Accounting Information Systems
Final Exam Questions
Course Introduction
Accounting Information Systems (AIS) explores the integration of accounting principles and information technology to support financial reporting, decision-making, and internal controls within organizations. This course covers the design, implementation, and management of systems that collect, process, and communicate accounting data. Topics include the structure and components of AIS, documentation techniques, internal control frameworks, data security, business processes, and the role of AIS in auditing and regulatory compliance. Students will also examine current trends such as cloud-based systems, cybersecurity, enterprise resource planning (ERP), and the ethical considerations involved in managing financial information.
Recommended Textbook
Forensic Accounting 1st Edition by Robert Rufus
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Chapter 1: Introduction to the World of Forensic Accounting
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Q1) A ________ records,classifies and summarizes the financial transactions a company.
A) transactional accountant
B) internal auditor
C) external auditor
D) management accountant
Answer: A
Q2) Which of the following is a process flowing from a set of specific observations,facts,or data to a working hypothesis and then a general conclusion?
A) intuitive reasoning
B) inductive reasoning
C) deductive reasoning
D) critical reasoning
Answer: B
Q3) Define forensic accounting.
Answer: Forensic accounting is a discipline that is focused on: (1)the prevention,detection,and investigation of both occupational fraud and financial statement fraud; and (2)the rendering of other litigation-support services.
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Chapter 2: The Legal Environment of Forensic Accounting
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Q1) Rule 26(a)(2)of the Federal Rules of Civil Procedure requires the disclosure of all experts (such as forensic accountants)expected to testify at trial.The disclosure is generally accompanied by the expert's written report.List the elements that should be contained in the expert's written report.
Answer: The expert's written report must contain the following elements:
1.A complete statement of all opinions the witness will express,along with the basis and reasons for them.
2.The facts or data considered by the witness in forming the opinions.
3.Any exhibits that will be used to summarize or support the opinions.
4.The witness's qualifications,including a list of all publications authored in the preceding ten years.
5.A list of all other cases in which the witness has testified as an expert (either at trial or by deposition)during the preceding four years.
6.A statement of the compensation to be paid for the study and testimony in the case.
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Chapter 3: Screening and Staging Engagements
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Q1) Which of the following is a reason why research is considered valuable to forensic accountants?
A) It enhances critical thinking and reasoning skills.
B) It eliminates the requirement of a working hypothesis.
C) It helps in avoiding the evidences against the hypothesis.
D) It increases the mistakes, but results in better decisions.
Answer: A
Q2) When engaged as a testifying expert rather than consulting expert,the expert is not considered an agent of the attorney.
A)True
B)False
Answer: False
Q3) Online research is a double-edged sword.Explain why.
Answer: Although online research clearly has a place in the forensic accountant's tool box,it is a double-edged sword.The Internet has a number of research benefits,including breadth and depth of subject matter,quick access,and ease of use.However,it also contains much false and/or misleading information,which is clearly inconsistent with the Daubert standard.Moreover,the sheer volume of available information can be easily overwhelming and difficult to navigate,leading the researcher off track.
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Page 5
Chapter 4: Gathering Evidence Interviews and Observations
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Q1) Which of the following is true of the memorializing stage of the interview process?
A) The interviewer should transcribe the notes in his own words to provide greater understanding.
B) The memorandum should not contain recommendations and opinions of the interviewer.
C) Any content attributable to the interviewer should be clearly identified as such.
D) Hand-written interview notes can serve as a memorandum of interview by itself.
Q2) When multiple individuals are identified as potential sources of information,they should be interviewed from the specific to the general.
A)True
B)False
Q3) Which of the following is true of introductory questions?
A) These can be used to norm the interviewee.
B) These are asked in an informal interview but not in a formal interview.
C) These are generally confrontational.
D) These cannot be used to build rapport.
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Chapter 5: Financial Statements Analysis Reading
Between the Lines
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Q1) Explain the matching principle.
Q2) Which of the following is a difference between a forensic accountant and an accountant or auditor?
A) A forensic accountant works with complete information, whereas an accountant or auditor works with incomplete information.
B) A forensic accountant commonly works backward, whereas an accountant or auditor typically works forward.
C) A forensic accountant works with financial ratios, whereas an accountant or auditor works with internal reports.
D) A forensic accountant uses professional skepticism while conducting the analysis, whereas an accountant or auditor has a more open mindset.
Q3) Which of the following is the correct formula for calculating sustainable growth rate?
A) Sustainable growth rate = Return on sales × Return on equity
B) Sustainable growth rate = Retention ratio × Return on equity
C) Sustainable growth rate = Retention ratio × Return on assets
D) Sustainable growth rate = Return on sales × Return on assets
Q4) List and explain the three basic financial statements.
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Chapter 6: Fraud and White-Collar Crime
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Q1) Which of the following is the most common type of financial statement fraud?
A) understatement of losses
B) overvaluation of reserves
C) overstatement of revenues
D) undervaluation of liabilities
Q2) Which of the following is a term used to describe an effort to neutralize one's actions by shifting blame to those who condemn the behavior?
A) defamation
B) accusation
C) denunciation
D) condemnation
Q3) Which of the following is a red flag of personal fraud characteristics?
A) difficulty in controlling anger
B) excessive gambling habits
C) impulsive behavior
D) depression
Q4) Explain rationalization with respect to Cressey's fraud theory.
Q5) List any six characteristics of a typical white-collar fraudster.
Q6) Write a short note on techniques of rationalization (neutralization).
Q7) Define the term prosecutorial misconduct.
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Chapter 7: Conducting a Fraud Investigation
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Q1) What are the common characteristics of fraudulent journal entries outlined in SAS No.99?
Q2) Dylan,the accountant of Skylar Constructions,is being suspected for altering entries in the books of accounts and transferring the difference to a separate account.Dylan has recently bought a luxury car.You are appointed to investigate the fraud.Which of the following is a good preliminary hypothesis for the case?
A) Skylar uses perpetual inventory method which reduces the probability of detection of fraud.
B) Dylan shares a good rapport with the auditor of the company, enhancing the opportunity to commit fraud.
C) Dylan recently bought a luxury car, the sources of funds for which is yet to be determined.
D) The financial statements of the company are reported quarterly, increasing the probability of detection.
Q3) A hypothesis is simply a statement of fact.
A)True
B)False
Q4) Fraud is not an accounting problem - it is a social phenomenon.Explain.
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Page 9
Chapter 8: Transforming Data Into Evidence
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Q1) Which of the following is an advantage of data analysis tools?
A) They deal with quantitative data and hence have specific applicability.
B) They force the analyst to explicitly consider constraints in the data.
C) They allow the forensic accountant to extract the meaning of the data in a usable manner.
D) They are easy to apply, easy to customize, and easy to understand.
Q2) Which of the following is a difference between fourth-party data sources and other data sources?
A) Fourth-party data sources do not reflect the actual activity of the subject, whereas the other data sources reflect the actual activity.
B) Fourth-party data sources are obtained from reference sources, whereas the other data sources are obtained from entities that maintain records regarding the subject.
C) The other data sources fall within the realm of secondary research, whereas fourth-party data sources fall within the realm of primary research.
D) The other data sources may have some firsthand knowledge of the subject's activities, whereas fourth-party data sources can only be used to confirm data obtained from other sources.
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Chapter 9: Transforming Data Into Evidence
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Q1) Which of the following is true of data mining?
A) Sorting is a form of data mining.
B) Data mining cannot be used for investment analysis.
C) Ratio analysis is a form of data analysis, not data mining.
D) Data mining can be used to identify all types of fraud.
Q2) Which of the following describes the descriptive measure "median"?
A) It is the center point of the data set, when the observations are ordered by magnitude.
B) It is the average value calculated by adding all the observations and dividing by the number of observations.
C) It is the average of the squared deviations of the observations from the mean.
D) It is the most frequently occurring value.
Q3) What does a positively skewed distribution mean?
A) The distribution is more heavily weighted toward larger numbers.
B) The median is lower than the mean, which is lower than the mode.
C) The distribution extends farther to the left than to the right.
D) The mean is greater than the median, which is greater than the mode.
Q4) What are the different data analysis tests which use Benford's Law to identify irregularities in data sets?
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Page 11
Chapter 10: Professional Responsibilities
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Q1) Which of the following statements best defines the adverse interest threat as per AICPA's Guide for Complying with Rules 102-505 (2008)?
A) the threat that a member will not appropriately evaluate the results of a service performed by the member or by an individual in the member's firm as part of providing another service
B) the threat that a member will promote a client or employer's position to the point that his or her objectivity is compromised
C) the threat that a member will not be objective because his or her interests are in opposition to those of a client or employer
D) the threat that, because of a long or close relationship with a client or employer, a member will become too sympathetic to that entity's interests or too accepting of its work
Q2) ________ occurs when a testifying expert is specifically hired to represent the engaging attorney's theory.
A) Conscious bias
B) Unconscious bias
C) Witting bias
D) Selection bias
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Chapter 11: Fundamentals of Business Valuation
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Q1) Which of the following is situation commonly drives a business valuation engagement?
A) hypothecation of assets
B) shareholder dispute
C) hedging a company's derivatives
D) determination of dividend payout
Q2) Which of the following business valuation organizations merged with the NACVA in 2012?
A) the American Society of Certified Analysts
B) the Institute of Business Appraisers
C) the American Society of Appraisers
D) the Institute of Valuation Analysts
Q3) Which of the following gives the calculation of the capitalization rate?
A) the equity risk premium plus the specific company risk premium
B) the required rate of return minus the risk free rate
C) the dividend payout rate plus the long-term sustainable growth rate
D) the discount rate minus the expected long-term sustainable growth rate
Q4) Excluding valuation discounts allows for a more equitable determination of fair value.Substantiate.
Q5) Why is identification of the ownership interest to be valued important?
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Chapter 12: Special Topics
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Q1) Which of the following statements is true of the calculation of economic damages in a civil litigation?
A) In economic damages calculations, risk is not an issue, since the discount rate is supposed to represent a risk-free rate.
B) All past economic damages must be reduced to present value, which requires the application of a discount rate.
C) Calculations of economic damages are often based on a set of foundational facts rather than assumptions.
D) An economic expert must convert future losses to present value using the applicable interest rate.
Q2) Digital evidence can be time sensitive,because some data are intended for only temporary storage and may be overwritten on a regular basis.
A)True
B)False
Q3) Indirect methods of proof are founded on logic,common sense,critical thinking,and deductive reasoning.
A)True
B)False
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