorable outcomes." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Follow documented and authorized credit policies and procedures for all customers. B) Review credit limits periodically and adjust if required. C) Use standardized, authorized sales contracts that are legally enforceable. D) Employee training covering appropriate and inappropriate wording when speaking with customers Answer: D Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 34) Julia's Cookies has identified the following B2B sales order control activity risk: "An unauthorized sales order may result in fraudulent or inappropriate sales." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) The ERP system matches the customer on the sales order to the main customer data. B) The ERP system matches the amount of the sales order with the credit limit in the main customer data. C) All shipments must have properly authorized shipping documents with an appropriate delivery address. D) Restrict access to the shipping area. Answer: A Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

35) Julia's Cookies has identified the following B2B sales order control activity risk: "A sales order without credit approval or above the credit limit may result in uncollectible accounts." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) The ERP system matches the customer on the sales order to the customer master data. B) The ERP system matches the amount of the sales order with the credit limit in the customer master data. C) All shipments must have properly authorized shipping documents with an appropriate delivery address. D) Restrict access to the shipping area. Answer: B Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Sales AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 36) Julia's Cookies has identified the following B2B shipping control activity risk: "Shipments made to incorrect customers or locations may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) The ERP system matches the customer on the sales order to the customer master data. B) The ERP system matches the amount of the sales order with the credit limit in the customer master data. C) All shipments must have properly authorized shipping documents with an appropriate delivery address. D) Restrict access to the shipping area. Answer: C Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Shipping AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

37) Julia's Cookies has identified the following B2B shipping control activity risk: "Lost or fraudulently diverted undelivered shipments may result in customer dissatisfaction, complaints, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) The ERP system matches the customer on the sales order to the main customer data. B) The ERP system matches the amount of the sales order with the credit limit in the main customer data. C) All shipments must have properly authorized shipping documents with an appropriate delivery address. D) Restrict access to the shipping area. Answer: D Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Shipping AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 38) Julia's Cookies has identified the following B2B shipping control activity risk: "Shipping incorrect products or quantities may result in customer dissatisfaction, complaints, sales returns, and financial losses." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) The ERP system matches goods and quantities taken from the warehouse to approved sales orders. B) The ERP system matches the amount of the sales order with the credit limit in the customer master data. C) All shipments must have properly authorized shipping documents with an appropriate delivery address. D) Restrict access to the shipping area. Answer: A Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Shipping AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

39) Julia's Cookies has identified the following B2B shipping control activity risk: "Lack of shipping documentation may result in inaccurate shipments, fraudulent shipments, or missed shipments." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) The ERP system matches the customer on the sales order to the customer master data. B) The ERP system generates shipping documentation when the sales order is processed. C) All shipments must have properly authorized shipping documents with an appropriate delivery address. D) Restrict access to the shipping area. Answer: B Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Shipping AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 40) Select the best definition of revenue recognition from the list below. A) A set of determined conditions that must be met to justify a business recognizing the revenue as earned B) A set of determined conditions that must be met to justify a business recognizing the expenses as incurred C) The oversight of inventory from purchase to sales D) A system to oversee the lifecycle of a product from procuring raw materials through customer sales Answer: A Diff: 1 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

41) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. They are listed below. Properly order these five steps. i. Recognize revenue when (or as) the entity satisfies a performance obligation. ii. Determine the transaction price. iii. Identify the contract with a customer. iv. Allocate the transaction price to the performance obligations in the contract. v. Identify the performance obligations in the contract. A) i, ii, iii, iv, v B) iii, v, ii, iv, i C) v, iv, iii, ii, i D) iv, iii, I, ii, v Answer: B Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Revenue Recognition Model AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 42) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 1 from the list below. A) Recognize revenue when (or as) the entity satisfies a performance obligation. B) Determine the transaction price. C) Identify the contract with a customer. D) Allocate the transaction price to the performance obligations in the contract. E) Identify the performance obligations in the contract. Answer: C Diff: 1 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Revenue Recognition Model AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting

43) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 2 from the list below. A) Recognize revenue when (or as) the entity satisfies a performance obligation. B) Determine the transaction price. C) Identify the contract with a customer. D) Allocate the transaction price to the performance obligations in the contract. E) Identify the performance obligations in the contract. Answer: E Diff: 1 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Revenue Recognition Model AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 44) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 3 from the list below. A) Recognize revenue when (or as) the entity satisfies a performance obligation. B) Determine the transaction price. C) Identify the contract with a customer. D) Allocate the transaction price to the performance obligations in the contract. E) Identify the performance obligations in the contract. Answer: B Diff: 1 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Revenue Recognition Model AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 45) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 4 from the list below. A) Recognize revenue when (or as) the entity satisfies a performance obligation. B) Determine the transaction price. C) Identify the contract with a customer. D) Allocate the transaction price to the performance obligations in the contract. E) Identify the performance obligations in the contract. Answer: D Diff: 1 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Revenue Recognition Model AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 23

46) The Accounting Standards Codification 606 of the U.S. GAAP has five steps for revenue recognition. Choose step 5 from the list below. A) Recognize revenue when (or as) the entity satisfies a performance obligation. B) Determine the transaction price. C) Identify the contract with a customer. D) Allocate the transaction price to the performance obligations in the contract. E) Identify the performance obligations in the contract. Answer: A Diff: 1 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Revenue Recognition Model AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 47) Julia's Cookies has identified the following revenue recognition misstatement control activity risk: "Improper revenue recognition may result in incorrect recordings during a reporting period and misstatement of financial statements." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Strict enforcement of the company's sales cutoff policy B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy. C) Segregate billing function from shipping and accounts receivable functions. D) Review accounts receivable periodically including write-offs and aging. Answer: A Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

48) Julia's Cookies has identified the following revenue recognition misstatement control activity risk: "Sales billed to customers that are not recorded as revenue in the general ledger may result in misstatement of financial statements." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Strict enforcement of the company's sales cutoff policy B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy. C) Segregate billing function from shipping and accounts receivable functions. D) Review accounts receivable periodically including write-offs and aging. Answer: B Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 49) Julia's Cookies has identified the following revenue recognition misstatement control activity risk: "Sales to customers not resulting in billing or recognizing the revenue may result in loss of cash because customers may never pay, leading to misstatement of financial statements." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Strict enforcement of the company's sales cutoff policy B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy. C) Segregate billing function from shipping and accounts receivable functions. D) Review accounts receivable periodically including write-offs and aging. Answer: C Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

50) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Fictitious sales may result in overstatement of revenues (a credit) and receivables (a debit) or understatement of expenses (a debit)." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Strict enforcement of the company's sales cutoff policy B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy. C) Segregate billing function from shipping and accounts receivable functions. D) Review accounts receivable periodically including write-offs and aging. Answer: D Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 51) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Sales returns and credits and adjustments made for returns not properly recorded may result in misstatements in accounting records." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Review returns, credits, and adjustments to determine timing for revenue recognition. B) Reconcile totals for invoices to gross sales in the general ledger to verify completeness and accuracy. C) Segregate billing function from shipping and accounts receivable functions. D) Review accounts receivable periodically including write-offs and aging. Answer: A Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

52) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Sales invoices with incorrect quantities and/or prices may result in misstatement of sales revenue and accounts receivable." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Review returns, credits, and adjustments to determine timing and revenue recognition. B) Match the sales invoice quantities to the shipping information and the prices to the sales contract or main price list. C) Segregate billing function from shipping and accounts receivable functions. D) Review accounts receivable periodically including write-offs and again. Answer: B Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 53) Julia's Cookies has identified the following revenue recognition fraud control activity risk: "Shipping more products to retailers or distributors than they are capable of selling near the end of a reporting period may result in an inflated statement of revenue and channel stuffing fraud." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Review returns, credits, and adjustments to determine timing and revenue recognition. B) Match the sales invoice quantities to the shipping information and the prices to the sales contract or master price list. C) Avoid setting unrealistic bonus targets to remove incentive for fraud and consider other forms of compensation and the right balance between revenue targets and incentivizing employees. D) Review accounts receivable periodically including write-offs and aging. Answer: C Diff: 2 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

54) Jim walks into Starbucks, places an order at the counter, pays at the cash register and receives his cup of coffee. Choose from the list below the appropriate type of payment method that Jim has partaken in? A) Cash sale (B2C) B) Advance payment (B2C or B2B) C) Credit sale (B2B) D) Debit sale (B2C) Answer: A Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 55) RAM Manufacturing, Inc. pays for purchases at the time of order, even though items sold by the supplier have not yet been packaged or shipped. Choose from the list below the appropriate type of payment method that RAM Manufacturing has partaken in? A) Cash sale (B2C) B) Advance payment (B2C or B2B) C) Credit sale (B2B) D) Debit sale (B2C) Answer: B Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

56) RAM Manufacturing, Inc. orders cardboard boxes from a corrugated box manufacturer. RAM Manufacturing will use the boxes to ship their products to their customers. The box manufacturer begins fulfilling the order for boxes before RAM Manufacturing pays for the order. Choose from the list below the appropriate type of payment method that RAM Manufacturing has partaken in. A) Cash sale (B2C) B) Advance payment (B2C or B2B) C) Credit sale (B2B) D) Debit sale (B2C) Answer: C Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 57) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financials loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Implement electronic funds transfer directly to the company's bank account or a lockbox system. B) Perform independent check of remittance advices from customers against daily remittance list. C) Automated calculation of discounts D) Regular independent bank reconciliations with management review Answer: A Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

58) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financials loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Perform independent check of remittance advices from customers against daily remittance list. B) Prepare a daily remittance list immediately upon opening mail and restrictively endorse checks. C) Automated calculation of discounts D) Regular independent bank reconciliations with management review Answer: B Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 59) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that are lost or misappropriated after receipt may result in financials loss and customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Perform independent check of remittance advices from customers against daily remittance list. B) Automated calculation of discounts C) Deposit checks received in the mail daily. D) Regular independent bank reconciliations with management review Answer: C Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

60) Julia's Cookies has identified the following cash receipt control activity risk: "Checks received in the mail that do not agree with the daily remittance list may result in misstatement of financial statements and incorrect accounts receivable records." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Automated calculation of discounts B) Deposit checks received in the mail daily. C) Regular independent bank reconciliations with management review D) Perform independent check of remittance advices from customers against daily remittance list. Answer: D Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 61) Julia's Cookies has identified the following cash receipt control activity risk: "Cash discounts taken by customers that are incorrect may result in loss of profit and future cash receipts." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Automated calculation of discounts B) Deposit checks received in the mail daily. C) Regular independent bank reconciliations with management review D) Perform independent check of remittance advices from customers against daily remittance list Answer: A Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Receiving Payments AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

62) Julia's Cookies has identified the following cash deposit control activity risk: "Checks received in the mail that are not deposited intact may result in missing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Automated calculation of discounts B) Regular independent bank reconciliations with management review C) Deposit checks received in the mail daily. D) Perform independent check of remittance advices from customers against daily remittance list. Answer: B Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Bank Deposits AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 63) Julia's Cookies has identified the following cash deposit control activity risk: "Checks received in the mail that are not deposited intact may result in missing cash." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Automated calculation of discounts B) Deposit checks received in the mail daily. C) Implement electronic funds transfer directly to the company's bank account or a lockbox system. D) Perform independent check of remittance advices from customers against daily remittance list. Answer: C Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Bank Deposits AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

64) A(n) ________ is a P.O. box that can only be accessed by the company's bank. The bank collects the checks daily, deposits them into the company bank account, and sends source documents to the company. A) lockbox B) bank remittance report C) deposit slip D) electronic funds transfer Answer: A Diff: 1 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Bank Deposits AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 65) A(n) ________ is a source document that the bank sends of the daily listings of each check received from the customers. A) lockbox B) bank remittance report C) deposit slip D) electronic funds transfer Answer: B Diff: 1 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Bank Deposits AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 66) A(n) ________ is a source document that serves as proof of the amount deposited into the company's account, with the amount of the deposit equal to the total of the bank remittance report. A) lockbox B) bank remittance report C) deposit slip D) electronic funds transfer Answer: C Diff: 1 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Bank Deposits AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

67) A(n) ________ transfers the payment from the customer's bank account directly into the company's bank account. A) lockbox B) bank remittance report C) deposit slip D) EFT Answer: D Diff: 1 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Bank Deposits AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 68) Julia's Cookies has identified the following recording cash receipts control activity risk: "Recording inflated receipts from customers may result in overstated revenues." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Perform monthly bank reconciliations with management review. B) Implement electronic funds transfer directly to the company's bank account or a lockbox system. C) Regular independent bank reconciliations with management review D) Perform independent check of remittance advices from customers against daily remittance list. Answer: A Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Recording Cash Receipts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

69) Julia's Cookies has identified the following recording cash receipts control activity risk: "Recording inflated receipts from customers may result in overstated revenues." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Automated calculation of discounts B) Mail monthly statements to customers and investigate and fix discrepancies reported in a timely manner. C) Regular independent bank reconciliations with management review D) Perform independent check of remittance advices from customers against daily remittance list. Answer: B Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Recording Cash Receipts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 70) Julia's Cookies has identified the following recording cash receipts control activity risk: "Receipts posted to the incorrect customer account may result in customer dissatisfaction." Choose from the list of control activities below one of the appropriate control activities for this risk statement. A) Automated calculation of discounts B) Regular independent bank reconciliations with management review C) Mail monthly statements to customers and investigate and fix discrepancies reported in a timely manner. D) Perform independent check of remittance advices from customers against daily remittance list. Answer: C Diff: 2 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Recording Cash Receipts AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

71) Electronic payment data is transmitted through the ________, which is an electronic system serving financial institutions. It facilitates financial transactions in the U.S. A) lockboxes B) bank remittance reports C) Financial Electronic Data Interchange (FEDI) D) Automated Clearing House (ACH) Network Answer: D Diff: 1 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Recording Cash Receipts AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 72) Which of the following ERP modules is responsible for the accounts receivable function? A) Financial B) Sales Management C) Customer Relationship Management D) Supply Chain Management Answer: A Diff: 1 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 73) Which of the following ERP modules is responsible for the shipment of the product function? A) Financial B) Sales Management C) Customer Relationship Management D) Supply Chain Management Answer: B Diff: 1 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

74) Which of the following ERP modules is responsible for the marketing management function? A) Financial B) Sales Management C) Customer Relationship Management D) Supply Chain Management Answer: C Diff: 1 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Introduction AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

75) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

What is the relationship between Sales_Order and Sales_OrderLineItem? A) One-to-One B) One-to-Many C) Many-to-Many D) Many-to-One Answer: B Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 38

76) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

What is the relationship between Sales_Order and Shipment? A) One-to-One B) One-to-Many C) Many-to-Many D) Many-to-One Answer: B Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 39

77) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

What is the relationship between CRM_Customer and Sales_Order? A) One-to-One B) One-to-Many C) Many-to-Many D) Many-to-One Answer: B Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 40

78) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

What is the primary key of the Sales_Order entity? A) SalesOrder_ID B) SalesOrder_Date C) Customer_ID D) ShipmentMethod Answer: A Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 41

79) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

What is the foreign key in the Sales_OrderLineItem entity that establishes the relationship with the Sales_Order entity? A) SalesLine_ID B) SalesOrder_ID C) Inventory_ID D) Quantity E) Price Answer: B Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 42

80) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

What is the foreign key in the Sales_Order entity that establishes the relationship with the CRM_Customers entity? A) SalesOrder_ID B) SalesOrder_Date C) Customer_ID D) ShipmentMethod Answer: C Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 43

81) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

A sales order may be referenced in ________ or ________ AR invoice. A) Zero, one B) Zero, many C) One, one D) Many, one Answer: A Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 44

82) Reference the entity relationship diagram of the marketing, sales, and collection ERP modules below.

A shipment must include products for ________ and only ________ sales order. A) Zero, one B) Zero, many C) One, one D) Many, one Answer: C Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 45

83) The sales process generates a lot of data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a sales orders aging report. A) Summarizes inventory sold over a specific time period to customers B) The number of days sales orders have been outstanding classified in buckets C) List of items on backorder that customers have ordered D) Listing of customers and the credit limits Answer: B Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 84) The sales process generates a lot of data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a non-invoiced shipments report. A) Summarizes inventory sold over a specific time period to customers B) The number of days sales orders have been outstanding classified in buckets C) List of items on backorder that customers have ordered D) Shipments to customers that did not include a recorded invoice for that customer Answer: D Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 85) Like sales data, data from revenue recognition is processed by the system. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a revenue changes report. A) Summarizing historical revenue by customers B) Revenue by month or quarter C) Increase or decrease of revenue between months, quarters, or years D) Summarizing revenue by whether it is recognized Answer: C Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 46

86) Like sales data, data from revenue recognition is processed by the system. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a customer revenue report. A) Summarizing historical revenue by customers B) Revenue by month or quarter C) Increase or decrease of revenue between months, quarters, or years D) Summarizing revenue by whether it is recognized Answer: A Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 87) As it does in other business processes like sales and revenue recognition, the system processes and stores the cash collection data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of a sales amounts report. A) Summarized by customers over a period of time B) Summarizes outstanding amounts due by customer C) Summarizes the current balance in accounts receivable for each customer at a specific point in time D) Bank reconciliation between bank statements and the control account in the general ledger Answer: A Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

88) As it does in other business processes like sales and revenue recognition, the system processes and stores the cash collection data. The processed data can appear in reports that can help a company improve processes and mitigate risks. Choose from the following list the best definition of an outstanding balances report. A) Summarized by customers over a period of time B) Summarizes outstanding amounts due by customer C) Summarizes the current balance in accounts payable for each customer at a specific point in time D) Bank reconciliation between bank statements and the control account in the general ledger Answer: B Diff: 2 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Reporting and Insights AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 89) A sales order is a source document that is sent to the customer. What are some of the order details that would be included on a sales order? Answer: A sales order would include: the date ordered, customer name, address, delivery address, description, price, and quantity of goods ordered, and total selling price of the order. Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 90) A delivery receipt is a source document that is sent to the customer. What is some of the information that would be included on a delivery receipt? Answer: A delivery receipt would include order details, contents of the delivery, and customer information. Diff: 2 Learning Objective: 12.1 Describe the marketing, sales, and collection processes for businessto-consumer sales. Section Reference: Business-to-Consumer Sales AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

91) Haley is the vice president of marketing and sales at Robert and Son's Sunglasses, Inc. Given the increased level of competition, she realizes that the company's continued success requires flexibility when it comes to marketing and sales. Robert and Son's Sunglasses' sales organization employs a team of full-time salespeople to sell directly to the independent retail outlets that sell their sunglasses. Required: Discuss some of the opportunities and challenges Robert and Son's Sunglasses faces by employing their own sales team versus using third-party sales representatives. Answer: Independent, third-party sales representatives offer more flexibility to cut costs, but full-time sales employees offer more flexibility by quickly changing selling points and sales strategies. Sales employees also have more loyalty to the company as the company and their long-term interests intersect. Diff: 3 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 92) Haley is the vice president of marketing and sales at Robert and Son's Sunglasses, Inc. Given the increased level of competition, she realizes that the company's continued success requires flexibility when it comes to marketing and sales. Robert and Son's Sunglasses' sales organization has both short-term (3-month) and long-term (2+ years) price agreements with different independent retail outlets. Required: Discuss some of the opportunities and challenges Robert and Son's Sunglasses faces by having both short-term and long-term price agreements with different independent retail outlets. Answer: Short-term price agreements provide more flexibility to increase prices in periods of strong sales. However, long-term agreements give some stability of prices if sales are weaker over a longer time-period. Diff: 3 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Pricing and Contracts AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 93) Most of the sales of Robert and Son's Sunglasses, Inc. to independent retail outlets are on credit. When the independent retail outlet submits payment, what account is debited and what account is credited? Answer: Cash is debited, and Accounts Receivable is credited. Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Billing and Collections AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 49

94) Most of the sales of Robert and Son's Sunglasses, Inc. to independent retail outlets are on credit. If the independent retail outlet returns the sunglasses unopened, what accounts are debited and what accounts are credited? Answer: Sales Returns and Allowances, and Inventory are debited, and Accounts Receivable and Cost of Goods Sold are credited. Diff: 2 Learning Objective: 12.2 Evaluate the credit sales process and its related risks and controls. Section Reference: Billing and Collections AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 95) Channel stuffing occurs when revenue and profits are intentionally inflated by recognizing revenue from unnecessary sales in the current quarter or year. Discuss what impact (beneficial or detrimental) channel stuffing may have in the company's following period and why. Answer: Channel stuffing often has a detrimental impact on the company in the following period. Retailers or distributors will return the products, or the company may sell less the following period because retailers and distributors have excess inventory. Diff: 3 Learning Objective: 12.3 Identify risks and controls relating to revenue recognition in the sales process. Section Reference: Controlling for Mistakes and Fraud AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management 96) A new RAM Manufacturing customer, Tri-Auto Repair, orders parts on August 1, 20XX for delivery the following week and pays cash in advance for the order. The selling price of the parts is $10,000 and the cost of goods sold is $6,500. The parts are delivered on August 10, 20XX. Record the three accounting transactions. Answer: August 1, 20XX Dr. Cash $10,000 Cr. Deferred Revenue $10,000 August 10, 20xx

August 10, 20XX

Dr. Deferred Revenue Cr. Sales

$10,000

Dr. Cost of Goods Sold Cr. Inventory

$6,500

$10,000

$6,500 Diff: 3 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Recording Cash Receipts AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 50

97) A RAM Manufacturing customer, Tri-Auto Repair, orders parts on August 1, 20XX for delivery the following week. No journal entries are recorded at this time. The goods are shipped on August 8, 20XX and received and revenue recognized on August 10, 20XX. The selling price of the parts is $10,000 and the cost of goods sold is $6,500. Tri-Auto Repair pays their invoice on August 31, 20XX. Record the three accounting transactions. Answer: August 10, 20XX Dr. Accounts Receivable $10,000 Cr. Sales $10,000 August 10, 20xx

August 31, 20XX

Dr. Cost of Goods Sold Cr. Inventory

$6,500 $6,500

Dr. Cash $10,000 Cr. Accounts Receivable

$10,000

Diff: 3 Learning Objective: 12.4 Assess the risks and controls related to the cash collections and accounts receivable processes. Section Reference: Recording Cash Receipts AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 98) RAM Manufacturing, Inc. is planning to purchase a new ERP system. Jim, who works in revenue recognition, is creating an entity relationship diagram as part of this project. Jim has learned that all RAM Manufacturing sales orders must have at least one sales order line item and can have many sales order line items. Each sales order line item is related to one and only one sales order. Draw the entity relationship diagram between the sales order and sales order line item entities. Answer:

Diff: 3 Learning Objective: 12.5 Connect the ERP system and underlying database to potential reports and analytics. Section Reference: Database Design AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 51

99) RAM Manufacturing, Inc. is planning to purchase a new ERP system. Jim, who works in revenue recognition, is creating an entity relationship diagram as part of this project. Jim has learned that all RAM Manufacturing invoices are related to one and only one sales order. However, a sales order may have no invoices or many invoices. Draw the entity relationship diagram between the sales order and invoices entities. Answer:

100) RAM Manufacturing, Inc. is planning to purchase a new ERP system. Jim, who works in revenue recognition, is creating an entity relationship diagram as part of this project. Jim has learned that all RAM Manufacturing sales order line items must contain one and only one inventory item. Some inventory items have not yet sold, and many inventory items will be sold on many sales order line items. Draw the entity relationship diagram between the sales order line item and inventory entities. Answer:

Accounting Information Systems, 1e (Savage) Chapter 13 Financial Reporting Processes 1) Financial reports are prepared to provide an accurate depiction of a company's financial situation to whom? A) CFO B) CEO C) External stakeholders D) Controller Answer: C Diff: 1 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 2) Which of the following roles in a company is responsible for financial reporting? A) CEO B) CFO C) Controller D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 3) Which of the following roles in a company is responsible for overseeing accounting processes? A) CEO B) CFO C) AIS D) Controller Answer: D Diff: 1 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

4) Which financial statement is created immediately after the income statement and balance sheet are complete? A) Statement of stockholder's equity B) Statement of cash flows C) Statement of profit and loss D) Statement of financial position Answer: A Diff: 1 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 5) Which of the following statements concerning financial reporting is TRUE? A) Financial statements present the financial position of a company at points in time. B) Financial statements present results of operations over specific time periods. C) Financial statements present results of cash flows over specific time periods. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 6) LeBron is asked to review the financial statements created by the company to determine priorities and frequency of creation for each report as each report utilizes man hours that could be used for other activities. LeBron must consider the quality of information produced and how well the report presents the information to the end user. What information characteristic is LeBron asked to review for in his assessment of the financial reporting? A) Decision usefulness B) Predictive value C) Error free D) Verifiability Answer: A Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

7) Which of the following characteristics of financial data is most important? A) Timeliness B) Understandability C) Comparability D) Accuracy Answer: D Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 8) Which of the following statements is an example of timeliness of data? A) Information is useful to determine future actions. B) Information is available prior to a decision deadline. C) Information is understandable by the end user. D) Information is presented in the same way over time. Answer: B Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 9) Which of the following statements is FALSE? A) Financial accounting information only serves a purpose if it is useful for decision making. B) Information quality is the suitability of information for a particular purpose in a specific task. C) Understandability and timeliness of data has a higher priority than relevance. D) Relevance of information carries more priority than consistency and verifiability. Answer: C Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

10) Which of the following statements is TRUE with respect to financial data characteristics? A) Enhancing characteristics of data include relevance and accuracy. B) Enhancing characteristics of data include timeliness and comparability. C) Fundamental characteristics of data include materiality and understandability. D) Fundamental characteristics of data include completeness and verifiability. Answer: B Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 11) Jerome audits the financial statements for a firm and discovers an error in the statement of cash flows. Which characteristic of data is NOT present for decision usefulness in the financial statements that Jerome audited? A) Relevance B) Materiality C) Timeliness D) Faithful representation Answer: D Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 12) The cost effectiveness of accounting information is determined by evaluating the cost of providing the information versus the A) consistency of the information. B) timeliness of the information. C) value of the information. D) accuracy of the information. Answer: C Diff: 1 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

13) Which characteristic of useful information is most clearly expressed by a company who always discloses information in the same order and style each reporting period? A) Predictive value B) Confirmatory value C) Consistency D) Understandability Answer: C Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 14) Which characteristic of useful information is most clearly expressed by a firm who prioritizes providing financial statements to employees before selecting benefit options, which include stock options, index funds, or money market funds? A) Predictive value B) Confirmatory value C) Timeliness D) Understandability Answer: C Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 15) Melody Corporation owns 51% of a subsidiary, A-Plus Realty (A+), which maintains its own legal public entity and financial information. Considering the ownership stake of Melody in A+, which of the following statement is TRUE? A) A+ reports individually, and Melody reports both sets of financial statements. B) Melody and A+ report separately. C) A+ reports individually, and Melody reports a set of consolidated financial statements. D) Melody reports a consolidated set of financial statements for both entities. Answer: C Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

16) Melody Corporation, which owns 51% of A+, uses a different AIS than A+ with different account numbers and names for many accounts. Which of the following methods could allow Melody to consolidate financial statements? A) Consolidation software with account mapping B) Utilizing a spreadsheet to manually consolidate data C) Integration of XBRL D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 17) External auditors for a firm found errors in the recent financial statements. After further investigation into the issue, the auditors discovered a strong control environment that should have prevented the financial statement errors. Based on the information provided by the auditors, who do you suggest would be responsible for the errors? A) Controller B) Internal auditors C) External auditors D) Chief financial officer Answer: D Diff: 3 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 18) Financial reporting is the output of accounting professionals' work in A) corporate accounting. B) internal audit. C) tax. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

19) The accounting equation, Assets = Liabilities + Owner's Equity, represents the A) balance sheet. B) income statement. C) statement of stockholder's equity. D) statement of cash flows. Answer: A Diff: 1 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 20) Which of the following statements is FALSE? A) A chart of accounts must be developed before beginning the financial statement process. B) The chart of accounts is a classification scheme to organize and summarize data. C) A chart of accounts uses an industry-mandated coding system to classify accounts. D) The chart of accounts makes creating financial statements possible. Answer: C Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 21) Which of the following transactions is NOT an accounting transaction for Sunshine Eats, a catering company? A) Sunshine delivers box lunches each Monday to teachers at a local school. The delivery is set up to automatically charge a credit card for payment. B) Sunshine signs a contract to cater a wedding three months from now at a local event center. The catering job will be paid by the event center as part of a wedding package. C) Sunshine receives a down payment on a catered dinner for a new business grand opening coming up in two weeks. D) Sunshine sends a monthly bill to a local coffee shop to which Sunshine delivers fresh muffins each Tuesday and Thursday. Answer: B Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

22) Which of the following would be considered an accounting transaction for ColdBrews, a local coffee and beer shop? A) ColdBrews' beer supplier drops off fresh kegs on Thursday morning. B) ColdBrews' coffee supplier emails an invoice for an order that arrived yesterday. C) A ColdBrews manager uses the company credit card to purchase printer ink. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 23) The accounting system for The Assembly, a growing restaurant, requires that all transactions be entered as journal entries. When the bookkeeper for The Assembly enters the transactions, he discards the paperwork associated with the transaction. As an auditor for the accounting firm, which of the following recommendations should be shared with the bookkeeper? A) As an auditor, I need to be able to review the source documents to verify the accuracy and validity of the accounting transactions. Therefore, source documents should be stored either physically or electronically. B) Source documents do not provide an accurate audit trail as they can fade or be altered after entered in the system, so discarding them is an efficient operational decision. C) As an auditor, I follow the audit trail generated by the AIS and do not consider the source documents when reviewing accounting transactions for accuracy. D) Source documents take up too much physical storage space and are too difficult to sort through to be reviewed during an audit. Answer: A Diff: 3 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting

24) Which type of journal would be most appropriate for recording an adjusting journal entry for depreciation? A) Sales journal B) Cash receipts journal C) Special journal D) General journal Answer: D Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 25) Which type of journal would be most appropriate for recording a sale on account to a customer? A) Sales journal B) Purchase journal C) General journal D) Cash receipts journal Answer: A Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 26) When a customer makes a payment on account, which of the following subsidiary ledgers would be affected by the transaction? A) General ledger B) Accounts receivable subsidiary ledger C) Undeposited funds ledger D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

27) Which of the following is best defined as a listing of all the accounts and balances in the general ledger at the end of the reporting period? A) Balance sheet B) Trial balance C) Chart of accounts D) Income statement Answer: B Diff: 1 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 28) Which step of the financial reporting process occurs after the preparation of an unadjusted trial balance? A) Post journal entries to ledgers B) Enter adjusting entries C) Prepare financial statements D) Prepare an adjusted trial balance Answer: B Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 29) Which of the following financial documents could be used to ensure that debits equal credits? A) Income statement B) Statement of cash flows C) Statement of stockholder's equity D) Trial balance Answer: D Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

30) Which of the following steps in the financial reporting process only occurs at the end of the fiscal year? A) Prepare an adjusted trial balance B) Prepare financial statements C) Prepare closing journal entries D) Prepare an unadjusted trial balance Answer: C Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 31) Which of the following internal controls over financial reporting could be automated in the AIS? A) Resolution of reconciliation discrepancies in a timely manner B) Identification of contingent liabilities and make necessary accruals C) Assign responsibilities to ensure segregation of duties D) Verification that journal entries are posted in the correct reporting period Answer: D Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 32) With respect to internal controls over financial reporting, what accounting role should be the control owner for general ledger reconciliation? A) CFO B) AIS C) Controller D) Treasurer Answer: C Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

33) For which of the following reasons are internal controls over financial reporting (ICFRs) necessary? A) ICFRs mitigate fraud risk. B) ICFRs guide internal review of financial data. C) ICFRs help firms avoid losses of reputation and stock prices. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 34) What role in a company is responsible for ensuring legal compliance for reporting purposes? A) Controller B) Treasurer C) CEO D) AIS Answer: C Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 35) Which of the following statements is TRUE? A) Step 8 in the financial reporting process, journalize and post-closing entries, occurs at the end of each reporting period. B) Step 8 in the financial reporting process, journalize and post-closing entries, occurs at the end of the fiscal year. C) Posting to the general ledger, step 3, occurs at the end of the reporting period. D) Posting to the general ledger, step 3, occurs at the end of the fiscal year. Answer: B Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

36) XBRL is the abbreviation for which of the following? A) Extensible broad range language B) Extensible business reporting language C) Easy business reporting language D) Easy business reporting listing Answer: B Diff: 1 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools 37) Which of the following is an open standard markup language, specifically designed for electronic financial reporting? A) XBRL B) XML C) EBRL D) EML Answer: A Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 38) XBRL improves business' ability to A) consolidate financial reporting information. B) share data across departments. C) compare performance with benchmarks. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools

39) Which of the following statements is TRUE? A) XBRL is an adaptation of XML. B) XBRL use is mandated for SEC filings. C) XBRL standards are available for anyone to use. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 40) For what reasons might a company decide to implement XBRL? A) The company plans to go public next year. B) The company would like to compare data from other public companies. C) The company seeks greater financial consolidation efficiency. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 41) XML is the abbreviated version of which of the following? A) Extra markup listing B) Extra markup language C) Extensible markup listing D) Extensible markup language Answer: D Diff: 1 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Technology and Tools

42) Which of the following is a correct definition of a tag? A) A tag, enclosed in angle brackets, is a standardized piece of taxonomy assigned to a piece of data, or element. B) A tag, enclosed in square brackets, is a standardized piece of taxonomy assigned to a piece of data, or element. C) A tag, like a barcode reader's programming, provides the structure of instance documents. D) A tag, like a barcode reader's programming, provides the data plus structure for human readability and SEC compliance. Answer: A Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 43) What is the term associated with XBRL standardized structure to produce financial statements? A) Tag B) Format C) Layout document D) Instance document Answer: D Diff: 1 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 44) Why would a public company decide to include XBRL interactive data tags within their financial statements? A) The SEC requires public companies to embed iXBRL data tags. B) The iXBRL data tags allow users to drill down into the details. C) The company wants to improve the quality of data provided. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools

45) Which of the following is a FALSE statement? A) XBRL makes data extraction easier. B) XBRL makes data analysis easier. C) XBRL makes consolidations more efficient. D) XBRL deals with numbers, not terminology. Answer: D Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 46) Why might an organization that is NOT a public company choose to integrate XBRL into their accounting information? A) XBRL allows for easier consolidation of data from disparate systems with the organization. B) XBRL simplifies the financial reporting process in such a way that the statements need not be reviewed by the CFO. C) The SEC requires that all organizations utilize XBRL whether they are public or private. D) The SEC requires that all organizations utilize XBRL to report comparative data. Answer: A Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 47) In what ways could XBRL help a young, privately held firm? A) The firm can use XBRL to extract data efficiently for data analysis. B) The firm will avoid fines form the SEC by implementing XBRL. C) XBRL will remove flexibility that could cause the young firm to fail. D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

48) Which of the following keywords sets the currency unit for a data element? A) us-gaap B) unitRef C) contextRef D) decimals Answer: B Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 49) Which of the following keywords sets the rounding size for a data element? A) us-gaap B) unitRef C) contextRef D) decimals Answer: D Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 50) Which of the following is the appropriate opening and closing bracket syntax for XBRL? A) <> </> B) [] [/] C) <> [/] D) { } {\} Answer: A Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

51) Which is the correct interpretation of the XBRL shown below? contextRef = "FD2022Q4YTD" A) The data element covers the fiscal year 2022 ending September 30, 2022. B) The data element covers the 4 quarters of the period ending December 31, 2022. C) The data element displays the data from the 4th quarter of 2022. D) The data element displays the data from 2022 except for the 4th quarter. Answer: B Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 52) Which of the following benefits of XBRL would be most beneficial for a company that just acquired an organization that utilized different accounting software? A) XBRL improves data extraction capabilities. B) XBRL can integrate nonfinancial data. C) XBRL data is software agnostic. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 53) How will an element be displayed if the XBRL tag includes decimals="-3"? A) The amount will be displayed without the 3 characters at the end of the number, the period and 2 decimal places. B) The amount will be displayed rounded to the nearest thousand. C) The amount will be displayed rounded to the nearest million. D) The amount will be displayed without the commas separating the groups of 3 numbers. Answer: B Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

54) What type of accounting provides managers with accounting information that helps them make decisions within the organization? A) Financial B) Managerial C) Prescriptive D) Descriptive Answer: B Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 55) Which of the following statements is FALSE? A) Management accounting provides managers with accounting information for decisions. B) Management accounting reports follow GAAP protocols. C) Management accounting reports are customizable by companies. D) Management accounting includes cost accounting and balance scorecards. Answer: B Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 56) Which part of the AIS measures and helps managers control costs? A) Financial accounting B) Prescriptive accounting C) Cost accounting D) Price accounting Answer: C Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting

57) Which of the following statements is TRUE? A) Businesses must follow GAAP for managerial accounting reports. B) Measuring and controlling costs is only necessary for businesses who focus on low cost. C) Businesses who choose a product differentiation strategy to achieve competitive advantage focus on research, and development not managerial accounting. D) Businesses create value by combining and converting resources into goods or services that customers want at either a lower cost or better quality than competitors. Answer: D Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 58) Farm Fresh Bites offers dine-in, carry-out, frozen meals, and bakery items using locallysourced meat, produce, and grains. Farm Fresh Bites appeals to many groups of customers and has pricing based on their quality products that is competitive in the restaurant market. Which type of strategy is Farm Fresh Bites utilizing? A) Low cost, broad market B) Low cost, narrow market C) Differentiation, broad market D) Differentiation, narrow market Answer: C Diff: 3 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 59) Overtime Fitness recently opened in a large northern city. Overtime gears its workout facility to athletes who are serious about cross-fit training with applicable equipment and trainers. Overtime's owners build much of the training equipment, leased and renovated the facility in a lower-rent part of town, and seeks to keeps membership fees lower than comparable facilities. What type of strategy has Overtime Fitness chosen to employ? A) Cost leadership B) Cost focus C) Differentiation D) Differentiation focus Answer: B Diff: 3 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 20

60) Which type of business strategy involves the goal of being the low-cost provider in an industry? A) Cost leadership B) Cost focus C) Differentiation D) Differentiation focus Answer: A Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 61) Which type of business strategy involves a business seeking to provide a unique, highquality product or service in a narrow target market? A) Cost leadership B) Cost focus C) Differentiation D) Differentiation focus Answer: D Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 62) Which of the following statements is FALSE? A) Management accounting includes creating reports for management decision making purposes, such as the balanced scorecard. B) Financial accounting includes creating reports for external stakeholders, such as the income statement and balance sheet. C) Cost accounting includes creating reports associated with the conversion process, such as purchasing reports. D) Responsibility accounting includes creating reports for responsible parties, such as XBRL instance documents. Answer: D Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

63) What type of accounting is used to trace performance and hold accountable the managers of those departments? A) Financial accounting B) Cost accounting C) Responsibility accounting D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 64) Which of the following statements is TRUE of responsibility accounting reports? A) Responsibility accounting reports are used to trace performance to the responsible department. B) Responsibility accounting reports follow GAAP guidelines. C) The SEC mandates the public release of responsibility reports. D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 65) Which of the following statements concerning responsibility accounting reports is FALSE? A) Responsibility accounting reports are used to trace performance to the responsible department or manager to improve accountability. B) Responsibility accounting reports go beyond the scope of financial accounting reports and cannot be generated by the AIS. C) Responsibility accounting reports are customized for managers based on their areas of responsibility. D) Responsibility accounting reports break-down financial data by controllable costs in a department. Answer: B Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

66) As the report creator for your company's AIS, you recently received a request for some custom reports to show detail about outstanding accounts receivables for the accounts receivable manager. What category of accounting is the report is the accounts receivable manager asking you to create? A) Financial accounting B) Cost accounting C) Responsibility accounting D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 67) Which of the following best describes a balanced scorecard? A) Internal assessment tool B) Provides key performance indicators C) Turns strategy into action D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 68) What type of accounting tool combines financial and nonfinancial measures for managerial reporting? A) Responsibility report B) Corporate scorecard C) Balanced scorecard D) Cost report Answer: C Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting

69) The success of using a balanced scorecard is the A) link to the organization's strategic plan. B) accuracy of the data reflected. C) ability to update the scorecard frequently. D) use of multiple types of key performance indicators. Answer: A Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting 70) Which of the following most accurately reflects the four traditional dimensions of a balanced scorecard? A) Financial, managerial, customer relationships, and vendor relationships B) Financial, customer relationships, internal business processes, and learning and growth C) Innovation, financial, managerial, and customer relationships D) Innovation, managerial, customer relationships, and learning and growth Answer: B Diff: 1 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 71) Job satisfaction and employee turnover are examples of what type of metric on a balanced scorecard dashboard? A) Internal processes B) Customer relationships C) Financial D) Learning and growth Answer: D Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

72) Which of the following features in an ERP system contribute to financial reporting? A) Shipment of product B) Payroll C) Stock control D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 73) What is the record-keeping system that captures all journal entries and validates them using the trial balance? A) Financial reporting B) General ledger C) Budget D) Chart of accounts Answer: B Diff: 1 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting 74) What feature in an ERP system summarizes detailed transactions that occur in sub-ledger accounts? A) Chart of accounts B) Consolidated ledger C) General ledger D) Income statement Answer: C Diff: 1 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Reporting

75) What type of audit technique involves using a calculation to verify the completeness of the journal entry by adding a journal entry to the beginning balance and comparing it to the ending balance? A) Trial balance roll forward B) Trial balance roll backward C) General ledger roll forward D) General ledger roll backward Answer: A Diff: 1 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Reporting 76) In which module of the ERP system do the raw material management and product costing features reside? A) Supply chain management B) Sales management C) Production D) Financial Answer: C Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 77) Company A acquires Company Z. Company Z uses an ERP system that is incompatible to the one used by Company A. As a corporate manager, you must carefully consider the cost of switching Company Z to Company A's ERP system versus the A) decision usefulness of the financial data. B) corporate leadership appetite for adopting a new system. C) time investment to make the switch. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

78) Jessica works as an accountant for a local manufacturing company. At the company, Jessica is responsible for validating all journal entries. What report should Jessica use to accomplish the journal entry validation? A) Income statement B) Balance sheet C) Trial balance D) Ledger statement Answer: C Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 79) Ava works in the human resources (HR) department for the firm. Currently, the HR department is not integrated with the ERP system for the firm. Ava sees the opportunity to improve the department through employee development. What modules should Ava recommend be added to the ERP system for the firm to boost the efficiency of the HR department? A) Talent management B) Recruiting and onboarding C) Training and development D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 80) When developing the entity relationship diagram for the general ledger, which of the following fields is the most likely primary key, or unique identifier, for the chart of accounts? A) Account number B) Account name C) Account description D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools 27

81) In an entity relationship diagram for the general ledger, each journal entry includes a foreign key field for the Employee_ID of the employee who both posted and approved the transaction. Which of the following statements concerning the Employee_ID field used in this context is TRUE? A) The Employee_ID field is not enough information. The transaction should also include the employees' names and departments to allow auditors to complete their review. B) The Employee_ID would be a good candidate key for the primary key of the JournalEntry table listing each entry in the general ledger. C) Additional employee information required can be pulled from the Employee table as the Employee_ID field is a foreign key related to the Employee table inserted into the JournalEntry table. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Analysis AICPA: AC: Technology and Tools 82) Brandon, an auditor for XYZ Accounting, is set to perform an audit of the general ledger for a new client tomorrow morning. Which audit analytics should Brandon perform first? A) General ledger prescriptive analytics B) General ledger roll forward C) Trial balance roll forward D) Trial balance prescriptive analytics Answer: C Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

83) A trial balance roll forward analytics technique allows auditors to determine if the journal entry data is A) complete. B) balanced. C) correct. D) clear. Answer: A Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 84) When an audit team performs a trial balance roll forward, the team uses a calculation to verify completeness by re-creating the ending balance by A) recalculating the totals. B) changing the dates of the entries and reviewing the new total. C) querying data from the database. D) adding the journal entry activity to the beginning balance. Answer: D Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 85) Gregor is reviewing the financial statements of his newly formed company. Gregor is most concerned about the inflow and outflow of funds within the new organization. Which financial statement will be most useful for Gregor? A) Income statement B) Balance sheet C) Statement of cash flows D) Statement of stockholder's equity Answer: C Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting

86) Maybelle, a leader in the Flowers-R-Us organization, asked the accounting department to develop a way for the corporate leaders to review important financial data and ratios regularly. Jeri evaluated the Flowers-R-Us ERP and determined that the system could generate the data requested in real time. Which of the following actions would be most appropriate for Jeri? A) Jeri could design vertical analysis reports to run each quarter for Maybelle. B) Jeri could design a dashboard with financial ratios and metrics that could be accessed by Maybelle and other leaders at any time. C) Jeri could set up general ledger monitoring to create a summary report of the day's transactions for Maybelle. D) All of these answer choices are correct. Answer: B Diff: 3 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 87) Which type of financial statement analysis is most appropriate to review for an indication of financial statement fraud? A) Income statement vertical analysis B) Income statement horizontal analysis C) Balance sheet ratios D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 88) Which type of analytic may identify unusual spikes in revenue journal entry activity? A) Dormant accounts B) Daily revenue C) Benford analysis D) Revenue reversals Answer: B Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 30

89) Which type of analytic may identify fraudulent journal entries that are manually input into the general ledger? A) Benford analysis B) Unauthorized users C) General ledger close D) Round dollar entries Answer: D Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 90) Which type of analytics may identify journal entry fraud related to revenue inflation? A) Revenue reversals B) General ledger close C) Daily revenue D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 91) Explain the concept of cost-effectiveness with respect to accounting information. Answer: Determining cost-effectiveness of accounting information requires professional judgement of the perceived benefit of the data compared to the cost of gathering, processing, storing, and communicating the information. Only when the perceived benefit is greater than the total cost of obtaining the information is the financial information considered cost effective. Diff: 2 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Analysis AICPA: AC: Reporting

92) Financial statements for The Pastry Mom use the recommended chart of accounts from the AIS. Several investors in The Pastry Mom are individuals rather than institutional investors. How could The Pastry Mom's accounting team enhance the understandability of the financial statements and increase decision usefulness for the aforementioned investors? Answer: The accounting team for The Pastry Mom should review the chart of accounts with a special emphasis on the account names. Changing a few account names to accurately reflect how the accounts are used and the meaning of those values could make the financial statements easier to understand for the individual investors. Diff: 3 Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting. Section Reference: How Is an AIS Involved in Financial Reporting? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting 93) Arrange the following steps in the financial reporting process in order from beginning to end. Accounting transaction occurs Prepare post-closing trial balance Prepare financial statements Post to general ledger Journalize and post adjusting entries Journalize and post-closing entries Prepare adjusted trial balance Prepare unadjusted trial balance Record transaction in appropriate journal Answer: Step 1. Accounting transaction occurs Step 2. Record transaction in appropriate journal Step 3. Post to general ledger Step 4. Prepare unadjusted trial balance Step 5. Journalize and post adjusting entries Step 6. Prepare adjusted trial balance Step 7. Prepare financial statements Step 8. Journalize and post-closing entries Step 9. Prepare post-closing trial balance Diff: 3 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Reporting

94) Use the accounting equation to demonstrate that the pro-forma balance sheet shown below balances.

Answer: Assets ($1,423,611) = Liabilities ($38,150) + Owner's Equity ($1,385,461) Diff: 2 Learning Objective: 13.2 Document the generation of financial statements within the accounting information system. Section Reference: How Are Financial Statements Generated by an AIS? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 95) Sketch the relationship between XBRL and XML and how they work together to generate financial statements using instance documents. Answer:

Diff: 2 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

96) Support the argument for a private company to implement XBRL. Answer: Public companies are required by the SEC to utilize XBRL for financial reporting. Though privately held companies are not required to utilize XBRL for financial reporting, there are several benefits to XBRL. XBRL formatting allows for ease of sharing of data across units, across various platforms, and to outside entities. Additionally, using XBRL allows for efficient data analysis and benchmark comparisons. Each of these benefits improve decision making and could improve business financial outcomes. Diff: 3 Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency. Section Reference: How Does XBRL Create Efficient Financial Reporting? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Technology and Tools 97) Assess the value of cost accounting for a company utilizing a product differentiation strategy? Answer: While it is obvious that cost accounting benefits companies who implement a low-cost strategy, companies who implement a product differentiation strategy also benefit from cost accounting. Cost accounting allows a company to measure and control costs. The ability to reduce costs while maintaining differentiation allows a company to create even more value. Diff: 3 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Reporting

98) Given the balanced scorecard diagram, choose which of the following reports would fit into each dimension.

Reports: ROI Customer satisfaction rate Market segment success Cash flow Process efficiency Equipment downtime Job satisfaction Training opportunities

Answer:

Diff: 2 Learning Objective: 13.4 Describe when to use key management accounting reports. Section Reference: Are There Other Important Financial Accounting Reports? AACSB: Analytic Bloom's: Application AICPA: AC: Reporting 99) Match the list journal entry test analytics with most appropriate description of how the test is used. Journal Entry Analytic 1 — Fraud keyword testing 2 — Unusual dates 3 — Field analysis 4 — Unauthorized users 5 — Dormant accounts

Usage A — Review journal entry dates for weekends or holiday entries B — Identify journal entries that were approved by someone without authority C — Review inactive accounts for attempts to hide journal entries D — Search for journal entries with missing fields E — Search for vague journal entry descriptions

Answer: 1 — E, 2 — A, 3 — D, 4 — B, 5 — C Diff: 2 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

100) Demi, a local banker, requests quarterly financial statements from her business line of credit clients. One of her clients, Josef, asked Demi to explain why he should have to create so many reports so often for her. How should Demi answer Josef? Answer: Demi should share with Josef that financial statements reflect the overall financial health of a business. These reports can be used to monitor his company's financial performance and, simultaneously, the credit risk for the bank. The income statement shows the results from operations within a period of time. The balance sheet shows the assets, liabilities, and owner's equity as of the date of the report. The statement of cash flows reflects the inflows and outflows of funds from operations, financing, and investing. The statement of stockholders' equity offers information about changes in equity from profits, losses, and investments. The data provided from these reports is how the bank determines the availability of funds for lines of credit and other financial products for the bank's clients. Diff: 3 Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making. Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Reporting

Accounting Information Systems, 1e (Savage) Chapter 14 Information Systems and Controls 1) Which statement about Information Technology (IT) is FALSE? A) IT includes the technology and processes involved with technology. B) IT is concerned with both hardware and software. C) IT includes controls for facility power and utilities. D) IT includes systems for the processing and distribution of data. Answer: C Diff: 1 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Technology and Tools 2) Which statement describing COBIT 2019 is TRUE? A) COBIT contributors do not have the pay the subscription fee. B) COBIT has an organizational focus on HR governance. C) COBIT is designed to assist in IT governance and implementing IT controls. D) COBIT has a control scope that encompasses all internal controls. Answer: C Diff: 1 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 3) COBIT 2019 controls are organized into five domains that are divided into what two categories based on their objectives? A) Internal and external B) Organization and implementation C) Governance and management D) Management and assessment Answer: C Diff: 1 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

4) Which of the following statements about the COBIT 2019 IT governance domain, Evaluate, Direct and Monitor (EDM) is TRUE? A) EDM relates to the operational side of IT projects and support. B) EDM focuses on whether IT projects are meeting organizational objectives. C) EDM assesses IT requirements for acquiring technology. D) EDM states that the board of directors must assess needs and provide oversight. Answer: D Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 5) Which of the following statements about COBIT 2019 is TRUE? A) COBIT is an open-source model that has an online platform for feedback. B) COBIT is a part of the COSO Internal Controls C) COBIT focuses on addressing risk from a strategic perspective. D) COBIT has a control scope that encompasses all internal controls. Answer: D Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 6) Which of the following statements concerning IT governance are TRUE? A) IT governance requires a dedicated department. B) IT governance ensures effective and efficient use of IT. C) IT governance should be scheduled to occur once per year. D) IT governance standards framework, COSO, focuses on minimizing risk. Answer: B Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

7) What is the most widely used international standard for IT governance? A) COSO B) COBIT C) ISACA D) ITGC Answer: B Diff: 1 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 8) ABC Technology Management, InC. is seeking guidance on managing risk, security, budgets, and innovation. Which COBIT 2019 management IT objective should ABC consult? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Monitor, Evaluate and Assess (MEA) Answer: A Diff: 3 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management 9) Which of the following COBIT 2019 management IT objectives includes topics that would help an organization define project requirements, change management guidelines, and project execution plans? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Monitor, Evaluate and Assess (MEA) Answer: B Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

10) Which of the following COBIT 2019 management IT objectives includes topics that would help an organization manage operations, problems, continuity, and business process controls? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Monitor, Evaluate and Assess (MEA) Answer: C Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 11) Which of the following COBIT 2019 management IT objectives includes topics that would help an organization define compliance with external requirements, performance monitoring, and a system of internal control? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Monitor, Evaluate and Assess (MEA) Answer: D Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 12) What elements of IT are IT general controls (ITGCs) designed to protect? Select all that apply. A) Structure B) Components C) Data D) Risk Answer: A, B Diff: 1 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

13) IT governance frameworks define the criteria that a company uses for which aspects of IT governance? Select all that apply. A) Management B) Monitoring C) Objections D) Implementation Answer: A, B Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 14) Accounting professionals utilize multiple frameworks. Which framework would a manager select to make sure that all internal controls are Sarbanes Oxley compliant? A) ITGC B) COSO C) ISACA D) COBIT Answer: B Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 15) Which framework would an IT manager select to make sure that access to sensitive customer data is limited to only those who require access? A) ITGC B) COSO C) ISACA D) COBIT Answer: D Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

16) The objectives of which COBIT domain include frameworks, resource optimization, and being transparent with stakeholders? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Evaluate, Direct, and Monitor (EDM) Answer: D Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 17) Angela is tasked with reviewing the IT service request process for her accounting firm. Which COBIT domain should she reference? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Monitor, Evaluate, and Assess (MEA) Answer: C Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management 18) Wade is tasked with evaluating and recommending improvements to the project management framework for his accounting firm. Which COBIT domain should he reference? A) Align, Plan and Organize (APO) B) Build, Acquire and Implement (BAI) C) Deliver, Service and Support (DSS) D) Monitor, Evaluate, and Assess (MEA) Answer: B Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Risk Assessment, Analysis, and Management

19) Select the appropriate role assigned to a leader in the IT team who needs unlimited access and is responsible for assigning roles to other users. A) Creator B) Read-only C) User D) Administrator Answer: D Diff: 3 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 20) New users to a system are granted access through what formal process? A) User access provisioning B) User authentication C) User role assignment D) User validation Answer: A Diff: 1 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 21) Which of the following is an example of a user authentication control? A) Username and password B) Login name C) Electronic safe D) Employee handbook Answer: A Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management

22) Which of the following statements concerning user access reviews is TRUE? A) User access reviews are periodic reviews of current power users and their system roles. B) User access reviews move infrequently used accounts to a dormant status. C) A user access review should be a simple, quick process that is completed frequently. D) A user access review lowers inappropriate use risks associated with employee changes. Answer: B Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 23) Which of these access roles would you assign a graphic designer working on updating the internal corporate data dashboard to include key financial data? A) Administrator B) Read-only C) User D) Creator Answer: C Diff: 3 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 24) What role should be assigned to a new team member who just needs access to review files and not make changes? A) Creator B) Read-only C) User D) Administrator Answer: B Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management

25) Which type of authorization uses groups with pre-defined permissions to which users are assigned? A) Permission roles B) User access roles C) Creator roles D) Read-only roles Answer: B Diff: 1 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 26) Which of these access roles would you assign an internal auditor reviewing accounts payable and accounts receivable transactions? A) Administrator B) Read-only C) User D) Creator Answer: B Diff: 3 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 27) Sushma, the IT employee responsible for setting up user names and passwords, handles user access updates daily to prevent inappropriate access to the organization's system. After what event should Sushma complete user access de-provisioning for an organization employee? A) Employee new hire B) Employee reprimand C) Employee transfer D) Employee award Answer: C Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

28) Select each of the following examples of a logical user access control? Choose all that apply. A) Security badge B) Multifactor authentication C) Biometric authentication D) Fingerprint scanner Answer: A, B, C Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management 29) Adrian evaluated Branch Technologies user access assignment procedures and found them to be inefficient. Rather than assign each user permissions individually, Adrian recommends that Branch Technologies define roles with pre-defined access criteria and assign users to roles. What type of authorization is Adrian recommending? A) Role-based access controls B) Individual permissions C) Physical access controls D) User access de-provisioning Answer: A Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 30) User access de-provisioning should occur when which of the following user access status changes occur? Choose all that apply. A) Termination B) New hire C) Transfer D) Dormancy Answer: A, C Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

31) A user access review is an important yet tedious and time-consuming process. What kind of newer technology can be implemented to automate or semi-automate the process? A) Analytical automation B) Machine learning algorithm C) User access software D) Dormancy software tools Answer: B Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 32) Which of the following statements about user access de-provisioning is FALSE? A) User access de-provisioning is the formal process of changing a user's access. B) User access de-provisioning should occur after an employee's termination or transfer. C) Removing someone's access does not create risk for the system. D) Removing access to systems is not required for employee promotions. Answer: D Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 33) Alejandro reviewed the user access protocols for Ponder Products. Alejandro is concerned that the accounting system could be subject to malicious attacks on user accounts that are currently protected with a user name and password. The system has the capability to send a message to a user's cell phone or email address. How could Alejandro use the messaging capabilities of the system to further protect it from attack? A) Enable two-factor authentication B) Enable fingerprint scanners C) Enable read-only access for all users D) Enable administrator access for all users Answer: A Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

34) What role should be assigned to a new team member who needs access to make changes to the system, create files, download and upload files, and edit files. A) Creator B) Read-only C) User D) Administrator Answer: A Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management 35) Which statement about user access provisioning request tickets is TRUE? A) Request tickets require the employee to explain why they need access to the system. B) Request tickets require the user's direct supervisor's information. C) Managers and system owners must review the request tickets. D) All of these statements are true. Answer: D Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 36) What user access role includes permission to add, remove, and set access rights on all objects? A) Administrator B) Creator C) User D) Read-only Answer: A Diff: 1 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

37) An internal auditor inspecting a data center will look at all the following components. A) Security system B) Fire protection C) Physical access D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 38) Controlled access to data centers often includes multifactor authentication to mitigate the high risk to the equipment that is powering the business. An increased security measure used at very high security data centers is a man-in-the-middle trap. What kind of risk does the trap prevent? A) Wind damage B) Piggybacking C) Provisioning D) Flood damage Answer: B Diff: 3 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 39) Which of the following roles have control ownership related to protecting the physical computer systems? A) Information Security Manager B) Data Center Manager C) Facilities Manager D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

40) Which of the following statements represents a poor design element for a data center protected from the outside environment? A) A data center with a two-phase fire suppression system and fire extinguishers B) A data center with cables suspended from the ceiling or bundled up to racks C) A data center located on the top floor of a building to prevent easy access D) A data center located on a raised floor near the center of an offsite building Answer: C Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 41) What kind of security method can help prevent against piggybacking? A) User name and password B) Fingerprint scanner C) Locked door D) Man-in-the-middle trap Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 42) Which of the following are physical security measures used to prevent unauthorized access to a data center? A) Single entrance B) Security camera at entrance C) Multifactor authentication D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

43) Which of the following are risks to physical IT equipment and systems? A) A natural disaster causing damage to systems and equipment may result in a disruption of business activities and financial losses. B) An unauthorized user gaining access to physical equipment may result in theft, malicious attacks, fraud, or data breaches. C) Failure to maintain facilities in accordance with laws and regulations may result in fines and reputational losses. D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 44) What kind of facility is used to protect the physical components on which systems and data are stored? A) System center B) Network operations center C) Access center D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Technology Bloom's: Knowledge AICPA: AC: Systems and Process Management 45) Moore Software Development (MSD), Inc. began operations in Moore, Oklahoma, an area prone to tornadoes. Recent business growth necessitates the need for a larger data center. Select the most appropriate statement associated with MSD's new data center. A) MSD should expand their current on-site data center so that all components will be secure in one location. B) MSD should lease data center space nearby to allow current IT staff easy access to additional components. C) MSD should locate a space for an off-site data center in an area away from the risk of bad weather to mitigate the risk of losing both centers at the same time. D) All of these statements are correct. Answer: C Diff: 3 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 15

46) Data centers should be situated in a room with no windows to prevent A) someone from breaking in through the window. B) damage occurring to systems when a window breaks in a storm. C) unauthorized access to the room. D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 47) Caribbean Technologies is located on the island of Grand Cayman in the Caribbean SeA. The management team established a data center both onsite and offsite in Ohio. What onsite protection measures would you recommend be implemented? A) Climate controls B) Raised floors C) Interior room with no windows D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 48) In what ways do climate control systems protect computer system components in a network operations center (NOC)? A) Climate control systems keep NOCs cool. B) Climate control systems remove humidity in the NOC to prevent moisture damage. C) Climate control systems prevent NOC components from overheating. D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

49) Which of the following is a poor network operations center (NOC) power practice? A) An uninterruptable power supply is used to protect systems from outage and surges. B) An uninterruptable power supply is used to protect systems from varied power voltage. C) Power and network cables are run along the back of machines along the floor to keep them out of the way. D) Power and network cables are bundled up to racks suspended from the ceiling to keep them clean and visible. Answer: C Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 50) Which of the following is a poor policy for physical access control for a data center? A) Only employees directly involved with operating the data center are authorized to enter. B) Employees must scan their badge then enter a PIN on a keypad to gain access to the data center. C) Security personnel regularly walk the building perimeter and look through the outside windows to check for unauthorized access to the data center. D) Security cameras at the data center entrance door record all entrances and exits from the data center. Answer: C Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 51) How does a man-in-the middle trap create another level of security? A) The man-in-the middle trap forces users to spend time in the trap before entering the data center, so only those who really need in will enter. B) The man-in-the middle trap allows only one person to be between two doors, each with security measures, at a time. C) The man-in-the middle trap will not allow a person to exit if they do not have the verbal passcode to enter the data center. D) The man-in-the middle trap allows data center employees to trap intruders using trapdoors in the raised floor. Answer: B Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 17

52) Which control activity related to physical security is managed by the data center manager? A) Eating and drinking is prohibited where IT equipment is stored. B) Policies and procedures for maintaining physical equipment are documented. C) Access to buildings is justified, authorized, logged, and monitored. D) Inappropriate access to IT equipment is immediately revoked. Answer: A Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 53) Which control activity related to physical security is managed by the facilities manager? A) Eating and drinking is prohibited where IT equipment is stored. B) Policies and procedures for maintaining physical equipment are documented. C) Access to buildings is justified, authorized, logged, and monitored. D) Inappropriate access to IT equipment is immediately revoked. Answer: C Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 54) Which of the following plans are included in business continuity planning? A) Crisis reaction plans indicating who leads the organization's response B) Plans for essential equipment to be protected or to have alternative equipment C) Return to normal procedures that prescribe how to return to normal operations D) All answer choices are correct Answer: D Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

55) Disaster recovery planning involves categorizing systems and data based on importance to the business. Which of the following types of systems going down could have a detrimental impact on a business and should have a restoration plan that minimizes downtime to a few hours or less? A) Retail point of sale system B) Employee benefits system C) Customer service management system D) Payroll system Answer: A Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 56) Which of the following backup sites is the most expensive but has the fastest recovery speed? A) Hot backup site B) Warm backup site C) Cold backup site D) Frozen backup site Answer: A Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 57) Which of the following statements concerning data backups are TRUE? A) A data backup is the output of copying computer data to store. B) Backup storage can be costly and time consuming. C) Incremental backups are the cheapest backup strategy. D) All answer choices are correct. Answer: D Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

58) The CEO of All-Farm Insurance asked you to verify that organization data is fully backed up each weekend and that all new data is backed up daily. On the daily backups, the CEO requests that all new data since the full backup is stored. What type of backup strategy should you choose? A) Hot backup B) Full backup C) Differential backup D) Incremental backup Answer: C Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 59) IT Solutions Express (ITSE) is a database service firm in an area prone to tornadoes. Because ITSE stores critical data, they have a hot backup site for systems and data. As part of ITSE's disaster recovery plan, they need a plan that allows key personnel to resume work offsite within 4 hours if a tornado happens to strike their main facility. What kind of disaster recovery plan is necessary to meet the business requirements of ITSE? A) Alternative backup site plan B) Backup team plan C) Alternative operations site plan D) Backup direction site plan Answer: C Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 60) Which of the following backup sites is the least expensive but has the slowest recovery speed? A) Hot backup site B) Warm backup site C) Cold backup site D) Frozen backup site Answer: C Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

61) Which type of backup copies all data during every backup? A) Hot backup B) Full backup C) Differential backup D) Incremental backup Answer: B Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 62) Which type of backup copies only new or updated data every time? A) Hot backup B) Full backup C) Differential backup D) Incremental backup Answer: D Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 63) What determines when data is being stored during data back? A) Backup cycle B) Backup time C) Backup calendar D) Backup event Answer: A Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

64) Which statements concerning Business Continuity Planning (BCP) are TRUE? Select all statements that are TRUE. A) BCP includes the procedures taken to protect employees, stakeholders, and assets in the event of a disruptive event. B) BCP procedures focus on hot backup sites as all systems are critical and must be recovered quickly. C) After the BCP manager develops the BCP, plans need to be memorized and not changed over time so that all employees know what to expect and do when a disruptive event occurs. D) BCP plans could be triggered by a variety of disruptive events, such as natural disasters, cyberattacks, social unrest, or a global pandemic. Answer: A, D Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 65) What physical location is used to recover systems and data after a disaster? A) Data center B) Backup site C) Recovery center D) Strategy site Answer: B Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 66) What statement about the functionality of a cold backup site is FALSE? A) A cold backup site may be an almost empty room. B) A cold backup site is the least expensive type of backup site for a company to implement. C) A cold backup site imports data at the end of each business day. D) A cold backup site may take days or weeks to recover. Answer: C Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

67) What statement concerning backup cycles is FALSE? A) Warm and cold backup sites depend on which backup cycle is used. B) A backup cycle determines the frequency in which data is backed up. C) One of the most common backup cycle methods is know as the Grandfather-Father-Son backup scheme. D) The Grandfather-Father-Son backup cycle removes the need to conduct quarterly, or annual backups. Answer: D Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 68) If a company were to utilize the Grandfather-Father-Son backup scheme, what backup cycles are implemented? A) Full backup once per month and week and a smaller backup each day B) Full backup once per month, differential once per week, and incremental once per day C) Full backup once per quarter and month and a smaller backup each week and day D) Full backup once per year, differential once per month, and incremental each day Answer: A Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 69) When disaster strikes, what two metrics concerning system and data restoration are important to consider? A) Recovery Technology Objective (RTO) and Recovery Process Objective (RPO) B) Recovery Technology Objective (RTO) and Recovery Point Objective (RPO) C) Recovery Time Objective (RTO) and Recovery Point Objective (RPO) D) Recovery Time Objective (RTO) and Recovery Process Objective (RPO) Answer: C Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

70) Which statement concerning the disaster response Recovery Time Objective (RTO) is TRUE? A) The RTO is how much time a system can be down before it causes significant damage to the business. B) The RTO may be as short as a few seconds. C) The RTO considers how long the system restoration and data re-load process takes. D) All of these statements are true. Answer: D Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 71) Which type of backup strategy copies all data created since the most recent full backup in its entirety every time? A) Hot backup B) Full backup C) Differential backup D) Incremental backup Answer: C Diff: 1 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 72) How does a standardized change management process decrease risk? A) By controlling the identification of changes to a system B) By controlling the implementation of changes to a system C) By ensuring that changes are reviewed appropriately before being finalized D) All answer choices are correct. Answer: D Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

73) In which change management environment does a developer write code to make the change in the system? A) Test B) Model C) Production D) Live Answer: A Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 74) Which of the following change management steps occurs in the model environment? A) Developer writes code. B) Code implemented into production C) User reviews and approves code. D) User requests change. Answer: C Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 75) An emergency change request bypasses which stage of the change management process? A) Test B) Sandbox C) Model D) Production Answer: C Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

76) Unauthorized or incorrectly executed changes to a system may result in what kind of risk? A) Incongruency with users B) Incongruency of prioritization C) Internal code irregularities D) Internal fraud Answer: D Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 77) Which development environment is often referred to as the sandbox because developers can test without having impact on the live systems? A) Test B) Model C) Production D) Alteration Answer: A Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 78) Which of the following change management steps occurs in the model environment? A) User requests change. B) Developer writes code. C) Code implemented into production D) User reviews and approves code. Answer: D Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

79) Which of the stages of the formal change management process includes a recent copy of the production environment where tests are performed? A) Test environment B) Model environment C) Production environment D) Development environment Answer: B Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 80) Joel has developed new code and implemented it into the model environment so that the user can test it to see if it works as required. What stage in the change management process is Joel preparing for? A) User acceptance testing B) User code review C) User developer check D) User production run Answer: A Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 81) What role in an organization assumes responsibility for testing code before implementation in the production environment? A) Developer B) User C) IT analyst D) All of these are correct. Answer: D Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

82) A formal change management process includes multiple environments to reduce risk. A formal change must go through the environments in what order? A) Test, Model, then Production B) Model, Test, then Production C) Production, Model, then Test D) Production, Test, then Model Answer: A Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Technology Bloom's: Comprehension AICPA: AC: Systems and Process Management 83) Which of the following change management steps occurs in the test environment? A) Production control implements change. B) Developer writes code. C) IT Analyst documents testing. D) User reviews and approves code. Answer: B Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 84) Which of the following change management steps occurs in the production environment? A) User requests change. B) Developer tests code. C) Code is live in system. D) User reviews and approves code. Answer: C Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

85) Which user has access to all three change management environments? A) Developer B) IT Analyst C) Production control D) No user has access to all environments. Answer: D Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 86) What kind of occurrence would constitute an emergency change to a system? A) System outage B) Compliance issue C) Security risk D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 87) Enoch developed code in response to a request ticket submitted by Cody. Enoch tested his code in the sandbox and is ready for Cody to test the code to see if it meets his requirements. In what environment will Cody test the new code? A) Test environment B) Model environment C) Production environment D) Live environment Answer: B Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

88) In what way do the three change management environment stages work together to prevent a change being accidentally implemented? A) The three stages are isolated from one another. B) The same IT staff member works with the issue in all three stages to ensure error free completion. C) Code flows through each stage and then is tested by the developer to ensure that it meets the user's requirements. D) The three stages are symbolic of the iterative process. Answer: A Diff: 3 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 89) The Griffin Academy board approved a major change to the method for tuition calculation that will require a system change. A board member calls Julia, a developer in the IT department at Griffin, and requests that she make the change and implement the change immediately. If Jane does as she is told by the board member and does not put the change through the change management process, what kind of risk potential exists for Griffin? A) The change could contain code that miscalculates tuition and costs the company money. B) The change could contain code that opens Griffin up for the potential for fraud. C) The change could contain code that opens student data for inappropriate access. D) All of these risk statements are correct and avoidable using a change management process. Answer: D Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 90) Which role in the change management process tests the functionality of the code submitted to the model environment and documents the results of the test? A) Developer B) User C) IT Analyst D) Production Control Answer: C Diff: 1 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

91) Explain the concept of IT governance. Answer: IT Governance is the process that ensures effective and efficient use of IT so a company can achieve goals and provide value. Diff: 2 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 92) COBIT includes 5 domains, 40 control objectives, and over 300 generic IT controls. Explain how IT auditors use the COBIT framework to ensure that a company meets its control objectives. Answer: Risks associated with IT are vast and complex. IT auditors must understand where to locate the COBIT framework and how to apply it not memorize it. The COBIT 2019 framework is published on the ISACA website for IT auditors to use for designing IT controls and performing audits. Diff: 3 Learning Objective: 14.1 Describe the COBIT framework and its five domains. Section Reference: What Framework Can We Use to Mitigate Risk Around Our Systems? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 93) What permissions are granted to a Creator role? Answer: Someone assigned the role of creator has permission to make changes to the system, create files, download and upload files, and edit files. Diff: 2 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Technology Bloom's: Application AICPA: AC: Systems and Process Management 94) Explain how user access reviews protect the data and security of a system. Answer: Regular user access reviews prevent unauthorized access to systems. User access reviews identify users with excessive privileges, dormant access privileges, and outdated access. Unauthorized access may yield employee fraud, malicious attacks on systems and data, systems and data being held ransom, and data breaches, all of which can be costly and damaging to the system owner. Diff: 3 Learning Objective: 14.2 Evaluate logical user access controls. Section Reference: How Do We Decide Who Can Access Systems? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

95) Use what you have learned about how to protect the inside environment of a data center to describe how you would protect the center from fire damage. Answer: To protect a data center from fire, it should have smoke detectors, a fire suppression system that releases fire-suppressive gas before water, fire extinguishers, and a regular inspection by the fire department. Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 96) Describe a well-designed backup data center for a business with primary operations in an area subject to severe weather. Answer: A data center located on a raised floor near the center of an offsite building in a mild climate would protect a business from the loss of all systems and data in the event of severe weather affecting the primary business location. Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 97) How does a test environment reduce risk by ensuring that a developer does not make rogue changes to the production system? Answer: The test environment where developers write and test their code is not connected to the production system. Before their code can be implemented in the production system, it must be loaded to the model system for testing and user approval before being routed to production. Diff: 2 Learning Objective: 14.5 Summarize the change management process. Section Reference: How Do We Make Changes to Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 98) Google and Amazon have invested in off-site data centers, but other companies, like Apple and Netflix, do not. What is another way for these companies to reduce risk? Answer: They can reduce risk by renting off-site data center space and computer power. Diff: 2 Learning Objective: 14.3 Explain how physical access controls protect equipment and systems. Section Reference: How Do We Physically Protect Our Systems? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

99) When a company creates a disaster recovery (DR) plan, systems and data are categorized based on importance. Explain how and why a clothing store that conducts business at a storefront and online would categorize their customer facing website, retail point-of-sale, employee database, and accounting/payroll online software system. Answer: The company would categorize its customer facing website and retail point-of-sale system as critical because having these systems down for much time could have a detrimental impact on the business. Customers may not purchase or come back to the business, if they are unable to complete transactions. The company would want this system back online as soon as possible with a max of an hour or two. The company would categorize its accounting/payroll software as moderate as this system is necessary for paying employees and maintaining the financial records of the business. The company would want this system back online in a few days. The company's employee database would be in the low category as its impact on the business is low; therefore, it would be the last priority for recovering after a disaster. Diff: 2 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 100) The Cardinal Company is considering a backup site for their organization. Explain to Cardinal management the major differences between a hot and warm backup site. Answer: A hot backup site is more expensive to set up and operate but will get the company back to normal operations faster than a warm backup site. A hot backup site is a continuously running and backing up data and systems for a ready-to-go exact copy of the live systems, even the viruses on the live system. A warm backup site contains most of the systems and equipment to get the company back up and running but is not a continuous backup; instead, the warm backup site is loaded at the end of each business day. Because the backup loads are not continuous, the company will have the opportunity to detect and remove viruses before the backup is loaded to the backup site. A warm backup site is much less expensive but may take more than just an hour or two to be ready to run Cardinal after a disaster at the main site. Diff: 3 Learning Objective: 14.4 Compare backup and recovery efforts. Section Reference: How Do We Keep Our Systems Running? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 15 Fraud 1) Which of the following definitions of fraud is NOT true? A) Fraud is the known misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment. B) Fraud is intentionally misstating or hiding the truth knowing that the recipient of that information will act on the information. C) Fraud is a known false statement on which a victim relies on and suffers damages. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 2) According to the 2020 Association of Certified Fraud Examiners Report to the Nations, organizations lose around A) 5% of their revenues to fraud. B) 5% of their profits to fraud. C) 15% of their revenues to fraud. D) 15% of their profits to fraud. Answer: A Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 3) Which of the following could help a company manage fraud? A) Creating an anti-fraud culture B) Establishing and maintaining an effective system of internal controls C) Performing fraud risk assessments D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

4) Which law or regulation requires companies to evaluate their systems of internal controls to prevent and detect fraud? A) ACFE B) SOX C) CPA D) CFE Answer: B Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 5) Which of the following is an example of external fraud? A) A vendor offers to purchase football tickets for a purchasing officer if awarded a contract. B) A purchasing agent awards a contract to a vendor owned by a friend. C) A vendor bills the company for services that were never performed. D) The company overstates the financial performance in publicly-issued financial statements. Answer: C Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 6) Which of the following represents an accurate definition of external fraud? A) External fraud is fraud committed by owners, managers, or employees who use their positions to enrich themselves at the expense of the company. B) External fraud is fraud committed by a company's accounting firm to misrepresent the financial status of the firm to the public. C) External fraud is fraud committed by vendors who bribe purchasing agents to award contracts. D) External fraud is fraud committed by customers, vendors or other outside parties against a company. Answer: D Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

7) Occupational fraud is committed by A) owners. B) management. C) employees. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 8) Occupational fraud can A) also be called internal fraud. B) be committed by employees of the company seeking to enrich themselves at the expense of the company. C) be committed in as many as 50 different ways. D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 9) Juan Martin is a purchasing manager for North Industries. Juan Martin chose not to award a $1 million-dollar contract to his brother's firm because another firm was more qualified to perform the services required. What type of corruption scheme did Juan Martin avoid by choosing the most qualified vendor to provide services for North Industries? A) Conflicts of interest B) Illegal gratuities C) Commercial bribery D) Economic extortion Answer: A Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

10) Daniil is evaluating vendor bids for office furniture for his company's new building. A vendor called Daniil and offered season tickets to the professional basketball team's upcoming season if he were to consider awarding the contract to their firm. What type of fraud would be occurring if Daniil selects the vendor offering the season tickets? A) Conflicts of interest B) Illegal gratuities C) Commercial bribery D) Economic extortion Answer: C Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 11) Leylah threatens Alta, Inc. with awarding a contract to another vendor if Alta does not invite Leylah to the next Alta company retreat in Bali. What type of occupational fraud is Leylah committing? A) Conflicts of interest B) Illegal gratuities C) Commercial bribery D) Economic extortion Answer: D Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 12) Garbine, an internal auditor for XYZ, examined purchases made for the previous year. Garbine found that several contracts were awarded to the same vendor despite several bids coming in with more favorable terms. Upon questioning those in the purchasing department, Garbine learned that Amanda always handled the contracts with that vendor and seems to have received gifts from the vendor. What kind of corruption may be between Amanda and the vendor? A) Conflicts of interest B) Illegal gratuities C) Bid rigging D) Economic extortion Answer: B Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 4

13) Taylor's mother owns a commercial cleaning business that bid on the job for Taylor's office building. By awarding the cleaning contract to her mother's cleaning company without considering the competing bids, Taylor is engaging in what type of corruption? A) Conflicts of interest B) Illegal gratuities C) Commercial bribery D) Economic extortion Answer: A Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 14) Novak accepted an offer of payment from Iga to help sway a business decision. Who is in the wrong in this situation? A) Novak is guilty of corruption. B) Iga is guilty of bribery. C) Both Novak and Iga are guilty. D) Neither Novak nor Iga can be considered guilty without knowing the outcome of the decision. Answer: C Diff: 3 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 15) Alexander, the purchasing manager for Express Limited, recently received a luxury watch in the mail from Matteo, a salesman from VidStar. Alexander awarded a large contract to VidStar last week. Alexander should not accept the watch as it is a(n) A) conflicts of interest. B) illegal gratuities. C) commercial bribery. D) economic extortion. Answer: B Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

16) Ons is a purchasing agent for a large casino organization. The organization is reviewing many bids for security services. The two bids with the best cost benefit analysis are very close. Ons has informed one of the companies that they are the second choice but could be the first if they were to provide Ons with a vacation package for the weekend. What type of corruption is Ons guilty of in this situation? A) Conflicts of interest B) Illegal gratuities C) Commercial bribery D) Economic extortion Answer: D Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 17) What type of individual is most likely to commit occupational fraud? A) Someone with a prior criminal conviction B) A member of the management team C) A vendor in competition with the firm D) A customer who has had a bad experience Answer: B Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 18) Elana works in internal audit and take her job very seriously. So seriously that she rarely takes any time off and insists that she will complete any work when she returns and for no one else to touch her work. Which behavior red flag is being exhibited by Elana? A) Financial difficulties B) Unscrupulous attitude C) Control issues D) Family problems Answer: C Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

19) Casper brags and often shares negative comments about his coworkers to sway the management team into assigning him the projects that he prefers. What type of behavioral red flag does Casper exhibit? A) Unscrupulous attitude B) Control issues C) Living beyond one's means D) Close association with vendor Answer: A Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 20) Jannik visits with a good customer of the firm frequently at their place of business but never leaves the office to visit other customers. Is Jannik's behavior a red flag? A) No, Jannik can be friendly with some customers and not others. B) Yes, a close association with a customer could be a red flag. C) No, a close association with a vendor is a red flag but not a customer. D) Yes, Jannik's unscrupulous attitude toward the customer is a red flag. Answer: B Diff: 3 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 21) Hubert recently showed pictures of his luxury vacation to Denis. Denis who works in the same department as Hubert knows that he cannot afford this type of vacation on the salary that they both earn. What type of behavioral red flag has Denis identified? A) Financial difficulties B) Unscrupulous attitude C) Control issues D) Living beyond one's means Answer: D Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

22) Belinda misses work often for doctor's appointments for her son. The treatments for her son are very expensive and are only partially covered by health insurance. While empathic of Belinda's situation, Elina knows that this is a typical A) financial difficulty red flag. B) control issue red flag. C) unscrupulous attitude red flag. D) living beyond one's means red flag. Answer: A Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 23) Victoria, an accountant for the firm, and her husband are getting a divorce. How should the red flag presented by Victoria's divorce be treated by her supervisor? A) Victoria should be fired as she will commit fraud. B) All of Victoria's work should be audited to find the fraudulent activity. C) Victoria's divorce is a behavioral red flag that indicates the possibility not evidence of fraud. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 24) Which of the following statements is TRUE? A) Accounting professionals are the first line of defense when they use and comply with internal controls in their organization. B) Compliance professionals are the first line of defense when they design and monitor internal controls in their organization. C) Internal auditors are the first line of defense when they evaluate accounting systems for internal control deficiencies. D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

25) Which of the following statements is incorrect? A) Accounting professionals are the first line of defense when they use and comply with internal controls in their organizations. B) Financial accounting professionals are the first line of defense when monitoring internal controls in their organization. C) Internal auditors are the third line of defense when evaluating accounting systems for internal control deficiencies. D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 26) Which of the following statements is TRUE? A) External auditors, the third line of defense, evaluate systems for internal control deficiencies. B) External auditors, the second line of defense, monitor internal controls. C) External auditors provide additional assurance outside the three lines of defense. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 27) Which type of accounting professional provides the third line of defense by evaluating accounting systems for internal control deficiencies that provide an opportunity for fraud? A) Compliance officers B) Financial accountants C) Internal auditors D) External auditors Answer: C Diff: 1 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

28) Who is responsible for designing and monitoring internal controls as part of the second line of defense against fraud within an organization? A) Compliance professionals B) Internal auditors C) External auditors D) All of these answer choices are correct. Answer: A Diff: 1 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 29) Which of the following statements is incorrect? A) To prevent and identify fraud, many companies set up an anonymous hotline for employees to report suspected fraud. B) Anonymous hotlines for fraud reporting allow employees to report suspected fraud without fear of retaliation. C) Companies allow anonymous tips of suspected fraud because employees do not have legal protection from retaliation. D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 30) The fraud triangle includes three motivational elements A) difficulty, opportunity, and rationalization. B) rationalization, perceived pressure, and difficulty. C) opportunity, difficulty, and perceived pressure. D) perceived pressure, opportunity, and rationalization. Answer: D Diff: 1 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

31) Danielle, who was expecting a raise, purchased a new car with payments based on her anticipated new monthly salary. When the raise didn't occur, it rendered Danielle unable to make the car payment on her current budget. What element on the fraud triangle is most closely associated with Danielle's problem? A) Perceived pressure B) Opportunity C) Rationalization D) All of these answer choices are correct. Answer: A Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 32) Danielle purchased a new car with higher payments expecting a raise from her employer. When the raise didn't occur, Danielle started pocketing a bit of cash from the drawer each week to make up for the higher car payment since her employer didn't give her the raise that she deserved. What element of the fraud triangle is most closely related to Danielle's issue? A) Perceived pressure B) Opportunity C) Rationalization D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 33) Diego and Gael approve each other's reimbursement requests. Their collusion on fictitious receipts allows their fraud to go undetected for some time. Which element of the fraud triangle is most closely associated with the collusion of Diego and Gael? A) Perceived pressure B) Opportunity C) Rationalization D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

34) Psychopaths only need to complete two elements of the fraud triangle to commit fraud. Which element is NOT necessary for psychopaths to commit fraud? A) Perceived pressure B) Opportunity C) Rationalization D) All of these answer choices are correct. Answer: C Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 35) Grigor knows from his work on internal controls that the computer system that flags potentially fraudulent transactions can be manipulated to not check all transactions. Grigor's knowledge is an example of which element of the fraud triangle? A) Perceived pressure B) Opportunity C) Rationalization D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 36) Fabio and Frances work in cybersecurity and challenge each other to find holes in the internal control framework of the company as part of their job to test controls. When they discover that there is a monitoring program that can be manipulated, Fabio and Frances decide that the company will not notice a few hundred dollars per week in reimbursements when the normal budget for reimbursements is over $5,000 per week. Which of the following statements about Fabio and Frances's situation is TRUE? A) The perceived pressure element of the fraud triangle is met with the challenge to find holes. B) The opportunity element of the fraud triangle is met with the discovery of the ability to manipulate the monitoring program. C) Fabio and Frances rationalize that the company will not notice to meet the third element of the fraud triangle. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 12

37) Jalena is investigating a tip from the employee hotline that Camila may be misappropriating assets. Jalena learned from her investigation that Camila frequently uses her company computer to check her online gambling accounts during her breaks. Knowing that pressure alone does not mean Camila is committing fraud, how should Jalena proceed? A) Jalena should look for areas of opportunity for Camila to commit fraud. B) Jalena should look for psychopathic tendencies exhibited by Camila. C) Jalena should consider whether the element of rationalization is present. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 38) Which of the following statements is TRUE? A) Fraud investigations are less expensive than fraud prevention. B) Preventing fraud is the most cost-effective approach to fighting fraud. C) To mitigate the risk that fraud will occur, an organization implements internal controls. D) All of these answer choices are correct. Answer: B Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 39) Which of the following statements is TRUE? A) According to ACFE, over half of frauds in 2020 involved collusion. B) Collusion allows internal controls to be circumnavigated. C) A larger number of colluders translates to more difficult detection and larger losses. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

40) Which of the following is a primary risk factor in financial statement fraud? A) Internal controls B) Perceived pressure C) Tone at the top D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 41) Which elements of culture help prevent fraud? A) Zero tolerance for fraud B) Expectation of integrity C) Codes of conduct D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 42) External auditors for the firm alert management that the corporate culture could use some improvement with regards to fraud prevention. Which of the following could positively influence the company culture? A) Corporate leadership should communicate in writing their expectation of honesty and integrity among all corporate employees, including management. B) Corporate leadership must model behavior consistent with policies and make sure that employees are aware of the policies. C) Corporate leadership should create codes of conduct for leadership, employees, and those that work with the company. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

43) Ajla suggested to her company that they should consider financial statement analysis to identify potential fraud by comparing changes in items between different financial periods. What kind of analysis is Ajla suggesting? A) Non-behavioral B) Behavioral C) Horizontal D) Vertical Answer: C Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 44) Filip, a new accountant for the internal audit team at Wofford, relayed that his previous employer used percentages of line items in financial statement analysis as one method to review for potential fraud. What kind of analysis is Filip suggesting? A) Non-behavioral B) Behavioral C) Horizontal D) Vertical Answer: D Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 45) Which of the following is the top method of detecting fraud? A) Internal audit B) External audit C) Tips D) Surveillance Answer: C Diff: 1 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

46) Which of the following is an example of a method to detect fraud within an organization? A) Company implements a whistleblower hotline. B) Company uses data analytics to monitor processes. C) Company ensures that documentation creates an audit trail. D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 47) Which of the following terms refers to the theft of business owned cash, inventory, information, or intellectual property? A) Skimming B) Occupational fraud C) Corruption D) Asset misappropriation Answer: D Diff: 1 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 48) Though the least costly, this type of fraud is focused on by external auditors and is covered on the CPA exam? A) Corruption B) Asset misappropriation C) Financial statement fraud D) All of these answer choices are correct. Answer: B Diff: 1 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

49) Which of the following statements is TRUE? A) Asset misappropriation schemes are the most common and most costly fraud schemes. B) The CPA exam focuses on asset misappropriation as it is the costliest fraud scheme by case. C) Asset misappropriation schemes occur more frequently, but each individual case is less costly than financial statement fraud. D) Asset misappropriation schemes are less damaging to companies as they do not affect the financial statements. Answer: C Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 50) Select the statement that is TRUE. A) Skimming is the theft of assets before being recorded, and larceny is theft of assets after they are recorded in the books. B) Larceny is the theft of assets before being recorded, and skimming is theft of assets after they are recorded in the books. C) Skimming can only occur with cash as other forms of payment are easily tracked. D) Larceny can only occur with physical assets other than cash and may or may not be concealed. Answer: A Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 51) Which of the following terms is most closely associated with an employee stealing cash before the cash is recorded in the accounting records? A) Fraud B) Corruption C) Skimming D) Larceny Answer: C Diff: 1 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 17

52) Which of the following fraud situations would controls such as daily bank deposits or credit card only transactions help mitigate? A) Fraud B) Corruption C) Larceny D) Skimming Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 53) Which of the following controls could mitigate cash skimming efforts in a restaurant? A) Requiring receipts to be submitted B) Requiring manager approval for cash and check disbursement C) Implementing segregation of duties so that employees receiving payments do not also send invoices to customers D) Implementing segregation of duties so that employees executing sales do not also perform inventory counts and write-offs Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 54) Which of the following controls could mitigate accounts receivable skimming efforts? A) Requiring receipts to be submitted B) Requiring manager approval for cash and check disbursements C) Implementing segregation of duties so that employees receiving payments do not also send invoices to customers D) Implementing segregation of duties so that employees executing sales do not also perform inventory counts and write-offs Answer: C Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

55) Which of the following controls could help mitigate billing schemes? A) Requiring receipts to be submitted B) Requiring manager approval for cash and check disbursements C) Implementing segregation of duties so that employees receiving payments do not also send invoices to customers D) Implementing segregation of duties so that employees executing sales do not also perform inventory counts and write-offs Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 56) Which of the following controls could help mitigate expense reimbursement fraud? A) Requiring receipts to be submitted for all expenses. B) Requiring manager approval for cash and check disbursements C) Implementing segregation of duties so that employees receiving payments do not also send invoices to customers D) Implementing segregation of duties so that employees executing sales do not also perform inventory counts and write-offs Answer: A Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 57) Which of the following terms is defined as the theft of company assets after the company has recorded the assets in its books? A) Fraud B) Corruption C) Skimming D) Larceny Answer: D Diff: 1 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

58) Which category of fraud is associated with an employee submitting a receipt twice for reimbursement that was paid for using the company credit card? A) Billing scheme B) Cash skimming C) Accounts receivable skimming D) Double dipping Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 59) Which category of fraud is associated with an employee selling the employer's customer list to a competitor? A) Corruption B) Skimming C) Larceny D) Bribery Answer: C Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 60) Which category of fraud is associated when an employee submits an overpayment on a bill owed by the firm and then intercepts and cashes the overpayment reimbursement check from the vendor? A) Illegal gratuities B) Pay and return scheme C) Economic extortion D) Expense reimbursement scheme Answer: B Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

61) Which category of fraud is associated with an employee submitting meal and transportation receipts on an expense report outside of assigned travel dates on a company trip? A) Illegal gratuities B) Pay and return scheme C) Economic extortion D) Expense reimbursement scheme Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 62) Karolina works for Tour Sales and travels frequently in her own vehicle as part of her job. Anastasia, an accountant at Tour Sales, noticed that Karolina's mileage reimbursement checks seem to be larger than those issued to other employees and cannot determine a reason. What sort of control might Anastasia recommend to help mitigate any risk of Karolina or other employees overstating mileage for reimbursement? A) GPS Tracking B) Using map mileage rather than submitted mileage C) Requiring employees to drive company vehicles D) All of the above are correct. Answer: D Diff: 3 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 63) Which category of fraud is associated with an employee overstating mileage for reimbursement? A) Fraudulent disbursements B) Payroll schemes C) Economic extortion D) Cash skimming Answer: A Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 21

64) Which category of fraud is mitigated by having employees' clock in and out for shifts rather than submit a time sheet? A) Billing schemes B) Pay and return schemes C) Payroll schemes D) Expense reimbursement schemes Answer: C Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 65) Which category of fraud may be detected by using data analytics to look for anomalies in the vendor list and among vendor transactions? A) Billing schemes B) Pay and return schemes C) Payroll schemes D) Expense reimbursement schemes Answer: A Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 66) Which category of fraud may be detected by audit teams performing independent inventory counts? A) Billing schemes B) Pay and return schemes C) Corruption D) Skimming Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

67) Which category of fraud may be detected in a grocery store by reconciling cash drawers between cashier shifts? A) Billing schemes B) Pay and return schemes C) Skimming D) Larceny Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 68) Which category of fraud may be detected by using data analytics to summarize inventory write-offs by employee? A) Cash skimming B) Accounts receivable skimming C) Larceny D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 69) If fraudulent financial statements were to be submitted to the SEC, who at the submitting organization would be held responsible? A) Chief Accounting Officer and Chief Financial Officer B) Chief Executive Officer and Chief Financial Officer C) Chief Executive Officer and Chief Accounting Officer D) Only the Chief Executive Officer Answer: B Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

70) Which of the following are victims of financial statement fraud? A) Investors B) Employees C) Customers D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 71) What type of fraud involves materially misrepresenting the financial results and position of a company in the financial statements? A) Asset misappropriation B) Fraudulent disbursement C) Financial statement fraud D) Occupational fraud Answer: C Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 72) Which of the following is the best definition of materiality? A) Materiality means that the misrepresentation is large enough that users who rely on the information to make decisions may suffer financial damage. B) Materiality means that the misrepresentation is shared in such a way as to purposely dissuade potential investors from investing in the company. C) Materiality means that the financial statements are not misstated by enough to make a difference to those using the statements for decision making. D) Materiality means that any misrepresentations in the financial statements are negligible in amount and should not be considered wrong by malicious intent. Answer: A Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

73) According to the ACFE's 2020 report, which type of fraud is the least common yet most costly of frauds? A) Corruption B) Asset misappropriation C) Financial statement fraud D) All of these answer choices are correct. Answer: C Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 74) Which of the following is an example of a scheme to overstate financial performance? A) Sham sales B) Unauthorized shipments C) Channel stuffing D) All of these answer choices are correct. Answer: D Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management 75) Which of the following would be considered a fraud scheme to understate financial performance? A) Unauthorized shipments B) Channel stuffing C) Misclassification of revenue D) Expense cutoff Answer: C Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Comprehension AICPA: AC: Systems and Process Management

76) Which of the following reasons would management use to justify overstating performance in the financial statements? A) To decrease taxes owed B) To defer earnings to subsequent periods if current goals have been met C) To reduce investors' current expectations to create a perception of growth in the future D) To meet benchmarks for performance-based compensation Answer: D Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 77) What type of fraud would result from a company recording revenue earned on January 2nd in the previous fiscal year after the books are closed? A) Skimming B) Corruption C) Asset misappropriation D) Financial statement fraud Answer: D Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 78) Daria is asked to arrange to have a container load of inventory shipped to a newly rented offsite warehouse. Daria prepares and ships the inventory as told and then notices an invoice to a new customer that Daria doesn't recognize for the same amount of inventory that she just arranged shipping to the company-owned warehouse. Daria suspects that fraud might be occurring with this situation. Daria chooses to call the whistleblower hotline and lets them know about the A) unauthorized shipments. B) sham sales. C) channel stuffing. D) All of these answer choices are correct. Answer: B Diff: 3 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management 26

79) Andrey is worried that he will not meet sales goals for the month, so he creates invoices to customers for several thousand dollars in sales and ships the goods to a storage unit to make sure that they are not found on site during the end-of-month inventory count. What type of fraud scheme is Andrey committing? A) Sham sales B) Unauthorized shipments C) Channel stuffing D) Sales cutoff Answer: A Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 80) Implementing preventive and detective controls to identify fake customer names similar to legitimate customer names could help mitigate what type of financial statement fraud? A) Unauthorized shipments B) Channel stuffing C) Sham sales D) Sales cutoff Answer: C Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

81) Cameron processed and shipped a large order of soccer balls to A-1 Sporting Goods, a regular customer, late in the fiscal year without a customer order. The sale is recorded in the current year's financial statements even though A-1 returned the soccer balls that they did not order a few days later. When the return was received back, Cameron processed it in the next fiscal year. What type of financial statement fraud has Cameron committed? A) Sham sales B) Channel stuffing C) Sales cutoff D) Unauthorized shipments Answer: C Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 82) Pablo, an external audit consultant, reviewed the fraud controls for Jamestown Supply. Jamestown recently changed senior leadership after a small fraud incident resulting from the tone at the top. New leaders have asked that Pablo recommend additional controls to help convey that fraudulent activity will not be tolerated. Pablo has recommended that Jamestown implement vertical and horizontal financial statement analysis to detect possible occurrences of A) sham sales. B) unauthorized shipments. C) channel stuffing. D) All of these answer choices are correct. Answer: D Diff: 3 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

83) To meet year-end goals, Trident Telecom doubled shipments to customers during the month of December and let the customers know that they could return any of the extra products that they did not get sold in January. Trident did not allow for any reserve against these expected returns in the financial statements for the year ending in December. What type of financial statement fraud scheme did Trident use to inflate its financial performance? A) Sham sales B) Unauthorized shipments C) Channel stuffing D) Sales cutoff Answer: C Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 84) Lorenzo used journal entries to move backdated sales that occurred just after the start of the fiscal year to the previous fiscal year. What type of fraud scheme did Lorenzo use to overstate financial performance for the previous fiscal year? A) Sham sales B) Channel stuffing C) Sales cutoff D) Unauthorized shipments Answer: C Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 85) Which type of revenue fraud is most likely to occur at a service-based business? A) Sales sham B) Unauthorized shipments C) Channel stuffing D) Sales cutoff Answer: D Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 29

86) When Alpha Industries records equipment maintenance as a capital improvement to fixed asset accounts instead of an expense account, what is the result? A) Increased profits B) Increased owner's equity C) Capitalization of expenses fraud D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 87) Angelique is asked to help design controls to mitigate the potential of management at Zion attempting to improperly capitalize expenses. Which of the following controls could Angelique recommend for Zion? A) Implementing segregation of duties in the general ledger system B) Using data analytics to identify significant capitalization and reviewing for appropriateness C) Requiring appropriate approvals in the general ledger system D) All of these answer choices are correct. Answer: D Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 88) Petra received expenses dated the 31st of the month but waited to record them until the next month to help the current month make the income goals. What type of financial statement fraud is Petra committing by waiting to record and dating the expenses in the following month? A) Capitalization of expenses B) Expense cutoff C) Sales cutoff D) Channel stuffing Answer: B Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

89) While Camila Incorporated has had a good sales year, they do not have much cash near the end of the year. To avoid needing to take out a loan to pay dividends to shareholders, Camila chose to push some sales in December into the next fiscal year. What type of fraud scheme is Camila using to understate financial performance? A) Sales cutoff B) Expense cutoff C) Unrecorded revenue D) Expensing capitalized costs Answer: A Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 90) A business with cash transactions may choose not to record the cash sales to understate revenue. Why would a business want to understate revenue? A) To decrease tax liabilities B) To decrease inflate stock prices C) To hide problems D) To meet the terms of loan covenants Answer: A Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management 91) Marin recorded the purchase of a new delivery vehicle as a delivery expense for the current year. What type of financial statement fraud is being committed by Marin? A) Unrecorded revenue B) Expense cutoff C) Expensing capitalizable costs D) Capitalizing expense costs Answer: C Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

92) What term is used to describe what happens when the senior leadership of an organization chooses to ignore controls that are in place to prevent fraud? A) Corruption B) Collusion C) Management misclassification D) Management override Answer: D Diff: 1 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 93) A purchasing manager awards a contract worth $500,000 to a company owned by a family friend even though there were other similar bids in the $475,000 range. After the contract is awarded the family friend takes the purchasing manager on a weekend deep sea fishing trip with all expenses paid by the family friend. Analyze the situation to determine if fraud has occurred. Record your findings for your supervisor. Answer: Analysis of the situation reveals that two types of corruption may have occurred involving this transaction by the company's purchasing manager. First, the purchasing manager chose the family friend over similar bids that would have cost the company less. This conflict of interest cost the company around $25,000. After the contract was awarded, the purchasing manager accepted illegal gratuities that may lead to future expectations of favorable treatment with that same company. Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management

94) Katerina works in reimbursement accounting for the firm. Katerina has not taken more than a day at a time off in the past three years, always saying that it is more work to be gone than it is worth and no one else can properly do her job. When she is gone for a day, she insists that she will handle it her next day in the office. A new internal auditor learned of this behavior and started watching Katerina's transactions more closely. Is the auditor's action appropriate? Why? Answer: Yes, the auditor's action is appropriate based on the behavioral red flag indicating possible fraud being exhibited by Katerina. Employees with control issues and who are unwilling to share duties are often hiding fraudulent activity. Because this is a known fraud red flag, the auditor should be monitoring Katerina's transactions and reviewing past transactions for potentially fraudulent activity. Diff: 2 Learning Objective: 15.1 Identify the main types of fraud. Section Reference: What Is Fraud? AACSB: Analytic Bloom's: Knowledge AICPA: AC: Systems and Process Management 95) Hans and Frans both work in payroll at Tech Industries. Both employees have shared comments with each other and others in the department about feeling underpaid for the work required and stress level of the job. An external auditor recently discovered paychecks written to an employee not in the company directory. Payroll management discovered that Hans and Frans had colluded to create the fictional employee and collected those checks for themselves. Explain how applying the fraud triangle framework to the situation may have prevented continual losses for the company. Answer: Hans and Frans displayed behavioral red flags by sharing comments about feeling underpaid. The feelings of being underpaid or underappreciated at work provide motive that pushes a person toward the decision to commit fraud. With both employees colluding on the fraud, they were able to circumvent the internal controls in place to prevent the creation of the fictitious employee. The final element of the fraud triangle framework, rationalization, was met by the sentiment expressed by the employees that they are not paid enough anyway. Diff: 2 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management

96) 89th Bank recently reviewed the SEC's Accounting and Auditing Enforcement Releases. The report found that 89% of cases named the CEO and/or the CFO and indicated that fraud occurred because of control environment issues resulting from tone at the top. The findings have spurred 89th Bank to review their tone at the top and controls environment. Propose a plan for 89th Bank to ensure that the tone from their executive leadership works to prevent fraudulent activity. Answer: 89th Bank should communicate and regularly reinforce that zero tolerance will be given to mangers or employees guilty of fraudulent or unethical behavior and model that behavior in their daily work lives. One way to communicate these behavioral expectations is by requiring all employees, including leadership, to sign and adhere to codes of conduct. These codes of conduct can specifically denote that criminal acts, including fraud, will result in dismissal and legal prosecution. Following through with statements shared by executive leadership will further cement the culture of zero tolerance for fraud. Diff: 3 Learning Objective: 15.2 Describe the role of an accounting professional in fraud management. Section Reference: How Do We Manage Fraud Risk? AACSB: Analytic Bloom's: Synthesis AICPA: AC: Systems and Process Management 97) Analyze the expense reimbursement request submitted by an employee for possible red flags. Explain why each red flag should be investigated further.

Answer: The receipt for transaction 2 should be examined to determine if the breakfast buffet from transaction 4 is also included there and is an example of the employee double dipping for a larger reimbursement. Transactions 5 and 6 should be examined further to determine if the employee drove or took an Uber to the airport for the flight. Both are not reasonable. Diff: 3 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

98) Dominic noticed that his restaurant had not seemed to make as much in profit in the couple of months since Beniot was hired as the manager. Dominic's first thought was that an employee might be cash skimming and not recording cash restaurant sales. The new point-of-sale system in place requires that orders be entered for the kitchen to fill the order, so Dominic is confident that this internal control is preventing the cash skimming scheme that he first suspected. After digging deeper, Dominic found that the inventory receipts were much higher than the cost of goods sold recorded for sales through the restaurant, yet there was not a backlog of inventory nor was Beniot writing off expired inventory. What should Dominic investigate to determine what might be going on with his restaurants lack of profitability? Answer: Dominic should investigate the inventory issue further. It is possible that Beniot is ordering in more inventory than necessary for the restaurant and stealing the extra inventory for his personal use or to reselling that inventory to convert it into cash. This is a form of non-cash larceny. A segregation of duties control activity could help deter this type of fraud from occurring in the future. Diff: 2 Learning Objective: 15.3 Explain how to identify, prevent, and detect asset misappropriation schemes. Section Reference: How Does Asset Misappropriation Result in Fraud? AACSB: Analytic Bloom's: Application AICPA: AC: Systems and Process Management 99) For what reasons might a manager choose to override controls to allow fraud to occur? Answer: Managers are often assessed and rewarded based on financial performance of the company. Overstating financial results could increase a manager's pay, increase the value of stock or stock options, and allow for funding to expand operations. Understating financial results could reduce the tax and dividend liabilities of the company, thereby conserving cash. Diff: 2 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Analysis AICPA: AC: Systems and Process Management

100) Compare and contrast how a product-based business and service-based business may overstate revenue as part of financial statement fraud. Answer: Service-based businesses often use sales cutoff scheme to move sales into another reporting period to benefit the company. While product-based businesses can also use recording dates to inflate revenue in the reporting period, product-based businesses can also create sham sales to fictitious customers and move the inventory off-site to avoid it being found by auditors during inventory counts. Additionally, product-based businesses can use unauthorized shipments and channel stuffing to ship unordered goods to current customers during one reporting period, even though the goods may be returned. The returned goods are not recorded until the next reporting period, so they do not offset the sales in the current set of financial statements. This allows management to manipulate financial statements to meet goals, inflate stock prices, or hide problems. Diff: 3 Learning Objective: 15.4 Identify financial statement fraud and explain how to mitigate its risks. Section Reference: What Are the Characteristics of Financial Statement Fraud? AACSB: Analytic Bloom's: Evaluation AICPA: AC: Systems and Process Management

Accounting Information Systems, 1e (Savage) Chapter 16 Cybersecurity 1) The terms "hacker" and "attacker" are used to refer to A) programmers with malicious intentions that pose a risk to a company. B) analysts with ulterior motives. C) managers whose behavior poses a risk to the company. D) executives who treat the company's assets as their own. Answer: A Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 2) Cybersecurity encompasses A) actions by programmers with malicious intentions that pose a risk to a company. B) the measures a company takes to protect a computer or system against unauthorized access or attacks. C) actions taken by managers which pose a risk to the company. D) actions by executives who treat the company's assets as their own. Answer: B Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Introduction AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 3) Colonial Pipeline, which provides almost 50% of the fuel for the East Coast, is an example of an attack of A) chaos and destruction. B) financial data breach. C) ransomware. D) reconnaissance. Answer: C Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Recent Cybersecurity Threats AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

4) Florida Water Supply, a water treatment facility, is an example of being hacked to A) obtain financial data. B) create a denial of service. C) obtain customer information. D) cause chaos and destruction. Answer: D Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Recent Cybersecurity Threats AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 5) Equifax, a credit reporting agency, was victim to A) a financial data breach. B) ransomware. C) reconnaissance. D) chaos and destruction. Answer: A Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Recent Cybersecurity Threats AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 6) At larger companies, the cybersecurity program is usually the responsibility of a dedicated executive leader. This could include the A) Chief Executive Officer. B) Chief Information Officer. C) Chief Marketing Officer. D) Chief Operating Officer. Answer: B Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Relevance to Accounting Professionals AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

7) At larger companies, the cybersecurity program is usually the responsibility of a dedicated executive leader. This could include the A) Chief Executive Officer. B) Chief Marketing Officer. C) Chief Technology Officer. D) Chief Operating Officer. Answer: C Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Relevance to Accounting Professionals AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 8) At larger companies, the cybersecurity program is usually the responsibility of a dedicated executive leader. This could include the A) Chief Executive Officer. B) Chief Marketing Officer. C) Chief Operating Officer. D) Chief Information Security Officer. Answer: D Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Relevance to Accounting Professionals AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

9) The National Institute of Standards and Technology (NIST) Cybersecurity Framework is displayed below.

What is function A? A) Recover B) Identify C) Protect D) Detect Answer: A Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

10) The National Institute of Standards and Technology (NIST) Cybersecurity Framework is displayed below.

What is function B? A) Recover B) Identify C) Protect D) Detect Answer: B Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

11) The National Institute of Standards and Technology (NIST) Cybersecurity Framework is displayed below.

What is function C? A) Recover B) Identify C) Protect D) Detect Answer: C Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

12) The National Institute of Standards and Technology (NIST) Cybersecurity Framework is displayed below.

What is function D? A) Recover B) Identify C) Protect D) Detect Answer: D Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

13) The National Institute of Standards and Technology (NIST) Cybersecurity Framework is displayed below.

What is function E? A) Respond B) Identify C) Protect D) Detect Answer: A Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 14) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is A) a list of cybersecurity risks companies may face. B) a catalog of security control baselines for business. C) a checklist for Information Technology professionals. D) a list of entry level cybersecurity jobs for Accounting professionals. Answer: B Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 8

15) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into A) 53 chapters. B) 5 sections. C) 18 control families. D) 27 volumes. Answer: C Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 16) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). One of the control families is Access Control. What ID does Access Control family use? A) AT B) AN C) AL D) AC Answer: D Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 17) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). One of the control families is Awareness and Training. What ID does Awareness and Training family use? A) AT B) AN C) AL D) AC Answer: A Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 9

18) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into 18 control families. One of the control families is Security Assessment and Authorization. What ID does Security Assessment and Authorization family use? A) SA B) CA C) AA D) AS Answer: B Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 19) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into 18 control families. One of the control families is Configuration Management. What ID does Configuration Management family use? A) CO B) MC C) CM D) CP Answer: C Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

20) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into 18 control families. One of the control families is Maintenance. What ID does Maintenance family use? A) MT B) AM C) MN D) MA Answer: D Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 21) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into 18 control families. One of the control families is Physical and Environmental Protection. What ID does Physical and Environmental Protection family use? A) PE B) PP C) PH D) PY Answer: A Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

22) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into 18 control families. One of the control families is Personal Security. What ID does Personal Security family use? A) PR B) PS C) PE D) SE Answer: B Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 23) The National Institute of Standards and Technology (NIST) has published Security and Privacy Controls for Federal Information Systems and Organizations (NIST-800-53). The NIST-800-53 document is divided into 18 control families. One of the control families is System and Information Integrity. What ID does System and Information Integrity family use? A) SY B) SS C) SI D) SN Answer: C Diff: 1 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 24) Which of the following reflects the correct sequence of the three steps of the cyber-kill chain? A) Gather information about the network, access the network, disrupt the network B) Access the network, gather information about the network, disrupt the network C) Access the network, disrupt the network, gather information about the network D) Disrupt the network, gather information about the network, access the network Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 12

25) What step do reconnaissance attacks correspond to in the cyber-kill chain? A) Steal passwords B) Gather information about the network C) Access the network D) Disrupt the network Answer: B Diff: 2 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 26) Cybercriminals look for vulnerabilities in the network, through either a ________, who exposes valuable information or a ________ in the network. A) person, company B) company, person C) person, technical weak point D) company, technical weak point Answer: C Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 27) What two categories do cyberattacks fall into? A) Conceptual attack, theoretical attack B) Conceptual attack, logical attack C) Physical attack, conceptual attack D) Physical attack, logical attack Answer: D Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

28) Attackers us these three types of attacks to plan, enter, and damage a victim's network:

What type of attack is A? A) Reconnaissance attack B) Access attack C) Disruptive attack D) Translucent attack Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

29) Attackers us these three types of attacks to plan, enter, and damage a victim's network:

What type of attack is B? A) Reconnaissance attack B) Access attack C) Disruptive attack D) Translucent attack Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

30) Attackers us these three types of attacks to plan, enter, and damage a victim's network:

What type of attack is C? A) Reconnaissance attack B) Access attack C) Disruptive attack D) Translucent attack Answer: C Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Introduction AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 31) Which of the physical reconnaissance attacks is a deceptive request designed to trick victims into sharing private information? A) Email phishing B) Dumpster diving C) Eavesdropping D) Malware Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

32) Which of the physical reconnaissance attacks is looking through someone else's physical trash? A) Phishing B) Dumpster diving C) Eavesdropping D) Malware Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 33) Which of the physical reconnaissance attacks is the unauthorized interception of communication? A) Phishing B) Dumpster diving C) Eavesdropping D) Malware Answer: C Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 34) What is a company's best defense against phishing attacks? A) Only allow email from certified businesses B) Shut down email C) Monitor employee's email D) Train employees to recognize and report red flags Answer: D Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

35) What is an incorrect sender address red flag? A) Sending from obscure domains that are designed to look similar to legitimate domains B) Addressing the email to a generic recipient C) Including grammar or spelling mistakes D) Using words like "suspended", "security concerns," and "immediately" Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 36) What is a vague salutation red flag? A) Sending from obscure domains that are designed to look similar to legitimate domains B) Addressing the email to a generic recipient C) Including grammar or spelling mistakes D) Using words like "suspended", "security concerns," and "immediately" Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 37) A company's best defense against phishing attacks is to train employees to recognize and report red flags. The correct definition of a poor grammar or spelling red flag is A) Sending from obscure domains that are designed to look similar to legitimate domains B) Addressing the email to a generic recipient C) Including grammar or spelling mistakes D) Using words like "suspended", "security concerns," and "immediately" Answer: C Diff: 2 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

38) What is an urgency red flag? A) Sending from obscure domains that are designed to look similar to legitimate domains B) Addressing the email to a generic recipient C) Including grammar or spelling mistakes D) Using words like "suspended", "security concerns," and "immediately" Answer: D Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 39) What is an unusual links red flag? A) Hovering over a link in the email shows the actual link is not the same as the displayed text. B) Addressing the email to a generic recipient C) Including grammar or spelling mistakes D) Using words like "suspended", "security concerns," and "immediately" Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 40) What is a surveys red flag? A) Sending from obscure domains that are designed to look similar to legitimate domains B) Asking for personal information in a survey instead of taking you to a company portal to input information directly in the corporate system C) Including grammar or spelling mistakes D) Using words like "suspended", "security concerns," and "immediately" Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

41) What is encryption? A) Sending from obscure domains that are designed to look similar to legitimate domains B) A standard network protocol that allows users to transfer files between the company network and outside parties C) The process of using an algorithm to encode a plaintext message and converting it to something that is seemingly meaningless D) Asking for personal information in a survey instead of taking you to a company portal to input information directly in the corporate system Answer: C Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 42) What is file transfer protocol (FTP)? A) Sending from obscure domains that are designed to look similar to legitimate domains B) A standard network protocol that allows users to transfer files between the company network and outside parties C) The process of using an algorithm to encode a plaintext message and converting it to something that is seemingly meaningless D) Asking for personal information in a survey instead of taking you to a company portal to input information directly in the corporate system Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Physical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 43) The purpose of a ________, also called an IP probe, is to identify which hosts are active in the network by sending a communication to each IP address to see if there is a response packet. A) ping sweep B) port scan C) computer scan D) network sweep Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Logical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

44) For hackers to narrow their results, they use ________, which indicates which ports are open and sending or receiving data on the network. A) ping sweep B) port scans C) computer scan D) network sweep Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Logical Reconnaissance Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 45) What is it called when a company performs sweeps and scans to detect and classify loopholes in their infrastructure? A) Vulnerability scans B) Penetration tests C) Patches D) Upgrades Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Logical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 46) What is it called when a company attempts to hack their own systems? A) Vulnerability scans B) Penetration tests C) Patches D) Upgrades Answer: B Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Logical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

47) What does a company apply to ensure that systems are running up-to-date security when they are available? A) Vulnerability scans B) Penetration tests C) Patches D) Upgrades Answer: A Diff: 1 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Logical Reconnaissance Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 48) Physical access attacks A) result in access to either hardware or people. B) seek unauthorized access to a system by either exploiting a network vulnerability or attempting to use force to get through network security. C) result in access to customers or vendors. D) seek unauthorized access to employee records on the network. Answer: A Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Physical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 49) ________ are the biggest weakness in a company's internal control environment. A) Networks B) Humans C) Systems D) Routers Answer: B Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Physical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

50) What is accidental tailgating? A) Unauthorized users are aware that there is a tailgater. B) The authorized user is aware of the other person and blocks entry to the tailgater. C) Authorized users are unaware that there is a tailgater. D) The authorized user is aware of the other person but may politely hold the door for the tailgater. Answer: C Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Physical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 51) What is polite tailgating? A) Unauthorized users are aware that there is a tailgater. B) The authorized user is aware of the other person and blocks entry to the tailgater. C) Authorized users are unaware that there is a tailgater. D) The authorized user is aware of the other person but may politely hold the door for the tailgater. Answer: D Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Physical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 52) Logical access attacks A) result in access to either hardware or people. B) seek unauthorized access to a system by either exploiting a network vulnerability or attempting to use force to get through network security. C) result in access to customers or vendors. D) seek unauthorized access to employee records on the network. Answer: B Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

53) An attacker force access to the network by attempting many passwords or phrases until finding the correct one. What type of attack is being described? A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: A Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 54) Which of the following logical access attacks is a brute-force attack? A) An attacker forces access to the network by attempting many passwords or phrases until finding the correct one. B) An attacker attempts to gain access to an on-going communication between two endpoints by pretending to be each of the parties. C) An attacker disguises their identity and impersonates a legitimate computer on the network. D) An attacker follows an authorized user into the system. Answer: A Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 55) What type of logical access attack attempts to gain access to an on-going communication between two endpoints by pretending to be each of the parties? A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: B Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

56) Which of the following describes an on-path attack? A) An on-path attack is when the attacker forces access to the network by attempting many passwords or phrases until finding the correct one. B) An on-path attack is when the attacker attempts to gain access to an on-going communication between two endpoints by pretending to be each of the parties. C) An on-path attack is when the attacker disguises their identity and impersonates a legitimate computer on the network. D) An on-path attack is when the attacker follows an authorized user into the system. Answer: B Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 57) What type of logical access attack disguises the source identity and impersonates a legitimate computer on the network? A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: C Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 58) Which of the following logical access attacks describes IP spoofing? A) IP spoofing is when the attacker forces access to the network by attempting many passwords or phrases until finding the correct one. B) IP spoofing is when the attacker attempts to gain access to an on-going communication between two endpoints by pretending to be each of the parties. C) IP spoofing is when the attacker disguises their identity and impersonates a legitimate computer on the network. D) IP spoofing is when the attacker follows an authorized user into the system. Answer: C Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

59) NIST provides explicit guidelines that companies can require for password strength. What is the NIST recommended length? A) 2 — 6 characters B) 18 — 32 characters C) 4 — 8 characters D) 8 — 64 characters Answer: D Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 60) NIST provides explicit guidelines that companies can require for password strength. What does NIST recommend for character types? A) Mixture of letters, numbers, and special characters B) Numbers only C) Mixture of numbers and letters D) Letters only Answer: A Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 61) NIST provides explicit guidelines that companies can require for password strength. What is the NIST recommendation for resetting a password? A) Reset your password every month. B) Only reset your password if you know it has been compromised. C) Reset your password every six months. D) Never reset your password. Answer: B Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

62) NIST provides explicit guidelines that companies can require for password strength. What does NIST recommend for password construction? A) Combine multiple common words in a password. B) Reuse previous passwords so you remember them. C) Avoid dictionary words. D) Use your name as the password. Answer: C Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 63) On-path attacks, which were once known as man-in-the-middle attacks, attempt to gain access to an ongoing communication between two endpoints. Which of the following is the definition of eavesdropping? A) The hacker is actively communicating with the server. B) The hacker is passively injected into the connection. C) The hacker is actively injected into the connection. D) The hacker is only listening to or intercepting the communication. Answer: D Diff: 1 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 64) Match the cybersecurity threat to the following control activity: Ensure that the information system enforces minimum password complexity of specified case sensitivity, character numbers, and mix of uppercase and lowercase letters, including minimum requirements for each type. A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: A Diff: 2 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

65) Match the cybersecurity threat to the following control activity: Enforce a specified number of changed characters when new passwords are created. A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: A Diff: 2 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 66) Match the cybersecurity threat to the following control activity: Prohibit password reuse for a specified number of generations. A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: A Diff: 2 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 67) Match the cybersecurity threat to the following control activity: Review and update the baseline configuration of the information system using a company-defined frequency. A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: B Diff: 2 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

68) Match the cybersecurity threat to the following control activity: Review and update the baseline configuration of the information system as an integral part of information system component installations and upgrades. A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: B Diff: 2 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 69) Match the cybersecurity threat to the following control activity: Ensure that the information system uniquely identifies and authenticates devices before establishing a connection. A) Brute-force attack B) On-path attack C) IP spoofing D) Tailgating Answer: C Diff: 2 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Logical Access Attacks AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 70) What is an attack that prohibits users from using resources such as computers, websites, servers, or an entire network called? A) Denial-of-service attack B) Malware attack C) Virus attack D) Logic bomb attack Answer: A Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

71) What is a Denial-of-service attack? A) An attack that prohibits users from using resources such as computers, websites, servers, or an entire network B) An attack that uses destructive programs to take down a system C) An attack that is disguised as benign software but carries malicious code that may be activated via a logic bomb D) An attack that is a piece of malicious code that is programmed into a system and remains dormant until certain conditions are met Answer: A Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 72) What is a Botnet attack? A) An attack that creates a virus that cause a variety of problems B) An attack that is disguised as benign software but carries malicious code that may be activated via a logic bomb C) An attack that uses computers infected with malware that function like robots D) An attack that uses multiple machines or IP addresses to force the target to shut down Answer: C Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 73) What is a Distributed Denial-of-Service attack? A) An attack that creates a virus that cause a variety of problems B) An attack that is disguised as benign software but carries malicious code that may be activated via a logic bomb C) An attack that uses computers infected with malware that function like robots D) An attack that uses multiple machines or IP addresses to force the target to shut down Answer: D Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

74) A business can protect itself from DoS and DDoS attacks by ensuring that ________, routers, and intrusion detection systems are up-to-date, are properly configured, and will automatically block the ports where fake requests enter the system. A) firewalls B) servers C) websites D) ecommerce sites Answer: A Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 75) A business can protect itself from DoS and DDoS attacks by ensuring that firewalls, ________, and intrusion detection systems are up-to-date, are properly configured, and will automatically block the ports where fake requests enter the system. A) servers B) routers C) websites D) ecommerce sites Answer: B Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 76) A business can protect itself from DoS and DDoS attacks by ensuring that firewalls, routers, and ________ are up-to-date, are properly configured, and will automatically block the ports where fake requests enter the system. A) servers B) websites C) intrusion detection systems D) ecommerce sites Answer: C Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

77) Which of the following is an example of a Denial-of-Service internal control? A) Manage capacity, bandwidth, or other redundancy to limit the effects of an attack. B) Employ malicious code protection mechanisms at information system entry and exit points. C) Configure malicious code detection to perform periodic scans of the information system, block malicious code, quarantine malicious code, and notify the administrator. D) Monitor the information systems to detect attacks and indicators of potential attacks, including unauthorized local, network, and remote connections. Answer: A Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 78) Which of the following is an example of a Denial-of-Service internal control? A) Employ malicious code protection mechanisms at information system entry and exit points. B) Employ monitoring tools to detect indicators of attacks against, or launched from, the system. C) Configure malicious code detection to perform periodic scans of the information system, block malicious code, quarantine malicious code, and notify the administrator. D) Monitor the information systems to detect attacks and indicators of potential attacks, including unauthorized local, network, and remote connections. Answer: B Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 79) Which of the following is an example of a Denial-of-Service internal control? A) Employ malicious code protection mechanisms at information system entry and exit points. B) Configure malicious code detection to perform periodic scans of the information system, block malicious code, quarantine malicious code, and notify the administrator. C) Monitor system resources to determine if sufficient resources exist to prevent effective attacks. D) Monitor the information systems to detect attacks and indicators of potential attacks, including unauthorized local, network, and remote connections. Answer: C Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Denial-of-Service Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

80) What is an attack that uses destructive programs to take down a system called? A) Denial-of-service attack B) Malware attack C) Virus attack D) Logic bomb attack Answer: B Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 81) What is a Malware attack? A) An attack that prohibits users from using resources such as computers, websites, servers, or an entire network B) An attack that uses destructive programs to take down a system C) An attack that is programmed to do whatever the attacker wants D) An attack that uses multiple machines or IP addresses to force the target to shut down Answer: B Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 82) Which of the following is an example of Malware internal controls? A) Employ malicious code protection mechanisms at information system entry and exit points. B) Employ monitoring to detect indicators of attacks launched from the system. C) Manage capacity, bandwidth, or other redundancy to limit the effects of an attack. D) Increase system resources to prevent an effective attack. Answer: A Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

83) Which of the following is an example of Malware internal controls? A) Employ monitoring to detect indicators of attacks against, or launched from, the system. B) Configure malicious code detection to perform periodic scans of the information system, block malicious code, quarantine malicious code, and notify the administrator. C) Manage capacity, bandwidth, or other redundancy to limit the effects of an attack. D) Monitor system resources to determine if sufficient resources exist to prevent effective attacks. Answer: B Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 84) Which of the following is an example of Malware internal controls? A) Employ monitoring to detect indicators of attacks against, or launched from, the system. B) Manage capacity, bandwidth, or other redundancy to limit the effects of an attack. C) Monitor the information system to detect attacks and indicators of potential attacks, including unauthorized local, network, and remote connections. D) Monitor system resources to determine if sufficient resources exist to prevent effective attacks. Answer: C Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 85) What is a type of malware used by hackers that replicates itself in a system and spreads quickly, causing damage to core system functions? A) Virus B) Worms C) Logic bombs D) Trojan horse Answer: A Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

86) What is a type of malware used by hackers that replicates without the assistance of human interaction? A) Virus B) Worms C) Logic bombs D) Trojan horses Answer: B Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 87) What is a type of malicious code used by hackers that is programmed into a system and remains dormant until certain conditions are met? A) Virus B) Worms C) Logic bombs D) Trojan horses Answer: C Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 88) What is code used by hackers that is disguised as benign software but carries malicious code that may be activated via a logic bomb? A) Virus B) Worms C) Logic bombs D) Trojan horses Answer: D Diff: 1 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

89) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, the VP of Internal Audit is working with the chief technology officer, Justin, to propose an enterprise-wide data strategy project to the audit committee. Maeve suggests that the Internal Audit department perform a review of the company's data management and privacy procedures. This review will involve interviewing various departments throughout RAM Manufacturing to ask questions such as: • What guidelines are in place for data privacy? • How is data being shared? • Are communications masked or encrypted securely? • What are the differences between internal communications and communications with third parties? • Where is data being stored? • What procedures are in place for data retention? • Do these procedures meet regulatory standards? Maeve and Justin must decide which framework(s) to use as guidance for proposing recommendations for this project to the audit committee. What framework would you recommend? Justify your answer. Answer: This project will benefit from both the COBIT and NIST frameworks. COBIT contains guidelines for IT general controls, which are being reviewed. Additionally, NIST offers specific guidelines related to data privacy and security. Maeve and Justin should include both frameworks as guidance recommendations when proposing this project to the audit committee. Diff: 3 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 90) Cybersecurity programs are subject to different resource constraints and business needs depending on the size of the company. Who might be responsible for leading the cybersecurity program in a larger organization? Answer: The chief information officer (CIO), chief information security officer (CISO), or chief technology officer (CTO) are likely to lead the cybersecurity team at larger companies. Diff: 2 Learning Objective: 16.1 Describe the relationship between cybersecurity risks and the accounting profession Section Reference: Governance and Policies AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

91) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, an accountant at RAM Manufacturing recently received an email from Justin, the VP of Human Resources, asking her to click on a link and re-enter her login credentials and social security number. Suspicious of the email, Maeve forwarded the email to the Cybersecurity department. After talking with the cybersecurity department, Maeve decided to review her inbox to check for any other suspicious emails. Below is a list of what Maeve found: a. An email reminder from the Human Resources department to enter her time for the month. b. An email addressed to "Dear Accountant at RAM Manufacturing". c. An email from a plant manager to escalate payment of an invoice, as the vendor won't ship needed steel until this invoice is paid. d. A request from the CFO to transfer a large sum of money to an account that Maeve hadn't worked with before. e. A request from a product manager to run a report on the costs involved in launching a new product the prior year. Required: Do you think any of the emails are suspicious and why? Justify your answer by identifying the nature of the red flag or why it can be dismissed as suspicious. Answer: b and d are suspicious. Email b is suspicious because it is addressed to a non-personal recipient. Email d is suspicious because the CFO is required to follow a specific formal business process for requesting money transfers. Diff: 3 Learning Objective: 16.2 Describe the characteristics of reconnaissance attacks Section Reference: Logical Reconnaissance Attacks AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management 92) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve, an Internal Auditor, started with RAM Manufacturing a month ago. Maeve arrives at work, parks her car and walks to a side entrance. There she finds Justin waiting. Justin tells her that he works for an equipment repair company, has been called out to RAM Manufacturing to make repairs on a piece of equipment and forgot his ID in his work truck. He asks if Maeve could let him enter the side entrance. Maeve has never met Justin before. What should Maeve do? Answer: Maeve should not let Justin in the side door. A few things she should do include: • Insist that he get his ID from his truck. • Insist that he enter through the front entrance. • Allow him entry, but escort him to the security checkpoint. Diff: 3 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Physical Access Attacks AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management

93) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Justin, a newly hired Network Administrator, arrives at one of RAM Manufacturing's remote manufacturing facilities to perform a network upgrade. Justin approaches the main entrance and encounters Alison, a courier delivery person, waiting. Alison tells Justin that she delivers to the facility often and knows where the package goes. She asks if she could follow Justin in because she is behind schedule on her deliveries. Justin has never met Alison before. What should Justin do? Answer: Justin should not let Alison follow him in. A few things he should do include: • Insist that Alison follow normal security procedures • Escort Alison to the security checkpoint Diff: 3 Learning Objective: 16.3 Compare and contrast physical and logical access attacks Section Reference: Physical Access Attacks AACSB: Analytic Bloom's: Evaluation AICPA: AC: Risk Assessment, Analysis, and Management 94) What are some of the things that attackers may do once they have broken into a network? Answer: Answers will vary. It depends on the attacker's motives: • Attackers can steal data. • They can hold information hostage and demand a ransom. • They can crash systems or even permanently damage the network. Diff: 3 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Introduction AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 95) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is an IT auditor at RAM Manufacturing, working on a project for the Cybersecurity department. Maeve has prioritized the following cyberattack categories: • Denial-of-service attacks • Viruses • Worms • Logic bombs • Trojan horses Match the following attack description to one of these cyberattack categories. On Saturday, June 2nd, at exactly 12:00 noon, a program stopped allowing users to log in. Answer: Logic bomb. This attack took place at a specific time and date without interaction. Diff: 3 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 38

96) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is an IT auditor at RAM Manufacturing, working on a project for the Cybersecurity department. Maeve has prioritized the following cyberattack categories: • Denial-of-service attacks • Viruses • Worms • Logic bombs • Trojan horses Match the following attack description to one of these cyberattack categories. Many RAM Manufacturing employees received an email from prompting them to install a new expense reporting system. Employees who downloaded the software experienced no disruption and the attack did not replicate itself. Answer: Trojan horse. Because the attack did not replicate itself, it is a Trojan horse. Diff: 3 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 97) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is an IT auditor at RAM Manufacturing, working on a project for the Cybersecurity department. Maeve has prioritized the following cyberattack categories: • Denial-of-service attacks • Viruses • Worms • Logic bombs • Trojan horses Match the following attack description to one of these cyberattack categories. Mobile app orders experienced an unprecedented increase at an unusual time of day that resulted in the order system crashing. Answer: Denial-of-service attack. Unexpected traffic on a website or application that bogs down the target system to the point that legitimate users are unable to access it is a denial-ofservice attack. Diff: 3 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management

98) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is an IT auditor at RAM Manufacturing, working on a project for the Cybersecurity department. Maeve has prioritized the following cyberattack categories: • Denial-of-service attacks • Viruses • Worms • Logic bombs • Trojan horses Match the following attack description to one of these cyberattack categories. An employee was granted a large increase in memory on his laptop and then requested an additional increase one week later. Upon investigation, highly replicative malicious code was found on is computer. Answer: Worm. Requiring an increase in memory is indicative of a self-replicating worm that eats away processing power without requiring human interaction. Diff: 3 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management 99) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve is an IT auditor at RAM Manufacturing, working on a project for the Cybersecurity department. Maeve has prioritized the following cyberattack categories: • Denial-of-service attacks • Viruses • Worms • Logic bombs • Trojan horses Match the following attack description to one of these cyberattack categories. Employees received an email with a funny meme that was forwarded throughout the company. The email contained a link that employees clicked on to view the meme. Users who clicked on the link in the email experienced unexpected pop-ups on their computers. Answer: Virus. Viruses require human interaction to replicate across the network. Diff: 3 Learning Objective: 16.4 Explain how hackers perform disruptive attacks. Section Reference: Malware Attacks AACSB: Analytic Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management © 2022 John Wiley & Sons, Inc. All rights reserved. Instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. Except as permitted herein or by law, no part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. 40

Accounting Information Systems, 1e (Savage) Chapter 17 Data Analytics 1) Five data analytics-related job titles were discussed in the text. Which of the following job titles would best fit the following description: "Builds the technological infrastructure and architecture for gathering, growing, and storing raw data." A) Data engineer B) Data scientist C) Statistician D) Data analyst Answer: A Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 2) Five data analytics-related job titles were discussed in the text. Which of the following job titles would best fit the following description: "Designs and programs algorithms to collect and analyze data and perform predictive analytics." A) Data engineer B) Data scientist C) Statistician D) Data analyst Answer: B Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

3) Five data analytics-related job titles were discussed in the text. Which of the following job titles would best fit the following description: "The role is math oriented and focuses on collection and interpretation of quantitative data using defined scientific methods." A) Data engineer B) Data scientist C) Statistician D) Data analyst Answer: C Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 4) Five data analytics-related job titles were discussed in the text. Which of the following job titles would best fit the following description: "Collects, manipulates, and analyzes data across a business." A) Data engineer B) Data scientist C) Statistician D) Data analyst Answer: D Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 5) Five data analytics-related job titles were discussed in the text. Which of the following job titles would best fit the following description: "Possesses a deep understanding of business processes and can evaluate them, analyze key metrics, and provide strategic recommendations." A) Business analyst B) Data scientist C) Statistician D) Data analyst Answer: A Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 2

6) Five data analytics-related job titles were discussed in the text. Which of the following job titles would need an expert understanding of database administration? A) Data engineer B) Data scientist C) Statistician D) Data analyst Answer: A Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 7) Five data analytics-related job titles were discussed in the text. Which of the following job titles would need an expert understanding of data modeling? A) Business analyst B) Data scientist C) Statistician D) Data analyst Answer: B Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 8) Five data analytics-related job titles were discussed in the text. Which of the following job titles would need an expert understanding of data? A) Data engineer B) Data scientist C) Statistician D) Data analyst Answer: C Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

9) Five data analytics-related job titles were discussed in the text. Which of the following job titles would need an expert understanding of visualization? A) Data engineer B) Data scientist C) Statistician D) Business intelligence analyst Answer: D Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 10) There are four widely used categories of data analysis. Which two looks at the past and uses historical data to learn more about what occurred and why it occurred? A) Descriptive and Diagnostic B) Predictive and Prescriptive C) Descriptive and Prescriptive D) Diagnostic and Predictive Answer: A Diff: 1 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 11) There are four widely used categories of data analysis. Which two analyze historical data and predict future events, providing recommendations on what the business should do? A) Descriptive and Diagnostic B) Predictive and Prescriptive C) Descriptive and Prescriptive D) Diagnostic and Predictive Answer: B Diff: 1 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

12) There are four widely used categories of data analytics. Which one tells us what has happened? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: A Diff: 1 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 13) There are four widely used categories of data analytics. Which one tells us why something happened? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: B Diff: 1 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 14) There are four widely used categories of data analytics. Which one uses statistical modeling and algorithms to predict what is likely to happen? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: C Diff: 1 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

15) There are four widely used categories of data analytics. Which one identifies what we should do? A) Descriptive analytics B) Diagnostic analytics C) Predictive analytics D) Prescriptive analytics Answer: D Diff: 1 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 16) There are four widely used categories of data analytics. Choose the best description for descriptive analytics. A) Looks at historical data and condenses it into smaller, more meaningful bits of information B) Drills down to a granular level C) Provides powerful tools that assist in decision making and inform future actions D) Requires advanced programming Answer: A Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 17) There are four widely used categories of data analytics. Choose the best description for diagnostic analytics. A) Looks at historical data and condenses it into smaller, more meaningful bits of information B) Drills down to a granular level C) Provides powerful tools that assist in decision making and inform future actions D) Requires advanced programming Answer: B Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

18) There are four widely used categories of data analytics. Choose the best description for predictive analytics. A) Looks at historical data and condenses it into smaller, more meaningful bits of information B) Drills down to a granular level C) Provides powerful tools that assist in decision making and inform future actions D) Requires advanced programming Answer: C Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 19) There are four widely used categories of data analytics. Choose the best description for prescriptive analytics. A) Looks at historical data and condenses it into smaller, more meaningful bits of information B) Drills down to a granular level C) Provides powerful tools that assist in decision making and inform future actions D) Requires advanced programming Answer: D Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 20) Machine Learning (ML) uses algorithms and statistical models to train an AI system through patterns and trends in data sets. ML programs systems to perform tasks without explicit instructions and is a popular application of AI in data analytics. There are three machine learning approaches. Choose the best definition for supervised learning. A) Uses labeled data sets to train the algorithm to classify data or predict outcomes from a data set B) Uses algorithms to analyze unlabeled data sets for hidden patterns C) Focuses on decision making by rewarding desired behaviors and/or punishing undesired behaviors D) This hybrid approach may require human intervention. Answer: A Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Machine Learning (ML) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 7

21) Machine Learning (ML) uses algorithms and statistical models to train an AI system through patterns and trends in data sets. ML programs systems to perform tasks without explicit instructions and is a popular application of AI in data analytics. There are three machine learning approaches. Choose the best definition for unsupervised learning. A) Uses labeled data sets to train the algorithm to classify data or predict outcomes from a data set B) Uses algorithms to analyze unlabeled data sets for hidden patterns C) Focuses on decision making by rewarding desired behaviors and/or punishing undesired behaviors D) This hybrid approach may require human intervention. Answer: B Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Machine Learning (ML) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 22) Machine Learning (ML) uses algorithms and statistical models to train an AI system through patterns and trends in data sets. ML programs systems to perform tasks without explicit instructions and is a popular application of AI in data analytics. There are three machine learning approaches. Choose the best definition for reinforcement learning. A) Uses labeled data sets to train the algorithm to classify data or predict outcomes from a data set B) Uses algorithms to analyze unlabeled data sets for hidden patterns C) Focuses on decision making by rewarding desired behaviors and/or punishing undesired behaviors D) Before it can begin, human intervention is necessary to label the data set. Answer: C Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Machine Learning (ML) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

23) Machine Learning (ML) uses algorithms and statistical models to train an AI system through patterns and trends in data sets. ML programs systems to perform tasks without explicit instructions and is a popular application of AI in data analytics. There are three machine learning approaches. Monte Carlo simulation is an example of which type of ML? A) Supervised learning B) Unsupervised learning C) Reinforcement learning D) Refurbished learning Answer: C Diff: 2 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Machine Learning (ML) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 24) The first step in analyzing a data set is learning about its data. Exploratory data analytics techniques reveal the key characteristics of a data set. Exploratory data analytics techniques help us identify three key factors of a data set. Which of the key factors is the descriptive components within a data set? A) Categorical values B) Quantitative values C) Patterns D) Anomalies Answer: A Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 25) The first step in analyzing a data set is learning about its data. Exploratory data analytics techniques reveal the key characteristics of a data set. Exploratory data analytics techniques help us identify three key factors of a data set. Which of the key factors is the numeric data points that can be summed, counted, or otherwise analyzed using mathematical operations? A) Categorical values B) Quantitative values C) Patterns D) Anomalies Answer: B Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 9

26) The first step in analyzing a data set is learning about its data. Exploratory data analytics techniques reveal the key characteristics of a data set. Exploratory data analytics techniques help us identify three key factors of a data set. Which of the key factors is recurring or similar values, either categorical or quantitative? A) Categorical values B) Quantitative values C) Patterns D) Anomalies Answer: C Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 27) The first step in analyzing a data set is learning about its data. Besides discovering patterns, exploration can find unexpected data points. What are these data points called that fall outside the data set's norm? A) Categorical values B) Quantitative values C) Patterns D) Anomalies Answer: D Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 28) You are presented with a data set of 6 test scores: 47, 46, 46, 44, 43 and 26. What is the average test score? A) 46 B) 44 C) 42 D) 26 Answer: C Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

29) You are presented with a data set of 6 test scores: 47, 46, 46, 44, 43 and 26. Which grade is an outlier? A) 46 B) 44 C) 42 D) 26 Answer: D Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 30) You are presented with a data set of 10 test scores: 99, 85, 84, 83, 83, 81, 80, 80, 79, and 66. What is the average test score? A) 82 B) 99 C) 83 D) 81 Answer: A Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 31) You are presented with a data set of 10 test scores: 99, 85, 84, 83, 83, 81, 80, 80, 79, and 66. Which grade(s) are an outlier? A) 82 B) 99 and 66 C) 95 D) 79 Answer: B Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

32) Choose from the definitions below the best definition of anomaly detection. A) Anomaly detection techniques reveal the key characteristics of a data set. B) Anomaly detection is the numeric data points that can be summed, counted, or otherwise analyzed using mathematical operations. C) Anomaly detection reveals observations or events that are outside a data set's normal behavior. D) Anomaly detection is the descriptive components within a data set. Answer: C Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Anomaly Detection AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 33) What is also known as outlier analysis and reveals observations or events that are outside a data set's normal behavior? A) Quantitative values B) Categorical values C) Exploratory data analytics D) Anomaly detection Answer: D Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Anomaly Detection AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 34) Exploring a new data set and understanding its composition commonly involves the data analytics technique ________, which involves simplifying data to quickly identify the composition of categorical and quantitative values. We compress the data into smaller, easier-tounderstand outputs, called data summaries. To do this, we typically group a data set by a specific field, or column. A) data summarization B) quantitative values C) data summaries D) field, or column Answer: A Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Data Summarization AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

35) Exploring a new data set and understanding its composition commonly involves the data analytics technique data summarization, which involves simplifying data to quickly identify the composition of categorical and ________. We compress the data into smaller, easier-tounderstand outputs, called data summaries. To do this, we typically group a data set by a specific field, or column. A) data summarization B) quantitative values C) data summaries D) field, or column Answer: B Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Data Summarization AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 36) Exploring a new data set and understanding its composition commonly involves the data analytics technique data summarization, which involves simplifying data to quickly identify the composition of categorical and quantitative values. We compress the data into smaller, easier-tounderstand outputs, called ________. To do this, we typically group a data set by a specific field, or column. A) data summarization B) quantitative values C) data summaries D) field, or column Answer: C Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Data Summarization AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

37) Exploring a new data set and understanding its composition commonly involves the data analytics technique data summarization, which involves simplifying data to quickly identify the composition of categorical and quantitative values. We compress the data into smaller, easier-tounderstand outputs, called data summaries. To do this, we typically group a data set by a specific A) data summarization. B) quantitative values. C) data summaries. D) field, or column. Answer: D Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Data Summarization AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 38) What is a popular method of summarizing smaller data sets in Excel? A) Pivot table B) Group by C) Summarize D) Dragging field names to the appropriate locations Answer: A Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Data Summarization AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 39) What is the first step in most complex data analytics techniques? A) Data summarization B) Clustering C) Classification D) Anomaly detection Answer: A Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

40) Clustering, or cluster analysis, is an analytics technique that categorizes data points into groups based on their similarities. The groups, called clusters, are determined by the distance between individual items, which indicates how closely related the data points are. Clustering is a(n) ________ Machine Learning (ML) technique in which the data input contains unlabeled data. A) supervised B) unsupervised C) labeled D) unlabeled Answer: B Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 41) Clustering, or cluster analysis, is an analytics technique that categorizes data points into groups based on their similarities. The groups, called clusters, are determined by the distance between individual items, which indicates how closely related the data points are. Clustering is an unsupervised Machine Learning (ML) technique in which the data input contains ________ data. A) supervised B) unsupervised C) labeled D) unlabeled Answer: D Diff: 1 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

42) Classification analysis is the categorization of data into groups based on similarities found in a data label that was previously defined. Classification analysis might sound closely related to clustering—and these two types of analysis do have similarities. While they are both methods of categorization, they differ in the type of Machine Learning (ML) they use. Clustering uses A) unsupervised ML to analyze unlabeled data inputs. B) supervised ML to analyze labeled data inputs. C) unsupervised ML to analyze labeled data inputs. D) supervised ML to analyze unlabeled data inputs. Answer: A Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 43) Classification analysis is the categorization of data into groups based on similarities found in a data label that was previously defined. Classification analysis might sound closely related to clustering—and these two types of analysis do have similarities. While they are both methods of categorization, they differ in the type of Machine Learning (ML) they use. Classification uses A) unsupervised ML to analyze unlabeled data inputs. B) supervised ML to analyze labeled data inputs. C) unsupervised ML to analyze labeled data inputs. D) supervised ML to analyze unlabeled data inputs. Answer: B Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 44) What is the first step in classification? A) Data summarization B) Clustering C) Ensuring that a data set has appropriate data labels D) Ensuring that a data set is alphabetical Answer: C Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

45) ________ captures data that occurs in chronological order across a period of time. A) A time series B) Seasonality C) A time trend D) A dependent variable Answer: A Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 46) ________ is a consistent movement in the time series data that does not repeat. One example is an increase in revenue through a fiscal year due to a new product launch. A) A dependent variable B) A time trend C) Seasonality D) Noise Answer: B Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 47) ________ is a consistent movement in the time series data that repeats on a regular basis. An example is an increase in revenue every June, July and August due to summer beach sales. A) A dependent variable B) A time trend C) Seasonality D) Noise Answer: C Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

48) ________ is additional movements in the time series data that cannot be explained as a trend or seasonality. A drastic spike in revenue at the end of February due to a large customer order for a one-time event is an example of A) A dependent variable B) A time trend C) Seasonality D) Noise Answer: D Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 49) Linear regression is a statistical technique we use to estimate the relationships between a(n) ________ and one or more independent variables. A) dependent variable B) independent variable C) slope of the line D) Y-intercept Answer: A Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 50) Linear regression is a statistical technique we use to estimate the relationships between a dependent variable and one or more A) dependent variables. B) independent variables. C) slopes of the line. D) Y-intercepts. Answer: B Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

51) Choose from the list below the best definition of a dependent variable. A) A dependent variable is the value to be understood. It is often called the outcome. B) A dependent variable is the factor that may be influencing the dependent variable. There can be one or more than one, depending on the type of regression performed. C) A dependent variable is the Y-intercept. D) A dependent variable is the slope of the line. Answer: A Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 52) Choose from the list below the best definition of an independent variable. A) An independent variable is the value to be understood. It is often called the outcome. B) An independent variable is the factor that may be influencing the dependent variable. There can be one or more than one, depending on the type of regression performed. C) An independent variable is the Y-intercept. D) An independent variable is the slope of the line. Answer: B Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 53) Maeve is a freshman outfielder on the softball team. Her softball coach tells her that the more hours she practices hitting in the batting cage and on the field, the higher her batting average will be during the season. What is the dependent variable? A) The number of pitches she faces B) The spikes she wears C) Her batting average D) The hours of practice she does Answer: C Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

54) Maeve is a freshman outfielder on the softball team. Her softball coach tells her that the more hours she practices hitting in the batting cage and on the field, the higher her batting average will be during the season. What is the independent variable? A) The number of pitches she faces B) The spikes she wears C) Her batting average D) The hours of practice she does Answer: D Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 55) Consider the simple linear regression equation: Y = A + Bx What does Y represent? A) The dependent variable B) The independent variable C) The Y-intercept D) The slope of line Answer: A Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 56) Consider the simple linear regression equation: Y = A + Bx What does x represent? A) The dependent variable B) The independent variable C) The Y-intercept D) The slope of line Answer: B Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 20

57) Consider the simple linear regression equation: Y = A + Bx What does A represent? A) The dependent variable B) The independent variable C) The Y-intercept D) The slope of line Answer: C Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 58) Consider the simple linear regression equation: Y = A + Bx What does B represent? A) The dependent variable B) The independent variable C) The Y-intercept D) The slope of line Answer: D Diff: 2 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 59) What is the process of estimating future events based on the combination of past and present time series data? A) Forecasting B) Confidence interval C) Break-even analysis D) Simulation Answer: A Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Forecasting AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 21

60) The "lower confidence bound" and "upper confidence bound" are part of what? A) Forecasting B) A confidence interval C) Break-even analysis D) A simulation Answer: B Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Forecasting AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 61) The known fixed costs are compared to the estimated variable costs to predict what? A) Forecasting B) A confidence interval C) Break-even analysis D) A simulation Answer: C Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Forecasting AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 62) Businesses like to use a ________ confidence interval when they perform forecasting. A) 25% B) 35% C) 75% D) 95% Answer: D Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Forecasting AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools

63) What uses complex calculations to predict the outcomes and probabilities associated with a decision that influences a data set? A) Forecasting B) A confidence interval C) Break-even analysis D) A simulation Answer: D Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Monte Carlo Simulation AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 64) What is a popular simulation that predicts the probability of different outcomes in the presence of many random variables? A) Monte Carlo simulation B) Forecasting C) A confidence interval D) Break-even analysis Answer: A Diff: 1 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Monte Carlo Simulation AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 65) Choose from the definitions below the best definition of event log data. A) Event log data is data about activities in a system and includes the timestamp of when the activities occur. B) Event log data uses data to show what individuals, systems, and machines are doing in a visual format. C) Event log data is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Event log data is a type of network analysis that investigates social structures on social media. Answer: A Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Process Mining AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

66) Choose from the definitions below the best definition of process mining. A) Process mining is data about activities in a system and includes the timestamp of when the activities occur. B) Process mining uses event log data to show what individuals, systems, and machines are doing in a visual format. C) Process mining is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Process mining is a type of network analysis that investigates social structures on social media. Answer: B Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Process Mining AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 67) Choose from the definitions below the best definition of network analysis. A) Network analysis is data about activities in a system and includes the timestamp of when the activities occur. B) Network analysis uses data to show what individuals, systems, and machines are doing in a visual format. C) Network analysis is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Network analysis is a type of network analysis that investigates social structures on social media. Answer: C Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

68) Choose from the definitions below the best definition of social network analysis. A) Social network analysis is data about activities in a system and includes the timestamp of when the activities occur. B) Social network analysis uses event log data to show what individuals, systems, and machines are doing in a visual format. C) Social network analysis is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Social network analysis is a type of network analysis that investigates social structures on social media. Answer: D Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 69) During the COVID-19 pandemic, researchers began using contact tracing to track people who have been in contact with an infectious disease and map the infected people and everyone they have been near during a certain time. The goal is to isolate infected and exposed individuals to slow the spread of the disease. Contact tracing is an example of what? A) Process mining B) Network analysis C) Geospatial analytics D) Natural language processing Answer: B Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 70) What is a type of network analysis that investigates social structures on social media? A) Physical network analysis B) Social category analysis C) Social network analysis D) Society network analysis Answer: C Diff: 1 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 25

71) You recently joined Facelink, the latest social network craze. Facelink suggests 3 "friends" for you to link with based on your current connections. What type of network analysis is Facelink practicing? A) Physical network analysis B) Social category analysis C) Social network analysis D) Society network analysis Answer: C Diff: 1 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: None Bloom's: Knowledge AICPA: AC: Technology and Tools 72) When you tag a location in a social media post, what type of analytics are you practicing? A) Process mining B) Network analysis C) Geospatial analytics D) Natural language processing Answer: C Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Geospatial analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 73) When you track your run on a smart watch, what type of analytics are you practicing? A) Process mining B) Network analysis C) Geospatial analytics D) Natural language processing Answer: C Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Geospatial analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

74) When you request a ride service to drive you from point A to point B, what type of analytics are you practicing? A) Process mining B) Network analysis C) Geospatial analytics D) Natural language processing Answer: C Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Geospatial analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 75) Choose from the definitions below the best definition of geospatial analytics. A) Geospatial analytics is data about activities in a system and includes the timestamp of when the activities occur. B) Geospatial analytics uses data to show what individuals, systems, and machines are doing in a visual format. C) Geospatial analytics is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Geospatial analytics is a technique that gathers, transforms, and visualizes geographic data and imagery. Answer: D Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Geospatial analytics AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

76) Choose from the definitions below the best definition of textual analysis. A) Textual analysis is a category of data analytics techniques used to interpret objects that include words. B) Textual analysis uses data to show what individuals, systems, and machines are doing in a visual format. C) Textual analysis is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Textual analysis is a technique that gathers, transforms, and visualizes geographic data and imagery. Answer: A Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 77) Choose from the definitions below the best definition of natural language processing. A) Natural language processing uses data to show what individuals, systems, and machines are doing in a visual format. B) Natural language processing is a form of textual analysis that gathers, processes, and interprets meaning from human language. C) Natural language processing is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. D) Natural language processing is a technique that gathers, transforms, and visualizes geographic data and imagery. Answer: B Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools

78) Choose from the definitions below the best definition of sentiment analysis. A) Sentiment analysis uses data to show what individuals, systems, and machines are doing in a visual format. B) Sentiment analysis is an analytics technique that visualizes relationships among participants in a data set to learn about the social structure those relationships create. C) Sentiment analysis uses NLP to interpret and classify the emotions underneath language in a text format. D) Sentiment analysis is a technique that gathers, transforms, and visualizes geographic data and imagery. Answer: C Diff: 2 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: None Bloom's: Application AICPA: AC: Technology and Tools 79) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve recently completed a double major in accounting and information systems at her university. She has completed three of the four sections of the CPA exam and hopes to sit for the fourth next month. Maeve wrote SQL queries during an internship as an internal audit data analyst and is passionate about turning data into useful information that impacts business operations. She wants to know that her work will result in change for her future employer. RAM Manufacturing currently has several job openings posted on LinkedIn, including: • Data scientist • Data analyst • Business analyst • Data engineer These positions are specific to the Finance and Accounting departments. Which jobs do you think Maeve should apply for? Answer: Maeve is qualified to apply for a position as a data analyst or a business analyst. She would need to gain additional experience in a data analyst role to further her skills in coding before she can move into a data scientist position. Maeve doesn't have enough experience at this time with data modeling, hardware, networking or database administration to be qualified for the data engineer role. Diff: 3 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

80) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Justin recently graduated with a computer science degree from his university. He enjoyed his database courses and interned for a small manufacturing company as a network and database administrator and enjoyed the work. He is really interested in supporting the infrastructure for gathering, growing, and storing data. RAM Manufacturing currently has several job openings posted on LinkedIn, including: • Data scientist • Data analyst • Business analyst • Data engineer These positions are specific to the Finance and Accounting departments. Which jobs do you think Justin should apply for? Answer: Justin should apply for the data engineer position with RAM Manufacturing. His experience as a network and database administrator will be helpful in terms of doing data modeling, hardware, networking and database administration. Diff: 3 Learning Objective: 17.1 Identify career opportunities for accounting professionals working with data. Section Reference: Types of Analysts AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 81) Abdul is a newly hired Accounting Information Systems (AIS) professor at Big State University. Abdul just administered his first 100-point exam. Abdul has 10 students registered for his AIS course. The scores on his first exam were 99, 89, 88, 88, 84, 84, 83, 81, 81, and 63. What grade(s) in the data set are outliers? Answer: The scores of 99 and 63 are significant outliers from the average score of 84. Diff: 2 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Introduction AACSB: Analytic Bloom's: Application AICPA: AC: Technology and Tools

82) Anomaly detection, also known as outlier analysis, reveals observations or events that are outside a data set's normal behavior. Anomaly detection is an important data analytic objective. Anomaly detection is applicable to every part of a business. Describe how anomaly detection could be used in the marketing department. Answer: There are many examples. One such example would be when a marketing department monitors website traffic and social media engagement as part of its marketing data analytics program. Suppose there is an unusual uptick in social media posts that mention the business when there are no special marketing campaigns currently happening. In this case, the marketing department may investigate those social media posts to ensure that they are not likely to damage the company's reputation. Diff: 3 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Anomaly Detection AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 83) In cluster analysis, the Machine Learning (ML) algorithm finds similarities between the data points to group them together without human intervention. There are many business uses for clustering. Describe an example of clustering in the accounting field. Answer: There are many examples. One such example would be an accountant in the insurance industry might cluster customers based on average claim costs or premium payments. At a bank, customers could be clustered by their credit card payment behavior to help target perpetually tardy customers and trigger reminders to these customers to pay their bills. Diff: 3 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 84) In cluster analysis, the Machine Learning (ML) algorithm finds similarities between the data points to group them together without human intervention. There are many business uses for clustering. Describe an example of clustering in the public health field. Answer: There are many examples. One such example would be scientists can cluster people based on geographic areas in terms of low or high tendencies toward certain illnesses. This information can suggest appropriate locations for specialty clinics or direct health education for various groups, or it may prompt investigation of local factors that might be influencing occurrences of illnesses. Diff: 3 Learning Objective: 17.2 Describe data analytics techniques that can explore data. Section Reference: Clustering and Classification AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

85) RAM Software, Inc. is an Inventory Management software company. Justin, a CPA, has recently been hired to oversee sales transactions. The CFO of RAM Software is concerned that some of the sales transactions are fraudulent which increase the commissions of the sales personnel. Justin wants to perform linear regression to identify red flags for fraud in the sales data. The company offers greater customer discounts on their software at the end of each quarter, and even greater discounts at the end of each fiscal year. Justin's hypothesis is that sales transactions recorded at the end of a quarter, and particularly at the end of the year, are at greater risk of fraud. He will use linear regression to determine if the date of the sales transaction in the quarter or year is related to the percent of fraudulent sales transactions. In Justin's analysis, what is the dependent variable and what is the independent variable? Answer: The two variables Justin is analyzing are: • The date of the sales transaction in the quarter or year, and • The percent of fraudulent sales transactions The percent of fraudulent sales transactions is the dependent variable. The date of the sales transaction in the quarter or year is the independent variable. Diff: 3 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Linear Regression AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 86) Monte Carlo simulation is an important simulation in the business world and can be used in many contexts. Give an example of how Monte Carlo simulation could be used in investment firms? Answer: Monte Carlo can predict the value of a portfolio based on various investment options while considering the uncertainty of the financial markets and other external factors. Diff: 3 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Monte Carlo Simulation AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

87) Monte Carlo simulation is an important simulation in the business world and can be used in many contexts. Give an example of how Monte Carlo simulation could be used in personal finances? Answer: Monte Carlo simulation can simulate investment options in a 401(k)-retirement account to predict outcomes and determine the amount of savings necessary to achieve a targeted income at retirement age. It considers financial market performance, investment selections, and other factors as the random variables. Diff: 3 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Monte Carlo Simulation AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 88) Monte Carlo simulation is an important simulation in the business world and can be used in many contexts. Give an example of how Monte Carlo simulation could be used in project management? Answer: Managers can use Monte Carlo simulation to predict project costs, project schedules, and more using random values such as resource availability and project funding. Diff: 3 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Monte Carlo Simulation AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 89) Monte Carlo simulation is an important simulation in the business world and can be used in many contexts. Give an example of how Monte Carlo simulation could be used in cost accounting? Answer: Cost accountants can use Monte Carlo to simulate cash flows, costs, variances, and more to understand and plan production budgets and actual compared to budgeted results. Diff: 3 Learning Objective: 17.3 Evaluate data analytics techniques that explain changes over time. Section Reference: Monte Carlo Simulation AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

90) Any part of the business that captures event data is a candidate for process mining. Give an example of how process mining could be used in investment firms? Answer: Process mining can be used to identify unusual activities of traders and portfolio managers, such as a trade being executed unexpectedly before being approved. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 91) Any part of the business that captures event data is a candidate for process mining. Give an example of how process mining could be used in journal entries? Answer: Process mining can be used to show the chain of command of journal entries, including originator, poster, and approver, in order to identify potential issues related to segregation of duties. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 92) Any part of the business that captures event data is a candidate for process mining. Give an example of how process mining could be used in Information Technology (IT)? Answer: Events for IT requests can be analyzed for processes like change management, addition of new users to a system, and system error reports. This analysis can show whether processes are followed appropriately and whether the IT support team effectively addresses user issues. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

93) RAM Manufacturing LLC is a rapidly growing manufacturer of parts for the automotive industry. Maeve recently joined RAM Manufacturing and has been asked to review the A/P invoice approval process. Maeve wants to use process mining to identify any deviations in the A/P invoice approval process. Maeve develops the following process mining visualization, which shows the process path for 5 invoices:

What anomalies can Maeve detect using her process mining analytic? Answer: One invoice bypasses the "Match and approve invoice" step and goes straight to the Pay invoice step. Maeve should investigate how and why the one invoice skips the "Match and approve invoice" step. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Network Analysis AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 94) Geospatial analytics is a technique that gathers, transforms, and visualizes geographic data and imagery, including satellite photographs, Global Positioning System (GPS) coordinates, and more. Give an example of how geospatial analytics could be used in the delivery industry. Answer: Amazon delivery trucks use GPS so customers can track the locations of their deliveries in real time. Geospatial data also allows Amazon to carefully craft routes for delivery trucks based on the current traffic in their delivery areas. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Geospatial Analytics AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

95) Geospatial analytics is a technique that gathers, transforms, and visualizes geographic data and imagery, including satellite photographs, Global Positioning System (GPS) coordinates, and more. Give an example of how geospatial analytics could be used in the banking industry. Answer: The banking industry uses geospatial data to track credit card transactions. If you live in Pittsburgh, Pennsylvania, and your credit card is used in person in Seattle, Washington, the bank will flag that transaction and (most likely) immediately call or text you to see if you made that purchase. If you did not, the bank will freeze your account to prevent further fraudulent transactions from occurring. This is an example of using geospatial analytics to perform anomaly detection. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Geospatial Analytics AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 96) Natural Language Processing (NLP) is a form of textual analysis that gathers, processes, and interprets meaning from human language. Sentiment analysis is a complex and advanced data analytics technique. Give an example of how natural language processing (NLP) could be used with social media posts. Answer: Large businesses may be the subject of thousands of tweets on Twitter every day. Sentiment analysis quickly categorizes tweets into customer mood categories based on whether each tweet includes verbiage that is positive, negative, or neutral. In fact, Big Four accounting firms perform consulting engagements with clients to create dashboards that visualize the results of brand sentiment analysis using the client's social media data. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 97) Natural language processing (NLP) is a form of textual analysis that gathers, processes, and interprets meaning from human language. Sentiment analysis is a complex and advanced data analytics technique. Give an example of how natural language processing (NLP) could be used with board meeting minutes. Answer: NLP and sentiment analysis can extract metadata by associating verbiage contained in board meeting minutes and categorizing it into metadata tags. The goal is to create an indexed and searchable categorization of unstructured data. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 36

98) Natural Language Processing (NLP) is a form of textual analysis that gathers, processes, and interprets meaning from human language. Sentiment analysis is a complex and advanced data analytics technique. Give an example of how natural language processing (NLP) could be used with employee satisfaction surveys. Answer: Analyzing open text fields of employee satisfaction surveys can quickly quantify a company's culture and make fast work of reviewing hundreds, or even thousands, of employee comments. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools 99) Natural Language Processing (NLP) is a form of textual analysis that gathers, processes, and interprets meaning from human language. Sentiment analysis is a complex and advanced data analytics technique. Give an example of how natural language processing (NLP) could be used with auditing documents. Answer: NLP has gained popularity in the auditing field. It is being implemented, for example, to "read" through documents, such as contracts and leases, to identify the key terms, trends, and outliers, which would take a human many hours to read. Humans are still an important part of the equation as they must interpret the output. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

100) Natural Language Processing (NLP) is a form of textual analysis that gathers, processes, and interprets meaning from human language. Sentiment analysis is a complex and advanced data analytics technique. Give an example of how natural language processing (NLP) could be used with journal entry analysis. Answer: An NLP algorithm can search for questionable terminology in journal entries. While this function could be performed with keyword searching, the size of general ledger data sets often creates a valuable use case for leveraging NLP instead. ML (machine learning) algorithms can analyze multiple years of data in minutes to produce a report with outliers and high-risk items that the end user can investigate. Diff: 3 Learning Objective: 17.4 Summarize advanced data analytics techniques that transform data into insights. Section Reference: Natural Language Processing (NLP) AACSB: Analytic Bloom's: Synthesis AICPA: AC: Technology and Tools

Accounting Information Systems, 1e (Savage) Chapter 18 Data Visualization 1) ________ is a data analytics technique that presents data in a graphical format. A) Design principle B) Data visualization C) Data design D) Data storytelling Answer: B Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 2) Charles Schwab wanted to tap into the potential of its data, so it adopted an enterprise-wide data visualization strategy using what software? A) Excel B) Canva C) SAS D) Tableau Answer: D Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 3) When Charles Schwab implemented a data visualization software, which of the following did it not see as a key result? A) An increase in team collaboration B) More transparency between departments C) A decrease in employees D) Decreased wait times for data analytics results Answer: C Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

4) Businesses value data visualizations because they A) add color to reporting. B) show trends and seasonality. C) tell a story the business wants to tell. D) find raw data useless. Answer: B Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 5) Data visualization is only reliable when underlying data is A) complete and accurate. B) accurate and big. C) big and complete. D) structured and big. Answer: A Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 6) ________ include(s) all the end users of a data visualization. A) Visualization audience B) Visualization consumers C) Story listeners D) Visualization consultants Answer: A Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

7) The first step toward creating a data visualization is A) choosing the color palette. B) choosing the appropriate chart. C) knowing your audience. D) brainstorming the data story. Answer: C Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 8) Data visualizations that tell stories A) present facts. B) avoid conveying messages. C) avoid adding color to reports. D) convey only bad news. Answer: A Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 9) Lina is creating visualizations that will present big ideas about the core functions of the business, such as accounting, finance, marketing, and sales. Who is most likely her visualization audience? A) CEO B) Staff accountant C) Mid-level manager D) Intern Answer: A Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Application AICPA: AC: Reporting

10) Which of the following is not an example of a technical user requirement? A) Need for certain filters B) Layout of the dashboard C) Color preference for the dashboard D) What the business will use the dashboard for Answer: D Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Application AICPA: AC: Reporting 11) Milo, an accountant, is presenting sales data from the past quarter to the CFO. The sales were not good in the past quarter, as they severely missed the projections. He wants to be able to present the data in a way that the CFO will remember, since the CFO hears many presentations in a day. What should he focus on when presenting the bad news? A) Setting the tone of the visualization B) Giving the CFO all the raw data behind the visualization C) Adding a lot of color D) Providing the names of the salespeople who did not hit their sales goals Answer: A Diff: 3 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Setting the Tone AACSB: None Bloom's: Synthesis AICPA: AC: Reporting 12) There are human aspects behind all data. Out of the following, which data scenario requires an extra level of respect when speaking to it? A) Engagement of customers with the brand on social media B) Number of claims filed in a life insurance company C) Emphasis of employee trends using the color red D) Store names that that had the worst sales in the previous quarter Answer: B Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Setting the Tone AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

13) Setting the tone of a data visualization allows the end users to A) see the data. B) feel the data. C) believe in the data. D) question the data. Answer: B Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Setting the Tone AACSB: None Bloom's: Application AICPA: AC: Reporting 14) You need to keep the tone of your visualization in mind as you select A) colors, icons, and fonts. B) icons, audience, and printer paper. C) audience, slide design, and colors. D) tone of voice, colors, and fonts. Answer: A Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Setting the Tone AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 15) Jorge is preparing the company's annual report. Which of the following is considered a data visualization for this purpose? A) Balance sheet B) Line chart showing actual revenues C) Statement of operations D) Statement of cash flows Answer: B Diff: 1 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

16) Celine has created a scatter plot diagram that identifies outliers in the company's daily transactions that her bosses hope will help identify fraudulent transactions. Reading it properly requires strong technical knowledge. Which party would most likely be the appropriate audience for this visualization? A) Shareholders B) Sales reps C) Internal audit department D) New trainees Answer: C Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Application AICPA: AC: Reporting 17) Nissa is creating a daily report that will have visualizations presenting technical details of the data conversion project she's managing. Which party would most likely be the appropriate audience for this visualization? A) Shareholders B) C-suite (CEO, CFO, etc.) C) Staff-level employees D) Mid-level managers Answer: D Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Application AICPA: AC: Reporting 18) Soren is created a chart showing the goal sales for the quarter and the actual sales that the company had. He is using both red and orange colors within the chart, as well as icons with red X's and orange words. What tone is Soren setting with his visualization? A) Hopeful and calming B) Prideful and positive C) Distasteful and rigid D) Negative and alarming Answer: D Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Setting the Tone AACSB: None Bloom's: Application AICPA: AC: Reporting 6

19) What is a design concept? A) Using many colors to draw the audience's attention B) Having a central idea that drives the design's meaning and tone C) Making a visualization memorable to the audience D) Listing all of the visualization tools that will be needed for the design Answer: B Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 20) Amaya is creating a visualization that needs to set an energetic, enthusiastic, and optimistic tone. Which colors should she use in her visualization? A) Blue, yellow, red B) Green, orange, yellow C) Yellow, red, orange D) Purple, yellow, red Answer: C Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting 21) No more than how many colors should a single visualization use? A) 3 B) 4 C) 5 D) 6 Answer: B Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

22) Colors that are right next to one another on the color wheel are referred to as A) complementary. B) analogous. C) triadic. D) tetradic. Answer: B Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 23) Emmet is creating a visualization for a business where trust and security are core values. Which color should be use as the main color? A) Green B) Purple C) Yellow D) Blue Answer: D Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting 24) Which of the following colors represents loyalty, calmness, and coldness? A) Purple B) Green C) Blue D) Yellow Answer: C Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting

25) A perfume brand on the market is targeted at teenagers and young mothers. What color has most likely been used on the logo? A) Red B) Green C) Purple D) Blue Answer: C Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting 26) Malika, the accountant, is creating a visualization for the Environment, Social, and Governance (ESG) report. She is charting the sustainability efforts of the company and the improvement that it has had over the past year around sustainability. Which color scheme should she use? A) Blue B) Yellow C) Purple D) Green Answer: D Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting 27) What percentage of men have a color vision deficiency (CVD)? A) 6% B) 8% C) 10% D) 12% Answer: B Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

28) The most common type of color vision deficiency (CVD) is A) blue and green. B) green and red. C) red and blue. D) yellow and blue. Answer: B Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 29) Which design concept is not CVD-friendly? A) Using shades of gray with blue and orange or blue and red B) Selecting different tints of the same color C) Distinguishing your data by using text, line styles, or line widths D) Using shades of gray with red and green or blue and green Answer: D Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting 30) White space refers to A) the background color of a visualization. B) the absence of color. C) a white element in a visualization. D) negative space that creates a visual pause. Answer: D Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: White Space AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

31) Avia is working on the annual report for her company. She notices that there are many visualizations on one page, which makes it difficult for the reader to focus on the message of the visualization. To reduce the cognitive load of the reader, Avia should add more A) colors. B) white space. C) icons. D) typography. Answer: B Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: White Space AACSB: None Bloom's: Application AICPA: AC: Reporting 32) Typography should be A) bold. B) trendy. C) readable. D) small. Answer: C Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Typography and Iconography AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 33) ________ is the use of visual images and symbols to represent ideas. A) Data storytelling B) Data visualization C) Typography D) Iconography Answer: D Diff: 1 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Typography and Iconography AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

34) Kira wants to use an icon to represent "savings." Which of the following icon choices would be the best visual cue? A) Checkmark B) Tree C) Bank D) Handshake Answer: C Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Typography and Iconography AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 35) What type of analytics tell us what has happened? A) Descriptive B) Diagnostic C) Predictive D) Prescriptive Answer: A Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 36) Naomi is an accountant who is visualizing sales of the current best-selling product — a hand sanitizer. She realizes that there was a sharp increase in the demand for hand sanitizers after the pandemic. Her visualization story will also include why hand sanitizer is the best-selling product. What type of analytics did she perform? A) Descriptive B) Diagnostic C) Predictive D) Prescriptive Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting

37) What type of data visualization technique would one use to illustrate how often a variable occurs in the data set? A) Composition B) Comparison C) Relationships D) Distribution Answer: D Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 38) Monique works for a popular makeup and beauty store and wants to visualize daily sales of their top five products for the past year to see if there are any seasonal patterns. The goal of her analysis is to discover how different variables in her data set relate to one another. What type of data visualization technique will she use? A) Composition B) Comparison C) Relationships D) Distribution Answer: C Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting 39) What type of values are the following? customer name, customer city, product description, shipping location. A) Quantitative values B) Categorical values C) Distribution values D) Summary values Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting

40) What type of values is the following? total sale amount, hotel tax amount, sales tax percentage. A) Quantitative values B) Categorical values C) Distribution values D) Summary values Answer: A Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting 41) Which type of chart divides the data into groups proportional to their size within a data set? A) Historical chart B) Box plot C) Stacked bar chart D) Pie chart Answer: D Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 42) Which type of chart presents groups and subgroups as rectangular portions of the larger whole? A) Histogram B) Tree map C) Stacked bar chart D) Pie chart Answer: B Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

43) Bar charts are best used for what? A) Comparison B) Composition C) Relationships D) Distribution Answer: A Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 44) What type of chart was first adopted by businesses because they are the easiest to understand? A) Pie charts B) Bar charts C) Line charts D) Tree maps Answer: B Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 45) Micah works at the zoo and wants to illustrate the cost of maintenance for each of the animals that are in the Safari exhibit. There are 12 types of animals in the Safari exhibit. What type of chart should Micah use for his report to management? A) Pie chart B) Bar chart C) Stacked bar chart D) Tree map Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting

46) What type of chart best illustrates major and minor categories within one visualization? A) Pie chart B) Bar chart C) Stacked bar chart D) Tree map Answer: C Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 47) Jade owns a successful coffee shop on a busy street in Brooklyn, New York. She wants to create a quick visualization that shows different days of the week and the number of people who like her Instagram posts on those days versus the likes her competitor coffee shops receive on Instagram for the same days. There are three competitors on Jade's street. Jade identifies the major category to be the days of the week and minor category to be the number of Instagram likes that her coffee shop receives versus the amount that her competitors receive. What type of chart should Jade use for her report? A) Pie chart B) Bar chart C) Stacked bar chart D) Line chart Answer: C Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting 48) Which type of chart focuses on the use of different colors to represent the values of the data set it visualizes? A) Pie chart B) Bar chart C) Stacked bar chart D) Heat map Answer: D Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

49) Elijah works in a local coffee shop that sells baked goods. He is given a table that has the baked goods listed along the X-axis and the months of the year along the Y-axis. The table shows the profit that the baked goods made that month. Elijah wants to quickly spot which month the baked goods did the best, when all baked goods and months are considered. He thinks that adding some color to the table might help. What type of chart should he create? A) Pie chart B) Heat map C) Stacked bar chart D) Bar chart Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting 50) Which of the following is a visual representation of numeric distributions based on userdefined ranges? A) Pie chart B) Bar chart C) Histogram D) Box plot Answer: C Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Distribution AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 51) Ophelia, a payroll accountant, created a chart to show employee salaries by gross monthly salary intervals that she defined. Her chart starts at $800 and increases by $25 intervals. She then charts how many employees fall within those ranges in one pay period. Which type of chart did she create to visualize that? A) Pie chart B) Histogram C) Line chart D) Box plot Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Distribution AACSB: None Bloom's: Application AICPA: AC: Reporting

52) Which of the following identifies a maximum, minimum, median, and quartiles for every category that it charts? A) Pie chart B) Bar chart C) Histogram D) Box plot Answer: D Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Distribution AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 53) Dalton collected customer review data for his customer support audit that he is performing. He's trying to find the lowest score that the customer support staff received, the highest score, the median score, and how all the other scores fall between those values. What type of chart should he create? A) Histogram B) Box plot C) Line chart D) Bar chart Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Distribution AACSB: None Bloom's: Application AICPA: AC: Reporting 54) Which of the following charts helps with trend analysis and identifying anomalies in time series data? A) Line chart B) Histogram C) Box plot D) Bar chart Answer: A Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Relationships AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

55) As an accountant working at a university, Malik wants to chart the number of students who are attending the university, full-time, over the course of the past 10 years. Which chart should Malik use? A) Histogram B) Box plot C) Line chart D) Pie chart Answer: C Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Relationships AACSB: None Bloom's: Application AICPA: AC: Reporting 56) Which of the following best shows a relationship between two variables? A) Histogram B) Scatter plot C) Box plot D) Line chart Answer: B Diff: 1 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Relationships AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 57) As an owner of a successful ice cream shop, Leila wants to see if there is a correlation between the temperatures outside and ice cream sales. Which type of chart would help her visualize this? A) Histogram B) Box plot C) Scatter plot D) Line chart Answer: C Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Relationships AACSB: None Bloom's: Application AICPA: AC: Reporting

58) Aspen wants to open a clothing boutique that carries trendy clothing targeted at customers aged 19 to 25. Before she signs the lease, she wants to do some research around population age ranges in the state where she wants to open the store, to ensure many customers in that age range live in a certain area. What type of chart would be most beneficial for her to create? A) Histogram B) Scatter plot C) Geospatial map D) Heat map Answer: C Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Geospatial Maps AACSB: None Bloom's: Application AICPA: AC: Reporting 59) Cyrus is tasked with visualizing a ratio of sales divided by the number of employees in each of the store locations to see which stores would need a potential increase in headcount. Which chart would help him visualize that information? A) Heat map B) Geospatial map C) Histogram D) Scatter plot Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Geospatial Maps AACSB: None Bloom's: Application AICPA: AC: Reporting 60) Dallas received some customer feedback around call center wait times taking too long. Dallas wanted to visualize the customer wait time in 5-second intervals to show management how many customers wait within different time interval windows. Which chart would help him visualize that information? A) Heat map B) Bar chart C) Histogram D) Scatter plot Answer: C Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Distribution AACSB: None Bloom's: Application AICPA: AC: Reporting

61) Ambrose wants to create a visualization to show senior management the progress of each of the five projects that her team is working on. Each of the projects is made up of multiple tasks, so the chart will show a percentage completion of each project divided among the following subcategories: "complete," "in process," and "not started." Which chart would help Ambrose visualize that information? A) Heat map B) Stacked bar chart C) Histogram D) Scatter plot Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting 62) Griffin is tasked with visualizing hourly wages of tax directors in his accounting firm. Griffin's visualization will show the maximum, minimum, and median hourly wage. Which chart would help him visualize that information? A) Box plot B) Scatter plot C) Histogram D) Bar chart Answer: A Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Distribution AACSB: None Bloom's: Application AICPA: AC: Reporting 63) Brady, an accountant at a local coffee shop, wants to show management the relationship of the sum of sales versus the sum of the cost of different products that the coffee shop offers. Which chart would help him visualize that information? A) Box plot B) Scatter plot C) Histogram D) Bar chart Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Relationships AACSB: None Bloom's: Application AICPA: AC: Reporting

64) Max is tasked with finding the fixed cost after being given the number of units sold in a month as well as the total cost spent in the month. Which chart would help him visualize that information? A) Heat map B) Bar chart C) Histogram D) Scatter plot Answer: D Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Relationships AACSB: None Bloom's: Application AICPA: AC: Reporting 65) Victor, who works for a bank, has created an interactive dashboard that charts customer locations via a bank mobile app that tracks the customer location and the locations where the customer credit card payment is being made. Victor is using which type of chart to visualize this information? A) Heat map B) Geospatial map C) Histogram D) Scatter plot Answer: B Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Geospatial Maps AACSB: None Bloom's: Application AICPA: AC: Reporting 66) When one has the data and the visuals, then they can ________ the audience. A) engage B) enlighten C) explain to D) energize Answer: B Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Infographics AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

67) Which question is irrelevant when crafting an explanatory data visualization? A) Who is the audience? B) What is the key takeaway of this story? C) How many people will see it? D) Which visualization techniques best portray the story? Answer: C Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Infographics AACSB: None Bloom's: Application AICPA: AC: Reporting 68) Which of the following is a stand-alone visual that tells a story through graphic design and rarely needs to be accompanied by verbal communication? A) Tableau storyboard B) Excel chart C) Infographic D) Dashboard Answer: C Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Infographics AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 69) Which of the following is a collection of individual visualizations that allows the audience to view multiple pieces of data at once? A) Excel workbook B) Database C) Infographic D) Dashboard Answer: D Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

70) Mirabel wants to create key performance indicators to help monitor for suspicious transactions by using an accounts payable data set. What can she use to present these key performance indicators if she wants to include many charts, in one view, which will be updated on a regular basis? A) Excel workbook B) Database C) Dashboard D) Infographic Answer: C Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting 71) What type of data visualization allows the user to drilling down into the underlying data, exporting views as images, and changing filters? A) Static dashboard B) Database C) Infographic D) Interactive dashboard Answer: D Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 72) What is a collection of dashboards, stand-alone visualizations, infographics, and other presentation materials? A) Storyboard B) Database C) Interactive dashboard D) Excel workbook Answer: A Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

73) What part of the story arc presents suggestions for improvement or predictions of what may happen if the audience take certain actions? A) Rising action B) Climax C) Falling action D) Resolution Answer: C Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 74) What part of the story arc presents the call to action? A) Introduction B) Climax C) Falling action D) Resolution Answer: D Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 75) What part of the story arc describes the subject matter and why it is being presented? A) Introduction B) Climax C) Falling action D) Resolution Answer: A Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting

76) What part of the story arc articulates the problem being addressed or the question being answered? A) Introduction B) Rising action C) Climax D) Falling action Answer: B Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 77) What part of the story arc shows the results of the analytics that have been performed? A) Introduction B) Rising action C) Climax D) Resolution Answer: C Diff: 1 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 78) Jasmine has done data analysis around the current communication system at work. It turns out that the employees send over 100 emails every day to communicate with one another. She wants to prepare a data story to help management understand that the company should adopt an instant internal communication system like Microsoft Teams or Slack. What part of the story would present the results of her data analysis? A) Introduction B) Climax C) Falling action D) Resolution Answer: B Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Application AICPA: AC: Reporting

79) Jasmine has done data analysis around the current communication system at work. It turns out that the employees send over 100 emails every day to communicate with one another. She wants to prepare a data story to help management understand that the company needs to adopt an instant communication system like Microsoft Teams or Slack. What part of the story would present her suggestion to improve the current communication system? A) Introduction B) Climax C) Falling action D) Resolution Answer: C Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Storyboards AACSB: None Bloom's: Application AICPA: AC: Reporting 80) Emma performed analytics with accounting data. She wants to create a dashboard to present accounts payable metrics and include three charts. Which of the following is a chart Emma should create? A) Average cost per invoice type B) Average call abandonment rate C) Average days sales outstanding D) Average age of employee Answer: A Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting

81) Tyler performed analytics with accounting data. He wanted to create a dashboard that would present accounts receivable metrics and include three charts. Which of the following would be one chart Tyler should create? A) Average cost per invoice type B) Average call abandonment rate C) Average days sales outstanding D) Average age of employee Answer: C Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting 82) Kevin is an auditor who is looking at call center metrics that the business tracks. There are four charts that he is auditing. He realizes that one of them does not belong with the theme of call center metrics. Which of the following metrics would be irrelevant to the call center? A) Average velocity of answer B) Average age of customer C) Queue waiting time D) Average call abandonment rate Answer: B Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting 83) Theo is an auditor who is looking at human resources (HR) metrics that the business tracks. There are four charts that he is auditing. He realizes that one of them does not belong with the theme of HR metrics. Which of the following metrics would be irrelevant to HR? A) Total number of employees B) Number of employees who leave the company C) Average cost of hiring a new employee D) Average payment processing time Answer: D Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting 28

84) Liam works for an ice cream shop in his town. He wants to help predict when the store needs to increase its stock of ice cream in preparation for its customers. What external data, beyond the historical sale of ice cream, can he gather to help him predict when ice cream sales will start increasing? A) Cost of fuel B) Temperatures C) Pollination levels D) Price of dairy Answer: B Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting 85) Genevieve is an accountant who helps with staffing analysis for a theme park in Florida. She wants to predict surges in the theme park visitors for the upcoming season so she can allocate the proper staff headcount. Besides looking at historical information, what external data could she use to help her predict when high numbers of visitors will come to the park? A) Car fuel prices B) Cost of hot dogs and buns C) Local school holiday calendar D) Local temperatures Answer: C Diff: 2 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Application AICPA: AC: Reporting 86) In what ways can one create data visualizations? Answer: Potential answers include the following: • Using a built-in reporting module of a system • Connecting data visualization software to a stand-alone file • Connecting data visualization software directly to the system's data base to perform queries in real time Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 29

87) As an accountant working with a large amount of sales data, you want to convince your manager to buy you a data visualization software license. What points of discussion would you bring up to justify such a purchase? Answer: Answers will vary. • One can see seasonality of sales — for example cyclical sales patterns that are repeated throughout the year • One can see the overall sales trend — are sales going up or trending down? • Peak sale times are easy to identify Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Turning Data into a Story AACSB: None Bloom's: Application AICPA: AC: Reporting 88) When considering your audience, what questions should you keep in mind? Answer: Potential answers include the following: • Who is the end user? • How will the visualization be used? • What are the technical user requirements? Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Designing for a User AACSB: None Bloom's: Application AICPA: AC: Reporting 89) Why is setting the tone in data visualization important? Answer: Setting the tone helps audience members to remember the visualization and the message, even when/if they forget the numbers. Setting the tone also allows the end users to feel the data — whether it is good, bad, or neutral news. Diff: 2 Learning Objective: 18.1 Summarize the importance of user-centric design and storytelling in data visualization. Section Reference: Setting the Tone AACSB: None Bloom's: Application AICPA: AC: Reporting

90) Why is white space important? Answer: White space is important since it increases comprehension by eliminating distracting visual elements, avoids overwhelming the reader, and focuses the audience's attention by highlighting key information. Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: White Space AACSB: None Bloom's: Application AICPA: AC: Reporting 91) What are some ways in which you can create white space in a chart? Answer: White space can be achieved in a chart by removing the grid lines, cleaning up the axis (consolidating the trailing zeros), removing the chart border, removing unnecessary chart markers, and/or transforming the legend to notations. Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: White Space AACSB: None Bloom's: Application AICPA: AC: Reporting 92) Your manager asks why you are not adding photographs to the shareholder presentation. Describe why businesses should move away from using photographs in their shareholder presentations. Answer: Photographs might show people wearing outdated clothing; they might depict unconvincing behaviors; they might lack diversity and accurate representation; or they might be dull or overly dramatic. Diff: 3 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Typography and Iconography AACSB: None Bloom's: Synthesis AICPA: AC: Reporting 93) You need to create a presentation slide and choose three icons that represent achievement, progress, and goal. Describe the three icons you would use in the presentation and why you chose them. Answer: Answers will vary. Achievement: thumbs up, a medal, trophy, achievement ribbon, seal on a document, a person on top of a mountain; Progress: arrow pointing upward, a bar/line chart indicating incline, clock, gears, a person climbing mountain/stairs; Goal: finish flag, bull'seye, top of the mountain, person standing at the top of the mountain, finish line. Diff: 3 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Topography and Iconography AACSB: None Bloom's: Synthesis AICPA: AC: Reporting 31

94) Ashwin is creating visualizations for the audit committee. He knows that at least one audit committee member has color blindness. What can he do to make his visualizations CVDfriendly? Answer: Use CVD-friendly color combinations (such as blue and orange or red and blue); select different tints of the same color; add text, icons, arrows, annotations, different line widths, or different line styles to clarify the message. Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: Color AACSB: None Bloom's: Application AICPA: AC: Reporting 95) Levi is cleaning up his visualizations and adding white space to them. How can he remove clutter in a chart? Answer: Remove grid lines, clean up the axis, remove the chart border, remove the unnecessary chart markers, transform the legend to notations. Diff: 2 Learning Objective: 18.2 Apply fundamental design principles to data visualizations. Section Reference: White Space AACSB: None Bloom's: Application AICPA: AC: Reporting 96) Mia is preparing some charts for senior management to view. She wants to include a pie chart but knows she needs to follow certain rules to make the pie chart clear and meaningful to the reader. What rules should she follow when creating a pie chart? Answer: Mia should add numeric labels for quantitative values (percentages preferred); she should sort the pie slices from largest to smallest in a clockwise direction; she should only use the pie chart if she is showing up to five or six groups within the pie chart. Diff: 2 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison AACSB: None Bloom's: Application AICPA: AC: Reporting

97) May, a deli owner, wants to create two charts to help her make business decisions around staffing and inventory. She wants to create one chart that will help her show which day of the week has the most sales, and another chart showing which sandwich type is the most popular, overall. What type of visualizations would best fit her needs and what data points does she need to create these two charts? Answer: Scenario: which day of the week has the most sales Chart type: line or bar chart Variables needed: Dates and sales per each day of the week Scenario: which sandwich type is the most popular Chart type: bar chart or pie chart Variables needed: count of number of sales per sandwich type Diff: 3 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison, Relationships AACSB: None Bloom's: Synthesis AICPA: AC: Reporting 98) Emerson is creating a slide deck for the Accounts Payable Manager who will be meeting with the Chief Accounting Officer to present how the business did this past quarter. Emerson has been given some data to visualize. She received the following data points: transaction ID, transaction date, transaction amount, vendor name, and purchase type. What type of charts could Emerson create with this data that would help tell a story of the company's spending for the past quarter? Answer: Answers will vary. 1. Line chart showing the transaction date vs. count of the transactions by that day 2. Bar chart showing the vendor's name and the sum of the transaction amounts 3. Pie chart showing the vendor's name and the count of transactions (as a percentage of all vendors) 4. Bar chart showing the purchase type and the sum of the transaction amounts 5. Bar chart showing the purchase type and the count of the transactions Diff: 3 Learning Objective: 18.3 Evaluate visualization techniques for exploratory analysis. Section Reference: Composition and Comparison, Relationships AACSB: None Bloom's: Synthesis AICPA: AC: Reporting

99) Roberto, a senior accounting student, is tasked with presenting a short informational pitch to all incoming first-year students about becoming a CPA. He wants to include some data points in his presentation about the current format of the CPA exam before it changes effective January 1, 2024. What five data points should he include? Answer: Answers will vary. • Price of each exam part • Number of accounting hours you need to have to sit for the exam • Number of exam parts you need to take • Number of multiple-choice questions and SIMs per exam part • Number of minutes allocated per exam for the MCQs and the SIMs • Number of months from beginning of passing the first exam part before that part lapses • Locations of testing center(s) in the area • Passing rate for each part of the exam Diff: 3 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Synthesis AICPA: AC: Reporting 100) Adelaide became a coffee shop manager. In her new role, she wants to create some metrics to help her run the coffee shop effectively. What analytics could she build on her interactive dashboards? Answer: Answers will vary. • Sales forecasting (seasonality, holidays, weather, recurring behavior based on historical data) • Staff analytics (availability, hours, staff members, experience) • Pricing analytics (actual sales, budget, cost, profit by product, inflation of raw goods) • Inventory analytics (products on hand, products needed based on forecasting) Diff: 3 Learning Objective: 18.4 Describe visualization techniques that are used to create explanatory stories. Section Reference: Dashboards AACSB: None Bloom's: Synthesis AICPA: AC: Reporting

Accounting Information Systems, 1e (Savage) Chapter 19 Audit Assurance 1) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor? A) Cybersecurity B) Financial reporting C) Claims processing D) Human resources Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 2) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor? A) Financial reporting B) Backups and storage C) Claims processing D) Human resources Answer: B Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 3) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor? A) Financial reporting B) Claims processing C) Network infrastructure D) Human resources Answer: C Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 1

4) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor? A) Financial reporting B) Claims processing C) Human resources D) Security administration Answer: D Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 5) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor? A) Financial reporting B) Claims processing C) Network infrastructure D) Human resources Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 6) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor? A) Claims processing B) Corporate tax C) Human resources D) Security administration Answer: B Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

7) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor? A) Claims processing B) Network infrastructure C) Accounts payable D) Human resources Answer: C Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 8) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor? A) Claims processing B) Human resources C) Security administration D) Payroll Answer: D Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 9) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor? A) Claims processing B) Network infrastructure C) Accounts payable D) Change management Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

10) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor? A) Security administration B) Corporate investments C) Payroll D) Disaster recovery Answer: B Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 11) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor? A) Network infrastructure B) Accounts payable C) Sales and distribution D) Change management Answer: C Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 12) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor? A) Security administration B) Payroll C) Disaster recovery D) Human resources Answer: D Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: Audit Specializations AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

13) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of aligned assurance? A) Aligned assurance focuses on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks. B) Aligned assurance is the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes. C) Aligned assurance evaluates whether the financial statements of the audited company are free from material misstatements and are presented in accordance with generally accepted accounting standards. D) Aligned assurance employs rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client. Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 14) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of internal auditing? A) Auditing focuses on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks. B) Auditing is the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes. C) Auditing evaluates whether the financial statements of the audited company are free from material misstatements and are presented in accordance with accounting standards. D) Auditing employs rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client. Answer: B Diff: 2 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

15) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of external auditors? A) External auditors focus on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks. B) External auditors provide the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes. C) External auditors evaluate whether the financial statements of the audited company are free from material misstatements and are presented in accordance with accounting standards. D) External auditors employ rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client. Answer: C Diff: 2 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 16) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of internal auditors? A) Internal auditors focus on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks. B) Internal auditors provide the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes. C) Internal auditors evaluate whether the financial statements of the audited company are free from material misstatements and are presented in accordance with generally accepted accounting standards. D) Internal auditors employ rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client. Answer: A Diff: 2 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

17) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.

What does A represent in the IIA's Three Lines Model? A) Governing Body B) Management C) Internal Audit D) External Assurance Providers Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

18) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.

What does B represent in the IIA's Three Lines Model? A) Governing Body B) Management C) Internal Audit D) External Assurance Providers Answer: B Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

19) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.

What does C represent in the IIA's Three Lines Model? A) Governing Body B) Management C) Internal Audit D) External Assurance Providers Answer: C Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

20) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.

What does D represent in the IIA's Three Lines Model? A) Governing Body B) Management C) Internal Audit D) External Assurance Providers Answer: D Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

21) Who prepares the results of the audit engagement as presented in the independent audit report regarding the financial statements? A) External auditors B) Internal auditors C) Management D) Audit committee Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 22) Which part of the external audit report typically presents the auditors' conclusions? A) Report on the Financial Statements B) Management's Responsibility for the Financial Statements C) Auditor's Responsibility D) Opinion Answer: D Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Knowledge AICPA: AC: Reporting 23) An employee of which of the following companies would likely serve as an external auditor? A) PwC B) Coca-Cola C) Disney D) Netflix Answer: A Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

24) An employee of which of the following companies would likely serve as an internal auditor? A) PwC B) Coca-Cola C) Deloitte D) EY Answer: B Diff: 1 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 25) What is the first step an internal audit department takes? A) Create an audit plan B) Create an agile audit C) Create a rolling audit plan D) Change management Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 26) Many companies perform the audit planning process annually and create a 12-month audit plan. Another method is an increasingly popular methodology that involves working in shorter sprints and making changes as needed. What is this auditing approach called? A) Sprint auditing B) Agile auditing C) External auditing D) Waterfall auditing Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

27) Many companies perform the audit planning process annually and create a ________-month audit plan. A) 3 B) 6 C) 12 D) 24 Answer: C Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 28) The audit risk assessment determines which audits the department recommends for the next period. The internal audit department presents its recommendations to the ________ for approval. A) Nominating committee B) Finance committee C) Executive committee D) Audit committee Answer: D Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

29) The five stages of an audit include important audit activities and deliverables.

What is Stage A? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

30) The five stages of an audit include important audit activities and deliverables.

What is Stage B? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

31) The five stages of an audit include important audit activities and deliverables.

What is Stage C? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: C Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

32) The five stages of an audit include important audit activities and deliverables.

What is Stage D? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: D Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

33) The five stages of an audit include important audit activities and deliverables.

What is Stage E? A) Follow-up B) Fieldwork C) Wrap-up D) Reporting Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

34) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the scoping document is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 35) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the audit canvas is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 36) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the documentation request is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

37) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the sample selection is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 38) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the preliminary observations are delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 39) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the workpapers are delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: C Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

40) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the draft audit report is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: C Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 41) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the final audit report is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: D Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 42) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the management action plan is delivered? A) Planning B) Fieldwork C) Wrap-up D) Reporting Answer: D Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

43) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the updated management action plan is delivered? A) Follow-up B) Fieldwork C) Wrap-up D) Reporting Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: The Internal Audit Process AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 44) Which of the following is the best definition of a scoping document? A) A scoping document describes the areas of the process that are subject to audit. B) A scoping document includes key audit planning information. C) A scoping document is an Agile version of a planning memo. D) A scoping document is an interview where auditees explain their daily functions to the auditor. Answer: A Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: Planning an Audit AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 45) Which of the following is the best definition of an audit planning memo? A) An audit planning memo describes the areas of the process that are subject to audit. B) An audit planning memo includes key audit planning information. C) An audit planning memo is an Agile version of a planning memo. D) An audit planning memo is an interview where auditees explain their daily functions to the auditor. Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: Planning an Audit AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

46) Which of the following is the best definition of an audit canvas? A) An audit canvas describes the areas of the process that are subject to audit. B) An audit canvas includes key audit planning information. C) An audit canvas is an Agile version of a planning memo. D) An audit canvas is an interview where auditees explain their daily functions to the auditor. Answer: C Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: Planning an Audit AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 47) Just as a business does not have the resources to mitigate all its risks, internal audit does not have the resources to test every risk and the controls implemented to address each risk. What helps a company prioritize the risks it faces? A) Risk scores B) Audit scores C) Planning scores D) Scoping scores Answer: A Diff: 2 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: Planning an Audit AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management 48) The plans of the audit team, including the audit planning memo, are presented during what event? A) The audit wrap-up meeting B) The audit kickoff meeting C) The audit fieldwork D) The audit follow-up meeting Answer: B Diff: 1 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: Planning an Audit AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

49) Internal audit's primary purpose is to provide independent assurance that a company's ________, internal controls, and governance processes are effective. A) Risk management B) Audit canvas C) Workpapers D) Management action plan Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 50) Internal audit's primary purpose is to provide independent assurance that a company's risk management, ________, and governance processes are effective. A) Audit canvas B) Internal controls C) Workpapers D) Management action plan Answer: B Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 51) Internal audit's primary purpose is to provide independent assurance that a company's risk management, internal controls, and ________ are effective. A) Audit canvas B) Workpapers C) Governance processes D) Management action plan Answer: C Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

52) What is the audit stage called that is focused on assessing the adequacy of internal controls, compliance, and business processes, including the performance of testing transactions, data, and other procedures necessary to accomplish the audit objectives? A) Audit fieldwork B) Information gathering C) Process walkthrough D) Design effectiveness Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 53) What is the first step in fieldwork called? A) Audit fieldwork B) Information gathering C) Process walkthrough D) Design effectiveness Answer: B Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Information Gathering AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 54) What is an interview where auditees explain their daily job functions to the auditor called? A) Audit fieldwork B) Information gathering C) Process walkthrough D) Design effectiveness Answer: C Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Information Gathering AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

55) What determines whether a control, if operated as prescribed, meets the company's control objectives and affectively prevents or detects errors or fraud? A) Audit fieldwork B) Information gathering C) Process walkthrough D) Design effectiveness Answer: D Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 56) What determines whether a control is operated as designed by a person with appropriate authority and training to perform the control? A) Operating effectiveness B) Information gathering C) Process walkthrough D) Design effectiveness Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 57) Which of the following is the best definition of inquiry? A) Asking questions of key employees B) Watching key employees perform the control C) Reviewing documentation such as policies and procedures D) Independently re-creating a control situation, often through data analytics Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

58) Which of the following is the best definition of observation? A) Asking questions of key employees B) Watching key employees perform the control C) Reviewing documentation such as policies and procedures D) Independently re-creating a control situation, often through data analytics Answer: B Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 59) Which of the following is the best definition of inspection? A) Asking questions of key employees B) Watching key employees perform the control C) Reviewing documentation such as policies and procedures D) Independently re-creating a control situation, often through data analytics Answer: C Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 60) Which of the following is the best definition of reperformance? A) Asking questions of key employees B) Watching key employees perform the control C) Reviewing documentation such as policies and procedures D) Independently re-creating a control situation, often through data analytics Answer: D Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

61) If you are asking questions of key employees, which operating effectiveness test are you performing? A) Inquiry B) Observation C) Inspection D) Reperformance Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 62) If you are watching key employees perform the control, which operating effectiveness test are you performing? A) Inquiry B) Observation C) Inspection D) Reperformance Answer: B Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 63) If you are reviewing documentation, such as policies and procedures, which operating effectiveness test are you performing? A) Inquiry B) Observation C) Inspection D) Reperformance Answer: C Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

64) If you are independently re-creating a control situation, which operating effectiveness test are you performing? A) Inquiry B) Observation C) Inspection D) Reperformance Answer: D Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management 65) Unlike design effectiveness, operating effectiveness is tested through what? A) Inquiry B) Observation C) Inspection D) Reperformance Answer: D Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Tests of Controls AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 66) What are used to determine if material misstatements exist in the underlying data that is used to create the financial statements? A) Substantive procedures B) Document request C) Design effectiveness D) Operating effectiveness Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Substantive Procedures AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

67) What is a formal list of all documentation needed for an audit? A) Substantive procedures B) Document request C) Design effectiveness D) Operating effectiveness Answer: B Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Substantive Procedures AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 68) What Excel function would you use if you want to split a column into multiple columns using a specified delimiter to divide the column? A) Text to Columns B) LEFT C) CONCAT D) SUM Answer: A Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Substantive Procedures AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 69) What Excel function would you use if you want to return a specified number of characters beginning at the left of the column? A) Text to Columns B) LEFT C) CONCAT D) SUM Answer: B Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Substantive Procedures AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

70) What Excel function would you use if you want to combine two or more columns into one new column? A) Text to Columns B) LEFT C) CONCAT D) SUM Answer: C Diff: 1 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Substantive Procedures AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 71) ________ is the core of an audit engagement. A) Fieldwork B) Wrap-up C) Reporting D) Planning Answer: A Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 72) The ________ gathered about the business and internal controls during the audit engagement must be communicated so that management can implement suggestions and address shortcomings. A) fieldwork B) valuable information C) reporting D) planning Answer: B Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

73) The valuable information gathered about the business and internal controls during the audit engagement must be communicated so that management can A) ignore and decide to change auditors. B) instruct the auditors to implement the changes. C) implement suggestions and address shortcomings. D) plan for the next audit engagement. Answer: C Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Introduction AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 74) What is the first stage after fieldwork, where auditors complete their workpapers and draft an audit report to share with key stakeholders? A) Fieldwork B) Wrap-up C) Reporting D) Planning Answer: B Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Wrap-up AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 75) During the wrap-up stage of an audit, what are the notes called that are compiled into formal documentation capturing the results of the control testing performed? A) Audit findings B) Wrap-up C) Audit workpapers D) Draft audit report Answer: C Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Wrap-up AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

76) What are the results of an audit, such as written explanations of errors, improper activities, control weaknesses or deficiencies, and discovered fraud? A) Document request B) Wrap-up C) Audit workpapers D) Audit findings Answer: D Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Wrap-up AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 77) Once the first draft of the audit report is complete, the audit team meets with the auditee in a(n) ________ to discuss the findings. A) exit meeting B) management's response C) audit recommendations D) audit findings Answer: A Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Wrap-up AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 78) Management of the business area provides the audit team with ________, in the form of a plan for remediation. A) exit meeting B) management's response C) audit recommendations D) audit findings Answer: B Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Wrap-up AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management

79) Once the first draft of the audit report is complete, the audit team meets with the auditee in an exit meeting to discuss the findings. Management of the business area provides the audit team with management's response, in the form of a plan for remediation. But auditors don't come to these meetings empty handed. Instead, they provide ________ that include the cause of the issue, details about the root cause(s), and suggested actions management can take to address the findings. A) exit meeting B) management's response C) audit recommendations D) audit findings Answer: C Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Wrap-up AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 80) Once feedback is gathered from essential stakeholders and updates are made based on those review comments, the ________ is created. A) exit meeting B) management's response C) audit recommendations D) final audit report Answer: D Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Reporting AACSB: None Bloom's: Knowledge AICPA: AC: Risk Assessment, Analysis, and Management 81) The final audit report is distributed to the auditees and their leadership. Which of the following is the most likely leader to whom the audit report is distributed? A) Chief executive officer B) Analyst C) Intern D) Supervisor Answer: A Diff: 2 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Reporting AACSB: None Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

82) If an audit has no findings, the engagement ends at what stage? A) Field work B) Reporting C) Wrap-up D) Follow-up Answer: B Diff: 1 Learning Objective: 19.4 Summarize the outcome of control testing. Section Reference: Follow-up AACSB: None Bloom's: Comprehension AICPA: AC: Risk Assessment, Analysis, and Management

83) Maeve is a Junior accounting student, interning with RAM Manufacturing LLC, a rapidly growing manufacturer of parts for the automotive industry. Maeve has been asked to prepare a chart that illustrates the three lines of defense. Maeve has a spreadsheet listing the names and job descriptions of five key employees. Using the chart below, help Maeve place each employee in the appropriate part of the IIA's three lines of defense model. Name Justin Wright Cameron Yoder Ryan McDermott Lucy Volna Derrick Hile

Responsibility Line of Defense Provides assurance of the effectiveness of internal controls Performs annual reviews and writes opinions regarding the financial statements of the company Tests the effectiveness and efficiency of operations and the reliability and integrity of data Guides those responsible for developing and implementing policies and procedures Assists risk owners in defining the target risk exposure

Answer: Name

Responsibility Line of Defense Provides assurance of the effectiveness of Justin Wright internal controls Third Performs annual reviews and writes opinions regarding the financial statements Cameron Yoder of the company External Assurance Tests the effectiveness and efficiency of operations and the reliability and integrity of Ryan McDermott data Third Guides those responsible for developing and Lucy Volna implementing policies and procedures First Assists risk owners in defining the target Derrick Hile risk exposure Second

Diff: 2 Learning Objective: 19.1 Compare and contrast internal and external audit functions. Section Reference: External Auditors AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

84) Maeve is a recently hired internal auditor with RAM Manufacturing LLC, a rapidly growing manufacturer of parts for the automotive industry. After the audit kickoff meeting, Maeve is given a list of tasks, but the list is not in order. In the following chart, indicate which audit stage each task belongs in planning, fieldwork, wrap-up, reporting, or follow-up. Number Task 1. Send a final copy of the audit report to the audit manager. 2. Add your testing observations to the draft report. Schedule interviews and walkthrough meetings with the audit 3. team and auditees. Update the audit canvas and scoping document to incorporate 4. feedback for the business during the kickoff meeting. Finish drafting your workpapers and have them reviewed and 5. approved by the senior auditor on the audit.

Audit Stage

Answer: Number Task Audit Stage 1. Send a final copy of the audit report to the audit manager. Reporting 2. Add your testing observations to the draft report. Wrap-up Schedule interviews and walkthrough meetings with the 3. audit team and auditees. Fieldwork Update the audit canvas and scoping document to incorporate feedback for the business during the kickoff 4. meeting. Planning Finish drafting your workpapers and have them reviewed 5. and approved by the senior auditor on the audit. Wrap-up Diff: 2 Learning Objective: 19.2 Describe the stages of an internal audit. Section Reference: Planning an Audit AACSB: Analytic Bloom's: Application AICPA: AC: Risk Assessment, Analysis, and Management

85) Using the data provided in the table below, identify monthly payments that vary from payment trends.

Answer: There are several ways to identify monthly payments that vary from payment trends.

One approach is to calculate an average ($25,211) and subtract each month's figure from the average. This allows you to identify the variance between the amount paid in each month from the average. After making these calculations, we can see that May-22 and Nov-22 have large variances in relation to the other month's variances. Diff: 3 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Substantive Procedures AACSB: None Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management

86) Maeve is a recently hired internal auditor with RAM Manufacturing LLC, a rapidly growing manufacturer of parts for the automotive industry. Maeve conducts an interview with Justin who works in customer management. Justin explains his process for adding new customers to the system. • The process starts when Justin receives requests from the sales department to add a new customer. • He reviews the request to determine if the new customer has been approved. • If the request has been approved, Justin inputs the customer information into the customer management system. However, if it is not approved, he returns it to the source. • If the customer name already exists in the system, Justin will get an error message and he will notify the requester that the customer name already exists. • If the customer name does not exist, Justin will finish entering the customer information, including address, contact information and payment terms. Create a process flowchart for the described customer management process.

Answer:

Diff: 3 Learning Objective: 19.3 Summarize the internal audit testing process. Section Reference: Information Gathering AACSB: None Bloom's: Synthesis AICPA: AC: Risk Assessment, Analysis, and Management © 2022 John Wiley & Sons, Inc. All rights reserved. Instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. Except as permitted herein or by law, no part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. 41