Core Concepts of Accounting Information Systems, 14th Edition
By Simkin, Worrell, Savage
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Chapter 1 ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT
True-False Questions 1.
The acronym AIS stands for “Accounting Information Standards.”
2.
Accounting information systems must be computerized to be effective.
3.
It is best to view an AIS as an accounting system that must be computerized.
4.
AISs often create information that is useful to non-accountants.
5.
In order to be useful, raw accounting data must be processed by a computer.
6.
The path that data follow in an AIS, for example from manual source document to completed output report, is called an audit trail.
7.
A company's audit trail is normally easier to follow under a manual data processing system compared to a computerized information processing system.
8.
The starting point for an audit trail of a weekly payroll system might be an employee time card.
9.
The starting point for an audit trail of a production department might be the purchase order for raw materials.
10.
The acronym ERP stands for “electronic reporting plan.”
11.
The term information overload refers to providing too much data to management, often resulting in managers ignoring it.
12.
An advantage of computerized AISs is that they do not need to be programmed to catch simple input errors such as entering “4.0” instead of “40.0” for hours worked in a payroll application.
13.
Computers tend to make audit trails easier to follow because everything is computerized.
14.
The acronym ERP stands for “enterprise reporting system.”
15.
The authors consider accountants to be “knowledge workers.”
16.
Predictive analytics use large data warehouses to help organizations improve performance by predicting future outcomes.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
17.
As used in this chapter, the acronym SAR stands for “suspicious accounting reporting.”
18.
Sections of the Patriot Act mandate suspicious activity reporting.
19.
One of the motivations for SAR is to identify money laundering activities.
20.
The term “Patriot” in the “Patriot Act of 2001 is an acronym for “providing appropriate tools required to intercept and obstruct terrorism.”
21.
Accounting rules do not allow for any flexibility in financial reporting by management.
22.
Accounting systems are useful for performing accounting tasks, but cannot be used for such security purposes as countering terrorism.
23.
An example of a corporate scandal that was mentioned in this chapter is the Enron case.
24.
The Sarbanes-Oxley Act allows CPA firms to help clients acquire, install and use information systems and to also act as those clients’ external auditor.
25.
The Sarbanes-Oxley Act prohibits companies from using the same auditing firms for performing both auditing and management consulting services.
26.
Cloud computing is a way of using business applications over the Internet.
27.
A consulting service provided by CPA firms is risk assessment.
28.
A major output of financial accounting is the preparation of financial statements such as an income statement.
29.
The series of steps leading from data recorded in transaction records to the information reported on financial statements is called the accounting cycle.
30.
AISs are only concerned with financial information.
31.
One major difference between financial accounting and managerial accounting is that financial accountants prepare financial statements for external investors while managerial accountants prepare financial statements for internal managers.
32.
In a responsibility accounting system, managers trace unfavorable performance to the department or persons causing the inefficiencies.
33.
One major difference between financial accounting and managerial accounting is that financial accountants use dashboards while managerial accountants do not.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
34.
An example of a financial report that would be prepared by a managerial accountant (instead of a financial accountant) is a budget report.
35.
XBRL is a business reporting language that is used to define interactive financial data.
36.
“Cost accounting” is a subset of managerial accounting.
37.
An ABC inventory system refers to an “activity-based costing” system.
38.
As used in chapter 1, the term “dashboard” refers to a quick and easy plan to install a computerized accounting system in an organization.
39.
As used in Chapter 1, a dashboard is an up-to-the-minute graphic depiction of key performance measures.
40.
The purpose of the assurance services of an accounting firm is to give a company’s managers moral support when they are audited by the federal or state government.
41.
“CPA Trust Services” performed by a CPA provides assurance that a company engaged in electronic commerce has an information system that is secure.
42.
An example of a value-added reseller (VAR) is a dealer who sells software but does not help with the installation, training and customization of that software for the customer.
43.
Some possible career opportunities for AIS majors or minors include consulting positions, computerized auditing, or computer security positions.
44.
Accountants are usually classified as “line workers” within business organizations.
45.
Today's AIS is an enterprise-wide information system that focuses on interdepartmental business processes.
46.
A good audit trail within the financial accounting system should allow a manager or auditor to trace any source document back from a report to the original data entry.
47.
Managerial accounting principally provides decision-making information to a company's internal managers.
48.
As a result of computerized information processing systems in many organizations today, the need for accountants in these organizations has significantly declined.
49.
Activity-based costing systems focus on allocating overhead on the basis of direct labor hours used.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
50.
Because accountants are not normally computer programmers working within the information processing subsystem, it is unnecessary for them to understand the capabilities and limitations of computers.
51.
Within the traditional AIS, a sales order would not be considered an accounting transaction.
52.
Students majoring in AIS are unlikely to assume jobs in traditional accounting positions because they know too much.
53.
There are limited career opportunities available for students who study both accounting and information systems.
54.
One possible career for AIS majors is in the traditional area of financial or managerial accounting.
55.
The CISA is an acronym for a professional accounting certification.
Multiple-Choice Questions 56.
The “S” in the acronym “AIS” stands for: a) Standard b) System c) Symbol d) none of these
57.
The letter “P” in the acronym “ERP” stands for: a) Production b) Planning c) Project d) none of these
58.
Which of the following is true about the terms “data” and “information” within the context of Chapter 1? a) These terms are exactly the same b) These terms are exact opposites c) Processed “data” becomes “information” d) none of these
59.
Which of the following captures the same idea as the term “Garbage In Garbage Out?” a) Too much information is the same as garbage b) The quality of computer output is determined by the quality of the input c) Great investments lead to great returns d) Too many cooks spoil the broth
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
60.
Which of the following best describes a data warehouse? a) A repository of historical information from one accounting application b) A repository of historical information from a set of accounting applications c) A repository of information from a wide range of services—some not accounting—stored within a company d) A repository of information from many businesses in the same industry
61.
Most AISs perform all of these functions except: a) Collect raw accounting data b) Store accounting data for future uses c) Process data into useful information d) AISs perform all of these functions
62.
As used in the chapter, the term “knowledge workers”: a) Are blue collar workers in non-managerial positions b) Are the same as delivery clerks c) Include most accountants d) Does not include most accountants
63.
All of the following are possible uses of AIS or accounting personnel that were discussed in the chapter except: a) Countering terrorism b) Foiling future accounting scandals c) Providing assurance services d) Performing monetary exchanges
64.
Suspicious activity reporting: a) Only applies to banking transactions b) Is mandated by state, but not federal, regulations c) Is mostly concerned with embezzlement issues d) Requires CPAs to report questionable financial transactions to the U.S. Treasury Department.
65.
Which of these would be considered suspicious activities under current SAR rules? a) Money laundering b) Bribing officials c) Transferring money to suspected terrorists d) all of these
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
66.
Which of these businesses is not required to report suspicious activities under current federal laws? a) Banks b) Money service organizations c) Commodity Traders d) Mutual fund dealers e) All of these businesses must engage in SAR
67.
Which of these statements best describes the relationship between “AISs” and “countering terrorism?” a) These are completely independent items; there is no relationship b) AISs can help counter terrorism by providing SAR evidence c) AISs can help by denying financial aid to terrorist groups d) AISs can help by identifying international embezzlers
68.
Bernard Madoff is most closely associated with which of the following terms? a) The father of activity-based costing systems b) SAR c) Ponzi scheme d) Sarbanes-Oxley Act of 2002 e) Key sponsor of the Patriot Act
69.
Many accountants feel that the most important part of the Sarbanes-Oxley Act is: a) Its anti-terrorist provisions b) Its provisions requiring the reporting of suspicious activities c) Section 404 on internal controls d) Section 505 on money laundering
70.
Managerial accounting principally provides information to: a) Stockholders b) Government regulators (e.g., SEC, Federal bank examiners) c) Internal company management d) Potential creditors
71.
The process by which a financial transaction is recorded so that its flow through the system can be followed is called: a) Financial shadowing b) Managerial trace technique c) Concatenation d) An audit trail
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
72.
Which of the following accounting functions has been automated by most companies' information processing subsystems? a) Posting to ledgers b) Recording journal entries c) Preparing trial balances d) all of the above
73.
What has been the effect on accountants in those organizations which have computerized their data processing functions? a) The need for accountants has disappeared b) The accountants have become "pure" bookkeepers c) The accountants have become involved in more decision-making activities d) The accountants' decision-making activities have drastically declined
74.
What is the first step to be performed by most organizations in their accounting cycles? a) Recording business transactions in a journal b) Preparing a trial balance c) Recording closing entries in a journal d) Preparing transaction source documents e) none of the above
75.
Which of these is a business reporting language often used in recording or transmitting accounting data? a) XBRL b) XFile c) ABC d) Accounting Live
76.
The P in the acronym KPI stands for: a) Processing b) Performance c) Planning d) Personnel e) none of these
77.
For performance reports to achieve their control objectives, they must: a) Include relevant information so that necessary action may be taken to accomplish organizational goals b) Be timely so that minimal time elapses between an activity's occurrence and the feedback reflecting the activity's efficient or inefficient performance c) Provide subsystem managers with suggestions as to how they can operate their subsystems more efficiently d) all of the above e) a and b only
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
78.
Historically, financial data used in one application was not easily transferable to other applications. However, the problem was fixed with which one of the following? a) XMP b) ERP c) XBRL d) XMLP
79.
An example of an assurance service for a company engaged in electronic commerce is: a) XBRL b) Trust US c) CITP d) CPA Trust Services
80.
Which of the following is not a component of the balanced scorecard? a) Customer knowledge b) Internal business processes c) Transaction processing d) Financial performance
81.
Information systems auditors are: a) Auditors who are concerned with analyzing risks associated with computerized information systems b) Individuals who often work closely with financial auditors c) Auditors who have a lot of technical expertise related to information technology d) all of the above
82.
Which of these is a certification that accountants can earn that focuses on proficiency in information technology? a) CPA b) CMA c) CISA d) CITP
83.
The designation for a licensed information systems audit professional is: a) CPA b) CMA c) CIA d) CISA
84.
The certified information systems auditor certification is sponsored by: a) ISACA b) AICPA c) IMA d) none of these
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
85.
Which of the following best describes “predictive analytics”? a) It is a method auditors use to predict when managers might have a weak internal control system b) It is a technique that uses data stored in data warehouses to create systems that allow managers to use their data to make predictions about future outcomes c) It is a method used to prevent managers from overriding internal controls d) none of the above
86.
Which of the following describes “cloud computing”? a) It is a is a way of using business applications over the Internet b) It is an internal business process over the organizations intranet c) It is an internal business process over the organizations extranet d) none of these
87.
Which one of the following best describes the performance elements contained in most balanced scorecards? Financial Nonfinancial Performance Measures Performance Measures a) No No b) No Yes c) Yes No d) Yes Yes
88.
The balanced scorecard provides an action plan for achieving competitive success by focusing management attention on critical success factors. Which one of the following is not one of the competitive success factors commonly focused upon in the balanced scorecard? a) Competitor business strategies b) Financial performance measures c) Internal business processes d) Employee innovation and learning
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are two terms that are not used. 89. _______CFE 90. ______ SAR 91. ______ CISA 92. ______ ERP 93. ______ XBRL 94. _______ ISACA 95. _______ IT 96. _______ REA 97. _______ KPI 98. _______ VAR
Definitions: A. A professional auditing organization B. A special type of systems consultant who is licensed to sell particular software packages
and provide organizations with consulting services related to that software C. An enterprise-wide accounting system D. Federally-mandated reporting of suspicious accounting activities E. An important database design approach F. Key productivity report G. A language for creating, transforming, and communicating financial information H. An auditing certification I. An acronym often used to describe the computer department of an organization J. A type of knowledge worker K. A certification that requires individuals to meet certain qualification set by the
Association of Certified Fraud Examiners L. An important performance indicator
Short Answer Questions 99.
Name some business activities that do not require traditional journal entries.
100.
Give three reasons why XBRL formatted documents are useful.
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
Chapter 2 ACCOUNTING ON THE INTERNET
True-False Questions 1.
The domain address of a web page is the equivalent of its universal resource locator (URL).
2.
The Internet Protocol address is a numerical translation of the text-based domain address.
3.
Another name for a URL is the term “domain address.”
4.
Most accountants believe that auditors do not need to concern themselves with IP addresses.
5.
ICANN is an acronym that stands for Internet Control and Network Numbers.
6.
An example of an Internet domain address is www.Wiley.com.
7.
The new standard is IPv6 that uses 128 bits for Internet protocol addresses.
8.
Intranets do not use the same software as the Internet.
9.
An extranet is a network that a business might establish with its trading partners.
10.
The World Wide Web is the text portion of the Internet.
11.
The term “blog” is an acronym that stands for “binary login.”
12.
Social media is important to marketers, but only of passing interest to accountants.
13.
Surveys suggest that less than half of all companies use social media for business purposes.
14.
Groupware is the technology that enables knowledge sharing and knowledge management among employees.
15.
XBRL is not related to XML.
16. XBRL allows users to extract and compare financial data from many different companies. 17.
HTML tags describe how data and graphics should be presented by a web browser.
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
18.
The SEC will not accept XBRL formatted data in electronically filed financial reports.
19.
All electronic commerce takes place over the Internet.
20.
XBRL is an acronym for “extensive business reports and liabilities.”
21.
XBRL is a type of XML.
22.
A set of XBRL tags identifies the data it contains as well as indicates how to display that data.
23.
An advantage of XBRL is its ability to express semantic meaning—i.e., to express such relationships as “assets = liabilities + equity.”
24.
IDEA is a computer system used by the Securities and Exchange Commission (SEC).
25.
IDEA uses XBRL-coded data of corporate financial statements.
26.
An advantage of XBRL is that the tags have been completely standardized by the XBRL International Consortium and these standards are now fixed.
27.
An advantage of XBRL is that it can save companies the cost of rekeying financial data from one computer application to another.
28.
An important disadvantage of XBRL is that most accounting packages cannot read or write documents in XBRL format.
29.
E-wallets store customer data to facilitate online purchases. They do not store dollars.
30.
Bitcom is an example of a virtual currency.Use of electronic procurement systems typically raises purchasing costs.Bitcoin is an example of a virtual currency.
31.
A disadvantage of a virtual currency is the unwillingness of some to accept payments. To date, e-commerce has had less impact on accounts payable and accounts receivable than on procurement and inventory tracking. A disadvantage of a virtual currency is the unwillingness of some to accept payments in such currency.
32.
EDI automates the exchange of business information, particularly with respect to source documents.
33.
EDI can only be used by private, for-profit businesses.
34.
A major issue impacting e-business is the trade-off between accessibility and vulnerability.
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
35.
Firewalls are virtually unbreachable and offer assurance against anyallall viruses.
36.
Proxy servers can act as firewalls and can also limit employee Internet access to approved web addresses only.
37.
Data encryption renders a text message unreadable during data transmission, even if intercepted.
38.
Public key encryption requires the use of a pair of public/private encryption keys.
39.
Digital signatures can never be as secure as written signatures.
40.
Digital time stamping authenticates the time and sometimes the place a transmission or transaction occurred.
41.
For all its exposure in the popular press media, identity theft affects a relatively small number of people and, in total, involves a small amount of losses per year.
42.
Three types of access security are (1) what you have, (2) what you know, and (3) who you are.
43.
Spam is annoying, but not a particularly costly or bothersome, to most businesses or government agencies.
44.
The term “phishing” refers to the use of web pages or other means to trick viewers into revealing their passwords or other personal information.
45.
Worldwide, the total the total number of phishing attacks annual financial losses resulting from all phishing activities is increasing. was less than $1 billion in 2010.
46.
Two types of firewall policies are protection by (1) inclusion, and (2) exclusion.
47.
An advantage of a proxy server is the ability to store commonly-requested web pages in memory, thereby enabling it to respond quickly to internal user requests for them.
48.
The term “B2B” is Internet slang for “back to basics.”
49.
BASF is one of the world’s largest telephone companies.
50.
EDI is an acronym standing for “electronic delayed interface.”
51.
The term “SaaS” is an acronym standing for “software as a service.”
52.
When a cloud service company hosts a client’s website, this is an example of “platform as a service.”
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
53.
For most businesses, cloud computing is an example of outsourcing.
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
54.
The heaviest demands on book publishing websites come in the weeks just prior to the start of a fall or spring semester.
55.
Mozy is a cloudyHome is a cloud provider of backup services.
56.
One important personal category of cloud computing for accountants is educational services.
57.
The Department of Justice prosecutes identity theft under the ITADA Act of 1998.
58.
An example of a social networking site is eBay.
59.
An example of a social networking site is FaceBook.
60.
Businesses can use social networking sites to better understand the reactions to new products or services.
61.
Social networks do not pose privacy concerns.
62.
The most common reason businesses outsource is to increase control over their data and data processing tasks.
Multiple-Choice Questions 63.
An example of an Internet service provider is: a) General Electric b) AOL c) PeachTree d) ISP e) none of these
64.
Another name for an Internet domain address is its: a) URL b) ISP c) email address d) IETF
65.
An example of a URL is: a) .gov b) 100.100.100.100 c) www.wiley.com d) <B>Title</B>
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
66.
In the Internet address www.Name.com.X, the term X usually stands for: a) A country b) A city c) An abbreviation such as “gov” d) A transmission protocol
67.
Which of these is not a component of an IP address? a) A geographic region b) An organization number c) A computer group d) A specific computer number e) A specific user number
68.
This organization assigns the official registry of Internet domain names. a) TCP b) URL c) ICANN d) HTTP
69.
An advantage of an extranet is that: a) It can disseminate information corporate-wide b) It can be accessed by selected trading partners c) Users can employ common web browsers to access information in them d) all of the above
70.
The letter “p” in the acronym http stands for: a) Page b) Provider c) Protocol d) Parity
71.
All of the following are normally associated with the Internet except: a) IP addresses b) URL addresses c) http d) MICR coding
72.
These allow a user to access alternate web pages from an existing page: a) Hyperlinks b) Golf links c) html titles d) The XBRL tag <Web Address>
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
73.
This language allows its users to create web pages on the Internet: a) HTTP b) HTML c) URL d) COBOL
74.
The “X” in the term XBRL stands for: a) Extra b) Extensible c) X-rated d) Exante
75.
Which of the following is true about XBRL? a) It is a business application of XML b) It uses tags such as <b> like HTML c) It is used by the SEC to collect and store financial information about companies d) all of the above are true about XBRL
76.
One advantage of XBRL tags is that: a) They always contain links to other web pages b) Optional entries allow users to specify units of currency, such as Euros c) They are now fixed standards d) They cannot be used by hackers
77.
IDEA is used by the Securities and Exchange Commission (SEC) to: a) Store the financial data of public companies b) Collect lists of bankrupt companies c) Store the URL’s of member firms d) Collect data on individuals victimized by identity theft hackers
78.
All of the following are true about XBRL tags except: a) Tags are “extensible” b) Tags describe the data c) Tags tell how to display data d) Tags are now permanently standardized across industries
79.
All of the following are benefits of XBRL except: a) Companies can file financial information in one format, avoiding the errors that may come from reentering data multiple times b) The SEC accepts XBRL-format for electronic filing of financial statement reports c) XBRL permits the automatic and reliable exchange of financial information across many software formats and technologies, including the Internet d) all of the above are benefits of XBRL e) none of the above are benefits of XBRL
80.
The “A” in the term IDEA (used by the SEC) stands for:
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
a) b) c) d) e)
Accounting Association Addition Applications Access
81.
Which of these is not an advantage of XBRL? a) It often enables businesses to avoid rekeying data downloaded from corporate websites b) It constrains companies to particular formats, thus ensuring consistency c) It helps standardize the storage and therefore presentation of financial information d) all of these are advantages of XBRL
82.
Which of these is the official website of the XBRL International Consortium? a) www.xbrl.com b) www.xbrl.org c) www.xbrl.gov d) www.xbrlic.com
83.
Which of these best describes the current state of XBRL? a) It now lacks standards, but the hope is that we will get some soon b) The language is completely standardized c) The language is dynamic and standards are still being developed d) The language now awaits official sanction by the United Nations before being released for use
84.
Retail sales on the Internet: a) Are growing rapidly b) Were growing at first, but are now declining c) Are not possible on the Internet d) Have only been achieved by major retailers such as Wal-Mart
85.
All of these are business advantages of social media except: a) Enables businesses to iIncrease organization recognition b) Enables businesses to eEvaluate customer reactions to new goods or services c) Enables accountants to communicate with one another on projects d) Enables businesses to mManage strong reactions to firm missteps early e) all of these are business advantages of social media
86.
Which of these best describes a firm’s use of social media for monitoring employees? a) It is illegal b) It is legal but rarely done c) It enables companies to identify employees with undesirable traits d) It is a required practice that is required by most worker unions
87.
This company is one of the largest “auction houses” on the web:
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
a) b) c) d)
Wal-Mart Sears, Roebuck eBay Forester
88.
The term “click fraud” refers to: a) Overcharging clients when they view a website b) Overcharging companies for phantom clicks on an advertising link c) Misleading users into clicking on links to web sites selling illegal goods or services d) none of these refers to click fraud
89.
An important characteristic of E-wallets is: a) It is exactly the same as regular cash b) It is the same as EDI c) It contains the identity of the user d) Users must also supply a credit card number when using it
90.
A virtual currency is money that: a) Doesn’t actually exist b) Cannot actually be purchased by anyone who is not authorized to buy it c) Operates as a medium of exchange despite the fact that no company or country stands behind it d) No one has ever seen, but that Internet junkies believe exists
91.
An example of a virtual currency is: a) Negotiable bonds b) Bitcoin c) A certificate of deposit d) The lettered stock of a company
92.
All of these are advantages of a virtual currency except: a) The ability of a company to do more business if they accept the currency b) No need to pay credit-card charges or large clearing house fees c) The support of the issuer’s central bank in the event of default d) all of these are advantages of a virtual currency
93.
Which of these is an accounting drawback of a virtual currency to a company using it? a) Appreciation in value is reportable for tax purposes b) Floating cost bases makes accounting for such assets more difficult c) No central bank guarantees its value d) all of these are drawbacks of virtual currencies
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
94.
An advantage of E-wallets is that: a) Users do not need to re-enter personal information each time they make an online purchase b) Most E-wallet information is maintained on vendor file servers c) They ensure the completion of a purchase transaction over the Internet d) none of the above are advantages of E-wallets
95.
All of the following are examples of EDI “documents” except: a) Purchase orders b) Sales invoices c) Customs documents d) Bar codes
96.
Which of these is not an advantage of cloud computing? a) Companies must update their own software, even if stored in the cloud b) Companies save money on hardware or software costs c) Gives access to distant vendors or software developers d) Organizations pay as they go
97.
Which of these is correct about the terms “e-business” and “e-commerce.” a) They are exact synonyms b) They are exact opposites c) e-business is a subset of e-commerce d) e-commerce is a subset of e-business
98.
Within the context of e-commerce, the acronym B2B stands for: a) Back to basics b) Baltimore or bust c) A non-existent public broadcasting system d) Business to business
99.
In recent years, the most common complaint related to identify theft is: a) Alteration of personal information b) Imbalances in financial statements c) Credit card fraud d) Deletions of the personal information maintained by banks and insurance companies
100.
According to the textbook, which of the following statements is true about identity theft? a) Most personal identities are stolen by dumpster diving b) There is little individuals can do to protect themselves from identify theft; this is a corporate problem c) There is much that individuals can do to protect themselves d) Accountants are more vulnerable to identity theft than non-accountants
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
101.
One form of access security is determining authentic users by “who they are.” Which of the following is an example of such authentication? a) Verifying a password b) Biometric tests such as retina scans c) Requesting that the user provide his or her mother’s maiden name d) Requiring the user to show a valid driver’s license
102.
One form of access security is determining authentic users by “what they have.” Which of the following would be an example of such authentication? a) Verifying a password b) Biometric tests such as retina scans c) Requesting that the user provide his or her mother’s maiden name d) Requiring the user to show a valid driver’s license
103.
One form of access security is determining authentic users by “what they know.” Which of the following would be an example of such authentication? a) Verifying a password b) Biometric tests such as retina scans c) Requesting that the user provide an employee identification card d) Requiring the user to show a valid driver’s license
104.
What is the main reason why companies prefer VANs to the Internet for implementing EDI? a) Cost - VANs are cheaper than the Internet b) Speed - VANs are faster than the Internet c) Security - VANs are thought to be more secure d) Convenience - VANs are everywhere
105.
The letter “N” in VPN stands for: a) Network b) Notice c) Nanosecond d) Nothing
106.
Tricking users into providing personal information such as a social security number on a web site is an example of: a) Spamming b) Spoofing c) Proxy serving d) Phishing
TB 2.11
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107.
The term “spoofing” refers to: a) Computer hijacking b) Kidding c) Posing as a legitimate computer user d) Distributing junk mail
108.
The purpose of a company firewall is to: a) Guard against spoofing b) Assist the IETF c) Deny computer hackers access to sensitive data d) all of the above
109.
A proxy server is: a) A type of computer network often used by companies with many employees b) An alternate for a company mainframe computer c) A substitute for a good waiter at a restaurant d) A computer dedicated to Internet access and transfers
110.
The term data encryption refers to: a) Storing data in safe places called “crypts” b) Transforming data into secret codes c) Scrambling data systematically d) none of these
111.
All of the following are associated with data encryption except: a) Plaintext b) Cyphertext c) DES d) URL
112.
The term key in the context of data encryption refers to: a) A physical key similar to a house key b) A logical key similar to the primary key of a data file c) A mathematical function used for encryption purposes d) A computer function key that can be found on keyboards
113.
An interesting dimension of public key encryption is that: a) It actually requires two keys b) It only requires one key c) Everyone can decode a message written in it d) none of these
TB 2.12
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114.
A digital signature: a) Is the same as a hand-written signature b) Is a bitmapped representation of a hand-written signature c) Is encrypted data that authenticates a transmitted message d) none of these
115.
Third party assurance: a) Provides online purchasers with some assurance regarding the security and privacy of a web site b) Is unlikely to concern auditors c) Is a service offered only by the American Institute of Certified Public Accountants d) Is a service offered only by the Better Business Bureau
116.
Which of the following is not true regarding user authentication? a) One level of authentication is who you know b) An information system may require more than one level of authentication for access c) One level of authentication is what you know d) An example of authentication would be use of a password
117.
Because Internet software is so convenient to use, many companies also create these the following items for internal communications purposes: a) Intranets b) Extranets c) Firewalls d) Domain address
118.
Which of the following is a group collaboration tool that allows anyone with a Web browser and some easy-to-use software to publish a personalized diary online? a) Electronic conferencing b) Blogs c) Firewalls d) e-mail
119.
Which of these is not an acronym normally associated with cloud computing? a) SaaS b) PaaS c) IDEA d) all of these are cloud computing acronyms
120.
Utilizing tax preparation software from a cloud service provider is an example of: a) SaaS b) PaaS c) IDEA d) XML
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121.
All of the following are advantages of cloud computing except: a) The client only pays for resources that it actually uses b) The client gains additional control over its data c) The provider, not the client, handles changes in processing volume d) all of these are advantages of cloud computing
122.
Which of these is not an example of a cloud service provider? a) A company that performs backup services over the Internet b) A company that performs payroll processing over the Internet c) A company that provides janitorial services d) all of these are examples of cloud service providers
123.
Companies such as Backblaze, DropBox, and Mozy are examples of companies that perform this type of cloud service: a) Backup services b) Payroll processing c) Janitorial services d) Tax preparation services e) Web hosting
124.
Which of these is not an Internet search engine? a) Google b) Bing c) Yahoo d) MySpace
125.
Social networking sites such as Twitter or Facebook: a) Have only social uses, not commercial ones b) Have both social and commercial uses c) Have only commercial uses d) May have future commercial uses that have not been realized to date
126.
Which of these is a concern regarding social networks? a) They pose privacy issues b) They are inconvenient for communicating with target audiences c) none of them identify the author of a particular comment d) none of these are social-networking concerns
127.
Within the context of Chapter 2, the term “C2C” means: a. Computer to computer b. Customer to computer c. Correction to correction d. Customer to customer
128.
Which one of these acronyms does not make sense within the context of Chapter 2?
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a. b. c. d.
B2B C2C B2C C2B
129.
Which of these describes large businesses such as Amazon selling goods to individuals? a. B2B b. B2C c. C2C d. C2B
130.
The company AirBnB is an example of: a. B2B b. B2C c. C2C d. C2B Within the context of Chapter 2, the term “C2C” means: Computer to computer Customer to computer Correction to correction Customer to customer
127.
128. Which one of these acronyms does not make sense within the context of Chapter 2? a) B2B b) C2C c) B2C d) C2B
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129.
130.
Which of these describes large businesses such as Amazon selling goods to individuals?? a) B2B b) B2C c) C2C d) C2B The company AirBnB is an example of: a) B2B b) B2C c) C2C d) C2B
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Core Concepts of Accounting Information Systems, 13th 14th Edition, by Simkin, Rose, and NormanWorrell and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are five terms that are not used. 13127. _____ click fraud 13228. _____ DES 13329. _____ EDI 1340. _____ HTML 1351. _____ phishing 1326. _____ proxy server 1373. _____ TCP/IP 1384. _____ VPN 1395. _____ VoIP Formatted: Font: 14 pt
Definitions: A. A secure method of transmitting messages cheaply over existing Internet connenctions B. A digital time-stamping service C. A local area network file server typically devoted to providing Internet service D. A markup language designed specifically for businesses and financial reporting E. A transmission protocol enabling users to send voice-grade messages over the Internet F. A transmission protocol used to send email messages sent over the Internet G. An activity designed to steal a person’s financial identity H. An authenticating document issued by a third party called a certificate authority I. An encryption standard used by the U.S. government J. An extension of HTML that allows users to create their own markup tags K. Inflating the number of uses of a link to an alternate website L. Software typically used for web conferencing M. The exchange of electronic documents such as contracts N. The markup language typically used to display web pages in a web browser
Short Answer Questions 136140.
What does "html" stand for and what is it used for?
14137. Why would buyers prefer to use E-payments when making purchases onver the web? 14238. What is the difference between secret key encryption and public key encryption?
TB 2.16
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Chapter 3 INFORMATION TECHNOLOGY AND AISs
True-False Questions 1.
The top ten technologies discussed in the chapter results from an annual survey conducted by the AICPA.
2.
There are only two components to an AIS—computer hardware and computer software.
3.
A turnaround document is a source document such as a utility bill that is prepared by a company, sent to a customer, and returned for further processing.
4.
The technology commonly used to read turnaround documents is OCR.
5.
OCR is an acronym that stands for “optimal computer resources.”
6.
The acronym ATM is a technology often used by banks that stands for “automated transmission method.”
7.
Data transcription in AISs is labor intensive and is prone to introduce errors into accounting data.
8.
A printer is an example of an input device.
9.
A source document could be electronic, such as booking an airline reservation online.
10.
Equipment that surrounds a computer and assists it with input and output tasks is called “peripheral equipment.”
11.
An example of a source document is a direct electronic payroll transfer into an employee’s checking account.
12.
An example of a source document is an employee time card.
13.
“Data transcription” is the same as “data communications.”
14.
Plastic cards with magnetic strips are an example of bar code input.
15.
A computer mouse is an example of an input device.
16.
Equipment that gathers accounting data at the point at which a sale is made are sometimes called POS devices. TB 3.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
17.
The acronym OCR stands for “optical character recognition.”
18.
A laptop computer is an example of a CPU.
19.
The processing power of a computer is often measured by the power of its CPU.
20.
CPU is an acronym for “computerized peripheral unit.”
21.
A microprocessor is a component of a CPU.
22.
RAM is an acronym for “record access machine.”
23.
RAM is an acronym that stands for “read and manipulate.”
24.
RAM is usually measured in megahertz.
25.
A gigabyte of computer storage is equal to one million bytes.
26.
The two components of a microprocessor are the arithmetic-logic unit and the control unit.
27.
Processor speeds are very important to AIS applications because faster processors automatically lead to greater throughput.
28.
Laser printers and dot-matrix printers produce equal quality output.
29.
In online, real-time systems, hard-copy output may be less desirable than soft-copy video screen display output.
30.
For fast printing, most AIS systems use ink jet printers rather than laser printers.
31.
“Secondary storage” has volatile memory and cannot be used as permanent storage.
32.
Magnetic disks and USB flash disks are examples of secondary storage media.
33.
CD-ROM disks and hard disks have about the same capacities.
34.
Accounting data are typically stored on hard disks in groupings called “computer records.”
35.
Each computer record on a hard disk is composed of sub-elements called “data fields.”
36.
The term “ROM” (as in CD-ROM) means “read-only memory.”
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
37.
The acronym “worm” means that some types of CD-ROMs can be rewritten repeatedly.
38.
A “DVD” disk is encoded by laser.
39.
A DVD typically has a greater storage capacity than a CD-ROM medium.
40.
Blu-ray disks can store more information on them than CD-ROM disks.
41.
The term “data communications” primarily refers to the transfer of data from primary memory to hard disks.
42.
The mechanism for transferring data between components of the CPU is called a TRAIN (Transfer Random Accessed Instructions Now).
43.
The term DSL stands for “digital subscriber network.”
44.
The term “enrollment” refers to the initial reading in a biometric authentication.
45.
In the last 100 years, only about 20 people have been found with identical fingerprints.
46.
The fingerprints of identical twins are also identical.
47.
Biometric identification requires that a new observation (e.g., a fingerprint) must match its stored version perfectly.
48.
An example of a “communications channel” is microwave transmission.
49.
LAN is an acronym for “local area network.”
50.
The central computer of a LAN is called a “file server.”
51.
An advantage of using a LAN is the ability to distribute information among the employees in the same building.
52.
An advantage of using a LAN is the ability to share computer files and equipment.
53.
A computer network spanning a small area such as a single building is a WAN.
54.
A computer network spanning a regional or national area is called a WAN.
55.
Client/Server computing enables businesses to distribute the computer processing of the system between the client computer and the server computer.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
56.
The “application-logic” component of a client/server system refers to where the processing logic of the system takes place.
57.
Wireless data communications refers to the ability to transmit data over fiber optic cables instead of twisted pair wires.
58.
Bluetooth is a wireless data communications standard that allows unlike communications devices to communicate with one another.
59.
An operating system is a set of computer programs that helps a computer run itself.
60.
Programs such as Windows 10 and Unix are examples of application programs.
61.
Python, C++, and Visual Basic are examples of computer operating systems.
62.
Preparing your tax return on software accessed over the Internet for a fee is an example of cloud computing.
63.
A legacy system is an example of an older computer system, typically running on a mainframe computer.
64.
The terms kilobyte, megabyte, terabyte, and gigabyte are correctly ordered by size or capacity.
65.
The term RFID is an acronym for “registered for information or data.”
66.
The term cloud computing refers to services that organizations can access on the Internet.
67.
An advantage of cloud computing is that data are always obscured.
68.
The acronym ERP stands for “electronic or radio patron.”
69.
A “mom-and-pop” convenience store would be an example of a business that would best utilize an ERP system.
Multiple-Choice Questions 70.
All of the following are reasons why information technology is important to accountants except: a) IT supports AIS functions such as communications and record keeping b) Accountants must often evaluate AISs for themselves or for clients c) It is important to keep up; if your competitor buys new computers, you should too d) IT is likely to affect the way accountants work in the future TB 3.4
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
71.
The AICPA regularly conducts a voluntary survey to identify a list of important IT trends or factors called: a) The Top Ten Technologies b) The Top Twenty Technologies c) IT Trends for Tomorrow d) The AICPA IT List
72.
The hardware of a computer system includes the computer itself and other devices that help the computer perform its tasks. These “other devices” are commonly also called: a) Helper equipment b) IT devices c) Peripheral equipment d) Secondary equipment e) Accessory equipment
73.
All of the following are examples of peripheral equipment except: a) Input equipment b) Output equipment c) Communications equipment d) Primary memory equipment e) Secondary storage equipment
74.
Which of these is one of the five interacting components of an AIS? a) Fuzzy logic b) Testing c) Certification d) Processes e) Internet
75.
Time cards, input to airline reservation screens, and input to bank deposit screens best describe which of the following? a) Data transcription b) Point-of-sale devices c) Source documents d) Turnaround documents e) Data transaction documents
76.
MICR is most closely associated with: a) The airline industry b) The data communications industry c) Manufacturing d) The banking industry
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
77.
The UPC code is an example of a(n): a) PDA b) MICR c) Bar code d) Biometric input
78.
Which of the following best describes documents initially prepared by a company, then sent to individuals, and returned to an organization for data processing? a) Mark-sense media b) Source documents c) Turnaround documents d) MICR documents
79.
A POS device is usually attached to a: a) Printer b) Bank check c) Cash register d) Keyboard e) Computer mouse
80.
POS devices, bar code readers, and OCR devices are examples of: a) Input devices b) Output devices c) Processing devices d) Transaction devices
81.
Minicomputers, mainframe computers, supercomputers, and laptops are examples of: a) Input devices b) Output devices c) Central processing units d) Display devices
82.
Printers and video monitors are examples of: a) Output devices b) Input devices c) Processing devices d) Storage devices
83.
Which of computer is the most portable? a) Minicomputer b) Laptop computer c) Mainframe computer d) Supercomputer
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
84.
Which of these secondary storage media are the easiest to transport offsite? a) Hard disk b) Blue-ray disc c) CD-ROM d) Flash drive
85.
Which of these secondary storage media is likely to hold the most data? a) Hard disk b) Blue-ray disc c) CD-ROM d) Flash drive
86.
Which of these is not a secondary storage medium? a) Hard disk b) Flash drive c) Random access memory (RAM) d) CD-ROM
87.
Which of these is not an acronym associated with secondary storage? a) RAM b) WORM c) CD-ROM d) DVD
88.
A 5-inch plastic disk used to store information up to 17 gigabytes describes which of the following? a) CD-ROM b) Flash memory c) Zip disk d) DVD disk
89.
A bar code reader is most likely to be used by which type of system? a) POS system b) MICR system c) Printer/scanner system d) Fax machine system
90.
Which type of company is most likely to use MICR? a) Grocery store b) Bank c) Phone company d) Web site seller
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
91.
The term “mark sense media” is most-closely related to which of the following? a) POS system b) OCR system c) MICR system d) ABA system
92.
Which of the following is the most important reason to use POS systems, OCR systems, or MICR systems? a) To use the latest information technology b) To avoid data transcription c) To create an extra layer of IT infrastructure d) To decrease dependency on foreign oil
93.
Which of these is not a basis for authenticating a person and validating his or her identity? a) Something they have (such as a key) b) Something they know (such as a password) c) Something they are (such a fingerprint) d) Something they can do (such as a walking gait) e) all of these are methods for authenticating users
94.
Which of these is not commonly used for biometric identification? a) Fingerprints b) Breath sampling c) Retinal scans d) Iris scans
95.
The term “enrollment” is most closely associated with which of the following? a) ABA system b) Biometric system c) POS system d) Joystick e) PDA
96.
Which of the following is correct? a) A laptop computer is an example of a minicomputer b) Minicomputers are more powerful than microcomputers c) Minicomputers are examples of PDAs d) A mainframe computer is an example of a supercomputer
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97.
An older computer system, typically using a mainframe, centralized data processing, and COBOL software, is often called a: a) Supercomputer system b) Primary system c) Legacy system d) Traditional system
98.
The reason why processor speeds are not important to AISs is because: a) Most AIS processing is performed on weekends anyway b) There are so many of them in the world today c) Microcomputers are so inexpensive these days d) Most computers are I/O bound
99.
Which of these is another common name for a printed document? a) A foldable document b) A hard-copy document c) A soft-copy document d) A POS document
100.
Which of these is not an example of a type of printer? a) Dot-matrix printer b) Inkjet printer c) Laser printer d) VGA printer
101.
The speed of a printer is commonly measured in: a) ppm b) crt c) lcd d) Pixels
102.
Within the context of the chapter on IT, which of these is not an acronym? a) ppm b) byte c) pixel d) CD-ROM e) all of these are acronyms
103.
When associated with CD-ROMs, the letters “rw” mean: a) Raw b) Rewind c) Rewriteable d) Regular width
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
104.
A USB drive that uses flash memory is an example of a(n): a) Input device b) Output device c) Secondary storage device d) Web device
105.
The term “EDRM” is mostly-closely associated with: a) Records management b) Points-of-sale processing c) Banking d) Electronic data recording and merchandising
106.
Which of the following is not an example of a communication channel? a) Twisted-Pair wires b) Coaxial Cables c) Optical Fibers d) Modem
107.
Data communication speeds are typically measured in: a) ppm b) bps c) Pixels d) LANS e) WANs
108.
A computer network spanning regional, national, or global areas best describes which of the following? a) LAN b) WAN c) ESPN d) DSL e) ISDN
109.
Hardware or software that protects organizational information from external sources best describes which of the following? a) Intranets b) Extranets c) Firewalls d) ISDN servers
110.
Which of the following is a component of a client/server system? a) User component b) Satellite component c) Data-management component d) Output component TB 3.10
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
111.
The user’s view of a client/server system best describes which component of a client/server system? a) Application-logic component b) Data-management component c) Presentation component d) Data-transmission component
112.
This measures how close a biometric reading is to a prerecorded template: a) PDA reading b) Hamming distance c) Match percentage d) Legacy amount
113.
A system that uses inexpensive or diskless microcomputers instead of more expensive models to save money on system acquisition and maintenance costs describes which component of a client/server system? a) Data-management component b) Application-logic component c) Thin-client system d) Presentation component
114.
The special cards that users can store in their cars to gain access to parking lots and breeze through collection booths on toll roads are examples of: a) RFID systems b) NFC systems c) POS systems d) MICR systems
115.
This is an example of an RFID system with a very limited range (less than 8 inches): a) LAN system b) NFC system c) WAN system d) MICR system
116.
Menus, icons, and other graphical elements are examples of which of the following? a) Utility programs b) Personal productivity software c) Virtual storage d) Graphical user interface (GUI)
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117.
Programs that help users perform such tasks as copying files, converting files from one format to another, compressing files, performing system diagnostics, and building disk directories best describes which of the following? a) Antivirus software b) Utility programs c) Application software d) Operating system software
118.
Application software that enables businesses and government agencies to maintain, transmit and manipulate financial data on an organization-wide basis best describes: a) Communication software b) CAD software c) Enterprise resource planning (ERP) software d) Programming software
119.
Software used for preparing payrolls, maintaining accounts receivable files, or controlling inventory best describes: a) Communication software b) Personal productivity software c) Project management software d) Accounting software
120.
All of the following are programming languages except: a) Java b) HTML c) C++ d) COBOL e) ERP
121.
The translation process of converting source code into machine language (object code) is performed by which of the following? a) Utility program b) System software c) ERP (Enterprise Resource Management) software d) Compiler
122.
This is the process of recording the biometric readings of a legitimate user for the first time: a) Authorization b) Biometric recording c) Compiling d) Digital assisting e) Enrollment
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
123.
The term DSL is mostly closely associated with: a) PDAs b) Biometrics c) Compiling computer programs d) Digital data transmission
124.
The term cloud computing refers to: a) Fuzzy computing logic b) Hidden computer data, which are obscured in some way c) Purchasing computing services on the Internet d) Undetected errors in data processing
125.
An advantage of cloud computing is that: a) No one understands it, including hackers and would-be fraudsters b) All data inputs, processing, and outputs are hidden c) The service provider provides for backup d) Smaller businesses or government agencies cannot use it
126.
Which of these is least likely to be an example of a cloud computing service? a) The development of a web site for a retail store b) The remote processing of payroll records for a manufacturer c) The use of computer time on a remote supercomputer by a research firm d) Interviewing candidates for an executive accountant e) all of these are reasonable examples of cloud computing services
127.
Which of these is a drawback of cloud computing? a) Inability to handle periods of peak processing loads b) Users must still invest heavily in computer resources of their own c) Requires users to pay for services, whether they use them or not d) May require users to trust service provider with sensitive data e) none of these are drawbacks of cloud computing
128.
Which of these terms is most closely associated with cloud computing? a) Data processing b) Outsourcing c) Data communications d) Source programming language e) Compiling
129.
Which of these is not an example of application software? a) Operating systems b) Spreadsheet packages c) Accounting packages d) Database management systems e) all of these are examples of application software TB 3.13
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are two terms that are not used. 130. ______ Input-processing-output 131. ______ POS system 132. ______ data transcription 133. ______ MICR coding 134. ______ biometric verification 135. ______ legacy system 136. ______ gigabyte 137. ______ terabyte 138. ______ worm 139. ______ RFID
Definitions: A. Automated data recording for input B. Potential bottleneck for processing accounting data C. An older AIS, typically using a mainframe computer D. 1 billion bytes E. The data processing cycle for processing most accounting transactions F. A type of CD encoding G. 1 trillion bytes H. Threshold hamming distance I. Data communications using radio waves J. Used by banks for automated data input K. 1 thousand bytes L. 1 million bytes
Short Answer Questions 140.
One component of an AIS system is “hardware?” What are the other four?
141.
Why is “processing speed” rarely important to an AIS?
142.
What is the difference between mainframe/host computing and microcomputer client/server computing?
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Chapter 4 ACCOUNTING AND DATA ANALYTICS
True-False Questions 1.
Big data is a catch-all term that term that primarily deals with voluminous amounts of structured data.
2.
When we hear the term big data, typically we think of historical data stored in legacy systems.
3.
The “Four V’s” of big data are velocity, veracity, volume and variety.
4.
One of the challenges the accounting profession faces is that the tools accountants have traditionally used are ill-equipped for analyzing the types and quantity of data present in big data.
5.
Mainstream spreadsheet and database software, such as Excel and Access, are often sufficient for analyzing the variety and volume presented by big data.
6.
Velocity is a term coined to describe the diversity of data that organizations create or collect.
7.
Variety is a term coined to describe the diversity of data that organizations create or collect.
8.
Traditional AISs generate unstructured data as part of processing transactions and business events.
9.
The Association to Advance Collegiate Schools of Business (AACSB-International) requires all separately accredited accounting programs to incorporate data analytics into their accounting curriculum.
10.
Operational sources of data include transaction processing systems, enterprise systems and legacy systems.
11.
Transaction processing systems handle the collection, modification and retrieval of data associated with business events.
12.
Mechanical sources of data include sensors, wearable tech and ingestible e-pills.
13.
Organizations that spend more on legacy systems tend to experience a lower incidence of security breaches.
TB 4.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
14.
Facebook, Pinterest, Instagram and YouTube are all sources of social data.
15.
ETL involves extracting data from source data stores, harmonizing and cleansing the data into a consistent format, and populating a final data store.
16.
It is always best to extract all data from the source data store during ETL.
17.
Because data formats are consistent across all data stores within an organization, the TRANFORM component of ETL requires very little effort.
18.
The majority of data analysis currently performed in businesses today would be classified as predictive analytics.
19.
The majority of data analysis currently performed in businesses today would be classified as descriptive analytics.
20.
Prescriptive analytics are useful in answering What should be done?
21.
OLAP tools are uniquely positioned to analyzing big data because of their ad hoc flexibility and ability to handle very large data sets.
22.
A data mart is larger and more comprehensive than a data warehouse.
Multiple-Choice Questions 23.
One of the defining attributes of big data is volume. Volume is defined as: a) The diversity of data that entities collect or create b) The extent to which data are objective and representative relative to the decision at hand c) The speed at which data are created d) The quantity and scale of data that entities collect or create
24.
One of the defining attributes of big data is velocity. Velocity is defined as: a) The diversity of data that entities collect or create b) The extent to which data are objective and representative relative to the decision at hand c) The speed at which data are created d) The quantity and scale of data that entities collect or create
TB 4.2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
25.
One of the defining attributes of big data is variety. Variety is defined as: a) The diversity of data that entities collect or create b) The extent to which data are objective and representative relative to the decision at hand c) The speed at which data are created d) The quantity and scale of data that entities collect or create
26.
One of the defining attributes of big data is veracity. Veracity is defined as: a) The diversity of data that entities collect or create b) The extent to which data are objective and representative relative to the decision at hand c) The speed at which data are created d) The quantity and scale of data that entities collect or create
27.
Given the tools and training that accountants currently possess, which of the following sources of data presents the most challenges with respect to data manipulation and analysis? a) Operational sources b) Mechanical sources c) Social sources d) All are equally challenging
28.
Transaction processing systems would be categorized as a/n: a) Operational data source b) Mechanical data source c) Social data source d) Financial data source
29.
Considerations when performing an EXTRACT include all of the following except: a) Field format differences between various data stores b) Identifying which data to extract from source data stores c) Load and other negative infrastructure performance considerations d) Determining whether all data or a subset of the data are sufficient
30.
Resolving issues related to harmonizing field formats and data duplication would be addressed in which phase of the ETL process? a) EXTRACT b) TRANSFORM c) LOAD d) These issues would be considerations during all phases of ETL
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
31.
Information systems that collect data regarding the business events of entity and support its day-to-day business requirements originate from the following broad source: a) mechanical b) electronic c) operational d) social
32.
Information systems that collect data from sensors that are worn, embedded in devices, or ingested originate from the following broad source: a) mechanical b) electronic c) operational d) social
33.
Information systems that collect large quantities of data from sources such as Facebook, Twitter and LinkedIn originate from the following broad source: a) mechanical b) electronic c) operational d) social
34.
A division manager is interested in identifying which products are most profitable. She has requested the accounting department to pull together a report that breaks out product sales by profit margin, region and product category. This type of analysis would be characterized as: a) Prescriptive b) Predictive c) Descriptive d) Directive
35.
Blazer Communications, a digital content provider, is experiencing intense competition from a number of new entrants into their marketspace. In an effort to determine which customer are at risk of not renewing their contract, the CFO has asked the comptroller to perform an analysis to identify vulnerable customers based on past payment history, renewal patterns, and the like. This type of analysis would be characterized as: a) Prescriptive b) Predictive c) Descriptive d) Directive
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
36.
A catch-all phrase that refers to aging applications and/or hardware that is outdated is: a) Enterprise Resource Planning systems b) Transaction processing systems c) Bookkeeping systems d) Legacy systems
37.
Your car insurance company asks you to install a tracking device in your vehicle to record your driving habits. Data from this device is used to adjust your premium. The source of this data is: a) Operational b) Transformative c) Social d) Mechanical
38.
Financial statements are ___ in nature. a) Predictive b) Descriptive c) Prescriptive d) Directive
39.
Hadoop is: a) a distributed file system that is optimized for mobile platforms b) An open-source platform for storing large datasets c) An infrastructure that allows organizations to outsources their databases to cloud service providers d) A tool used by public accounting firms to read and interpret text in contracts
40.
Which of the following is not a core function of data analytics software? a) Communicating insights b) Identifying data c) Processing data d) Enabling data collection
41.
Which of the following is not listed as a “Leader” in Gartner’s 2017 Magic Quadrant for Business Intelligence and Analytics Platforms? a) Google b) Microsoft c) Qlik d) Tableau
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42.
An effective data visualization: a) Provides an unfiltered view of the data b) Only provides facts c) Presents analysis results in a meaningful and informative format d) Is historical in nature
43.
Data analyses performed by management accountants typically include all of the following except: a) Cost management and reporting b) Performance management and analysis c) Supporting management’s planning and decision-making d) Compiling financial statements
44.
A Big Four public accounting firm whose proprietary data analytics software utilizes artificial intelligence and natural language processing to read and interpret contracts is: a) Deloitte’s Argus b) EY’s Helix c) PwC’s Halo d) KPMG’s Clara
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56.
______ big data ______ operational data source ______ descriptive analytics ______ ETL ______ Hadoop ______ tax data hub ______ predictive analytics ______ prescriptive analytics ______ variety ______ velocity ______ veracity ______ volume
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Definitions: A. Speed at which data are created B. A type of data analysis that is forward-looking and tells us what might happen C. Quantity and scale of data D. Diversity of data that organizations create or collect E. A type of data analysis that is historical in nature and tells us what happened F. Information systems that collect data regarding the business events of an organization and support its day-to-day business data requirements G. A catch-all term for vast quantities of structured, semi-structured and unstructured data that are often available in real time or near real time H. Extent to which data can be trusted for insights I. A specialized data mart for tax-related data J. The process of extracting data from similar or disparate data sources, harmonizing the data into a common format, and importing the data into a final target data store K. An open-source infrastructure for storing and processing large sets of unstructured, semistructured or structured data L. A type of data analysis that recommends a course of action based on a set of scenarios or inputs
Short Answer Questions 57.
Define descriptive, predictive and prescriptive analytics. Give an example of each.
58.
Define extract, transform and load.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Chapter 5 INTEGRATED ACCOUNTING AND ENTERPRISE SOFTWARE
True-False Questions 1.
“Integrated accounting software” means software that can interface with other corporate software such as CRM software.
2.
“Integrated accounting software” means software that includes the major software modules needed by a business—e.g., accounts payable, accounts receivable, inventory, general ledger, and payroll.
3.
Integrated accounting software is mostly available to midsize and large-sized firms—not small businesses.
4.
An example of an integrated accounting software package are various versions of Quickbooks.
5.
The availability of cloud services is available in accounting packages developed for medium and larger companies, but not available in packages developed for small businesses.
6.
An important advantage of cloud accounting includes the availability of backup services, multi-user access, but not upgrades to newer versions of the software.
7.
The term “scalability” refers to the ability of an organization to scale down an accounting package for a small business.
8.
The term “scalability” refers to the ability of an organization to ramp up processing volume, number of simultaneous users, and similar items as a company and its accounting transactions grows.
9.
Middle range accounting software programs can cost as much as $100,000 when you include the costs of customizing the software for a particular organization.
10.
SAP R/3 is a good example of a middle-range AIS software program.
11.
Internet connectivity is a software feature that is available only in enterprise resource planning software.
12.
Supply chain management concerns an organization’s ability to interface with its customers and suppliers.
13.
Integrated accounting software programs process accounting transactions only.
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14.
Low-end accounting software is unlikely to include features such as sample charts of accounts and flexible reporting.
15.
Two important features of enterprise systems are integration and a centralized database.
16.
MRP I and MRP II systems were forerunners to enterprise information systems.
17.
The acronym ERP stands for “electronic relations protocol.”
18.
The acronym ERP stands for “enterprise resource management.”
19.
The term “extended ERP systems” refers to ERP systems that have been expanded to include “front office” capabilities.
20.
A common source of business intelligence is the data in CRM systems.
21.
There is no such thing as an ERP for a niche market because with ERPs, one size fits all.
22.
The “systems configuration” of an ERP system refers to how the ERP system is deployed.
23.
ERP I systems are mostly back-office systems; ERP II systems are front-office information systems.
24.
PRM stands for Personnel Relationship Management.
25.
The acronym CRM stands for “computerized relationship module.”
26.
The acronym CRM stands for “computer resource management.”
27.
The acronym SCM stands for “supply chain management.”
28.
Business intelligence tools have no relationship with CRM.
29.
The four components of an ERP are its system configuration, a centralized database, application interfaces, and Internet protocols.
30.
One advantage of an ERP’s centralized database is that data are consistent for one user to another, even if they work in different parts of the country.
31.
It is impossible for the prices used by the accounting department to be different from the prices stored on the company’s website.
32.
A “portal” refers to a gateway with which users gain access to an ERP system.
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33.
A dashboard is another name for the control panel of an ERP that allows users to determine, for example, how fast the system operates.
34.
A dashboard for an ERP displays current information about important operations of a companyfor example, sales for a given store.
35.
Mashups are web pages that can combine the data from two or more sources.
36.
A characteristic of mashups when used with ERPs is their ability to combine the internal data of an organization with external data such as interest rates.
37.
The best-of-breed approach to software selection is never a good idea.
38.
Extended application interfaces are middleware that allow different software applications to share data and information.
39.
An e-business portal is a gateway to outside web sites and services.
40.
The acronym BPR stands for “business process reengineering.”
41.
Typically, BPR requires change management.
42.
A business implementing an enterprise system should always conduct business process reengineering before putting in the new system.
43.
It is not possible to implement an enterprise information system in less than one year.
44.
Software and consultant selection precedes formulation of the project team in an enterprise system implementation.
45.
Change management activities are nice to include in an enterprise system implementation, but they aren't necessary.
46.
The benefits of an enterprise system may include reduced inventory investment and improved cash management.
47.
It is relatively easy to determine the acquisition costs of an ERP system.
48.
Today’s ERP systems provide integration among all of an organization’s major business processes.
49.
Extended enterprise systems bring customers, suppliers, and other business partners together.
50.
A key success factor in BPR is the support of top management.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
51.
The term “spend management” refers to the ongoing process of limiting expenses to minimum levels.
52.
An important advantage of ERP systems is that they are close to failure-proof.
53.
An example of an intangible benefit of ERP systems is increased customer satisfaction.
54.
An important drawback of an ERP system is that a failure can be catastrophic.
55.
An advantage of an ERP system is that, once implemented, maintenance costs are negligible.
56.
It is rarely external forces that cause an organization to need new AIS software.
57.
One possible reason to acquire a new accounting system is “pressure from competitors.”
58.
Because most accounting software is standardized and straightforward, most packages can be purchased “off the shelf” from shopping mall sellers.
59.
A rule of thumb is that prewritten accounting packages can handle about 80% of a company’s needs.
60.
Today’s ERP systems are so good, and so straightforward, that most companies do not need the help of an expert when shopping for one.
61.
The approach to purchasing accounting software is the same, regardless of software complexity or price range.
62.
The Internet can be a great tool in learning about specialized accounting software options.
63.
A Value-Added Reseller can help install and customize software, along with selling it.
64.
According to the AIS-at-Work article, Mar-Bal is a private company that makes plastic products.
65.
In the “AIS at Work” case, Mar-Bal installed an integrated accounting package rather than an ERP system.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Multiple-Choice Questions 66.
Which of the following is considered an integrated software system? a) Material requirements planning systems (MRP I) b) Manufacturing resource planning systems (MRP II) c) Enterprise resource planning systems (ERP) d) all of the above
67.
Integrated accounting software programs generally include all of the following, except: a) Graphic reporting capabilities b) Internet connectivity c) One standardized chart of accounts d) The ability to handle multiple companies
68.
The word “integrated” in the term “integrated accounting software” means: a) The software is color blind b) The software can interface with non-accounting software such as spreadsheets. c) The software combines several accounting functions in one package. d) all of these are terms of integrated accounting software
69.
A trend in low- and mid-level accounting software is: a) Most sellers now come from China b) Decreasing prices for packages c) Consolidation of vendors d) The availability of fewer product lines, per vendor e) Their disappearance, because ERP systems are replacing them
70.
One problem with accounting packages for small businesses is that: a) There are so few of them b) The absence of cloud computing capabilities in most of them c) Their inability to interface with internet shopping cart applications d) The cost of a package is just the beginning of “total costs”
71.
Within the context of accounting packages for small businesses, the term “scalability” refers to: a) The weight of the package b) The ability of the system to grow with a business c) The ability to measure the benefits of the system in monetary terms d) none of these
72.
Which of the following software packages is not an example of a middle-range AIS? a) Great Plains Dynamics b) MAS 90 c) SAP d) Solomon
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73.
Another term for an accounting system accessed via the Internet is: a) Internet portal b) Online access c) Hosted solution d) BRP system
74.
The Cougar Mountain Fund Suite is accounting software designed for: a) Small businesses with less than $1 million in revenues b) Manufacturing concerns with between $1 million and $5 million in revenues c) Retail furniture stores d) Charities
75.
A software package at the entry-level, such as Peachtree: a) Is likely to cost a few thousand dollars to implement fully b) Is scalable c) Is unlikely to incorporate Internet connectivity d) Is suitable for many businesses with less than $5 million in revenues e) Will include sample, customizable Charts of Accounts
76.
Which of the following is not true regarding selecting a new AIS? a) It is usually cheaper to build a new AIS software program than to purchase it b) It is much easier today to learn about software options because of the Internet c) It is always a good idea to get expert help in choosing an ERP system d) Middle-range and high-end AIS software are not available in shopping malls
77.
The acronym ERP stands for: a) Electronic relative payment b) Electronic relational planning c) Enterprise resource planning d) Planning for enterprise resources
78.
Enterprise-wide AISs: a) Almost never pay for themselves b) Do not include many more features than middle-range accounting software packages c) Are seldom used by multinational organizations d) Integrate an organization’s financial functions with its other functional areas
79.
Which of the following is not an important feature of an enterprise system? a) Multiple databases b) Centralized database c) Functional integration d) Back-office functionality
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
80.
Extended ERP systems are ones that: a) Can process higher volumes of transactions b) Customers can access and use as though they were employees c) Can perform such front-office tasks as working with customers d) Were due for retirement, but whose life has been extended
81.
How are ERP systems and databases related? a) ERP systems are configured around a central database b) ERP systems eliminate the need for databases c) ERP systems and databases are not related d) ERP systems employ small, simple databases
82.
An example of business intelligence (BI) is to help managers: a) Identify the slowest-paying vendors b) Identify which of their customers are most profitable c) Avoid taxes d) Spy on their competitors
83.
Which of the following is not true regarding customer relationship management (CRM) systems? a) CRM is actually a set of multiple applications b) CRM can help managers better understand customer purchasing behavior c) CRM requires the collection of customer demographic data d) Business intelligence tools can enhance CRM
84.
Components of an ERP's architecture typically include: a) A centralized database and application interfaces b) Multiple databases c) A centralized database running on a mainframe computer d) A UNIX operating system
85.
A hosted (cloud) ERP system is an example of which component of an ERP? a) Internet portal b) Bolt-on component c) Configuration d) Database
86.
The database of an ERP system is best described as: a) Limited b) Bolt-on c) Centralized d) Distributed
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87.
Which of the following business processes or functions is unlikely to be part of an enterprise system? a) Accounting/financing b) Human resources c) Manufacturing d) Sales or distribution e) all of the above are likely to be included in an enterprise system
88.
Business process reengineering, as it relates to an enterprise system implementation: a) Always precedes the implementation b) May precede or be concurrent with implementation depending on the need to conform with industry best practices c) May precede or succeed an implementation depending on the need to conform with industry best practices d) Always succeeds the implementation
89.
A web page that uses graphs and other tools to visually display data from both an ERP system and from external sources is also called a: a) Portal b) Mashup c) Mixup d) Frameup
90.
The output from a company’s ERP system displays graphs and charts depicting sales by different regions of the country is often called a: a) Figure b) Portal c) Graphic design d) Dashboard
91.
ERPs often require BPR because: a) Business processes must change to accommodate the system b) Employees cannot breathe on their own c) They are so expensive d) They require a centralized database
92.
Training and change management activities: a) Take place just before implementation b) Are most effective when conducted throughout design, implementation, and postimplementation follow-up c) Include technical training only d) Do not include the design of user interfaces
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93.
All of the following are benefits of ERP systems except: a) Reduced employee turnover b) Corporate-wide integration of data c) Reductions in data redundancy d) Better coordination of the different functional areas of a business
94.
Which of these is not a risk or cost normally associated with an ERP system? a) Costs of internal staff time and effort b) Increased training of staff and users c) Reduced IT costs d) Potential for massive failure
95.
Which of these is the best reason why a company should not implement an ERP system? a) The system you want is expensive b) The system you want is likely to be difficult to implement c) The system you want requires you to reengineer some business processes d) The system you want has expected costs that exceed its expected benefits
96.
Which of the following is true regarding ERP costs? a) Enterprise systems tend to be less costly than integrated accounting software b) Enterprise systems are always less costly than best of breed software solutions c) Costs associated with reassigned employees have nothing to do with the true cost of an enterprise system d) There may be many costs that continue after systems implementation
97.
When we talk about a Value-Added Reseller within the context of accounting and enterprise software, we are referring to an individual or business that: a) Usually assists small businesses to select entry-level, small business software b) Is a qualified installer of mid-level or high-end accounting software c) Makes special arrangements with software vendors and is able to train customers d) both (b) and (c) e) none of the above
98.
When we talk about “front-office” capabilities of today’s ERP systems, we are referring to which of the following? a) The payroll functions b) The human resource functions c) The administrative functions d) none of the above
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99.
Which of these is most likely to be added to an ERP so that it becomes an extended enterprise information system? a) Supply chain management module b) Accounting module c) Human relations module d) Inventory control module e) all of the above
100.
Successful implementation of ERP systems typically involves: a) Substantial planning b) Review of business processes c) Support from management d) all of the above
101.
Which of the following is not a sign that indicates the need for a new AIS? a) A new vendor has just announced an AIS package with several features your system does not have b) A slowdown in inventory turnover c) The owner is concerned about cash flows and profitability d) It takes longer to collect on receivables e) It takes longer to close the books
102.
Which of these is likely to be the best source for acquiring accounting software for a medium-sized company? a) Shopping mall store b) Value-added reseller (VAR) c) ERP consultant d) BPR consultant
103.
On which of these should a business normally expend the most time and effort? a) Shopping for a spreadsheet program b) Shopping for an integrated accounting package c) Shopping for a bolt-on d) Shopping for an ERP system
104.
The 80-20 rule, when applied to accounting software states that: a) On average, a business can satisfy about 80 percent of its accounting needs with packaged software b) On average, a business can satisfy about 20 percent of its accounting needs with packages software c) On average, about 80 percent of employees hate ERP systems d) On average, about 80 percent of customers hate ERP systems
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are four terms that are not used. 105. ______ scalable 106. ______ mashups 107. ______ hosted solution 108. ______ supply chain management (SCM) software 109. ______ bolt-ons 110. ______ ERP 111. ______ business application suites 112. ______ portals 113. ______ value-added reseller (VAR) 114. ______ business intelligence (BI) tools 115. ______ integrated accounting software programs 116. _______back-office 117. ______ PRM software 118. ______ enterprise application integration (EAI)
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Definitions: A. Technology that allows extended ERP systems to interface with individuals inside and
outside an organization B. Describes a situation where an organization chooses to use cloud computing services
rather than buy software outright C. Allows companies with legacy applications and databases to integrate and continue to use
those systems D. Dashboard that collects data from several sources – both inside and outside the firm E. Software that interfaces with suppliers and customers F. Refers to internal functions and processing within an organization G. A key success factor for business process reengineering H. Software to gather, maintain, and use data to provide better customer service and customer loyalty I. Two important features of this type of technology are its integration and a central database J. Process to improve overall customer value and to increase the profitability of the products or services that the organization offers K. This is the concept that an organization’s software can grow as the business grows L. When companies have production or work completed in countries like India, China, Canada, Mexico, or Malaysia M. Another term for enterprise resource planning software N. Software that processes all types of accounting transactions O. Software that helps managers get the most information from their CRM P. Software that enhances the working relationship of a company with its strategic partners Q. When a company has an ERP and they choose to add a module from another vendor R. A qualified software installer
Short Answer Questions 119.
How is “integrated accounting software” integrated?
120.
Are all integrated accounting software packages alike? If not, how do they differ?
121.
What “cloud processing services” do vendors provide? How are these useful to accounting software users?
122.
What can an ERP system do that middle-market accounting software cannot.
123.
Are ERP systems too big to fail? Why or why not?
124.
Describe some consequences to a company that makes a poor decision when selecting an ERP system.
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Chapter 6 INTRODUCTION TO INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT Formatted: Tab stops: 3.61", Left
True-False Questions 1.
Controls that specifically encourage operating efficiency are often called preventive controls.
2.
Controls that attempt to safeguard asset resources are often called detective controlsWithin COSO’s 2017 ERM Report, Risk Governance and Culture represents the organization’s tone toward the design, implementation, execution and oversight of risk management activities.
3.
For a specific internal control to be effective, both the preventive and the detective aspect of the control must exist and be interrelated.
4.
Preventive and corrective controls are established solely to discourage fraud and embezzlement by an organization's employeesRisk portfolio represents the amount and type of risk that an organization is willing to accept in pursuit of its goals and objectives.
5.
A good internal control system will contribute towards detecting accidental errors made by employees.
6.
An organization should always attempt to implement ideal controls into its systemRisk response represents a series of actions taken by management to implement a desired risk management strategy.
7.
It is normally considered good organizational design to establish the internal audit function within the accounting subsystemThe 2004 COSO ERM Report differs from the 2017 COSO ERM Report, in that the former adopted a components- and principles-based approach to risk management.
8.
The introduction of a computer into an organization's data processing system will normally eliminate problems associated with following the organization's audit trailAccording to the 2017 COSO ERM Report, management is responsible for exercising oversight over strategy and risk management activities.
9.
A good audit trail is an important element within a company's internal control system.
10.
An audit trail problem associated with computerized data processing is that certain financial data processed by the computer may never be seen by the company's management.
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11.
Operational audits are performed by a company’s internal audit staffThe five components of internal control articulated in the 2013 COSO Report include Control Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring Activities.
12.
The separation of duties control would not be violated if a company's cashier was also responsible for recording cash transactions.
13.
The separation of duties control does not completely eliminate completely the possibility of embezzlement by employees.
14.
The personnel subsystem has the important function of matching job qualifications to people qualifications.
15.
The COSO report failed to define internal controlCOSO did not change its definition of enterprise risk management when it released the 2017 COSO ERM Report.
16.
An effective approach for maintaining a good audit trail for cash disbursements is to utilize a voucher system with coins and currency issued for each disbursement.
17.
COBIT 5 extensively examined the internal control areadeals exclusively with internal control within an IT context.
18.
Risk assessment is an important component of an internal control system.
19.
A company’s control environment is unimportant when developing an internal control system.
20.
Timely performance reports contribute towards achieving the monitoring component of an internal control system.
21.
Control activities and monitoring are one and the same.
22.
The Basle Committee published a framework for the evaluation of internal control systems in banking organizationsCOBIT 5’s principles guide effective management and governance of IT within the enterprise..
Multiple-Choice Questions 23.
Three objectives of a company's internal control system should be safeguarding assets, checking the accuracy and reliability of accounting data, and promoting operational efficiency. A fourth objective of a company's internal control system should be: a) Preventing embezzlement of assets b) Encouraging adherence to prescribed managerial policies c) Avoiding the payment of overtime to company employees TB 6.2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
d)
Revising standards for production costs on a weekly basis
24.
The control environment is a component of a company's internal control system that: a) Influences the control awareness of a company's employees b) Stresses the development of control procedures in a company c) Directly affects the accuracy and reliability of a company’s accounting data d) Can be ignored when establishing a company's internal control system
25.
The preventative controls within a company’s internal control system: a) Form the foundation for all of a company's other internal control components b) Focus on management’s philosophy and operating style c) Ignore the risk factor associated with a company's control procedures d) Relate to safeguarding a company's assets and checking the accuracy and reliability of the company's accounting data
26.
A general rule that should be followed when developing control procedures for a company's assets is: a) The cost of the control procedure will likely exceed the procedure's benefit b) The procedure should not be designed and implemented unless an asset's cost exceeds $5,000 c) The more liquid an asset is, the greater the risk of its misappropriation d) The procedure should not be designed and implemented in situations where a risk assessment has been previously performed
27.
Assume that a company designs and implements a control procedure whereby the accountant that is responsible for recording cash receipts transactions does not have access to the cash itself. This control procedure is an example of a: a) Detective control b) Preventive control c) Corrective control d) Feedback control
28.
Control procedures that provide feedback to management regarding the achievement of operational efficiency and adherence to prescribed managerial policies are called: a) Corrective controls b) Preventive controls c) Policy controls d) Detective controls
29.
Those control procedures that are designed to remedy problems discovered through detective controls are called: a) Corrective controls b) Preventive controls c) Before-the-fact controls d) Management-by-exception controls
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30.
The maintenance of backup copies of a company's important transaction and master files is an example of a: a) Preventive control procedure b) Detective control procedure c) Corrective control procedure d) Management-by-exception control procedure
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31.
A control procedure that may be established within the sales department of a company's marketing subsystem is the addition of the sales invoice amounts before these invoices are sent to the information processing subsystem. This control total of invoice amounts is called a: a) Checksum b) Random total check c) Redundant control amount d) Batch control total
32.
Which of the following statements is true regarding preventive control procedures and detective control procedures? a) They should be interrelated b) If preventive controls exist, detective controls are unnecessary c) If detective controls exist, preventive controls are unnecessary d) Preventive controls should be cost effective, but detective controls do not need to be cost effective
33.
Which of the following statements is true? a) The COSO report2013 COSO Report failed to define internal control b) The COSO report2013 COSO Report emphasized that an internal control system is a tool of management c) SAS 78 rejected the definition of internal control provided in the COSO report d) COBIT 5 concluded that a company's management is not responsible for establishing and monitoring a company's internal control system
34.
Regarding the cost-benefit concept, which of the following statements is true? a) Every control procedure that offers benefits to a company should be implemented into the company's system b) An optimal internal control package is developed for a company's system by implementing a standardized package of control procedures c) A control procedure is considered cost effective if it can be determined that the cost of operating the procedure will be cheaper in the current period compared to the previous period d) A control procedure is considered cost effective when its anticipated benefits exceed its anticipated costs
35.
An ideal control isWith respect to COBIT 5, which of the following is true : a) A control procedure that reduces to practically zero the risk of an error or an irregularity taking place and not being detectedCOBIT 5 is designed to be the authoritative governance, risk management and control framework within an organization, and is incompatible with other frameworks b) A control procedure that is anticipated to have the lowest possible cost in relation to its benefitsCOBIT 5 treats governance and risk management as one and the same c) A control procedure that should always be implemented into a company's system due to the efficiency and effectiveness that will result from its TB 6.5
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
d)
implementationCOBIT 5 is concerned primarily with internal, IT-focused stakeholders A control procedure that is always cost effectiveCOBIT 5 articulates a series of enablers that facilitate the achievement of organizational objectives.
36.
Due to data errors occurring from time to time in processing the Albert Company's payroll, the company's management is considering the addition of a data validation control procedure that is projected to reduce the risk of these data errors from 13% to 2%. The cost of the payroll reprocessing is estimated to be $11,000. If the data validation control procedure is implemented, the cost of this procedure is expected to be $700 per pay period (employees are paid biweekly). Based on the above data, which of the following statements is true? a) The data validation control procedure should be implemented because its net estimated benefit is $1,210 b) The data validation control procedure should be implemented because its net estimated benefit is $510 c) The data validation control procedure should not be implemented because the $700 expected cost per pay period exceeds the procedure's expected benefit d) The data validation control procedure should not be implemented because its net estimated benefit is a negative $1,210, thereby causing the control procedure to fail in terms of being cost effective
37.
Which of the following frameworks is widely used by managers to organize and evaluate their corporate governance structureWhich of the following components from the 2017 COSO ERM Report would provide guidance on risk assessment and risk response activities? a) COBITRisk Governance and Culture b) COSORisk, Strategy, and Objective-Setting c) NIST Risk in Execution d) SAS Risk Information, Communication and Reporting No. 94
38.
Which of the following fundamental concepts is stressed by the 2013 COSO Rreport? a) Internal control is not affected by people b) Internal control is geared to the achievement of a company's objectives in the financial reporting area only c) Internal control is designed to detect all errors and irregularities that occur within a company's system d) Internal control is a process
39.
A periodic review by internal auditors that stresses the evaluation of the efficiency and effectiveness of a department's procedures is called a (an):____ is defined as “the culture, capabilities, and practices, integrated with strategy and execution, that organizations rely on to manage risk in creating, preserving and realizing value.” a) Operational auditControl environment b) Financial auditRisk culture c) Management-by-exception auditInternal control TB 6.6
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
d)
Audit by exceptionEnterprise risk management
TB 6.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
40.
Regarding the internal audit function, which of the following statements is true?With respect to risk response strategies, which of the following would be a “risk avoidance” approach? a) XYZ company enters the market as a provider of car insurance to high credit risk clients; however, they diversify their portfolio by targeting 40% of their marketing efforts to traditional “safe credit” customers. b) LGW Communications employs a series of manual and automated controls to manage inventory shrinkage (inventory going missing due to damage or theft) in an effort to keep inventory costs in line with industry standards. c) JLW Industries is a holding company with a division that specializes in high-risk offshore oil drilling. Given the recent Gulf oil spill and vicious backlash from consumers and politicians, JLW decides to divest itself of the oil drilling division. a) Since many internal auditors have accounting backgrounds, the internal audit function should ideally be included within a company's accounting subsystem b) It is not proper for internal auditors to perform a fraud investigation within any part of their company's system c) XYZ company is concerned that they do not have the capability to bring a new product to market, so they enter into a joint venture with ABC company; XYZ will handle design and marketing of the new product, while ABC will handle manufacturing and logistics.Because of the independence of external auditors, they should never accept previous work of evaluating controls performed by a company's internal auditors d) Within a company's system, it is preferable to establish the internal audit function as a separate subsystem
41.
Regarding a company's audit trail, which of the following statements is true? a) Because of the complexities involved in establishing an audit trail, a good audit trail normally makes it more difficult for an individual to follow the flow of a company's business transactions through the company's information system b) In actuality, the audit trail established within a company's information system is an unimportant element of the company's internal control system c) When a company's audit trail becomes more difficult to follow, this causes an increase in the risk of errors or irregularities taking place in the processing of accounting transactions and not being detected d) A company's policies and procedures manual should not be part of its audit trail since confidential information is included within this manual
42.
An approach used by many companies to reduce the risk of loss caused by the theft of assets by employees is to: a) Utilize polygraphs b) Acquire arbitrage loss protection c) Acquire fidelity bond coverage d) Institute punitive management
TB 6.8
Formatted: Font: Times New Roman, 12 pt
Formatted
Formatted: Font: Times New Roman, 12 pt
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
43.
If the same employee is responsible for authorizing a business transaction and recording the transaction in the accounting records, this indicates a weakness in which element of a company's internal control system? a) A good audit trail b) Separation of duties c) Internal review of controls d) Competent employees
TB 6.9
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
44.
Which of the following control procedures provides physical protection for a company's cash asset? a) Majority of authorized cash disbursements made by check b) Daily cash receipts deposited intact at bank c) Voucher system for cash disbursements d) all of the above
45.
Which
Formatted: Indent: Left: 0.5", No bullets or numbering Formatted: Tab stops: Not at 0.06" Formatted: Outline numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 23 + Alignment: Left + Aligned at: 0" + Tab after: 0.5" + Indent at: 0.5"
TB 6.10
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
46.45. Which of the following statements is true regarding timely performance reports? a) In many companies, these reports are the major means of providing information to management concerning the actual operations of the companies’ internal control systems b) These reports should only include monetary data c) Since these reports fail to provide feedback to management on the operations of previously implemented internal control procedures, other techniques are needed to provide this feedback to managers d) The complexity that a computer introduces into a company's information system will typically prevent the preparation of timely performance reports for the company's management 47.46. A responsibility that should be assigned to a specific employee and not shared jointly is that of: a) Access to the company's safe deposit box b) Placing orders and maintaining relationships with a prime supplier c) Attempting to collect a particular delinquent account d) Custodianship of the petty cash fund 48.47. For control purposes, the quantities of materials ordered may be omitted from the copy of the purchase order which is: a) Forwarded to the accounting department b) Retained in the purchasing department's files c) Returned to the requisitioner d) Forwarded to the receiving department 49.48. Freije Refrigeration Company has an inventory of raw materials and parts consisting of thousands of different items which are of small dollar value individually but significant in total. A fundamental control requirement of Freije's inventory system is that: a) Perpetual inventory records be maintained for all inventory items b) The taking of physical inventories be conducted on a cycle basis rather than at year-end c) The storekeeping function not be combined with the production and inventory record-keeping functions d) Material requisitions be approved by an officer of the company
TB 6.11
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
50.49. The sales department bookkeeper has been crediting house-account sales to her brotherin-law, an outside salesman. Commissions are paid on outside sales but not on houseaccount sales. This might have been prevented by requiring that: a) Sales order forms be prenumbered and accounted for by the sales department bookkeeper b) Sales commission statements be supported by sales order forms and approved by the sales manager c) Aggregate sales entries be prepared by the general accounting department d) Disbursement vouchers for sales commissions be reviewed by the internal audit department and checked to sales commission statements In each one of the following four questions (questions 50-53), you are given a well-recognized procedure of internal control. You are to identify the irregularity that will be discovered or prevented by each procedure. 51.50. The voucher system requires that invoices be compared with receiving reports and express bills before a voucher is prepared and approved for payment. a) Unrecorded checks appear in the bank statement b) The treasurer takes funds by preparing a fictitious voucher charging "Miscellaneous General Expenses" c) An employee in the purchasing department sends through fictitious invoices and receives payment d) A cash shortage is covered by underfooting outstanding checks on the bank reconciliation e) A cash shortage is covered by omitting some of the outstanding checks from the bank reconciliation 52.51. Both cash and credit customers are educated to expect a sales ticket. Tickets are serially numbered. All numbers are accounted for daily. a) Customers complain that their monthly bills contain items that have been paid b) Some customers have the correct change for the merchandise purchased; they pay and do not wait for a sales ticket c) Customers complain that they are billed for goods they did not purchase d) Customers complain that goods ordered are not received e) Salesclerks destroy duplicate sales tickets for the amount of cash stolen
TB 6.12
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
53.52. At a movie-theater box office, all tickets are prenumbered. At the end of each day, the beginning ticket number is subtracted from the ending number to give the number of tickets sold. Cash is counted and compared with the number of tickets sold. a) The box office gives too much change b) The ticket taker admits his friends without a ticket c) The manager gives theater passes for personal expenses, which is against company policy d) A test check of customers entering the theater does not reconcile with ticket sales e) Tickets from a previous day are discovered in the ticket taker's stub box despite the fact that tickets are stamped "Good on Date of Purchase Only" 54.53. The duties of cashier and accounts-receivable bookkeeper should be separated. a) There are two cashiers. At the end of a certain day, there is a sizable cash shortage; each cashier blames the other and it is impossible to fix responsibility b) A cash shortage is covered by overfooting (overadding) cash in transit on the bank reconciliation c) A cash shortage is covered by charging it to "Miscellaneous General Expenses" d) Customers who paid their accounts in cash complain that they still receive statements of balances due e) The accounts-receivable bookkeeper charges off the accounts of friends to "Allowance for Uncollectible Accounts" 55.54. The 2013 COSO Rreport stresses that: a) Internal control is a process b) An internal control system, if properly designed, can become a substitute for management c) People only at high levels of an organization are an important part of an internal control system d) An internal control system should consist of three interrelated components: the control environment, risk assessment, and control activities
TB 6.13
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Formatted: Normal, Tab stops: Not at -1"
55.
With respect to risk response strategies, which of the following would be a “risk sharing” approach? a) XYZ company enters the market as a provider of car insurance to high credit risk clients; however, they diversify their portfolio by targeting 40% of their marketing efforts to traditional “safe credit” customers. b) LGW Communications employs a series of manual and automated controls to manage inventory shrinkage (inventory going missing due to damage or theft) in an effort to keep inventory costs in line with industry standards. c) JLW Industries is a holding company with a division that specializes in high-risk offshore oil drilling. Given the recent Gulf oil spill and vicious backlash from consumers and politicians, JLW decides to divest itself of the oil drilling division. d) XYZ company is concerned that they do not have the capability to bring a new product to market, so they enter into a joint venture with ABC company; XYZ will handle design and marketing of the new product, while ABC will handle manufacturing and logistics.
Formatted
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56. Regarding COBIT, which of the statements is true? a) COBIT means Cost Objectives for Information and Related Technology b) COBIT rejects the definition of internal control from the COSO report c) COBIT states that a company’s management should play a minor role in establishing an internal control system d) COBIT classifies people as one of the primary resources managed by various IT processes
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57.56. The component of an internal control system that concerns itself with the way a company’s management assigns authority and responsibility is called: a) Monitoring b) Control environment c) Risk assessment d) Information 58.57. _________________ describes the policies, plans, and procedures implemented by a firm to protect its assets. a) Internal control b) SAS No. 94 c) SOX, Section 404 d) Enterprise risk management 58.
The 1992 2013 COSO rReport identifies five components for an effective internal control system. These are: a) Control environment, risk assessment, control activities, information and communication, and monitoring b) Control environment, control procedures, control activities, communication, and TB 6.14
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
c) d)
monitoring Control procedures, control activities, information, communication, and monitoring Control procedures, risk assessment, control activities, information and communication, and monitoring
TB 6.15
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
59.
The 1992 2013 COSO Rreport identifies five components for an effective internal control system. Which of those five establishes the tone of a company and influences the control awareness of the company’s employees? a) Control procedures b) Control environment c) Control activities d) Information and communication
60.
The 1992 2013 COSO Rreport identifies five components for an effective internal control system. Which of those five includes the methods used to record, process, summarize, and report a company’s transactions? a) Control procedures b) Control environment c) Control activities d) Information and communication
61.
The Enterprise Risk Management (ERM) framework in the 2004 COSO Report is was based on the 1992 COSO report and adds three additional components for an effective internal control system. Which of the following is not one of those three? a) Objective setting b) Event identification c) Control assessment d) Risk response
TB 6.16
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
62.
Suppose a company established training programs that teach employees to perform their job functions more efficiently and effectively. This is an example of which type of control? a) Detective b) Preventive c) Corrective d) none of the above
63.
Many organizations have an internal audit function that makes periodic reviews of each department within the organization. The focus of these reviews is to: a) Conduct an investigation of each department to be sure fraud is not taking place b) Evaluate the efficiency and effectiveness of the department c) Evaluate the performance of the manager of the department d) Report to the organization’s top managers and board of directors
TB 6.17
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
64.
Which of the following factors best describes the “control environment” of a firm? a) The integrity, ethical values, and competence of employees b) Management’s philosophy and operating style c) The way management assigns authority and responsibility d) The direction and attention provided by the board of directors e) all of the above
65.
The purpose of ________________ is to identify organizational risks, analyze their potential in terms of costs and likelihood of occurrence, and install those controls whose projected benefits outweigh their costs. a) Internal controls b) A control environment c) Risk assessment d) Management consultants
66.
Which of the following personnel policies would be the most useful in mitigating fraud or embezzlement? a) Fidelity bonds for key employees b) Careful hiring procedures for key employees c) Having a Code of Conduct d) Required vacations for key employees
TB 6.18
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
67.
When assessing a company’s internal control structure policies and procedures, the primary consideration is whether they a) Prevent management override b) Relate to the control environment c) Reflect management’s philosophy and operating style d) Affect the financial statement assertions
TB 6.19
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
68.
Which one of the following functions performed in an organization is a violation of internal control? a) A mail clerk opening the mail compares the check received with the source document accompanying the payment, noting the amount paid, then forwards the checks daily (along with a listing of the cash receipts) to the Cashier for deposit b) A mail clerk opening the mail compares the check received with the source document accompanying the payment, noting the amount paid, then forwards the source documents that accompany the payments (along with a listing of the cash receipts) to Accounts Receivable, on a daily basis, for posting to the subsidiary ledger c) At the end of the week the Cashier prepares a deposit slip for all of the cash receipts received during the week d) The General Ledger clerk compares the summary journal entry, received from the Cashier for cash receipts applicable to outstanding accounts, with the batch total for posting to the Subsidiary Ledger by the Accounts Receivable clerk
69.
Which one of the following methods for the distribution of employees’ paychecks would provide the best internal control for the organization? a) Delivery of the paychecks to each department supervisor, who in turn would distribute paychecks directly to the employees in his/her department b) Direct deposit in each employee’s personal bank account c) Distribution of paychecks directly to each employee by a representative of the Human Resource department d) Distribution of paychecks directly to each employee by the payroll manager
70.
Which one of the following would be most effective in deterring the commission of fraud? a) Policies of strong internal control, segregation of duties, and requiring employees to take vacations b) Policies of strong internal control and punishments for unethical behavior c) Employee training, segregation of duties, and punishment for unethical behavior d) Hiring ethical employees, employee training, and segregation of duties
TB 6.20
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
71.
Which one of the following types of audits would be most likely to focus on objectives related to the efficient use of resources? a) Compliance audit b) Information systems audit c) Independent audit d) Operational audit
TB 6.21
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
72.
When management of the sales department has the opportunity to override the system of internal controls of the accounting department, a weakness exists in a) Risk management b) Information and communication c) Monitoring d) The control environment
73.
Segregation of duties is a fundamental concept in an effective system of internal control. Nevertheless, the internal auditor must be aware that this safeguard can be compromised through a) Lack of training of employees b) Collusion among employees c) Irregular employee reviews d) Absence of internal auditing
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are two terms that are not used. 74. ______ ideal control 75. ______ scenario planning 76. ______ COBIT 77. ______ detective controls 78. ______ SOX, Section 404 79. ______ control activities 80. ______ fidelity bond 81. ______ risk matrix 82. ______ preventive controls 83. ______ Val IT 84. ______ control environment 85. ______ separation of duties 86. ______ corporate governance 87. ______ internal control 88. ______ corrective controls
TB 6.22
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Formatted: Font: 14 pt
Definitions: A. Managing an organization in a fair, transparent and accountable manner to protect the interests of all the stakeholder groups B. A framework for IT governance C. The purpose of this control is to reduce the risk of loss caused by employee theft D. The policies, plans, and procedures management uses to protect company assets E. Software that interfaces with suppliers and customers F. A control procedure that reduces to practically zero the risk of an undetected error or irregularity G. A process whereby management identifies possible events that represent a problem to the firm and then identifies appropriate responses to those problems H. Establishes the tone of a company and influences the control awareness of the company’s employees I. An example of this control is to assign these three functions to different employees: authorizing transactions, recording transactions, and maintaining custody of assets J. An example of this type of control is a firewall to prevent unauthorized access to the company’s network K. An example of this type of control is a change to the company’s procedures for creating backup copies of important business files L. When companies have production or work completed in countries like India, China, Canada, Mexico, or Malaysia M. Examples of this type of control are: log monitoring and review, system audits, file integrity checkers, and motion detection N. The purpose of this procedure is to classify each potential risk by mitigation cost and also by likelihood of occurrence O. The purpose of this framework is to achieve effective governance of IT P. Reaffirms that management is responsible for an adequate internal control structure Q. Includes a combination of manual and automated controls – such as approvals, authorizations, verifications, reconciliations, reviews of operating performance, and segregation of duties
Short Answer Questions 89.
What do the acronyms COSO and COBIT stand for?
90.
Define preventive, detective, and corrective controls. Give an example of each.
TB 6.23
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Chapter 7 COMPUTER CONTROLS FOR ORGANIZATIONS AND ACCOUNTING INFORMATION SYSTEMS
True-False Questions 1.
All controls available for the computerized accounting information system of a company should be implemented regardless of cost due to the high rate of computer crime.
2. 2.
Automated controls are always preferable to manual controls. Automated controls are always preferable to manual controls.
3.
According to the text, data transcription would only be necessary for a computerized accounting information system.
4.
Edit checks are very rarely used because they are not cost-effective controls.
5.
Information processing personnel usually only use selective edit checks in data processing applications due to the cost of computer time necessary for editing.
6.
Testing processing programs with test data is performed only when a system is first installed due to the high costs of such test runs.
7.
The audit trail is easier to follow in an online computerized system as compared to a batch system.
8.
No record of transactions is made in an online computerized system.
9.
Most computer vandalism is performed by "professional" computer criminals who have no personal contact with the computer centers they disrupt.
10.
The primary function of controls for a computerized accounting information system is to detect computer fraud.
11.
Input controls attempt to assure the accuracy and completeness of the data fed into the CPU for processing.
12.
It is more difficult to safeguard logical computer access than it is to safeguard physical computer access.
13.
Output controls for the computerized accounting information system focus primarily on the security and distribution of print media prepared by the computer center.
14.
Biometric identifications are irrelevant to computer network systems. TB 7.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
15. 15.
Manual controls are often preferable to automated controls when human judgement and expertise are required. Consensus-based protocols contain an odd number of processors.
16.
One of the techniques for controlling batch processing is the use of hash totals.
17.
A hash total is obtained by counting all documents or records to be processed.
18.
The control of input and output of accounting transactions to and from the information processing subsystem should be performed by an independent control group.
19.
A Disaster Recovery Plan is primarily operational in nature, and focuses on resumption of critical business processes in the event of a disaster. In most companies, contingency planning is unnecessary.
19. 20. 20. 21. 21.
A Business Continuity Plan has numerous components, one of which is the Disaster Recovery Plan. Contingency planning includes the development of a formal disaster recovery plan. General controls are those controls that affect the entire organization and influence the effectiveness of other controls. Both external and internal file labels are useful in avoiding the use of the wrong input tape.
22. 22.
We can classify IT-related controls based on function, implementation, and scope. An internal label may be used only with magnetic tape systems.
23.
MDM software allows an administrator to control and protect data located on mobile devices. When they are not in use, tape and disk files should be stored apart from the computer room under the control of a librarian.
23.
24.
A limit check in a computer program is comparable to a decision that an individual makes in a manual system to judge a transaction's reasonableness.
25.
A completeness test is an internal equipment control to test whether or not all transactions have been processed.
26.
Because of the integrative nature of database systems, cost-effective controls on these systems are unimportant.
TB 7.2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Multiple-Choice Questions 27.
The principal function of an accounting system's computerized controls is: a) Detecting computer frauds b) Preventing computer frauds c) Encouraging programmer honesty d) none of the above
28.
When a company is setting up its accounting information system, it is important for management to select: a) A standard set of computer control mechanisms b) Only those controls which appear to serve its needs c) Controls whose benefits exceed their costs d) b and c only
29.
Which of the following control mechanisms is common to both observation and recording control: a) Confirmation slips b) Dual observation c) Preprinted forms d) Turn around document
30.
A very effective ID approach for safeguarding logical computer access bases user recognition on: a) IDA b) Biometric identifications c) Message acknowledgment procedures d) Routing verification procedures
31.
Which of the following is not a major reason for controls in a computerized accounting information system? a) More data are processed b) Often, computerized data are unreadable to the human eye c) With computerized data, there is a higher possibility of computer crime d) all of the above are reasons for controls
32.
Which of the following is not a subcategory of input controls? a) Computer access b) Data transcription c) Data recording d) Data processing
TB 7.3
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
33.
General controls within IT environments that affect personnel include: a) Use of computer accounts b) Separation of duties c) Informal knowledge of employees d) all of the above affect personnel
34.
Logical access to the computer system would be best controlled by: a) Intrusion alarm systems b) Complex operating systems c) Restrictions on physical access to online terminals d) Password codes
35.
Which of the following is not a feedback mechanism for observation controls for data collection? a) Confirmation slips b) Turnaround documents c) Dual observation d) Direct, 2-way communication devices
36.
Which of the following is true about control totals? a) Usually expressed in dollars b) Batches normally occur in groups of 200 or more c) Should "make sense" to be useful d) none of the above
37.
Which of the following is not a processing control? a) Record counts b) Control totals c) Hash totals d) Check digits
38.
Editing checks performed "in tandem" would be defined as: a) Tests of alphanumeric field content b) Tests for valid codes c) Redundant data checks d) Tests of reasonableness
39.
A data field could pass all editing tests and still be invalid. Additional controls to cope with this would include: a) Check digit b) Unfound record test c) Valid code test d) both a and b could validate after editing tests
TB 7.4
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
40.
Check digits have which of the following attributes? a) Guarantees data validity b) Detects fraudulent data c) Always recommended for accounting information systems d) none of the above
41.
Which of the following types of errors will check digits usually detect? a) Transposition of two digits b) Inaccuracy of one digit c) Double mistakes canceling out each other d) Fraudulent data
42.
Which of the following is not normally used as a control total to check the validity of data processing activities? a) Edit tests b) Batch totals c) Record counts d) Hash totals
TB 7.5
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
43.
From the standpoint of computer fraud, which type of controls would probably be of highest importance? a) Input controls b) Access controls c) Output controls d) Processing controls
44.
Tape and disk output controls are primarily concerned with: a) The storage space problem b) Building control totals c) Validating checksums d) The encoding process
45.
Principal output controls include all but one of the following: a) Sequence tests of check stubs b) Character control totals c) Strict regulation of preprinted forms d) all of the above
46.
Which of the following is not a control to ensure the physical safety of a company’s data processing center? a) Strategic placement of the computer center b) The use of password codes c) The use of identification badges d) all of the above are computer facility controls
TB 7.6
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
47.
The least effective physical security control for a computer center is: a) Limited employee access b) Color-coded identification badges c) Insurance d) Strategic placement of computer center equipment
48.
Which of the following is an example of application controls in automated data processing systems? a) Input controls b) Hardware controls c) Documentation procedures d) Controls over access to equipment and data files
TB 7.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
49.
An expense report was prepared by a company's cost center. One executive questioned one of the amounts and asked for "the source documents which support the total.” Data processing was not able to routinely do so. The best control procedure would be: a) An error listing b) An audit trail c) Transmittal control d) Documentation
50.
Daylight Corporation's organization chart provides for a controller and an information processing manager, both of whom report to the financial vice-president. Internal control would not be strengthened by: a) Assigning the programming and operating of the computer to an independent control group which reports to the controller b) Providing for maintenance of input data controls by an independent control group which reports to the controller c) Rotating periodically among machine operators the assignments of individual application runs d) Providing for review and distribution of computer output by an independent control group which reports to the controller
51.
Fault-tolerant systems are typically based on the concept of: a) Redundancy b) Consistency c) Materiality d) Fairness
TB 7.8
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
52.
An apparent error in input data describing an inventory item received was referred back to the originating department for correction. A week later the department complained that the inventory in question was incorrect. Data processing could not easily determine whether or not the item had been processed by the computer. The best control procedure would be: a) Input edit checks b) Missing data validity check c) Transmittal control d) An error log
53.
The basic form of backup used in magnetic tape operations is calledOrganizations that allow employees to use their own mobile devices for work purposes often require the installation of ___ software to mitigate the risk of enterprise information resources being compromised in the event of device theft or employee termination: a) Odd parity checkDDP b) DualDLP-head processing c) File protection ringsMDM d) The grandfather-parent-child conceptETL
TB 7.9
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
54.
Control totals are used as a basic method for detecting data errors. Which of the following is not a control figure used as a control total in automated accounting systems? a) Non-financial totals b) Check-digit totals c) Hash totals d) Financial totals
55.
The grandfather-parent-child approach to providing protection for important computer files is a concept that is most often found in: a) Online, real-time systems b) Manual systems c) Magnetic tape systems d) Magnetic disk systems
56.
_____________ permit data to be written on a magnetic tapeWe can classify IT controls based on implementation, function or scope. When considering IT controls based on scope, this classification includes: a) File protection ringsPreventive, Detective, Corrective b) Lock out proceduresEnterprise level, General and Application c) Rollback processingManual, Automated d) Fault-tolerant systemsRisk Assessment, Monitoring, Information & Communication
57.
A technique for controlling identification numbers (part number, employee number, etc.) is: a) Self-checking (check) digits b) Echo checks c) Parity control d) File protection
58.
In its automated data processing system, a company might use selfchecking numbers (check digit) to enable detection of which of the following errors? a) Assigning a valid identification code to the wrong customer b) Recording an invalid customer's identification charge account number c) Losing data between processing functions d) Processing data arranged in the wrong sequence
59.
Which of the following would lessen internal control in an automated data processing system? a) The computer librarian maintains custody of computer program instructions and detailed listings b) Computer operators have access to operator instructions and detailed program listings c) The data control group is solely responsible for the distribution of all computer output TB 7.10
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
d)
Computer programmers write and debug programs which perform routines designed by the systems analyst
60.
Which of the following best describes a fundamental control weakness often associated with automated data processing systems? a) Automated data processing equipment is more subject to systems error than manual processing is subject to human error b) Automated data processing equipment processes and records similar transactions in a similar manner c) Automated data processing procedures for detection of invalid and unusual transactions are less effective than manual control procedures d) Functions that would normally be separated in a manual system are combined in an automated data processing system
61.
A company uses the account code 669 for maintenance expense. However, one of the company's clerks often codes maintenance expense as 996. The highest account code in the system is 750. What would be the best internal control check to build into the company's computer program to detect this error? a) A check for this type of error would have to be made before the information was transmitted to the data processing center b) Valid-character test c) Sequence test d) Valid-code test
62.
We can classify IT controls based on implementation, function or scope. When considering IT controls based on implementation, this classification includes: a) Preventive, Detective, Corrective b) Enterprise level, General and Application c) Manual, Automated d) Risk Assessment, Monitoring, Information & Communication
62.
The magnetic tape containing accounts receivable transactions could not be located. A data processing supervisor said that it could have been put among the scratch tapes available for use in processing. The best control procedure would be a(an): a) Header label b) Trailer label c) External label d) File protection ring
63.
A sales transaction document was coded with an invalid customer account code (7 digits rather than 8). The error was not detected until the updating run when it was found that there was no such account to which the transaction could be posted. The best control procedure would be: a) Parity checks b) Keypunch verification c) A hash total check
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
d) 64.
64.
A check digit
We can classify IT controls based on implementation, function or scope. When considering IT controls based on function, this classification includes: a) Preventive, Detective, Corrective b) Enterprise level, General and Application c) Manual, Automated Risk Assessment, Monitoring, Information & Communication The operator, in mounting the magnetic tape containing the cash receipts for the processing run to update accounts receivable, mounted the receipts tape from the preceding rather than the current day. The error was not detected until after the processing run was completed. The best control procedure would be a: a) Header label check b) Trailer label check c) Parity check d) Hash total check
65.
The master inventory file, contained on a removable magnetic disk, was destroyed by a small fire next to the area where it was stored. The company had to take a special complete inventory in order to reestablish the file. The best control procedure would be: a) Fire insurance b) Data processing insurance c) A copy of the disk d) Remote storage of a copy of the disk and the transactions since the disk was copied
66.
The master file for inventory did not seem right. The file was printed out and many errors were found. The best control procedure would be: a) Trailer label control totals b) A periodic test against physical count c) A parity check d) Limit tests
67.
Due to an unusual program error which had never happened before, the accounts receivable updating run did not process three transactions. The error was not noted by the operator because he was busy working on another project. There were control totals for the file which were printed out. An examination of the printout would have disclosed the error. The best control procedure would be: a) An error message requiring operator response before processing continues b) Reconciliation of control total by control clerk c) Internal audit review of console log d) Label checking by next computer program
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
68.
A CPA reviews a client's payroll procedures. The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for: a) Distributing payroll checks to employees b) Reviewing and approving time reports for subordinate employees c) Hiring subordinate employees d) Initiating requests for salary adjustments for subordinate employees
69.
It would be appropriate for the payroll accounting department to be responsible for which of the following functions? a) Approval of employee time records b) Maintenance of records of employment, discharges, and pay increases c) Preparation of periodic governmental reports as to employees' earnings and withholding taxes d) Distribution of paychecks to employees
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70.
In designing a payroll system it is known that no individual's paycheck can amount to more than $300 for a single week. As a result, the payroll program has been written to bypass writing a check and printing out an error message if any payroll calculation results in more than $300. This type of control is called: a) A limit or reasonableness test b) Error review c) Data validity test d) Logic sequence test
71.
A weekly payroll check was issued to an hourly employee based on 98 hours worked instead of 38 hours. The time card was slightly illegible and the number looked somewhat like 98. The best control procedure would be: a) A hash total b) A code check c) Desk checking d) A limit test
72.
In preparing payroll checks, the computer omitted 24 of a total of 2,408 checks which should have been processed. The error was not detected until the supervisor distributed the checks. The best control procedure would be: a) A parity check b) A module N check c) Control totals d) Desk checking
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
73.
When erroneous data are detected by computer program controls, such data may be excluded from processing and printed on an error report. The error report should most probably be reviewed and followed up by the: a) Supervisor of computer operations b) Systems analyst c) Data control group d) Computer programmer
74.
Jonkers, Inc., a large retail chain, is installing a computerized accounts receivable system employing a batch mode of processing with sequential files. The program which will process receipts on account should include an input edit routine to assure: a) Proper sequencing of data b) Header and trailer label accuracy c) The amount received is recorded correctly d) The existence of control totals e) Proper operator intervention
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
75.
In order to maintain good internal control within the computer department: a) Computer operators need to be good programmers b) Programmers should have control over day-to-day production runs c) Computer operators should be allowed to make changes in programs as needed in order to keep the computer running d) Programmers and computer operators should be in separate sections of the computer department e) The tape librarian should be able to operate the computer
76.
Which of the following policies or practices is most likely to represent a weakness in internal controls pertaining to an automated data processing system? a) Computer operators are denied access to the system/program documentation library b) Employees in the data processing department are prohibited from initiating requests for changes to master files c) Computer programmers are permitted to operate the computer for regular processing runs which involve programs that they have written d) Computer operators who run the programs related to inventory are prohibited from making test counts of goods on hand in order to check the accuracy of the computer inventory files e) All corrections of errors in the master file are reviewed and approved by a supervisory-level employee who is independent of the data processing department
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
77.
A transaction involving a charge to a non-existent customer account was entered into an accounts receivable and billing system that was batch processed. This error should be detected by the computer system and appear in: a) The sort run error printout b) The edit run error printout c) The customer statements printout d) The master file update run error printout e) Some error printout other than those mentioned above
78.
Transactions which were erroneous and had been previously rejected by the computer system apparently were not being reentered and reprocessed once they had been corrected. This erroneous condition is best controlled by: a) Comparing a record count of transactions input into the system b) A comparison of the batch control totals c) Scanning the error control log d) Scanning the console log e) Desk checking
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79.
For a routine management report produced on the computer, which one of the following control duties is most likely to be the sole responsibility of the user department? a) Scanning the report for garbled output b) Checking input totals against report totals c) Determining that figures in the report are reasonable d) Verifying record count totals e) Checking the console listing for improper operator procedures
80.
In an online, real-time system, which of the following would be most likely to be used as backup for an application's master file maintained on magnetic disk? a) At specified periods the disk files would be dumped to (copied on) magnetic tape along with the period's transactions b) A duplicate disk file would be maintained and all activity would be copied on magnetic tape continuously c) The grandfather-parent-child technique would be employed to retain disk files d) All source documents for transactions would be retained e) The disk files would be copied to magnetic tape continuously
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
81.
A company's computer facilities and computer room conceivably could be destroyed completely by fire. The most appropriate action a company could take in an attempt to prepare for and protect itself for such a disaster would be: a) To have backup computer facilities at the same site b) To have off-site backup computer facilities c) To have a reconstruction and recovery plan which outlines the procedures for reconstruction of files and use of alternate facilities d) To have a contractual agreement with the manufacturer or another company to use its facilities e) To have the grandfather-parent-child concept implemented for all files stored on magnetic tapes
82.
A company’s disaster recovery site that includes a computer system configured similarly to the system used regularly by the company for data processing purposes is called: a) A cold site b) A recovery site c) A disaster site d) A hot site
83.
The risk of unauthorized access to data through electronic eavesdropping is minimized by using: a) Data encryption b) Routing verification procedures c) Message acknowledgement procedures d) EDC
84.
Within database systems, a control that restricts user access to precisely designated data sets and files is called a(an): a) Layered password b) Open password c) Closed password d) Server password
85.
An example of a check-digit technique that includes “ordering of digits” in the construction of check-digit values is the: a) Odd-even technique b) Modulus 11 technique c) Value-digit technique d) Orion technique
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
86.
A virtual private network (VPN)Regarding Mobile Device Management (MDM) solutions, which of the following is false?: a) Is a security appliance that runs behind an organization’s firewallMDM software often creates a virtual container on the mobile device that can be remotely managed b) Allows remote users to access entity resources by using wireless, hand-held devicesIf an employee terminates or their device is lost, the MDM will erase all data on the device c) Is security software that is specifically designed to protect hard-wired local area networks (LANs)Sensitive enterprise resources are stored and processed within the container d) both (a) and (b)MDM software must be installed on the mobile device e) none of the above
87.
The textbook identifies a number of issues that should be considered when developing a security policy. One of the issues is “identify threats”. Which of the following is not an example of this issue?When developing a Business Continuity Plan (BCP), the ___ is used to identify and inventory critical business processes and supporting systems, and to establish priorities and timelines for recovery efforts. a) What assets need to be protectedEmergency Communication Plan b) What are the sources of potential security problemsBusiness Resumption Plan c) External threats are viruses, worms, retaliations from former employeesDisaster Recovery Plan d) Internal threats are misuse of assets by employees and embezzlementBusiness Impact Analysis
88.
Which of the following best describes ISO 17799?___ controls prevent, detect, and correct errors and irregularities in processing transactions. a) The international information systems standards that establish information systems best practicesApplication b) The international information security standards that establish information security best practicesGeneral c) The international information systems control standards that establish information systems control best practicesLogical d) none of the abovePhysical
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89.
When we say that an organization has an “integrated security policy”, what do we mean? a) The organization is working with suppliers and customers to improve security up and down the supply chain b) Managers in various departments within the firm meet to assess risk and develop security options for top management c) The organization is using a variety of security measures, such as firewalls, virus protection, intrusion detection systems, virtual private networks, etc. d) none of the above
90.
A business continuity plan (BCP) includes which of the following?___ controls help ensure the validity, accuracy and completeness of data entered into an AIS. a) Backups for hardwareInput b) Procedures to follow in the event of an emergencyProcessing c) Who is in charge during the emergencyOutput d) none of the aboveStorage e) Backups, procedures and who is in charge are all part of a BCP
91.
A “flying-start site” for disaster recovery purposes is a location that includes: a) A computer system configured similarly to the system normally used b) A computer system configured similarly to the system normally used plus up-todate backup data and software c) Power and environmentally controlled space to install equipment on short notice d) none of the above
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
92.
Enterprise controls: a) Are controls in Enterprise Resource Planning Systems b) Are controls required by the AICPA c) Affect only application controls d) Affect many general and application controls
93.
If _____ controls are ineffective, this can cause ____ controls to be unreliable. a) IT general, application b) Application, IT general c) Application, enterprise d) Cross-footing, segregation of duties
94.
An effective control for maintaining the privacy of data stored on a large, networked server would be: a) Security personnel at the building entrance b) Encryption c) Laptop protection policies d) Routing verification
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
95.
A company’s management is concerned about computer data eavesdropping and wants to maintain the confidentiality of its information as it is transmitted. The company should use: a) Data encryption b) Dial back systems c) Message acknowledgment procedures d) Password codes
96.
In entering the billing address for a new client in Emil Company’s computerized database, a clerk erroneously entered a nonexistent zip code. As a result, the first month’s bill mailed to the new client was returned to Emil Company. Which one of the following would most likely have led to discovery of the error at the time of entry into Emil Company’s computerized database? a) Limit test b) Validity test c) Parity test d) Record count test
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are three terms that are not used. 97. ______ input controls 98. ______ business continuity plan (BCP) 99. ______ edit tests 100. ______disaster recovery 101. ______flying-start site 102. ______virtual private network (VPN) 103. ______cold site 104. ______physical security 105. ______ IT general controls 106. ______ red flags 107. ______ data encryption 108. ______ hot site 109. ______ integrated security 110. ______ logical security 111. ______ fault-tolerant systems 112. ______ processing controls 113. ______ output controls 114. ______ security policy 115. ______ eavesdropping 116. ______ computer facility controls 117. ______ application controls
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Definitions: A. Enable computer systems to deal with errors and keep functioning, and is often based on
the concept of redundancy B. This control limits only authorized individuals access to the organization’s systems and
information C. The purpose of this control is to securely transmit data to a remote site D. A disaster recovery site that has a computer system with capabilities similar to the system
it will replace and also has up-to-date backup data E. Certain behaviors exhibited by employees that can alert co-workers and supervisors to
trouble (i.e., fraud) F. A comprehensive plan that helps protect an enterprise from both internal and external
threats G. A process whereby management identifies possible events that represent a problem to the
firm and then identifies appropriate responses to those problems H. A disaster recovery site that has a computer system with capabilities similar to the system
it will replace I. A comprehensive approach to making sure organizational activities continue normally J. An example of this type of control is a “man trap” K. When organizations combine a number of logical and physical security technologies (i.e.,
firewalls, intrusion detection systems, virus protection) L. Any measures that an organization uses to protect its facilities, resources, or its
proprietary data that are stored on physical media M. The process and procedures that organizations follow to resume business after a
disruptive event such as an earthquake, a terrorist attack, or a serious computer virus N. Disaster recovery site that has power, environmentally controlled space, and processing
equipment that can be installed on short notice O. The controls at this level are critical so that organizations can rely on application controls P. A security appliance that runs behind a firewall and allows remote users to access entity
resources by using wireless, hand-held devices Q. The purpose of this control procedure is to prevent a company’s competitors from
electronically monitoring confidential data transmissions R. The purpose of these controls is to prevent, detect, and correct errors and irregularities in
processing transactions S. An example of these controls is the use of point-of-sale devices (such as bar code
readers) T. These controls examine selected fields of input data and reject those transactions (or
other types of data input) whose data fields do not meet the pre-established standards of data quality U. An important objective of these controls is to contribute to a good audit trail V. An example of this type of control is an authorized distribution list W. These controls help ensure that no transactions or messages are routed to the wrong computer network system address X. The purpose of this control is to perform a backup while the database is on-line and available for read/write
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Short Answer Questions 118.
Define and explain BCP and its purpose.
119.
When we talk of convergence of physical and logical security, what do we mean and why is it important?
120.
What is the purpose of the separation of duties control and why is it different between manual systems and computerized systems?
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Chapter 8 ACCOUNTING INFORMATION SYSTEMS AND BUSINESS PROCESSES: PART I
True-False Questions 1.
A ledger is a chronological record of business events that impact the accounting equation.
2.
A company’s chart of accounts is used to organize its general ledger.
3.
A cash disbursements journal is an example of a special journal.
4.
Subsidiary ledgers are frequently maintained for accounts receivable and inventory accounts.
5.
The first trial balance produced by an AIS in the accounting cycle, is the adjusted trial balance.
6.
Managerial reports are the primary output of the financial accounting system.
7.
Codes are seldom used in an AIS because they use excess space.
8.
Block codes are commonly used in constructing charts of accounts.
9.
Three primary concerns of a data collection process are accuracy, timeliness, and costeffectiveness.
10.
Debit/credit memoranda are issued when there is a discrepancy about the amount owed or when goods are returned.
11.
Block codes consist of a combination of a sequence code and a mnemonic code.
12.
Group codes are often used as product codes in a business.
13.
The first step in the accounting cycle is to post a transaction to the ledger.
14.
The sales process begins with placing an order with a vendor.
15.
The AIS should bill customers for goods at the time they are ordered.
16.
The purchasing process is always complete when goods are received from vendors.
17.
A shipping notice is a source document that serves as a packing slip and accompanies goods sent to a customer. TB 8.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
18.
The purchasing process begins with a request for goods or services and ends with receipt of the goods or services.
19.
The purchasing process begins with a request for goods or services and ends with payment to the vendor.
Multiple-Choice Questions 20.
Which of the following is not one of the trial balances typically produced as part of the financial accounting cycle? a) Closing trial balance b) Unadjusted trial balance c) Adjusted trial balance d) Post-closing trial balance
21.
A general ledger: a) Is a chronological listing of an organization’s transactions b) Is a collection of an organization’s monetary transactions, organized by account c) Does not include every account in an organization’s chart of accounts d) Is the same thing as a transaction listing
22.
The financial accounting cycle ends with: a) The production of financial statements b) Closing journal entries and a post-closing trial balance c) The production of an adjusted trial balance d) Development of cash forecasts
23.
Which of the following is not a primary objective of coding systems today? a) To compress data b) To uniquely identify objects c) To convey special meanings that are not apparent to the public-at-large d) To use numbers instead of alphabetic characters in order to save on computer data storage costs
24.
An AIS includes certain source documents to control sales and accounts receivable. The most complete set of documents for a manufacturer would include: a) Sales order, shipping notice, sales invoice, customer remittance advice, bank deposit slip. b) Purchase order, receiving report, shipping notice, sales invoice, customer remittance advice, bank deposit slip. c) Sales order, receiving report, sales invoice, customer remittance advice. d) Inventory reports of goods needed, purchase order, receiving report, vendor invoice.
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
25.
Which of the following is not usually a design consideration in coding systems? a) Consistency b) Standardization c) Government regulation d) Plans for future expansion
26.
Well-designed output reports are characterized by all but which of the following? a) They are useful b) They are conveniently formatted c) They never include graphs d) They are easily identifiable
27.
Information overload: a) Refers to a problem that can result when an AIS produces too many reports b) Refers to the situation that occurs when a company’s database is too large c) Almost always results when an AIS is computerized d) Cannot be avoided in the Information Age
28.
Which of the following is not an example of a source document? a) Receiving report b) Purchase order c) Sales order d) Aging report
29.
Performance reports are: a) Reports that compare budgets with actual performance b) Reports that show any exception conditions in an organization c) Adjusted trial balance d) Transaction listings
30.
The sales process begins with: a) Placing an order with a vendor b) A customer order for goods or services c) Production of goods or services d) Delivery of goods or services
31.
The primary objective in processing revenue transactions is to: a) Sell as many goods as possible b) Achieve timely and efficient cash collection c) Maximize an organization’s sales orders d) Only sell goods to customers who can pay their bills
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
32.
An important input to the sales process is: a) A customer sales order b) The cash forecast c) Aged accounts receivable information d) A receiving report
33.
To forecast cash receipts, information must be collected from: a) The purchasing process b) Payroll processing c) Inventory control systems d) The sales process
34.
Which of the following is not an objective of the purchasing process? a) Inventory control b) Fastest possible processing of payments to vendors c) Maintaining vendor records d) Forecasting cash outflows
35.
Which source document is used to request goods? a) Purchase order b) Shipping notice c) Purchase requisition d) Sales order
36.
The bill of lading: a) Reflects freight charges on goods shipped b) Signifies release of goods for shipment to customers c) Is sent to the customer with the purchase invoice d) Is used to control inventory
37.
Inputs to transaction processing systems: a) Are always in hard copy b) Are best when input in a graphical format c) May be in an electronic format when an EDI system is used d) May never be audio
38.
Forecasting cash flows: a) Is an objective of transaction processing b) Is never considered an objective of transaction processing c) Is only possible in computerized AISs d) Is considered as a risky activity with which accountants should not be associated
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
39.
Which of the following is not an objective of the sales process? a) Controlling inventory b) Tracking sales of goods and/or services to customers c) Billing for goods and services d) Forecasting sales and cash receipts
40.
All of the following are inputs (source documents) to the sales process except: a) Sales order b) Shipping notice c) Remittance advice d) all of the above are source documents to the sales process
41.
Business organizations are recognizing the value of sales data and are purchasing software solutions to gather, maintain, and use these data to provide better service and promote customer loyalty. These software solutions are called: a) Customer relations data solutions b) Customer relationship management solutions c) Sales data management solutions d) none of the above
42.
Which of the following outputs (reports) result from both the sales process and the purchasing process? a) Sales analysis reports b) Financial statement information c) both cash flow forecasts and financial statement information d) none of the above
43.
All of the following are inputs (source documents) to the purchasing process except: a) Purchase order b) Vendor invoice c) Bill of lading d) all of the above are source documents to the purchasing process
44.
Which of the following is an objective of accounts payable processing? a) Collecting information for the financial statements b) Making timely and accurate vendor payments c) Forecasting cash requirements d) Tracking bills of lading
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
45.
Which of the following statements best describes business process outsourcing? a) A company focuses on its core business processes and contracts with another firm to do the other processes b) Companies frequently outsource core business processes c) Due to networked enterprises and advanced technology, more employees may work from their homes or alternate locations d) Companies engaged in business process outsourcing to offer employees more opportunities to travel and more career choices for advancement
46.
Networked enterprises and globalization have enabled a new business model called “business-without-boundaries.” Which of the following statements describes this business model? a) Companies no longer have all of their employees in one location b) It is called offshoring and companies contract with firms in other countries to do such business processes as human resources, payroll, and accounting c) Companies are under a great deal of scrutiny to manage costs and generate revenue so they contract with foreign firms to do various business processes at a lower cost to the company d) all of the above statements describe this model
47.
Which of the following statements best describes a business process? a) It is a collection of related business activities in an organization that creates value b) The nature and type of processes might vary from industry to industry c) It is an activity that increases and/or decreases dollar amounts on the financial statements d) It is an economic event in the life of an organization
48.
Which of the following Business Process Management (BPM) software solutions is most often associated with the sales process? a) Enterprise resource management b) Integrated management c) Customer relationship management d) Supply chain management e) none of the above
49.
Much of the input and output related to business processes is now electronic. Which of the following technologies is popular to manage inventory? a) EDI b) RFID tags c) Magnetic ink characters that can be quickly and easily scanned d) Bluetooth and wireless-enabled laptop computers
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
50.
When companies outsource business processes to other countries, such as India, and the Philippines, it is often the case that workers in those countries: a) Gain job prestige b) Enjoy a better quality of life c) Have higher income d) all the above
51.
Which of the following is a benefit to corporate executives when a process is outsourced? a) Day-to-day process management responsibilities are deleted b) More time to explore new revenue generation activities c) More time to focus on recruiting and training personnel d) Changing customer demands are no longer a problem
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are four terms that are not used. 52. ______ business process 53. ______ BPM software 54. ______ BPO 55. ______ business-without-boundaries 56. ______ CRM software 57. ______ off-shoring 58. ______ RFID tags 59. ______ sales process 60. ______ mnemonic codes 61. ______ exception report 62. ______ group code
TB 8.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Definitions: A. Organizational structure for the general ledger B. Codes that help the user remember what they represent C. A sequential set of numbers used to identify customer accounts, employee payroll checks,
customer sales invoices, and so forth D. A list of conditions – for example, a purchase order has an authorization signature but
contains some inaccurate or missing information E. A collection of activities and work flows in an organization that creates value F. Combining two or more codes to create a new code G. Maintaining customer records is an important function H. Software to gather, maintain, and use these data to provide better customer service and customer loyalty I. Begins with a request (or an order) for goods or services J. List of differences between quantities or amounts on the purchase order, the receiving report, and the purchase invoice K. A new technology that is used in the sales and the purchasing processes L. This business model is a result of networked enterprises and globalization M. When companies have production or work completed in countries like India, China, Canada, Mexico, or Malaysia N. When companies contract with other companies to do certain tasks, such as human resources, finance and accounting, customer services, training, and IT O. Software that collects corporate knowledge, data, and business rules to improve core processes
Short Answer Questions 63.
What are the purposes of accounting codes?
64.
What is the difference between a data flow diagram and a system flowchart?
65.
What does offshoring business processes mean?
TB 8.8
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
Chapter 9 ACCOUNTING INFORMATION SYSTEMS AND BUSINESS PROCESSES: PART II
True-False Questions 1.
The payroll process is part of the human resource management process.
2.
The production process is present in service organizations.
3.
The primary objective of the production process is to convert raw materials to finished products as quickly as possible.
4.
An AIS’s cost accounting subsystem is an important part of the production process.
5.
Inputs to the production process include job time cards, material requisition forms, and the master production schedule.
6.
With a job costing system it is not possible to keep track of costs for each item or group of items produced.
7.
With a just-in-time inventory approach, raw material inventories are always zero.
8.
The bill of materials lists the types and quantities of parts needed to assemble each unit of product.
9.
Production cost reports are useful for internal control since they help in calculating budget variances.
10.
The financing process concerns a company’s acquisition and use of financial resources.
11.
Effective cash management is not an objective of the financing process.
12.
Financial planning models are useful to financial managers in helping them to determine an optimal strategy for acquiring and investing an organization’s financial resources.
13.
Deposit slips and remittance advices are examples of source documents associated with the financing process.
14.
A cash budget is a primary output of the financing process.
15.
The term vertical market refers to software distribution processes.
TB 9.1
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
16.
Time and billing features in accounting software are important to engineering, legal, and accounting firms.
17.
One distinguishing feature of organizations in the professional service industry is the difficulty in measuring the quantity and quality of their output when compared to manufacturing organizations.
18.
Not-for-profit organizations focus primarily on the flow of funds rather than income in their internal accounting systems.
19.
Point-of-sale accounting systems are important in the health care industry.
20.
Third party billing refers to the payment of many health care bills by insurance companies rather than by patients.
21.
The AIS for the health care industry is particularly complex due to third party billing.
22.
The objective of the fixed asset management function is to manage the purchase, maintenance, valuation and disposal of an organization’s fixed assets.
23.
The production process begins with a request for raw materials and ends with the transfer of finished goods to warehouses.
24.
The objective of a manufacturing organization’s production process is to convert raw materials to finished goods as quickly as possible to free up cash resources.
Multiple-Choice Questions 25.
The primary objective of a manufacturing organization’s production process is to: a) Maintain inventories at a zero level b) Convert raw materials into finished goods as efficiently as possible c) Make sure that there are no product defects d) Maintain the documentation and report on an organization’s manufacturing process
26.
The largest expense item on a manufacturing organization’s income statement is most likely to be: a) Salaries for production workers b) The depreciation associated with manufacturing equipment c) The cost of direct materials d) Cost of goods sold
TB 9.2
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
27.
Job costing systems are most appropriate for: a) Home builders b) Textbook publishers c) Beverage companies d) both a and b are appropriate industries for job costing systems
28.
All of the following are input documents for the production process, except: a) A master production schedule b) A production order c) A sales invoice d) A bill of materials
29.
An organization’s working capital consists of: a) Its checking accounts b) Both checking and savings accounts c) Bank accounts and other liquid assets d) Coin and currency only
30.
Which of the following is not a concern of the financing process? a) Effective cash management b) Optimizing an organization’s cost of capital c) Minimizing an organization’s borrowings d) Projecting cash flows
31.
Inputs to the financing process include: a) Remittance advices, deposit slips, checks, and stock market data b) Remittance advices, deposit slips, checks, and receiving reports c) Deposit slips, checks, receiving reports, and purchase requisitions d) Deposit slips, checks, purchase requisitions, and financial institution profiles
32.
Time and billing systems are most often used by: a) Health care organizations b) Professional service organizations c) Retail organizations d) Not-for-profit organizations
33.
Which of the following statements is not true? a) Time and billing systems in the professional service industry are similar to job order costing systems in manufacturing firms. b) Time and billing systems are an important component of an AIS for manufacturing firms c) A difficult problem for time and billing systems is tracking staff time d) All of the above are true
TB 9.3
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
34.
Which of the following is not a characteristic associated with professional service organizations? a) Lack of a profit motive b) Absence of inventories c) Importance of human resources d) Difficulty in measuring the quantity and quality of output
35.
It is generally true of not-for-profit organizations that they: a) Are profit-oriented despite their name b) Are always evaluated using profit measures c) Are not governed by accounting standards d) Emphasize funds rather than income in their internal accounting systems
36.
A major objective of professional service organizations is to: a) Decrease billable hours b) Increase billable hours c) Increase time spent training employees d) Bill customers as frequently as possible
37.
Which of the following is an example of a not-for-profit organization? a) Consulting firm b) State university c) Public hospital d) both b and c are correct
38.
Third party billing refers to: a) Billing to clients by professional service organizations b) Billing to insurance companies by health care organizations c) The fact that the customer often does not pay directly for goods purchased in the health care industry d) both b and c are correct
39.
Which of the following characteristics are common to both service and not-for-profit organizations? a) Importance of professional employees b) Difficulty in measuring the quality and quantity of output c) Inability to inventory a product d) all of the above
40.
Healthcare organizations: a) Are always not-for-profit enterprises b) Do not include nursing homes in their industry segment c) Have great difficulty in measuring outputs d) Do not include patient scheduling functions in their AISs
TB 9.4
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
41.
Business process reengineering: a) Is an incremental approach to redesigning business processes b) Involves redesigning business processes from scratch c) Is rarely successful in cutting an organization’s costs d) Is always welcomed by an organization’s employees
42.
Business process reengineering efforts sometimes fail because: a) Management gets too involved in the process b) Management is too optimistic regarding its expectations from its implementation c) Management support can never overcome employee resistance d) Employees will never accept change
43.
According to the text, all of the following are objectives of the human resource management process except: a) Hiring, training, and employing workers b) Counseling employees on retirement and medical benefits c) Maintaining employee earnings records d) Reporting on payroll deductions
44.
According to the text, which of the following is an output of the human resource management process? a) Retired employee roster b) List of training programs for employees c) Employee listings d) none of the above
45. Which of the following technologies are used in conjunction with automated production process systems to increase efficiencies? a) Radio frequency technology b) Bar code scanners c) FRIDs and advanced electronic tags d) all of the above e) none of the above 46.
The most significant difference in the AISs of retail organizations versus other vertical market organizations is the: a) Sophistication of the systems used b) Type of training programs available to employees c) Point-of-sale data capture d) Structure of information that the system provides to managers
TB 9.5
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
47.
Important source documents for the human resource management process do not include: a) Valid vendor lists b) Time sheets c) Payroll deduction authorizations d) Tax withholding forms
48.
Lean manufacturing involves: a) Decreasing production b) Using nonmonetary measures of performance c) Eliminating wasteful processes d) all of the above
49.
RFIDs allow firms to: a) Track inventory more effectively b) Eliminate the use of databases c) Reduce the costs of ERP systems d) all of the above
50.
When using activity-based costing techniques, which one of the following departmental activities would be expected to use machine hours as a cost driver to allocate overhead costs to production? a) Plant cafeteria b) Machine setups c) Material handling d) Robotics painting
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are three terms that are not used. 51. ______ enterprise asset management 52. ______ BPM software 53. ______ financing process 54. ______ lean accounting 55. ______ lean production 56. ______ change management 57. ______ business process reengineering 58. ______ value stream management 59. ______ lock-box systems 60. ______ fixed asset management 61. ______ non-value-added waste 62. ______ production process TB 9.6
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
Definitions: A. The opposite of “tweaking” a business process B. Used for effective cash management C. The process to help select an optimum strategy for acquiring/investing financial
resources D. Performance measures (data) that help managers and team members make wise
decisions regarding methods to reduce or eliminate waste E. Bar codes affixed to physical assets make this job easier F. A collection of activities and work flows in an organization that creates value G. A key success factor for business process reengineering H. Software to gather, maintain, and use these data to provide better customer service and
customer loyalty I. A management philosophy developed through the concepts of JIT and TQM J. Process to improve overall customer value and to increase the profitability of the products or services that the organization offers K. Begins with a request for raw materials and ends with the transfer of finished goods to warehouses L. When companies have production or work completed in countries like India, China, Canada, Mexico, or Malaysia M. An example of this concept is the following: an order fulfillment includes all metrics from the sales/order entry point, through manufacturing, and all the way to after-sales support N. Software that collects corporate knowledge, data, and business rules to improve core processes O. This process describes how a company acquires and uses cash, other liquid assets, and investments
Short Answer Questions 63.
Why would some companies choose to have payroll processed by an external service bureau?
64.
What concepts are the "root" of lean production and lean manufacturing?
65.
Identify three vertical market industries and list some unique needs they might have.
TB 9.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
Chapter 10 COMPUTER CRIME, ETHICS, AND PRIVACY
True-False Questions 1.
There is no complete, generally accepted definition of cybercrime presently available.
2.
The largest known cybercrime of record is the TRW Company Credit Data CaseCybercrime and fraud are one and the same.
3.
Most computer abuse that we have caught so far has been because of good accounting controls.
4.
According to the chapter, a computer virus is an example of a type of cybercrime called “denial of service.”
5.
Many types of cybercrime have other, more common names such as "vandalism" or "embezzlement."
6.
In the United States, trafficking in passwords is immoral, but not illegal.
7.
The U. S. Congress passed the first federal computer crime law in 1986 making it illegal to alter or destroy federal information.
8.
No one really knows how much is lost each year as the result of cybercrime.
9.
The absence of good statistics on cybercrime is partially explained by the fact that a large proportion of the cybercrime committed in private organizations is handled as an internal matter and thus is never publicly divulged.
10.
One conclusion that we can draw about cybercrime is that it is growing.
11.
We believe that most cybercrime is not discovered.
12.
There were less than 200 documented cases of cybercrime at the time the textbook was writtenThe Fraud Triangle provides a useful framework for understanding the drivers that must be present for cybercrime to occur.
13.
Automated accounting information systems are a particularly important potential target of cybercrime.
14.
When organizations discover a cybercrime, the cost of auditing and investigating the loss often exceeds the actual monetary loss.
TB 103.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
15.
The TRW Company Credit Data Case is an example of “valuable information” cybercrimeSAS 99 identifies two types of financial statement fraud: fraudulent financial reporting and misappropriation of assets.
16.
A paradoxical matter in the TRW Case was that the prosecution had trouble acquiring testimonies because the buyers as well as the sellers of the credit information were in technical violation of the lawWeak or ineffective internal controls often provide the fraudster the rationalization necessary to commit a fraud.
17.
A conflict exists between providing bona fide AIS users easy access to computer resources and security objectives.
18.
It is generally accepted that hackers are motivated only by greed.
19.
Worm programs are viruses that insert themselves into computer systems and disrupt operations or files.
20.
A computer virus may lie dormant in a system until software is copied and run on non-licensed machines.
21.
Lockout systems disconnect telephone connections if users fail to provide a correct password in a set number of triesA DDOS is a collection of compromise internet-enabled devices that are utilized in concert to commit cybercrime.
22.
Dial-back systems help control unauthorized access to computer systemsExamples of pressures that motivate the fraudster to act include financial difficulties and unobtainable sales / bonus goals.
23.
According to a recent CSI survey, the most common problem encountered by the respondents is virusesFraudsters often rationalize their actions by convincing themselves that everyone is doing it, or that their actions serve the greater good.
24.
One reason why computer crime is important to AISs is because, according to a Computer Security Institute survey, the average cost of a computer-abuse incident is about $500,000A DDOS attack often utilizes a botnet controlled by a nefarious actor.
25.
According to a KPMG survey, companiesOrganizations that stress the importance of business ethics tend to get about the same results as companies that do not stress its importance.
26.
A “strong password” is a password that lasts a long time.
27.
TFortunately, thwarting most forms of cybercrime does not require the support of top management.
TB 103.2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
28.
Experts suggest that policies on computer abuse are ineffective, and therefore should not be used to help educate employees about computer abuse.
29.
Most computer criminals are individuals of questionable background, little education, and no morals.
30.
Watching for tell-tale signs may help detect computer crime.
31.
Most computer criminals we have been fortunate enough to catch have had long, criminal backgrounds.
32.
Forensic accountants are to accounting as detectives are to criminal justice.
33.
Today’s accountants have no responsibility for designing or implementing control procedures that protect AISs from cybercrime and fraud.
34.
Cybercrime is another name for computer fraudFraud involves using deceit or concealment.
Multiple-Choice Questions 35.
According to the chapter, which of these statements is most accurate? a) Almost all cybercrime is committed for personal gain b) Very little cybercrime is committed for personal gain c) Most cybercrime is just as easily described as “embezzlement” d) We actually know very little about cybercrimeCybercrime is constantly evolving in terms of tools and techniques used
36.
According to the chapter, which of these statements is most accurate? a) Most cybercrime is performed as retaliation against employers b) Very little cybercrime is committed for personal gain c) Some cybercrime is performed simply to meet a challenge d) We catch most computer abusers with good accounting controls
37.
Which of these would be an example of “denial-of-service” computer abuse? a) Computer virus b) Salami technique c) Trojan horse computer program d) Embezzlement using computerized data e) none of these
38.
Which of these terms describes a computer program that remains dormant until triggered by some specific circumstance or date? a) Trojan horse program b) DDoS program c) Logic bomb d) Dial back system TB 103.3
Commented [j1]: Renumber below and adjust solution manual.
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
39.
Much of what has been termed cybercrime has merely involved the computer but probably would be more accurately classified as other types of crimes. A notable exception to this involves: a) Raiding dormant bank accounts b) Inventory misappropriation c) Embezzlement d) Theft of computer time
TB 103.4
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
40.
The process of changing data before, during, or after they are entered into a computer system is called: a) Data diddling b) Salami techiniqueDDOS c) Logic bombs d) Social engineering
41.
This term describes the technique of stealing small amounts of money from a large number of accounts over timeA DDOS attack works by:. a) Salami techniquechanging the passwords to critical system accounts so that they become unusable b) Buffet system overwhelming organizational information resources with a multitude of junk network traffic sent from a collection of compromised devices c) Baloney methodencrypting the data on a drive so that it becomes unreadable d) Dialing for dollarscompromising banking credentials so that the perpetrator can liquidate accounts
42.
This best explains why we have incomplete information on cybercrime. a) Most companies handle abuse as an internal matter b) Most newspapers no longer have any interest in reporting cybercrime c) Documentation of abuses is usually poor d) We believe that most cybercrime is not caught
43.
At present, we think that cybercrime is: a) Falling b) Random c) Rising d) Flat
44.
All of these are reasons why we think that cybercrime is rising except: a) Some InternetNumerous web sites now instruct users how to perform certain types of computer abuse b) More people now know how to use computersdevices are now connected to the Internet c) Computer usage continues to growInformation security measures are not keeping pace with threats d) all of these are reasons
45.
According to the chapter, which of these statements is most accurate?Most states now have at least one cybercrime law. In general, successful prosecution is predicated on a) Today, most computers are safe from computer abuseevidence that a breach occurred b) Today, very few computers are completely safe from computer abuseevidence that a computer was used c) Today, “hacking” is no longer possibleevidence that damage was incurred TB 103.5
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
d)
Today, all of these statements are accuratedemonstration of willful intent Formatted: Font: 10 pt
46.
The TRW Credit Data Case is an example of___ protects data in transit and at rest by transforming the data into an unintelligible format, readable only if the key is possessed.: a) The round-off trickIoT b) An outsider ripping off a corporate computerEncryption c) Valuable information computer crimeData diddling d) none of the aboveAntivirus software
47.
The TRW Case is notable because:According to most security professionals, most computer criminals are discovered because of a) The amount of dollars involved was so largemanagement review b) No one got caughtaudit and compliance activities c) The real victims were TRW customersluck, chance or accident d) A routine audit was responsible for detecting the fraudeffective internal controls
48.
Which of these is an acronym for computer crime legislation? a) ACL b) BART c) CFAA d) DDoS
49.
Hacking involves: a) Stealing carbons of credit cards b) Destroying computer hardware c) Gaining illegal entry to computer files from remote locations d) Inserting a logic bomb in a computer program
50.
A computer virus is: a) A disease that computer programmers are very susceptible to b) A small processing routine that the user accidentally introduces into the system c) A misnomer, since unlike biological viruses, computer viruses cannot reproduce themselves d) Harmless
51.
Computer programs that can scan computer disks for virus-like coding are called: a) Antivirus software b) Virus software c) Detection software d) Friendly applets
52.
All of the following are ways to thwart computer viruses except: a) Acquire a vaccine or anti-virus program b) Do not download computer games from questionable sources c) Maintain complete backup files d) Buy shrink-wrapped software from reputable sources
TB 103.6
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
53.
A small computer program that is stored on a web server and designed to run in conjunction with browser software is called a(n): a) Applet b) Logic bomb c) Worm d) Boot sector
TB 103.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
54.
Thwarting computer abuse can be enhanced by all of the following except: a) Enlisting top-management support b) Increasing employee awareness and education c) Allowing only 10% of employees access to computersMinimizing employees who have access to networked resources d) Using strong passwords
55.
In thwarting cybercrime, which of the following is true? a) It is not important to enlist the support of top management b) Many IT managers do not think cybercrime is very important c) Cybercrime mostly means controlling computer hardware d) Most cybercrime happens because of a failure of controls, not an absence of controls
56.
Almost all computer criminals can be described as: a) Professional criminals b) Technical hackers possessing strong computer skills c) White collar professional criminals d) Amateurs who describe themselves as relatively honest
57.
Most computer criminals who have been caught: a) Have inferior educational backgrounds b) Have superior educational backgrounds c) Work for organized crime d) Are ill suited to their jobs
58.
A forensic accountant is an accountant who: a) Performs autopsies on dead accountants b) Tries to explain why some accounts become inactive c) Investigates suspected fraud d) Performs court-approved accounting tasks for bankrupt companies
59.
Accounting “ethics” means: a) Whatever the corporate manual says it means b) Acting responsibly as long as no dollars are involved c) Only being honest; everything else is up for grabs d) Acting responsibly, no matter what
60.
An example of a conflict-of-interest situation is: a) Not working for a new company in a job similar to your last job b) Not talking to outsiders about general business concerns c) A decision where personal and corporate goals conflict d) Refusing to use a new computer if your colleagues are not provided similar systems
TB 103.8
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
61.
Which of the following is not a common way to steal personal identity information? a) Altering computer records b) Using key logging software c) Dumpster diving d) Phishing
62.
Which of the following is true? a) Only the AICPA has drafted an ethical code of conductMost accounting and audit professional associations have not articulated a code of ethics b) Computer crime only refers to manipulating a computer to dishonestly obtain money, property, or some other advantage of value c) ACM society is an acronym meaning “association of corporate managers”Most organizations report cybercrime once detected d) Ethical use of computers means realizing that the availability of a system does not convey its unrestricted use
63.
Probably the most important federal legislation governing activities involving computers is: a) CAN-SPAM Act of 2003 b) Federal Privacy Act of 1974 c) Computer Fraud and Abuse Act of 1986 d) Cyber Security Act of 1987
64.
Which of the following is a primary reason why accountants should be concerned about cybercrime? a) They might lose their job if they don’t detect cybercrime in their organization b) They might lose their professional credibility and license if cybercrime continues for a long time in their organization and they do not detect it c) They are responsible for designing, implementing, and monitoring the control procedures for AISs d) all of the above are equally important
65.
One of the most effective deterrents to prevent/discourage computer hacking isAccording to the most recent ACFE Report to the Nations, the greatest median fraud loss is reported among fraudsters who: a) User education, that is, making potential hackers aware of the ethical issues involved in this sort of behaviorcompleted high school b) The USA Patriot Act of 2001attended college, but did not graduate c) The Cyber Security Act of 1987college graduates with an undergraduate degree d) none of the abovecollege graduates with a postgraduate degree
66.
Which of the following does not destroy data but merely replicates itself repeatedly until the user runs out of internal memory or disk space? a) Computer virus TB 103.9
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
b) c) d)
Worm program Java applet Salami technique
67.
It is important to be able to recognize the symptoms of employee fraud. In practice, which of the following might be the best clue that fraud might be occurring? a) Accounting irregularities b) Internal control procedures that managers feel are inadequate c) Anomalies that, together, seem unreasonable d) Trial balances that almost always contain errors
68.
One of the major crimes identified by the Computer Fraud and Abuse Act of 1986 is the intent to illegally obtain information or tangible property through the use of computers. Which of the following methods might accomplish this type of crime if the perpetrator can change data before, during, or after they are entered into a computer system? a) Salami technique b) Data diddling c) Shoulder surfing d) Trojan horse program
69.
Acts such as dumpster diving, phishing, and smishing are all conducted to: a) Conduct a denial of service attack b) Disrupt computer services c) Get foodDestroy data d) Perform identify theft
70.
The term “smishing” means: a) Conducting identify theft by using text messages on cell phones b) Attempting to appear unnoticeable for an illegal act c) Stealing small amounts of monies from several computer accounts d) Masquerading as a corporate manager in order to obtain useful information
71.
A computer virus is different from a “Trojan Horse” because the virus can a) Corrupt data b) Alter programming instructions c) Replicate itself d) Erase executable files
72.
Some firms and governmental organizations use ethical hackers to help find any vulnerabilities that could be exploited by a malicious hacker. Which of the following is also used to refer to ethical hacking? a) Denial of service b) Intrusion service c) Penetration testing d) Executable testing
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73.
Misappropriation of assets is: a) A form of computer fraud involving the misapplication of account numbers. b) The theft of assets, usually by employees c) The proper recording of assets using debits d) A form of computer abuse that is not a crime
74.
The theft of millions of credit card numbers from customers of Target stores using malware is an example of: a) Denial of service b) Misappropriation of assets c) Penetration testing d) Hacking
75.
Good Effective computer security usually begins with: a) Strong application controls b) Enlisting the support of top management c) Long jail sentences d) Powerful microprocessors
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are three terms that are not used. 76. _____ shoulder surfing 77. _____ ACL 78. _____ CSI 79. _____ data diddling 80. _____ cookie 81. _____ dumpster diving 82. _____ EnCase 83. _____ CFAA 84. _____ salami technique 85. _____ Trojan horse 86. _____ firewall 87. _____ worm
TB 103.11
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell, and Savage
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Definitions:
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A. Malicious software similar to a computer virus B. An acronym for security institute that studies computer crime activities C. The act of altering data that are entered into, or used by, a computer D. A software program specifically designed for computer forensic investigations E. Federal legislation aimed specifically at computer crime F. A type of fraud in which the perpetrator steals small amounts from many different accounts G. A technique for luring individuals to reveal their personal identification information H. A software program or hardware device designed to prevent unauthorized data communications I. A malicious software program embedded in another innocent-looking one J. A type of bait used to lure computer users into sending money overseas K. A small text file that stores information about your browsing habits and interests L. Stealing personal information from trash cans M. Auditing software often used to test computer data N. Observing users as they enter passwords or other personal information to a computer O. A strong computer password named after a Greek statue
Short Answer Questions 88. 89. 90.
Define hacking. Define computer virus. Many say that cybercrime prevention begins with good policies and education of people. Discuss what it means to have good policies and good education.
TB 103.12
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
Chapter 115 INFORMATION TECHNOLOGY AUDITING
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True-False Questions
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1.
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One problem with internal auditing is that it is akin to self-regulation (i.e., the auditor cannot be impartial because both the auditor and the subsystem being audited work for the same company)External auditors report through a Chief Audit Executive to the Audit Committee of the Board of Directors.
2.
Both the internal audit and the external audit have the same primary objective (i.e., to verify that the financial records of the company have been prepared according to generally accepted accounting principles).
3.
Many of the assurance services auditors offer today involve information technology.
4.
The main objective of information technology auditing is to evaluate the computer’s role in achieving audit and control objectivesan organization’s IT infrastructure, processes and practices to provide assurance on the confidentiality, integrity and availability of information systems.
5.
If control procedures over a company’s computerized financial accounting system are particularly strong, auditors will not need to perform any substantive testing.
6.
Computer assisted audit techniques are used primarily when auditing around the computer.
7.
A career in information technology auditing requires both specialized skills and a broadbased set of technical knowledgeThe impetus for IT auditing can be traced to the adoption of computerized accounting systems, migration of business processes to computerized platforms, and enforcement of data security.
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8.
Certified Information Systems Auditors must have an accounting degree.
9.
The focus in an audit should be primarily on business risk rather than on internal control.
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10.9.
An information systems risk assessment is as concerned with errors and accidents as it is with fraud.
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11.10. When the costs of protecting against a business risk exceed the cost of the risk multiplied by its probability, an auditor will generally recommend against installing the specific controlThe CISSP is the most widely recognized and respected certification for IT auditors.
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
12.11. Public companies are required to adopt the Control Objectives for Information and Related Technology framework under SOX. 13.12. The Electronic Systems Assurance and Control model provides a framework for evaluating controls over email systemsElectronic Workpaper software (EWP) enable the auditor to review computer files without continually rewriting processing programs.
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14.13. An auditing around the computer approach pays little or no attention to the control procedures within an IT environment. 15.14. Normal transactions rather than exception transactions are of most interest to auditors. 16.15. Embedded audit modules and audit hooks are examples of continuous auditing techniques. 17.16. Use of test data is not recommended when evaluating integrated online systems. 18.17. The greatest advantage of an integrated test facility is that it enables an auditor to examine both manual and computerized steps companies use to process business transactions. 19.
In auditing through the computer, auditors will want to review systems software documentation.
20.18. An ideal program change control process includes required documentation of every request for application program changes as well as the use of a test environment for development and implementation of program changesThe Institute of Internal Auditors (IIA) released the Information Technology Assurance Framework (ITAF) as a “professional practices framework for IS audit and assurance”.
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21.19. The most important skills needed by information technology auditors are people skills. 22.20. Test of program length is one approach to detecting the existence of a Trojan HorseMany of the IIA’s GTAGs provide an overview of risks, controls and proposed audit procedures for a wide array of IT audit areas.
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23.21. Information Technology (IT) governance includes using IT responsibly and efficiently, but not necessarily strategically. 24.22. Auditors may use transaction tagging to verify how a system processes certain transactions. 25.23. It is relatively easy to prevent hackers from unauthorized access to data and programs. 26.24. The three conditions for fraud in the fraud triangle include pressure, rationalization, and opportunityThe IT Assurance Framework (ITAF) includes three broad groups of
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
standards: General Standards, Governance Standards, and Reporting Standards.
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27.25. SAS No. 99 – Consideration of Fraud in a Financial Statement Audit guides auditors in being more proactive in detecting fraud than did the predecessor standard, SAS No. 82. 28.26. One purpose of generalized auditing packages is to enable an auditor to examine the contents of computer files of interest without having to write a computer program himself/herself. 29.
The AICPA has decided to drop its WebTrust services and replace SysTrust with a general Trust assurance service.
27.
Section 404 of SOX requires that the information technology auditor “sign off” that the financial statements are reliable.
28.
Test data makes its possible to determine whether computer code is free from errors or fraud.
29.
Program comparison tools can detect unauthorized changes to accounting systems.
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30.
Internal audit functions are spending less time auditing information technology today because accounting systems are becoming too complex to audit.
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
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Multiple-Choice Questions
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31.
32.
Which of the following is not true regarding the CISA certification? a) An internal audit is never performed by external auditorsCISAs must comply with the Code of Professional Ethics b) The primary goals of an internal audit and an external audit are somewhat differentMaintaining the CISA designation requires substantial continuing professional education c) Both internal and external audits are similar in their insistence upon objectivity in the performance of the audit evaluationThe CISA exam covers a variety of job practice areas relevant to IT auditing d) Both the internal audit and the external audit rely heavily upon the audit trail of transactions in an accounting systemThe CISA exam is administered by the Institute of Internal Auditors
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The primary purposescope of an internal audit isfunction includes all of the following except: a) To verify the accuracy of a firm’s financial statementsefficiency and effectiveness of operations b) To punish employees for inefficient performancecompliance with laws and regulations c) To meet the requirements of the accounting professionreliability of internal and external reporting d) To ascertain employee adherence to organizational policies and proceduresmanaging day to day operations of business units
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33.
The best educational background for a Certified Information Systems Auditor is: a) A degree in information systems or technology b) A degree which combines the study of accounting with the study of information systems c) No college degree, but work experience in information systems d) An accounting degree
34.
Computer assisted audit techniques: a) Are never used in compliance testing b) May be used for substantive and compliance testing c) Are used primarily when auditing around the computer d) Are good tools for auditors who are lacking in technical computer skills
35.
A computerized AIS is harder to audit than a manual system for all of the following reasons except: a) The file information is not human readable b) The volume of transaction records and master file records is usually much larger in computerized systems than in manual systems c) An audit trail does not exist in a computerized AIS
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
d)
Computerized systems often use remote real-time data processing, thus complicating the tracing of transaction records to their sources
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
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36.
Information technology governance: a) Is a component of IT auditing b) Has one objective – to ensure that IT is used strategically to fulfill an organization’s mission c) Is intended to ensure both the strategic use of IT and control over IT resources d) Is primarily intended to deter IT fraud
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
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37.
Which of the following is not one of the groups of SOX compliance requirements? a) Requirements to use an IT auditor to evaluate controls b) Regulations governing executive reporting and conduct c) Rules about financial statement reporting d) Audit committee/corporate governance requirements
38.
The advantages of around-the-computer auditing include: a) The emphasis which is placed on testing data processing exceptions b) Use of live data c) The minimal disturbance of a company’s records d) both b and c
39.
If an auditor were to audit a payroll application using around-the-computer auditing techniques, the individual would: a) Use test data b) Verify that the output from the computerized processing was correct for the input data used to generate it c) Never use a surprise audit because of the amount of time and work involved d) Prepare a profile of a computer file and check the processed data with the profile thus obtained
40.
Through-the-computer auditing uses all of the following except: a) Confirmation sampling b) Test data c) Tests of program authorization d) Embedded audit modules
41.
The term “test data" is associated with: a) Auditing through-the-computer b) Auditing around-the-computer c) Auditing of manual accounting systems d) Non-auditing procedures performed by a firm’s accounting subsystem employees
42.
Three common techniques auditors use to test computer programs are: a) Test data, integrated test facilities, and parallel simulation b) Test data, edit checks, and integrated test facilities c) Test data, program change control, and parallel simulation d) Program change control, edit checks, and parallel simulation
43.
The most important advantage of an integrated test facility is that it: a) Allows auditors to evaluate transactions in an operational setting b) Can test every exception transaction as opposed to test data which includes only a limited set of such transactions c) Works best at evaluating input controls d) Has no disadvantages
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
44.
Which of the following audit techniques is likely to require the most technical expertise on the part of an auditor? a) Test data b) Integrated test facility c) Evaluation of program change control d) Parallel simulation
45.
Which of the following is not typically checked by an auditor in a review of a responsibility system of computer program development and maintenance? a) Documentation of all program changes on proper change-request forms b) Proper costing of all program change requests c) A review of each program change request by an internal auditor d) Matches between program documentation and the production version of a computer program
46.
The four approaches to through-the-computer auditing include all but which of the following: a) Use of embedded audit modules b) Testing of outputs to verify processing c) Computer program testing d) Validation of computer programs
47.
The auditor’s role in reviewing the system of computer program development: a) Does not include checking to see that all program changes are properly documented b) Does not include a check of librarian functions c) Does not include checking to see that program change requests are properly costed d) Includes a cross-check of program changes against in-use programs
48.
Which of the following is not a condition for fraud as identified in the fraud triangle?Within the IT Assurance Framework (ITAF), the General Standards: a) Incentives or pressuresProvide guidance on the planning and execution of IT assurance activities b) GreedRationalizationProvide guidance on the attributes of the IT auditing profession c) OpportunityProvide guidance on the nature of communications issued by the IT auditor d) Flawed moral characterProvide guidance on the distribution of IT audit reports
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
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49.
An integrated test facility is used to: a) Test only the computer programs of an AIS b) Test only the manual operations of an AIS c) Test both the programs and the manual operations of an AIS in an operational setting d) Test the computer programs, the manual operations, and the auditing procedures of a company using a computerized AIS
50.
The greatest drawback of an integrated test facility is that: a) It requires the construction of a high volume of test data b) It introduces artificial transactions into the transaction stream c) It produces overkill in the audit function d) It is not broad enough to cover the entire spectrum of activities involved in the AIS
51.
All of the following are true concerning embedded audit modules except: a) They provide for continuous auditing of application processing b) The auditor does not have to be involved in the development of these programs c) Once implemented, the system can capture information that is useful to the auditor on an ongoing basis d) With this approach, the application program incorporates subroutines for audit purposes
52.
Which of the following statements is not true regarding people skills for IT auditors? a) People skills are more important than technical skills b) An example of people skills would be the ability to work on a team c) In the case of protecting against computer viruses, technical skills matter more than people skills d) Many internal controls evaluated by auditors concern human behavior
53.
All of the following are examples of parameters that might be used to set passwords except: a) A minimum password length of six digits b) Restriction of passwords to numeric characters only c) Required use of words that can be found in a dictionary d) A requirement for a minimum interval (such as one day) before a password may be changed
54.
SQL is: a) An example of an integrated test facility b) A generalized audit software program c) A tool used for continuous auditing d) A tool query language used by auditors to retrieve and manipulate data
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d)
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
55.
Prewritten computer programs used for audit purposes are called: a) Sequential access program systems b) Positive confirmation audit systems c) Embedded audit modules d) Generalized auditing packages
56.
When an auditor audits with the computer, the auditor: a) Uses the computer to process transaction data under normal processing conditions b) Uses the computer as a tool to assist in various other auditing tasks c) Relies heavily upon test data to evaluate the presence or absence of specific computer controls d) Must also use an integrated test facility
57.
Information Technology governance includes all of the following except: a) A decentralized approach to IT acquisition b) Using IT strategically to carry out the objectives of an organization c) Ensuring effective management of an organization’s IT resources d) Control over IT-related risks
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
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58.
Under wWhich audit technique examines is the way transactions are processed examined? a) Exception reporting technique b) Transaction tagging technique c) Snapshot technique d) Parallel simulation technique
59.
Which section of SOX requires CEOs and CFOs to “sign off” on their company’s financial statements? a) Section 404 b) Section 201 c) Section 103 d) Section 302
60.
Which of the following services is not prevented bydoes SOX not prevent auditors from for an auditor to performing for their own clients? a) Internal auditing outsourcing services b) Expert services related to the audit c) Actuarial services d) Implementation of a financial information system
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, RoseWorrell, and NormanSavage
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61.
All of the following are reasons why SOX was enacted, except: a) Enron’s CEO, Jeffrey Skilling, claimed he did not know about the company’s financial shenanigans because he was not involved in their accounting b) Public perception was that auditors were having conflicts of interest with respect to the auditing and consulting services they provided c) The FASB has long been thought to be ineffective d) Congress wanted to restore investor confidence in the wake of a rash of corporate scandals
62.
Which of the following is not a principle of the AICPA’s Trust Services?The IT Assurance Framework’s (ITAF) Performance Standards a) Provide guidance on the planning and execution of IT assurance activities b) Provide guidance on the attributes of the IT auditing profession c) Provide guidance on the nature of communications issued by the IT auditor d) Provide guidance on the distribution of IT audit reports a) Maintainability b) Availability c) Online privacy d) Processing integrity
63.
Risks of using an integrated test facility include: a) Failure to remove fake transactions from the client’s system b) High costs of building the facility c) Discovery of many control weaknesses d) none of the above
64.
Controls over access to IT systems are particularly important because: a) Weak access controls prevent unauthorized use of systems b) Access controls allow auditors to employ continuous auditing techniques c) Access controls make test data more effective d) Weak access controls can allow users to bypass many other controls
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65.
Continuous audit techniques can improve the effectiveness of the audit by: a) Focusing most of the audit effort near the year-end b) Alerting auditors to potential problems when the problems occur c) Protecting the privacy of the auditors d) Facilitating parallel simulation
66.
Information technology governance is the process of using information technology resources: a) Iin governmental agencies b) Tto audit accounting systems c) Tto achieve organizational objectives d) Tto hire the board of directors
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67.
Increased use of big data by organizations is causing internal audit functions: a) Tto increase recruiting of IT specialists b) Tto abandon the CISA certification c) Tto stop using cloud computing d) Tto increase their focus on debits and credits
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Matching Questions
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For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once. 66.
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67. 68.______ automated workpaper software 68. 69.______ Certified Information Systems Auditor (CISA) 69. 70.______ computer-assisted audit techniques (CAATs) 70. 71.______ continuous auditing 71. 72.______ COBIT 72. 73.______ fraud triangle 73. 74.______ generalized audit software 74. 75.______ general-use softwareSQL 75. 76.______ information technology (IT) auditing 76. 77.______ information systems risk assessment 77. 78.______ integrated test facility 78. 79.______ IT governance 79. 80.______ parallel simulation 80. 81.______ penetration testing 81. 82.______ program change control 82. 83.______ Sarbanes-Oxley Act 83. 84.______ third party assurance services
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Definitions:
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A. Involves evaluating the computer’s role in achieving audit and control objectives B. The use of computer processes or controls to perform audit functions, such as sorting data
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to detect duplicate accounts payable invoice numbers C. A certification given by the Information Systems Audit and Control Association D. Method by which an auditor can evaluate the desirability of IT-related controls for a particular aspect of business risk E. To evaluate risk and design controls to protect against unauthorized access F. Provides auditors and businesses with guidance in managing and controlling for business risk associated with IT environments G. A language that auditors use to retrieve a client’s data and display these data in a variety of formats for audit purposesA productivity tool used by auditors to improve their work
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G. H. These programs enable auditors to review computer files without continually rewriting
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processing programs I. These programs can help auditors create common-size income statements and balance sheets that show account balances as percentages J. A more comprehensive test technique that is used to audit an AIS in an operational setting K. The auditor uses live input data, rather than test data, in a program actually written or controlled by the auditor L. A set of internal control procedures developed to protect against unauthorized program changes M. XBRL can support this concept N. The process of using IT resources effectively to meet organizational objectives O. Usually refers to motive, opportunity, and rationalization of inappropriate behavior in organizations P. An important feature of this legislation is commonly referred to as Section 404 Reviews Q. Specialized audits of Internet systems and Web sites
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Short Answer Questions
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853.
Discuss the elements of the Sarbanes-Oxley Act of 2002 that affect auditing.
864.
IT auditors need people skills as well as technical skills. Discuss some techniques and skills that assist the auditor during interviews.
87.New?. Describe continuous auditing and discuss examples of different continuous auditing techniques.
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TB 115.16
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Chapter 12 DOCUMENTING ACCOUNTING INFORMATION SYSTEMS
True-False Questions 1.
Documentation describes how an accounting information system operates.
2.
Documentation can help train new users of an accounting information system.
3.
Documentation can help businesses save money—for example, by saving on training costs.
4.
Documentation includes everything except narrative descriptions.
5.
A data flow diagram is an important tool in the systems development process.
6.
Data flow diagrams are only used to audit an AIS.
7.
Data flow diagrams use more symbols than system flowcharts.
8.
A circle or bubble symbol in a data flow diagram represents a “transformation process or an “internal entity.”
9.
Like system flowcharts, data flow diagrams have levels which show varying amounts of detail.
10.
The highest level of a data flow diagram is called a “context diagram.”
11.
The first level of detail in a data flow diagram is called a “physical data flow diagram.”
12.
The task of creating more detailed data flow diagrams is called “decomposition.”
13.
An important guideline to follow when creating data flow diagrams is to avoid including temporary files in them.
14.
An important guideline to follow when creating data flow diagrams is to show only one system entity even when several of them perform the same tasks.
15.
An important guideline to follow when creating data flow diagrams is to avoid user feedback because employees rarely understand data flow diagrams.
16.
Despite its name, a document flowchart does not show the physical flow of documents through an accounting information system.
TB 12.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
17.
The direction of information flow in a document flowchart is represented by arrows.
18.
Document flowcharts are mainly an educational aid and are seldom used in the business world.
19.
A document flowchart is a particular kind of system flowchart—it is a subset of a systems flowchart.
20.
Flowcharting is best viewed as a science, with strict rules and procedures.
21.
An example of a system flowcharting symbol is a rectangle, which represents “processing.”
22.
It is better to use connector symbols in flowcharts than to cross lines.
23.
A system flowchart typically depicts the electronic flow of data and processing steps in an AIS.
24.
A system flowchart represents a flow or job stream of accounting data through the various processing phases of the accounting system.
25.
Process maps document processes and are not as easy to draw or follow as system flowcharts. Process maps use circles and arrows as their primary symbols.
26. 27.
When drawing a process map, a good idea is to meet with employees to solicit ideas, suggestions, and comments.
28.
Program flowcharts are used primarily by systems analysts and programmers.
29.
The highest level program flowchart is called a “macro program flowchart.”
30.
Decision tables are useful when a data processing task includes a large number of conditions and subsequent courses of action.
31.
Decision tables use most of the same symbols as process maps.
32.
The maximum number of rules for a decision table is 2n, where n is the number of conditions.
33.
A major disadvantage of decision tables is that they are unable to summarize data processing tasks associated with a large number of data conditions into any kind of compact or easily understood format.
34.
A useful guideline for drawing decision trees is to begin on the right and draw branches to the left. TB 12.2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
35.
When drawing a decision tree, a node can represent an entire subset of conditions, which can be drawn later in a separate tree.
36.
You can draw documentation charts of various types using Microsoft Word or Excel.
37.
Programs such as allClear and Visio are examples of CASE tools.
38.
Documentation is not important when end users create their own computer programs or applications.
39.
Good documentation to include when creating spreadsheets is the name of the original developer and important assumptions made in the model.
40.
Companies should create documentation standards that apply to end-user programs as well as applications created by the IT department.
Multiple-Choice Questions 41.
Documentation includes: a) All flowcharts, narratives, and other written communications associated with the information system b) All written communications associated with an accounting information system except flowcharts and data flow diagrams c) All flowcharts, narratives, and other written communications associated with an accounting information system, except for program flowcharts or decision tables d) Flowcharts and data flow diagrams only
42.
The textbook identified 10 reasons why documentation of an AIS is important. For which of the following reasons would the user guides, procedure manuals and operating instructions be most important? a) Depicting how the system works b) Training users c) Designing new systems d) Standardizing communications with others
43.
Which of these requires external auditors to understand a client’s system of internal controls before conducting an audit—an understanding aided by documentation? a) SAS 1 b) AS 2201 c) The Securities and Exchange Act of 1939 d) SOX Act of 2002
TB 12.3
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
44.
AIS documentation is useful for accomplishing all of the following except: a) Standardizing communications with others b) Auditing AISs c) Helping businesses comply with the Sarbanes Oxley Act d) Saving businesses money e) Documentation helps in all of the above
45.
The AIS documentation discussed in the textbook enables businesses to document all of the following except: a) Accounts receivable processes b) Inventory management processes c) How to file a reimbursement claim d) Payroll deduction logic e) Documentation tools can represent the logic for all of these processes
46.
Logical data flow diagrams: a) Accomplish the same purpose as system flowcharts b) Are different from system flowcharts since they focus on a logical view of the information system c) Are useless for planning a new system d) Are never used in analyzing an existing system
47.
The basic symbols used in data flow diagrams are: a) A circle, square, diamond, and rectangle b) A triangle, circle, square, and open-ended rectangle c) An open-ended rectangle, line and arrow, diamond, and square d) An open-ended rectangle, line and arrow, circle, and square
48.
In a data flow diagram, an open-ended rectangle is used to represent: a) A process b) A data stream c) A data source or destination d) A data store
49.
All of these are levels of a data flow diagram except: a) Physical data flow diagram b) Process diagram c) Context diagram d) Logical data flow diagram
TB 12.4
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
50.
All of these are terms normally associated with data flow diagrams except: a) Context diagram b) Physical DFD c) Logical DFD d) Pseudo DFD
51.
The task of providing greater detail in successive levels of data flow diagrams is called: a) Contexting b) Detailing c) Decomposition d) Pyramiding
52.
All of these are guidelines for creating good data flow diagrams except: a) Show the most detail in the highest-level DFD b) Each logical DFD should contain between 5 and 7 processing bubbles c) Even if a file is temporary, include it in your DFD d) Classify most of the final recipients of processed data as external entities
53.
Which type of data flow diagram depicts what the participants are doing in a system (i.e., what the system is doing)? a) Context diagram b) Physical DFD c) Logical DFD d) Systems flowchart
54.
Which type of data flow diagram illustrates the internal and external entities who are participating in a given system? a) Context diagram b) Physical DFD c) Logical DFD d) Systems flowchart
55.
Which of the following data flow diagram symbols is correctly identified?
a. a) b) c) d)
b.
c.
External entity Internal entity Communication link (e.g., a satellite connection) Data store (file)
TB 12.5
d.
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
56.
Which type of data flow diagram presents a high-level view of a system process? a) Context diagram b) Physical DFD c) Logical DFD d) Systems flowchart
57.
Document flowcharts organize documents and activities by: a) People b) Departments c) Monetary value d) Complexity
58.
Which of the following are most likely to be used by accountants as documentation? a) Program flowcharts b) Document flowcharts c) Decision tables d) System flowcharts
59.
Which of the following professionals would find a document flowchart useful? a) Accountants b) Auditors c) System designers d) all of the above
60.
A reader of a document flowchart is able to distinguish between the preparation of a document in one department and its receipt in another department by: a) Logic b) Arrows or/and connectors c) Column d) Narratives
61.
When an individual prepares a document flowchart, the names of the various organizational departments involved in the accounting information system should be listed: a) Along the right-hand margin of the flowchart b) Along the left-hand margin of the flowchart c) In the title of the flowchart d) In the column headings of the flowchart
TB 12.6
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
62.
The document flowchart symbol for a manual file (such as a file cabinet) is: a)
63.
c)
d)
This is the document flowcharting symbol for a source document such as a purchase order: a)
64.
b)
b)
c)
d)
This is the system flowcharting symbol used to represent an online file: a)
b)
c)
d)
65.
A system flowchart is a block diagram that: a) Is used only by auditors b) Is used primarily when document flowcharts cannot be used c) Depicts the flow of computer systems in an organization d) Depicts the flow of data through a computerized accounting information system
66.
Most system flowcharting symbols: a) Have not been standardized b) Have been standardized by the Society of System Analysts c) Have been standardized by the National Bureau of Standards d) Are unique to the organization that uses them
TB 12.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
67.
Which of the following symbols represents the standard systems flowcharting symbol for an input/output process? a)
68.
c)
d)
Which of the following symbols represents the standard system flowcharting symbol for a screen display? a)
69.
b)
b)
c)
d)
Which of the following symbols represents the standard system flowcharting symbol for a processing operation? a)
b)
c)
d)
70.
When creating system flowcharts, the requirement that a processing symbol should always be placed between an input symbol and an output symbol is known as the: a) Processing rule b) Input/output rule c) Sandwich rule d) Cycle rule
71.
In most process maps, an arrow represents: a) The direction for reading the chart b) The tasks to perform in an accounting task c) The flow of data d) The flow of money through a cash register
72.
Which of the following is not one of the four parts of a decision table? a) The condition stub b) Condition entries c) Decision symbols d) Action entries TB 12.8
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
73.
Well written documentation plays a key role in: a) Reducing system failures b) Increasing time spent correcting errors c) Increasing time spent modifying programs d) Increasing time spent by auditors following data flows
74.
Decision trees normally flow from: a) Top to bottom b) Left to right c) Right to left d) Inside outwards
75.
Which of the following flowcharting symbols is correctly identified?
a. a) b) c) d) 76.
b.
c.
Process Document Decision Display
End-user computing is common in firms because: a) It is free b) It is well-documented c) It allows employees to rapidly develop applications d) It prevents employees from altering systems
TB 12.9
d.
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90.
______ CASE (computer-assisted software engineering) tools ______ context diagram ______ data flow diagrams ______ decision table ______ document flowchart ______ documentation ______ end user computing ______ graphical documentation software ______ logical data flow diagram ______ object-oriented software ______ physical data flow diagram ______ process map ______ program flowcharts ______ system flowchart
Definitions: A. Traces the physical flow of documents through an organization B. A high-level data flow diagram C. Concentrates on the computerized data flows of AISs D. Document business processes in easy-to-follow diagrams E. Programs that contain modular, reusable code F. IT professionals create these to help them plan the logic for each processing routine in
large programs G. Allows users to automate documentation tasks such as drawing or modifying flowcharts,
drawing graphics and screen designs, developing reports, and even generating code from documentation H. A DFD that shows what participants do in a given system I. Describes the logical flow of data within a computer system and the procedures that employees must follow to accomplish application tasks J. Used as an alternative to program flowcharts K. A context diagram that has been decomposed into the first level of detail L. Examples include Microsoft PowerPoint, Word, and Excel M. Refers to the ability of non-IT employees to create computer applications of their own N. Used primarily in the systems development process (i.e., as a tool for analyzing an existing system or as a planning aid for creating a new system)
TB 12.10
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Short Answer Questions 91.
What are the four symbols used in a data flow diagram, and what does each of the symbols mean?
92.
What is the purpose of a decision table?
93.
What are process maps? Are they useful to accountants? If so, how?
94.
What is end user documentation? Who creates it? Why is it important?
TB 12.11
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Chapter 13 DEVELOPING AND IMPLEMENTING EFFECTIVE ACCOUNTING INFORMATION SYSTEMS
True-False Questions: 1.
The first stage in the systems development life cycle is analyzing the company’s current system.
2.
The first stage in the systems development life cycle is planning the systems study itself.
3.
Most systems development life cycles consist of mutually exclusive activities, with little overlap between the stages.
4.
Accountants do not have to worry much about systems studies—they are rarely affected by them.
5.
The search for more efficient ways to serve customers is an important reason why business organizations perform systems studies.
6.
One way to help ensure a systems study uses a “broad point of view” is to assemble an interdisciplinary study team.
7.
A study team should approach a systems study with a narrow point of view in order to focus directly on the system and not be distracted by peripheral issues.
8.
The members of a systems study team should be from the same discipline or area so that they can work together well.
9.
An important first step in the systems analysis phase of a systems study is a preliminary investigation of the system under study.
10.
Top management involvement is critical to the success of a systems study.
11.
When a waitress delivers food late to a customer because the kitchen is backed up, the “late food” is an example of a symptom while the “kitchen being backed up” is the real cause of the problem.
12.
“Analysis paralysis” means “analyzing a system to death” at the expense of reaching a conclusion.
13.
The three major types of organizational goals discussed in the chapter are (1) general systems goals, (2) computer goals, and (3) salary goals.
TB 13.1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
14.
“Cost” is rarely a concern in developing information system. What is more important is that the anticipated benefits of a new AIS exceed its costs.
15.
In the context of systems analysis, the goal of developing a “flexible AIS” means that the system should be able to process a variety of transactions and produce a variety of outputs.
16.
It is not important to satisfy top management goals when creating a new information system because most such systems are used by operating employees, not top managers.
17.
The information needs of top managers tend to be the most detailed, and focus on short range planning and budgeting.
18.
The information needs of operating managers are normally easier to determine than those of top managers because their decision making tends to be better defined and narrower in scope.
19.
The developers of new accounting information systems should not be concerned with non-monetary figures because these are mostly irrelevant to accountants.
20.
One method of studying a current AIS is to observe the system in operation.
21.
Employee behavioral problems are rarely important in systems analysis and design work because most systems are computer-based, not human-based.
22.
Systems survey work might include gathering data on an existing information system or observing the current system in operation.
23.
An important deliverable from the analysis portion of a systems study is the final systems analysis report, which should be sent to the company’s steering committee.
24.
When considering the design of a new system, four types of feasibility concerns are (1) technical feasibility, (2) operational feasibility, (3) schedule feasibility, and (4) legal feasibility.
25.
An example of “legal feasibility” is whether or not a proposed computer system can comply with state and federal statutes.
26.
“Schedule feasibility” is not important to a study team if a company already has an automated system.
27.
“Economic feasibility” refers to whether a company can afford a proposed system.
28.
“Schedule feasibility” refers to whether or not computer vendors can provide bids in a timely manner.
TB 13.2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
29.
Unless the human element of a systems change is considered, the best designed system "on paper" will often be an operational failure when it is implemented.
30.
In designing an AIS, system developers should design the outputs of the system first, not the inputs.
31.
The term “cost/benefit” is most closely associated with the economic feasibility of a proposed accounting information system.
32.
For a system to be totally feasible, all feasibility areas must be considered in the process.
33.
When developing a new AIS, it is important for designers to delay developing controls for it so that they can retrofit controls after the new system is best understood.
34.
When developing the specifications for a new AIS, designers begin with outputs—not inputs or processing requirements.
35.
Within the context of systems design, an example of a “demand report” is one that shows anticipated demand for a new product.
36.
Within the context of systems design, an example of an “exception report” is one that identifies exceptional employees, as judged by popular vote.
37.
An example of a soft-copy report is one that identifies slow-moving items where demand is soft.
38.
Prototyping is an approach to systems design whereby a design team develops a simplified shell of working software for a proposed information system.
39.
An advantage of prototyping is that models are usually developed without the aid of a computer.
40.
Within the context of systems design, the “make or buy” decision refers to whether an organization should purchase an existing system, or develop its own system.
41.
Another common term for “prewritten software” is “canned software.”
42.
The term “RFP” stands for “reference project.”
43.
The term “RFP” stands for “relative forthcoming price.”
44.
The term “RFP” stands for “request for proposal.”
45.
When comparing computer vendor proposals, the reputations of these vendors should also be evaluated.
TB 13.3
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
46.
An alternative to developing its own AIS, an organization might consider outsourcing the processing to an external company.
47.
An example of knowledge process outsourcing (KPO) is processing tax returns.
48.
Knowledge process outsourcing (KPO) mainly refers to outsourcing to offshore companies in places where labor is cheap.
49.
One goal that outsourcing rarely achieves is saving money.
50.
In selecting a vendor finalist, a steering committee can use a point-scoring analysis to evaluate the proposals of alternate computer vendors.
51.
Systems study work ends when the follow-up analysis shows that no further adjustments need to be made to the newly implemented system.
52.
The implementation and initial operation phase of a systems study is also known as the "action" phase of a systems study.
53.
One implementation problem is installing a new system that is not adequately documented or tested.
54.
PERT is an acronym for “Project Expert and Resource Technique.”
55.
The purpose of PERT is to coordinate the activities in a project, such as a systems implementation project.
56.
One thing that can go wrong during systems implementation is implementing a system that has not been completely tested.
57.
A PERT network diagram reflects the logical sequence of systems implementation activities.
58.
The “slack time” for a PERT activity represents the amount of time the activity can be delayed without delaying the entire project.
59.
The critical path represents the longest path through a PERT network diagram.
60.
Gantt charts are the same as PERT charts.
61.
Project management software allows users to perform “what-if” analysis⎯for example, to determine how different work schedules might lower the time to install a new computer system.
TB 13.4
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
62.
Controls are rarely established during the implementation of a new computer system— this must wait for the first audit of the system.
63.
During systems implementation, “converting computer files” is only necessary if the files are currently in manual formats.
64.
A “turnkey” computer system is a complete set of computer hardware and software that allows the user to avoid technical decisions and to begin operating quickly.
65.
The terms “parallel conversion” and “direct conversion” are different terms for the same thing.
66.
As part of the systems follow-up work, an implementation team can watch employees perform their work activities to ascertain whether the employees are executing their assigned job functions correctly.
67.
At the conclusion of the initial follow-up study, a project leader will prepare a report called a post-implementation review report.
68.
The tasks involved in “systems maintenance” are normally performed by external vendors, and rarely by a company’s internal information systems department.
69.
When using outsourcing, a company needing data processing services hires an outside organization to handle all or part of these services.
70.
A possible advantage of outsourcing is that it frees corporate assets for other projects.
71.
Outsourcing can help a company avoid seasonal fluctuations in its business.
72.
Outsourcing facilitates downsizing.
73.
A disadvantage of outsourcing is that a company can lose control of its IT systems and data processing.
Multiple-Choice Questions: 74.
Which of these is not a stage in the systems development life cycle? a) Planning and investigation b) Analysis c) Design and acquisition d) Implementation, followup, and maintenance e) All of these are stages in the systems development life cycle
TB 13.5
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
75.
The acronym SDLC stands for a) Systems design and logic for computers b) Study, dedication, life, and conviction c) Systems development life cycle d) Secondary development and allocation
76.
The totality of computer systems in a firm is called its: a) Applications portfolio b) Systems burden c) BPR collection d) IT department
77.
Which of these should come first when performing a systems study? a) Systems analysis b) Systems design c) Preliminary investigation d) Systems audit
78.
Which of these acronyms is not normally associated with the systems studies? a) SDLC b) RFP c) PERT d) SOX
79.
Which of these individuals is least likely to participate in a system’s study? a) Internal auditor b) External auditor c) Top manager d) Member of the IT department
80.
An intensive investigation of a company's present information system in order to discover systems weaknesses is termed a: a) Systems study b) Systems follow-up c) Systems design d) Systems survey
81.
Which of these is not a phase in the life cycle of an information system? a) Planning b) Analysis c) Control d) Implementation
TB 13.6
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
82.
The four phases of the systems development life cycle end with this phase: a) Analysis b) Design c) Implementation, follow-up, and maintenance d) Development
83.
Which of these is most likely to be the first task in a systems study? a) Systems analysis b) Systems design c) Preliminary investigation d) any of these are possible—it depends upon the system under study
84.
According to the chapter, which of these comes closest in meaning to the term “systems approach?” a) Narrow point of view b) Broad point of view c) Focus on achieving those goals important to computerized systems d) Focus first and foremost on computerization
85.
Which of the following is least likely to be a member of a study team? a) CEO of a company b) Internal auditor or accountant c) IT specialist d) Middle-level manager who uses the system
86.
Which of these statements is true? a) Accountants need not bother with systems studies—they are mostly performed by IT specialists b) System studies enable bright accountants to express ideas for improving a system c) Systems studies rarely involve accounting information systems d) all of these are true
87.
A poorly-planned information system can result in: a) Employee resistance and even sabotage b) Inflexible systems that are hard to maintain or modify c) Systems that solve the wrong problems d) all of these are true
88.
A waitress brings cold food to a customer, who complains. Which of these is most likely to be the cause of the problem and not a symptom of this problem? a) The angry customer b) An irritable waitress c) The cold food itself d) The inability of the kitchen staff to keep up with many orders at once
TB 13.7
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
89.
A student fails a course at his university. Which of these is most likely to be the cause of the problem and not a symptom of this problem? a) An angry student b) The student gets placed on probation c) The student’s mother pays an angry visit to the dean of students d) The student did not study for the course
90.
Which of these is not a general systems goal? a) Relevant output b) Cost awareness c) Flexible structure d) Higher salaries
91.
The systems goals of a company's operating management include: a) Cost awareness b) Relevant output c) Flexible structure d) all of the above e) none of the above
92.
Compared to top management's system information goals, obtaining the information needs of operating management is normally: a) Easier b) More difficult c) No different d) Not required
93.
One mistake that a study team can make when performing a systems analysis is to: a) Perform a preliminary investigation first b) Have employees participate in the systems study work c) Utilize a "systems approach" in performing the systems study d) Ignore the strong points of the present system
94.
Which of the following is an objective of a systems survey? a) To understand management information needs b) To understand the human element and gain cooperation from people involved with the system c) To enlist management participation and cooperation d) all of the above are objectives of a systems survey
95.
The steering committee in a systems study: a) Consists entirely of outside consultants b) Represents management in a systems study c) Should include external auditors d) Is typically composed entirely of end users
TB 13.8
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
96.
This type of survey instrument best allows employees to answer in their own words: a) Open-ended questionnaire b) Closed-ended questionnaire c) Multiple-choice questionnaire d) Fill-in-the-blank questionnaire
97.
This is a common method for reviewing a company's internal control procedures: a) Use an informant b) Consult historical records c) Get top management's opinions d) Use internal control questionnaires
98.
Which of these is not a logical procedure that is followed in the systems analysis phase of a systems study? a) Define the problem(s) in the current system b) Identify the company's goals c) Perform a systems survey to acquire information about the current system d) Generate possible solutions to solve the company's problem(s) e) all of the above are systems analysis procedures
99.
Once all facts and data have been collected in the systems survey, this activity can begin: a) The preliminary investigation b) Appoint a steering committee c) Perform the data analysis d) Perform the systems implementation
100.
Systems design usually comes after: a) Systems analysis b) Systems funding c) Systems deletion d) Systems implementation
101.
Which of these is not a common dimension in a feasibility study? a) Technical b) Operational c) Schedule d) all of these are common dimensions
102.
The most important factor in planning for a major change in a computer-based system is: a) The organization of the IT department b) The ability of the systems programmers to write appropriate software c) The selection of the most advanced computer equipment d) Giving the systems people a free hand in all changes e) The participation of top management in the planning process
TB 13.9
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
103.
In conducting a feasibility study, operational feasibility refers to whether: a) A proposed system is attainable given the existing technology b) A manager can coordinate and control the activities of the systems department c) An adequate computer site exists for the proposed system d) The proposed system will produce economic benefits that exceed its costs e) The system can be used effectively within the operating environment of an organization
104.
Which of these are the five feasibility areas that a design team should examine? a) Technical, legal, social, economic, schedule b) Economic, software, legal, hardware, schedule c) Organizational, hardware, operational, legal, economic d) Schedule, economic, operational, technical, legal
105.
Which one of these design feasibility areas is typically performed by accountants? a) Economic b) Organizational c) Hardware d) Schedule e) Social
106.
Which of the following is not a general objective when designing an AIS? a) A system should provide information that is timely and relevant for decision making by management and operating personnel b) The output of a system should be highly accurate c) A system should have sufficient capacity to accommodate levels of normal activity; any additional capacity proves too costly in the long run d) A system should be as simple as permitted so that its structure and operation can be easily understood and its procedures easily accomplished e) A system should be flexible to accommodate changes of a reasonable magnitude when required
107.
Converting to a new computerized system will typically entail large dollar expenditures to make the new system operative. These monetary expenditures normally are incurred for: a) Transferring a company's financial data from its present storage media to computerized storage media b) Testing the operations of the new system before it replaces the old system c) Establishing good internal controls for the new computerized system d) all of the above
TB 13.10
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
108.
Which of these is true when designing control procedures for a computer system? a) Control procedures are irrelevant b) Control procedures should be designed and implemented after the proposed system is functioning properly c) Control procedures should be built into the system as it is designed d) Control procedures should be implemented regardless of their costs
109.
All of these are examples of typical benefits that a company might enjoy when switching to a new computer system except: a) Reduced clerical costs b) Enhanced sales c) Better customer service d) Lower hardware and software costs
110.
All of these are examples of typical costs that a company will usually incur when switching to a new computer system except the costs of: a) New computer hardware and software b) Hiring additional employees c) Operating the new system d) Site preparation e) Lost customers
111.
When designing a computer-based information system, the initial step in the systems design process is to identify: a) The required outputs b) The source documents that serve as the basis for input c) The processing required d) The computers that will be used e) The data required for input
112. A complete, ready-to-go system of computer hardware and software is also often called a(n): a) Turnkey system b) Canned system c) Kitchen-sink system d) All-in-one system 113.
Which of these best describes prototyping as used in practice? a) Reiterative process b) One-time trial c) Top management exercise d) all of these describe prototyping
TB 13.11
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
114.
All of these are advantages of prototyping except: a) Involves end users and therefore obtains a better definition of user needs b) Involves top management and therefore better achieves strategic goals c) Requires a comparatively short period of time d) all of these are typically advantages of prototyping
115.
Which of these is a disadvantage of prototyping? a) Requires inputs from end users b) Requires inputs from top management c) Requires an iterative testing process that takes some time and patience d) all of these are common disadvantages with prototyping
116.
All of these are common selection criteria for choosing a final software package from a vendor except: a) Evaluate the performance capabilities of each proposed system b) Weigh the costs and benefits of each proposed system c) Evaluate the maintainability of each proposed system d) all of these are common selection criteria for selection
117.
Within the context of systems studies, a point-scoring system is commonly used: a) Selecting employees to use for such studies b) To identify the most productive employees c) To rank processing alternatives for a given task d) To rank competing systems when purchasing a system
118.
The choice of developing its own system or acquiring a software package from an external vendor is also called this type of decision: a) Point-scoring decision b) Make-or-buy decision c) Overall feasibility decision d) PERT decision
119.
Which of these is not a common selection criterion when choosing an AIS? a) Performance capabilities of each proposed system b) Compatibility of each proposed system with existing systems c) Vendor stability and support d) The costs and benefits of each proposed system e) all of these are common selection criteria
120.
Which of these is an alternative to purchasing an AIS or developing one inhouse? a) Prototyping b) BPO c) Change management d) Direct conversion
TB 13.12
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
121.
When using a point-scoring system, the winner is usually the choice with: a) The lowest score b) The highest score c) The median score d) The vendor with the most resources
122.
All of the following are things that might go wrong when implementing a new system except: a) An untested system is installed anyway b) Complete documentation is lacking c) Not enough resources are allocated for subsequent maintenance d) all of these are common missteps in systems implementation
123.
After successfully implementing a new system, what activities should the implementation team normally perform in their follow-up work? a) Evaluate the control procedures of the new system b) Determine if output schedules for reports are being met under the new system c) Observe some of the employees’ work performances under the new system d) all of the above activities should normally be performed
124.
The most time-consuming path in a PERT network is called the: a) Slack path b) Completion path c) Critical path d) none of the above
125.
In a PERT network diagram, the amount of delay time that can occur in a non-critical activity and still not delay the estimated completion time of a systems implementation project is called: a) Slack time b) Noncritical time c) Critical time d) none of the above
126.
A simple diagram that shows estimated completion times versus actual completion times for the various activities in a systems implementation project is a(n): a) E-R diagram b) PERT chart c) Gantt chart d) Data flow diagram
TB 13.13
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
127.
With the use of this, a company hires an outside organization to handle all or part of its data processing services. a) Turnkey system b) Gantt chart c) Slack time d) Outsourcing
128.
Which of these is not generally a reason to outsource: a) Retain control over data b) Attractive business solution c) Lower data processing costs d) Avoid seasonal fluctuations
Questions 129 – 139 refer to the following chart. Numbers to the right of equal signs are in “weeks.” C=4 2 A=2
5
H=2
D=5
1
4 E=4
7 G=2
B=3
I=3
3
6 F= 4
129.
This diagram is an example of a: a) PERT chart b) Gantt chart c) System flowchart d) Waterfall model
130.
In this chart, the letters represent: a) Activities b) Milestones c) Employees d) Data values e) Position numbers
131.
In this chart, the circles represent: a) Activities b) Milestones c) Employees d) Data values e) References to other charts
TB 13.14
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
132.
In this chart, note that two arrows point to circle 5. This means that: a) Activity E requires two subsequent activities b) Activity H requires two precedent activities c) Both activities C and D require activity H to be completed first d) none of these
133.
In PERT diagrams the shortest completion time of the entire project is equal to: a) The shortest path through the network b) The longest path through the network c) The easiest path through the network d) The most difficult path through the network e) The path of least resistance
134.
Which of the following is the critical path in this network? a) ACH b) BFI c) EG d) EDH e) ABDG
135.
The latest starting time for activity H is the beginning of week: a) 2 b) 4 c) 6 d) 9 e) none of these
136.
The earliest starting time for activity G is the beginning of week: a) 2 b) 4 c) 5 d) 9 e) none of these
137.
The slack time for activity D is: a) 2 b) 4 c) 6 d) 9 e) none of these
138.
If the project leader now believes that C should be 6 (not 4), the critical path is now: a) EG b) ACH c) BFI d) ABC e) none of these
139.
The information in this chart is commonly summarized in a second, bar chart called a: a) Gantt chart b) Organization chart c) Control chart d) Data flow diagram e) Scatter chart
TB 13.15
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Matching Questions For the following terms find the correct definition below and place the letter of that response in the blank space next to the term. Each definition is used only once – there are two terms that are not used. 140. ______ modular conversion 141. ______ direct conversion 142. ______ legal feasibility 143. ______ scope creep 144. ______ applications portfolio 145. ______ feasibility evaluation 146. ______ critical path 147. ______ operational feasibility 148. ______ prototype 149. ______ slack time 150. ______ technical feasibility 151. ______ change management 152. ______ parallel conversion 153. ______ Gantt chart 154. ______ benchmark test 155. ______ economic feasibility 156. ______ PERT 157. ______ preliminary investigation 158. ______ schedule feasibility 159. ______ turnkey system
TB 13.16
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Definitions: A. Computer experts typically work on this phase of the feasibility evaluation because a
thorough understanding of IT is essential B. The design team attempts to assess whether the anticipated benefits of the system exceed its projected costs C. Systems work where the design team determines the practicality of alternative proposals D. This phase of a systems study requires the design team to estimate how long it will take a new or revised system to become operational E. Software that interfaces with suppliers and customers F. Software from independent vendors that comes bundled (i.e., combined) with hardware G. Includes an enterprise system, any specialized information systems, or other separate systems for functional areas such as accounting, marketing, and human resources H. The longest-path to project completion and also the shortest completion time of the entire project I. Conversion to a new system where the new system is implemented in stages J. A scaled-down, experimental version of a nonexistent information system that a design team can develop cheaply and quickly for user-evaluation purposes K. A new or revised system should comply with all applicable federal and state statutes about financial reporting requirements, as well as the company’s contractual obligations L. For this phase of the system study, the design team must analyze the capabilities of current employees to perform the specific functions required by each proposed system and determine to what extent employees will require specialized training M. A project leader first prepares a list of systems implementation activities, identifies the prerequisite activities that must be completed before others can start, and estimates the amount of time required to complete each activity N. The most difficult issue in implementing a new system O. The phrase used to describe delays in meeting the schedule for delivering a systems project P. Conversion to a new system where the organization operates both the new and the old system for some period of time Q. Conversion to a new system where the organization immediately discontinues use of the old system and uses the new system R. The amount of delay time that can occur in each non-critical activity and still not delay the project S. Useful for both scheduling and tracking the activities of systems implementation projects because actual progress can be contrasted with the planned progress T. One way to examine the operating efficiency of a particular system U. One important part of this work is to separate symptoms from causes V. One of the four stages in the SDLC
TB 13.17
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Short Answer Questions 160.
What is the purpose of a Systems Steering Committee if an outside consultant is hired to perform the system study?
161.
Name several conditions when prototyping a system is useful.
162.
What is a PERT chart and why is it helpful in planning a project?
TB 13.18
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
Chapter 14 DATA MODELING
True-False Questions 1.
The letter “M” in the acronym DBMS stands for “maintenance.”
2.
The letter “M” in the acronym DBMS stands for “management.”
3.
An accounting information system database is a collection of facts and figures that serves the accounting information needs of one or more organizational subsystems.
4.
Given the flexibility and usefulness of computerized accounting databases, a company will always find it cost effective to use them in processing, storing, and retrieving accounting data.
5.
The correct order of elements, from smallest to largest, in the data hierarchy is data field, record, file (table), database.
6.
The correct order of elements, from smallest to largest, in the data hierarchy is data field, file (table), record, database.
7.
The correct order of elements, from smallest to largest, in the data hierarchy is database, data field, record, file (table).
8.
The basic unit of information in an accounting information system database is the debit.
9.
The largest unit of information in an accounting information database is a data field.
10.
The basic unit of information in an accounting information database is a table.
11.
The smallest unit of information in the data hierarchy is a data field.
12.
The largest unit of information in the data hierarchy is a record.
13.
A computer record is used to store all the information about one transaction, but several such records must be used to store the information about one employee, one inventory part, and so forth, on a master file.
14.
The data field that distinguishes one computer record from another in a database table is called the primary record key.
15.
Record keys on computer files are unique only to the extent that they classify computer records by some general category.
TB 147.1
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
16.
A last name such as “Smith” is an example of a useful primary record key.
17.
An employee number is a good example of a useful primary record key.
18.
For a file of employee workers, it would make more sense to use their last name as a primary key rather than their employee number..
19.
A foreign key is a data field in the records of one table that references a primary key in the records of another table.
20.
Three database concerns when creating large databases are “data integrity,” “processing accuracy,” and “data security.”
21.
A data dictionary is a computer file describing the data items of an accounting database.
22.
The term “transaction control” refers to the requirement that a database system either process a transaction entirely, or not at all.
23.
The “concurrency” concern in database operations refers to the need to convert foreign currency amounts into dollar terms before reporting them to subschema viewers.
24.
The idea behind concurrency control is to deny several users access to the same database record at the same time.
25.
Database security is no longer important because DBMSs are already so safe.
26.
The idea behind view controls is to allow users access to only that information that they need to see.
27.
The initials R-E-A in the REA accounting framework refer to “resources, events, and accounting.”
28.
“Protecting privacy” is an important goal in data modeling.
29.
“Reducing data redundancy” is an important goal in data modeling.
30.
The E-R model refers to the “entity-relationship” model.
31.
An example of a database cardinality is “one-to-many.”
32.
An example of a database cardinality is “one-to-few.”
33.
An example of a database cardinality is “one-to-one.”
34.
An example of a “one-to-one” relationship is “employee to assigned parking stall.”
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
35.
An example of a “one-to-many” relationship is “students to classes.”
36.
A relational data structure should never be used for accounting systems.
37.
A disadvantage of relational databases is that they cannot accommodate a variety of file inquiries.
38.
An advantage of relational databases is that additional indexes can be added at later points of time as new data processing requirements dictate.
39.
Normalizing accounting data refers primarily to eliminating errors and outliers, thus creating “normal data.”
40.
An important reason for normalizing data is to eliminate data redundancy.
41.
A flat file is a database with no records.
42.
Databases cannot store more than one value in the same data field of the same record.
43.
A database is in first normal form if all of its record’s data fields are well defined and the information can thus be stored as a flat file.
44.
A database is in first normal form if the data it contains is free of errors and outliers.
45.
A database is in second normal form if all of its records are in first normal form, and a second, duplicate record exists for each of them.
46.
A database is in third normal form if all of its records are in second normal form, and there are no transitive dependencies.
47.
An example of a transitive relationship in a parking-tickets application is the one between “ticket code” and “fine amount.”
48.
An example of a transitive relationship in a medical application is the one between “medical procedure code” and “cost of treatment.”
49.
An example of a transitive relationship in a medical application is the one between “doctor number” and “patient name.”
50.
Relational databases store small amounts of data in spreadsheets.
51.
Big data refers to data that are of large volumes and are unstructured.
52.
A sale is an example of an event in the REA accounting framework.
TB 147.3
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
Multiple–Choice Questions 53.
All of these are reasons why databases are important to AISs except: a) AIS databases store valuable information b) Many AISs are large and therefore potentially unwieldy c) The databases of some organizations are very complex d) The hard disk space used to store AIS databases is comparatively expensive e) all of these are reasons why databases are important to AISs
54.
The basic unit of information in a database table of accounting data is a(n): a) Inventory part number b) Data field c) Computer record d) Debit
55.
All of the following are items within the data hierarchy except: a) Database b) Data field c) Record d) all of these items are part of the data hierarchy
56.
The data item which uniquely identifies a computer record in an AIS database table is called the: a) Pointer address b) Primary record key c) Employee number d) Header label e) Sort field
57.
This item creates relationships by linking the date in one file (e.g., customer) to an item in a second file (e.g., a sales order: a) Foreign key b) Data dictionary c) Relationships link bit d) Index file
58.
The best choice for the primary key in an “Employees” table would be his or her: a) Last name b) First name c) Phone number d) Employee number
TB 147.4
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
59.
From the following choices, the best example of a primary key for an employee table would be his or her: a) employee number b) Phone number c) Last name d) Office number
60.
The foreign key in one database table will always be a _______ key in a linked table. a) Secondary key b) Domestic key c) Primary key d) all of these are always true
61.
Access is an example of a _____ this type of database: a) Network b) Hierarchical c) Star d) Relational
62.
Which of these comes closest in structure to that of a hierarchical database? a) Organization chart b) List of students and their classes c) List of specialty doctors and their patients d) A map of a city
63.
The terms "parent record," "child record," and "sibling record" describe the records in a: a) Hierarchical database b) Network database c) Relational database d) Flat file
64.
This type of database structure enables users to create relationships after the database has been created and implemented: a) Hierarchical b) Network c) Star d) Relational
65.
A major advantage of relational databases is: a) All records are stored together b) No pointers are used c) The ability to add tables and relationships after the database becomes operational d) It closely resembles a flat file
TB 147.5
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
66.
Which of the following is not an objective of a computerized database? a) Minimize data redundancy b) Make efficient use of storage media c) Distribute information to end users d) Eliminate the data-gathering responsibilities of some subsystems within the organization e) Reduce the decision-making functions of subsystem managers
67.
This item helps developers document a database: a) Data documentation detailer (DDD) b) Data dictionary c) Database schema system d) Data OLAP system
68.
A data dictionary: a) Is a book defining computer terms b) Is a reference document describing how accounting data are collected c) Is usually a computer file that maintains descriptive information about the data items of an accounting information system d) all of the above
69.
A data dictionary can help an accountant: a) Prepare tax forms for the IRS b) Establish an audit trail c) Correct clerical mistakes in transaction data d) Perform an audit of the petty cash fund
70.
Controls that require a database to either execute a transaction completely, or not at all, are examples of: a) Data integrity controls b) Transaction controls c) Concurrency controls d) Privacy controls
71.
Edit tests that catch data entry errors are examples of: a) Data integrity controls b) Corporate ethics c) Concurrency controls d) Privacy controls
72.
Controls that do not allow users to update the same database record at the same time are examples of: a) Data integrity controls b) Data processing controls c) Concurrency controls d) Privacy controls TB 147.6
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
73.
In the REA accounting framework, the letter “R” stands for: a) Resources b) Recording c) Remembering d) none of these
74.
The REA accounting framework is most closely associated with which of the following? a) SQL b) An enterprise-wide view of accounting processes c) Normalization of accounting data for recording and query purposes d) An example of a data manipulation language
75.
Which of these would be an example of an “agent” in the REA framework? a) Salesperson b) Customer c) Manager d) all of these are possibilities
76.
Which of these would be an example of a “resource” in the REA framework? a) Equipment b) Inventory c) Cash d) all of these are possible examples of resources
77.
In the REA framework, which of these would be recorded as an “event?” a) Hiring a new president of the company b) Taking an initial sales order from a customer c) Buying a piece of equipment for cash d) all of these would be recorded as events
78.
In the REA framework, an account receivable would be classified as a(n): a) Asset b) Event c) Resource d) none of these
79.
In the REA framework, a database designer should create a ____ for each entity. a) Record b) Table c) Secondary key d) all of these
TB 147.7
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
80.
Assume that an accounts receivable application contains database tables for customer orders, inventory items, customers, and salespersons. All of these would be likely data fields in a customer order table except: a) Customer name b) Customer number c) Date of order d) Order number
81.
Assume that an accounts receivable application contains database tables for customer orders, inventory items, customers, and salespersons. Which of these items would probably be a foreign key in the customer orders table? a) Order number b) Customer name c) Salesperson number d) all of these
82.
The letters “E-R” in the term E-R diagram refer to: a) Entity relationship b) Economic relationship c) Enterprise resource d) none of these
83.
The purpose of the E-R model is to help database designers: a) Identify data redundancies b) Create databases in third normal form c) Design databases and depict data relationships d) Answer structured queries about the data in accounting databases
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d)
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84.
All of these are symbols in the E-R model except:
a)
A Star a)
b) c) c)
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b) Cconnecting lines Cardinality symbols d) Rectangle
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d)
Rectangle
85.
In the E-R model, this symbol represents a database entity such as a customer: a) Diamond b) Rectangle c) Arrow d) Parallelogram TB 147.8
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
86.
In the E-R model, an oval denotes a(n): a) A data attribute such as a social security number b) One-to-many relationship c) “is a” characteristic d) Transitive relationship
87.
In an E-R model of a database, this indicates the primary record key: a) An asterisk b) Underlining c) Using a square d) Printing the term (e.g., part number) in italics
88.
Within a database context, the relationship between “natural parent” and “child” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many
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89.
Within a database context, the relationship between “military officer” and “subordinates” would most likely be: a) One-to-one b) One-to-many Formatted: Not Highlight c) Many-to-one d) Many-to-many
90.
Within a database context, the relationship between “students” and “classes” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many
91.
92.
Within a database context, the relationship between “assigned parking space” and “car” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many
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Within a database context, the relationship between a specific “doctor” and his or her “patients” would most likely be: a) One-to-one b) One-to-many Formatted: Not Highlight c) Many-to-one TB 147.9
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
d)
Many-to-many
TB 147.10
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
93.
Within a database context, the relationship between “military commander” and “private” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many
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94.
Within a database context, the relationship between “president” and “vice president” would most likely be: a) One-to-one Formatted: Not Highlight b) One-to-many c) Many-to-one d) Many-to-many
95.
Within a database context, the relationship between a particular “grandparent” and his “grandchild” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many
96.
97.
98.
Assuming that a general a general ledger could have several subsidiary ledgers, the relationship between “general ledger” and “subsidiary ledger” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many Within a database context, the relationship between “sales invoice” and “line item” would most likely be: a) One-to-one b) One-to-many c) Many-to-one d) Many-to-many The process of data normalization refers to: a) Eliminating data errors and other problems from “normal data” b) Scaling data to values between zero and one c) Storing data in normal storage media such as hard disks d) none of these
TB 147.11
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
99.
100.
101.
102.
103.
As described in the chapter, all of these are normalization “forms” except: a) First normal form b) Second normal form c) Third normal form d) all of these are normal forms The reason why database designers normalize data is: a) To eliminate data errors and data redundancy b) To scale data properly c) To create backup copies of data d) To create efficient database tables In the context of databases, the term data redundancy refers to: a) Storing the same information in several records b) Repeating data on multiple reports c) Using foreign keys which duplicate the values of primary keys d) all of these are possible examples of data redundancy A database is in third normal form if it is second normal form and: a) It contains no data redundancies b) It contains no foreign keys c) It contains no transitive dependencies d) all of these An example of a transitive dependency in a database is: a) Student → grade b) Telephone area code → phone number c) Airline → flight number d) Parking Code → parking fine amount
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104.
105.
An example of a transitive dependency in a database is: a) Student → university course number b) Parking ticket code → total of student parking fines c) Product number → product price d) Age → social security number In an E-R model created using the REA framework, a customer would often be linked to inventory with a relationship that is: a) Direct between the customer and inventory b) Indirect through a cash resource c) Indirect through an employee agent d) Indirect through a sale event
TB 147.12
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
106.
Suppose a relationship indicates that a sale is related to one and only one customer. This indicates that: a) There is only one sale made and this sale is made to only one customer b) There are many sales over time, but each sale is made to only one customer c) There is only one customer, and one sale is made to this customer d) There are many customers, and each customer is involved in only one sale
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Note to Instructor: The following questions are drawn from past AICPA examinations. 107.
In recent years many businesses have formed a common information source within their business organization called a database. One of the advantages of building databases is the simultaneous updating of files with common data elements. Another major advantage of the database concept is that: a) Database systems can be used in microcomputers as well as on large computers Formatted: Not Highlight b) Database systems are simple to install and maintain c) Database systems are generally less expensive than separate file systems d) More duplication of data occurs with a database system e) Fewer skilled people are required to run a database system than another system
108.
Ander and Company has designed an electronic data processing system utilizing the database systems concept. In this system, transactions are entered into the system only once. In order to accomplish this Ander's files: a) Must utilize magnetic tape b) Must be separated by function (e.g., marketing has a set of files, production has a set, etc.) c) Must be located in an integrated file located in online storage d) Must be updated in a real-time environment e) Must be handled in some other manner than described above
109.
An important data field found in a typical computer record of an inventory file that would be vital to purchasing agents would be the inventory item's: a) Inventory number b) Assembly code c) Vendor code d) Assembly pointer address
The following data apply to items 110-112. The Oxford Corporation has the following eleven master files: * Accounts payable * Accounts receivable * Bill of materials * Finished goods inventory * Open production orders * Open purchase orders
* Raw materials inventory * Sales summary * Vendor history * Work in process inventory * Operations list (labor operations and machine requirements for production) TB 147.13
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
110.
Master files maintained as part of the sales order processing system are: a) Accounts receivable, bill of materials, sales summary b) Accounts payable, accounts receivable, finished goods inventory c) Accounts receivable, sales summary, operations list d) Accounts receivable, finished goods inventory, sales summary e) Accounts receivable, sales summary, vendor history
111.
Master files that are maintained as part of the processing of purchase transactions are: a) Accounts payable, bill of materials, finished goods inventory, open purchase orders b) Accounts payable, open purchase orders, raw materials inventory, work in process inventory c) Accounts payable, bill of materials, open purchase orders, vendor history d) Accounts payable, finished goods inventory, open purchase orders, vendor history e) Accounts payable, open purchase orders, raw materials inventory, vendor history
112.
Master files used to plan and report on the resources required for the coming period are: a) Bill of materials, open production orders, work in process inventory, operations list b) Finished goods inventory, open production orders, open purchase orders, work in process inventory c) Finished goods inventory, open purchase orders, raw materials inventory, work in process d) Bill of materials, open production orders, vendor history, operations list e) Accounts payable, bill of materials, open production orders, raw materials inventory Formatted: No bullets or numbering Formatted: List Paragraph, Indent: Hanging: 0.5", Numbered + Level: 1 + Numbering Style: A, B, C, … + Start at: 1 + Alignment: Left + Aligned at: 0.25" + Indent at: 0.5", Tab stops: 0.25", Left
e)
Short Answer Questions 113113. Explain the difference between Primary Record Keys, Secondary Record Keys, and Foreign Record Keys. 11414. Explain the difference between REA and traditional accounting views of data collection and storage. 11515. Imagine that you created a database for storing information about inventory for a small retail store that you own, but assume that you had never learned about normalization. As a result, the database you created included only one table that stored information about sales, customers, and inventory items. Think about the normalization rules and describe what types of problems your business will face when you attempt to change or delete records from your database.
TB 147.14
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
Chapter 15 ORGANIZING AND MANIPULATING THE DATA IN DATABASES True-False Questions 1.
Microsoft Access is an example of a database, not a database management system.
2.
Microsoft Access is an example of a database management system, not a database.
3.
Microsoft Access uses a key symbol to identify the primary record key in a database table record.
4.
It is not possible to save a table in Microsoft Access unless you also identify a primary record key.
5.
A good primary record key to use for a table of employee records that you might create in Access is the employee’s last name.
6.
The conventional prefix for the name of a table is “tbl.”
7.
To create a relationship between two tables in Microsoft Access, you should use the Queries window.
8.
To create a relationship between two tables in Microsoft Access, you should use the Relationships window.
9.
An example of a data type for a data field in the record of an Access table is “Short Text.”
10.
An example of a data type for a data field in the record of an Access table is “Number.”
11.
The inability to delete a parent record if it has subordinate or “child records” in a relational database is enforced by using “Referential Integrity” in Microsoft Access.
12.
The inability to delete a parent record if it has subordinate or “child records” in a relational database is enforced by using “Parental Hierarchy” in Microsoft Access.
13.
A template that you can create in Microsoft Access and that prompts users for expected values is called an “input mask.”
14.
A useful guideline to follow when creating data fields containing text is to assign at least 50 characters to it.
15.
A useful guideline to follow when creating data fields containing text is to limit data fields to reasonable lengths.
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
16.
The guideline recommending that you create “mnemonic names for data fields” means that you should name data fields that rhyme with their data types.
17.
A DBMS is a type of hardware.
18.
A DBMS is a type of software.
19.
DDL is an acronym for “data definition language.”
20.
Databases are the same thing as database management systems.
21.
A DBMS is an efficient database table in third normal form.
22.
When purchasing a new database management system, managers should focus on the system’s technological capabilities rather than its compatibility with current systems.
23.
An example of a data type for a database record field is “short text.”
24.
An example of an input mask for an Access data field is “999000\-00\-0000;;_.”
25.
Database designers typically store employee Social Security numbers as “Long Integer” data types.
26.
DML stands for “data management logic.”
27.
Database management systems allow their users to create “input masks” which help to prevent input errors.
28.
A database schema is a plan of the entire database.
29.
A database subschema is a plot that can often be discovered with forensic accounting.
30.
SQL is an example of a database query language.
31. 31.
OLAP is notable for its “drill-down capability.” Select queries are, by definition, multi-table queries.
32.
Online analytical processing enables a computer system to display information that must be computed from the data stored in a database.It is not possible to encode search criteria in more than one column of the criteria row in Access.
33.
Pivot tables are powerful statistical tools, but allow the user little flexibility in selecting what data can be analyzed.If there are multiple search criteria on the criteria row of a query, this is the equivalent of an AND requirement.
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
34.
A plus sign to the left of a database record in Access means there are related records linked to it. Object-oriented databases are used to archive older data that management no longer needs to process.
35.
Multimedia databases have rendered traditional text databases useless.An exclamation point in the design menu of an Access query means to “run the query.” One way to create an OR condition in a query is to place the search criteria on different lines of the query. 36. It is not necessary for data to be “clean” or accurate if they are stored in a data warehouse. 36. 37.
Quotation marks that appear around a search criteria (e.g., “New York”), indicates an error.If creating a data mart is not cost effective, management should consider creating a data warehouse, which typically uses less money and time to design.
38.
Data warehouses are only used for analyzing current accounting data.It is not possible to create queries for more than on table at a time.
39.
Using Microsoft Access, “referential integrity” enables you to delete a record on the “one” side of a one-to-many relationship.
40.
Using Microsoft Access, you can delete a record from the “many” side of a one-to-many relationship, even if referential integrity is enforced.
41.
A dynaset is the set of records that results from a query.
42.
A dynaset is the total set of records in a database table.
43.
Using Microsoft Access to create a select query with multiple criteria (all of which you want satisfied at the same time), you should specify them on the same Criteria line of the query.
44.
Using Microsoft Access to create a select query with multiple criteria (all of which you want satisfied at the same time), you should specify them on separate Criteria lines of the query.
45.
An OR operation (query) in Microsoft Access requires you to use multiple Criteria lines to create the query.
46.
If you wish to create a select query with alternate criteria using Microsoft Access (e.g., you wish to see a list of all customers living in zip codes 12345 or 12366), you should specify them on separate Criteria lines of the query.
47.
An update query in Microsoft Access is an example of an action query that enables you to increase the prices by ten percent for all those products starting with product code “123.” TB 815.3
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Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
48.
An append query in Microsoft Access is an example of an action query that enables you to systematically add the term “Jr.” to individual names in a customer database.
49.
A delete query in Microsoft Access is an example of an action query that enables you to delete all those records in a table satisfying specific criteria.
50.
It is not necessary to spell accurately or correctly when creating queries in Microsoft Access because such matters as case or spelling are corrected automatically by the system’s spell checker.
51.
It is not possible to conduct multi-table queries using Microsoft Access because each table in the system is independent of the others.
52.
Microsoft Access can create a well-functioning database for you using Wizards, and there is no need to understand database design or normalization.
53.
Foreign keys are necessary in a database because every record must have a foreign key.
54.
Validation rules are useful to prevent data entry errors in databases.
Multiple-Choice Questions 55.
All of the following are data types that you can assign to data fields when creating records in Microsoft Access except: a) Short Text b) Number c) Long Text Memo d) Percent e) all of these are legitimate data types
56.
In the Relationships window, Access Microsoft uses this symbol to represent the “many” side of a “one-to-many” relationship: a) & b) N c) √ d) ∞
57.
Using Microsoft Access, you create a “one-to-many” relationship between “Customers” records and “Customer Orders” records. When you view the Customers records in a datasheet view, Access indicates the presence of these customer order records using this symbol: a) & b) N c) √ d) ∞ TB 815.4
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
e) 58.
+
This is the Access tool that prohibits users from deleting parent records with child records (i.e., records related in a one-to-many relationship): a) Referential integrity b) Mnemonic naming c) Integrative relationships d) Data typing e) none of these is correct
TB 815.5
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59.
Which one of these is not a good guideline to follow when creating tables in a relational database? a) Design first, create tables later b) Name tables systematically, using conventional “tbl” prefixes c) Use mnemonic names for data fields d) Assign at least 50 characters to each text field e) Use consistent data types for primary and foreign key fields in database tables
60.
A database management system is: a) A set of computer files b) A set of one or more computer programs c) A set of data to be processed by a computer d) A manual accounting information system
61.
Database management systems are important to accountants because: a) They automate file storage tasks and enable managers to generate worthwhile financial reports b) They eliminate data redundancy c) They are unique data structures which accountants have never used before d) They are easy to develop and therefore save money e) They are energy efficient
62.
Database management systems can be implemented on: a) Mainframe computers only b) Mainframe and minicomputers only c) Mainframes, minicomputers, and microcomputers d) Microcomputers only
63.
A disadvantage of database management systems is that: a) They are not flexible b) They cannot be implemented on microcomputers c) They rarely support file inquiries d) They are often machine dependent (e.g., not all DBMSs can run on all types of computers)
64.
An advantage of using a drop-down box in an Access database is that: a) It helps users avoid input errors b) It provides an input mask for data entries c) It automatically screens numeric data for incorrect values d) all of these are correct
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65.
All of the following are advantages of drop-down boxes in Access except: a) It limits users to valid input choices b) It takes a small amount of room, even if the number of choices is large c) It always limits users to numeric entries d) The entries for the combo box can be stored in a separate table
66.
You can instruct Access to display a particular error message if you use this property: a) Validation rule b) Validation text c) Validation message d) Validation error
67.
If you want to require a data entry in an Access database to fall between two dates (rather than between two numeric values): a) You should use a select query using one line b) You should use a select query, using two lines c) You should use a validation rule and the word “between” d) This is impossible to require in Access
68.
A database developer can require Access to display records in an ascending sequence using this data field property: a) Organize b) Index c) Reorganize d) Sequencing
69.
A “default value” for an Access data field is: a) The value of last resort b) A value that Access will assume if the user does not enter one c) A value that Access will take from the last record entered into the system d) none of these
70.
An advantage of defining a default value for an Access data field is that it: a) Assures that the data in all records will be exactly the same for that field b) Eliminates data redundancy c) Helps create subsequent queries on that field d) Saves typing, and probably errors
71.
The purpose of an input mask is to: a) Disguise data when they are first input into a database b) Transform data from alphabetic to numeric formats c) Help users avoid data entry errors d) Hide sensitive data such as passwords onscreen
TB 815.7
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72.
Which of these is most likely to represent an input mask At the time that a user starts to input data into a database, an “input mask” for a telephone number in an Access database? might look like: a) xxx-xxx-xxxx b) abc-def-ghij c) (___) ___-____ d) none of these
73.
The value that a database will use if the user does not provide an alternate value is called a(n): a) Asset value b) Text value c) Control value d) Default value
74.
To perform a range test of the “hours worked” data field for an employee, you should store the term “Between 0 and 40” in which of these properties in Access? a) Text b) Testing procedure c) Validation rule d) Validation text
75.
To perform a range test on the hours worked data field in an Access database that requires the entry to be at least 0 and no more than 40, you should express this requirement as: a) At least 0; Not more than 40 b) 0<= X <= 40 c) Between 0 And 40 d) none of these
76.
The purpose of using validation tests in the record definition of a database is to: a) Make sure the database works properly b) Avoid data entry errors c) Ensure normalized data d) Verify that the user is authorized to enter data in the database
77.
In Access, a validation rule triggers at the time that: a) The user first enters data into the database b) The DBMS first uses the data in a report c) The user first requests the database to test data with a menu command d) The user powers up Access and loads that particular database
78.
DML stands for: a) Distributed management logic b) Data management logic c) Data management language d) Data manipulation language TB 815.8
Core Concepts of Accounting Information Systems, 143th Edition, by Simkin, Rose, and NormanWorrell and Savage
79.
When Access links records to one another in different tables, the foreign key in one record refers to the _______ in another record. a) Primary key b) Secondary key c) Foreign key d) Linkage key
80.
This tool enables a DBMS to extract only a subset of records from a database: a) Table b) Query c) Validation test d) none of these
81.
One purpose of a data manipulation language is to: a) Create data fields b) Define the record structure c) Create queries on the data d) all of these
82.
All of these are examples of action queries that you can create in Microsoft Access except: a) Append query b) Update query c) Make table query d) Delete query e) Validation query
83.
You can increase the prices of selected products systematically using Microsoft’s: a) Append query b) Update query c) Make table query d) Delete query e) Select query
84.
You could add the term “Jr.” to selected names in a customer database using Microsoft’s: a) Append query b) Update query c) Make table query d) Select query e) none of these (this is not possible using an action query)
TB 815.9
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85.
A school administrator wishes to select the names of all students who have taken at least 130 units of credit at your university to see if they qualify for graduation. Which of these is the best type of query to use for this task? a) Append query b) Update query c) Make table query d) Select query e) Make report query
86.
A school administrator wishes to select the names of all students who live in a certain city. That city has exactly two zip codes in it. Which of these would be the best approach to use for this task? a) Perform two separate select queries, using only one zip code for each task b) Perform a single select query, placing the zip codes on the same Criteria line of the query c) Perform a single select query, placing the zip codes on separate Criteria lines of the query d) Perform a single, update query e) none of these (this is not possible using Microsoft Access)
87.
Which of these is a desirable guideline to follow when creating queries with Microsoft Access? a) Spell accurately b) Don’t worry about capitalization c) Join each table at least twice to ensure their connectivity d) Name each query you create “Query”
88.
Which of these is an example of a data query language? a) ABC b) SQL c) DDL d) JPG
89. OLAP stands for: a) Object Language for Access Programming b) Object Level Analytical Programming c) Online Analytical Processing none of theseWhen creating queries in Access: a) It is necessary to include all data fields from an underlying record. b) It is not necessary to include all data fields from an underlying record. c) Data fields must be listed in alphabetical order. d) Numeric fields must precede short text fields. 90.
Sorting and Indexing database records are similar in that: a) Neither require underlying table records TB 815.10
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b) c) d)
Both require the user to first define data validation rules Both reorganize the way record data appear in outputs None of these
91.
Sorting records is unlike indexing records in that: a) Sorting physically rewrites records on disks whereas indexing does not b) Sorting requires a primary key whereas indexing does not c) Indexing requires a separate database file whereas sorting does not d) none of these
92.
Which of these is true about finding data in multimedia databases? a) It is not possible to search them because graphics have no text keys for searching b) It is not possible to search them because audio objects have no text keys for searching c) It is possible to search for items in them because such characteristics as “speaker” or “subject” can be used as search parameters d) It is possible to search for items in them if the name of the embedded graphics or audio file is also known
93.
All of these are characteristics of the data stored in a data warehouse except: a) Data are clean of errors b) Data are defined uniformly c) Data are stored in consistent formats d) Data are simplified, and thus cannot be used to answer complex questions
94.
Organizations sometimes pool the historical data from various, separate organizational databases into a common body of information called a(n): a) Data pool b) Data warehouse c) Amazon database d) Franchise database
95.
Another word for “cleaning” the data in preparation for storing it in a data warehouse in order to ensure uniform accuracy is: a) Scrubbing b) Sanitizing c) Validating d) Coding
96.
As a general rule, creating data warehouses is: a) Easy b) Habit forming c) Challenging but often worth the cost d) Challenging, and historically rarely worth the cost
TB 815.11
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927.
In Access, the terms “size,” “data type,” and “input mask” are mostly closely associated with: a) A table b) A record c) A data field d) A database
938.
Using Access, which of these terms is not associated with defining a data field within a record? a) Field name b) Data type c) Currency value d) Description
949.
Using Access, which of the following is not a recognized data type? a) yes/no b) Year c) Currency d) Date
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95100. To create a query that calculates the total amount for a sale, you would likely need to include the following tables in your query: a) Customers, Employees, and Cash Receipts b) Customers, Employees, and Sales c) Sales, Inventory, and Cash Receipts d) Sales, Inventory, and the relationship table Sales/Inventory 101. a) b) c) d)
Database-As-A-Service (DAAS) refers to databases that: Allow firms to outsource their databases to cloud service providers Are designed to record information about service providers Allow firms to create their own databases using mobile service providers Are designed to improve customer service
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Short Answer Questions 96. 102.
What is the difference between a database and a database management system?
97103. Why would an organization allow some users to only view a subschema of a database file instead of the schema? 98104. Describe how data mining could change the accounting profession.Why is “data validation” important in databases?
TB 815.12
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Chapter 169 DATABASE FORMS AND REPORTS
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True-False Questions
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1.
Forms are the only method of entering data in a database.
2.
Forms do not allow customized organization of the data they display.
3.
It's usually easier to create a database form from scratch instead of using the Wizard.
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4.
Using Microsoft Access, the “PgUp” button can be used to access the previous record in a form.
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5.
The Access navigation bar in a form allows access to any stored record.
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65.
In Access, forms allow users only to view database information, but not change it.
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67.
The changes that a user makes to the data in a form at run time do not alter the data in the underlying database table.
87.
Data field masks help prevent users from entering incorrect value entries.
89.
Subform data must be in a one-to-one relationship with the data on the main form.
190.
Grouping like data together is a useful guideline to follow when creating usable forms.
101.
Existing paper-based forms can help guide the creation of electronic database forms.
112.
A report can combine the information from various tables in a database.
123.
In Access, you can create a “report” that displays the name and address of only a single vendor.
14.
Modifying a report layout and other properties can be done using the Report Wizard.
1513. A report must contain all the information found in the records of the underlying table on which it is based.
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1614. Calculated fields are not possible when creating reports in Access. Formatted: Font: (Default) Times New Roman
1715. Calculated fields in reports use the information in external files exclusively.
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1816. The name of a form may contain spaces and capitalized characters. TB 916.1
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1917. When referencing data fields in queries using Access, bracket symbols indicate a reference to an existing field.
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2018. The Rreport Wwizard can create reports containing grouped data.
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219.
Formatting a report is usually a trivial task in Microsoft Access, requiring little time or effort.
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22.
The conventional naming prefix for report is “rept”.
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23.
Softcopy reports are unlikely to survive in the near future.
204.
Reports can be modified after they are created.
2521. A form may be created that is based on a query instead of a table. 22.
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26.
A report can only reference the data found in a single table—not the data from multiple tables.
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23. 27.
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24.
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28.
When selecting a particular data field to include in a report using the Rreport Wwizard, you should click on the ►► button.
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29.
The button with symbol “►│” on the navigation bar gets you to the first form in the table.
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25.
If you change an underlying value used in the calculated field of a report, the value of this calculated field in any subsequent copy of the report will also change.
26. 27.
The problem with Access forms is that they cannot be customized. Using Microsoft Access, an accountant could include internal controls in the tables and in forms.
30.28. An invoice could be created with Microsoft Access by creating a form for the sales data
and a subform for the items sold data.
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Multiple-Choice Questions
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3129. Which of the following is not a part of a form? a) A heading section b) A detail section c) A design section d) A navigation bar
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3230. Which of the following is not an advantage of form data entry over datasheet data entry? a) It is fast and efficient for data entry b) Accidental modification of adjacent records is not possible c) In Access, all the fields for a record are usually displayed on the same screen d) The forms are customizable by end users at run time
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313.
Which of the following is not a possible way to customize a form? a) Adding information to the Header of a form b) Adding artwork to a form c) Adding control buttons to the Title Bar of the form d) Using more complete names for fields
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3432.
When using the Form Wizard in Microsoft Access, which of these is not a step in creating a new form? a) Entering design settings such as the layout of the form b) Identifying the underlying table or query to use for the form c) Designing data validation tests for the form to perform for data entries d) Naming the form
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3533. Clicking the ▌◄ button on the navigation bar of a form causes Access to display: a) The last record b) The record with the lowest primary key c) The record with the highest primary key d) The first record
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3634. When designing a form for an Access database, the term “Inheritance” refers to: a) The propagation of properties and restrictions from the data field in the underlying table to the field in the form b) The propagation of properties and restrictions from the underlying table itself c) The ability of all the fields of the form to assume the same color d) none of these
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3735. A subform is: a) A subordinate form within a form b) A smaller, independent form compared to another form c) A specialized form used to create a report d) none of these
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3836. Which of these is an advantage of a subform? a) The ability to display subordinate information b) The ability to be used in the same manner as regular forms c) both of these d) none of these
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39.7. . One way to create a subform is to: a) Simply create a new table b) Identify the subform when you use the Form Wizard c) Utilize MySQL databases d) Add a subform to a printed report
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If a form contains a subform, then the relationship between the records of the form and the records of the subform are usually related in a ______ relationship. a) one to one b) one to many c) many to many d) none of these e) there is not enough information to answer this question
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4038. Which of these features is desirable in database form design? a) Use garish colors to attract the user’s attention b) Create forms that require several screens for display purposes c) Use unique fonts for different fields in the same form d) Resize data fields to ensure they display all the data in the underlying table
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4139. Manual forms, in terms of database form design, are: a) Archaic b) Used to guide the development of electronic forms c) Used to collect information electronically d) Used by many offices already
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4240. Forms are not capable of which of the following? a) Read-only display b) Auto-complete features c) Validating input d) Preventing all entry errors
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4341. A rule of thumb in industry is that the cost to correct an error in a database is approximately how many times the cost of entering the data initially? a) 3 b) 5 c) 7 d) 10
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44.42. Reports enable users to: a) See a paper output of database information b) Change information in the underlying database tables c) Limit the distribution of the information d) Tab from one data field to another at run time
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4543. What is the first step in creating a report? a) Determining what information to display b) Analyzing the available information c) Restructuring the database d) Analyzing the database
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4644. Which of these is likely to appear last in a report?
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a) b) c) d) e)
Page header Group header Detail lines Report header Report footer any of these could be last
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4745. Which of the following cannot be defined when using the Report Wizard in Microsoft Access? a) Data source selection b) Grouping c) Sorting d) Format design e) all of these can be defined by the Report Wizard
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4846. Which of these is not an example of a calculated field? a) Unit cost of an item b) Grand total c) Sales tax d) Profit
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4947. Which punctuation mark separates delineates the separation between a calculated the user-defined caption field name and the formula for that a calculated field? a) Colon b) Space c) Asterisk d) Dash
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5048. If you misspell a field name, Access will: a) Correct you b) Indicate an error c) Assume you are creating a new field d) none of these
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51.
5249. a) b) c) d) e)
The point at which a group changes from one type to the next in a report is referred to as: a) Lucky break b) Lunch break c) Choke point d) Control break Which of these is not an example of a control break? Changing a name of a client Change in department in an employee listing Change in service classification in a phone book listing Change in zip code in an address listing none of theseItems such as the “item description” and the “unit price” appear at the top of each page of a report. These labels are best placed in the: a) report header b) page header c) group header d) detail section e) page footer
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5350. Which of the following is an example of a valid calculated field entry? a) MyField = field1\field2 b) MyField = field1/field2 c) My Field: thisField/ThatField d) MyField: thisField\ThatField
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5451. The Format menu in Access allows users to: a) Resize objects b) Edit objects c) Align objects d) all of the above
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5552. Which of the following is not a guideline for creating professional data reports? a) Plan before you program b) Provide different output formats for different languages c) Avoid garish colors and fonts d) Fit on one sheet of paper
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5653. Which of the following would best minimize the vertical space used by a report? a) Reduce vertical space between lines in the report header b) Reduce vertical space between lines in the detail portion
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c) d)
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5754. Suppose an employee’s date of hire is changed in an employee table. When a database user subsequently runs a report showing the number of years the employee has worked for the company (a calculated field), what will happen? a) Nothing. The same value that was calculated in any prior report will continue to show in the new report b) The new report will show a new calculated value c) The new report will show the average of the original value and the new value d) This depends upon other settings not indicated in the statement
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5855. Which of these is not a section of a database report? a) Report Header b) Page Header c) Detail lines d) Page Footer e) all of these are common sections of a database report
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5956. Which of these sections of a database report is likely to occupy the most room on a report? a) Report Header b) Page Header c) Detail lines d) Page Footer e) Report Footer
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6057. Which of the following statements is not correct? a) You can avoid using Access’ Form Wizard and create a form from scratch b) A form can contain a subform c) A total value in a report footer will always be at least as large as any group footer value for the same data field d) A report can contain a subform within it e) You can embed pictures or other icons in a report header
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6158. Assume that your manager has asked you to prepare a budget for your firm using data stored in an Access database. The best approach for creating the budget would be to use a: a) Table b) Query c) Form d) Report e) SQL 6259. Assume that salespeople at your firm make many errors when inputting sales data to the firm’s Access database. Your manager has asked you to find a way to reduce data input errors. A good approach for reducing data entry errors would be to: create a: a) create one or more validation rulesTable b) create one or more validation texts Query c) Formmake sure that none of the data fields are required d) define several primary keys for each of the data fields containing errors Report e) make sure that every data field is a “short text” data typeSQL 6360. Assume that your manager has asked you to improve the efficiency and effectiveness of data entry for sales invoices by adding capabilities to the firm’s Access database. In order to allow data entry for each invoice and multiple items on each invoice, you should create a: a) Table b) Query c) Form without a subform d) Form with a subform e) Report
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641.
652.
A drop down menu on a form that allows the user to select a customer’s state of residence is an example of: a) aA validation rule b) aA bound control c) aAn unbound control d) aA form’s run mode A picture of a bicycle that appears at the top of every invoice form is an example of: a) Aan unbound control b) Aa bound control c) Aa lookup function d) Aa query
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Short Answer Questions
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6463. Explain why forms have subforms.
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6564. Why is it important to design the layout for a report prior to creating the report?
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6665. What is the difference of a report based on a table and a report based on a query?
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66.
New?. What is the difference between a control that is included on a form versus a control that is included in a database table?
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Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage AIS - 14th Edition TEST BANK KEY Chapter 1
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
True-False F 41 F 42 F 43 T 44 F 45 T 46 T 47 T 48 T 49 F 50 T 51 F 52 F 53 F 54 T 55 T F T T T F F T F T T T T T F T T F T T T T F T F
T F T F T T T F F F T F F T T
56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88
Multiple Choice B 96 B 97 C 98 B C D C D E D E B C C C D D C D A B E C D C D D D A B A D A
Test Bank Key - Page 1
Matching 89 K 90 D 91 H 92 C 93 G 94 A 95 I 96 E 97 F 98 B
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
AIS - 14th Edition TEST BANK KEY Chapter 2
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
True-False T 41 T 42 T 43 F 44 F 45 T 46 T 47 F 48 T 49 F 50 F 51 F 52 F 53 T 54 F 55 T 56 T 57 F 58 F 59 F 60 T 61 T 62 T T T F T F T T T T F T F T T T F T
F T F T T T T F F F T T T F T T T F T T F F
63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102
Multiple Choice B 103 A 104 C 105 A 106 E 107 C 108 D 109 C 110 D 111 A 112 B 113 B 114 D 115 B 116 A 117 D 118 D 119 D 120 B 121 B 122 C 123 A 124 E 125 C 126 C 127 B 128 C 129 C 130 B C D A D A D D C C B D
Test Bank Key - Page 2
A C A D C C D C D C A C A A A B C A B C A D B A D D B C
Matching 131 K 132 I 133 M 134 N 135 G 136 C 137 F 138 A 139 E
AIS - 14th Edition TEST BANK KEY Chapter 3 True-False 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
T F T T F F T F T T T T F F T T T T T F T F F F F T F F T F F T F T T T F T
41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69
Multiple Choice F F F T F F F T T T T T F T T T F T T F F T T F F T F F F
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107
C A C D D C D C C C A C A B D A C A D A B B B E B B B C D B D A B C C A D B
110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129
Matching C C C C A B D B C D E D E D C C D D B A
130 131 132 133 134 135 136 137 138 139
E A B J H C D G F I
39 40
T T
108 109
B C
AIS - 14th Edition TEST BANK KEY Chapter 4 True-False 1 F 2 F 3 T 4 T 5 F 6 F 7 F 8 F 9 T 10 T 11 T 12 T 13 F 14 T 15 T 16 F 17 F 18 F 19 T 20 T 21 F 22 F
Multiple Choice 23 D 24 C 25 A 26 B 27 C 28 A 29 A 30 B 31 C 32 A 33 D 34 C 35 B 36 D 37 D 38 B 39 B 40 B 41 A 42 C 43 D 44 A
Matching 45 G 46 F 47 E 48 J 49 K 50 I 51 B 52 L 53 D 54 A 55 H 56 C
AIS - 14th Edition TEST BANK KEY Chapter 5
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
True-False F 41 T 42 F 43 T 44 F 45 F 46 F 47 T 48 T 49 F 50 F 51 T 52 F 53 F 54 T 55 T 56 F 57 T 58 T 59 T 60 F 61 T 62 T 63 F 64 F 65 F T F F T F T F T T T F F T T
T F F F F T F F T T T F T T F F T F T F F T T T F
Multiple Choice 66 D 67 D 68 C 69 C 70 D 71 B 72 D 73 C 74 D 75 A 76 A 77 C 78 D 79 A 80 C 81 A 82 B 83 D 84 A 85 C 86 C 87 E 88 A 89 B 90 D 91 A 92 A 93 A 94 C 95 D 96 D 97 D 98 A 99 A 100 D 101 A 102 B 103 D 104 A
Matching 105 K 106 D 107 B 108 E 109 Q 110 I 111 M 112 A 113 R 114 O 115 N 116 F 117 P 118 C
AIS - 14th Edition TEST BANK KEY Chapter 6 True-False 1 F 2 T 3 T 4 F 5 T 6 T 7 F 8 F 9 T 10 T 11 T 12 F 13 T 14 T 15 F 16 F 17 F 18 T 19 F 20 T 21 F 22 T
23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62
Multiple Choice B 63 A 64 D 65 C 66 B 67 D 68 A 69 A 70 D 71 A 72 B 73 D D B C D D C C C B D A D D C B C E A D A D B A D B D C C
B E C D D C B A D D B
Matching 74 F 75 G 76 O 77 M 78 P 79 Q 80 C 81 N 82 J 83 B 84 H 85 I 86 A 87 D 88 K
AIS - 14th Edition TEST BANK KEY Chapter 7 True-False 1 F 2 F 3 T 4 F 5 F 6 F 7 F 8 F 9 F 10 F 11 T 12 T 13 T 14 F 15 T 16 T 17 F 18 T 19 F 20 T 21 F 22 T 23 T 24 T 25 F 26 F
27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66
Multiple Choice D 67 D 68 B 69 B 70 D 71 D 72 D 73 D 74 C 75 D 76 D 77 C 78 D 79 D 80 B 81 A 82 A 83 D 84 B 85 D 86 C 87 A 88 B 89 A 90 A 91 D 92 C 93 B 94 C 95 B 96 A B B D D C D A D B
B A C A D C C A D C D C C A C D A A B B D A C A B D A B A B
Matching 97 S 98 I 99 T 100 M 101 D 102 P 103 N 104 L 105 O 106 E 107 Q 108 H 109 K 110 B 111 A 112 U 113 V 114 F 115 C 116 J 117 R
AIS - 14th Edition TEST BANK KEY Chapter 8 True-False 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
F T T T F F F T T T F T F F F F T F T
Multiple Choice 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51
A B B D A C C A D A B B A D B C B C A A D B C D B A D A C B D B
Matching 52 53 54 55 56 57 58 59 60 61 62
E O N L H M K G B D F
AIS - 14th Edition TEST BANK KEY Chapter 9 True-False 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
T F F T T F F T T T F T T T F T T T F T T T T F
Multiple Choice 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
B D D C C C A B B A D B D D D C B B B C D C A C A D
Matching 51 52 53 54 55 56 57 58 59 60 61 62
E N O D I G A M B D J K
AIS - 14th Edition TEST BANK KEY Chapter 10 True-False 1 T 2 F 3 F 4 F 5 T 6 F 7 T 8 T 9 T 10 T 11 T 12 F 13 T 14 T 15 T 16 F 17 T 18 F 19 T 20 T 21 F 22 T 23 T 24 T 25 F 26 F 27 F 28 F 29 F 30 T 31 F 32 T 33 F 34 T
35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74
Multiple Choice D 75 C E C D A B D C D D B C C C B A C A C D D B C D C A D C C D B C B B B C C B D
B
Matching 76 N 77 M 78 B 79 C 80 K 81 L 82 D 83 E 84 F 85 I 86 H 87 A
AIS - 14th Edition TEST BANK KEY Chapter 11 True-False 1 F 2 F 3 T 4 T 5 F 6 F 7 T 8 F 9 T 10 F 11 F 12 F 13 T 14 F 15 T 16 T 17 F 18 F 19 T 20 T 21 F 22 T 23 F 24 F 25 T 26 T 27 F 28 F 29 T 30 F
31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66
Multiple Choice D 67 D B B C C A C B A A A A D C B D D C B B C C D D B A C D B C A A D B C
A
Matching 68 I 69 C 70 B 71 M 72 F 73 O 74 H 75 G 76 A 77 D 78 J 79 N 80 K 81 E 82 L 83 P 84 Q
AIS - 14th Edition TEST BANK KEY Chapter 12 True-False 1 T 2 T 3 T 4 F 5 T 6 F 7 F 8 T 9 T 10 T 11 T 12 T 13 F 14 T 15 F 16 F 17 T 18 F 19 F 20 F 21 T 22 T 23 T 24 T 25 F 26 F 27 T 28 T 29 T 30 T 31 F 32 T 33 F 34 F 35 T 36 T 37 T 38 F 39 T 40 T
Multiple Choice 41 A 42 B 43 B 44 E 45 E 46 B 47 D 48 C 49 B 50 D 51 C 52 A 53 B 54 B 55 D 56 A 57 B 58 B 59 D 60 B 61 D 62 B 63 A 64 C 65 D 66 C 67 C 68 B 69 A 70 C 71 C 72 C 73 A 74 B 75 D 76 C
Matching 77 G 78 B 79 N 80 J 81 A 82 I 83 M 84 L 85 H 86 E 87 K 88 D 89 F 90 C
AIS - 14th Edition TEST BANK KEY Chapter 13 True-False 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
F T F F T T F F T T T T F T F F F T F T F T T T T F F F T T T T F T F F F T F T
41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73
Multiple Choice T F F T T T T F F T F T T F T T T T T F T F F T F T T F T T T T T
74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113
E C A C D B A C C C B A B D D D D D A D D C A D B C A D E E D A C D C D E A A D
114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139
Matching D C D D B E B B D D C A C D A A A B B B D D C E E A
140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159
I Q K O G C H L J R A N P S T B M U D F
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
AIS - 14th Edition TEST BANK KEY Chapter 14
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
True-False F 41 T 42 T 43 F 44 T 45 F 46 F 47 F 48 F 49 F 50 T 51 F 52 F T F F T F T T T T F T F T F F F T T F T T F F F T F T
F T T F F T T T F F T T
53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92
Multiple Choice D 93 B 94 D 95 B 96 A 97 D 98 A 99 C 100 D 101 A 102 C 103 D 104 C 105 E 106 B 107 C 108 B 109 B 110 A 111 C 112 A B D D D D A A C A C A B A B B B D A B
Test Bank Key - Page 14
B A B B B D D A A C D C D B A C C D E A
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
AIS - 14th Edition TEST BANK KEY Chapter 15
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
True-False F 41 T 42 T 43 F 44 F 45 T 46 F 47 T 48 T 49 T 50 T 51 F 52 T 53 F 54 T F F T T F F F T T F F T T F T F F T T T T F F F T
T F T F T T T F T F F F F T
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94
Multiple Choice D 95 D E A D B A C D A C B C B B D C C D C C B A D A B C E B B C C A B E C A C C B
Test Bank Key - Page 15
C
Core Concepts of Accounting Information Systems , 14th Edition, by Simkin, Worrell and Savage
AIS - 14th Edition TEST BANK KEY Chapter 16 True-False 1 F 2 F 3 F 4 T 5 F 6 F 7 T 8 F 9 T 10 T 11 T 12 T 13 F 14 F 15 F 16 T 17 T 18 T 19 F 20 T 21 T 22 F 23 T 24 F 25 T 26 F 27 T 28 T
Multiple Choice 29 C 30 D 31 D 32 C 33 D 34 A 35 A 36 C 37 B 38 D 39 B 40 D 41 D 42 A 43 A 44 E 45 E 46 A 47 A 48 C 49 B 50 C 51 D 52 B 53 B 54 B 55 E 56 C 57 D 58 D 59 A 60 D 61 B 62 A
Test Bank Key - Page 16
AIS - 14th Edition TEST BANK KEY Chapter 7 True-False 1 F 2 F 3 T 4 F 5 F 6 F 7 F 8 F 9 F 10 F 11 T 12 T 13 T 14 F 15 T 16 T 17 F 18 T 19 F 20 T 21 F 22 T 23 T 24 T 25 F 26 F
27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66
Multiple Choice D 67 D 68 B 69 B 70 D 71 D 72 D 73 D 74 C 75 D 76 D 77 C 78 D 79 D 80 B 81 A 82 A 83 D 84 B 85 D 86 C 87 A 88 B 89 A 90 A 91 D 92 C 93 B 94 C 95 B 96 A B B D D C D A D B
B A C A D C C A D C D C C A C D A A B B D A C A B D A B A B
Matching 97 S 98 I 99 T 100 M 101 D 102 P 103 N 104 L 105 O 106 E 107 Q 108 H 109 K 110 B 111 A 112 U 113 V 114 F 115 C 116 J 117 R
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
AIS - 14th Edition TEST BANK KEY Short Answer Questions Chapter 1 109.
Some business activities that do not require traditional journal entries are: obtaining a line of credit, issuing purchase requisitions or purchase orders, signing contracts, hiring a new executive, and sending financial information to investors or bank loan personnel.
110.
Some reasons why XBRL formatted documents are useful include: they make financial data more searchable, comparable, informative, and therefore useful, it enables companies to use standard tags to identify specific accounting values, the language itself imposes a greater degree of standardization in the informational content of the reports, and XBRL also helps government agencies gather financial data that are more consistent, easier to understand, self-checking, and more quickly communicated.
Chapter 2 140.
HTML stands for “hypertext markup language.” HTML is the editing language used to display text, graphics, hyperlinks and similar information in web pages. HTML is nearly universal in that it works no matter which browser you use. The language mostly uses pairs of tags such as <b> and </b> to perform such tasks as bolding text.
141.
Electronic payments (E-payments) are payments that customers make to sellers electronically. They are similar to credit card payments except that they use third parties. One advantage of using such a system is that buyers need only provide their credit card numbers or otherwise establish accounts once with the e-payment firm, instead of repetitively with each vendor with whom they do business. Another major justification for using E-payments is security. Credit-card information is at risk when it is transmitted over data communications lines or stored in computer files of many vendors.
142.
Data encryption refers to transforming plaintext data into scrambled, cyphertext messages that cannot be understood if it is intercepted during data transmission. Secret key encryption relies upon a shared algorithm that must be kept secret to be secure. Public key encryption uses two keys, a “private key” and a “public key,” both of which must be known before a message can be decoded. This enables users to share a public key, but retain the secrecy of a private key.
Short Answer Key – Page 1
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Chapter 3 140.
The components that make up an AIS system include: hardware, software, people, data and procedures. A system is best viewed as a set of interacting components that must all work together to accomplish data gathering, storage, processing, and output tasks.
141.
Processor speeds are rarely important to accounting systems because the speed of the processor drastically exceeds the speeds for input and output operations. Most computers are I/O bound, meaning that their CPUs mostly wait for data to be input or output.
142.
In centralized computing systems, the mainframe/host computer or minicomputer/host performs most, if not all, of the processing and database tasks. In client/computing, processing may be performed by the server computer or the client (typically, a microcomputer), and database information is usually copied onto several file servers.
Chapter 4 57.
Descriptive analytics are the most common form of data analysis performed in organizations today. They utilize historical data to tell us what happened, and describe past events or occurrences. Examples of descriptive analytics include means, modes, median, frequency counts, and the like. Predictive analytics are data analyses that utilize historical data to infer future outcomes. Examples of predictive analytics include analyzing past payment patterns to infer creditworthiness, analyzing past product failures to predict warranty costs, or analyzing past purchasing decisions to cross-sell or up-sell products and services. Prescriptive analytics are data analyses that suggest a course of action while taking into account unknowns. Examples of prescriptive analytics include suggesting an optimal investment portfolio based on risk preferences, or suggesting product options and features based on geographic location or customer personal preferences
58.
ETL, or Extract, Transform and Load, are the steps performed during data provisioning. Extract involves identifying and copying relevant data from a source system or systems. Transform is the process of “cleansing” the data that was extracted. This step is necessary to harmonize the data such that data from multiple source systems follows the same format and conventions. Load is the process of importing the cleansed and harmonized data into the target system, where analysis will be performed.
Chapter 5 119.
Accounting software is integrated when (1) it contains various modules such as general ledger, accounts receivable, and accounts payable, and (2) inputs and outputs to and from these modules interact with one another seamlessly and without outside intervention.
Short Answer Key – Page 2
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
Lacking such integration, users must often transfer data from one system to another manually—a time-consuming, error-prone process that seems antiquated today. 120.
All integrated accounting software packages are not alike. Ways they differ include: (1) the number and types of modules included or available, (2) the sophistication and complexity of the basic general ledger application, (3) the type of company supported (e.g., niche company such as a car-rental agency versus a manufacturing facility), (4) price (or lease), (5) the number of simultaneous online users supported by the software, (6) the ability to interface with other, non-accounting software, (7) the availability of online, cloud hosting, (8) scalability, and (9) various specialized capabilities (e.g., cloudprocessing capabilities, or the ability to work with different currencies).
121.
The textbook mentions five major cloud services: (1) anytime, anywhere access to accounting information from a variety of Internet access devices, (2) automatic storage and backup of important accounting data, (3) multiuser access (perhaps from different remote locations), (4) automatic upgrades to newer versions of the software, and (5) the ability to print reports directly from host data sources.
122.
ERP systems offer flexibility and customization capabilities. They may also allow for features such as "user-defined codes." These are extra fields that users can designate to meet the special needs of a particular business. Another feature of high-end software is that it typically has more reporting capabilities.
123.
Sadly, no ERP system appears to be too big to fail, although most companies wish otherwise. Figure 5-8 in the chapter provides four, multi-million dollar examples. These illustrations point to the importance of advanced planning, careful implementation, and delicate change management when acquiring and installing such systems.
124.
Some of the consequences of bad decisions when acquiring a new accounting information system are wasted time, wasted money, and poor outcomes. Also, when trying to “make it work,” employees are likely to become frustrated, discouraged, or adversarial, managers will not have the information they need, and outside parties such as suppliers and investors may be inconvenienced. In worst-case scenarios, a company may have trouble managing its inventories, paying its bills, collecting on accounts receivable, managing cash flows, reporting positive net income, and meeting payroll deadlines.
Chapter 6 89.
COSO stands for Committee of Sponsoring Organizations. COBIT stands for Control Objectives for Information and Related Technology.
Short Answer Key – Page 3
Core Concepts of Accounting Information Systems, 14th Edition, by Simkin, Worrell and Savage
90.
Preventive control procedures are designed and implemented before an activity is performed to prevent some potential problem (e.g., the inaccurate handling of cash receipts) from occurring that relates to the activity. Detective control procedures are designed and implemented to provide feedback to management regarding whether or not operational efficiency and adherence to prescribed managerial policies have been achieved. In other words, preventive controls should be developed prior to operating activities taking place and detective controls should be developed to evaluate if operating efficiency and adherence to policies of management have occurred after operating activities have taken place. Corrective control procedures come into play based on the findings from the detective control procedures. That is, through detective controls, corrective control procedures should be developed to identify the cause of an organization’s problem, correct any difficulties or errors resulting from the problem, and modify the organization’s processing system so that future occurrences of the problem will hopefully be eliminated or at least minimized. Examples of each type of control are as follows: Preventive: scenario planning, risk management, segregation of duties, controlling access to assets Detective: duplicate check of calculations, bank reconciliations, monthly trial balances Corrective: backup copies of transactions and master files, training personnel to perform their jobs
Chapter 7 118.
Business continuity planning (BCP) is also called contingency planning and disaster planning. A business continuity plan is necessary because a variety of unforeseen disasters might occur that would cause a data processing center to not be operational. Examples of these disasters include natural events such as fires, floods, hurricanes, earthquakes, and manmade catastrophes such as terrorist attacks.
119.
The concept of convergence of physical and logical security means that an organization has integrated these two forms of security. Thus, incidents that might individually go unnoticed do not go undetected when they are combined. Restrictions on physical access protect the physical assets of the computer system and the data processing center. Restrictions on logical access safeguard computer time and maintain the privacy of the data files available to remote users. The combination of these two forms of security can make an organization less vulnerable to embezzlement or fraud.
120.
The separation of duties control is intended to deter an individual from committing an intentional accounting error and concealing this error in the normal course of his or her
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duties. To the extent that computerized accounting systems will handle functions that would be performed by more than one person under a manual system, the computerized version of the accounting information system cannot entirely adhere to this policy of separate responsibilities for related accounting processing functions. A computerized accounting information system will tend to combine certain traditionally separated accounting tasks in its data processing, but use alternate means for the application of the separation of duties control.
Chapter 8 63.
Among the uses of accounting codes are the following: to uniquely identify accounting data (more than one person or product may have the same name), to compress data (written descriptions are generally much longer than a code), to classify data (codes facilitate classification either manually or electronically), and to convey special meanings (codes can be used to indicate such things as credit ratings, credit limits, prices, or passwords).
64.
Data flow diagrams are logical descriptions of a system whereas systems flowcharts capture a physical view of the system. The data flow diagram would show processes, similarly to a systems flowchart. The systems flowchart, however, is likely to show whether the processes are performed by computer, manually, or by another device. Flow lines in the data flow diagram would show input and output items. These would either go to a data source or destination or a data store. The flowchart would show inputs and outputs apart from flow lines. They might be depicted in manual files, disk files, tape files, documents, etc. Both flowcharts and data flow diagrams may be designed to show increasing levels of detail. For instance, a context data flow diagram corresponds to a high level systems flowchart and each usually shows only one overall process for the revenue cycle.
65.
Offshoring means that companies have outsourced one or more business functions (processes) to companies that are not located in the US.
Chapter 9 69.
Two reasons students may give are that outside service bureaus may be less expensive for payroll processing and that an outside service may be advantageous in terms of confidentiality.
70.
Some "roots" of lean practices include: Consolidating production steps, having raw materials set up at hand to save time and increase productivity, moving equipment to
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make production flow smoother, and finishing a product in one space rather than walking to another room for finishing. 71.
Students will come up with a variety of answers to this question. Some vertical market industries include: insurance (different insurance needs and fraud), banking (check clearing, credit ratings, credit histories, and financial markets), construction (job costing and bidding capabilities), manufacturing (inventory control), retail (POS systems and analyzing sales), hospitality (monitoring costs, perishable inventory), and government organizations (fund accounting and governmental accounting standards
Chapter 10 88.
Hacking means gaining illegal or unauthorized access to computers, computer networks, or computer files.
89.
A computer virus is a program or subroutine that can replicate itself in other programs or computer systems.
90.
The idea that preventing cybercrime requires good policies and good education is based on the fact that computer security requires commitment by top management to a set of security policies that are understood and followed by employees. Employees must be educated such that they are aware of the policies, understand how to follow them, and are also able to recognize cybercrimes when they see them. Management must be committed to these policies such that employees understand their importance and recognize the value in helping to enforce the policies.
Chapter 11 85.
Section 404 of the Sarbanes Oxley (SOX) Act will likely add more cost to an audit. Section 404 requires management in public companies to establish and maintain an adequate internal control system and appropriate procedures for financial reporting. The annual report must include an assessment of this system and the procedures. Finally, the external auditor must attest to and report on management’s statements and assertions.
86.
Some techniques and skills that would be helpful to an interviewer would include: session planning, interview structuring, understanding the use of various question formats, options for controlling and documenting an interview, and, perhaps most important – how to listen.
87.
Continuous auditing is the real-time assurance of accounting disclosures. There is increased demand for continuous auditing because many businesses now report some
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information in real time using the Internet and stakeholders want more timely information. There are five main continuous auditing techniques. (1) Embedded audit modules are application subroutines that capture data related to high-risk areas and save these data in logs for auditors to review. (2) Exception reporting allows the system to continually monitor itself by reporting exception transactions. Exception transactions are transactions that fall outside predefined specifications and are rejected by the system, such as an unusually large payment to a vendor. (3) Transaction tagging allows auditors to tag transactions with special identifiers such that the transactions can be traced through processing steps in the AIS and logged for review. (4) The snapshot technique involves marking transactions with code that triggers a snapshot process. Snapshot data are recorded in a special file and reviewed by the auditor to verify that all processing steps have been properly performed. (5) Continuous and intermittent simulation (CIS) embeds an audit module in a database management system (DBMS). The CIS module examines all transactions that update the DBMS and can independently process the data and compare to results obtained by the DBMS.
Chapter 12 102.
Data flow diagrams use a square symbol to show the source or destination of data. A circle symbol indicates a process. An open rectangle symbol indicates a store of data. Finally, arrows depict a data flow or data stream.
103.
Decision tables outline the set of conditions that a given processing task might encounter and indicate the appropriate action to take for each condition. Decision tables therefore help system designers plan data processing functions and create written documentation of the processing logic for later reference. The major advantage of decision tables is that they can summarize a potentially large number of conditions and actions in a compact format. Decision tables are also useful as planning tools to system analysts, programmers, and related individuals who plan and/or create new AISs. Finally, the accountants who audit AISs rely heavily upon internal documentation, and decision tables can help them verify the processing logic and control procedures built into these AISs.
104.
Process maps document business processes in easy-to-follow diagrams. Accountants and managers can use this tool to help them describe current processes to others. Auditors can use process maps to help them learn how a department or division operates, document what they have learned, and identify internal control weaknesses or problems in existing operations. An additional use of process maps is for training—for example, to explain how complicated tax decisions are made. Finally, consultants frequently use process maps to help them study business processes and redesign them for greater productivity.
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105.
End user documentation refers to the (often non-existent) user manuals, reference aides, and similar materials that document the databases, spreadsheets, and other systems created by non-IT personnel. If end users create the systems, then these developers should also create the documentation for their models. End-user documentation is important because such materials explain how systems work, identifies important inputs and outputs, provides valuable insights into embedded controls, and helps others fix or otherwise modify systems when the primary developers are no longer there.
Chapter 13 160.
The steering committee serves as an oversight committee that monitors the consultant’s progress and critically reviews its systems analysis reports. These reports enable the committee to consider the consultant’s findings and evaluate the solutions recommended by its team members for solving current system problems.
161.
Several conditions when prototyping a system that should be used include: system users do not understand their information needs very well, system requirements are difficult to define and experimentation is easier with a live model, the system to be developed is critical and needed quickly, past interactions have resulted in misunderstandings between users and designers, design mistakes are costly, and the risks associated with developing and implementing the wrong system are high
162.
PERT charts allow project leaders to achieve the following: (1) outline the full set of activities that must be completed in a project, (2) identify precedence relationships, (3) estimate the completion time of an entire project, (4) identify activities on and off critical paths, and (5) examine “what-if” scenarios when project leaders contemplate reallocating project resources from some activities to others.
Chapter 14 125.
Primary record keys (also called primary keys) are unique and are used to distinguish one record from another. Secondary record keys are rarely unique, i.e., zip codes or last names. Foreign record keys are used in databases to link the records in one database table to records in other tables.
126.
An REA model in an AIS database stores information about these file entities—for example: information about inventories (resources), cash sales (events), and customers (agents). Two examples of such information mentioned in the text are “sales orders” and “hiring decisions.” Similar information includes data about customer demographics, interest rates, or competitor activities. Traditional accounting systems store data that
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directly affect the financial statements of a company. For instance: sales, inventory, or accounts payable. 127.
When a database is not normalized, use of the database can result in anomalies. Two types of anomalies are update and delete anomalies. An update anomaly occurs when a database user attempts to change information in the database, but data does not update completely or accurately. For example, if the owner changed the description of an item in the non-normalized database, the description would be changed for one instance of an inventory item. But every inventory item and its description would be repeated for every sale of that item. As a result, changing the description for one record in the database will not change the description for every other instance of the same item, and the update of the inventory description will not be complete. A delete anomaly occurs when one item is deleted from the database, but other information is unintentionally lost. In this example, a store clerk might delete an inventory item because the store no longer intends to sell this item. However, deletion of the item could also cause the store to lose information about customers if these customers had only purchased the item that is being deleted. Because the customer information is stored with each sale (instead of being stored in its own, normalized table), deletion of items can result in the permanent loss of information about the customers who purchased those items.
Chapter 15 96.
A database is a collection of tables with individual fields that identify each item (e.g., customer number, customer name, credit limit, etc.) and then relates the tables in order to query and write reports. A DBMS is a set of software programs that interfaces between the database and users or user programs.
97.
The schema of a database is an overall plan for storing information in the tables of a database (e.g., the data it contains and the relationships among them). In contrast, a subschema is a subset of this data (often, a particular user’s view). Subschemas focus on the informational needs of specific users, and limit access to sensitive data. Thus, the subschema is on a need to know basis.
98.
Data validation is important because it safeguards the accuracy and completeness of the data stored in data bases. Examples of such safeguards that are discussed in Chapter 15 include: 1. Proper data types for all data fields. 2. Input masks for such familiar data fields as telephone numbers or social security numbers. 3. Drop down lists to limit data input to valid choices. 4. Validation rules to guard (mostly numeric) data to acceptable values. 5. Referential integrity, which disallows (a) record deletions when the underlying data are needed (for example, the parent record required by existing child records), or (b) foreign keys that do not reference an existing parent.
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Chapter 16 63.
Subforms are handy for showing subordinate information and they also allow users to enter data at the time the form and subform display—a handy feature if the user wishes to create new records in the subform.
64.
Reasons for designing the layout for a report prior to creating the report include the usefulness of (1) identifying what information to include, or to omit, from a potentially large set of items, (2) deciding how to best make use of the limited “real estate” of an output page, and (3) grouping data in useful ways to best compute subtotals or other statistical outputs. This is a good opportunity to remind students that the purpose of most AISs is to provide meaningful, decision-oriented information to users—not simply to create “pretty” reports.
65.
A report based on a table simply displays the data (or calculated values) from a single underlying table. A report based on a query can be based on multiple tables, can also include calculated fields, and of course, will display the information for only those records satisfying the query itself. For example, a report based on query might limit the output to those students who live in dorms.
66.
Controls on forms (such as drop down lists) are often designed to prevent data entry errors and to help users input data more accurately and efficiently. These controls affect only the specific form being used. For example, a drop down list of states controls only the data entry of states and only when the form with the control is used to enter this data. Controls within database tables are more pervasive and provide control over the data that enters the tables regardless of which form is used and regardless of whether a form is used. These controls often involve validation rules and data type settings. Controls within the tables themselves provide for more wide-ranging protection of the integrity of the data in the database.
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