WILKINSON - Accounting Information System 4e test bank

Type:

Test Bank

Resource:

WILKINSON - Accounting Information System

Edition:

4th Edition

Author(s):

Joseph W. Wilkinson Michael J. Cerullo Vasant Raval Bernard Wong-On-Wing

CHAPTER 1 1-1. a. b. c. d. e.

1-2. a. b. c. d. e.

1-3.

Which of the following is not a reason for accounting students to study accounting information systems?

Accounting information systems are intimately related to the entire accounting curriculum.

Accountants are closely involved with accounting information systems during their careers.

Accounting information systems are becoming more computerized and difficult to understand without close study.

Accounting information systems are incorporating new developments that are presenting opportunities for accountants.

All of the above reasons are valid.

Which of the following is not a feature of the information age?

Service firms and not-for-profit organizations tend to outnumber farming and manufacturing enterprises.

Changes tend to occur at a more leisurely pace.

An increasing proportion of firms process their information with the aid of computers.

Firms tend to encounter increasing pressures from such sources as government agencies and consumer groups.

An increasing number of firms face global competition.

a. b. c. d. e.

Which of the following descriptions least encompasses the full meaning of the term "accounting"?

The language of business An information system Financial information related to the functioning of an entity Bookkeeping Activities involving recording, processing, analyzing, and reporting

1-4. a. b. c. d. e.

Which of the following least describes the field of accounting?

Physical operations Language of business System for summarizing all economic activities Recording of economic data Information for decision making

1-5. a. b. c. d. e.

One definition of accounting is that it is essentially a(n): information system. part of the basic field bounded by the concept of information. application of the general theory of information to the problem of efficient economic operations. b and c, above. a, b, and c, above.

1-6. a. b. c. d. e.

Information is related to data in which of the following ways?

Information and data are identical.

Information represents the inputs of an information system, while data are the outputs, Information represents the outputs of an information system, while data are the inputs.

Data is information made meaningful and more valued through processing.

Data is information transformed into understandable intelligence and rendered useful for achieving desired objectives.

2

1-7. a. b. c. d. e.

Which of the following is not a category of data collected by the typical business firm?

Routine data from internal operations Routine data from external sources Non-routine data from external sources Non-routine data arising from managerial decisions All are categories of collected data

Into which category of data does each of the following items in Questions 1-8 through 1-12 fit? a.

Routine data from internal operations b.

Routine data from external sources c.

Non-routine data from external sources d.

Non-routine data arising from managerial decisions e.

A category not listed above 1-8.

Interest rates on federal bonds?

1-9.

Quantities of raw materials issued into the production process of the firm?

1-10.

Amounts owed to suppliers, as shown on invoices received via the daily mail?

1-11.

Standard overhead manufacturing rate per direct labor hour?

1-12.

Dollar amounts of sales made to customers?

1-13.

Which of the following is not an input to a typical merchandising firm's accounting information system?

Sales order Merchandise reorder request form Packing slip with received merchandise Check for supplier Employee time card

a. b. c. d. e.

1-14. a. b. c. d. e.

1-15. a. b. c. d. e.

Which of the following is not an output from the formal accounting information system of a typical retail grocery store?

Paycheck for employee Income statement for firm Sales order Sales analysis of firm's product sales Deposit slip reflecting the day's receipts Which of the following is not a characteristic that is common to all accounting information systems?

Data conversion functions Information outputs Communication network Input stage Automated resources

3

1-16. a. b. c. d. e.

Which of the following statements is the best definition of an accounting information system?

An integrated framework that coordinates resources needed to convert inputs into outputs to achieve objectives A framework by which resources are coordinated to convert data into information in order to achieve objectives A framework of resources whereby desired objectives are achieved A framework involving people and computers whereby information is generated from data.

A framework that coordinates resources needed to convert information into data in order to achieve objectives

1-17. a. b. c. d. e.

An accounting information system of an enterprise may best be described as the: structured framework that transforms economic data into needed quantitative information. computer-based system that uses information to operate the enterprise. social network of employees who gather information for use by them and the managers. organization structure of the enterprise. general and only information system of the enterprise.

1-18.

Which of the following is the least important objective of the accounting information system of a firm?

To provide information for historical perspective To provide information supporting day-to-day operations To provide information for decision making To provide information pertaining to stewardship All are equally important objectives

a. b. c. d. e.

1-19. a. b. c. d. e.

1-20.

The system that is financially oriented and that has the most pervasive scope, in that it extends to all the activities of the firm and provides information to every type of user, is the: management information system data processing system. accounting information system. financial accounting system. personnel information system.

a. b. c. d. e.

Which of the following is not a characteristic that is common to all accounting information systems?

Data-related activities Information processing Transaction processing Inputs Automated resources

1-21. a. b. c. d. e.

Which of the following is not a type of information system?

An automated information system A computer-based information system A manual information system A data-driven information system An accounting information system

4

1-22. a. b. c. d. e.

The systems development phase that precedes the systems design phase is the: systems planning phase. systems analysis phase. systems justification and selection phase. systems implementation phase. systems operation.

1-23. a. b. c. d. e.

Important components common to all information systems are: automated devices that process data. human operators and users. production schedules. cash registers. stockholders.

1-24. a. b. c. d. e.

Which of the following is not a characteristic of all the accounting transactions of a firm?

Economic event Measurable in financial terms Reflected in the firm's accounts and financial statements Initiated by an exchange between the firm and an external party Affects the firm's assets and/or equities.

1-25. a. b. c. d. e.

Which of the following is not a basic type of external transaction?

Sale of products Purchase of merchandise Preparation of paychecks for employees Receipt of cash from customers Disbursement of cash to suppliers

1-26. a. b. c. d. e.

Which of the following functions is not a purpose of a firm's transaction processing systems?

To record economic events measurable in financial terms To devise codes that facilitate the processing of accounting transactions To generate purchase orders and other operational documents To process accounting transactions arising from external sources To aid in preparing financial statements pertaining to the firm

1-27.

The information subsystem that provides the framework which is primarily concerned with the day-to-day operations is known as the: management information system. accounting information system. transaction processing system. informal information system. decision support system.

a. b. c. d. e.

1-28. a. b. c. d. e.

Which of the following are external users of information generated by the information system of a corporation?

Managers Stockholders Employees a and b b and c

5

1-29. a. b. c. d. e.

Which of the following are not users of accounting information system outputs?

Customers Suppliers Owners Managers All are users

1-30. a. b. c. d. e.

Demand deposit accounting transactions are peculiar to: manufacturing firms. merchandising firms. insurance firms. banking and savings firms. nonprofit firms.

1-31. a. b. c. d. e.

Which of the following is not a systems development phase?

Planning Analysis Modification Design Implementation

1-32. a. b. c. d. e.

Information processing is performed mainly by the __________ of a manufacturing firm. accounting information system production information system management information system marketing information system informal information system

1-33.

Which of the following examples of information generated by a firm would be least needed by its external users?

Taxable income of the firm Economic order quantities of merchandise items sold by the firm Prices of merchandise sold by the firm Prospective earnings of the firm Salaries and benefits paid to top management of the firm

a. b. c. d. e.

1-34. a. b. c. d. e.

A management information system is designed to ensure that management possesses the information it needs to carry out its functions through the integrated actions of: data collection, processing, and reporting activities. a computerized information retrieval and decision making system. statistical and analytical review techniques. production-budgeting and sales forecasting activities. accounting cycles.

1-35. a. b. c. d. e.

The management information system of a firm: is identical with the accounting information system. requires the presence of computers. provides financial information to all users. serves the operational and decision making needs of managers is a subsystem of the accounting information system.

6

1-36. a. b. c. d. e.

Which of the following statements is true?

The accounting information system and the management information system are in effect identical.

The accounting information system provides information to external users rather than to managers of a firm.

The accounting information system can be viewed as being the entire formal information system of a firm.

The marketing information system can be viewed as being the entire formal information system of a firm.

The accounting information system is a central part of the management information system, an important portion of a firm's formal information system.

1-37. a. b. c. d. e.

Which of the following is least likely to be an information system function?

Data control Data management Data collection Data generation Data processing

1-38. a. b. c. d. e.

Which of the following is not one of the five major functions (tasks) of an information system?

Data collection Data processing Data retrieval Data control/security Information generation

1-39. a. b. c. d. e.

Which of the following steps is not generally performed as a part of the data collection function?

Data capture Data measurement Data recording Data transcription Data validation

1-40. Information system activities or tasks may be classified in terms of three stages--input, processing, and output. An activity that is normally associated with the output stage is: a. batching. b. recording. c. validating. d. reporting. e. classifying.

1-41. A functional step that is normally associated with the input stage of an accounting information systems is: a. calculating. b. recording. c. reporting. d. filing. e. reconciling.

7

1-42. a. b. c. d. e.

The primary functions (stages) of a computerized accounting information system include: input, processing, and output. input, processing, output, and data management. input, processing, output, and control input, processing, output, data management, and control. sorting, summarizing, and reporting.

1-43. a. b. c. d. e.

Which of the following steps is generally performed earliest in a procedure?

Data validation Data classification Data transcription Data capture Data transmission

1-44. a. b. c. d. e.

Which of the following steps is least considered to be a part of the data processing function?

Sorting Programming Batching Calculating Transcribing

1-45. a. b. c. d. e.

Which of the following steps is more likely to be performed during both the data collection and data processing function?

Validating Transcribing Recording Sorting Data capture

1-46. a. b. c. d. e.

Which of the following statements is incorrect?

Collected data usually undergo a series of processing steps, Collected data may be processed in batches.

Data may be classified and summarized during the data processing function.

New data may not be created during the data processing function.

Processed data are often stored for later retrieval.

1-47.

Which of the following is not a processing step performed by the formal information system of a typical merchandising firm?

Calculate total of today's cash receipts.

Count and inspect received merchandise.

Prepare analysis of this week's sales.

Post receipts of merchandise to inventory records.

Sort employee time cards.

a. b. c. d. e.

1-48. a. b. c. d. e.

Which of the following topics is least likely to be in the common body of knowledge for accountants?

Transaction processing systems Information needs for managerial decision makers Programming languages for data base systems Internal controls Uses of computers in accounting applications

8

1-49. a. b. c. d. e.

Which of the following terms does not relate to data management?

Data base Updating Monitoring Retrieving Filing

1-50. a. b. c. d. e.

Which of the following functions has the primary purpose of ensuring the accuracy of data?

Data processing Data control Data management Data collection Information generation

1-51. a. b. c. d. e.

Rendering reports more understandable and usable by managers is one aspect of which step in the information generation function?

Reporting Translating Transcribing Communicating Transmitting

1-52. a. b. c. d. e.

Which of the following procedural sequences appears to be most logical?

Recording, batching, reporting, classifying, sorting, analyzing Storing, recording, classifying, reporting, storing, retrieving Recording, classifying, sorting, storing, retrieving, reporting Transmitting, storing, retrieving, calculating, reporting, sorting Recording, transcribing, sorting, reducing, storing, reporting

1-53. a. b. c. d. e.

Which of the following roles can the accountant fulfill with respect to information systems?

Designer User Evaluator b and c a, b and c

1-54.

Which of the following are heavily involved in generating score-keeping information for financial statements?

Managerial accountants Tax specialists Auditors Financial accountants Systems designers

a. b. c. d. e.

1-55. a. b. c. d. e.

Which of the following are mainly involved in providing information to managers that can be used in making decisions?

Managerial accountants Tax specialists Financial accountants Systems designers Auditors

9

1-56. a. b. c. d. e.

Which of the following is least likely to arise in the future?

Increasing use of computers in business firms Increasing use of information technology in business operations Increasing distinction between accounting and non-accounting information Increasing scope of accounting information system within business firms Increased use of decision models to aid decision making

1-57. a. b. c. d. e.

Which of the following express an opinion concerning the efficiency and effectiveness with which a firm's system-related resources are being used?

Financial accountants Tax specialists Accounting managers Auditors Systems designers

1-58. a. b. c. d. e.

Two fundamental models employed by the accounting information systems are the: data model and the information model. accounting model and the information model asset model and the equity model. financial accounting model and the managerial accounting model. cost accounting model and the tax accounting model.

1-59. a. b. c. d. e.

Which of the following models would not be classified as a managerial accounting model?

Cost-volume-profit model Funds-flow statement model Cost-variance analysis model Capital budgeting model Cash-flow forecasting model

1-60. a. b. c. d. e.

Which type(s) of information is (are) provided by the accounting information system?

Attention-directing information Scorekeeping information Decision-making information a and b, above a, b, and c, above

1-61. a. b. c. d. e.

Which of the following roles is least likely to be assumed by current accountants?

Users of computer-generated information Auditors of financial statements and records Operators of computer systems Designers of computerized controls and security measures Preparers of managerial reports

1-62.

1.

2.

3.

4.

5.

Listed below are the steps in the systems development life cycle. What is the correct sequence?

Systems analysis Systems implementation Systems planning Systems operation Systems design

10

The correct sequence of steps in the systems development life cycle is: a.

1-3-5-2-4 b.

3-1-5-2-4 c.

1-5-3-2-4 d.

3-1-5-4-2 e.

5-1-3-2-4 1-63. a. b. c. d. e. **1-64. a. b. c. d. e.

The systems development phase that precedes the systems operation phase is the: systems planning phase. systems analysis phase. systems design phase. systems justification and selection phase. systems implementation phase.

An accounting information system (AIS) is distinguished from a management information system (MIS) by the fact that: an AIS deals with financial information while a MIS handles all other information. an AIS may be either manual or computer-based while a MIS is computer-based. an AIS is a subsystem within a MIS. an AIS is control-oriented while a MIS is used exclusively for planning. information produced by an AIS is used only by financial people while information produced by a MIS is used throughout the organization.

11

1-1.

1-2.

1-3.

1-4.

1-5.

1-6.

1-7.

1-8.

1-9.

1-10.

1-11.

1-12.

1-13.

1-14.

1-15.

1-16.

1-17.

1-18.

1-19.

1-20.

1-21.

1-22.

1-23.

1-24.

1-25.

1-26.

1-27.

1-28.

1-29.

1-30.

1-31.

1-32.

1-33.

1-34.

1-35.

1-36.

1-37.

1-38.

1-39.

1-40.

E B D A E C E C A B D B D C E B A A C E D B B D C B C B E D C C B A D E D C D D

1-41.

1-42.

1-43.

1-44.

1-45.

1-46.

1-47.

1-48.

1-49.

1-50.

1-51.

1-52.

1-53.

1-54.

1-55.

1-56.

1-57.

1-58.

1-59.

1-60.

1-61.

1-62.

1-63.

1-64.

B D D B A D B C C B D C E D A C D D B E C B E C

12

CHAPTER 2 2-1. a. b. c. d. e.

Which of the following is not a system?

A building A restaurant Human body A business firm Financial accounting

2-2. a. b. c. d. e.

Which of the following is not a system?

A river Fireworks A state government A baseball team A network of highways

2-3. a. b. c. d. e.

Which of the following is not a characteristic of systems?

Computers Objectives Environment Constraints Feedback

2-4. a. b. c. d. e.

Which of the following is not a characteristic of systems?

Controls Money Subsystems Input-process-output Environment

2-5. a. b. c. d. e.

The environment of a business firm includes all of the following except: the industry. its creditors. its customers. the purchasing department. its suppliers.

2-6. a. b. c. d. e.

Which of the following statements is not correct?

Most industrial age firms use hierarchic structures.

Most government organizations use flat structures.

Knowledge-intensive organizations use matrix structures.

Consulting firms use network structures.

All of the above are correct.

2-7. a. b.

C. d. e.

Which of the following terms least applies to most systems?

Unity Common purpose Simplicity Interdependent parts Orderly functioning

13

2-8. a. b. c. d. e.

Every system has all of the following characteristics except: objectives. constraints. outputs. independent subsystems. an environment.

2-9. a. b. c. d. e.

Which of the following terms implies the presence of at least two systems?

Objectives Inputs-process-outputs Boundary Constraints Interfaces

2-10. a. b. c. d. e.

A shared boundary between two systems of subsystems is known as a(n): constraint. hierarchy. environment. input. interface.

2-11. a. b. c. d. e.

A business firm can be viewed as a resource system subsystem supersystem product

2-12. a. b. c. d. e.

With respect to a business firm, the information system may be best described as: part of its environment. one of its subsystems. the only example of a hierarchical structure within the firm an automated network. the accounting process.

2-13. a. b. c. d. e.

Which of the following belong(s) to a subsystem of the accounting information system of a merchandising firm?

Payroll clerks Sales transaction processing system Cash registers b and c, above a, b, and c, above

2-14. a. b. c. d. e.

The surroundings that lie outside the boundary of a system comprise its: scope. environment. subsystems. interfaces. hierarchies.

of its industry.

14

2-15. a. b. c. d. e.

Which of the following series of systems best illustrates the concept of a multi-level system hierarchy?

Accounting clerk, data entry clerk, sales clerk Accounting information system, management information system, operational system Accounting function, marketing function, personnel function Merchandising firm, accounting information system, purchasing transaction processing system Data inputs, processing steps, outputs

2-16. a. b. c. d. e.

Which of the following benefits cannot be gained by use of an audit trail?

Enable the effects of transactions to be traced from source documents to final dispositions Enable the total of entered debits to be balanced against the total of entered credits Enable inquiries regarding account balances to be answered Enable files to be reconstructed Enable detected errors to be corrected

2-17. a. b. c. d. e.

A business firm, as a system, is affected by constraints. Which of the following is not such a constraint?

Budgeted resources Available technology Physical boundary Planned profits Legally required reports

2-18. a. b. c. d. e.

Which of the following is not a basic resource input of a business firm?

Profits Manpower Funds Facilities Data

2-19. a. b. c. d. e.

An output of every firm is: services. products. information. profits.

All of the above are outputs of every firm.

2-20. a. b. c. d. e.

Which of the following is not a part of the environment of a business firm?

Suppliers Public Managers Owners Customers

2-21. a. b. c. d. e.

Three of the most important major subsystems of a business firm are its: organization, employees, and managers. organization, information system, and operational system. information system, accounting system, and computer system. facilities, operations, and financial systems. accounting, marketing, and personnel functions.

15

2-22. a. b. c. d. e.

Which of the following terms does not apply to a business firm?

Complex system Probabilistic system Human-made system Closed system All of the terms apply

2-23. a. b. c. d. e.

Which of the following phrases does not apply to the systems approach?

Holistic viewpoint Flexible procedure Clear objectives Development of interconnected "black boxes" Framework for solving problems

2-24.

Which of the following combinations is likely to be most influential in determining the design of a firm's information system?

The firm's financial condition and the experience of its managers The firm's accounting cycle, organization, and operations The firm's resource flows, legal obligations, and industry characteristics The firm's objectives, policies, and procedures The firm's size, objectives, and future expectations

a. b. c. d. e.

2-25. a. b. c. d. e.

2-26. a. b. c. d. e.

2-27. a. b. c. d. e.

Which of the following items of information is not likely to be collected and stored by a firm concerning its materials resource?

Quantities of materials on hand Suppliers from whom to acquire materials Receipts of materials from suppliers Usage or sales of materials All of the above items are likely to be needed Which of the resources likely has the greatest impact upon the information system of a mail order firm?

Manpower Facilities Materials Funds All have an equal impact.

Which of the resources likely has the greatest impact upon the information system of a public accounting firm?

Manpower Facilities Materials Funds All have an equal impact.

16

2-28. a. b. c. d. e.

2-29.

What aspects do a railroad, a public utility and a health service organization have in common, other than their status as providers of services?

Severe competition High technology Extensive legal obligations Labor-intensive operations Satisfied stockholders

a. b. c. d. e.

Which of the following types of firms most need an information system that provides very timely market information?

Public utility Oil refiner Food producer Garment manufacturer Railway line

2-30. a. b. c. d. e.

Which of the following is a 12rima[y operational subfunction in an integrated oil company?

Oil refining Purchasing Engineering design and development Advertising Personnel management

2-31. a. b. c. d. e.

Which of the following is not likely to be a major operational function of a manufacturing firm?

Inventory management Production Marketing/distribution Finance/accounting Maintenance

2-32. a. b. c. d. e.

Which of the following is not one of the major subsystems of a business firm?

Organization Resource flows Information system Operational system Collective functional (e.g., accounting, marketing) information systems

2-33.

Which of the following statements best reflects the relationship(s) between the operational system and the information system of a firm?

Both are subordinate to the organization structure.

Both require the use of computers.

The information system generates the inputs for use by the operational system.

The information system provides inputs to the operational system and also records its results.

The operational system generates the inputs for use by the information system.

a. b. c. d. e.

17

2-34. a. b. c. d. e.

2-35.

The accounting/finance subsystem interfaces closely with which of the following subsystems in a manufacturing firm?

Inventory management Production Marketing/distribution Personnel All of the above subsystems

a. b. c. d. e.

Which of the following subfunctions (activities) is not included within the marketing/distribution function of a typical products-oriented firm?

Selling merchandise Processing sales orders Warehousing merchandise Receiving merchandise Shipping merchandise

2-36. a. b. c. d. e.

A function very closely related to accounting is: finance. inventory management. marketing distribution production.

2-37.

The function in a business firm whose objective is to create form utility by converting raw materials into finished goods is the: marketing function. inventory management function. warehousing function. production function. distribution function.

a. b. c. d. e.

2-38. a. b. c. d. e.

Which of the following activities or subfunctions is not included within the finance function of a typical firm?

Cash receipts Credit checking Accounts payable Cash disbursements Cash budgeting

2-39. a. b. c. d. e.

A function closely related to marketing is: accounting. personnel. accounts payable. cash disbursements. cash budgeting.

18

2-40. a. b. c. d. e. +2-41. a. b. c. d. e.

Responsibilities are divided by a formal organizational structure in order to provide: authority and unity. responsibility and authority. specialization and control. control and optimization. control and unity.

An organization chart is prepared for which of the following reasons?

To show the channels of communication within an organization To reflect the lines of authority and divisions of work To reflect the significant formal and informal relationships within the organization To reveal the functional status of the various managerial positions To show the relationships between the management structure and organizational structure

2-42. a. b. c. d. e.

A "flat" organizational structure is most likely to violate which of the following precepts?

Span of management Division of work Delegation of authority Responsibility reporting Line and staff

2-43. a. b. c. d. e.

Sound organizational precepts suggest that the credit manager should report to the: sales manager. customer-service manager. president. treasurer.

None of the above.

2-44. a. b. c. d. e.

If the organizational structure of a manufacturing firm has a major function called administration, which of the following would least likely be placed under the function?

Personnel Inventory management Office management Insurance Information systems management

2-45. a. b. c. d. e.

Which of the following responsibilities would least belong within the accounting function?

Billing Accounts payable Cash receipts General ledger Inventory record keeping and control

2-46.

Which of the following is most likely to be a line-type department within the accounting function?

Operational budgeting Cost analysis Special reports General ledger System analysis

a. b. c. d. e.

19

2-47. a. b. c. d. e.

Departments such as production planning and advertising are appropriately described by all except which of the following phrases?

Staff units Decision centers Responsibility centers Organizational units Line authority units

2-48. a. b. c. d. e.

Which is not a dimension employed to segment the work performed by firms?

By products By geographical territories By markets served By projects All are employed in various firms.

2-49.

A drawback to an organization that is structured or segmented in a manner other than functionally is that it: does not integrate the functional activities. does not reduce coordination problems. does tend to be more costly to maintain. reduces responsiveness to changing conditions. does not focus on results achievedThe organization chart of a firm that shows the three primary divisions to be marketing, manufacturing, and finance indicates that the firm is organized according to: functions. products. geographic locations. services. customer classifications.

A small furniture-manufacturing firm with 99 employees is located in a two-story building and currently does not plan expansion. The furniture products are broad based and standardized; none are special-ordered or custom-made. The organizational structure is likely to be of which of the following types?

Product-oriented Matrix Customer-oriented Functional Decentralized

a. b. c. d. e. +2-50. a. b. c. d. e. +2-51.

a. b. c. d. e.

2-52. a. b. c. d. e.

Which of the following benefits is decentralization least likely to accomplish?

Reduction of delays in decision making Standardization of decision making Reduction of duplicated effort Provision of better training for younger managers Decisions that better suit local conditions

2-53.

Which of the following statements is correct?

20

a. b. c. d. e.

A decentralized organizational structure is preferable to a centralized organizational structure.

A decentralized organizational structure is most likely to be found in a firm that is large, diversified, and geographically dispersed.

A centralized organization structure is preferable to a decentralized organizational structure.

A centralized organizational structure is most likely to be found in a firm that is large, diversified, and geographically dispersed.

A decentralized organizational structure is most likely to be found in a firm that is organized functionally.

2-54. a. b. c. d. e.

Which of the following is a recognized advantage of decentralization?

It motivates managers to perform more effectively.

It provides clearer lines of authority.

It eliminates duplicated decision making.

It reduces the need for coordination.

It simplifies the lines of authority within the firm.

2-55. a. b. c. d. e.

A matrix organizational structure blends the structures. functional and project-oriented product-line and market-oriented functional and market-oriented product-line and project-oriented territorial and functional

2-56. a. b. c. d. e.

Which of the following is not true of the informal organization?

It meets those needs not satisfied by the formal organization.

It tends to be disruptive of the formal organization and should be resisted by management.

It overlaps with the informal information system.

It is more difficult to analyze than the formal organization.

It resembles a set of social groupings.

2-57. a. b. c. d. e.

The formal information system and organizational structure of a firm are least related through: flows of information to managers in the firm's decision centers. the firm's objectives. responsibility performance reports. their informal counterparts. the general ledger accounting function.

2-58. a. b. c. d. e.

The accounting information system and organizational structure of a firm are related through: flows of information to managers in the firm's responsibility centers. the departments that process transactions. the informal organization. a and b only. a, b, and c.

21

2-59. a. b. c. d. e.

2-60. a. b. c. d. e.

2-61. a. b. c. d. e.

2-62. a. b. c. d. e.

2-63.

Which of the following is not a transformation that takes place within the financial accounting cycle?

Transformation of an accounting entry into posted amounts in ledger accounts, Transformation of data concerning an event into a recorded transaction.

Transformation of a journal entry into coded transaction data on a document.

Transformation of ledger account balances into various financial outputs.

Transformation of a recorded transact-ion into coded and classified transaction data.

The major difference between the managerial accounting cycle and the financial accounting cycle is that the former: involves several transformations. provides information for managerial decision making. involves data collection. involves data processing. provides financial outputs.

Which of the following sets of steps comprise the financial accounting cycle sequence?

Capture and record data on source document, classify and code data, enter data in journal, post data in ledger, summarize balances in trial balance, prepare financial statements.

Classify and code data, capture and record data on source document, post data in ledger, enter data in journal, summarize balances in trial balance, prepare financial statements.

Capture and record data on source document, enter data in journal, classify and code data, post data in ledger, summarize balances in trial balance, prepare financial statements.

Capture and record data on source document, enter data in journal, post data in ledger, classify and code data, summarize balances in trial balance, prepare financial statements.

Classify and code data, capture and record data on source document, enter data in journal, post data in ledger, prepare financial statements, summarize balances in trial balance.

Captured and recorded data generally undergo which of the following steps first upon entering an accounting cycle?

Transcribing into a journal Posting to a ledger Summarizing in a trial balance Classifying and coding by reference to a chart of accounts Totaling in a financial statement

a. b. c. d. e.

Which of the following is an example of a source document that initiates a sequence of steps in the accounting cycle?

Journal Sales invoice Accounts receivable ledger Sales summary Income statement

2-64. a. b. c. d. e.

Which of the following is not a typical function of source documents?

To authorize physical operations To monitor physical flows To reflect accountability for actions taken To serve as posting media To serve as journal vouchers

22

2-65. a. b. c. d. e.

Which of the following is not an example of a source document?

Sales order Purchase order Customer's statement Supplier's invoice Remittance advice

2-66. a. b. c. d. e.

Which of the following data would not appear in a general journal?

Dates of transactions Account names Posting references Descriptions of transactions Account balances

2-67. a. b. c. d. e.

Which of the following special journals would not be needed by a cash-and-carry food market?

Cash receipts journal Sales journal Purchases journal Cash disbursements journal Payroll journal

2-68. a. b. c. d. e.

Which of the following transactions would typically be entered in a general journal (assuming that special journals are also available)?

Sales Purchases Payroll disbursements Depreciation adjustments Cash receipts

2-69. a. b. c. d. e.

Which of the following may replace the general journal, especially in larger firms?

Special journal General ledger Subsidiary ledger Source document Journal voucher

2-70. a. b. c. d. e.

A record that is similar to a journal, but that may reflect data other than transaction amounts, is known as a: general ledger. subsidiary ledger. source document. register. posting medium.

2-71. a. b. c. d. e.

Financial statements are prepared from balances that appear in the: source documents. general journal general ledger. specific journals. subsidiary ledgers.

23

2-72. Each general ledger account that is supported by a subsidiary ledger is called a: a. control account. b. subsidiary account total. c. summary account. d. total ledger account. e.

None of the above.

2-73. a. b. c. d. e.

An alternative to the use of a subsidiary ledger is the use of: a general ledger. a general journal. a register. source document copies. a master file.

2-74. a. b. c. d. e.

Which of the following represents a subsidiary ledger?

Production job cost records Sales invoices General ledger Purchase orders Payroll register

2-75.

Which of the following considerations is most important in deciding whether or not to include a sales returns special journal within a firm's accounting information system?

The volume of the sales returns The types of the sales returns The amounts of the sales returns The dates of the sales returns All of the above are equally important.

a. b. c. d. e.

2-76. a. b. c. d. e.

A listing of all account balances from the general ledger, arranged by debits and credits, is known as a(n): balance sheet. income statement. general ledger account summary. trial balance. control listing.

2-77. a. b. c. d. e.

In designing an accounting information system which of the following should be designed first?

Journals Source documents Chart of accounts Ledgers Financial statements

2-78. a. b. c. d. e.

Which of the following is most likely to serve as a managerial report?

Accounts receivable aging schedule Sales invoices Statement of changes in financial position Credit report on customer XYZ Trial balance

24

2-79. a. b. c. d. e.

An example of an operational document is a: balance sheet. general ledger. purchase order. general journal. annual report.

2-80.

A set of posting references that tie transactions to their ultimate dispositions in the general ledger and financial statements is known as a(n): audit trail. posting process. financial balancing. trail balance. coding scheme.

a. b. c. d. e.

2-81. a. b. c. d. e. **2-82. a. b. c. d. e.

2-83.

A means of tracing transactions from source documents through accounting records to final reports, and vice versa, is provided by: a direct access device. feedback control. a sequential access device. an audit trail. a batch control total.

A document flowchart represents the: sequence of logical operations performed during the execution of a computer program. possible combinations of alternative logic conditions and corresponding courses of action of each condition in a computer program. flow of data through a series of operations in an automated data processing system. flow of forms that relate to a particular procedure. manual of all program flowcharts for an entire system application.

a. b. c. d. e.

A symbol having the shape of an inverted trapezoid and appearing in a document flowchart refers to a: document, file. manual processing operation. machine processing operation. termination of a procedure.

2-84. a. b. c. d. e.

A symbol having the shape of a rectangle and appearing in a system flowchart refers to a: document, file. manual processing operation. computer processing operation. termination of a procedure.

25

+2-85. a. b. c. d. +2-86. a. b. c. d. +2-87. a. b. c. d.

+2-88.

a. b. c. d.

Which particular type of organization structure will likely have unity-of-command problems unless there is frequent and comprehensive communication between the various functional and project managers?

Line and staff.

Strategic business unit.

Centralized.

Matrix.

An organization’s management perceives the need to change fundamentally. Which of the following factors is management least likely to change?

The organization’s members.

The organization’s structure.

The organization’s environment.

The organization’s technology.

Which of the following is not true with regard to matrix structures for organizations?

It is akin to functional structures in that it fosters specialization.

It is akin to divisional structures in that it has an explicit focus on results.

It only works well when the organization’s projects or products have a short life cycle.

The major disadvantage of matrix structures is their potential for creating confusion and power struggles.

A “flat” organization structure is one with relatively few levels of hierarchy and characterized by wide spans of management, while a “tall” organization has many levels of hierarchy and narrow spans of management. Which of the following situations is consistent with a flat organization structure?

Tasks where little direction and control of subordinates is required Work areas that are geographically dispersed Tasks that are highly complex and varied Subordinates perform distinctly different tasks

26

2-1.

2-2.

2-3.

2-4.

2-5.

2-6.

2-7.

2-8.

2-9.

2-10.

2-11.

2-12.

2-13.

2-14.

2-15.

2-16.

2-17.

2-18.

2-19.

2-20.

2-21.

2-22.

2-23.

2-24.

2-25.

2-26.

2-27.

2-28.

2-29.

2-30.

A B A B D B C D E E C B E B D B D A C C B D B C E C A C D A

2-31.

2-32.

2-33.

2-34.

2-35.

2-36.

2-37.

2-38.

2-39.

2-40.

2-41.

2-42.

2-43.

2-44.

2-45.

2-46.

2-47.

2-48.

2-49.

2-50.

2-51.

2-52.

2-53.

2-54.

2-55.

2-56.

2-57.

2-58.

2-59.

2-60.

E B D E D A D C C C B A D B C D E E C A D B B A A B E E C B

2-61.

2-62.

2-63.

2-64.

2-65.

2-66.

2-67.

2-68.

2-69.

2-70.

2-71.

2-72.

2-73.

2-74.

2-75.

2-76.

2-77.

2-78.

2-79.

2-80.

2-81.

2-82.

2-83.

2-84.

2-85.

2-86.

2-87.

2-88.

A D B E C E B D E D C A D A A D E A C A D D C D D C C A

27

CHAPTER 3 3-1. a. b. c. d. e.

3-2. a. b. c. d. e. **3-3. a. b. c. d. e.

3-4.

The growth in data communications networks is due to: improvements in data communications technologies. increased numbers of geographically dispersed firms whose remote points need timely information. stable data communications costs. a and b, above. a, b, and c, above.

Historically, which of the following was the first type of computer system or network employed by organizations?

Centralized computer networks Decentralized computer systems Distributed computer networks Wide-area networks Local-area networks Transaction and information processing that is performed by a network of computers dispersed throughout an organization is called: Centralized processing.

On-line processing.

Interactive processing.

Real-time processing.

Distributed data processing.

a. b. c. d. e.

A computer network in which multiple computers are linked together and located in a variety of geographical locations is called: a distributed computer network. a centralized computer network. a wide-area network. a and c, above. a, b, and c, above.

3-5. a. b. c. d. e.

A local-area network is a __________ that functions within a __________. centralized network;, single limited geographical area distributed network; several limited geographical areas decentralized network; single limited geographical area distributed network; single limited geographical area centralized network; several limited geographical areas

3-6. a. b.

Which of the following is not a reason why computer networks are significant to accountants?

A computer network for a firm is often an integral part of its AIS. A computer network is exposed to a variety of high-level risks and requires special controls and security measures.

Accountants will be expected to operate and design computer networks as they become more common.

Computer networks are increasing in number and usefulness to many organizations.

Computer networks are becoming the backbones of specialized applications that handle a variety of financial information, e.g., automated offices and electronic funds transfer networks.

c. d. e.

28

3-7. a. b. c. d. e.

3-8. a. b. c. d. e.

3-9. a. b. c. d. e.

3-10.

Which of the following is not a hardware component found in most data communications networks?

Acoustical coupler modems Front-end processors Multiplexers Communications programs Terminals Which of the following communications media transmits large volumes of data with a high degree of security?

Twisted-pair cables Coaxial cables Fiber optics cables Satellite beamed transmissions Cellular radios Which of the following grades of communications lines permits the greatest volumes of data to be transmitted?

Narrow-band Broad-band Voice-band Data-band Full-band

a. b. c. d. e.

Which type of transmission allows transmissions in both directions, although not at the same time?

Simplex Half-simplex Full-duplex Half-duplex Synchronous

3-11. a. b. c. d. e.

Which of the following combinations allows the fastest transmission?

Simplex asynchronous Simplex synchronous Full-duplex asynchronous Full-duplex synchronous Half-duplex synchronous

3-12.

Which of the following types of transmission allows data to be transmitted faster and more reliably, while dispensing with the need for modems?

Analog Digital Serial Parallel Synchronous

a. b. c. d. e.

29

3-13.

a. b. c. d. e.

3-14. a. b. c. d. e.

3-15.

Which of the following types of data communication line services involves a fixed charge for a minimum number of hours of usage per month, plus a variable charge per hour above the minimum?

Private line Public switched line WATS line Simplex line Duplex line Which of the following represents a relative advantage of switched (public) lines with respect to leased (private) lines?

Wide accessibility Economy Reliability (lower error rates) Less waiting time None of these

a. b. c. d. e.

Which of the following represents a relative advantage of leased private lines over public switched lines?

Wide accessibility Economy Lower error rates Charges based on actual time used None of the above.

3-16. a. b. c. d. e.

Which are the key questions to ask when selecting communications line service?

How many hours will the line be used per day?

Which line has the lowest billing rate per message?

What is the distance between the sender and receiver? a and b, above. a and c, above.

3-17. a. b. c. d. e.

Which of the following is not a service typically provided by a public data network?

Error detection and correction Transmission of graphics Leased communication lines Sharing of central data bases Tele-conferencing

3-18. a. b. c. d. e.

Which of the following items is least likely to appear within a typical protocol envelope?

Message number Error check character Destination address of message Name of sender of message End-of-message mark

30

3-19. a. b. c. d. e.

3-20. a. b. c. d. e.

3-21. a. b. c. d. e.

3-22.

A set of rules or procedures applied by the communications software of a network to move data throughout the network is known as a: transmission mode. protocol. line service. communications medium. network controller.

The type of basic communications protocol that involves the use of a unique special signal to control the movements of messages throughout a network is known as: token passing.

CSMA/CD. protocol A. AT&T protocol.

SNA protocol.

Savings and loan associations have been employing communication-based computer systems for a number of years. What configuration have they typically been employing?

Distribution network Hierarchical network Multi-processing network Centralized network Ring network

a. b. c. d. e.

Which of the following is normally an advantage of a centralized network over a distributed network?

Economies of scale Sharable facilities More user-oriented Better equipment backup Greater flexibility

3-23. a. b. c. d. e.

Which of the following centralized network configurations is shown in the drawing below?

Point-to-point lines Multiplexor with switched fines Duplexed lines Multidrop lines Time-phased lines

31

Computer

3-24. a. b. c. d. e.

Which configuration employed by centralized networks is the most reliable, provides the greatest degree of service, but tends to be the most expensive?

Multidrop Multiplexed Centralized Point-to-point Ring

3-25. a. b. c. d. e.

Which of the following types of organizations is most likely to employ a centralized network?

Manufacturing firm Distribution firm Motel chain Government agency University

**3-26.

Hooper, Inc. wants an information system whereby the divisions have relatively independent subsystems that are tied together via communication interfaces. Thus, each subsystem will be customized to that division's needs, but the system will permit computerized subsystems to interact and share files if necessary. The information system structure Hooper would like to employ is known as a(n): integrated data base system. centralized system. distributed system. micro-computerized system. strategic system.

a. b. c. d. e.

3-27.

a. b. c. d. e.

A firm that locates separate microcomputers and minicomputers at its various geographically scattered plants and warehouses, but that ties these remote computers to a host computer at the main office via data communications lines, is employing a: centralized network. distributed network. decentralized system. parallel processing system.

LAN.

32

3-28. a. b. c. d. e.

A firm that employs satellite systems to process transactions and then to transmit the summarized results via communications channels to a host computer at the home office has installed a: centralized network. decentralized system. distributed network. multisatellite system. parallel processing system.

3-29. a. b. c. d. e.

Which of the following functions would likely be performed in a distributed network?

Entry, editing, and transmission of batched data On-line data entry and editing Batch data editing and remote processing On-line data editing and remote processing All of the above are likely to be performed

3-30.

a. b. c. d. e.

Which distributed network configuration provides an ability for a remote site to communicate directly with other sites in the network?

Star Ring Multidrop Hierarchical Point-to-point A firm is developing a distributed computer network in which all messages will be channeled to a centralized computer, which in turn will transmit the messages to the designated computers (nodes) within the network. This type of configuration is known as a: ring configuration. star configuration. linear configuration. bus configuration. web configuration.

3-32. a. b. c. d. e.

Which of the following is the most popular distributed network configuration? ring hierarchical star web loop

3-33. a. b. c. d. e.

Which of the following is not normally an advantage of a distributed network over a centralized network?

Better balancing of the overall processing loads.

More user-oriented.

Better security and data reliability.

Better backup of facilities in case of malfunctioning computers.

More adaptable to expansions or contractions.

3-34.

Which of the following is an advantage of a distributed network over a centralized network?

a. b. c. d. e. + 3-31.

33

a. b. c. d. e.

Economies of scale Better control and security over the various user sites Higher level of professional planning Very responsive to users' needs Better coordination of all computing activities

3-35.

A firm that has a decentralized organizational structure, diverse operations, and local processing needs would tend to employ which of the following types of networks?

Centralized network Distributed network Multiprocessing network None of the above Any of the above.

a. b. c. d. e.

3-36. a. b. c. d. e.

3-37. a. b. c. d. e.

3-38.

a. b. c. d. e.

3-39. a. b. c. d. e.

Which of the following is an approach by which data bases may be distributed in a distributed network?

Partition Duplication Articulation a and b, above a, b, and c, above Which of the following is not a drawback to distributed networks?

Adequate security and control is difficult to maintain.

Computer hardware of differing manufacturers is difficult to coordinate, to allow "talking" with each other.

Hardware costs tend to be relatively high.

Users at various remote locations linked to the network tend to be relatively dissatisfied because they must be responsible for some of their processing needs.

Distributed data bases increase the complexity due to added transmission of data.

Workstations are key hardware components within local-area networks. Which of the following is not likely to be an integral hardware feature of a powerful work-station, or a device closely linked to such a work-station?

Microcomputer processor Laser printer Color graphics displays Data base management system Disk server Which of the following is not a hardware device that is generally employed in a local area network?

Work-stations Protocols Network controller Gatewav Servers

34

3-40. a. b. c. d. e.

What device enables a local area network to communicate with a mainframe computer and central data base?

Server Gateway Concentrator Modem Protocol

3-41. a. b. c. d. e.

Which of the following statements concerning local area networks (LANS) is incorrect?

LANS function within single limited geographical areas.

Multi-function work stations are fundamental components of LANS. LANS are often used to implement automated offices.

LANS are independent of and isolated from wide-area networks.

The communications protocol for a LAN functions under the overall control of an operating system.

3-42. a. b. c. d. a. b.

3-43. a. b. c. d. e.

Of the various LAN configurations, which has (have) no network controller?

Bus Star Ring a and b, above a and c, above

3-44. a. b. c. d. e.

Which of the following is not a benefit of a LAN? Less costly per terminal (work-station) Enhanced communications among employees and managers.

Flexibility in adding or removing work stations.

Standardized protocols.

Improved employee productivity.

3-45.

Which of the following features of distributed networks requires the greatest degree of control, in order to avoid contamination of the firm's data base?

Uploading Downloading Distributed data processing Decentralized printing Decentralized data retrieval

a. b. c. d. e.

Which of the following is not a LAN configuration?

Bus Multipoint Star Ring Tree

35

3-46.

a. b. c. d. e.

Which of the following risk exposures is not due essentially to the characteristics of a distributed data communications network?

Data entry and processing errors by sophisticated users who use microcomputers at remote locations within the network Unauthorized access of data via microcomputers at remote locations that are not restricted Unauthorized access of data through tapping of communications lines Lack of sufficient separation of duties at remote locations due to localized managers who have little concern with controls Breakdowns of microcomputers and other devices at remote locations within the network A bank employee had access to automated teller machines (ATMs) account codes and obtained personal identification numbers (PINs) by looking over the shoulders of the bank's customers.

With this information, the employee created fraudulent ATM cards with a machine that wrote the cards' magnetic strips. The bank's ATMs detected the fraudulent cards, and the bank was able to catch the person in the act of using a fraudulent card. The control in the bank that was likely most responsible for the successful apprehension was the: use of careful security restrictions over the bank customers' account codes and PINs. validation of cards at the point of ATM transactions. restriction of knowledge concerning ATM operation by the bank's employees. strict limitation on the availability of the machines that write magnetic strips on cards. sturdy construction of the ATMs.

3-48. a. b. c. d. e.

Which of the following is not a security measure that is applicable to computer networks?

Encryption of transmitted data Employment of write-protected system software Training of network users Restrictions over access to communications equipment and devices All of the above are applicable security measures

3-49.

The regional offices of a national employment agency transmit confidential data concerning job applicants to the home office daily. The surest means of protecting the confidentiality of the data is to: employ a series of validation checks. require that senders use passwords before accessing the sending terminals. encrypt the data before transmission. provide security training of all regional personnel. place the sending terminals in restricted locations.

a. b. c. d. e. +3-47.

a. b. c. d. e.

3-50. a. b. c. d. e.

Which type of computer system network includes a second central processing unit that automatically takes over operations if the first central processor fails?

Multiplexing network Multi-processing network Parallel processing network Duplex network Two-way network

36

+3-51.

a. b. c. d. e.

A type of system service available via a distributed network or local-area network provides features that may be identified by function keys with such labels as: Answer, Forward, Send, Read, Print, and Edit. This service, which is faster than postal service, is called: digital transmission. electronic mail. voice store-and-forward. token passing. tele-messaging.

A firm has a local area network, which is controlled by a network controller and which enables 30 work-stations in the network to send or receive electronic mail. The network configuration employed is a: star. ring. loop. bus.

Web.

3-53. a. b. c. d. e.

Which of the following is not a capability of a typical point-of-sale system/network?

Checking the credit of customers via an on-line connection.

Applying prices from a stored data base to the scanned merchandise items.

Automatically listing prices on the shelves where merchandise is stocked.

Updating the inventory master file to reflect merchandise sales.

Preparing daily sales analyses for store managers.

3-54. a. b.

Which of the following statements is incorrect?

An electronic mail system involves a computer network.

A point-of-sale system may update an inventory master file as well as prepared detailed sales receipts for customers.

A point-of-sale system is often linked to an automated office but seldom to an electronic funds transfer system.

An electronic data interchange system may link a manufacturing firm with its key suppliers.

An automated office integrates such activities as word processing, data processing, and information analysis.

a. b. c. d. e. +3-52.

c. d. e.

3-55. a. b. c. d. e.

3-56. a. b. c. d. e.

3-57.

Which of the following is not a technique that is directly encompassed within a computer integrated manufacturing system?

Computer-aided design Materials requirements planning Computer-aided manufacturing Robotics Cost accounting Which of the following is not a problem encountered in establishing an electronic funds transfer system?

High initial costs Security difficulties Resistance by customers Errors in processing transactions Complexities in linking with POS systems Which of the following is not an electronic data interchange network?

37

a. b. c. d. e.

3-58. a. b. c. d. e. +3-59.

a. b. c. d. +3-60.

a. b. c. d. +3-61.

a. b. c. d. **3-62. a. b. c. d. e.

+3-63. a. b. c. d.

Stock exchange quotations provided to brokerage firms Electronic funds transfer systems Credit checks via point-of-sale systems Automobile manufacturer-to-supplier systems Facsimile mail office-to-office systems Which of the following is not a likely benefit of a typical electronic data interchange network?

Reduction in paper flows Reduction in processing costs Improved controls and security Reduction in investments in inventory, receivables, and so on Strengthened competitive position Audit team members can use the same database and programs when their microcomputers share a hard disk and printer on a local area network (LAN). Which communication devices enable a microcomputer to connect to a LAN? A network interface card that plugs into the motherboard An internal modem that plugs into the motherboard An external modem with a cable connection to a serial port A fax modem that sends signals through telephone lines Companies can use electronic transfers to conduct regular business transactions. Which of the following terms best describes a system where an agreement is made between two or more parties to electronically transfer purchase orders, sales orders, invoices, and/or other financial documents?

Electronic mail (E-mail) Electronic funds transfer (EFT) Electronic data interchange (EDI) Electronic data processing (EDP) Management of a company is attempting to build a reputation as a world-class manufacturer of quality products. Which of the following measures would not be used by the firm to measure quality?

The percentage of shipments returned by customers because of poor quality The number of parts shipped per day The number of defective parts per million The percentage of products passing quality test the first time The technological elements of computer-based information systems driving organizational and managerial change include all of the following except: the availability of computing power to most managers. advances in personal computing, hardware, and software. teleprocessing, database processing, and office automation. information resource management and management information services. decision support systems and executive information systems.

Which of the following is likely to be a benefit of electronic data interchange (EDI)?

Increased transmission speed of actual documents.

Improved business relationships with trading partners.

Decreased liability related to protection of proprietary business data.

Decreased requirements for backup and contingency planning.

38

3-1.

3-2.

3-3.

3-4.

3-5.

3-6.

3-7.

3-8.

3-9.

3-10.

3-11.

3-12.

3-13.

3-14.

3-15.

3-16.

3-17.

3-18.

3-19.

3-20.

3-21.

3-22.

3-23.

3-24.

3-25.

3-26.

3-27.

3-28.

3-29.

3-30.

3-31.

3-32.

3-33.

3-34.

3-35.

3-36.

3-37.

3-38.

3-39.

3-40.

D B E D D C D C B D D B C A C E C D B A D A D D C C B C E B B B C D B D D D B B

3-41.

3-42.

3-43.

3-44.

3-45.

3-46.

3-47.

3-48.

3-49.

3-50.

3-51.

3-52.

3-53.

3-54.

3-55.

3-56.

3-57.

3-58.

3-59 3-60.

3-61.

3-62.

3-63.

D E B D A C B E C D B A C C E D E C A C B D B

39

CHAPTER 4 4-1. a. b. c. d. e.

Which one of the following is a data orientation for modeling data?

Documents Files Procedures Organization structure Computers

4-2. a. b. c. d. e.

Which one of the following is a data orientation model?

Data security Data files Document folders Data base b and d, above

4-3. a. b. c. d. e.

In a file oriented data model, which one of the following is not involved?

Record File Data base Data element All of them are not involved.

4-4. a. b. c. d. e.

Characteristics of entities, when recorded, result in what are called: data sets. data segments. records. data tables. data elements.

4-5. a. b. c. d. e.

The most general way of looking at data is that they represent: organizations. procedures. devices. entities. events.

4-6.

In a field name called Country, which one of the following does not appear to be an appropriate value?

Spain Germany Ireland Phoenix Sudan

a. b. c. d. e.

41

4-7. a. b. c. d. e.

Which of the following is a valid pair of data element name and data value?

City; Panama Country; Edinburgh Street; 42nd Marriage; Couple Food; Recipe

4-8. a. b. c. d. e.

In a student file at a university, the most likely data element to serve as a primary key is the student’s: class standing grade point average home state social security number major

4-9. a. b. c. d. e.

Which one of the following statements is untrue?

Data files and data bases can coexist in the same system.

Data base orientation requires an additional software.

Operating system does the data management work in the file orientation model.

Data base structures can be modified while data file structures cannot be.

Changes in application programs are often required when file structures are changed.

4-10. a. b. c. d. e.

An E-R diagram includes: programs. data dictionary. entities. source documents. users.

4-11. a. b. c. d. e.

A data flow diagram does not include: processes. physical records. data stores. data flows. entities.

4-12. a. b. c. d. e.

Data issues facing a typical company include all except: strategy. privacy. new data needs. quality. users.

4-13. a. b. c. d. e.

Versions of logical data-flow diagrams include all except: context diagram. pretext diagram. level-zero diagram. level-one diagram. level-two diagram.

42

4-14. a. b. c. d. e.

Data stored according to the data base approach are organized by flexible structures known broadly as: data sets. files. data stores. records. fields.

4-15. a. b. c. d. e. +4-16. a. b. c. d. e.

When a firm employs the data-base approach, the users are encouraged to view the data base as a: collection of files. single file. collection of physical records. set of application-oriented files. valued data resource.

A physical data base, which includes the hardware and software, is an integral component of the: operating system. data base system. user system. computer processor. file management system.

4-17. a. b. c. d. e.

The process of developing conceptual and logical diagrams that represent the essential aspects of data needed by a firm is known as: data modeling. data management. data structuring. data base development. data flow diagramming.

4-18. a. b. c. d. e.

Documentation of an accounting information system is important to which of the following?

Users of the systems Designers of systems Evaluators of systems a and b, above a, b, and c, above

4-19. a. b. c. d. e.

Which of the following is not a benefit of systems-related documentation?

To aid in training newly employed users To spot deficiencies in the current system To reduce the need for an improved system To aid in the design of a new or improved system To aid users in performing their duties reliably and efficiently

4-20. a. b. c. d. e.

Which of the following is not an example of documentation pertaining to a data base?

Record layouts Data dictionaries Data structure diagrams Systems analysis Entity-relationship models

43

4-21. a. b. c. d. e.

A type of documentation that describes the pertinent characteristics of data elements within the collections of fields comprising files is known as a: record layout. data dictionary. data base. file format. data structure diagram.

4-22. a. b. c. d. e.

Which of the following is not a distinguishing feature of each data element within a record?

Amount Degree of permanency Field size Data mode Position within record

4-23.

A type of documentation that reflects the contents of files, including field sizes, names of data elements and data modes, is known as a: file layout. record layout. data structure. print layout. data model.

a. b. c. d. e.

4-24. a. b. c. d. e.

A type of documentation that focuses on the characteristics of each data element within a data base is known as a: record layout. data model. entity-relationship model. data dictionary. data structure diagram.

4-25. a. b. c. d. e.

An example of a data model is known as a(n): data dictionary. record layout. entity-relationship diagram. screen display. data table.

4-26. a. b. c. d. e.

The top level diagram in a set of data flow diagrams is called a: flowchart. context diagram. data structure diagram. overview diagram. enterprise diagram.

4-27. a. b. c. d. e.

Which of the following statements is incorrect?

All interactions between a process and outside entities should be shown by flow lines.

A level-zero data flow diagram contains more detail than a level I data flow diagram.

A box (rectangle) representing a particular entity may appear more than once in a data flow diagram.

A context diagram contains less detail than the other data flow diagrams in a set.

A data flow diagram at any level can be decomposed into data flow diagrams having more detail.

44

4-28.

a. b. c. d. e.

When a context diagram is decomposed into a data flow diagram at the zero level, all of the data flows in the context diagram should appear in the level-zero data flow diagram. When this is the case, the data flows are said to be: corresponding. linking. matching. balanced. decomposed.

Use the following information to answer questions 4-29 through 4-32.

A single combined data base is used by both the purchasing and accounts payable departments. Items “a” through “f” below are components of a data base. Select the component that best corresponds to questions 4-29 through 4-32. Items may be used more than once. a. b. c. d. e. f.

Data element Record Master file record Master file Transaction file record Transaction file

4-29. What is the vendor number?

4-30. What is the cash receipts journal?

4-31. What is the general ledger?

4-32. What is a subsidiary ledger?

45

4-1.

4-2.

4-3.

4-4.

4-5.

4-6.

4-7.

4-8.

4-9.

4-10.

4-11.

4-12.

4-13.

4-14.

4-15.

4-16.

4-17.

4-18.

4-19.

4-20.

4-21.

4-22.

4-23.

4-24.

4-25.

4-26.

4-27.

4-28.

4-29.

4-30.

4-31.

4-32.

B E C E D D C D D C B E B A E B A E C D B A B D C B B D A F D D

46

CHAPTER 5 5-1. a. b. c. d. e.

Which of the following transaction cycles would likely not be found in a typical firm?

Revenue cycle Expenditure cycle Resources management cycle Profit or loss cycle General ledger and financial reporting cycle

5-2. a. b. c. d. e.

Which of the following events is not included within the typical revenue cycle?

Entering sales orders Checking credit of customers Shipping ordered merchandise Posting to the accounts payable ledger Receiving payments from customers

5-3. a. b. c. d. e.

The revenue cycle encompasses the: sales transaction and cash receipts transaction. sales transaction and cash disbursements transaction. purchases transaction and cash disbursements transaction. purchases transaction and cash receipts transaction. cash receipts transaction and cash disbursements transaction.

5-4. a. b. c. d. e.

Which of the following transaction processing systems feed inputs into the accounts receivable records?

Sales Purchases Cash receipts a and c, above a, b, and c, above

5-5. a. b. c. d. e.

The expenditure cycle encompasses the: sales transaction and cash receipts transaction. sales transaction and cash disbursements transaction. purchases transaction and cash disbursements transaction. purchases transaction and cash receipts transaction. cash receipts transaction and cash disbursements transaction.

5-6.

Which of the following transaction processing systems feed inputs into the accounts payable records?

Sales Purchases Cash disbursements a and c, above b and c, above

a. b. c. d. e.

47

5-7. a. b. c. d. e.

Which of the following events is not included in the resources management cycle?

Acquiring fixed assets Paying employees Storing merchandise investing funds All of the above events are included.

5-8. a. b. c. d. e.

Which of the following transaction processing systems feed inputs into the general ledger system?

Sales Cash disbursements Cash receipts Purchases All of the above

5-9. a. b. c. d. e.

Which of the following events is not included within the typical expenditure transaction cycle?

Purchasing materials or other resources Posting to the accounts receivable ledger Receiving ordered materials Vouching (checking) suppliers' invoices Disbursing cash to suppliers

5-10.

A suitable set of functional information subsystems for a bank would include all of the following except a(n): personnel information subsystem. financial/accounting information subsystem. personal loan information subsystem. inventory information subsystem. demand deposit information subsystem.

a. b. c. d. e.

5-11. a. b. c. d. e.

Which of the following transaction cycles is not common to merchandising and other nonmanufacturing firms?

Revenue cycle Expenditure cycle Resource management cycle Product conversion cycle General ledger and financial reporting cycle

5-12. a. b. c. d. e.

Which of the following is not an explicit objective of computer-based transaction processing?

Efficiency Economy Completeness Timeliness Accuracy

5-13. a. b. c. d. e.

Which of the following transaction processing approaches is least employed in business applications?

Batch input, batch processing Batch input, immediate processing On-line input, batch processing On-line input, immediate processing All approaches are commonly employed.

48

5-14. a. b. c. d. e.

A computer-based processing method which involves the periodic collection of data into like groups to permit convenient and efficient processing is known as: document processing. batch processing. direct processing. immediate processing. random processing.

5-15. a. b. c. d. e.

The length of a processing cycle depends upon: the volume of inflowing transactions. the desired batch size. the available processing capacity. a and c. a, b, and c.

5-16. a. b. c. d. e.

When processing a file by the sequential batch processing approach: each record of the file is accessed by means of a sequential index. the file must be stored on magnetic tape. each record of the file is accessed randomly. each record of the file is read, beginning with the first record. the file cannot be stored on a magnetic medium.

5-17. a. b. c. d. e.

Which of the following is not typically a feature of batch processing?

Sequential arrangement of transactions Delay in processing received transactions Immediate processing of priority transactions Periodic processing of received transactions Updating of master file records

5-18. a. b. c. d. e.

Which processing approach is most suitable when monthly statements are to be prepared by a department store for all of its credit customers?

Immediate Off-line Centralized Batch All of the above are equally suitable.

5-19. a. b. c. d. e.

Which of the following statement is incorrect with respect to batch processing?

Both transaction files and master files may be stored on magnetic tapes.

A new master file is created during an update run using magnetic tapes.

Transaction data normally must be resorted if a second master file is to be updated.

Master files on magnetic disks are seldom, if ever, processed by the batch processing approach.

Transaction data are normally edited before the updating run.

**5-20. Batch processing of accounting transactions is likely to be the appropriate approach or mode when: a. the sequence of master file records is not relevant. b. unique hardware features are available. c. up-to-dateness is a vital consideration. d. a single handling of data is desired. e. the volume of transactions is large.

49

5-21. a. b. c. d. e.

Two advantages of the batch processing approach over the immediate processing approach are: flexibility and shorter turnaround time, speed and up-to-dateness of data. performance and durability. processing efficiency and control totals. capacity and accuracy.

5-22. a. b. c. d. e.

Which of the following is not a basic batch processing run?

Edit/validate run Conversion run File replacement run Report generation run Updating run

5-23. a. b. c. d. e.

Which of the following is not a feature of a typical computer-based batch processing application?

Sorting the batch of transactions before updating Posting the batch of transactions directly to several files Collecting a batch of transactions and obtaining a batch total Transcribing the transactions to a computer-readable medium Generating one or more printouts during or after the updating run

5-24.

Which of the following describes the use of magnetic tape and magnetic disk to store a master file being updated?

When tape is used, the entire file is rewritten, while only the records affected by transactions are processed when disk is used.

The entire file is rewritten when either tape and disk is used.

Disk cannot be used when batches of transactions are to be processed against a master file.

Neither tape nor disk allow the rewriting of an entire file.

When disk is used, the entire file is rewritten, while only the records affected by transactions are processed when tape is used.

a. b. c. d. e.

5-25. a. b. c. d. e.

Which of the following is not a typical type of batch processing run?

Sort Edit File updating Data transmission Conversion

5-26. a. b. c. d. e.

Which types of runs generally precede a file updating run in a batch processing application?

Editing Sorting Report generation a and b a, b, and c

5-27. a. b. c. d. e.

Which combination of batch processing runs is most feasible?

File updating and report generation File updating and sorting Converting and sorting Editing and report generation None of the above is feasible.

50

5-28. a. b. c. d. e.

Just before a master file is updated by a batch of transaction data, the transaction file is generally: converted to a different medium. stored for future reference. printed for later reference. sorted into the same sequential order as the master file. examined by a control clerk.

5-29.

What is the most likely sorting key to employ with sales transactions when preparing to update accounts receivable master records?

Customer name Customer number Sales order number Date of order Shipping date

a. b. c. d. e.

5-30.

Listed below are the runs which are generally employed in batch processing applications: 1.

Update the master file and generate an exception and summary report.

2.

Edit the transaction tape and generate an exception and summary report.

3.

Print any reports which are desired.

4.

Batch the documents and generate batch totals.

5.

Sort the edited transaction tape and generate an exception and summary report.

6.

Convert the source documents.

The sequence of runs generally followed in a batch processing application is: a.

4-6-2-5-1-3 b.

4-6-5-1-3-2 c.

6-4-2-5-1-3 d.

6-4-5-2-1-3 e.

6-4-5-1-2-3 5-31. a. b. c. d. e.

A merchandising firm uses batch processing to update its inventory. Prior to updating the inventory master file, the inventory transaction tape is probably sorted by: date. batch number. inventory part number. general ledger account number. some other sequence,

5-32. a. b. c. d. e.

Which of the following is an off-line data entry device?

Data collection terminal Point-of-sale terminal Automated teller machine Key-to-disk system OCR device

5-33. a. b. c. d. e.

Which of the following is least likely to be used as a source data automation device?

Electronic cash register (point of sale terminal) Key-to-tape encoder Embossed-card imprinter, such as those used in connection with VISA cards Badge reader Meter reading sensor

51

5-34. a. b. c. d. e.

Which of the following can not serve as a medium for directly entering a batch of transactions into a computer system?

Magnetic tape OCR documents Magnetic disk Key-to-disk encoder Magnetic diskette

5-35. a. b. c. d. e.

MICR documents are primarily issued by: retailers. manufacturers. banks. insurance companies.

All of the above.

5-36. a. b. c. d. e.

Which of the following is not an attribute of a well-designed coding system for a firm?

Simple and concise codes Standardized throughout the firm Suited to the needs of users Codes are unique identifiers Most codes are alphabetic

5-37. a. b. c. d. e.

Which of the following is not a capability of a computer-based data transaction processing?

Printing of transaction listings as by-products of updating files Verification of data items entered from transactions Prompt generation of complex reports and analyses Extraction of descriptive names that match entered code numbers All of the above are capabilities.

5-38.

In a manual processing system a journal entry is made prior to the posting step. In a computerbased processing system: this procedure is unchanged. a transaction listing is produced as a by-product of the posting step. a listing of transactions is not needed. a transaction listing is produced prior to the posting step. neither journals nor ledgers are needed.

a. b. c. d. e.

5-39. a. b. c. d. e.

In a manual processing system transaction data are verified by human clerks. In a computerbased processing system the transaction data are: also primarily verified by human clerks. primarily verified by the operating system. primarily verified by edit programs. primarily verified by updating programs. less in need of verification.

52

5-40. a. b. c. d. e.

Which of the following statements is correct?

On-line processing is relatively economical and efficient as compared to batch processing.

Batch processing generally employs an efficient sequential file update process.

On-line processing applications are generally easier to control than batch processing applications.

In batch processing, the data are accessible both during processing and when that application is not being processed.

Batch processing cannot be performed if data are entered by an on-line method

**5-41. Wees Company has designed its order entry system so that salespersons may send orders in from a terminal connected via telephone lines to the central processing unit (CPU). Edit checks are performed as the data are received by the system. However, files are not updated until a run at 1:00 a.m. the next morning. The transaction processing approach employed in this situation may be described as: a. on-line input, real-time processing. b. real-time input and processing. c. on-line processing. d. on-line input, batch processing. e. batch input, batch processing.

5-42. a. b. c. d. e.

5-43. a. b. c. d. e.

5-44.

Which of the following statements is correct?

Data must always be recorded on source documents before being entered into a computer system.

Batch data entry is almost always performed by trained clerks in centralized locations.

On-line data entry may be performed in combination with batch processing.

Batch-oriented hardware and software are more expensive than the hardware and software needed for on-line processing.

Batch processing always requires data to be sorted before processing.

If three reports are desired as outputs from a particular processing step, but only two printers are available, what technique should be employed?

Repeat the processing step Eliminate the least important of the three reports Spool the information for the third report onto magnetic tape Alternate the preparation of the reports during successive cycles Purchase a new printer

a. b. c. d. e.

A feature that enables information to be stored temporarily on a secondary storage medium and printed at a later time is known as: spooling. retrieving. blocking. editing. imaging.

5-45. a. b. c. d. e.

Which of the following is not a typical on-line processing step?

Editing Sorting File updating Report generation All are typical steps.

53

5-46.

a. b. c. d. e.

What is the computer-based system called that enables processing to be performed concurrently with a particular activity and the results to be made available soon enough to influence the particular course of action being taken or decision being made?

Batch processing system Real-time system Integrated data processing system Interactive system On-line processing system

5-47. a. b. c. d. e.

In an immediate processing system the individual transactions are edited: by an off-line device before data entry. during the updating step. at the time the data are entered. only when the entry clerk visually spots errors. after processing is completed.

5-48. a. b. c. d. e.

Which of the following is not a means of facilitating the entry of data via the on-line input approach?

Preformatted screen Dialogue prompt Optical scanner Voice response unit Menu screen

5-49. a. b. c. d. e.

Which of the following statements is correct with respect to the immediate processing approach?

Transaction data may be entered for processing without benefit of source documents.

All outputs are generated immediately upon processing transactions.

Magnetic tape may not be used for any purpose.

The sorting and editing steps are not necessary.

Sequential as well as interactive processing is feasible.

5-50 a. b. c. d.

Which of the following statements is incorrect?

Data is not always recorded on source documents before being entered into a computer system.

Batch data entry is sometimes performed by trained clerks in remote locations.

On-line data entry may not be performed in combination with batch processing.

Batch-oriented hardware and software are less expensive than the hardware and software needed for on-line processing.

Batch processing usually but not always requires data to be sorted before processing.

e. **5-51. a. b. c. d. e.

5-52. a. b. c. d. e.

A current trend with respect to data input for processing by computer systems is the: use of less preprinting on source documents. reliance on punched cards. reduction in the use of multiple-copy documents. standardization of source document styles among firms. reduction in the prior preparation of source documents.

The most important advantage accruing from the application of source data automation (SDA) is: the maintenance of up-to-date files. its compatibility with on-line processing. the immediate capture of data on computer-readable media. a high degree of reliability in the captured data. a high degree of acceptance by users.

54

5-53. a. b. c. d. e.

Which of the following input media is being increasingly employed as turnaround documents?

Punched cards OCR documents MICR documents Magnetic tape Microfiche

5-54. a. b. c. d. e.

Assuming that transaction data are to be captured on source documents, which of the following is not an option to be considered when designing a transaction processing application?

Transcribing the data onto computer-readable media Processing the data in batches Processing individual transactions immediately upon being recorded Recording the data directly onto computer-readable media All of the above are viable options.

5-55. a. b. c. d. e.

Which of the following is typically not an option in immediate processing?

Real-time responses Remote processing Voice input and response Screen prompting Batch totals

5-56. a. b. c. d. e.

Two advantages of immediate processing over batch processing are: up-to-dateness and fewer processing steps. processing efficiency and up-to-dateness. economy and processing efficiency. efficiency and fewer processing steps. efficiency and more controls.

5-57. a. b. c. d. e.

In order to attain more up-to-date information, it is often necessary to sacrifice (trade-off): flexibility. throughput. relevance. economy All of the above.

5-58.

Which of the following is not a direct advantage of on-line computer-based file management over the storage of data in manual information systems?

More compact storage of data Less formalized arrangement of stored data More timely responses to urgent inquiries Greater accessibility of records More efficient storage due to need for fewer copies

a. b. c. d. e.

5-59. a. b. c. d. e.

Which of the following statements is correct?

Logical files are designed to serve users, while physical arrangements of files are selected to use the capabilities of a physical medium.

Logical files and physical files are essentially the same.

Logical files and physical files are primarily of interest to system designers.

Logical files and physical files are both important concerns for users.

Logical files are of less concern to users than are physical files.

55

5-60. a. b. c. d. e.

A magnetic tape represents a physical storage structure. It may also comprise: exactly one logical file. more than one logical file. no logical file. a and c, above. a, b, and c, above.

5-61. a. b. c. d. e.

Which of the following is correct with respect to a block of data on a magnetic tape?

It represents a single logical record.

It has a gap at one end or the other.

It is capable of being accessed directly.

It represents one physical record.

It is readable by humans.

5-62. a. b. c. d. e.

Which of the following can be described as a master file?

Filed copies of purchase orders A balance sheet A trial balance An accounts payable subsidiary ledger An invoice register

5-63. a. b. c. d. e.

Which of the following is not a major type of file?

Master file Transaction file Information file Reference file History file

5-64. a. b. c. d. e.

A collection of logically related records within the overall data base of a firm is known as a: field. block. cluster. grouping. file.

5-65. a. b. c. d. e.

A type of file that contains relatively permanent data concerning a firm's entities and activities is known as a: master file. transaction file. reference file. history file. report file.

5-66. a. b. c. d. e.

The collection of today's receiving reports can best be described as a: master file. transaction file. reference file. history file. open document file.

56

5-67. a. b. c. d. e.

The collection of sales orders for the past year can best be described as a: master file. transaction file. reference file. history file. open document file.

5-68. a. b. c. d. e.

Transactions that are completed and closed are often transferred to a: master file. reference file. transaction file. document file. history file.

5-69. a. b. c. d. e.

Which of the following is not a type of file employed in data processing?

Master file Minor file Transaction file Open document file Report file

5-70. a. b. c. d. e.

A type of file that contains transactions that have been posted to master files but are still uncompleted is known as a: reference file. master file. transaction file. open document file. history file.

5-71. a. b. c. d. e.

A sales summary file is an example of a: master file. transaction file. reference file. report file. history file.

5-72. a. b. c. d. e.

A table of shipping rates is an example of a: master file. transaction file reference file. report file. history file.

5-73. a. b. c. d. e.

A record employs fields to display the values of: attributes. data elements. characteristics pertaining to entities or events. a and b, above. a, b, and c, above.

57

5-74. a. b. c. d. e.

The data hierarchy, from smallest to largest, is: character, data base, record, file. file, record, character, data element. character, data element, record, file. data element, file, record, character. record, character, file, data element.

5-75.

A collection of payroll data for a single employee—including the employee's name, number, amounts earned, deductions, and so on—is known as a: file. record. database. key. field.

a. b. c. d. e.

5-76. a. b. c. d. e.

A fixed-length logical record within a file contains a series of ______________ that are identical to those in all of the records comprising the file. fields characters repeating groups indexes primary keys

5-77. a. b. c. d. e.

In an accounts receivable master file which of the following is likely to be the primary key?

General ledger account number Accounts receivable number Customer account number Sales invoice number Remittance advice number

5-78. a. b. c. d. e.

In an accounts payable master file which of the following is likely to be the primary key?

General ledger account number Accounts payable number Purchase order number Supplier number Supplier's invoice number

5-79. a. b. c. d. e.

In a sales order transaction file which of the following is most likely to be the primary key?

Customer account number General ledger account number Date of order Customer name Product number

5-80.

With respect to each record within an employee master file, the department number field is best described as a: primary key. secondary key. significance code, direct access key. matching key.

a. b. c. d. e.

58

5-81. a. b. c. d. e.

In an inventory parts file the warehouse bin code that indicates the location of the part is an example of a(n): pointer. physical data storage address index. secondary key. owner or parent record.

5-82. a. b. c. d. e.

The three major functions of file management are: storing, maintaining and programming the files. storing, converting and updating the files. storing, maintaining and retrieving data from the files analyzing, designing and building the files. planning, controlling and modifying the files.

5-83. a. b. c. d. e.

Which type of transaction is not included within the category of file maintenance?

Addition of new master records Deletion of current master records Updating of balances in master records Changes to nonbalance data in master records Extraction of data from master records

5-84. a. b. c. d. e.

Which of the following is not an activity encompassed by the file maintenance function?

Updating of master file balances Changes to relatively permanent data in master files Additions of records for new entities Deletions of records for discontinued entities All of the above are data maintenance activities.

5-85. a. b. c. d. e.

The processing of files is made more efficient when which of the following technique is employed?

Updating Blocking Spooling Auditing Formatting

5-86. a. b. c. d. e.

One feature of a file employing the sequential access method is that: the records must be stored on magnetic tape. a particular logical record is found by means of a hashing scheme. a particular record is found by means of an index. a particular record is generally found by reading all records from the beginning of the file. each record may be accessed in the same length of time.

5-87.

Which of the following is not a method by which the time required to update a magnetic tape file can be reduced?

Increasing number of records per block Increasing tape drive speed Skipping (not reading) those records in the master file not requiring processing Increasing density of recorded characters Decreasing width of interblock gaps

a. b. c. d. e.

59

5-88. a. b. c. d. e.

Which of the following physical file organization methods may be used with magnetic disks?

Sequential Indexed sequential Random b and c a, b, and c

5-89. a. b. c. d. e.

The index for an indexed sequential file stored on a magnetic disk cross-references: primary key values and the disk addresses of blocked logical records. secondary key values and the disk addresses of blocked logical records. primary key values and secondary key values. primary key values and the disk addresses of physical pointers.

None of the above.

5-90. a. b. c. d. e.

Which of the following statements is incorrect with respect to an indexed sequential file?

It must be stored on a direct access storage medium.

Individual records are accessed via an index that lists the primary key value in the initial record of each block.

Updated records remain (are overlaid) in the same locations on the medium.

Newly created records are inserted in their sequential locations (disk addresses) within the file.

Blocks of logical records are called buckets.

5-91. a. b. c. d. e.

When the indexed sequential file organization method is used, records are accessed: sequentially. directly. randomly. a and b. a and c.

5-92. a. b. c. d. e.

An indexed sequential file uses: sequential organization and sequential access. sequential organization and direct access. random organization and direct access. a and b. b and c.

5-93. a. b. c. d. e.

Which physical file organization method employs a hashing scheme?

Sequential access method Indexed sequential access method Direct access method Random access method None of the above approaches employs a hashing scheme.

5-94. a. b. c. d. e.

A drawback to the randomizing (hashing) method of storing and accessing records is that it: employs the available storage space inefficiently. provides slower access times than alternative methods. does not allow new records to be easily stored. requires the use of magnetic tape.

The randomizing method has no drawbacks.

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+5-95. a. b. c. d. d. +5-96. a. b. c. d. e.

On a typical direct access storage device such as a magnetic disk, the physical recording area is divided into: tracks and cylinders. blocks and sectors, files and records. files and tracks. blocks and tracks.

A firm decides to use magnetic disks to store its accounts receivable records. What features are available for retrieving data in a direct manner from the records?

Sequential arrangement, primary keys, chains Sequential arrangement, secondary keys, disk addresses Primary keys, disk addresses, index files Inverted lists, primary keys, chains Sequential arrangement, disk addresses, chains

**5-97. Ledoin Company is designing a computerized accounts receivable system. Ledoin has over 10,000 customers, and a requirement of the system is to provide the ability to respond to salespersons' telephone credit checks. The most appropriate storage medium for the accounts receivable master file would be: a. microfilm. b. cassette tape. c. magnetic disk. d. reel-to-reel magnetic tape. e. punched paper tape.

5-98.

a. b. c. d. e.

5-99. a. b. c. d. e.

If a firm has an inventory master file containing 20,000 items, many of which are updated daily, and needs to access individual records in the file on a frequent basis, the appropriate storage medium is: magnetic tape. cassette tape. magnetic disk. microfilm. optical disk.

In a typical accounts receivable record the customer name is best described by which of the following attribute sets?

Fixed value, numeric mode, secondary key Fixed value, alphabetic mode, secondary key Fixed value, alphabetic mode, primary key Variable value, numeric mode, secondary key Variable value, alphabetic mode, secondary key

5-100. In a typical accounts payable record the account balance is best described by which of the following attribute sets? a.

Fixed value, numeric mode, secondary key b.

Fixed value, numeric mode, primary key c.

Variable value, numeric mode, secondary key d.

Variable mode, numeric mode, primary key e.

Variable mode, alphabetic mode, secondary key **5-101. Small Time, Inc. is preparing to computerize its payroll records, using magnetic tape to store its master file of employees. The logical file organization method to employ is:

61

a. b. c. d. e.

sequential. batch. random. on-line. direct.

5-102. When the activity ratio for a particular file maintenance procedure is relatively high, it is generally advantageous to process the transactions: a. in random order. b. in sequential order. c. at remote sites only. d. at the main computer site only. e. manually.

5-103. For applications which have both a high activity ratio and numerous requests to see individual records, which of the following file organization methods is generally preferable? a.

Sequential b.

Indexed sequential c.

Random d.

Direct e.

Simple list 5-104. Various accounting and credit personnel need to access individual customers' accounts at any time during the day. The firm needs to be able to update many customers' accounts each night.

Which one of the following would be suitable? a.

Linked list file b.

Sequential file c.

Random file d.

Inverted file e.

Index sequential file 5-105. RST Co. has a large file that has experienced low volatility and activity. Reasonably fast response times are desired for any updates or file inquiries. What file organization method should be employed? a.

Sequential b.

Indexed sequential c.

Random d.

Direct e.

Some other file structure **5-106. Ander and Company has designed a computer-based system utilizing one data base. In this system, transactions are entered into the system only once. In order to accomplish this, Ander's files must: a. utilize magnetic tape. b. be separated by function (i.e., marketing has a set of files, production has a set, etc.). c. be located in an integrated file located in on-line storage. d. be updated in a real-time environment. e. be handled in some other manner than described above.

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5-107. Which of the following file organizations is preferable for applications in which relatively few records are affected by transactions during a given period of time but in which an up-to-date status of data in the records and timely responses are critical? a.

Sequential b.

Indexed sequential c.

Random d.

Direct e.

Simple list 5-108. An example of a file having high volatility is found in which of the following applications? a.

Airline reservation system b.

Payroll processing system c.

Budgetary system d.

Inventory processing system e.

Point-of-sale system 5-109. Which of the following represents a trade-off when designing the file management activity for a firm? a.

Accessibility versus flexibility b.

Processing efficiency versus accessibility c.

Accessibility versus relevance d.

Throughput versus timeliness e.

Accuracy versus security **5-110. PANTAB Airlines is considering the installation of an on-line, real-time reservation system. The most important factor to be considered in the selection of input/output (I/0) devices and file media is the: a. nature of source information. b. accessibility of stored data. c. cost of alternative I/O devices and files. d. quality of output required. e. density of the data input into the system.

5-111. Which of the following statements is correct? a.

Coding and classifying are identical concepts. b.

Classifying refers to the assignment of symbols, such as letters and numbers, to specific, events and entities. c.

A sound coding system anticipates the demands of automated data processing, even though the present information system may not be automated. d.

A sound coding system provides at least two identifiers for each event and entity. e.

Coding refers to the act of grouping of data and information into classes 5-112. Which of the following is not a benefit of using codes? a.

Codes are usually easier to remember than names. b.

Codes can be unique identifiers. c.

Codes tend to be more concise than names and descriptions. d.

Codes can reflect meaning to users, within a framework such as chart of accounts. e.

Codes facilitate the analysis of sales and other activities.

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5-113. MI (the postal abbreviation of Michigan) is an example of a: a. sequence code. b. mnemonic code. c. block code. d. zip code. e. logical code.

5-114. If the numbers 100 through 150 are assigned to the asset accounts and 151 through 189are assigned to the liability accounts of a firm, which of the following types of codes is being employed? a.

Sequence b.

Block c.

Mnemonic d.

Group e.

Faceted 5-115. In the specific group code 35-610, the number 601 refers to the direct material account; then the number 35 probably refers to: a. a production department. b. a sales territory. c. the account to be credited. d. the account to be debited. e. an employee. +5-116. A logical record contains several fields of related data elements that pertain to an event or entity.

What is a characteristic of the primary key field? a.

It contains the disk address of the record. b.

It contains the password that allows access to the record. c.

It contains the data dictionary item number. d.

It contains a unique identifier of the event or entity. e.

It contains the relative location of the record within the file.

5-117. Which of the following statements concerning coding is not correct? a.

A primary key is the unique identifier code that is used to sequence and retrieve records. b.

Records can be sorted using codes other than the primary key codes. c.

Secondary key codes can be used to sequence the records in a file when the primary codes are not available. d.

Secondary key codes can be used to create inverted lists or files. e.

The record format for a particular file may have more than one secondary key.

5-118. A coding system including the sales territory number and salesperson number in the code that records each sales transaction is known as a(n): a. sequence coding system. b. block coding system. c. group coding system. d. mnemonic coding system. e. identification coding system.

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5-119. Auda Co. uses a coding system for inventory, which allows the firm to determine the size and supplier of any part in stock. What type of coding system is most likely being used? a.

Block code b.

Sequence code c.

Group code d.

Simple code e.

Cannot be determined by the above data.

Questions 5-120 through 5-123 use the following data.

The following group code pertains to sales transaction data for a manufacturer of men's shoes that sells to a number of retail outlets: ABCCDEFGHH Where A is the shoe style B is the material code CC is the shoe length D is the shoe width E is the shoe color code (1 = black, 2 = brown, 3 = tan, 4 = natural, 5 = olive) F is the salesperson G is the sales territory where the sale is made HH is the number of the retail outlet to which shoes are sold Below are partial data for one day, with the quantities sold being listed at the right: 541OB2A312 30 4208C3A312 20 3306D1A312 15 6110C4A312 35 4609D2C507 40 3207C5C507 25 2408B4C507 30 5309C3C507 10 6110D2D410 20 8305BID410 30 5-120. In which sales territory were the largest number of style 3 shoes sold? a.

1 b.

2 c.

3 d.

4 e.

5 5-121. Which salesperson sold the most shoes? a.

A b.

B c.

C d.

D e.

None of the above

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5-122. If the shoe styles are coded from 1 through 10, which pair of styles is not represented in the excerpted sales data? a.

0, 1 b.

2, 3 c.

4, 5 d.

6, 7 e.

8, 9 5-123. Which is the most popular color of shoe, based on the excerpted data? a.

Black b.

Brown c.

Tan d.

Natural e.

Olive **5-124. A commonly used measure of the relative frequency of adds, deletes, and changes to a master file during a specified time period is: a. volatility b. the index ratio c. the frequency ratio d. the volume ratio e. accessibility **5-125. If the activity ratio for a particular application file is low, which one of the following is the best statement regarding sorting and file updating? a.

Transactions should be sorted during file updating. b.

Transactions should be sorted after file updating. c.

Transactions should always be sorted prior to file updating. d.

Transactions should be sorted prior to file updating only if random access storage media are used. e.

Transactions should be sorted prior to file updating only if sequential access storage media are used. **5-126. Batch processing: a. is not used by most businesses because it reduces the audit trail b. processes individual transactions as they occur c. allows users to inquire about groups of information contained in the system d. accumulates transaction records into groups for processing against the master file e. can only be performed on a centralized basis **5-127. Block codes in a coding system: a. provide listings of balance sheet and income statement accounts b. require the use of numeric codes only c. reserve numbers in a numerical sequence that correspond to categories significant to the user d. preclude the sorting of data on different keys e. allow users to identify missing data within specific categories

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5-128. Which of the following is not an example of procedural documentation? a.

System flowcharts b.

Data flow diagrams c.

Analysis worksheets d.

Program flowcharts e.

Data-structure diagrams 5-129. Which of the following is not a valid design feature when designing forms? a.

Assigning a form identification number b.

Reducing the form to the smallest feasible size c.

Providing instructions for the users d.

Providing color-coded copies in multi-part forms e.

Grouping related data together 5-130. Which of the following questions concerning forms represents the least important design consideration? a.

Does the form exhibit a clear purpose? b.

Is the form easy for the preparer to complete? c.

Does the form contain as much data as possible for the user? d.

Are the costs of printing, preparing, and using the form as low as possible? e.

Are the data contained on the form easily understood?

5-131. Which of the following is not a valid design principle with respect to a data entry screen? a.

It has a clear purpose. b.

The data elements to be entered are logically arranged. c.

It should present a format that is consistent with those of other screens within the framework to which it belongs. d.

It incorporates as many data items as possible within the format of the screen. e.

Certain of the entries are generally entered by the computer system rather than the person initiating the data entry.

5-132. Which of the following is not a purpose that may be applied to the various reports of a typical business firm? a.

To control the use and acquisition of resources b.

To reflect stewardship responsibilities c.

To comply with legal requirements d.

To provide the basis for planning e.

Each is a valid purpose.

5-133. A Form 10-K is an example of a(n): a. operational report. b. planning report. c. control report. d. stewardship report. e. legal compliance report.

67

5-134. Which of the following types of report contains information pertaining to actual events or status? a.

Operational reports b.

Planning reports c.

Control reports d. a and c, above e. a, b, and c, above 5-135. An employee register and a labor distribution summary can be described as: a. operational reports. b. control reports. c. planning reports d. demand reports. e. stewardship reports.

5-136. Features common to planning reports are: a. future-oriented information. b. comparisons between alternatives. c. standards of performance. d. a and b only. e. a, b, and c.

5-137. A report used for control must: a. contain future-directed information. b. contain standards of comparison or variances. c. contain information that compares two or more alternatives. d. be an exception report. e. be a demand report.

5-138. Sales analyses and make-or-buy analyses can be described as: a. operational reports. b. control reports. c. planning reports. d. demand reports. e. stewardship reports.

5-139. Reports may be usefully classified according to each of the following types except: a. planning. b. ad hoc. c. scheduled. d. detailed. e. event-triggered.

5-140. The key property of an exception report is: a. timeliness. b. scope. c. conciseness. d. regularity. e. preciseness.

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5-141. Reports that (1) compare actual deliveries with scheduled deliveries and (2) compare the scheduled time equipment is utilized with actual times in service can be described as: a. operational reports. b. control reports. c. planning reports. d. demand reports. e. summary reposes.

5-142. An operational report primarily contains which kind(s) of information? a.

Attention-directing b.

Decision-making c.

Scorekeeping d. a and c e. a, b, and c 5-143. Which of the following reports would serve primarily as a control report? a.

Budget b.

Sales forecast c.

Accounts receivable aging report d.

Sales analysis e.

Cash projection 5-144. An equipment utilization report may be classified as a control report if it compares actual equipment service times with service times. a. computed b. scheduled c. average d. past e. future 5-145. Which of the following is not an element of a control report? a.

Actual performances b.

Benchmarks c.

Projections d.

Variances e.

Centers or objects of focus 5-146. Which of the following features in a report will be most likely to enhance understandability by users? a.

Timeliness b.

Graphical presentation c.

Numerous details d.

Accuracy e.

Tabular comparisons of results 5-147. A report that can be viewed as both a planning report and a control report is the: a. quality control report. b. budget. c. make of buy analysis. d. inventory status report. e. income tax return.

69

5-148. Before developing a report to be provided by an information system, it is necessary to assess: a. what computer equipment will be used. b. what the competitors are doing. c. what controls will be established. d. what purpose the report is to serve. e.

None of the above.

5-149. Which of the following is not an attribute of an effective report? a.

It provides useful information for decision making. b.

It provides adequate discriminating among segments (e.g., sales territories, products) or alternatives (e.g., make or buy) relevant to a firm’s objectives. c.

It includes numerous details. d.

It displays information in a clear and understandable format. e.

It is sufficiently timely to enable necessary and effective decisions to be made and actions to be taken.

5-150. A report that reflects profits earned for each of the sales territories provides desirable: a. scope. b. stewardship. c. conciseness. d. discrimination. e. reliability.

5-151. Which of the following is not a desirable feature with respect to screen displays? a.

Logical and meaningful arrangement of information b.

Minimized labeling c.

Graphical format d.

Description of display at top of screen e.

Bold lettering 5-152. Which of the following is not a reason why system flowcharts and data flow diagrams warrant considerable attention in the study of accounting information systems? a.

They are the most suitable means of presenting the flows of data and documents through the various transaction processing systems. b.

They are extremely useful in analyzing and/or documenting current procedures within the AIS. c.

They are extremely useful in designing and/or documenting new or improved systems within the AIS. d.

They are well-understood by all persons involved with the AIS, since t6y have been traditionally employed for a number of years. e.

They require skill in their preparation, which can only be gained through exposure and practice.

5-153. A system flowchart portrays: a. the flow of instructions within a computer system's programs. b. a firm's managerial reporting system. c. the internal control structure. d. the processing steps and related documents and outputs comprising a system. e.

None of the above.

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5-154. Which of the following is not a question answered by a system flowchart? a.

What inputs are received, and from whom? b.

What outputs are generated and to whom are they sent? c.

What is the next step in the processing sequence? d.

What files and accounting records are affected? e.

What set of controls and security measures are installed?

5-155. A program flowchart represents which level of detail in the flowchart hierarchy? a.

Summary level b.

Middle level c.

Detailed level d.

All of the above e.

None of the above 5-156. A type of system flowchart that emphasizes the inputs and outputs pertaining to a particular transaction and their flows through organizational units is a: a. program flowchart. b. control flowchart. c. document flowchart. d. data flowchart. e. process flowchart.

5-157. A system flowchart is primarily useful in analyzing and designing transaction processing systems because it: a. shows all the controls. b. shows relationships among the documents, procedures, and files. c. shows the detailed processing steps. d. supplants the other documentation of the system. e. shows decisions affecting the systems.

5-158. The symbol that represents data stored on a magnetic disk is a: a. rectangle. b. diamond. c. cylinder. d. square. e. circle with a tail.

5-159. The following symbol represents which operation in a computer system flowchart?

a. b. c. d. e.

Data flow Data processing Information display Data storage On-line input by manual means

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5-160. When used in a computer system flowchart, what does the following symbol represent?

a. b. c. d. e. +5-161. a. b. c. d. e.

Manual on-line entry of data On-line storage of data CRT terminal On-line display of information On-line processing of data.

The diamond-shaped symbol, which may appear in either a program or system flowchart, represents a: process or single step in a procedure. terminal output display. decision point, from which two processing paths may be followed. predefined process or sequence of steps. entry of data via a terminal.

**5-162. The correct labeling, in order, for the following flowchart symbols is:

a. b. c. d. e.

document, display, on-line storage, data entry. manual operation, processing, off-line storage, computer processing operation. display, document, on-line storage, computer processing operation. manual operation, document, on-line storage, computer processing operation. document, display, on-line storage, input/output step.

5-163. The following flowchart symbols portray which of the following?

a.

A document has been generated by a clerical operation. b.

A master file has been created by a computer operation. c.

A document has been generated by a clerical operation. d.

A master file has been created by a clerical operation. e.

A document has been pulled from a file.

5-164. The following flowchart symbols portray which of the following?

72

a. b. c. d. e.

A document has been pulled from a file.

A document has been placed in a file.

A file has been created by a clerical operation.

A processing operation has created a document.

A file has been referred to in the preparation of a document.

5-165. The following computer system flowchart segment portrays which type of computer processing run?

a. b. c. d. e.

Updating a master file Converting a file to a different medium Sorting a file Merging files Printing a report

5-166. What does the following computer system flowchart portray?

a.

An input document produces two outputs, one on magnetic tape and one on an on-line file.

73

b. c. d. e.

A computer-performed process produces two outputs, one on a direct access storage device and one on a source document which is filed off-line.

An auxiliary process produces two outputs, one on a magnetic disk and one on source document which is filed off-line.

A computer-performed process produces two outputs, one displayed on a CRT terminal and one printed on a source document which is filed off-line.

None of the above.

5-167. The following computer system flowchart segment portrays which processing activities?

Process

Document

a. b. c. d. e.

Converting a file to another medium and updating a file Updating a file and printing a report Sorting and updating a file Sorting and updating a file and printing a report Sorting a file and printing a report

5-168. The symbol which would be employed to represent the printing of the employees' paychecks by the computer is:

74

a.

b.

d.

c.

e.

**5-169. The symbol which would be employed to represent the employees’ checks, which have been printed by the computer, is: a.

d.

b.

c.

e.

**5-170. The symbol which would be used to represent the clerical act of collecting employees’ time cards for processing is:

75

a.

b.

c.

e.

d.

**5-171. The symbol which would be used to represent the employees' payroll records, which are stored on magnetic tape, is: b.

a.

d.

c.

e.

**5-172. The symbol which would be used to represent the weekly payroll register, which is generated by the computer, is:

76

a.

b.

d.

c.

e.

** 5-173. The symbol which would be used to represent the file drawer of hard copy, computer-generated payroll reports stored for future reference is: a.

c.

b.

d.

e.

The following flowchart pertains to Items 5-174, 5-175, and 5-176.

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B

A

C

**5-174. The symbol at point A represents: a. input or output processing. b. initiation of a process. c. computer processing. d. manual processing. e. a decision point. **5-175. The line encompassing point B represents a(n): a. decision tree. b. input process. c. output step. d. conditional loop. e. computer program. **5-176. The hardware signified by the symbol at point C is a: a. magnetic tape drive. b. direct access device. c. floppy disk drive. d. computer drum storage device. e. optical scanner. **5-177. System flowcharts generally do not show: a. manual operations. b. computer-based operations. c. flows of documents. d. peak volumes of data. e. internal accounting controls.

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5-178. Which of the following is not a sound flowcharting guideline? a.

Focus on the usual or normal procedure b.

Provide ample cross-references between procedures c.

Show the final disposition of each source document d.

Employ a consistent set of symbols e.

Employ symbols that are of uniform sizes.

5-179. The “sandwich rule” in flowcharting states that a a symbol and a symbol. a. input; processing; output b. processing; input; output c. file; document; processing d. processing; file; document e. processing; terminal; terminal

symbol should be sandwiched between

5-180. Exceptional occurrences may appear on system flowcharts in the form of: a. annotated comments. b. separate flowcharts. c. decision branches. d. a and b, above. e. a, b, and c, above.

5-181. A technique that documents the logical flows of data through a transaction processing system is known as a(n): a. document flowchart. b. computer system flowchart. c. analysis worksheet. d. process flowchart. e. data flow diagram.

5-182. Which of the following statements is not correct with respect to a data flow diagram? a.

It shows logical flows of data through a system. b.

It shows physical aspects of a system. c.

It emphasizes what is being done to data. d.

It can be decomposed into diagrams of greater detail. e.

It is well suited for analyzing a processing system.

5-183. A rectangle represents computer processing in a system flowchart. In a data flow diagram it represents a: a. source or destination of data. b. process that transforms data inputs into outputs. c. data store. d. manual processing operation. e. document or report.

5-184. In a data flow diagram a process may be represented by a: a. rectangle. b. circle. c. square. d. diamond. e. trapezoid.

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5-185. Processes in data flow diagrams are often coded. Which of the following statements concerning coding is incorrect? a.

Processes coded 4.11, 4.12, 4.13, and 4.14 are the subprocesses of a process coded 4.10. b.

Coding allows processes to be easily identified with the processes from which they are “exploded.” c.

The process in a context diagram is usually coded O.O. d.

Processes coded 2.1, 2.2, and 2.3 are the subprocesses of a process coded 2.0. e.

All of the above statements are correct. **5-186. The following flowchart symbols, in order of appearance, denote:

a. display, on-line storage, document, and keying operation. b. display, off-line storage, magnetic disk, and input/output activity. c. document, output activity, magnetic disk, and keying operation. d. document, temporary on-line storage, magnetic disk, and keying operation. e. document, on-line storage, keying operation, and magnetic disk. +5-187. Which of the following tools would best give a graphical representation of a sequence of activities and decisions? a.

Flow chart b.

Control chart c.

Histogram d.

Run chart

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5-1.

5-2.

5-3.

5-4.

5-5.

5-6.

5-7.

5-8.

5-9.

5-10.

5-11.

5-12.

5-13.

5-14.

5-15.

5-16.

5-17.

5-18.

5-19.

5-20.

5-21.

5-22.

5-23.

5-24.

5-25.

5-26.

5-27.

5-28.

5-29.

5-30.

5-31.

5-32.

5-33.

5-34.

5-35.

5-36.

5-37.

5-38.

5-39.

5-40.

D D A D C E E E B D D C B B E D C D D E D C B A D D A D B C C D B D C E E B C B

5-41.

5-42.

5-43.

5-44.

5-45.

5-46.

5-47.

5-48.

5-49.

5-50.

5-51.

5-52.

5-53.

5-54.

5-55.

5-56.

5-57.

5-58.

5-59.

5-60.

5-61.

5-62.

5-63.

5-64.

5-65.

5-66.

5-67.

5-68.

5-69.

5-70.

5-71.

5-72.

5-73.

5-74.

5-75.

5-76.

5-77.

5-78.

5-79.

5-80.

D C C A B B C D A C E C B E E A D B A E D D C E A B D E B D D C E C B A C D A B

5-81.

5-82.

5-83.

5-84.

5-85.

5-86.

5-87.

5-88.

5-89.

5-90.

5-91.

5-92.

5-93.

5-94.

5-95.

5-96.

5-97.

5-98.

5-99.

5-100.

5-101.

5-102.

5-103.

5-104.

5-105.

5-106.

5-107.

5-108.

5-109.

5-110.

5-111.

5-112.

5-113.

5-114.

5-115.

5-116.

5-117.

5-118.

5-119.

5-120.

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D C E E B D C E A D D D D A A C C C B C A B B E B C C A B B C A B B A D C C C E

5-121.

5-122.

5-123.

5-124.

5-125.

5-126.

5-127.

5-128.

5-129.

5-130.

5-131.

5-132.

5-133.

5-134.

5-135.

5-136.

5-137.

5-138.

5-139.

5-140.

5-141.

5-142.

5-143.

5-144.

5-145.

5-146.

5-147.

5-148.

5-149.

5-150.

5-151.

5-152.

5-153.

5-154.

5-155.

5-156.

5-157.

5-158.

5-159.

C A B A E D C E B C D E E A A D B C D C B C C B C B B D C D B D D E C C B C E

5-160.

5-161.

5-162.

5-163.

5-164.

5-165.

5-166.

5-167.

D C D A B C B B

5-168.

5-169.

5-170.

5-171.

5-172.

5-173.

5-174.

5-175.

C E B E D B E D

5-176.

5-177.

5-178.

5-179.

5-180.

5-181.

5-182.

5-183.

82

A D E B E E B A

5-184.

5-185.

5-186.

5-187

B A D A

CHAPTER 6 6-1. a. b. c. d. e.

Which of the following is not compatible with the accounting concept known as the "events" approach?

Data base approach Each data element stored in only one place in the data base Transaction data stored in a disaggregated form Multidimensional features of each transaction captured and stored Double-entry model

6-2. a. b. c. d. e.

The three major functions of data management are: creating, maintaining and programming the data base. creating, converting and updating the data base. creating, maintaining and retrieving data from the data base. analyzing, designing and building the data base. planning, controlling and operating the data base.

6-3.

The method for retrieving desired data records from a sequentially organized file which consists of locating a succession of midpoints is known as the: sequential search method. binary search method. index search method. direct access method. random access method.

a. b. c. d. e.

6-4.

a. b. c. d. e. **6-5. a. b. c. d. e. **6-6.

a. b. c. d. e.

A fixed-assets master file is stored on a magnetic disk. One of its secondary keys is the class of asset. All records having the same value for the class (e.g., 01) are linked together by pointers.

The resulting associations are known as: indexes. inverted lists. attribute chains. relational structures. tree structures.

The records pertaining to accounts receivable are physically scattered throughout the data base.

However, these records may be linked by means of: account numbers. pointers. a hashing scheme. a data base scheme. a flat file structure.

In a given data base management system (DBMS), all the records pertaining to overdue accounts receivable are physically scattered throughout the data base. However, these same overdue account records may be associated logically by: transaction tags. the use of record pointers. randomization of the records. the data base schema. the implementation of a flat file structure.

83

+6-7. a. b. c. d. e.

A data field containing the address of the next record of interest is known as a(n): page field. pointer field. branch field. index field. decision field.

6-8. a. b. c. d. e.

Which of the following is in reality an index?

Simple list Ring list Inverted list Attribute list Backward list

6-9.

Which of the following data association techniques is most appropriate for answering such involved inquiries as: How many salesmen in Region 5, who have been with the company less than two years, have exceeded their sales quota? (Assume that all the data are in the salesman's master record.)

Inverted lists Tree structures Network structures Hierarchical structures Ring lists

a. b. c. d. e.

6-10.

a. b. c. d. e.

What would be the most appropriate means of linking records together for a finished goods master file when questions such as the following are often asked, “Which work station produced this part and when was it completed?”

Backward pointers Inverted lists Linked lists Parent pointers Ring lists

6-11. a. b. c. d. e.

A common disadvantage of attribute chains and inverted lists is that: both must be stored in indexes. both require additional storage space. neither can be used to form data structures. neither reduces the need for sorting. none of the above is a common disadvantage-

6-12. a. b. c. d. e.

Which of the following is not a use of a pointer chain?

To link new records, belonging to indexed sequential files and stored in overflow areas, to places in the file where they would normally fit To link consecutive records within an indexed sequential file stored on magnetic disks To facilitate the retrieval of related data To form attribute chains To update or print in sequential order the records of a random file

6-13.

The file-oriented approach is also known as the approach.

84

a. b. c. d. e.

data management data base application data processing data store

**6-14. Which one of the following statements most completely describes a key difference between a fileoriented data processing system and a data base system? a.

Data base systems are on-line, real-time systems; file systems are not. b.

Data base systems are inquiry systems, while file-oriented systems are not. c.

The application programs found in file-oriented systems are replaced by data base programs in a data base system. d.

The logical relationships among records are formed by programs or programmers in a fileoriented system, while the records in a data base system are related one to another when they are stored in the data base. e.

Records in a file-oriented system are physically arranged in sequential order, while records in a data base system are arranged by the indexed-sequential method.

6-15. a. b. c. d. e.

The conversion to the data base approach from the file-oriented approach should have the least effect on the: inconsistencies among data elements. procedures employed by application programs. degree of associations among data sets and items. extent of redundant data elements and files. degree to which data are commonly shared.

6-16. a. b. c. d. e.

Which of the following is not a shortcoming of the traditional file-oriented approach?

Data and file redundancy Inconsistency with respect to data names Need for relatively costly hardware and software Difficulty in associating data for different files Inflexibility in changing programs

6-17.

e.

Which of the following is not a feature of the data base approach (as opposed to the traditional file-oriented approach)?

One-time entry of data items Independence of application programs and the stored data in the data base Standardization of data items Clear-cut "ownership" of information (e.g., production information is the exclusive property of the production function) Linkages of data items that have logical associations

6-18. a. b. c. d. e.

Which of the following is not an objective of data management?

To provide sufficient data to meet the needs of the users To secure stored data from losses and unauthorized access To provide up-to-date and accurate data To be efficient in handling data All of the above are objectives.

a. b. c. d.

**6-19. The data-base approach is most useful in enabling an AIS to:

85

a. b. c. d. e. +6-20. a. b. c. d. e. +6-21. a. b. c. d. e.

be more speedy in providing regularly scheduled reports. minimize data validation and other entry requirements. respond more capably to a wide variety of management's requests for needed information. provide greater portability of application systems. maintain decentralized data bases.

Which of the following benefits will not likely be gained by changing to the data base approach?

Faster processing of transactions Reduced data redundancy Greater sharing of data among users Improved consistency and integrity of data Increased flexibility through data independence One characteristic of the data base approach is that each _______ is to be entered once and to have a single storage location. record data element file data base data set

**6-22. Which of the following statements does not apply to the data-base approach and the selected data base management system? a.

Data base systems maintain data independence. b.

Data base systems contain a data definition language that is used to describe each schema and subschema. c.

The data base administrator is a part of the software package that instructs the operating aspects of the program when data are to be retrieved. d.

A key purpose of data base systems is to reduce redundancy. e.

Data base systems enable users to have greater accessibility of stored data and flexibility in using data. **6-23. a. b. c. d. e.

One purpose of the data-base approach is to: eliminate multiple access to a particular piece of stored data. eliminate redundancy in the data base of a firm. lessen the integration of information-producing activities so that a given department may easily ascertain its current status. provide each application program with its own fixed data file. make it possible to have data compatible with a variety of computer hardware.

6-24. a. b. c. d e.

Which of the following is not an advantage of the data base approach?

Reduced data redundancy Synchronized (coordinated) files Quick availability to data for qualified users Elimination of application programs Ability to provide a greater variety of logically related information

**6-25. A major benefit of the data base approach is that: a. data bases can be employed as efficiently with microcomputers as with large computers. b. data base systems are easy to implement.

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c. d. e. **6-26. a. b. c. d. e.

6-27. a.

data base systems are generally less expensive to acquire than file-oriented systems. data base systems reduce the degree of duplication in data. data base systems require fewer skilled people to operate and maintain.

A key benefit of a data base system is to: store all data needed by the firm in multiple files. reduce the redundancy of stored data. employ physical rather than logical data organization concepts. change the manner in which application programs access individual records and data items. reduce the overall complexity of data processing and storage.

c. d. e.

A prime focus of the data base approach is to: integrate the data sets into an overall framework that is accessible and meaningful to a variety of users. eliminate all redundancy of data, so that the storage space required can be maintained at a minimum level. render all data items freely available to all possible users. enable systems development to be completed in the least possible time and with the least effort. decentralize all applications and related files.

6-28. a. b. c. d. e.

Data independence: is a feature of every computerized information system. is less important to central data bases than to tape-oriented computerized systems. results in the data base being independent of the data base management system (DBMS). results in the data base being independent of the application programs. results in the data base being independent of both the DBMS and the application programs base.

6-29. a. b. c. d. e.

A logical view or "blueprint" of the entire data base is called a(n): set. hierarchy. attribute. schema. network.

6-30. a. b. c. d. e.

The focus of a subschema is the: firm's management. firm itself individual user. data base. physical storage device.

6-31. a. b. c. d. e.

The data base administrator is responsible for: operating the data base system. managing data as a firm wide resource. developing application programs. selecting the hardware on which the data base resides. directing the development of the information system.

b.

+6-32.

A professor needs to monitor the students in his classes. The data he needs includes the student’s name, major, and grades on all assignments. This user's view of the data pertaining to students is called:

87

a. b. c. d. e.

a logical view. a physical view. a subschema. both a and c, above. both b and c, above.

6-33. a. b. c. d. e.

Which of the following statements is incorrect?

Data independence is achieved by means of a data base management system.

The data base management system causes the logical view to be identical to the physical view of data.

Data independence enables changes in application programs to be made more easily.

Due to data independence, data can be stored efficiently in the data base.

Data independence separates the data for applications from the application programs.

6-34. a. b. c. d. e.

Which of the following is not an effect of the data base approach on accounting?

It provides improved information for users.

It allows each transaction amount to be entered only once.

It increases the vulnerability of stored financial data.

It is inconsistent with the accounting equation.

It allows transaction data to be stored in a disaggregated form.

6-35. a. b. c. d. e.

Which of the following is not a drawback of the data base approach?

Costliness of hardware and software Resistance from designers and users Vulnerability to severe impact if breakdown occurs Complication of backup procedure Inability to accommodate the double-entry accounting model

6-36. a. b. c. d. e.

Which of the following is a question that least needs to be answered when designing data bases?

What physical media should be employed for storing data?

What data should be stored?

How should data be retrieved?

How should data be organized within the data base?

What are the data flows in the transaction processing systems?

6-37. a. b. c. d. e.

A firm’s enduring entities that bear on its operations and planning and control functions, as well as the relationships among the above entities, are reflected in a(n): subschema. conceptual data model. physical view. application program. enterprise diagram.

6-38. a. b. c.

A technique that can reflect the conceptual data model of a firm is known as a(n): relational data model. entity relationship diagram. enterprise model.

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d. e.

schema. subscherna.

6-39. a. b. c. d. e.

Which of the following phases in the development of a data base is not, in proper order? (Select the first option out of order.)

Determine the data sets and other features of the logical view.

Devise the conceptual model.

Select the DBMS and physical storage devices.

Implement the DBMS on the selected storage devices.

Determine the entities and their relationships.

6-40. a. b. c. d. e.

Which of the following would not be a type of entity around which the data of a firm tend to cluster?

Objects, such as inventory Events, such as sales Reports, such as sales analyses Agents, such as suppliers All of the above are types of entities.

6-41. Identifying the entities of a firm can be aided by means of a(n): a. data flow diagram. b. enterprise diagram. c. system flowchart. d. data structure diagram. e. relational diagram.

6-42. a. b. c. d. e.

A situation in which a particular supplier provides more than one type of inventory item to a firm and a particular type of inventory item is acquired from more than a single supplier is called a: one-to-one relationship one-to-many relationship. many-to-many relationship. entity-relationship. data relationship.

6-43. a. b. c. d. e.

Which of the following statements concerning an entity-relationship diagram is incorrect?

It is identical to a data structure diagram.

It can be developed by reference to an enterprise diagram.

It can aid in arranging the layout of a data base.

It is constructed with the data needs of the various users in mind.

It is a conceptual rather than physical model.

6-44. a. b. c.

Which of the following statements concerning an entity-relationship diagram is correct?

It is identical to an enterprise diagram.

It is a type of data flow diagram.

It reflects a generalized set of conditions pertaining to all firms of a specific type, e.g., merchandising.

It reflects the relevant data relationships for a single firm at one point in time.

It shows the dynamic flows of data and processes.

Which of the following can be employed to portray the logical view of a data base?

Data flow diagram Data structure diagram Entity-relationship diagram

d. e.

6-45. a. b. c.

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d. e.

Enterprise diagram Configuration diagram

6-46. a. b. c. d. e.

IDMS, DB2, and Oracle are examples of commercially available: design techniques. accounting programs. data base management system software packages. control and security systems. application programs.

6-47. a. b. c. d. e.

A key trade-off in the selection of a DBMS is between processing efficiency and: timeliness. accuracy. economy. relevance. flexibility.

6-48. a. b. c. d. e.

Which of the following is not a function performed by a typical DBMS? To load data sets into the data base To prevent more than one user from accessing the same data simultaneously To provide the backup of data sets To coordinate the movement of data from input/output devices and from the data base To retrieve data in response to queries from users

6-49. a. b. c. d. e.

Which of the functional components of a DBMS communicates directly with the operating system?

Data base control system Data dictionary Query language Report writer Host-language interface

6-50. a. b. c. d. e.

Which of the following functions cannot be performed by a data base management system (DBMS)?

Data description (definition) Data security Report writing Data manipulation relative to the data base Application processing

6-51. a. b.

Which of the following statements is correct with respect to a data base and its DBMS? The DBMS handles only on-line applications.

If two or more users attempt to use the data base at the same instant, the typical DBMS halts operation until the computer operator enters a resume command via the console.

The operating system directs the transfer of data from the data base to the working area of the primary storage unit.

The DBMS only “understands” the logical structures of data within the data base.

Each application program directly accesses the data base to store or retrieve data pertaining only to its subschema.

The primary purpose of a data base management system is to: enable the processing of two or more application programs by interleaving the execution of individual instructions. accept computer instructions in a higher-level language and convert them to machine language.

c. d. e. +6-52. a. b.

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c. d. e.

provide a means of compensating for differences in rates of data transfer between primary and secondary storage devices. serve as a software controller that enables a variety of applications to access data sets stored on on-line storage devices. regulate the activities of storage devices and input/output devices.

6-53. a. b. c. d. e. +6-54. a. b. c. d. e.

To function properly, a DBMS must be compatible with the: operating system. users' application programs. computer hardware on which it operates. a and c, above. a, b, and c, above.

A function of the data dictionary is to: document the processing steps in applications. ensure that the design of the data base is consistent. maintain data integrity by listing authorized users. coordinate the interfaces among software and application programs. provide a series of commands that allow interactive searches of the data base.

+6-55.

When tracing through several application programs, an auditor needs to know which programs use which data elements, which data sets contain the data elements, and which reports are based on which data elements. If the data-base approach is used, this information can normally be found in the: data dictionary. data base schema. data encryptor. system flowchart. data model.

a. b. c. d. e.

6-56. a. b. c. d. e.

6-57. a. b. c. d. e.

6-58. a. b. c. d.

Which of the functional components of a DBMS contains standardized definitions of all data elements stored in the data base, so that redundancies and inconsistencies are eliminated?

Data base control system Data dictionary Data manipulation language Query language Report writer Which of the functional components of a DBMS provides powerful verbs that are translated into executable commands?

Data base control system Data definition language Data manipulation language Report writer Host-language interface Which of the functional components of a DBMS enables application programs to communicate directly with the DBMS? Data base control system Data definition language Data manipulation language Query language

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e.

Host-language interface

6-59. a. b. c. d. e.

Which of the following is not likely to be found in the data dictionary?

Name of each data element Password protection for each data element and record Mode of each data element Relationships among data elements and records Verbs by which data elements are manipulated

6-60. a. b. c. d. e.

A file consisting of __________records is called a __________file. fixed length; flat variable length; flat fixed length; fixed variable length; variable variable length; document

6-61.

a. b. c. d. e. +6-63. a. b. c. d. e.

In a firm that sells products to customers, the relevant data pertaining to each customer includes (1) relatively permanent facts concerning the customer, (2) sales and payments transactions, and (3) the account balance. Which of the following is likely to be the least desirable option in storing the above data?

Using fixed length customer records that consolidate all the above data Using fixed length customer records, sales records, and payment records Using variable length customer records that consolidate all the above data None of the above options is undesirable.

All of the above options are undesirable.

Which type of logical data structure would likely be most suitable for a batch-processed payroll application where each record contains the same number of data elements arranged in the same order and occupying the same number of storage positions?

Flat file Tree structure Network structure Relational structure Matrix structure Which of the following does not require the support of a data base management system?

Relational structures Tree structures Network structures Sequential structures Object-oriented structures

6-64. a. b. c. d. e.

Which of the following logical data structures is viewed as being the most flexible and versatile?

Tree structure Network structure Relational structure Object-oriented structure Sequential structure

6-65.

Which of the following is not a type of logical data structure?

a. b. c. d. e. +6-62.

92

a. b. c. d. e.

Tree structure Network structure Attribute structure Relational structure Object-oriented structure

6-66. a. b. c. d. e.

The tree structure, a type of logical data structure, reflects on: hierarchical relationship. one-to-many relationship. structure of branches that extend upward from a root node. a and b, above. a, b and c, above.

6-67. a. b. c. d. e.

The type of logical data structure that is best suited for structuring all data relative to each depositor in a bank is the: network model. tree model. regional model.

None of the above.

All of the above.

6-68. a. b. c. d. e.

Which of the following pairs is a substitute for the term “owner-member record set”?

Parent-child record set Network-tree record set Root-branch record set Head-tail record set Member-owner record set

6-69.

Which of the following is a necessary condition that distinguishes a network structure from a tree structure?

At least one one-to-many relationship At least one owner and one member record At least one root node At least one member record that has multiple owners At least two levels that exist in the data structure

a. b. c. d. e.

6-70. a. b. c. d. e.

6-71. a. b. c. d. e.

The relationships between a few classes and the variety of students who are enrolled in relationship and is best one or more of the classes is known as a portrayed by a model. many-to-many; tree many-to-many; network one-to-many; relational few-to-many; network many-to-few; tree Which of the following is not a distinguishing characteristic of a network logical data model?

Allows more than one root node Requires at least one parent record to have multiple children records Allows many-to-many relationships Allows the construction of complex data structures Can be portrayed by a data structure diagram

6-72.

A many-to-many relationship is implemented in a network data structure by means of a(n):

93

a. b. c. d. e.

simple network. member record. owner record. root node. intersection record.

6-73.

The following diagram shows a data structure known as a

Supplier record

Accounts payable

Open purchase order record

a. b. c. d. e.

set. tree structure. network structure. inverted structure. random structure,

6-74. a. b.

C. d. e.

The diagram that follows portrays a data structure known as a: network structure. tree structure. ring structure. chain structure. random structure.

94

Items ordered record

General ledger account

Accounts receivable record Salesperson record

Sales invoice record

6-75. a. b. c. d. e.

6-76.

Which of the following is a drawback of the logical data structure of the network type that limits its use?

Allows only one point of entry into the structure Exhibits relatively complex structures Severely limits the variety of information requests that satisfied Does not reflect realistic models of business relationships Provides slower responses to information requests than alternative data models.

a. b. c. d. e.

Which of the following is not a required characteristic of the fully normalized form of a relational data structure?

Each row is fixed in length.

There are no repeating groups.

Each relation pertains directly to a single event or entity.

The data in each relation is incapable of being structured by either a tree or network.

Each relation has a unique set of values in each row.

6-77. a. b. c. d. e.

What characteristic of a relational logical data model provides its high degree of flexibility?

Numerous relationships can be predefined.

Numerous normalized forms can be stored.

Numerous new relations can be formed by data manipulating operators.

Numerous domains can be predefined.

Numerous tuples can be predefined.

6-78. a. b. c. d. e.

Which of the following is a drawback to the relational data structure?

It allows only one point of entry, i.e., one root node.

It is relatively inflexible.

It represents a very complex version of a network structure.

It requires more redundancy than the alternative data structures.

It has no drawbacks.

95

6-79. a. b. c. d. e.

Which of the following is correct with respect to relational operators?

PROJECT moves data from one relation to another.

SELECT extracts data from one or more relations.

JOIN creates a linked set of relations.

PROJECT extracts data from the columns of a relation.

SELECT extracts data from the columns of a relation.

6-80.

(1) (2) (3) (4) (5)

The following relations, using relational notation, are included within a relational data base: INSTRUCTOR (INST.-NAME, DEPARTMENT) STUDENT (STUDENT-NO., STUDENT-NAME, MAJOR) CLASS (CLASS-NO., DESCRIPTION) INSTRUCTOR/CLASS (INST.-NAME, CLASS-NO.) STUDENT/CLASS (STUDENT-NAME, CLASS-NO.)

a. b. c. d. e.

What resultant relation would be formed based on the use of the JOIN operator with respect to relations (1), (3), and (4) above?

(INST.-NAME, DEPARTMENT, CLASS-NO., DESCRIPTION) (INST.-NAME, CLASS-NO., DESCRIPTION) (INST.-NAME, INST.-NAME, DEPARTMENT, CLASS-NO., CLASS-NO., DESCRIPTION) (INST.-NAME, STUDENT-NAME, CLASS-NO.) (INSTRUCTOR, CLASS, INSTRUCTOR/CLASS)

6-81. a. b. c. d. e.

Which of the following statements is incorrect with respect to the relational data structure?

Relations should be established in normalized forms.

Data manipulating operators can create new relations.

A typical relational data model has no redundancy.

Each normalized form is centered around a single entity or event.

Relational data models are becoming increasingly popular in the business world.

6-82.

Within a relational data base one relation has columns for supplier number, supplier, and supplier address; another relation has columns for purchase order number, supplier number, purchase date, and quantity ordered. The supplier number in the second relation is known as a: table key. record key. foreign key. primary key. secondary key.

a. b. c. d. e.

6-83.

a. b. c. d. e.

A relational data base contains three relations or tables: (1) a student table that has columns for student number, student name, class standing, and grade point average, (2) a class table that has columns for class number, class title, class times, and classroom number, and (3) a table that has columns for student number and class number. If a class listing is needed that includes information about the class and also the students in the class, the first step that must be performed is to request the DBMS to: print all three tables. search the student table for all students taking the specified class. search the class table for the specified class number. join all three tables to create a new table. reform the tables in third normal form.

96

6-84. a. b. c. d. e.

Which of the following statements concerning normalization is incorrect?

It is a process of decomposition.

It can transform a set of nonflat data records into flat tabular relations.

It may be generally considered complete when relations or tables are in first normal form.

Its purpose is to produce efficient data structures.

Relations or tables in normalized form focus on single entities.

6-85. a. b. c. d. e.

In moving from first normal to second normal form during the process of normalization: all of the attributes that are nondependent on the entity of a relation are removed. all of the repeating groups are eliminated. all of the rows are made fixed in length. the key value for each row is caused to be unique. all concatenated keys are removed.

6-86. a. b. c. d. e.

Which of the following is not a feature of the third normal form in a relational table design?

Pertains to a single entity or event Contains rows that differ from all other rows in the table Contains volumes that differ from columns in any other table Includes table key column Has no transitive dependencies

6-87. a. b. c. d. e.

Which of the following statements is incorrect with respect to data management?

Duplicate files and records should be minimized.

Data should preferably be stored in a summarized form.

Data should be coded for storing if feasible.

Data no longer needed should be purged from the data base.

Less costly storage media should be employed where feasible.

6-88. a. b. c. d. e.

Which of the following is not a means of achieving economy in the design of a data base?

Eliminating data redundancy Using less costly storage media Using more efficient processing methods Storing data in more disaggregated form Providing data on a less timely basis

**6-89. A software tool used to infrequently select or access items in the database would most likely be a(n): a. report generator. b. program generator. c. application generator. d. query utility program. e. emulator. **6-90. Transaction processing systems frequently support the inquiry of online database users. Inquiry processing includes all of the following characteristics except that: a. either batch or real-time processing may be used. b. it is dependent on the use of telecommunication networks and database management query languages. c. responses are in a pre-specified format displayed on the end-user’s terminal. d. end-users are allowed to make changes to the records retrieved. e. end-users receive responses concerning the results of transaction activities.

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**6-91. The graphic portrayal of the flow of data and the information processing of a system, including computer hardware, is best displayed by a: a. data flow diagram. b. system flowchart. c.

Gantt chart. d. decision table. e. program flowchart.

6-92. a. b. c. d. e.

To be sound, a system flowchart must: trace two or more transactions. show all controls affecting a transaction. identify individuals responsible for each processing step. trace a transaction from its initiation to its completion. achieve all of the above.

6-93. a. b. c. d. e.

System flowcharts do not typically reflect: computer-based processing steps. clerical processing steps. files affected by processing. data items contained in documents. dispositions of documents.

6-94. a. b. c. d. e. +6-95. a. b. c. d. +6-96 a. b. c. d.

A symbol having the shape of a square and appearing in a document flowchart refers to a: document. file. manual processing operation. machine processing operation. termination of a procedure.

All of the following are methods for distributing a relational database across multiple servers except: snapshot (making a copy of the database for distribution). replication (creating and maintaining replica copies at multiple locations). normalization (separating the database into logical tables for easier user processing). fragmentation (separating the database into parts and distributing where they are needed).

Graphical notations that show the flow and transformation of data within a system or business are called: action diagrams. program structure charts. conceptual data models. data flow diagrams.

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6-1.

6-2.

6-3.

6-4.

6-5.

6-6.

6-7.

6-8.

6-9.

6-10.

6-11.

6-12.

6-13.

6-14.

6-15.

6-16.

6-17.

6-18.

6-19.

6-20.

6-21.

6-22.

6-23.

6-24.

6-25.

6-26.

6-27.

6-28.

6-29.

6-30.

6-31.

6-32.

6-33.

6-34.

6-35.

6-36.

E C B C B B B C A B B B C D B C D E C A B C B D D B A D D C B D B D E E

6-37.

6-38.

6-39.

6-40.

6-41.

6-42.

6-43.

6-44.

6-45.

6-46.

6-47.

6-48.

6-49.

6-50.

6-51.

6-52.

6-53.

6-54.

6-55.

6-56.

6-57.

6-58.

6-59.

6-60.

6-61.

6-62.

6-63.

6-64.

6-65.

6-66.

6-67.

6-68.

6-69.

6-70.

6-71.

6-72.

B B A C B C A D B C C D A E C D E C A B C E E A A A D D C D B A D B B E

6-73.

6-74.

6-75.

6-76.

6-77.

6-78.

6-79 6-80.

6-81.

6-82.

6-83.

6-84.

6-85.

6-86.

6-87.

6-88.

6-89.

6-90.

6-91.

6-92.

6-93.

6-94.

6-95.

6-96.

B A B D C D D A C C D C A C B D D D B D D D C D

99

CHAPTER 7 7-1. a. b. c. d. e.

Which of the following is not a required element in a typical control process?

Performance measure Benchmark Regulator element Accounting element Sensor element

7-2. a. b. c. d. e.

Which of the following actions is least likely to occur during the control process?

Comparing benchmark and actual values Detecting variances from planned levels Feeding information back to the operating process Deciding among alternative courses of action Determining when corrective action is necessary

**7-3. a. b. c. d. e.

7-4. a. b. c. d. e. **7-5. a. b. c. d. e. **7-6.

a. b. c. d. e.

The underlying feature of the control process is the concept of: standard operating procedures. organizational structure. behavioral attitudes. feedback. systems boundaries.

Flexible budgeting systems and quality control systems are examples of feedforward control systems. preventive control systems. feedback control systems. analytical control systems.

None of the above.

Many organizations supplement feedback control systems with feedforward control systems. The major goal of most feedforward control systems is: the prediction of potential variations from plans so that adjustments can be made to prevent problems before they occur or become significant the prediction of potential variations from budgets so that variance analysis can be performed on problems that become significant to provide complete information by use of system controls on computer input to make predictions about any future event in the organization to disclose significant deviations of actual activities from planned activities Three important types of control systems for accounting information systems are feedback, feedforward, and preventive control systems. Which of the following sets of examples are arranged in the order listed above?

Cost accounting variances, separation of duties, cash planning Cost accounting variances, cash planning, organizational independence Cash planning, cost accounting variances, separation of duties Inventory control, capital budgeting, cash planning Cash planning, capital budgeting, hiring qualified employees

100

+7-7. a. b. c. d. e. +7-8. a. b. c. d. e. **7-9.

a. b. c. d. e.

7-10.

(1) (2) (3) (4)

A comment card filled out by a customer of a restaurant, informing management of needs to improve the level of service and quality of food, is an example of: feedforward control. steering control. concurrent control. preventive control. feedback control.

Feedforward controls are important because they: suggest corrective actions to be taken when deviations occur. enable management to anticipate problems and take early corrective actions provide the basis for evaluating results from a historical perspective. represent the most economical type of control, incorporate both first- and second-order feedback controls.

Accounting controls are concerned with the safeguarding of assets and the reliability of financial records. Consequently, these controls are designed to provide reasonable assurance that all of the following take place except: permitting access to assets in accordance with management’s authorization executing transactions in accordance with management’s general or specific authorization compliance with methods and procedures ensuring operational efficiency and adherence to managerial policies comparing recorded assets with existing assets at periodic intervals and taking appropriate action with respect to differences recording transactions as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and maintaining accountability for assets Four objectives of internal control are to: secure the assets from loss and theft. ensure the accuracy and completeness of processed data. promote efficiency in all operations. encourage adherence to management's prescribed policies and procedures.

Which of the following statements is correct? a.

The first two objectives are the primary concern of internal accounting control. b.

The last two objectives are the primary concern of internal accounting control. c.

The first two objectives are the primary concern of administrative control. d.

The first three objectives are the primary concern of internal accounting control. e.

The last three objectives are the primary concern of administrative control.

7-11. a. b. c. d. e.

Which of the following is not an objective of the internal control structure?

To safeguard the assets To ensure the accuracy and reliability of data and information To guarantee management decision making effectiveness To encourage adherence to management's prescribed policies and procedures To promote efficiency in all operations

7-12.

Which of the following is not a difficulty in achieving control objectives within the typical firm?

101

a. b. c. d. e.

Complexity of modem business conditions, including rapid changes Lack of computer technology applied to the control structure Severe and numerous risk exposures Managerial and employee omissions and fallacies High costs of effective controls

7-13. a. b. c. d. e.

Which of the following is not a subobjective that helps a firm to accomplish the objective of assuring the reliability and accuracy of the accounting data and information?

Authorizing all transactions before processing Capturing and processing all transactions on a timely basis Validating all transaction data before processing Preparing all outputs from transaction data according to appropriate rules, e.g., GAAP Processing all transactions in an efficient manner

7-14. a. b. c. d. e.

Which of the following is an element of a firm! s internal control structure?

The control environment The accounting system Control procedures not covered by the control environment and AIS a and b, above a, b, and c, above

7-15. a. b. c. d. e.

Which of the following is not included in the control environment of an entity (e.g., firm)?

Organizational structure Security measures for assets Management's philosophy and operating style Internal auditing function Personnel policies and practices

7-16. a. b. c. d. e.

Which of the following is not included in control procedures other than the control environment and the AIS? Sound design and use of documents and records Adequate segregation of employees' duties Adequate safeguards and security measures for assets Adequate use of internal auditing Reviews of valuation of recorded amounts in aged trial balances of accounts receivable, etc.

7-17. a. b. c. d. e.

The process that promotes efficiency in technical operations is known as: strategic planning. accounting control. management control. operational control. operational planning.

7-18. a. b. c. d. e.

Which of the following is not an example of an operational control system?

Budgetary control Quality control inventory control Production control Credit control

7-19.

A feature that pertains to a management control system but not to an operational control system is:

102

a. b. c. d. e.

benchmark. responsibility center. planner. corrective action. variance.

7-20. a. b. c. d. e.

Controls needed to implement operational and management control systems are known as: accounting controls. feedforward controls. concurrent controls. internal controls. administrative controls.

7-21. a. b. c. d. e.

Critical features of a management control process include all except: responsibility centers. policies and procedures. corrective actions by managers. performance targets. operational controls.

7-22.

Internal accounting structures should be designed to provide reasonable assurance with respect to all of the following except: Transactions are executed in accordance with management's authorizations.

Assets are secured in accordance with management's authorizations.

Decisions are made in accordance with management's policies and authorizations.

Transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles.

Existing physical assets are compared periodically with the recorded accountability for the assets, and appropriate actions are taken with respect to differences.

a. b. c. d. e.

7-23. a. b. c. d. e.

Which of the following is not a risk exposure due to lapse in controls?

Unintentional error in an entered data item Theft of merchandise from the storeroom Loss of accounts receivable records Inefficiencies due to lack of computerization Unauthorized access of salary files

7-24. a. b. c. d. e.

Which of the following would not be a risk exposure?

Cash receipt posted to the wrong account Unintentional errors in data processing Inaccurate count of merchandise received Raw material in an open supply room All are risk exposures.

7-25. a. b. c. d. e. +7-26.

Deliberate errors may be viewed: in essence as being identical to unintentional errors. as constituting a type of fraud. as the most common type of error. as unlikely to cause material damage. as the main concern of auditors.

Fraud may be perpetrated with the intent to benefit a firm. An example of such a fraud is:

103

a. b. c. d. e.

7-27. a. b. c. d. e. +7-28. a. b. c. d. e. +7-29.

acceptance of kickbacks by a purchasing agent. claims submitted by suppliers for goods not actually provided. sales or assignments of fictitious or misrepresented assets. lapping of customers' accounts by a clerk. errors made by programmers in revising a sales analysis program.

a. b. c. d. e.

Which of the following acts constitutes fraud?

Deliberate errors Libel Assault Unintentional errors Breaches of security Which of the following is not a characteristic of fraud within a particular firm?

Intentional deception Unfair or unlawful gain For the benefit of the firm Negligence on the part of management To the detriment of the firm A firm manufactures mirror frames. Scrap is adequately accounted for at the point of generation.

The scrap is sorted and sold frequently to the firm's regular buyer at a price negotiated between the scrap manager and buyer. A risk exposure due to this procedure is that: excessive scrap may be generated. the price received for scrap may be inadequate. inefficiencies in production may be revealed. the amounts collected from the buyer may be questionable. the sale of scrap may be terminated at any time.

7-30. a. b. c. d. e.

Which of the following is not a potential source of risk to which a firm may be exposed?

Managers of the firm Competitors Acts of nature Former employees All of the above can be sources of risk.

7-31. a. b. c. d. e.

When a computer "hacker" gains access to the files of her bank's computer system and illegally transfers funds to her account, which of the following types of risk have been involved?

Fraud and losses of assets Act of violence and fraud Theft of assets and breach of security Breach of security and act of violence All of the above.

7-32. a. b.

The exposure of an asset to risk is affected by: frequency of events involving the asset. vulnerability of the asset.

104

c. d. e.

value of the asset. b and c, above. a, b, and c, above.

7-33.

If numerous sales of high value are made near the end of a firm's accounting period, the risk exposure relative to accounting controls is: greatest if the sales are made for credit. that the net income may be understated. that the revenues may be overstated. that sales in the next accounting period may be reduced. unaffected.

a. b. c. d. e.

7-34. a. b. c. d. e.

7-35. a. b. c. d. e.

7-36. a. b. c. d. e.

7-37. a. b. c. d. e.

7-38. a.

Which of the following traits of computer-based processing does not represent a high exposure to risk?

Capacity to process numerous transactions Vulnerability of the computer equipment and stored data Sizable loss from the average computer crime Difficulty in detecting irregularities Use of machine language not readable by humans Which of the following is not a type of control-related risk exposure that is increased when an information system is computerized?

Unauthorized access to confidential data Destruction of data and files Unauthorized manipulation of programs Interruption of business operations All of the above are increased exposures.

Which of the following best describes a fundamental control problem related to computer-based systems?

Computer equipment is more likely to make errors in processing data than are humans.

Computer equipment processes all similar transactions in a consistent manner.

Functions that are normally separated in a manual system are concentrated in a computerized system.

Computerized procedures often cannot process unusual transactions.

Certain transactions and files stored in computer systems cannot be retrieved by auditors.

Which of the following is not a problem often introduced when computers are employed in processing transactions?

The loss of human judgment in spotting errors The concentrated nature of computer processing The fragmentation of the audit trail The added vulnerability of stored data The added vulnerability of clerical employees

Which of the following transaction processing steps is generally performed by humans even when computer-based systems are employed?

Recording of transaction data on source documents

105

b. c. d. e.

Editing transaction data Posting to ledgers Calculating of totals Preparing of reports

7-39.

Why are adequate controls perhaps even more important in computer-based systems than in manual systems?

Computers cannot exercise the judgment that humans can.

Losses from fraud occurrences in computer-based systems are higher on the average than in manual systems.

New possibilities of errors and fraud are introduced by computer-based systems. a and b only. a, b, and c.

a. b. c. d. e.

7-40. a. b. c. d. e.

7-41.

Computer-based information systems that employ on-line processing are more vulnerable than batch systems because: the hardware is more complex. the software is more complex. systems documentation cannot be as complete. processing speeds are much higher. the files and programs can be directly accessed via remote devices (e.g., terminals).

a. b. c. d. e.

Who has the primary responsibility for establishing and maintaining the internal control structure of a firm?

The management The owners The external auditors The internal auditors The accounting personnel Which of the following is likely to be the best preventive measure against a computer virus?

Compare software in use with authorized versions of the software.

Allow only authorized software from known sources to be introduced into the computer system.

Execute virus exterminator programs periodically on the computer system.

Prepare and test a program for recovering from the incidence of a virus.

There is no known preventive measure against a virus.

7-43. a. b. c. d. e.

Which of the following is least likely to be a condition that increases a firm's exposure to risk?

Collusion between an employee and nonemployee The expanded development of computer viruses The rise in computer-related fraud The rising number of business bankruptcies Refusal by management to prosecute detected instances of employee fraud.

7-44. a. b. c.

Which of the following is not a type of computer crime?

Software piracy "Hacking" into a firm's computer system Unauthorized modification of a firm's transaction processing programs

a. b. c. d. e.

+7-42.

106

d. e.

Planting a virus in a firm's computer system Accidentally erasing a firm’s vital customer list

7-45.

Which of the following represents the risk exposure that is least affected when a data base system is installed?

Improper modifications of the data dictionary Losses of stored data sets Unauthorized changes to application programs Additions of nonstandardized data elements Instances of unauthorized persons accessing the data base Six months after a disgruntled systems programmer was fired and passwords disabled, the firm's mainframe computer was brought to a halt when it suddenly took over control of itself and erased all of its own files and software. The most likely way that the programmer accomplished this was by: secretly entering the computer center after six months. planting a computer virus through the use of telephone access. having an accomplice in the computer center. implanting a time-delayed virus within the operating system. planting a variety of program bugs in the various application programs used by the system.

a. b. c. d. e. +7-46.

a. b. c. d. e.

7-47. a. b. c. d. e.

What effect(s) upon the audit trail may be experienced when computer-based processing replaces manual processing of transactions?

Data comprising the audit trail may be invisible, at least in part.

The audit trail may be eliminated, at least in part.

The audit trail may no longer be needed. a and b only. a, b, and c.

7-48. a. b. c. d. e.

Which of the following conditions least increases the exposure of a computer system to risks?

On-line processing application Geographical dispersion Batch processing application Significant amounts of confidential data Network of several computers

7-49. a. b.

Which of the following statements is incorrect?

Every internal control structure should be reviewed and evaluated by auditors.

Auditors should serve as consultants with respect to internal control structures after the systems are fully operational.

Auditors should recommend the addition of additional controls that they discover to be needed during the course of financial audits.

Audits should include valuations of controls as well as financial statements.

The management of firms are responsible for sound internal control structure in their firms.

c. d. e.

7-50. a. b.

Which of the following statements is incorrect?

An additional control is desirable if its perceived benefits exceed its costs of installation and maintenance.

A cost-benefit analysis should begin with an assessment of the various control exposures and attached risks.

107

c. d. e.

+7-51. a. b. c. d. e.

Controls that are complementary to already-installed controls are usually desirable additions.

If the addition of a control will appreciably degrade processing efficiency without significantly enhancing reliability, the control should not be installed.

The size of each risk exposure should be measured.

Which of the following statements is incorrect?

An important objective of a control in a computer-based system is to reduce the exposure to risk of the internal control structure.

A control in a computer-based system may reduce exposure to risk by minimizing potentially harmful effects or by reducing the probability of its occurrence.

The utilization of a computer to process data significantly changes the basic concepts and objectives of controls that are relevant to the firm's internal control structure.

Controls for computerized systems are equally important as controls for manual systems.

The computerization of transaction processing activities changes the degrees of effectiveness and appropriateness of at least some of the specific controls that were in existence prior to the computerization.

7-52. a. b. c. d. e.

Which of the following is not a step in a cost-benefit analysis for controls?

Assess the risks to which a firm is exposed.

Measure the extent of each risk exposure in monetary terms.

Estimate the effect of each risk exposure over the life of the firm.

Determine the cost of installing and maintaining a control to counteract each risk exposure.

Compare the benefits of each control against its cost.

7-53. a.

c. d. e.

Which of the following statements is incorrect?

A strong ethical climate within a firm contributes to the effectiveness of the internal control structure.

Ethical standards are best communicated within a firm by word-of-mouth from managers to employees.

The management of a firm should exhibit high ethical values.

Employees are often subject to negative aspects, such as unrealistic performance goalsOne qualification for hiring an employee should be personal integrity.

7-54. a. b. c. d. e.

A code of ethical conduct for a firm may address all of the following matters except: conflicts of interest. improper payments. rationale for internal controls. acceptable employee practices. control procedures.

7-55. a. b.

Which of the following statements is correct?

Employees may circumvent controls that they view to be punitive or unnecessary.

An understandable set of controls assures that the objectives of the internal control structure will be achieved.

Procedures designed to assure the execution and recording of transactions in accordance with proper authorizations are effective against fraud.

b.

c.

108

d. e.

The benefits expected to be derived from effective internal accounting controls usually do not exceed the costs of such controls.

Employees are seldom a critical element in an internal control structure.

7-56. a. b. c. d. e.

Which of the following is not a force for the improvement of internal controls within firms?

Needs and concerns of management Codes of ethics published by professional accounting associations Auditors of internal control structures Foreign Corrupt Practices Act All of the above are forces.

7-57.

Which of the following is not a feature of the Foreign Corrupt Practices Act relative to subject corporations?

It prohibits certain types of bribes and hidden ownership.

It requires adequate internal control structures to be devised and maintained.

It requires the establishment of independent audit committees.

It subjects noncomplying managers to fines and imprisonment.

It states the legal as well as ethical responsibilities of managers concerning internal control structures

a. b. c. d. e.

7-58. a. b. c. d. e. +7-59. a. b. c. d. +7-60. a. b. c. d.

+7-61. a. b. c. d. +7-62.

Which of the following is a major requirement of the Foreign Corrupt Practices Act of 1977 with respect to publicly owned corporations?

To report all violations of sound internal accounting control To devise and maintain adequate systems of internal accounting control To prevent all violations of sound internal accounting control To avoid all fraudulent or corrupt control practices To limit involvement in foreign firms Internal auditors would be more likely to detect fraud if they developed/strengthened their ability to: recognize and question changes which occur in organizations. interrogate fraud perpretrators to discover why the fraud was committed. develop internal controls to prevent the occurrence of fraud. document computerized operation system programs.

A computer program will not generate month-end balances if transactions are missing. This is an example of a: preventive control. detective control. corrective control. discretionary control.

Your firm has recently converted its purchasing cycle from a manual process to an on-line computer system. Which of the following is a probable result associated with conversion to the new automatic system?

Processing errors are increased.

The nature of firm’s risk exposures is reduced.

Processing tie is increased.

Traditional duties are less segregated.

A significant employee fraud took place shortly after an internal audit. The internal auditor may not have properly fulfilled the responsibility for the deterrence of fraud by failing to note and report that:

109

a. b. c. d.

+7-63. a. b. c. d. +7-64. a. b. c. d.

Policies, practices, and procedures to monitor activities and safeguard assets were less extensive in low-risk areas than in high-risk areas.

A system of control that depended upon separation of duties could be circumvented by collusion among three employees.

There were no written policies describing prohibited activities and the action required whenever violations are discovered.

Divisional employees had not been properly trained to distinguish between bona fide signatures and cleverly forged ones on authorization forms.

Corporate directors, management, external auditors, and internal auditors all play important roles in creating proper control environment. Top management is primarily responsible for: Establishing a proper environment and specifying an overall internal control structure.

Reviewing the reliability and integrity of financial information and the means used to collect and report such information.

Ensuring that external and internal auditors adequately monitor the control environment.

Implementing and monitoring controls designed by the board of directors.

One particular type of control is frequently criticized because corrective action takes place after the fact. What type of control exhibits that trait?

Automatic control.

Feedback control.

Strategic control.

Feedforward control

110

7-1.

7-2.

7-3.

7-4.

7-5.

7-6.

7-7.

7-8.

7-9.

7-10.

7-11.

7-12.

7-13.

7-14.

7-15.

7-16.

7-17.

7-18.

7-19.

7-20.

7-21.

7-22.

7-23.

7-24.

7-25.

7-26.

7-27.

7-28.

7-29.

7-30.

7-31.

7-32.

7-33.

7-34.

7-35.

7-36.

7-37.

7-38.

7-39.

7-40.

D D D C A B E B C A C B E E B D D A B E E C D E B C A D B E C E C E E C E A E E

7-41.

7-42.

7-43.

7-44.

7-45.

7-46.

7-47.

7-48.

7-49.

7-50.

7-51.

7-52.

7-53.

7-54.

7-55.

7-56.

7-57.

7-58.

7-59.

7-60.

7-61.

7-62.

7-63.

7-64.

A B D E C D D C B C C C B E A E C B A A D C A B

111

CHAPTER 8 8-1. a. b. c. d. e.

8-2. a. b. c. d. e.

8-3. a. b. c. d. e.

8-4.

Controls within the internal control structure may be classified in all of the following ways except: accounting and administrative. preventive, detective, corrective. general and application. specific and system-wide. manual and computer-based.

Which of the following statements is incorrect?

Controls are as important for computer-based systems as for manual systems.

When a computer-based system is installed, the objectives of the internal control structure are significantly changed.

Certain controls must be modified or added when computer-based systems are introduced.

Controls in computer-based systems may reduce certain risk exposures.

Certain controls are applicable to both manual and computer-based systems.

Which of the following types of knowledge is 1= necessary for accountants?

Impacts of computer hardware and software on internal control structures The array of general controls and security measures that are suitable to computer-based information systems The array of computer hardware and software currently in use The processing steps and controls for basic transaction cycles in manual systems The processing steps and controls for basic transaction cycles in computer-based systems

e.

Which of the following is not a question to be answered when designing the control framework of a firm?

Which general controls and security measures should be built into an information system?

Which specific application controls should be built in the various transaction processing systems?

What means should be employed to detect and correct errors in input data?

How many controls must be installed to eliminate the need for periodic evaluations of the control framework?

All of the above questions must be answered.

8-5. a. b. c. d. e.

Which of the following is least affected by the presence of computer-based processing?

Security measures Control objectives General controls Application controls Accounting controls

8-6.

Controls that reflect the objectives of the internal control structure may most meaningfully be classified as: accounting and administrative. administrative and feedback. broad and narrow. general and specific. general and administrative.

a. b. c. d.

a. b. c. d. e.

112

8-7. a. b. c. d. e.

Internal controls may be classified according to the ways that they counteract a firm' s risk exposures as: active and passive controls. preventive, detective, and corrective controls. active and preventive controls. active, detective, and corrective controls. preventive and passive controls.

8-8. a. b. c. d. e.

Internal controls may be classified in accordance with Auditing Standards as: general and specific. administrative and clerical. administrative and feedback. general and application. general and administrative.

8-9. a. b. c. d. e.

Which of the following controls cannot be classified as either an administrative control or a general accounting control?

Organizational controls Authorization controls Documentation controls Operational controls All of the above can be classified as both an administrative and a general accounting control.

8-10. a. b. c. d. e.

General controls include controls: designed to ascertain that all transaction data are accurate. that relate to the correction and resubmission of data that were initially incorrect. for documenting and approving programs and changes to programs. designed to assure the accuracy of the processing steps. designed to assure the reliability of the outputs.

8-11. a. b. c. d. e.

Which of the following is not a system architecture for which an extensive and generally unique set of controls is needed?

Manual system Computer-based batch processing system Computer-based on-line processing system Computer-based decision support system Computer-based data-base system

8-12. a. b. c. d. e.

Which of the following is a preventive control?

Bank reconciliation Fidelity bond Reconciliation of physical counts and inventory records Separation of responsibility for custody over inventory and maintenance of inventory records Recalculation of net pay

8-13. a. b. c. d. e.

The use of turnaround documents is an example of a(n): preventive control. detective control. corrective control. adjustment retroactive transaction,

113

8-14. a. b. c. d. e.

The use of a programmed check or edit test with respect to transaction data is an example of a: preventive control. detective control. corrective control. check control. retroactive control.

8-15. a. b. c. d. e.

The use of fenced-in and locked area for storing raw materials is an example of a(n): preventive control. detective control. corrective control. application control. retroactive control.

8-16. a. b. c. d. e.

The computation and use of batch control totals is an example of a(n): preventive control. detective control. corrective control. general control. administrative control.

8-17. a. b. c. d. e. +8-18. a. b. c. d. e.

The review of a console log by internal auditors is an example of a: preventive control. detective control. corrective control. review control. logging control.

Which type of the following controls is a pre-list of incoming cash receipts, with copies being sent to the cashier and accounting?

Preventive Detective Corrective Directive Administrative

8-19. a. b. c. d. e.

Which of the following arrangements violates the concept of organizational independence?

The storekeeper reports to the controller.

The credit manager reports to the treasurer.

The payroll department reports to the chief accountant.

The personnel department reports to the administrative vice president.

The inspection department reports to the production department.

8-20.

Which of the following combinations of responsibilities, when performed by the same person or unit, violates most seriously the concept of organizational independence?

Signing paychecks and distributing paychecks Posting to the accounts receivable subsidiary ledger and preparing monthly statements to customers Preparing deposit slips and carrying the cash receipts to the bank Accepting cash receipts and posting the amounts to the accounts receivable subsidiary ledger Preparing personnel action forms and posting to the general ledger

a. b. c. d. e.

114

8-21. a. b. c. d. e.

8-22. a. b. c. d. e.

8-23. a. b. c. d. e.

8-24. a. b. c. d. e.

8-25. a. b. c. d. e.

8-26. a. b. c. d. e.

An internal control structure that is functioning effectively is most likely to detect an irregularity arising from: the fraudulent collusions of several employees. the fraudulent action of an individual employee. informal deviations from the official organization chart. ineffective management decisions. inefficient processing procedures.

Effective internal control in a small company that has an insufficient number of employees to pen-nit proper division of responsibilities can best be enhanced by: employment of temporary personnel to aid in the separation of duties. direct participation by the owner of the business in key transactional activities. engaging a CPA to perform monthly "write-up" work. delegation of full clear-cut responsibility to each employee for the function assigned to each. rental of time on a service bureau computer.

Which of the following functions should be organizationally separated for effective internal control?

Authorization, operation, and review functions Operation, recordkeeping, and review functions Authorization, recordkeeping, and custodial functions Authorization, processing, and review functions Recordkeeping, processing, and custodial functions Organizational independence provides the most effective control when which functions are in separate organizational units?

Purchasing, accounts payable, and inventory control Accounts payable, accounts receivable, and inventory Data processing, inventory, and accounts receivable Credit, accounts payable, and inventory Purchasing, sales, and general ledger The primary responsibility for establishing an adequate internal control structure within a computerized information system rests with the: auditors. audit committee. information systems director. higher-level management. th control group in the information systems department Which of the following represents a sound organizational control with respect to information system activities?

Allowing the user departments to specify data processing standards Allowing requests for system changes to be initiated by the computer operator Allowing the data librarian to report to the head computer operator Allowing the user departments to submit data for processing directly to the computer operators Allowing the user departments to prepare input data

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**8-27. a. b. c. d. e. +8-28. a. b. c. d. e.

An important control function of the data base administrator is the: scheduling of data base operations. evaluation of internal accounting controls relative to computer hardware. review of data base output for errors and omissions. physical control over the data library. establishment of access controls and security measures related to the data base.

The standardized data items in a data base should be defined by: application programmers. systems analysts. the data base administrator. systems programmers. users.

8-29. a. b. c. d. e.

Which of the following generally enter transaction data in on-line processing applications?

User departments Computer operations Data preparation unit Data control unit Data base administration

8-30. a. b. c. d. e.

Which of the following is a violation of internal control in a computer-based system?

The data librarian maintains custody of computer programs.

Computer operators are provided program documentation.

The data control unit is solely responsible for the distribution of all computer output.

Computer programmers write programs based on specifications developed by the systems analyst.

Systems analysts design new computer-based procedures.

**8-31. Which of the following policies or practices is most likely to represent a weakness in internal control pertaining to a computer-based system? a.

Computer operators are denied access to the system/prograrn documentation library. b.

Employees in the data processing department are prohibited from initiating requests for changes to master files. c.

Computer programmers are not permitted to operate the computer for regular processing runs, which involve programs that they have written. d.

Computer operators who run the programs pertaining to inventory are prohibited from reconciling batch totals after computer runs. e.

All corrections of errors in the master file are reviewed and approved by a supervisory level employee who is a member of the data processing department.

8-32. a. b. c. d. e.

Which of the following should be a responsibility of the information systems function?

Initiating transactions Initiating changes to programs Maintaining custody over cash assets Processing transactions Correcting errors in transaction data

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8-33. a. b. c. d. e.

8-34. a. b. c. d. e.

8-35. a. b. c. d. e.

Which of the following combinations within the information systems function causes the least serious violation of proper organizational segregation?

Systems development and computer operations Data preparation and data base administration Systems development and data control Data control and computer operations Data preparation and computer operations Which of the following responsibilities should be organizationally segregated from the data processing function?

Data preparation Data initiation Systems development b and c, above a, b, and c, above Which one of the following control functions normally would not be the responsibility of the data control unit of the information systems function?

Review of the efficiency and effectiveness of systems design Receipt of data inputs from user departments Review and distribution of computer output Maintenance of a control log Checking of control totals and monitoring corrections of errors

**8-36. Which one of the following represents a weakness in internal control in a computer-based AIS? a.

The design and implementation is performed in accordance with management’s specific authorization. b.

Any and all changes in application programs have the authorization and approval of management. c.

Provisions exist to ensure the accuracy and integrity of computer processing of all files and reports. d.

Provisions exist to protect files from unauthorized access, modification, or destruction. e.

Both computer operators and programmers have unlimited access to the programs and data files.

8-37. a. b. c. d. e. **8-38. a. b. c. d. e.

Corrections to transaction data in which errors have been detected should be made by the: computer operator. data control clerk. user departments. programmer. information systems director.

In order to maintain good internal control: computer operators need to be good programmers. programmers should have control over day-to-day production runs. computer operators should be allowed to make changes in programs as needed in order to keep the computer running. programmers and computer operators should be in separate organizational units of the information systems function. the data librarian should be able to operate the computer.

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8-39. a. b. c. d. e.

8-40. a. b. c. d. e.

Which of the following responsibilities should not be assigned to members of the information systems function?

Designing new information systems Preparing documentation for new information systems Maintaining a data and program library Initiating changes to the files maintained in the data base Processing transaction data Which is the most objectionable assignment of responsibilities within the information systems function?

Programmers maintain the processing and output controls for applications.

Systems analysts maintain systems documentation.

Data processing supervisors schedule the processing times for applications.

Data control clerks establish controls over batches of transactions received from user departments.

Data librarians maintain custody over data files.

8-41. Which of the following is an invalid concept of internal control? a.

Generally, a person should not be responsible for all phases of a transaction. b.

The recorded accountability for assets should be compared with the existing assets at reasonable intervals, and appropriate action should be taken if there are differences. c.

Accounting control procedures are ideally performed by auditors, but may be performed by others who are relatively independent of transaction processing. d.

Reconciliations designed to detect errors should be performed by persons who conduct the processing of transactions where the errors may occur. e.

Organizational independence is as important to computer-based systems as to manual systems.

8-42. a. b. c. d. e.

8-43. a. b. c. d. e. +8-44. a. b. c. d. e.

8-45.

Which of the following statements is incorrect?

The bank statement should be reconciled by a person who is actively involved in transaction processing.

The petty cash custodian should not also be the cashier.

Well-designed documents aid in both safeguarding the assets and assuring the accuracy of records.

A customer who receives a monthly statement can be viewed as one control over the accuracy of a firm's outputs.

Goods should be purchased only upon authorization provided by a purchase requisition.

Which of the following employees in a firm' s information systems function should be responsible for designing new or improved transaction processing procedures?

Flowchart editor Programmer Systems analyst Control-group supervisor Data base administrator A primary reason for establishing documentation with respect to the information system is to: set forth the segregation of responsibilities for each application. provide reasonable assurance that the benefits of each application exceed its costs. ensure the proper and timely reentry of rejected data. discourage the improper manipulation of data. provide for continuity and consistency of information system services to users.

Documentation standards serve which of the following purposes?

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a. b. c. d. e.

Enhance the overall framework of controls Aid auditors in reviewing the system Aid systems analysts in making systems changes Aid new personnel in learning the system All of the above

8-46. a. b. c. d. e.

Which of the following have a high level of need for documentation pertaining to transaction processing systems?

Users of systems Designers of systems Evaluators of systems a and b, above a, b, and c, above

8-47. a. b. c. d. e.

Which of the following is not a purpose of systems-related documentation?

To aid in training newly employed users To spot deficiencies in the current system To reduce the need for an improved system To aid in the design of a new or improved system To aid users in performing their duties reliably and efficiently

8-48. a. b. c. d. e.

Which of the following is not a necessary item to include in program documentation, if the purpose of the documentation is to facilitate the use and updating of the programs?

Program flowcharts Program change procedures Operating instructions System flowcharts Printouts of reports

8-49. a. b. c. d. e.

Which of the following is not a category of documentation for computer-based systems?

User documentation Operating documentation Program documentation Data documentation Information documentation

8-50. a. b. c. d. e.

Documentation of particular interest to computer operators includes: a console run book. program flowcharts. layouts. test data. a data dictionary.

8-51. When new computer programs are unreliable and not able to handle the most common exceptions, a likely missing VAX of documentation is: a. test data. b. a console run book. c. an exception and summary report. d. a data dictionary. e. a user's manual.

8-52. Operating documentation is of primary interest to:

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a. b.

C. d. e.

computer operators. computer programmers. systems analysts. users. operations management.

8-53. a. b. c. d. e.

Systems application documentation is of least interest to: systems analysts. auditors. users. computer operators.

It is of interest to all of the above.

8-54. a. b. c. d. e.

Which of the following is not an example of system application documentation?

System flowcharts Data flow diagrams Narrative descriptions of procedures Audit trail details Program listings

8-55. a. b. c. d. e.

Which of the following is not primarily an asset accountability control?

Maintenance of a complete and clear audit trail Use of an account payable subsidiary ledger and related general ledger control account Acknowledgment of merchandise received by the storekeeper Reconciliation of physical inventory with counts shown in the records Reassessment of customer account balance by means of an accounts receivable aging schedule

8-56. a. b. c. d. e.

Which of the following controls does not aid in preventing the loss of assets?

Prenumbered source documents Document registers Precomputed. batch control totals General ledger account codes Bank reconciliation

8-57. a. b. c. d. e.

When a storekeeper accepts and signs a receipt for newly received merchandise, he or she is engaging in a(n) procedure. review acknowledgment reassessment register reconciliation

8-58. a. b. c. d. e.

Which of the following is not a sound management practice control?

Preparation of budgets Training of employees Supervision of employees Assignment of employees to jobs permanently, without rotation Development of schedules

8-59.

Which of the following is a feasible means of minimizing the loss from possible defalcations by employees having access to cash and other assets?

120

a. b. c. d. e.

Allow only managers to have access to cash and other assets.

Search employees each day as they leave the premises.

Require that fidelity bond coverage be acquired for such employees.

Assign internal auditors to closely supervise such employees.

Hire employees for such responsibilities who have extensive histories of trustworthy work experience.

8-60. a. b. c. d. e.

Because of their importance to a firm's well-being, the internal auditors report in an increasing number of firms to: the president. the controller. the treasurer. the budget director. a high level audit committee.

8-61. a. b. c. d. e.

To provide the most effective control, the internal audit function should: be retained only as long as its measurable benefits exceed its costs. replace the external auditors. be organizationally independent of the accounting function. focus on the computer processing portion of the AIS. take part in key transaction processing tasks.

8-62. a. b. c. d. e.

Which of the following is not a sound personnel practice?

Require employees in key positions of trust to take periodic vacations Evaluate the performance of employees at randomly selected times Maintain close supervision over employees in key positions Provide job descriptions that are clear and detailed Establish clear-cut termination policies

8-63. a. b. c. d. e.

Changes to application programs should be initiated by: programmers. users. auditors. systems analysts. data processing managers.

8-64. a. b. c. d. e.

Changes to data elements in a data base should be approved by: application programmers. systems analysts. data base administrators. data control clerks. users.

8-65. a. b. c. d. e.

8-66.

Testing of changes to an information system should be conducted by: programmers. users. auditors. a and b. a, b, and c.

Integrated accounting application software packages often combine data entry and processing steps that in manual systems are performed and cross-checked by clerks in separate

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a. b. c. d. e. +8-67.

a. b. c. d. e.

8-68.

organizational units. What preventive control in a computer-based system is necessary to compensate for the risk of processing errors?

Batch control totals Header label checks Approval procedure for all changes to computer programs Hiring of trustworthy computer operators Authorization of all transactions A computer programmer alters her firm's payroll program so that the dollar amount of her paycheck is doubled each payroll processing cycle. A control to prevent this type of fraud involves: having the treasurer's office distribute paychecks. employ a batch control total of the number of time sheets submitted, which is compared to the number of paychecks generated. compute a hash total on the field containing the employees' social security numbers. establish a program change procedure that includes prior authorizations and testing. compute a control total on the field containing the net amounts of the employees' paychecks.

a. b. c. d. e.

In order that new computer-based applications are designed in an acceptable manner, the systems development procedure should include: project controls over the development schedule. user involvement in the design process. all the phases in a systems development life cycle. the use of the most advanced design techniques. auditors on the development team.

8-69. a. b. c. d. e.

Which of the following does not provide the basis for sound computer operations?

Close supervision of operators Data processing schedules Console run logs Maintenance of control reports by computer operators Preventive diagnostic programs

8-70. a. b. c. d. e.

Which of the following is a control relating to the computer operations of a firm?

Edit programs Performance control reports Batch control logs Exception and summary reports Controlled distribution of output reports

8-71. a. b. c. d. e.

Which of the following is not a control-type report that can be usefully employed to control computer operations?

Computer facilities utilization report Employee productivity report Program change report Data processing schedule Computer processing run-time report

8-72. a. b.

Application controls may also be called general administrative

controls.

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c. d. e.

preventive accounting transaction

8-73. a. b. c. d. e.

Which of the following is a category of application controls in computer-based systems?

Output controls Hardware controls Documentation controls Software controls Organizational controls

8-74. a. b. c. d. e.

Which of the following is not a primary objective of application (transaction) controls?

To ensure that all transactions are properly authorized To ensure that all transactions are accurately recorded To ensure that all transactions are efficiently processed To ensure that all transactions are properly classified To ensure that the outputs from all transactions are accurately reported

8-75. a. b. c. d. e.

An important control procedure related to transactions consists of assuring that: all transactions are processed in accordance with management's general or specific authorizations. collusion among employees is always detected. all data processing employees are bonded. all management policies are sound, source documents are prepared beforehand for all transactions.

8-76. a. b. c. d. e.

An example of specific transaction authorization is the: establishment of requirements to be met in determining a customer's credit limits. setting of automatic re-order points for material or merchandise. approval of a budget for the accounting function. establishment of sales prices for products to be sold to any customer. approval of plans for hiring new engineering employees.

8-77. a. b. c. d. e.

An example of an internal accounting control is a set of procedures that are designed to provide reasonable assurance that: employees efficiently perform their assigned tasks. transactions are executed in accordance with management s general or specific authorizations, decisions leading to management s authorization of transactions are effective. collusive activities are prevented by segregation of employee duties. processing is performed with maximum efficiency.

8-78. a. b. c. d. e.

An example of a specific authorization is a(n): guideline pertaining to credit terms for customers. authorization for a cashier to sign checks. approval for a regional sales office to acquire a new computer system. approval for the warehouse to release goods upon receipt of picking copies. published list of prices for the various products that are for sale.

8-79. a. b.

Which of the following statements is not generally correct concerning authorizations?

They enforce management's policies respecting transactions.

They may be classified as general or specific.

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c. d. e.

They -enhance the concept of organizational independence.

They improve the efficiency of transaction processing.

They share characteristics of both administrative and accounting controls.

8-80. a. b. c. d. e.

Which of the following is not a transaction input control?

Users' procedure manuals Well-designed source documents Document registers Coded charts of accounts Edits of transaction data

8-81.

When the on-line processing approach is used, errors in transaction data should be detected at which of the following control points?

When the input data totals are first computed When outputs are delivered to users When the transactions are entered into the computer system When all data items have been processed by the computer system At some other point

a. b. c. d. e.

8-82. a. b. c. d. e.

Which of the following is not a means of minimizing transcribing errors when entering data into on-line computer systems?

Use of codes rather than names Use of badges that contain data Use of preformatted screens Use of key-to-tape encoders Use of menu screens

8-83. a. b. c. d. e.

An edit test or programmed check that verifies transaction data is an example of a(n): input control. processing control. hardware control. output control. data access control.

8-84. a. b. c. d. e.

An input control that is appropriate for on-line data entry systems is the use of: batch control totals. source documents. preformatted screens. translation logs. error logs.

8-85. a. b. c. d. e.

Which of the following is not a category of input controls?

Authorization controls Recording controls Conversion controls Programmed edit controls General controls

8-86. a. b.

The purpose of key verification is to: detect the erroneous recording of data on source documents. detect the errors introduced during the keying process.

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c. d. e.

detect errors caused by computer processing. replace programmed edit checks.

None of the above.

8-87.

Errors in transaction data should be detected as early as possible. In computer-based systems these errors are normally detected by means of: visual verification. programmed checks (edit tests). hardware checks. parity checks. reviews of outputs.

a. b. c. d. e.

8-88. a. b. c. d. e.

8-89. a. b. c. d. e.

8-90.

A soundly designed computer-based transaction processing system can replace the human ability of detecting errors in input data by means of which of the following?

Programmed checks Echo checks Read-after-write checks Parity checks Dual circuitry The use of a limit check with respect to just entered transaction data is an illustration of which type of control?

Preventive Detective Corrective Adjustive Retroactive

a. b. c. d. e.

Totals are often used in batch processing applications to prevent the loss of data. One type of total, based on the addition of identification numbers, is known as a(n): record count. amount total. identification total. hash total. processing total.

8-91. a. b. c. d. e.

Which of the following is not a control figure used as a control total in computer-based systems?

Amount total Validity total Hash total Record count All of the above are used as control totals

8-92. a. b.

Which of the following may be used as hash total?

Transaction codes Counts of transactions in batches

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c. d. e.

Hours worked by employees Amounts shown on sales invoices Header labels

**8-93. Many customers, managers, employees, and suppliers have blamed the computer for making errors. In reality, computers make very few mechanical errors. The most likely source of errors in a fully operational and tested computer-based system is: a. programming. b. operator actions. c. systems analysis. d. processing. e. data inputs.

8-94. a. b. c. d. e.

8-95. a. b.

Batches of transactions submitted to the data control unit for processing should be accompanied by batch transmittal sheets. Which of the following is not a necessary entry on these sheets?

Assigned batch number Number of documents in batch Control totals pertaining to batch Approval signature or initials All of the above should be included.

c. d. e.

Which of the following is not a step that should be performed by a data control unit?

Record batches of transactions in a batch input-output control log.

Verify that totals derived from computer operations agree with predetermined batch control totals.

Prepare batch transmittal sheets.

Distribute outputs from computer operations to user departments.

Maintain a listing of errors found when processing transactions.

8-96. a. b. c. d. e.

Which of the following is not a programmed check (edit test)?

Validity check Field check Limit check Relationship check Dual read check

8-97. a. b. c. d. e.

Which of the following is a programmed check (edit test)?

Encryption check Redundancy check Parity check Read-after-write check Dual-read-check

8-98.

A data entry clerk entered the quantity for 817 wigits as 8I7. The best control to detect this error is a(n): check digit.

a.

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b. c. d. e.

field check. sign check. amount total. validity check.

8-99.

Which of the following programmed checks is appropriately applied during a batch processing run?

Validity check Sequence check Echo check Completeness check Field check

a. b. c. d. e.

8-100. Which of the following controls would ensure that the proper master record is updated by transaction data? a.

Reasonableness check b.

Field check c.

Relationship check d.

Sequence check e.

Matching check 8-101. Check digits enable which of the following errors to be detected? a.

Transactions that are processed in an incorrect sequence b.

Checks that are prepared for non-existent suppliers c.

Transaction data that are lost between processing steps d.

Employee members that are recorded incorrectly because digits are transposed e.

Transaction codes that are valid but incorrectly selected **8-102. Which of the following controls is not applicable to computer-based systems? a.

Cross footing b.

Check digits c.

Limit checks d.

Labels written on magnetic media by the computer e.

All of the above controls are applicable 8-103. Before processing a batch of suppliers' invoices, an accounts payable clerk sums the suppliers' account numbers that have been entered on the invoices. The sum obtained is best described as a(n): a. amount total. b. payable total. c. hash total. d. document total. e. record count.

8-104. In the case of a computer-based payroll application, the control total that can best be described as a hash total would be which of the following? a.

Net pay

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b. c. d. e.

Hours worked Gross pay Total debits and credits Employee numbers

8-105. In a computer-based purchases application, the inventory item descriptions are echoed back on the computer terminal screen when the inventory items numbers to be ordered are entered by the buyer. The most important reason for this procedure is to enable the buyer to: a. establish the validity of the inventory item numbers. b. visually verify that the desired inventory item numbers were entered. c. verify the desirability of the inventory items to be purchased. d. determine the supplier from whom to purchase. e. complete the purchase order more quickly.

8-106. A buyer in the purchasing department attempts to initiate a purchase transaction affecting the supplier master file, using his user's code to access the on-line computer system. The type of control that determines whether he is allowed access to the supplier master file is known as a: a. completeness test. b. validity check. c. password verification. d. limit check. e. logical check.

8-107. Which of the following is not a transaction processing control? a.

Preparation of batch total of hours worked on time cards b.

Verification of extensions of sales amounts performed by a clerk c.

Reviewing monthly statements received (by customers) d.

Vouching of suppliers' invoices e.

Preparation of bank reconciliations 8-108. A key output of every batch processing run should be a(n): a. updated master file b. exception and summary report. c. managerial report. d. journal listing. e. updated transaction file.

8-109. An important means of maintaining the audit trail in an on-line computer system is: a. the use of frequent audits. b. frequent dumping of master files. c. a transaction log (listing). d. a record count. e. an access log.

8-110. Which of the following controls does not aid in preventing the loss of data? a.

Prenumbered source documents b.

Document registers

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c. d. e.

Precomputed batch control totals General ledger account codes Bank reconciliations

8-111. In on-line systems which of the following items would least likely be a part of the audit trail? a.

Input terminal number b.

Transaction reference number c.

Printed transaction listing (log) d.

Proof account activity listing e.

Input-output control log 8-112. In a batch processing application, which of the following controls is employed to verify that the amount fields in a master file are accurately and completely updated by a batch of transactions? a.

Check digit b.

Transaction log c.

File change report d.

Run-to-run total e.

Sequence check 8-113. Which of the following is not a purpose for maintaining an audit trail during a computer-based transaction processing application? a.

To be able to trace individual transactions b.

To provide support to changes in general ledger account balances c.

To be able to perform analyses of processing activity d.

To aid in preparing financial reports e.

To aid in correcting transaction errors +8-114. In a computer-based batch processing system, the audit trail should include: a. hash totals. b. amount totals. c. batch numbers. d. check digits. e. echo checks. +8-115. The last few records on a payroll master file were omitted during an update run because the batch processing program failed to read to the end-of-file marker. A control that would most quickly detect the incomplete processing is a: a. transaction sequence check. b. reconciliation with the record count in the trailer label. c. comparison with the proof account activity listing. d. verification of the transaction log. e. comparison with a listing of the master file.

8-116. Reviews of proof account activity listings and exception and summary reports can be classified as: a. input controls. b. processing controls. c. output controls.

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d. e.

general controls. access controls.

8-117. Which of the following is an output transaction control? a.

Parity check b.

Distribution log (register) c.

Access log d.

Program change procedure e.

Organizational independence 8-118. Who of the following is not involved in reviews of processed outputs from the typical firm that performs computerized processing? a.

Creditors b.

Data control unit c.

User departments d.

Customers e.

All of the above can review outputs.

8-119. Which of the following controls cannot be used with batch input-batch processing systems? a.

Batch control totals b.

Tape file protection ring c.

Grandfather-father-son backup procedure d.

Echo check e.

Key-to-tape verification 8-120. Which of the following is not a technique for reducing errors when on-line data entry is employed? a.

Key verification of entered data b.

Programmed edit checks c.

Preformatted screens d.

Dialogue prompts e.

All of the above are used in on-line data entry.

8-121. Which of the following controls is distinctive to batch processing systems? a.

Input programmed checks b.

Passwords c.

Transaction logging d.

Sequence checks e.

Access logs 8-122. Which of the following controls is useful to on-line processing systems but not applicable in batch processing systems? a.

Lockout procedure b.

Input programmed checks c.

Transaction listing d.

Batch totals e.

Header label check 8-123. Which of the following controls is distinctive to data base systems? a.

Programmed checks b.

Identification codes c.

On-line data dictionary

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d.

Transaction logging e.

Preformatted screens +8-124. An inventory update program rejects transactions that do not have an inventory identification number that matches a record in the inventory master file. As a result, the updated inventory quantities are consistently in error. The best control procedure to remedy this situation is to use a: a. data file security program. b. suspense file and error correction procedure. c. reasonableness check on quantities. d. data currency check. e. matching check on inventory identification numbers.

8-125. In the case of batch processing applications, transactions containing errors must be suspended, corrected, and resubmitted for processing. What control mechanism ensures that the transactions are being corrected and resubmitted without undue delay? a.

Batch control totals prepared by users b.

A printed error listing or log maintained by the data control unit c.

A computer console log maintained by the computer system d.

Edit checks applied by users e.

Key verification by data entry clerks **8-126. Smith Manufacturing Co. has a batch processing order entry and invoicing system. All master files are maintained on disks. All incoming orders are initially coded onto magnetic tape, and a program then performs routine checks to detect missing records or missing data in the fields of each record. Inventory and customer numbers are validated later in the processing stream as the inventory and customer master files are updated. After the orders are completely validated and the master files are updated, invoices are printed. If invalid inventory part numbers are detected as the inventory master file is being updated, which one of the following action sequences would be most appropriate? a.

Immediately correct the part numbers manually and re-enter them back into the same batch so that invoicing will not be delayed. b.

Have the computer programs code the items having errors so they will be suspended from further processing as the customer file is updated and as invoices are printed for the valid items. After the corrected part numbers are entered, they should be sent through the edit programs as if they were new orders. c.

Suspend the printing of invoices having invalid part numbers. The invoices will be prepared manually after all items are correctly identified. d.

Suspend printing invoices for the entire batch. After part numbers are corrected, the entire batch should be sent through the edit program. e.

Print both valid and invalid part numbers on invoices; however, instead of pricing out the invalid items, a note that the part number is incorrect should be printed on the invoices informing the customer to reorder those items.

**8-127. 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

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d. e.

Verifying record count totals Checking the console listing for improper operator procedures

8-128. The actual correction of data input errors should be the responsibility of the: a. data control group. b. internal auditors. c. computer operators. d. originating (user) department. e. programmers.

8-129. The following diagram illustrates which of the procedures listed below:

Transaction entry

Edit program Suspense file

Error log Valid transactions

a. b. c. d. e.

Key-to-disk data entry procedure of batched transactions Error detection procedure for batched transactions entered on line Data file backup procedure for on-line systems Transaction logging procedure Batch entry and processing procedure

8-130. Which of the following procedures represents a severe control weakness in batch processing applications? a.

Dumping the contents of the master files from disk to tape b.

Preparation of documentation by programmers c.

Approval of program changes by data processing managers d.

Correction of data errors by computer operators e.

Preparation of transaction documents by operating department (e.g., shipping department) clerks

8-131. During the error correction procedure involving batch processing applications, the error listing should be maintained and followed up by the: a. computer operator. b. systems analyst. c. data control unit.

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d. e.

data processing manager. user department.

8-132. In on-line processing systems most transactions containing errors must be: a. placed in a suspense file and omitted from processing. b. corrected by the entering clerk before additional transaction data will be accepted. c. accepted by the system and corrected later. d. flagged by the system and entered for processing. e. treated in the same manner as in batch processing systems. **8-133. Data processed by a computer system are transferred to some form of output medium for storage.

However, the presence of computerized output does not, in and of itself, assure the output’s accuracy, completeness, or authenticity. For this assurance, various controls are needed. The major types of control for this area include: a. transaction controls, general controls, and printout controls b. activity listings, echo checks, and pre-numbered forms c. tape and disk output controls, and printed output controls d. input controls, tape and disk output controls, and printed output controls e. hash totals, tape and disk output controls, and printed output controls **8-134. The most critical aspect of the separation of duties within a mainframe information systems environment is between: a.

Programmers and project leaders. b.

Programmers and system analysts. c.

Programmers and users. d.

Programmers and computer operators. e.

Systems analysts and users. +8-135. Which of the following procedures would enhance the control structure of a computer operations department?

I. Periodic rotation of operators.

II. Mandatory vacations.

III. Controlled access to the facility.

IV. Segregation of personnel who are responsible for controlling input and output. a. b. c. d. +8-136. a. b. c. d. +8.137. a. b. c. d.

I, II. I, II, III. III, IV. I, II, III, IV. Which of the following controls would assist in detecting an error when the data input clerk records a sales invoice as $12.99 when the actual amount is $122.99?

Batch control totals Echo check Limit check Sign check Which one of the following input controls or edit checks would catch certain types of errors within the payment amount field of a transaction?

Record count.

Echo check.

Check digit.

Limit check.

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+8-138. When assessing application controls, which one of the following input controls or edit checks is most likely to be used to detect a data input error in the customer account number field?

Limit check.

Validity check.

Control total.

Hash total.

Minimizing the likelihood of unauthorized editing of production programs, job control language, and operating system software can be accomplished by: a. database access reviews. b. compliance reviews. c. change control procedures. d. network security audits. +8-140. It is important to maintain proper segregation of duties in a computer environment. Which of the following access setups is appropriate? a. b. c. d. +8-139.

Update access for production data Users have?

a. b. c. c.

Yes Yes No No

Application programmers have?

No No Yes Yes

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Update access for production programs Users have?

Application programmers have?

No No No Yes Yes No Yes Yes

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CHAPTER 9 9-1. a. b. c. d. e.

9-2. a. b. c. d. e.

9-3.

Which of the following is not a purpose of the security measures employed as part of the internal control structure of a firm?

To protect physical assets from unauthorized access To protect information system equipment and other resources from breakdowns and interruptions To protect stored data from loss or improper alteration To protect physical assets from disasters To protect asset values from bad managerial decisions To which of the following do security measures maintained by a firm's information system least pertain?

Physical assets of the firm Computer hardware facilities Data handled by the information system Employees operating the information system Information generated by the information system

a. b. c. d. e.

Which of the following security measures are not intended to protect physical assets or their values?

Burglar alarms Fidelity bonds Security guards Backup facilities Safes

9-4. a. b. c. d. e.

Which of the following is not a security measure?

Preventive maintenance of assets Passwords Programmed checks Sprinkler systems Disaster plans

9-5. a. b. c. d. e.

A security measure that is corrective in nature is: a password. closed-circuit television a data recovery and reconstruction procedure. an automatic lockout. a lockbox,

9-6. a. b. c. d. e.

A preventive security measure by which to protect data files and equipment from loss by fire is: back up of both files and equipment. security guards. a halon gas-based automatic extinguisher system. an auxiliary power supply. adequate insurance coverage.

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9-7. a. b. c. d. e.

Which of the following is not a typical purpose of providing security for physical noncomputer resources?

To provide protection from theft of the assets by individuals To protect the assets from natural disasters such as fires To protect the assets from viewing by nonernployees To protect the assets from breakdowns To protect the assets from access by unauthorized individuals

a. b. c. d. e.

Which of the following is not a security measure that is intended to protect a firm’s physical assets from theft?

Security guards Fenced areas Locked cash registers Insurance coverage Close supervision of employees

9-9. a. b. c. d. e.

The most practical security measure with respect to the breakdowns of physical assets is: Insurance coverage Security guards Preventive maintenance Duplicate physical assets Strictly limited work hours

9-10. a. b. c. d. e.

Which of the following is not a means of restricting access to computer facilities?

Security guards Fireproof vaults Closed-circuit television monitors Employee badges Inconspicuous location

9-11. a. b. c. d. e.

A preventive control that provides protection from computer hardware breakdowns is: scheduled maintenance. a sprinkler system. backup of data files. processing schedules. restricted access to computer centers.

9-12.

The most reasonable and comprehensive approach that may be taken to prepare for and protect against extensive damage or destruction to computer facilities is to: have back-up computer facilities at the same site. have back-up computer facilities at a separate site. have a disaster contingency and recovery plan. install an array of features such as humidity controls. employ the grandfather-father-son procedure with respect to all files.

9-8.

a. b. c. d. e.

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**9-13. A fire has recently destroyed the computer facilities of Davco, Inc. The fire had started at night in a different building and spread to Davco's building. The best control would be a: a. fire alarm system. b. halon gas extinguisher system c. night watchman. d. fire insurance policy. e. sprinkler system. +9-14. Which of the following disaster recovery measures is likely to be most effective in aiding the resumption of operations after the destruction of a firm's computer facilities? a.

Storing the disaster contingency and recovery plan in the computer facility b.

Maintaining comparable backup physical facilities on a standby basis c.

Keeping backup master and transaction files in the computer facility d.

Keeping a version of the operating system available e.

Storing current versions of programs and program documentation in an off-premises location +9-15. In an overall security evaluation of a computer facility, which of the following should receive the closest attention? a.

Organization of the information systems function b.

Size of the computer facility c.

Number of information systems employees d.

Insurance coverage e.

All of the above should receive equal attention.

9-16. a. b. c. d. e. +9-17. a. b. c. d. e.

9-18. a. b. c. d. e.

9-19.

Which of the following is not a desirable feature of a disaster contingency and recovery plan for a computer-based information system?

Internal control checklist Potential threats to the computer system Needed preventive security measures Steps to follow when a specific type of disaster strikes List of resources to be protected Physical security over a computer terminal includes which of the following controls?

Access restricted access to the terminal area via locked doors Log-on identification required prior to use Password required prior to use Access denied after three unsuccessful log-on attempts Callback procedure employed Which of the following is the least effective means of restricting access to the use of computer terminals by unauthorized employees?

Locking terminals after working hours Locking terminals, via automatic lockup software, after three unsuccessful log-on attempts Having a security guard patrol the entire office area Placing terminals in locked rooms Employing passwords that are changed frequently

A means of thwarting hackers and other outside parties, who have somehow discovered the password, from gaining access to a firm' s data base is to employ a(n):

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a. b. c. d. e.

access log. transaction log. another password. callback procedure. terminal lock.

9-20.

An important purpose of security is to restrict unauthorized access to data stored in online files.

Which of the following is not a means of restricting access?

Passwords Preformatted screens Limitations on terminal usage Callback procedures Limitation on number of allowed access attempts

a. b. c. d. e.

9-21. a. b. c. d. e.

A group of teenagers with microcomputers and modems obtain data from a credit card bureau's computer. The best control would be to employ: a callback procedure. usage limitations. an access log. passwords. an echo check.

9-22. a. b. c. d. e.

A means of preventing unauthorized access to on-line files via terminals is through the use of: batch totals. check points. passwords. locked computer room doors. hardware controls.

**9-23. Arcade Manufacturing Co. has production and research and development sites located throughout the country. It transfers data via phone lines. Recently, it has discovered that a competitor has received a patent on a product it had just developed. Arcade has found out that the competitor had used a computer to eavesdrop on the data that they sent out via the phone lines. The best measure Arcade could have used to prevent this would have been to: a. employ a dial back technique. b. disconnect the phone after three unsuccessful log-in attempts. c. employ encryption. d. employ passwords. e. use some other control.

9-24. a. b. c. d. e.

What is the most practicable security measure to protect data from an unscrupulous competitor who taps the phone lines over which data are being transmitted?

Password Encryption Restricted access Backup data files Send the data through the mail

9-25. a.

Control over access to data in an on-line computer system is commonly applied by means of: batch control totals.

139

b. c. d. e.

user codes or passwords. header label checks. file protection rings. data librarians.

9-26.

Which of the following is not a means of restricting access to data stored in on-line computer systems?

Boundary protection within on-fine storage Identification of authorized users Encryption Internal file labels Terminal usage limitations Bank tellers and their supervisors sign-on to an on-line deposit system with their employee numbers, which are readily available to all tellers. The bank management desires to prevent tellers from performing certain approval functions, such as withdrawals over a specified dollar amount. The best control to implement this type of restriction is a(n): callback procedure. password that contains specified limitations. access log. console log. automatic lockup The increased presence of microcomputers in firms has resulted in an increasing number of persons having access to the data and programs that they contain. A control normally used to prevent unauthorized access in such situations is: backup copies of all diskettes. passwords for all authorized users. disaster recovery procedures. access logs. internal file labels.

Dial-up order entry systems are used by some firms to transmit customer orders. Salespersons are assigned portable computers by means of which they enter the orders from customers' locations.

Unfortunately, unauthorized persons who use their own computers have been able to enter fraudulent transactions into the order entry systems. A control that should be most successful in preventing unauthorized persons from making such entries is: a callback procedure. an error-correcting code. an access or user code for validation. modem equalization procedure. a parity check.

a. b. c. d. e. +9-27.

a. b. c. d. e. +9-28.

a. b. c. d. e. +9-29.

a. b. c. d. e.

+9-30.

a.

The members of a personnel department share one computer terminal. To maintain computerized employee records, the firm's employees has been divided alphabetically among the five members of the department. All of the data concerning employees are stored in the employee file.

Passwords that enable the members to gain entry to the computer system should provide access at what level?

Entire data base, to both read and write

140

b. c. d. e.

Employee file, to both read and write Employee file, to read only Employee file, to write only Data elements within employee records, to both read and write.

9-31.

A detective control that might deter computer operators from making fraudulent changes to a payroll file is a(n): review of the console log for unauthorized actions. review of payroll and distribution controls. audit trail review of payroll journal listings. review of batch control totals. review of the system design.

a. b. c. d. e.

9-32. a. b. c. d. e.

The security measure that prevents two programs from accessing the same data set in a data base concurrently is called: lockout. restricted access. preventive access. multiprogramming. virtual storage.

9-33. a. b. c. d. e.

Which of the following should be reviewed to detect computer-operator errors?

Console log Header log Data processing schedule Hardware monitor Data-library log

9-34. a. b. c. d. e.

Which of the following is not a commonly used log in an information system?

Console log Data library log System and program change log Transaction log Program run log

9-35. a. b. c. d. e.

Which of the following is not a useful log in a computer-based information system?

Transaction log Reference log Access log Console log Data library log

9-36.

Which of the following is not a means of preventing the loss or alteration of data in an online computer system?

Programmed edit checks Read-only memory Tape file protection rings File labels Lockouts

a. b. c. d. e.

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+9-37. a. b. c. d. e.

9-38.

a. b. c. d. e.

9-39.

A computer room supervisor responsible for the productivity of the computer facilities needed to know if a particular job had been run as scheduled. To find out, he examined the: console log. data control log. console run book. access log. transaction log.

An accounting employee, who had access to her firm's computer system via a terminal, was restricted from viewing the employee payroll file by the password that she had been assigned.

However, she obtained a password from a friend in the payroll department that allowed her to see her payroll record. What control would detect this improper viewing?

Callback procedure Automatic lockup feature Boundary protection Access log Library log

a. b. c. d. e.

Which of the following security measures prevents the inadvertent erase of stored data on magnetic tape during a batch processing computer run?

File protection ring Lockout feature Data library log Automatic lockup feature Callback procedure

9-40. a. b. c. d. e.

Internal file header labels aid computer security since they tend to prevent errors by: computer operators. data preparation clerks. systems analysts. accountants. data control clerks.

9-41.

A reel of magnetic tape was accidentally placed among the scratch tapes for use in processing.

The best aid when searching for the mislocated tape is a(n): internal file header label. internal file trailer label. external label. tape file protection ring. data access log.

a. b. c. d. e.

9-42. a. b. c. d. e.

Which of the following does not control the accuracy and completeness of data entered into an on-line computer system?

Edit check Preformatted screen Internal file header label Batch control total Error message

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9-43. a. b. c. d. e.

Which of the following items is normally found in internal file trailer labels?

File name Control total Creation data Application code Disposal data

**9-44. Generally, the most cost-effective audit trail of the detailed transactions that make up an account balance would consist of: a. a hard copy source document of every transaction that has occurred. b. on-line storage of all transactions for their immediate access. c. logging of all transactions and holding them available for later examination by various methods. d. a chronological listing of all transactions. e. a before and after image of the master record. **9-45. An effective means of providing an audit trail for an on-line computer system is to implement a: a. transaction log generated by the computer that records each transaction as it is entered into the system. b. record of batch totals calculated by the computer for each group of transactions entering the system. c. count of records entered into the computer system. d. test of completeness to ensure that all data fields have been entered for each transaction. e. series of programmed checks, such as a limit check, in the computer software to detect the loss of data in processing.

9-46. a. b. c. d. e.

Which of the following is a means of providing data backups in computer-based systems?

Grandparent-parent-child approach Periodic dump procedure Before and after image procedure a and b a, b, and c

9-47.

a. b. c. d. e.

An employee payroll file, contained on a removable magnetic disk, was destroyed by a small fire in the computer center. Paydays were consequently delayed. A control procedure that would have enabled this embarrassment to be avoided would be to: carry fire insurance. carry fidelity bonds. store the data on magnetic tape. store a copy of the disk in a remote location. prevent employees from entering the computer center.

9-48. a. b. c. d. e.

The grandparent-parent-child procedure pertains generally to: on-line systems. manual systems. magnetic tape systems. magnetic drum systems. magnetic disk systems.

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9-49. a. b. c. d. e.

9-50.

In computer systems that employ on-line disk files, the usual grandparent-parent-child concept does not apply. Which of the following is the nearest substitute?

Adequate documentation Periodic dump onto magnetic tape A backup computer system Data security techniques (e.g., cryptography) Programmed checks

e.

When magnetic disk files are used the grandparent-parent-child backup approach is difficult to employ because the: location of addresses on disks is extremely time consuming. magnetic disks cannot easily be stored off-site. data must be converted to hard copy for reviewing before updating. process of updating disk files usually involves the overlay approach and hence is destructive of data. additional disks are too bulky to store.

9-51. a. b. c. d. e.

Which of the following is not a usual type of backup technique?

Dumping of the data base Grandparent-parent-child approach Maintaining an activity log Maintaining a transaction log All are usual types of backup techniques

9-52. a. b.

Backup procedures of master files can best be described as follows: The grandparent-parent-child procedure is suitable for magnetic tape or disk files.

Data from master files are periodically dumped onto another storage medium in the case of magnetic tape or disk files.

Master files on magnetic tape are periodically dumped, whereas those files on magnetic disk are not.

The prior master files on magnetic tape are retained as backup magnetic disks.

Backup procedures are employed only in special situations.

a. b. c. d.

c. d. e.

**9-53. In an on-line processing system which of the following backup procedures would most likely be used? 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 grandparent-parent-child procedure would be employed with respect to the disk files. d.

All source documents for transactions would be stored next to the computer room. e.

The disk files would be copied onto magnetic tape when time allows. +9-54. a. b. c. d. e.

The computer system requiring the most extensive backup and recovery procedure is a: batch processing system for payroll. file-oriented processing system for billing customers. system for on-line order entry and processing. data base system that supports a variety of production applications. batch processing general ledger system.

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+9-55.

a. b. c. d. e.

A firm updates its accounts receivable master file weekly and retains the master files and corresponding update transactions for the most recent two-week period. The purpose of this practice is to: verify run-to-run totals for receivables. match internal file labels. permit reconstruction of the master file if necessary. validate all groups of update transactions. maintain a history file.

A firm was running the payroll program when a temporary power outage occurred. When power resumed, it was discovered that the computer had terminated the payroll program! s processing.

Which of the following would best ensure the efficient resumption of operations?

A backup procedure that copies the master files and associated transaction files.

A series of checkpoints that enable the program to restart at an intermediate stage of processing.

A review of the console log.

A formal procedure that automatically transfers the processing to another location.

A grandfather-father-son backup procedure.

An on-line teller application goes down while transactions are in progress. The best control to ensure that each in-progress transaction is completed fully when the system resumes operation is: the manual reconstruction of in-progress transactions by tellers. the reconciliation by the computer system of accepted-item totals. an automatic restart that prompts tellers to complete in-progress transactions. the manual reconciliation of accepted-item totals. the comparison of all transactions processed for the day with the transaction documents.

9-58. a. b. c. d. e.

If part or all of a data base is lost, its recovery involves a: rollback procedure. rollforward procedure. rollover procedure. looping procedure. deletion procedure

a. b. c. d. e. +9-56.

a. b. c. d. e. +9-57.

**9-59. Medical Service, Inc. provides computerized billing services for medical clinics and doctors throughout the Midwest. Records of unpaid charges, cash receipts, and credit memos for each patient account are stored in disk files for monthly preparation of customer bills. A cycle billing system is used, with about 1,000 bills prepared daily. Occasionally, during the printing of bills, a failure within the computer system causes the printing to be halted. When printing is resumed, the preferable procedure is to: a. start over with the first bill in the current cycle, and compute new control totals. b. resume at the point where the halt took place, and the totals for the bills printed after the halt should be added to the control totals accumulated before the halt.

145

c.

d.

e.

resume at the point where the halt took place. Control totals should be recomputed for those bills printed before the halt. Control totals for the bills printed after the halt should then be added to this recomputed total. restart printing at a point immediately preceding the last bill that was printed before the halt. The control totals for the bills prepared after the restart will be added to the control totals accumulated before the halt, and manual adjustments will be made to the control totals because of duplicate printings. resume at the point where the halt took place. Control totals may be ignored if the transaction inputs to the system have been fully checked for accuracy and completeness.

9-60. Checkpoints are employed in a(n): a. programmed check of input data. b. hardware control. c. recovery procedure. d. documentation procedure. e. authorization procedure. +9-61. Rollback and recovery procedures, together with checkpoints, a. are limited to those systems having data bases. b. require the use of magnetic tape storage. c. can be employed only if the virtual storage feature is present d. shorten the time required to recover from a loss of data. e. eliminate the need for off-site data storage. **9-62. Online access controls are critical for the successful operation of today’s computer systems. To assist in maintaining control over such access, many systems use tests that are maintained through an internal access control matrix which consists of: a. authorized user code numbers, passwords, lists of all files and programs, and a record of the type of access each user is entitled to have to each file and program b. authorized user code numbers and passwords c. a list of controls in the online system and a list of those individuals authorized to change and adjust these controls along with a complete list of files in the system d. a completeness test, closed loop verification, and a compatibility test e. a complete listing of system tests and the applicable programs +9-63. Good planning will help an organization restore computer operations after a processing outage.

Good recovery planning should ensure that: a.

Backup-restart procedures have been built into job streams and programs. b.

Change control procedures cannot be bypassed by operating personnel. c.

Planned changes in equipment capacities are compatible with projected workloads. d.

Service level agreements with owners of applications are documented. +9-64. a. b. c. d. +9-65. a. b.

The duties properly assigned to an information security officer could include all of the following except: Developing an information security policy for the organization.

Maintaining and updating the list of user passwords.

Commenting on security controls in new applications.

Monitoring and investigating unsuccessful access attempts.

Which of the following risks is not greater in an electronic fund transfer environment than in a manual system using paper transactions?

Unauthorized access and activity.

Duplicate transaction processing.

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c. d. +9-66. a. b. c. d. +9-67.

a. b. c. d. +9-68. a. b. c. d. +9-69.

a. b. c. d.

Higher cost per transaction.

Inadequate back-up and recovery capabilities.

Securing client/server system is a complex task because of all of the following factors except: The use of relational databases.

The number of access points.

Concurrent operation of multiple user sessions.

Widespread data access and update capabilities.

Client/server architecture may potentially involve a variety of hardware, systems software, and application software from many vendors. The best way to protect a client/server system from unauthorized access is through: A combination of application and general access control techniques.

Use of a commercially available authentication system.

Encryption of all network traffic.

Thorough testing and evaluation of remote procedure calls.

Methods to minimize the installation of unlicensed microcomputer software include all of the following except: Employee awareness programs.

Regular audits of unlicensed software.

Regular monitoring of network access and start up scripts.

An organizational policy that includes software licensing requirements.

In traditional information systems, computer operators are generally responsible for backing up software and data files on a regular basis. In distributed or cooperative systems, ensuring that adequate backups are taken is the responsibility of: user management. systems programmers. data entry clerks. tape librarians.

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9-1.

9-2.

9-3.

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E D D C C C C D C B A C B B D A A C D B A C C B B D B B C B A A A E B A A D A A

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C C B C A E D C B D A D A D C B C B D C D A A B C A A C A

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CHAPTER 10 10-1. a. b. c. d. e.

An information systems auditor should have thorough knowledge of: computer hardware and software. data bases. computer-oriented controls. audit techniques.

All of the above.

10-2. a. b. c. d. e.

Which of the following is not a type of audit in common usage relative to business organizations?

Management audit Operational audit Financial audit Compliance audit External audit

10-3. a. b. c. d. e.

In an internal control audit, the auditor's primary concern is to determine: the possibility of fraud occurring. compliance with policies, plans, and procedures. the adequacy of the internal control structure. the type of an opinion he or she will express. the cost of additional controls that are needed.

10-4. a. b. c. d. e.

The primary purpose of an operational audit is usually to: resolve conflicts between management and employees. express an opinion on the fairness of financial statements. assess compliance with laws. assess adequacy of internal controls. assess efficiency and effectiveness in using resources.

**10-5. a. b. c. d. e.

10-6. a. b. c. d. e.

The primary objective of internal auditing is to: locate errors and irregularities. attest to the fairness of financial statements. assist management in the effective discharge of its responsibilities. provide audit assistance and guidance to the external accountant. ascertain the operational efficiency of the organization.

The most important knowledge that an auditor should possess concerning the information system of the firm being audited is the: operating system for the computer. basic procedures of the information system. programs used for processing data. models used by the system in decision making. capabilities of the computer hardware.

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10-7. a. b. c. d. e.

Which of the following is not an auditing standard of professional conduct?

Exhibiting due care Adequate training and proficiency Management-oriented attitude Evaluation of internal control Adequate planning of audit work

10-8. a. b. c. d. e.

One audit standard pertaining to financial audits specifies that an auditor: review all records. charge fair fees. evaluate the existing internal control structure. observe all operations. perform all of the above.

10-9.

Which of the following is not a purpose of auditing codes of ethics, i.e., standards of professional conduct?

They provide members of the auditing profession with guides to conduct that justifies the confidence of the public.

They serve as impersonal standards that can be used to support audit decisions.

They narrow the areas in which an auditor must struggle with doubts.

They emphasize the primary responsibility to clients and colleagues.

They contribute to effective audits.

a. b. c. d. e.

10-10. A firm which previously used time sheets in a manual payroll processing system has changed to an on-line processing system in which all records are automatically updated upon entry of time data into terminals. The impact on the audit due to this change is that: a.

Payroll fraud is lessened, and thus the audit program can be reduced. b.

The audit trail is invisible and may be partially obscured, and thus more printouts are needed. c.

The batch totals become more important. d.

The auditor cannot express an opinion concerning the adequacy of controls over payroll. e.

The audit must be expanded greatly and the distribution of all paychecks should be observed.

10-11. Which of the following does not represent an impact upon auditing caused by the conversion to computerized systems? a.

Greater degree of automated processing b.

Concentration of processing within computer facilities c.

Loss of visible audit trail (i.e., increased use of machine-readable files) d.

Changed audit standards of professional conduct e.

Replacement of human screening of transactions by programmed checks 10-12. Which of the following is not an impact on auditing procedures due to the presence of an on-line processing system (rather than a batch processing system)? a.

Overlaying new data onto presently existing data in files b.

Omission of source documents for certain transactions c.

Storage of data in an invisible form on magnetic media d.

Transmitting data from remote on-line terminals to mainframe computers e.

Accessing stored data via on-line terminals

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**10-13. The internal auditors of the Zebra Company have expressed concern that the new computerized purchase order system does not permit them to trace through the system from the source document to the final report. The item about which the auditors have expressed concern is the non-existence of: a. test data. b. operations manuals. c. system flowcharts. d. internal file labels. e. audit trails.

10-14. The following represent steps in the process related to financial audits: I. Develop the audit program.

II. Review the internal control structure.

III. Initiate audit planning.

IV. Assess the control risk.

V. Perform tests of controls.

VI. Perform substantive tests.

VII. Evaluate findings from tests of controls.

Which is the proper sequence of these steps? a.

I, II, IV, III, VII, V, VI b.

III, IV, V, II, VII, I, VI c.

III, II, IV, V, VII, I, VI d.

I, II, IV, V, VII, III, VI e.

II, III, IV, V, VII, I, VI 10-15. Which of the following is not an aspect of knowledge to be gained by reviewing the internal control structure? a.

Management' s philosophy and operating style b.

The organizational structure c.

Personnel policies and practices d.

Financial status e.

Accounting information system 10-16. Which of the following activities must be performed as a part of a financial audit? a.

Preparing a management letter b.

Evaluating the productivity of employees c.

Reviewing management s policies d.

Assessing compliance with laws and regulations e.

Evaluating the existing internal control structure 10-17. A primary reason for an external auditor to study and evaluate internal accounting control in connection with financial audits is to: a. express an opinion. b. detect employee fraud. c. recommend improvements to management d. determine the extent, nature, and timing of substantive tests to perform. e. establish which audit techniques to employ.

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10-18. Which of the following is not performed by the auditor during the review of controls? a.

Establishing the substantive tests to be performed b.

Developing an understanding of transaction flows and controls c.

Identifying the basic structure of accounting controls d.

Determining the extent of computer-based controls e.

All of the above are performed.

10-19. Which of the following techniques would not likely be applied during the review of the internal control structure? a.

Observing activities b.

Preparing an internal control questionnaire c.

Preparing system flowcharts d.

Preparing risk analysis matrices e.

Inspecting documents and records 10-20. During which step of an audit process is the preparation of flowcharts most appropriate? a.

Review of the internal control structure b.

Tests of controls c.

Evaluation of the internal control structure d.

Substantive testing e.

None of the above.

10-21. The primary purpose of a well-designed internal control questionnaire is to: a. provide sufficient information for a sound evaluation of a firm's internal control structure. b.

Provide opinions from a variety of users concerning the adequacy of a firm's internal control structure. c. identify strengths and weaknesses in a firm’s internal control structure, especially related to its operating effectiveness. d. question the need for an internal control structure. e.

None of the above. **10-22. The procedures least likely to be performed by an external auditor during the study and evaluation of internal accounting control is: a. performance of substantive testing. b. performance of tests of controls. c. preparation of flowcharts. d. completion of internal control questionnaires. e. consideration of controls that are needed to prevent errors.

10-23. Which of the following techniques would least likely be used in reviewing and documenting the internal control structure? a.

System flowchart b.

Internal control questionnaire c.

Control-type flowchart d.

Tests of controls e.

Inspection of records and manuals

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10-24. An auditor observes the activities of clerks and computer operations during the review of the internal control structure mainly for the purpose of: a. revising the procedures manuals and computer programs. b. gaining an understanding of the internal control structure. c. ascertaining the extent of compliance with control standards. d. preparing a letter of recommendation to management. e. preparing flowcharts and questionnaires.

10-25. What is the main reason for using flowcharts during an audit? a.

To document the procedures underlying the internal control structure b.

To reflect the operational efficiency of the procedures c.

To classify the various types of transactions performed by the information system d.

To eliminate the need for internal control questionnaires e.

To itemize the array of controls employed within the information system 10-26. Which type of flowchart is particularly useful during the review and documentation of the internal control structure by an auditor? a.

System flowchart b.

Program flowchart c.

Process flowchart d.

Control-type flowchart e.

Micro-program flowchart 10-27. The appropriate sequence of steps in gathering evidence as the basis of the auditor's opinion is: a. substantive tests, internal control review, and tests of controls. b. internal control review, substantive tests, and tests of controls. c. internal control review, tests of controls, and substantive tests. d. tests of control, internal control review, and substantive tests. e. tests of control, substantive tests, and internal control review.

10-28. The risk that the currently installed internal controls will not prevent (or detect) significant errors from appearing in the outputs of the information system is known as: a. control risk. b. error risk. c. audit risk. d. detection risk. e. output risk.

10-29. The essential purpose for assessing the control risk is to assist the auditor in evaluating the extent of the risk that: a. the tests of controls will not reveal operating deficiencies. b. misstatements of a material nature may exist in the financial statements due to weaknesses in the internal control structure. c. the substantive tests will provide an adequate basis for an opinion. d. organizational independence is inadequate. e. the financial controls may be circumvented by the management of the firm being audited.

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10-30. Which of the following is not a reason for deciding against performing test of controls? a.

The control risk is extremely high and the internal control structure cannot be relied upon. b.

The controls appear to be reasonably adequate. c.

Controls related to computer-based processing are absent. d.

The costs of such testing would exceed the savings in substantive tests. e.

No purpose would be served, since planned substantive tests must be performed extensively.

10-31. The two phases of the auditor's study of internal accounting control are referred to as “review of the system” and “tests of control.” In testing controls, the auditor attempts to: a. obtain sufficient, competent evidential matter to afford a reasonable basis for an opinion. b. obtain assurances that disclosures in the financial statements are sufficient. c. determine how well the installed controls actually function. d. obtain knowledge and understanding of the firm's prescribed procedures and methods. e.

None of the above.

10-32. The primary purpose of performing tests of controls is to provide reasonable assurance that: a. accounting control procedures are functioning as intended. b. the accounting system is up-to-date. c. transactions are recorded in proper amounts. d. accounting control procedures are documented. e. the financial statements are fairly presented.

10-33. During a financial audit an external auditor traces selected purchases and cash disbursements transactions throughout the entire cycle, with particular attention to the presence of suitable transaction-oriented controls (e.g., vouched invoices). This step within the audit-process is known as: a. review of the internal control structure. b. substantive testing. c. development of the audit program. d. tests of controls. e. assessing control findings.

10-34. If the assessment of control risk and extensive tests of controls reveal that the internal control structure has certain weaknesses that are significant but not overwhelming, which course of action should likely be taken? a.

Extend the tests of controls to gain more information b.

Expand the number and extent of substantive tests c.

Abandon the audit d.

Write a letter to the management concerning the weaknesses and plan the audit program without giving attention to these weaknesses e.

Reassess the control risk 10-35. The purpose of substantive testing in financial audits is to enable the auditor to: a. obtain sufficient evidence regarding transactions and balances to express an opinion concerning the financial statements. b. examine selected transactions and balances of the financial statements. c. determine if accounting controls are actually functioning. d. maximize the efficiency with which the audit is conducted. e. evaluate the accounting information system.

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10-36. The major drawback of the auditing-around-the-computer approach is that it: a.

Cannot be employed if more than one computer is used in processing data. b.

Cannot be employed if a computer system involves a significant number of manual steps. c.

Does not allow sound inferences to be drawn concerning how processing programs handle erroneous data. d.

Cannot be employed if the data are mainly processed by the batch approach. e.

Does not allow sound conclusions to be drawn concerning the adequacy of the audit trail.

10-37. Which of the following computer-based systems generally can be audited without examining or directly testing the computer programs of the system? a.

A system that performs relatively uncomplicated processes and incorporates a complete and visible audit trail. b.

A system that affects a number of essential master files and produces a few key outputs. c.

A system that updates a few essential master files and produces summary reports as printed output. d.

A system that performs relatively complicated processing and has a detailed audit trail. e.

A system that performs complicated processing and has no audit trail.

10-38. Which of the following audit techniques requires the least knowledge of computers? a.

Generalized audit software b.

Parallel simulation c.

Embedded audit modules d.

Integrated test facilities e.

Traces of selected transactions via the audit trail 10-39. After studying the security measures for an on-line processing system, an external auditor evaluates them to be inadequate. Which of the following techniques would not have been used to reach this conclusion? a.

Observations b.

Internal control questionnaires c.

Parallel simulation d.

Document system flowcharts e.

Reviews of documentation 10-40. The most important effect that the presence of computer-based processing has upon auditing techniques is due to the: a. necessary changes in processing procedures. b. changes in audit standards. c. reduced influence of the auditor upon system design. d. loss of accessibility to stored data. e. addition of programmed checks.

10-41. An audit technique that helps the auditor to evaluate programmed checks in computer programs involves the use of: a. confirmations. b. test data. c. selected transactions that are traced via the audit trail. d. statistical sampling. e. generalized audit software packages.

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10-42. The test data technique: a. can be performed using only actual transactions. b. can be performed using valid transactions or transactions containing errors. c. is impractical since much computer-based processing cannot be traced. d. is inadvisable, because it tends to contaminate master files. e.

None of the above.

10-43. Which of the following is not a limitation of the test data technique? a.

Difficulty in testing all possible error conditions b.

Costliness of the technique c.

Unusable with batch processing computer systems d.

Difficulty in maintaining control over processing programs e.

Test results that rapidly become obsolete if processing programs are changed 10-44. Which of the following procedures for applying the test data technique to payroll processing is most sound? a.

The test data should be employed at the end of each year rather than throughout the year. b.

Actual payroll records rather than simulated (copies of) payroll records should be involved when test data are used. c.

Test data should be applied on a surprise basis just after regular scheduled payroll processing has been performed. d.

The printed outputs from the use of test data should be reviewed by the data processing manager before being accepted by the auditor. e.

The test data should be employed only if payroll is processed by an on-line system.

10-45. The “integrated test facility” technique, sometimes referred to as the mini-company approach, is an audit tool that: a. is more applicable to external audits than internal audits. b. is mainly applicable to batch processing systems. c. is the most commonly used tool for "auditing with the computer". d. enables the system to be audited by means of five transactions. e. involves the introduction of test transactions into an on-line computer-based processing system concurrently with actual transactions.

10-46. Which of the following is not an advantage of the integrated test facility technique over the test data technique? a.

It provides greater assurance that the test transactions are testing the actual “production” programs. b.

It enables integrated on-line applications to be tested. c.

It ensures that the test transactions will detect a wider range of program errors. d.

It provides special miniature files where the test transaction data are collected. e.

None of the above is an advantage.

10-47. The purpose of the test data technique is to: a. identify differences between simulated processing results and actual processing results. b. select data for substantive testing. c. document the internal control structure. d. verify the logic and programmed checks of processing programs. e. trace instructions executed through an application.

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10-48. Which of the following types of data is least likely to be a part of the test data when the processing of sales transactions is being verified? a.

Valid sales order data b.

Erroneous customer number in a sales order c.

Exceptionally large quantity of goods on a sales order d.

Password of sales data entry clerk e.

Erroneous unit of measure listed for a quantity of goods on a sales order 10-49. Which of the following is the correct procedure when the integrated test facility technique is employed? a.

Enter test transactions during a separate run at year-end b.

Reenter actual transactions during a separate run at year-end c.

Enter test transactions together with actual transactions d.

Draw a sample of records from master files and trace to source documents e.

Trace test transactions through processing to the output reports 10-50. Which is the appropriate sequence of steps for using the integrated test facility technique with respect to on-line processing of transactions?

I. Compare expected and actual results.

II. Prepare and load dummy master records.

III. Enter test transactions.

IV. Calculate expected results of processing. a. b. c. d. e.

I, II, III, IV II, III, IV, I IV, III, II, I II, IV, III, I IV, II, III, I

10-51. Which of the following statements is most generally correct? a.

Because of its importance, the auditor should focus upon the computerized portion of an information system and de-emphasize the processing and controls related to the manual portion of the system. b.

The test data technique is not well suited to on-line processing computer systems. c.

Actual transaction data should preferably be used in the test deck method. d.

The auditor should carefully notify all persons affected prior to the time when he or she plans to use test data with a firm's program. e.

Audit standards or principles are significantly affected by the type of system being audited. **10-52. An approach to testing on-line processing by a computer-based information system is known as the integrated test facility (ITF) technique. ITF can involve: a.

Setting up a small set of records for a fictitious entity in the master files, and then processing test transactions against the fictitious entity. b.

Running monthly activities simultaneously with current transactions, so that the two are integrated in the result of the test. c.

Using generalized audit software to integrate the testing along with processing regular transactions. d.

Validating as well as editing of all input transactions entering the on-line system. e.

Testing the computer hardware at the same time as test transactions enter the on-line system.

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**10-53. The internal auditors of City Savings Bank are not sure the programmed checks for deposits and withdrawals handled by a recently installed on-line savings deposit accounting system are operating as specified in the documentation package. In order to satisfy themselves that the controls are working, the auditors could: a. use cross-footing balance tests. b. design an integrated test facility. c. review transaction logs. d. read the source program code. e. use synergistic tests. +10-54. Which of the following would an auditor examine only in the case of on-line computer systems? a.

Results of test data b.

Balancing controls c.

Error correction procedures d.

Access controls over terminals, e.g., passwords e.

Transaction processing 10-55. The parallel simulation technique: a. simulates the processing performed by application programs. b. can replace generalized audit software. c. normally uses test transactions. d. does not require computer knowledge to be developed and applied. e. traces individual transactions as they are being processed.

10-56. Which of the following functions is the parallel simulation technique intended to perform? a.

Test the programmed checks of processing programs b.

Trace the processing logic of application programs c.

Select sample data for use in audit programs d.

Verify that totals computed by the regular application programs are correct e.

Trace transactions via the audit trail 10-57. A variation of the parallel simulation technique is known as the: a. embedded audit module technique. b. controlled reprocessing technique. c. integrated test facility technique. d. generalized audit software technique. e. live processing technique.

10-58. Which of the following is not a suitable application of an expert system in auditing? a.

Developing audit programs b.

Determining the size of samples of test data c.

Assessing audit risks d.

Tracing selected transactions e.

Performing analytical reviews 10-59. Which of the following is not normally performed by the embedded audit module technique? a.

Capturing and tagging transactions of audit interest b.

Tracing all instructions executed during the processing of a selected transaction c.

Capturing intermediate or final processing results on an audit log d.

Reprocessing transactions and comparing the results against those obtained during earlier processing e.

Detecting unauthorized accesses of the data base

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10-60. An auditor can best detect the existence of unauthorized changes to computer programs and data by using which of the following techniques? a.

Integrated test facility b.

Review of computer-generated logs and program listings c.

Traces of transactions via the audit trail d.

Parallel simulation e.

Generalized audit software 10-61. Which of the following is not a problem of the embedded audit module technique? a.

Delays the processing of transactions b.

Involves added costs to implement c.

Heightens the security requirements d.

Requires computer expertise by the auditor e.

Requires the preparation of test transactions +10-62. In an audit of the data processing center, an internal auditor reviews computer performance efficiency. Which of the following techniques is most suitable to use? a.

Generalized audit software b.

Software and hardware monitors c.

Observation of computer operations d.

Special audit software e.

Review of data processing center budgetary controls +10-63. A technique involving the comparison of a computer program used at the time of the last audit with the program currently in use for the same application should serve the purpose of: a. verifying that the program performs the required functions. b. testing the efficiency of the instructions coded into the program. c. disclosing unauthorized changes made in the program. d. determining that data generated by the program are reliable. e.

All of the above.

10-64. Tagging, snapshooting, tracing, and real-time notification are features that may be found in: a. integrated test facilities. b. parallel simulation programs. c. embedded audit modules. d. test decks. e. generalized audit software packages.

10-65. Which of the following audit techniques is primarily useful during substantive testing? a.

Integrated test facility technique b.

Test data technique c.

Generalized audit software technique d.

Tracing selected transactions via the audit trail e.

Embedded audit module technique 10-66. A major advantage of a generalized audit software package is that it allows the auditor to: a. trace transactions through the processing steps. b. test the logic of computer programs used in the processing of transactions. c. examine a larger percentage of a firm's actual transaction data. d. aid in processing a firm's records. e. perform the audit automatically, so that the auditor can supervise several audits at once.

10-67. Which of the following statements is correct with respect to generalized audit software packages? a.

They can be used only in auditing on-line computer systems.

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b. c. d. e.

They can be used on any computer without the need for modifications.

They each have individual limitations.

They enable the auditor to perform tests of controls more effectively.

Most can retrieve data easily from complex data structures.

10-68. Which of the following cannot be performed by a generalized audit software package? a.

Recalculating totals and extensions. b.

Extracting samples from an array of data. c.

Retrieving items that exceed specified values. d.

Computing inventory turnover ratios. e.

Making physical counts of merchandise.

10-69. Which of the following audit techniques should be used to age inventory by date of purchase in order to identify slow-moving items? a.

Integrated test facility b.

Transaction testing and tracing c.

Parallel simulation d.

Generalized audit software e.

Embedded audit module 10-70. Which of the following is a limitation in the use of generalized audit software packages? a.

They can be used only on compatible computer systems. b.

They require extensive computer expertise on the part of auditors. c.

They cannot perform such important audit functions as the statistical selections of sample data. d.

They cannot retrieve data when stored in formats other than those built into the package. e.

None of the above is a limitation. +10-71. The use of a generalized audit software package to process all transactions for an accounting period and thereby produce the final balances in the general ledger is an alternative to: a. examining a statistical sample of source documents. b. evaluating controls over the master file containing the general ledger. c. manually tracing selected transactions along the audit trail and footing the general ledger accounts. d. a and c, above. e. a, b, and c, above. +10-72. A firm uses a computerized accounts payable system to process its disbursements. Which of the following techniques would enable an auditor to reconcile the accounts payable balance listed in the month-end trial balance report to the accounts payable master file stored on magnetic disk? a.

Generalized audit software b.

Test data c.

Control flowchart d.

Review of documentation, i.e., program listings e.

Embedded audit module

10-73. Which of the following is not a recent development in auditing? a.

Test data systems b.

Expert auditor systems c.

Network-oriented audits

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d. e.

Microcomputer audit-assist software Integrated data base audits

+10-74. A code of conduct was developed several years ago and distributed by a large financial institution to all its officers and employees. Identify the best audit approach to provide the audit committee with the highest level of comfort about the code of conduct. a.

Fully evaluate the comprehensiveness of the code and report to the audit committee. b.

Fully evaluate company practices for compliance with the code and report to the audit committee. c.

Review employee activities for compliance with provisions of the code and report to the audit committee. d.

Perform tests on various employee transactions to detect potential violations of the codes of conduct. +10-75. Using test data, an auditor has processed both normal and atypical transactions through a computerized payroll system to test calculation of regular and overtime hours. Sufficient competent evidence of controls exists if: a. no other tests are performed. b. test data results are compared to predetermined expectations. c. exceptions are mapped to identify the control logic executed. d. test result data are tagged to instigate creation of an audit data file. +10-76. A large organization relies on comprehensive user controls over stand-alone microcomputer usage and wishes to gain some assurance as to the control structure over microcomputer-based processing. Which of the following audit strategies is most appropriate? a.

Perform tests of user controls b.

Perform edit tests of data entered into key applications c.

Perform comprehensive tests of software licensing procedures d.

Perform substantive tests of executed program logic +10-77. Which of the following is not a benefit of using information technology in solving audit problems? a.

It helps reduce audit risk. b.

It improves the timeliness of the audit. c.

It increases audit opportunities. d.

It improves the auditor’s judgment. +10-78. The greatest impact information technology has had on the audit process is: a. its use to track personnel performance and development of the audit staff. b. its use in the audit reporting process such as automated workpaper packages. c. its use to conduct audits utilizing various computer-assisted techniques. d. its use as a strategic tool to develop the audit plan.

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10-1.

10-2.

10-3.

10-4.

10-5.

10-6.

10-7.

10-8.

10-9.

10-10.

10-11.

10-12.

10-13.

10-14.

10-15.

10-16.

10-17.

10-18.

10-19.

10-20.

10-21.

10-22.

10-23.

10-24.

10-25.

10-26.

10-27.

10-28.

10-29.

10-30.

10-31.

10-32.

10-33.

10-34.

10-35.

10-36.

10-37.

10-38.

10-39.

10-40.

E E C E E B C C D B D C E C D E D A D A C A D B A D C A B B C A D B A C A E C E

10-41.

10-42.

10-43.

10-44.

10-45.

10-46.

10-47.

10-48.

10-49.

10-50.

10-51.

10-52.

10-53.

10-54.

10-55.

10-56.

10-57.

10-58.

10-59.

10-60.

10-61.

10-62.

10-63.

10-64.

10-65.

10-66.

10-67.

10-68.

10-69.

10-70.

10-71.

10-72.

10-73.

10-74.

10-75.

10-76.

10-77.

10-78.

B B C C E C D D C D B A B D A D B D D B E B C C C C C E D A C A A A B A D C

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CHAPTER 11 11-1. a. b. c. d. e.

11-2. a. b. c. d. e.

11-3. a. b. c. d. e.

11-4.

Which of the following functions is not one of the objectives of a firm' s transaction processing systems?

To monitor internal physical operations To devise codes that facilitate the processing of accounting transactions To generate purchase orders and other operational documents To process accounting transactions arising from external sources To prepare financial statements pertaining to the firm Which of the following transaction processing systems feed transaction data into the general ledger system?

Sales Cash disbursements Cash receipts Purchases All of the above Which of the following transaction processing systems feed transaction data to the general ledger system?

Sales Purchases Cash receipts a and c, above a, b, and c, above

a. b. c. d. e.

Which of the following is not a reason for selecting the general ledger and financial reporting cycle as the first of the transaction processing cycles and systems?

It provides an integrating perspective of the other transaction processing cycles.

AR of the other transaction cycles feed data to the general ledger.

One of the most important purposes of the AIS is to provide financial reports to a variety of users.

It involves the most complex processing activities and needs the greatest variety of controls.

It is closely linked to the chart of accounts and the major coding structure of a firm.

11-5. a. b. c. d. e.

Which of the following is not an objective of the general ledger and financial reporting system?

Record all accounting transactions promptly and accurately Post all accounting transactions to the proper accounts Maintain an equality of debit and credit balances among accounts Accommodate needed adjusting journal entries Generate all managerial reports needed for planning and control

11-6. a. b. c. d. e.

Which of the following is not a source of inputs to the general ledger of a typical firm?

Routine transaction Non-routine transaction End-of-period adjusting entry Reversing entry All of the above are sources.

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11-7. a. b. c. d. e.

11-8. a. b. c. d. e.

11-9. a. b. c. d. e.

Which of the following is not a type of adjusting entry that must be accommodated by the general ledger system?

Accruals Deferrals Revaluations Corrections Reversings A recurring type adjusting entry that arises from the passage of time and that reflects amounts not yet due or earned is called a(n): accrual entry. deferral entry. revaluation entry. correction entry. reversing entry.

A recurring type adjusting entry that arises from the passage of time and that reflects amounts as of the end of an accounting period is called a(n): accrual entry. deferral entry. revaluation entry. correction entry. reversing entry.

11-10. In a computer-based general ledger financial accounting package, the primary source document to the general ledger system is the: a. journal voucher. b. source voucher. c. check voucher. d. invoice. e. general journal.

11-11. If the numbers 100 through 150 are assigned to the asset accounts and 151 through 189 are assigned to the liability accounts of a firm, which of the following types of codes is being employed? a.

Sequence b.

Block c.

Mnemonic d.

Group e.

Faceted 11-12. In an on-line computer-based system a preformatted journal entry screen may be used to: a. enter individual transactions. b. enter batches of transactions. c. replace hard copy journal vouchers. d. a and c, above e. a, b, and c, above

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11-13. A batch of transactions may be recorded on journal vouchers and transmitted for processing via batch transmittal sheets, or they may be recorded directly on batch entry forms. In either case, certain data should be included pertaining to the batch. Which of the following data elements would least likely be included? a.

Assigned batch number b.

Batch total c.

Date of preparation d.

Debit and credit amounts e.

All should be included.

11-14. Which of the following is not a user-friendly aspect normally employed in the on-line entry of transaction data? a.

A series of menus b.

Preformatted screens c.

Codes to authorize transactions d.

Automatic entry of account numbers involved in transactions e.

Built-in editing of entered data 11-15. Which of the following files is least likely within a general ledger accounting system? a.

General ledger history file b.

Budget master file c.

Accounts receivable master file d.

Journal voucher file e.

Responsibility center master file 11-16. The type of processing system that allows the general ledger accounts to be updated concurrently with and as a by-product of the updating of the subsidiary ledgers is a: a. computer-based batch processing system. b. computer-based on-line processing system c. manual batch processing system. d. manual on-line processing system e. computer-based information processing system.

11-17. If the general ledger application involves batch processing, the sorting key is generally the: a. subsidiary ledger account numbers. b. transaction document numbers. c. batch numbers. d. general ledger account numbers. e. general ledger account names.

11-18. Which of the following is not a risk to which a computer-based general ledger processing system is exposed? a.

Improperly prepared journal entries b.

Loss of journal vouchers c.

Manual approval of journal vouchers d.

Unposted journal entries e.

Unequal total debits and total credits

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11-19. Which of the following can provide the most usable audit trail? a.

Daily dumps of the general ledger b.

Collective hard copy source documents c.

Transaction log d.

General journal listing e.

Batch entry forms 11-20. Entries from approved journal vouchers should be posted to the general ledger by persons who: a. approved the journal entries. b. prepared the journal entries. c. are in charge of the accounting function d. are not otherwise involved with the journal vouchers. e. are not assigned to the accounting function.

11-21. A programmed edit check that can determine if an entered account number is within the current chart of accounts is a: a. field check. b. validity check. c. limit check. d. reasonableness check. e. relationship check.

11-22. A programmed edit check that can determine if entered debit amounts are equal to entered credit amounts for a transaction is a: a. field check. b. validity check. c. limit check. d. zero-balance check. e. completeness check.

11-23. A programmed edit check that would normally not be employed in on-line processing general ledger system is a: a. field check. b. sequence check. c. validity check. d. limit check. e. relationship check.

11-24. An on-line general ledger processing system displays the general ledger account title when the account number is entered. What is the programmed edit check that provides this response? a.

Field check b.

Validity check c.

Echo check d.

Redundancy matching check e.

Relationship check

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11-25. Which programmed edit check provides two verifications to ensure that the proper record in the general ledger master file is updated by a transaction? a.

Field check b.

Validity check c.

Echo check d.

Redundancy matching check e.

Posting check 11-26. Which programmed edit check provides assurance that the balance in a general ledger master record is correct after being updated by a transaction amount? a.

Field check b.

Validity check c.

Echo check d.

Redundancy matching check e.

Posting check 11-27. The responsibility of users of financial reports with respect to internal control is to: a. review the amounts for reasonableness. b. recompute the totals. c. review the transactions on which the reports are based. d. review the general ledger control procedures. e. observe the processing of the reports.

11-28. Which of the following is not an analysis to aid accountants in verifying the accuracy of postings to the general ledger? a.

General ledger proof listing b.

General ledger account change report c.

Listing of all posted transactions by account numbers d.

Analysis of allocations of expenses to cost centers e.

All of the above are general ledger analyses.

11-29. Which of the following is not a useful financial output from the general ledger and financial reporting system? a.

Balance sheet b.

Cash flow statement c.

Comparative income statement showing budgeted and actual amounts d.

Analyses of financial statement ratios e.

Sales forecast analyzed by products 11-30. Which of the following is not a likely output of end-of-period general ledger processing? a.

General ledger trial balance b.

Comparative general ledger listing c.

Special journal analysis d.

Current general ledger report e.

Income statement

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11-31. Responsibility accounting systems provide information for use in: a. strategic planning, b. tactical planning. c. management control. d. operational control. e. transaction processing.

11-32. A group code used by a firm to record its various accounting transactions has the following format: AAA-BBB-CCC-D where AAA is the general ledger account number, CCC is the responsibility center number, and D is the code for debit or credit. The field BBB is most likely to represent the: a. subsidiary ledger code. b. transaction processing code. c. organizational code. d. resource code. e. accounting cycle code.

11-33. In a responsibility reporting system for a merchandising firm, the code for one of the six sales territories is 133; if the responsibility center coding scheme is of the hierarchical type, then the code for the center headed by the sales manager in charge of all six sales territories is: a.

100. b.

1333. c.

13.3. d.

130. e.

1300.

11-34. In which of the following reporting systems is the use of codes not necessary? a.

Responsibility reporting systems b.

Profitability reporting systems c.

Cost accounting reporting systems d.

Financial reporting systems e.

Codes are necessary for all of the above reporting systems 11-35. Which of the following components of an accounting cycle should be designed first? a.

Financial statement formats b.

Chart of accounts c.

General and subsidiary ledgers d.

Journals e.

Source documents 11-36. The accounts comprising a chart of accounts for a firm are likely to be based on all except which of the following? a.

Activities and customs of the industry of which the firm is a member b.

The legal obligations to which the firm is subject c.

The assets owned by the firm and liabilities owed by the firm d.

The physical locations of the firm's facilities e.

The revenue segments, e.g., product lines

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11-37. When a subsidiary ledger is maintained, the account in the general ledger which is supported by the subsidiary ledger balances is known as a: a. general account. b. control account. c. support account. d. major account. e. basic account. **11-38. The financial accounting database has several critical relationships that must be properly maintained if the system is to function in an orderly manner. Which one of the statements about the financial accounting database is incorrect? a.

The general ledger is a master file in which a record is maintained for each and every account in the organization’s accounting system. b.

Subsidiary ledgers are master files containing accounting records by specific account categories. c.

Cash disbursements journals are complete records of each transaction that reduces cash. d.

Transaction records include cross-reference between general ledger files, subsidiary account numbers, and source document numbers. e.

Journals list amounts debited and credited to each ledger account by each transaction.

11-39. Which of the following is not an objective of the facilities management system? a.

To ensure that all acquisitions are properly approved and recorded b.

To safeguard the plant assets c.

To record the plant asset values at current replacement cost d.

To reflect depreciation expense properly and consistently e.

To ensure that all disposals are properly approved and recorded 11-40. The acquisition of plant assets is normally approved by the: a. department head where they will be used. b. property account manager. c. purchasing manager. d. chief engineer. e. higher-level management.

11-41. Which of the following data is not likely to be recorded concerning a particular plant asset? a.

Acquisition cost b.

Estimated salvage value c.

Estimated physical life d.

Location of asset e.

Method of depreciation 11-42. Which of the following departments is not normally involved in the facilities management system? a.

Accounts payable b.

Cash disbursement c.

Property accounting d.

Inventory control e.

General ledger

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12-43. Which of the following is not a type of transaction that may appear in the plant asset transaction file? a.

Acquisition of plant assets b.

Sale of plant assets c.

Major addition to a plant asset d.

Transfer of a plant asset between locations e.

Repairs to plant assets 11-44. Which of the following documents is not normally employed in the acquisition of plant assets? a.

Property expenditure request b.

Purchase order c.

Receiving report d.

Supplier's invoice e.

Bill of lading 11-45. Which of the following items would least likely be found in a typical fixed assets master file record? a.

Fixed asset number b.

Fixed asset description c.

Asset type code d.

Replacement cost of fixed asset e.

Location code 11-46. Which of the following statements concerning plant assets is incorrect? a.

Unique identification numbers should be affixed to each plant asset. b.

A plant asset subsidiary ledger should be maintained and reconciled periodically with the general ledger control account. c.

The acquisition of plant assets should involve a special procedure that differs in most respects from that used for acquiring merchandise. d.

Retirements of plant assets should be approved beforehand by higher level managers. e.

Most plant assets are subject to depreciation.

11-47. Which of the following is not a risk exposure that exists within the facilities management cycle? a.

Fixed assets may be improperly acquired b.

Fixed assets may be lost c.

Fixed assets may be fully depreciated d.

Fixed assets may be incorrectly billed e.

Balances in fixed asset accounts may be incorrect 11-48. What control technique should reduce mislocations of equipment within a firm's premises? a.

Unique identification numbers and location codes within the plant asset records b.

Locks that fasten the equipment in place c.

Complete documentation concerning the use of equipment d.

Separation of responsibilities for approving the acquisition from those concerning the use of the equipment e.

Preparation of plant asset register

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11-49. An engineer within a large firm sold a valuable piece of equipment and kept the cash. He later claimed that the equipment was fully depreciated and was worthless, so he had simply put it in the trash dumpster. What control should prevent such an occurrence? a.

Locking all equipment in place b.

Requiring the use of pre-numbered and pre-approved retirement forms c.

Periodic inspection of plant asset d.

Preparation of plant asset registers a.

Use of longer depreciation periods b.

11-50. The improper disposition of equipment can most likely be prevented by which of the following control procedures? a.

Assign identification numbers to equipment b.

Separating the authority to approve dispositions from the custody over the equipment c.

Periodically analyzing scrap sales d.

Periodically reviewing depreciation of equipment e.

Preparation of plant asset registers 11-51. A large firm acquires and retains numerous plant assets. It consequently processes the transactions by means of a computer-based batch processing system. One control it might employ during this processing is a hash total based on the: a. number of transactions. b. cost amounts of the acquisitions and retirements. c. plant asset identification numbers. d. description of the plant assets. e. header label in the plant asset file.

11-52. A depreciation expense report is most likely to be generated as an output of which transaction processing system? a.

Payroll b.

Plant assets c.

Cash disbursements d.

Purchases e.

Sales 11-53. Which of the following outputs is likely to be of least interest to the asset management supervisor, who has overall responsibility for the physical well-being of facilities? a.

Plant asset register b.

Plant asset depreciation reports c.

Facilities maintenance schedule d.

Plant assets by location e.

Plant assets acquisition listing 11-54. Which of the following assets would not normally be viewed as being a part of the funds resources of a firm? a.

Short-term marketable securities b.

Long-term bond investments c.

Prepaid expenses d.

Plant assets e.

Receivables

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11-55. Which of the following weaknesses in the funds management system should cause the least concern? a.

Checks are signed by only one person. b.

Signed checks are returned to the chief accountant. c.

The treasurer does not review supporting documents before signing checks. d.

Cash disbursements are sometimes paid from currency received in the mail from customers. e.

Checks are signed by the same person who approved suppliers' invoices for payment.

11-56. Which of the following is not a sound procedure for the management of cash? a.

Deposit all cash receipts intact. b.

Organizationally separate the cashier and the accounts receivable department. c.

Have bank statements for all accounts reconciled monthly by a person not otherwise involved in cash transactions. d.

Authorize the controller to sign checks, but only after reviewing all supporting documents. e.

Require all cash disbursements, except those for petty cash, be approved and issued through check vouchers.

11-57. Which of the following is not a sound policy for the management of cash? a.

Maintain an adequate cash balance to meet all conceivable situations. b.

Make adequate provisions to safeguard cash from theft and loss. c.

Acquire cash from various sources at the lowest feasible cost. d.

Pay obligations in time to obtain all purchase discounts. e.

Prepare frequent cash budgets and forecasts.

11-58. A complete bank reconciliation pertaining to a business firm normally provides all of the following reconciliations except: a.

A reconciliation of the bank account balance with the cash balance in the general ledger, as of the end of an accounting period. b.

A reconciliation of all bank deposits with the total receipts entered into the cash receipts journal. c.

A reconciliation of all bank withdrawals with the total amount of checks entered into the cash disbursement journal. d.

A reconciliation of the bank account balance with the checkbook balance, as of the date the reconciliation is prepared. e.

A reconciliation of the bank account balance in the general ledger, as of the beginning of an accounting period.

11-59. Preferably the monthly bank statements should be received directly from the bank and reconciled by the: a. cash receipts clerk b. cash disbursement clerk. c. chief accountant d. internal auditor. e. general ledger clerk.

11-60. Which of the following would be the best safeguard against loss of a firm's marketable securities? a.

Maintaining the securities in a safe in the main office and having the internal auditor verify them each year b.

Depositing the securities in an independent trust company that has no ties to employees c.

Depositing the securities in the safe deposit box of the president of the firm d.

Requiring an audit each year of all transactions involving marketable securities e.

Bonding all employees who handle the securities

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11-61. Which of the following employees should be assigned responsibility for maintaining custody of bearer bonds owned by the firm as a short-term investment, as well as for submitting coupons for periodic interest? a.

Chief accountant b.

Cashier c.

Treasurer d.

Vice-president of administration e.

Budget director 11-62. Which of the following would be most useful in providing adequate custodial control over investments? a.

Require that each transaction involving investments be authorized by the treasurer. b.

Periodically compare the balances that are recorded in an investment subsidiary ledger with the physical investment documents maintained in the safety deposit box of an independent trust company. c.

Require that the investment documents be maintained in a safety deposit box with only one top manager of the firm having access. d.

Limit the investments to mutual funds and other instruments from which no documents are issued. e.

Separate organizationally the persons who post transactions concerning investments from those who authorized their purchase and sale.

11-63. Which of the following statements is incorrect? a.

The bank statement should be reconciled by a person who is actively involved in transaction processing. b.

The petty cash custodian should not also be the cashier. c.

Well designed documents aid in both safeguarding the assets and assuring the accuracy of records. d.

A customer who receives a monthly statement can be viewed as one control over the accuracy of the firm's outputs. e.

Goods should be purchased only upon authorization provided by a purchase requisition.

11-64. The major purpose of a projected cash flow statement is to: a. ensure that sufficient funds are available at all times to satisfy liabilities. b. measure adherence to a firm’s planning procedure. c. verify the posting of cash receipts and disbursements to correct accounts. d. assure that the bookkeeping for cash receipts and disbursements is consistent with generally accepted accounting principles. e. support the cash account ledger.

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11-1.

11-2.

11-3.

11-4.

11-5.

11-6.

11-7.

11-8.

11-9.

11-10.

11-11.

11-12.

11-13.

11-14.

11-15.

11-16.

11-17.

11-18.

11-19.

11-20.

11-21.

11-22.

11-23.

11-24.

11-25.

11-26.

11-27.

11-28.

11-29.

11-30.

11-31.

11-32.

11-33.

11-34.

11-35.

11-36.

11-37.

11-38.

B E E D E E E B A A B E E D C B D C D D B D B C D E A E E C C A D E A D B C

11-39.

11-40.

11-41.

11-42.

11-43.

11-44.

11-45.

11-46.

11-47.

11-48.

11-49.

11-50.

11-51.

11-52.

11-53.

11-54.

11-55.

11-56.

11-57.

11-58.

11-59.

11-60.

11-61.

11-62.

11-63.

11-64.

C E C D E E D C C A B B C B B D A D A D D B C B A A

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CHAPTER 12 12-1. a. b. c. d. e.

Which of the following is not a typical objective of the revenue cycle?

To verify the creditworthiness of customers To backorder goods for customers as soon as credit is checked To ship ordered products or perform services by agreed-on dates To bill for products or services timely and accurately To record cash receipts promptly

12-2. a. b. c. d. e.

Which of the following functions is not included in the typical revenue cycle involving goods?

Entering sales order Shipping ordered goods Assembling goods for shipment Posting to the accounts payable subsidiary ledger Receiving payments from customers

12-3.

Which of the following sequences pertaining to the revenue cycle is least likely to be employed by a firm that sells goods?

Enter sales order, assemble goods for shipment, check credit, ship ordered goods, bill customer, receive cash payment Enter sales order, check credit, assemble goods for shipment, bill customer, ship ordered goods, receive cash payment Check credit, enter sales order, assemble goods for shipment, bill customer, ship ordered goods, receive cash payment Assemble goods for shipment, check credit, enter sales order, bill customer, receive cash payment Check credit, assemble goods for shipment, enter sales order, ship ordered goods, bill customer, receive cash payment

a. b. c. d. e.

12-4. a. b. c. d. e.

The procedure in which the sales invoice is prepared with prices and extensions as soon as the order is approved is known as: invoicing. prebilling. incomplete prebilling. separate sales order and invoice preparation.

None of the above.

12-5. a. b. c. d. e.

Billing is not complete until the: invoice is completely prepared. goods are shipped. bill is presented for payment. cash payment is received. amount is posted to the customer's record.

12-6. a. b. c. d. e.

Which of the following is not a typical means of receiving cash payments from customers?

Through a lockbox Through the mailroom Over the counter Via a petty cash box All of the above are means of receiving customers' payments.

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12-7. a. b. c. d. e.

Which of the following is the least routine process pertaining to the accounts receivable activity of a firm?

Bill customer Post sales and receipts to accounts receivable records Prepare and post credit memos Receive cash Prepare customers' monthly statements

12-8. a. b. c. d. e.

Processing of accounts receivable is simplified by use of the: open invoice method. balance forward method. lapping method. daily posting method. receivables aging method.

12-9. a. b. c. d. e.

Which of the procedures is not likely to be performed in the case of delinquent customers?

Send delinquency notices Hire a collection agency Factor the accounts with a financing agency Offset the accounts against miscellaneous income Write-off the accounts against a reserve

12-10. When insufficient quantities of ordered products are on hand to fill an order, what action is typically taken? a.

The sale is refused. b.

Other products are substituted. c.

A back order is placed. d.

The customer is immediately billed for all ordered items. e.

None of the above.

12-11. Which of the following units within the marketing function are normally involved in transactions pertaining to the revenue cycle when products are sold? a.

Sales b.

Product development c.

Shipping d. a and c,above e. a, b, and c, above 12-12. Which of the following units within the finance accounting function is not normally involved in transactions pertaining to the revenue cycle when products are sold? a.

Credit and collections b.

Billing c.

Accounts receivable d.

Cash receipts e.

Cost distribution

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12-13. Which of the following does not involve a decision that must be made by marketing managers? a.

Which types of markets should be served? b.

How should the costs of products be accounted for? c.

What prices should be charged for the products for sale? d.

What after-sales services should be offered? e.

What new products should be introduced?

12-14. Which of the following does not involve a decision that must be made by either the controller or treasurer affecting the revenue cycle? a.

What criteria should be employed in granting credit to customers? b.

What collection methods should be employed with respect to delinquent accounts? c.

What revenue budgets should be established for the coming year? d.

To what types of customers should sales be made? e.

What sources of funds should be employed when revenues do not adequately provide funds for operations?

12-15. Data from which two source documents are posted to the accounts receivable subsidiary records? a.

Sales invoices and check vouchers b.

Suppliers' invoices and check vouchers c.

Sales invoices and remittance advices d.

Suppliers' invoices and remittance advices e.

Sales invoices and suppliers' invoices 12-16. Which source document within the revenue cycle authorizes a common carrier to transport goods to customers? a.

Sales order b.

Shipping notice c.

Bill of lading d.

Packing slip e.

Sales invoice 12-17. Which source document within the revenue cycle authorizes the warehouse to assemble goods needed to fill a customer's order? a.

Picking slip b.

Packing slip c.

Bill of lading d.

Sales invoice e.

Shipping notice 12-18. A sales invoice that contains a portion to be returned by the customer (with the payment) as a remittance advice is an example of a: a. financial report. b. turnaround document. c. transaction document. d. journal document. e. revenue document.

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12-19. Which documents should have been prepared as a part of the return of goods sold to a customer? a.

Sales order and shipping notice b.

Purchase order and receiving report c.

Credit memo and sales order d.

Receiving report and credit memo **12-20. A bill of lading is a document that: a. summarizes data relating to a disbursement and represents final authorization for payment. b. indicates the amount a customer owes by listing the quantities shipped, unit prices, and total price of goods shipped. c. is sent with the goods, giving a listing of the quantities of items included in the shipment. d. provides details of a shipment of goods and transfers responsibility for the goods from the seller to a common carrier. e. reduces a customer's account for goods returned to the seller.

(The following diagram portrays the flows of sales transactions through the accounting cycle and pertains to questions 12-21 through 12-24.)

A

B

C

D

12-21. A is a: a. remittance advice. b. time card c. purchase order. d. check. e. sales invoice 12-22. B is the: a. payroll register. b. check register. c. cash receipts journal. d. sales journal. e. general ledger.

12-23. C is the: a. payroll register. b. check register. c. cash receipts journal. d. sales journal. e. general ledger.

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Trial balance

Financial statemements

12-24. D is the: a. accounts payable subsidiary ledger. b. accounts receivable subsidiary ledger. c. cash receipts journal. d. sales journal. e. general ledger.

12-25. The accounts receivable account is not credited in which of the following transactions? a.

Cash receipt b.

Sales return c.

Sale d.

Write-off of account e.

Sales allowance (The following diagram portrays the flows of cash receipts transactions through the accounting cycle and pertains to questions 12-26 through 12-29)

A

B

C

D

12-26. D is the: a. accounts payable subsidiary ledger. b. accounts receivable subsidiary ledger. c. cash receipts journal. d. general ledger. e. general journal.

12-27. B is the: a. customer ledger. b. check register. c. cash receipts journal. d. sales journal. e. general ledger 12-28. A is a: a. remittance advice. b. payroll register. c. purchase order. d. paycheck and stub. e. sales invoice.

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Trial balance

Financial statemements

12-29. C is the: a. check register. b. accounts receivable subsidiary ledger. c. accounts payable subsidiary ledger. d. cash receipts journal. e. general ledger.

12-30. Sales transactions in a particular firm are coded by a group code having this format: AAABBBBB-CC. If AAA refers to the general ledger account numbers, and the sales date is recorded elsewhere, the second and third fields most likely reflect: a. sales invoice number and customer number. b. customer number and sales territory number. c. customer number and product number. d. salesperson number and customer number. e. sales invoice number and sales territory number.

12-31. Customer numbers in a certain firm are coded by the following format: ABBBBCCD. If CC represents the year the customer was granted credit, the A, BBBB, and D most likely represent: a. self-checking digit, unique customer identifier, and class of customer. b. customer credit rating, unique customer identifier, and self-checking digit. c. class of customer, unique customer identifier, and self-checking digit. d. customer credit rating, class of customer, and unique customer identifier. e. customer credit rating, unique customer identifier, and self-checking digit.

12-32. Which of the-following files is not likely to be involved in the processing of sales transactions? a.

Merchandise inventory file b.

Accounts receivable file c.

Back order file d.

Purchase requisition file e.

Price data reference file 12-33. Which of the following files is least likely to be involved in the processing related to the revenue cycle of a merchandising firm? a.

Accounts receivable master file b.

Merchandise inventory master file c.

Receiving reports file d.

Back orders file e.

Open sales orders file 12-34. Which set of files should be available for entering sales orders in a merchandising firm? a.

Customer master file, accounts receivable master file, sales invoice file b.

Customer master file, open sales order file, merchandise inventory file c.

Merchandise inventory file, shipping file, open sales order file, sales invoice file d.

Merchandise inventory file, shipping file, open sales order file, sales invoice file e.

Customer master file, merchandise inventory file, shipping file, sales invoice file

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12-35. Which set of files is needed within the revenue cycle to maintain the credit customers' accounts? a.

Accounts receivable master file, customer master file, sales history file b.

Accounts receivable master file, merchandise inventory master file, open sales order file c.

Accounts receivable master file, customer master file, sales invoice file, cash receipts file d.

Customer master file, sales invoice file, cash receipts file, merchandise inventory master file e.

Accounts receivable master file, customer master file, merchandise inventory file, open sales order file, cash receipts file 12-36. Which two files may logically be consolidated into a single file? a.

Accounts receivable master and merchandise inventory master b.

Accounts receivable master and customer master c.

Sales invoice and cash receipts d.

Sales invoice and open sales order e.

Open sales order and sales history 12-37. In an accounts receivable master file, which of the following is usually the primary key? a.

General ledger account number b.

Accounts receivable number c.

Customer account number d.

Sales invoice number e.

Remittance advice number 12-38. Records in the open sales order file are removed when the orders have been: a. credit approved. b. shipped. c. billed. d. paid for. e. posted to accounts receivable.

12-39. Which of the following files would be the most logical candidate to associate with the customer accounts receivable master file via a network schema? a.

Merchandise inventory file b.

Accounts payable file c.

Purchase order file. d.

Open sales order file e.

Pricing file 12-40. In a network structure pertaining to the revenue cycle of a firm that sells multiple products to credit customers, which of the following data structures appears to be most reasonable? a.

Customer/accounts receivable records (owner records) are linked to sales invoice records (member records). b.

Customer/accounts receivable records (owner records) are linked to sales invoice header records (member records), which in turn are linked to ordered item records (lower member records). c.

Sales remittance/sales invoice records (owner records) are linked to customer/accounts receivable records (member records). d.

Cash remittance/sales invoice records (owner records) are linked to customer/accounts receivable records (member records). e.

Sales invoice records (owner records) are linked to merchandise records (member records).

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12-41. In a relational data base that contains tables pertaining to the revenue cycle, which is likely to be the common column in the accounts receivable table and the sales invoice table? a.

Sales invoice number b.

Sales amount c.

Customer account number d.

Customer name e.

Sales date 12-42. Which of the following is not a control point within a revenue cycle involving the sales of goods? a.

The receipt of a sales order b.

The credit check c.

The shipment of ordered goods d.

The billing for goods shipped e.

The mailing of the sales invoice 12-43. Which of the following is not a control point within a revenue cycle involving the sales of goods? a.

The point at which a sales transaction is recorded b.

The point at which merchandise is received into the firm c.

The point at which an extra copy of a supplier's invoice is discarded d.

The point at which a cashier receives cash over-the-counter e.

The point at which the day's cash is delivered to the bank 12-44. In manual cash receipts procedure the checks are usually received by mail and a remittance list is prepared. Who is likely to receive copies of this list? a.

Prepare remittance advices and a deposit slip b.

List the receipts and prepare a deposit slip c.

List the receipts and post the amounts d.

List the receipts and endorse the check restrictively e.

Post the amounts and prepare a deposit slip 12-45. In a manual cash receipts processing procedure the deposit slip should be prepared by the: a. cashier. b. mail clerk. c. accounts receivable bookkeeper. d. controller. e. internal auditor.

12-46. In a manual credit sales procedure, a key step to be performed upon receipt of a customer's order and before shipping the ordered merchandise is to: a. prepare a formal sales order. b. send an acknowledgment of the order to the customer. c. obtain approval of the customer's credit. d. a and b, above e. a, b, and c, above.

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12-47. In a manual credit sales procedure, the first step to be performed after receiving a customer's order and preparing a formal sales order is to: a. notify the shipping department. b. notify the warehouse c. notify the billing department. d. obtain approval of the order from the credit department. e. prepare a sales invoice.

12-48. In a manual credit sales procedure, which of the following would least likely receive a copy of each formal sales order? a.

The shipping department b.

The credit department c.

The warehouse d.

The customer e.

The accounts receivable department 12-49. In a credit sales procedure, usually __________ accompanies the goods that are shipped to a customer. a. a sales invoice b. the customer's original order c. a packing slip d. a bill of lading e. a catalog 12-50. In a manual credit sales procedure, the billing department typically prepares a __________ only after receiving a __________. a. sales invoice; sales order b. sales invoice; shipping notice c. sales order; credit approval d. billing summary; sales invoice e. sales invoice; journal voucher 12-51. In many cash receipts procedures the checks are received by mail. What two key control steps should be taken by the mail clerk? a.

Prepare remittance advices and a deposit slip b.

List the receipts and prepare a deposit slip c.

List the receipts and post the amounts d.

List the receipts and endorse the check restrictively e.

Post the amounts and prepare a deposit slip 12-52. In a manual cash receipts procedure the deposit slip should be prepared by the: a. cashier. b. mail clerk. c. accounts receivable bookkeeper. d. controller. e. internal auditor.

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12-53. In a manual credit sales processing procedure, which of the following is typically a purpose served by sales invoices? a.

To notify the customers of amounts owed b.

To provide the data for the sales journal entries c.

To be the posting medium to accounts receivable records d.

To notify the shipping department of the goods to be shipped e.

To notify the inventory control department of the reduction of quantities of goods on hand 12-54. Write-offs of accounts receivable should be authorized by the: a. sales manager. b. controller. c. accounts receivable clerk. d. billing manager. e. credit manager.

12-55. A credit manager prepares and approves credit memos for goods supposedly returned by a customer who also happens to be a relation. How can this activity best be curbed? a.

Require receiving reports to support all credit memos pertaining to sales returns. b.

Prenumber all credit memos. c.

Rotate the duty of approving credit memos. d.

Prepare listings of credit memos. e.

Prohibit the return of sold goods.

12-56. When customers return ordered merchandise for any reason, the merchandise should first be delivered to the: a. sales department. b. accounts receivable department. c. shipping department d. receiving department e. warehouse.

12-57. In an on-line sales order entry processing system, which of the following steps can be performed upon the entry of an order via a computer terminal? a.

Validating the accuracy of the order data b.

Checking the creditworthiness of the customer c.

Verifying that adequate merchandise is on hand to fill the order d. a and b, above e. a, b, and c, above 12-58. Which of the following would least likely be prepared and/or initially computed by the computer system in a cash receipts/accounts receivable procedure? a.

Deposit slips b.

Remittance list c.

Batch total of received remittances d.

Summary of accounts receivable activity e.

Customers' monthly statements

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12-59. After the authenticated deposit slip concerning a day's cash receipts has been returned from the bank, a sound procedure consists of having the __________ compare it to the copy of the deposit slip, to the general ledger posting, and to the __________. a. cashier; cash receipts journal b. internal auditors; remittance list c. bank teller; bank statement d. treasurer; cash account balance e. accounting clerk; accounts receivable account balance 12-60. Which of the following actions is not likely to be performed at the time of invoicing by an on-line sales processing system? a.

Entering new records in the sales invoice file b.

Posting to the accounts receivable accounts c.

Updating the merchandise inventory master file d.

Printing a sales journal and summary of accounts receivable postings e.

Verifying the postings to individual customers' accounts 12-61. Which of the following is not a risk exposure that exists within the revenue cycle? a.

Back orders may be misplaced. b.

Accounts receivable may be written off without authorization. c.

Sales orders may be excessive. d.

More goods may be shipped than ordered. e.

Accounts receivable may be incorrectly posted.

12-62. A form of embezzlement involving cash receipts is known as: a. vouchering. b. overlapping. c. feed forward. d. lapping. e. documentation.

12-63. A firm' s sales procedure involves preparing sales invoices based on shipping documents; posting the sales amounts to accounts receivable records; and posting quantities billed to the inventory records. Due to control weaknesses in the procedure, certain goods that are shipped may not be reflected in the sales invoices. The exposure from this risk can result in: a. overstatements of revenues, receivables, and inventory. b. understatements of revenues and receivables and over statement of inventory. c. understatements of revenues, receivables, and inventory. d. overstatements of revenues and receivables and understatement of inventory. e. understatement of revenues and overstatements of receivables and inventory.

12-64. Which of the following risk exposures is likely to be experienced by a firm due to control weaknesses in its revenue cycle? a.

Overstatement of revenues and receivables due to the recording of fictitious transactions b.

An understatement of inventory due to shipping documents that were not prepared upon the shipment of ordered goods c.

An understatement of receivables due to lapping of customers' accounts by an accounting clerk d.

An overstatement of receivables due to fraudulent write-offs of customers' accounts e.

An overstatement of revenues and receivables due to shipments that were not billed

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12-65. Which of the following is not a control objective of the revenue cycle? a.

To ensure that all sales orders from customers are filled without exception b.

To ensure that all shipments are billed and classified properly c.

To ensure that all billings are posted to the correct customers' accounts d.

To ensure that all cash receipts are properly classified, recorded, and posted to the correct customers' accounts e.

To ensure that effective collection procedures are employed with respect to overdue account balances 12-66. The concept of organizational independence requires that which trio of sales-related functions be located in separate organizational units? a.

Accounts receivable, accounts payable, and inventory control b.

Shipping, receiving, and cashier c.

Sales order, purchasing, and cashier d.

Sales order, billing, and shipping e.

Personnel, credit, and inventory management **12-67. Which of the following is not a proper separation of duties in the processing of orders from customers? a.

Approval by the credit department of a sales order prepared by the sales department b.

Shipment of goods by the shipping department that have been retrieved from bins by the finished goods warehouse c.

Preparation of invoices by the billing department, with posting from the invoices to customers' accounts by the accounts receivable department d.

Posting to the appropriate general ledger accounts by general ledger clerks, using batch totals prepared and verified by the billing department e.

Approval of sales credit memos by the sales department upon the returns of goods, with subsequent posting to the customers' accounts by the accounts receivable department 12-68. Organizational independence is maintained in a manual cash receipts procedure if the cashier receives the remittance from the mailroom and also: a. prepares the remittance list. b. prepares the deposit slip. c. posts to the accounts receivable records. d. prepares the monthly bank reconciliation. e. prepares the remittance advices.

12-69. In a manual sales procedure the shipping documents should be matched with the sales orders by the __________, which should also prepare daily sales summaries. a. shipping department b. credit department c. billing department d. accounts receivable department e. sales order department

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12-70. Which of the following does not represent a physical security measure for cash received daily from customers? a.

Lockbox b.

Cash register c.

Restricted areas d.

Petty cash box e.

Security guards 12-71. A firm, such as a catalog mail order house, that receives numerous remittances from customers each day, is likely to employ which of the following to reduce the risk of theft of cash? a.

Fidelity bonds for all employees b.

A lockbox c.

Daily remittance fists prepared by mail clerks d.

Daily summaries of cash, broken down by checks and currency e.

Several bank accounts 12-72. Which of the following control procedures is most likely to ensure that all shipments are billed and recorded? a.

Reconciling the accounts receivable subsidiary ledger to the accounts receivable control account b.

Mailing monthly statements to customers and monitoring responses from customers c.

Matching prenumbered shipping documents (e.g., notices) to the sales journal in the billing department d.

Comparing copies of sales orders with customer accounts e.

Preparing sales invoices to cash remittances 12-73. Which of the following is not likely to prevent lapping of accounts receivable? a.

Do not allow the general ledger clerk to have access to the mailroom. b.

Separate the duties of receiving and handling cash from the duty of posting remittances to the accounts receivable ledger. c.

Compare the daily cash receipts summary with the cash receipts journal entries. d.

Require customers to remit checks rather than currency. e.

Verify the dates of cash receipts journal entries with the dates of daily cash receipts summaries.

12-74. A firm receives a purchase order from a customer for 10 units. Due to a shortage in the ordered item, the firm ships only 5 units. However, the customer is billed for all 10 units. What control would be most effective in preventing this error? a.

Require that the sales invoice be prepared before the goods are shipped and be based on the purchase order. b.

Require that each sales invoice be prepared only after the goods have been shipped, and base the invoice on the shipped quantities. c.

Base the shipping order on the purchase order, and use the latter as the basis for the sales invoice. d.

Delay sending a sales invoice until the purchase order can be completely filled. e.

Use the shipping order as the sales invoice and enclose with the shipped items.

12-75. Which of the following is necessary to ensure that the proper quantities are reflected on sales invoices? a.

Sales orders b.

Backorders c.

Picking slips d.

Shipping notices e.

None of the above is necessary.

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12-76. A clerk mistakenly posted a cash receipt from customer 135 for $200 to customer account 153. Which of the following is the most effective procedure for discovering and correcting this type of mistake? a.

Mail monthly customer statements. b.

Require the customer to return a copy of the remittance advice. c.

Compute a batch total on customer account number and amount. d.

Require a second clerk to check the work of the clerk who performs the original posting. e.

None of the above.

12-77. A reasonable batch control total to use with respect to the cash receipts portion of the revenue cycle during a particular day is: a. the total of daily sales. b. the total of the remittance listing. c. the total of the credits posted to accounts receivable records. d. the total of daily shipments. e.

None of the above.

12-78. A sales invoice is prepared by billing clerk in the amount of $850. However, it is incorrectly posted as $805 in the accounts receivable subsidiary ledger. Which of the following is the most effective control to detect this error? a.

A precomputed total of all amounts billed b.

A well-designed sales invoice c.

A monthly statement sent to the customer d.

An audit of all sales invoices e.

An independent posting to the general ledger 12-79. A cash receipts clerk writes off an overdue account receivable, even though the customer pays the amount due. The clerk then pockets the cash paid. What is the best control to prevent this (in addition to prohibiting the above clerk from having access to the accounts receivable records)? a.

Require that write-offs be approved by an accounts receivable clerk who has access to the account records. b.

Require that write-offs be prepared only if accounts are overdue for three or more months. c.

Require that write-offs be approved by a manager (such as a credit manager) who is knowledgeable concerning overdue accounts. d.

Require that write-offs be granted only at the end of a fiscal year. e.

Require that write-offs be reviewed by internal auditors at least once a year.

12-80. If the accounts receivable control account balance does not reconcile with the total of the account balances in the accounts receivable ledger at the end of a month, which of the following is most likely to have occurred? a.

A sales invoice amount was incorrectly computed. b.

An account balance became delinquent. c.

A sale amount was incorrectly posted. d.

A customer made more than one payment during the month. e.

More than one sale was made to a customer during the month.

12-81. Perhaps the most effective means of controlling the level of uncollectible accounts is to: a. require write-offs to be authorized. b. pay a salesperson a straight salary rather than commissions. c. use a system that allows accounts receivable records to be quickly accessed. d. require prior credit approval before ordered goods are shipped. e. require the sales manager to approve all sales orders.

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12-82. Which of the following should not be performed by the cashier if he or she receives remittances from the mail room? a.

Preparing the deposit slip b.

Carrying the daily deposit at a local bank c.

Endorsing the checks d.

Posting the amounts to the accounts receivable records e.

None of the above operations is incompatible with the others.

12-83. An error that is detected during an edit run of sales transactions should be listed on: a. a sales invoice. b. the customer's monthly statement. c. the sales journal. d. an exception and summary report. e. no record, since the transaction is invalid.

12-84. A computer operator performs a daily processing run that updates the accounts receivable master file with the day's cash receipts, which are recorded on a magnetic tape. This evening, however, he mistakenly mounts yesterday's tape of cash receipts, rather than today's tape. The mistake is not discovered until the update run is completed. Which of the following could have prevented this mistake? a.

Trailer label check b.

External label check c.

Header label check d.

Programmed edit check e.

Parity check **12-85. A transaction involving a charge to a non-existent customer account was entered into an accounts receivable and billing system that employs the batch processing mode. his error should be detected by the computer system and appear in: a. an exception or error report. b. the customer's invoice. c. the customer statement printout. d. the sales summary. e.

The error should not be listed, since the transaction is not valid. **12-86. Omen Company is a manufacturer of men's shirts and distributes weekly sales reports to each sales manager. The quantity 2R5 appeared in the quantity sold column for one of the items on the weekly sales report for one of the sales managers. The most likely explanation for what occurred is that the: a. quantity has been outputed using hexadecimal numbers. b. computer has malfunctioned during execution. c. printer has malfunctioned and the "R" should have been a decimal point. d. program did not contain a data validation routine for input data. e. product code has been printed for that one item instead of quantity.

+12-87. A bank’s automatic teller machine (ATM) system uses currency dispensing machines to issue cash automatically to customers. An ATM system employs inter-connecting data communication

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a. b. c. d. e.

networks and data bases. One of the important programmed checks applied by programs within ATM systems is the validity check, which checks: identification numbers against those known to be authorized and issued. characters in the various field to assure that they are of the modes that the fields are supposed to contain. transaction amounts to be sure that they do not exceed a pre-established amount. the logical correctness of relationships between the values of transactions and values stored in files.

None of the above.

12-88. A customer orders 100 units of merchandise, but only 90 units are available to be shipped. Which of the following controls is most effective in preventing a firm from billing a customer for 100 units if only the 90 available units are shipped? a.

Prepare the sales invoice as soon as possible by reference to the customer's order. b.

Prepare the sales invoice by reference to a shipping notice that lists the quantities shipped. c.

Prepare an accounts receivable aging schedule that shows the amounts owed by customers. d.

Require a backorder to be prepared for ordered quantities that are not available. e.

Maintain records of goods ordered and on hand.

12-89. A sales transaction source document was coded with an invalid customer account code. 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 among the following for detecting this error is: a. a parity check. b. key verification. c. a hash total check. d. a validity check. e. a sequence.

12-90. Which of the following programmed edit checks would not be employed by an online processing sales system? a.

A validity check of the customer numbers b.

A limit check on sales amounts c.

A field check of all identification numbers d.

A sequence check on customer numbers e.

An echo check that shows each customer name after the number has been entered 12-91. A customer inadvertently writes part number 12368 (a non-existent part) on an order, rather than part number 12638. In processing this order the error could most likely be detected by which of the following controls? a.

A batch control total b.

Key verification c.

A self-checking digit d.

A logical check e.

A reasonableness check **12-92. The Dibut Company's computer-based information system was recently audited by the firm's internal audit staff, with special attention to the internal controls. One problem uncovered was the failure of the system to detect that several inventory transaction records were missing. A control that would not help to ensure that missing records are detected is: a. a batch control total.

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b. c. d. e.

a record count. pre-numbered inventory transaction documents. a limit check.

None of the above.

12-93. Which of the following programmed edit checks would not be employed by a batch processing sales system that uses magnetic tape files? a.

A validity check of the customer numbers b.

A limit check on sales amounts c.

A sign check of the updated inventory balances d.

A self-checking digit on merchandise inventory numbers e.

An echo check that shows each customer name after the number has been entered 12-94. An on-line sales transaction processing system employs a programmed edit check that compares entered customer numbers against entered customers' names in order to detect when incorrect customer numbers have been entered. This edit check is called a: a. self-checking digit check. b. redundancy matching check. c. validity check. d. field check. e. relationship check. **12-95. 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 is to update the customer accounts in the master file should include an edit check 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.

12-96. When a customer places an order by phone with the Power Co., the sales clerk enters each product number and the quantity ordered into an on-line terminal. The system then displays for the clerk the description of the product as visual verification. The control employed in this case is a(n): a. echo check. b. validity check. c. limit check. d. relationship check. e. field check.

12-97. Which of the following programmed edit checks should have detected a quantity that was entered as 5C4? a.

A validity check b.

A limit check c.

A field check d.

A relationship check e.

A range check 12-98. In a sales processing system that involves batch processing, the transaction data are subjected to extensive programmed edit checks prior to the preparation of sales invoices and postings to the customers' accounts. Which of the following is an output needed from each processing run?

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a. b. c. d. e.

Inventory status report Report of control totals and suspended transactions having detected exceptions Accounts receivable aging schedule Invoice register Summary of sales and returns

12-99. Which of the below is least likely to be a daily output from the processing of sales transactions in a typical merchandising firm that sells on credit? a.

Shipping register b.

Sales invoice register c.

Sales summary d.

Customer statements e.

Back order status report **12-100.Adle Supply Company recently installed an integrated order-entry and invoicing system. The basic inputs to the system consist of one record for each line on the customers' orders, the inventory master file, and the customer master file. Individual items ordered by the customer may be rejected at the computer entry audit or when the items are validated by comparing them when data in the inventory mater file. Complete orders may be rejected when data from the orders are compared with data in the customer master file. All orders that are found to be valid are posted to the inventory and customer files. For data control personnel to account for all inventory items and customer orders processed, the system should include: a. boundary protection. b. echo checks. c. run-to-run control totals and exception reports. d. manual processing of invalid transactions. e. printing the status of the master records before and after processing the applications.

12-101. Two outputs from the revenue transaction cycle, the monthly statements to customers and the accounts receivable aging schedule are prepared from the: a. customers’ orders. b. sales journal. c. general ledger. d. accounts receivable subsidiary ledger. e. cash receipts journal.

12-102. Which of the following is least likely to be a useful inquiry with respect to management of the revenue cycle? a.

How many units of product X are on hand? b.

When is order Y scheduled to be shipped? c.

How much is customer Z's balance overdue? d.

From which suppliers are ordered goods expected? e.

What percentage of orders were shipped on time this month?

12-103. Which of the following is least likely to be a managerial report based on information from the revenue cycle? a.

Late shipments report b.

Unbilled shipments report

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c. d. e.

Sales analysis by products Accounts receivable aging schedule Cash requirements report

12-104. Which of the following is the most discriminating sales analysis for a nation-wide merchandising firm? a.

Sales analysis by sales regions b.

Sales analysis by products and customer classes c.

Sales analysis by customer classes d.

Sales analysis by products, sales regions, and customer classes e.

Sales analysis by salespersons and products **12-105.The internal controls surrounding the revenue cycle provide the organization with several assurances that include all of the following except the: a. accurate recording, shipping, and billing of all valid sales transactions b. approval of all credit sales transactions after they are processed c. proper authorization of all sales and sales return and allowance transactions d. proper safeguarding of finished goods inventories while in stock and during the shipping process e. accurate recording of customer accounts and finished goods inventories

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D D D C A D A B D D C D E B A A C B D C D D E D B

CHAPTER 13 13-1. a. b. c. d. e.

Which of the following is not a typical objective of an expenditure cycle involving goods?

To ensure that all goods are ordered as needed To receive all goods delivered To store all received goods in a safe place until needed To determine that all invoices are valid and correct To receive cash disbursements promptly

13-2.

Which of the following functions is not included in the typical expenditure cycle involving goods?

Recognizing the need for goods or services Placing an order for goods or services Ascertaining the validity of payment obligations Posting to the accounts receivable subsidiary ledger Disbursing payments to the customers

a. b. c. d. e.

13-3. a. b. c. d. e.

13-4.

Which of the following functions is the first function listed out of order in a typical expenditure cycle involving goods?

Place order for goods.

Receive and store goods.

Prepare the cash disbursement.

Ascertain validity of payment obligation.

Post the obligation to the accounts payable record.

a. b. c. d. e.

Which of the following is a task that is performed at the time of placing an order for goods or services?

Select a supplier Establish specifications such as estimated unit price Determine quantity to be ordered a and b, above a, b, and c, above

13-5. a. b. c. d. e.

When competitive bidding is desirable, the purchasing department: Mails a RFP to prospective suppliers Requests bids by the phone to expedite the procedure First requests permission of the inventory control department Accepts bids from all interested parties None of the above.

13-6. a. b. c. d. e.

Which of the following is not a step involved in vouching suppliers' invoices?

Tracing unit prices and quantities to purchase orders Recalculating extensions and totals Tracing received quantities to receiving reports Ascertaining discount periods All of the above are steps

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13-7. a. b. c. d. e.

Processing of accounts payable is simplified by use of the: open invoice method. ledgerless method. formal records method. daily posting method. payables aging method.

13-8.

e.

A zero-level data flow diagram pertaining to accounts payable shows these processes: (1.0) Recognize need for goods or services, (2.0) Place order for goods or services, (3.0) Receive goods or services (and store goods). If four additional processes are included in the diagram, which of the following statements is correct?

The process coded 4.0 is Maintain accounts payable.

From the two processes labeled “Ascertain validity of payable” and “Prepare cash disbursement” are flow lines that lead into the process labeled “Maintain accounts payable.”

The process labeled “Prepare reports and other outputs” shows a flow line leading to the external entity labeled Supplier (Vendor).

From the process labeled “Prepare cash disbursement” a flow line leads into a data store labeled “Accounts payable records.”

The process labeled “Prepare cash disbursement” is the final process shown.

13-9. a. b. c. d. e.

Which of the following is not a feature of an imprest system for petty cash disbursements?

Currency is kept in a locked cash box or drawer.

Petty cash vouchers are prepared for disbursements.

The cashier is usually in charge of the fund.

A petty cash account is maintained in the general ledger at a fixed amount.

A check on the general cash account is written to replenish the fund periodically.

a. b. c. d.

13-10. Which of the following organizational units within the logistics or inventory management function are normally involved in transactions pertaining to the expenditure cycle when goods are purchased? a.

Purchasing b.

Receiving c.

Inventory stores d. a and b, above e. a, b, and c, above 13-11. Which of the following units within the finance function is not normally involved in transactions pertaining to the expenditure cycle when goods are purchased? a.

Inventory control b.

Cash disbursements c.

Accounts payable d.

General ledger e.

Cash budgeting 13-12. Which of the following does not involve a decision that must be made by inventory managers of a merchandising firm? a.

What levels of merchandise should be stocked? b.

What prices should be charged for the various items of merchandise? c.

When should particular merchandise items be reordered? d.

How much of each merchandise item should be reordered? e.

Where and how should the merchandise inventory be stored?

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13-13. Which of the following does not involve a decision that must be made by either the controller or treasurer affecting the expenditure cycle? a.

What expenditure budgets should be established for the coming year? b.

What should be the maximum levels of expenditure that each department head should be allowed to acquire equipment or services? c.

What suppliers should be selected from whom to acquire services? d.

What accounts payable records should be maintained? e.

What policies concerning purchases discounts should be established?

13-14. Which source document within the expenditure cycle authorizes a purchase to be made by the purchasing department? a.

Purchase requisition b.

Receiving report c.

Purchase order d.

Purchase invoice e.

Disbursement voucher 13-15. Which source document within the expenditure cycle represents a binding obligation to accept goods according to stated terms and conditions? a.

Purchase requisition b.

Receiving report c.

Purchase order d.

Supplier's invoice e.

Disbursement voucher 13-16. A receiving report should show the quantities received of ordered goods and: a. the unit prices of each. b. the condition of the goods. c. any purchase discounts. d. the requisitioning department. e. the total amount due.

13-17. Which of the following is not a benefit of disbursement vouchers? a.

Added control through pre-numbered documents b.

Reduction in number of needed checks c.

Convenient means of packaging invoices for processing d. a and b, above e.

All are benefits of disbursement vouchers 13-18. Which of the following statements is incorrect? a.

Disbursement vouchers are entered into a voucher register. b.

Disbursement vouchers are pre-numbered. c.

A voucher register can reflect miscellaneous disbursements as well as disbursements to suppliers. d.

Disbursement vouchers eliminate the need for suppliers' invoices. e.

Disbursement vouchers form an integral part of a voucher system.

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13-19. What document should be prepared by the purchasing manager in case damaged goods need to be returned to a supplier? a.

Credit memo. b.

Debit memo. c.

RFP. d.

Back order. e.

Purchase order.

13-20. Which of the following events is least suitable for the use of preformatted screens in an on-line system for the processing of the expenditure cycle? a.

Preparation of purchase orders. b.

Posting payables. c.

Vouching of invoices. d.

Preparation of debit memos. e.

Disbursement of payments.

13-21. Data from which two source documents are posted to the accounts payable subsidiary ledger? a.

Sales invoices and check vouchers b.

Suppliers' invoices and check vouchers c.

Sales invoices and remittance advices d.

Suppliers' invoices and remittance advices e.

Sales invoices and suppliers' invoices **13-22. Which source documents are needed to control purchasing and accounts payable in atypical merchandising firm? a.

Purchase orders, receiving reports, vendor invoices b.

Receiving reports and vendor invoices c.

Purchase requisitions, purchase orders, receiving reports, vendor invoices d.

Purchase requisitions, purchase orders, inventory reorder reports, vendor invoices e.

Purchase orders. receiving reports, inventory reorder reports (The following diagram portrays the flows of purchases transactions through the accounting cycle and pertains to questions 13-23 through 13-26)

A

B

C

D

13-23. A is a: a. remittance advice. b. time card. c. purchase order. d. supplier's invoice. e. sales invoice.

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Trial balance

Financial statemements

13-24. B is the: a. accounts payable subsidiary ledger. b. check register. c. purchases journal. d. accounts receivable subsidiary ledger. e. general ledger.

13-25. D is the: a. accounts payable subsidiary ledger. b. accounts receivable subsidiary ledger. c. purchases journal. d. general ledger. e. cash disbursement journal.

13-26. C is the: a. cash disbursements journal. b. purchases journal. c. accounts payable subsidiary ledger. d. general ledger. e. accounts receivable subsidiary ledger.

(The following diagram portrays the flow of cash disbursements transactions through the accounting cycle and pertains to questions 13-27 through 13-30.)

A

B

C

D

13-27. A is a: a. remittance advice. b. cash disbursements journal. c. check voucher. d. accounts payable subsidiary ledger. e. sales order-invoice.

13-28. B is the: a. accounts payable subsidiary ledger. b. check register. c. purchases journal. d. accounts receivable subsidiary ledger. e. general ledger.

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Trial balance

Financial statemements

13-29. D is the: a. accounts payable subsidiary ledger. b. accounts receivable subsidiary ledger. c. cash disbursements journal. d. general ledger. e. purchases journal.

13-30. C is the: a. cash disbursements journal. b.

Purchases journal. c. accounts payable subsidiary ledger. d. general ledger. e. accounts receivable subsidiary ledger.

13-31. The accounts payable account is not debited in which of the following transactions? a.

Purchase b.

Purchase return c.

Cash disbursement d.

Purchase allowance e.

It is not debited in any of the above transactions.

13-32. Which of the following is least likely to be included in a group code that a firm assigns to its suppliers, who are evaluated yearly for performance? a.

Year that the supplier began business b.

Unique supplier identifier c.

Self-checking digit d.

Classification, e.g., size, diversity of products offered, or other basis e.

Performance rating (Note: Performance rating is not a desirable facet of a code, since it may vary from year to year. A code preferably should remain unchanged during its life.)

13-33. Which of the following transaction processing systems feeds inputs into the accounts payable records? a.

Sales b.

Purchases c.

Cash disbursements d. a and c, above e. b and c, above 13-34. Which set of files should be available for the processing of purchase orders? a.

Supplier master file, accounts payable master file, open purchase order file b.

Supplier master file, open purchase order file, inventory master file c.

Accounts payable master file, open purchase order file, receiving report file d.

Inventory master file, receiving report file, open purchase order file e.

Supplier master file, inventory master file, receiving report file

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13-35. Which set of files is needed within the expenditure cycle to maintain the credit suppliers' accounts? a.

Accounts payable master file, supplier master file, open purchase order file, supplier history file b.

Accounts payable master file, inventory master file, open purchase order file c.

Accounts payable master file, supplier master file, disbursement voucher file, cash disbursement file d.

Supplier master file, disbursement voucher file, cash disbursements file, inventory master file e.

Accounts payable master file, supplier master file, inventory file, open purchase order file, cash disbursement file 13-36. Which two files may logically be consolidated into a single file? a.

Accounts payable master and inventory master b.

Accounts payable master and supplier master c.

Open voucher and cash disbursements d.

Open voucher and open purchase order e.

Open purchase order and supplier history 13-37. Records in the open purchase order file are removed when: a. the goods are received. b. the suppliers' invoices are received. c. the suppliers' invoices are approved for payment. d. disbursement checks are written e. the vouchers are posted to accounts payable.

13-38. Which set of files is needed to process the receipts of ordered goods? a.

Inventory master file, open purchase order file, supplier master file b.

Inventory master file, open purchase order file, receiving report file c.

Supplier master file, accounts payable master file, receiving master file d.

Purchase requisition file, open purchase order file, inventory master file e.

Supplier master file, inventory master file, receiving report file 13-39. Which of the following files is least likely to be involved in the processing related to the expenditure cycle of a merchandising firm? a.

Open purchase order file b.

Accounts payable master file c.

Merchandise inventory master file d.

Shipping reports file e.

Supplier history file (The following data pertains to questions 13-40 and 13-41) The Oxford Corporation has the following eleven files: - Accounts payable - Raw materials inventory - Accounts receivable - Sales summary - Bill of materials - Supplier history - Finished goods inventory - Work in process inventory - Open production orders - Operations list (labor - Open purchase orders requirements for production)

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**13-40.Files maintained as part of the sales transaction processing systems 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, supplier history. **13-41.Files maintained as part of the complete 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, suppliers history. d. accounts payable, finished goods inventory, open purchase orders, supplier history. e. accounts payable, open purchase orders, raw materials inventory, supplier history.

13-42. Which of the following files is the most logical candidate to associate with the supplier master file via a network schema? a.

Sales history file b.

Open purchase order file c.

Employee master file d.

Customer master file e.

Open sales order file 13-43. In a network structure pertaining to the expenditure cycle of a firm that acquires merchandise from suppliers for resale, which of the following data structures appears to be most reasonable? a.

Supplier/accounts payable records (owner records) are linked to purchase order records (member records). b.

Purchase order records (owner records) are linked to supplier/accounts payable records (member records). c.

Supplier/accounts payable records (owner records) are linked to purchase order header records (member records), which in turn are linked to ordered item records (lower member records). d.

Supplier invoice records (owner records) are linked to supplier/accounts payable records (member records). e.

Supplier invoice records (owner records) are linked to merchandise records (member records).

13-44. In a relational data base that contains tables pertaining to the expenditure cycle, which is likely to be the common column in the supplier/accounts payable table, the supplier's invoice table, and the purchase order table? a.

Purchase order number b.

Invoice amount c.

Supplier name d.

Supplier account number e.

Purchase date 13-45. In a relational data base that contains tables pertaining to the expenditure cycle, which tables are most likely to have the purchase order number as a common column? a.

Supplier table, purchase order table, invoice table b.

Purchase order table, ordered items table, receiving report table c.

Purchase order table, merchandise table, supplier table d.

Invoice table, purchase order table, ordered items table e.

Purchase order table, receiving report table, supplier table

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**13-46. Doncor Producing Company has completed the design of a new computerized purchase order system. As a part of this development it prepared a diagram that emphasized the inputs and outputs and shows the flow of data through the entire system. This type of diagram is called a(n): a. program flowchart. b. documentation table. c. organization chart. d. system flowchart. e. division table.

13-47. Which of the following is not a control point within the expenditure cycle involving goods? a.

The determination of a need for goods b.

The preparation of a purchase order c.

The receipts of ordered goods d.

The approval of a supplier's invoice for payment e.

The establishment of a payables cutoff policy 13-48. Which of the following is not a control point within the expenditure cycle involving goods? a.

The point at which goods are ordered b.

The point at which goods are shipped by the supplier c.

The point at which the suppliers' invoices are vouched d.

The point at which the checks are prepared and signed e.

The point at which cash disbursements are posted **13-49. Copies of the purchase order are obviously sent to the supplier and filed when a manufacturing firm orders materials. For proper informational flow and control purposes, in a manual purchases procedure copies of the purchase order should also be sent to which of the following departments? a.

Accounts payable, receiving, and stores b.

Accounts payable, receiving, and inventory control c.

Accounts payable, accounts receivable, and receiving d.

Accounts payable, receiving, and production planning e.

Accounts payable, inventory control, and production **13-50. Which of the following departments should have the responsibility for following up on any problems regarding orders of materials and supplies—such as overdue orders, partial orders, damaged materials, and so on? a.

Receiving b.

Inventory control c.

Stores d.

Purchasing e.

Accounts payable 13-51. Which of the following procedural steps should not be performed by the accounts payable department? a.

Comparing the suppliers' (vendors') invoices with receiving reports b.

Canceling the supporting documents after checks have been signed c.

Comparing unit prices on invoices with unit prices on purchase orders d.

Verifying that purchases have been properly authorized e.

Approving invoices or disbursement vouchers for payment

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13-52. In a purchase procedure the determination of when to reorder inventory items is made by the __________ department on the basis of the __________. a.

Purchasing; reorder points b.

Stores; quantities in the bins c.

Inventory control; reorder points d.

Stores; quantities in the records e.

Purchasing; quantities in the records 13-53. In a purchasing procedure the authorization for preparing a purchase order is based on the __________ and the quantity to order is based on the __________. a.

Purchase requisition; reorder point b.

Purchase requisition; economic order quantity c.

Stores requisition; past usage d.

Purchase requisition; past usage e.

Material requisition; economic order quantity 13-54. Why are quantities omitted on the copy of the purchase order that is forwarded to the receiving department? a.

Because there is no assurance that the supplier will have the quantities or ordered goods available b.

Because the name of the supplier is the only important information to the receiving department c.

To ensure that receiving clerks actually count the quantities received d.

To discourage receiving clerks from keeping items if more are sent than ordered e.

To ensure that the receiving clerks have sufficient work to keep them busy 13-55. What control can be employed to ensure that unwanted goods are not accepted by the receiving department? a.

Accept goods only from approved suppliers b.

Accept goods only if a purchase order copy is on hand c.

Carefully inspect all received goods d.

Accept only those goods accompanied by a packing slip e.

Accept only those goods for which a supplier's invoice has been received 13-56. Which department should approve suppliers' invoices for payment? a.

Purchasing department b.

Inventory control department c.

Cash disbursement department d.

Accounts payable department e.

General ledger department 13-57. Which control procedure is necessary to encourage receiving department clerks to count goods when received? a.

Accept goods only if a purchase order copy is on hand b.

Accept goods only from approved suppliers c.

Accept goods only if accompanied by a packing slip d.

Require order quantities to be deleted from the receiving department's copy of the purchase order e.

Accept goods only if a related supplier's invoice has been received

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13-58. What step should be taken to ensure that ordered quantities are actually received? a.

Compare purchase requisitions to receiving reports b.

Compare purchase orders to receiving reports c.

Compare purchase orders to suppliers' invoices d.

Compare quantities received to the posting on the records in the inventory master file e.

None of the above.

13-59. Which of the following controls should prevent overpaying a supplier due to a greater quantity of items being listed on the invoice than were actually received? a.

A precomputed batch total on invoice quantities b.

Comparison of the receiving report with the supplier's invoice c.

Checking of computations on the supplier's invoice d.

Separation of the custodial and record-keeping functions e.

Comparison of the purchase order with the supplier's invoice 13-60. Which of the following verifications is not performed during the vouching procedure? a.

That the purchase has been authorized. b.

That the goods or services have been ordered. c.

That the terms and specifications are in agreement with the order. d.

That all computations on the invoices are correct. e.

That the amount total on the invoice agrees with the amount total on the purchase order.

13-61. Which of the following managers should be responsible for ensuring that the disbursement checks are properly mailed? a.

President b.

Controller c.

Accounts payable manager d.

Purchasing manager e.

Treasurer 13-62. Which control should prevent the payment of the same supplier's invoice more than once? a.

Assign numbers to each supplier's invoice b.

Require at least two signatures on each check c.

Require each suppliers invoice to be vouched d.

Employ the voucher system e.

Cancel invoices and file with supporting documents after payment 13-63. Which of the following is a sound control procedure with respect to all disbursement checks? a.

Assign the controller to sign all checks b.

Return the checks after signing to the accounts payable department c.

Pre-number checks sequentially and account for the sequence d.

Require that a separate check be written for each supplier invoice e.

Write checks only once a week 13-64. Which of the following procedures is undesirable with respect to cash disbursements? a.

The signer of disbursement checks is responsible for mailing them to recipients. b.

Disbursement checks are prepared by accounts payable clerks. c.

Disbursement checks are signed by the cashier. d.

Batch control totals are computed on each day's vouchers from which checks are to be written. e.

Disbursement checks are entered into a check register.

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13-65. What procedure should be followed to ensure that a firm does not pay for more goods than were needed? a.

Compare the supplier's invoice to the purchase order b.

Compare the supplier's invoice to the receiving report c.

Verify the authenticity of the receiving report d.

Verify the authenticity of the suppliers invoice e.

Compare the purchase order to the receiving report 13-66. In a manual cash disbursements procedure the payment amounts are posted from check vouchers to the suppliers' accounts by the: a. cash disbursements clerk. b. accounts payable clerk. c. cashier. d. general ledger clerk. e. treasurer.

13-67. Which of the following procedures should be performed to detect disbursement vouchers that are prepared for payment of goods that have not been received? a.

Compare quantities of goods received with the quantities listed on purchase requisitions in the receiving department. b.

Check the vouchers for accuracy and approval in the cash disbursements department. c.

Compare each disbursement voucher against the corresponding receiving report, purchase order, and supplier's invoice in the accounts payable department. d.

Count all incoming goods when they arrive in the receiving department. e.

Eliminate the use of disbursement vouchers in the accounts payable department.

13-68. In a cash disbursements procedure, the checks should be mailed by the person or department that: a. vouches the suppliers' invoices. b. approves the disbursement vouchers for payment. c. prepares the checks for signature d. signs the checks. e. posts the payment amount to the general ledger.

13-69. Which of the following outputs is least likely to be printed by an on-line purchases and receiving system? a.

Inventory reorder list b.

Prenumbered purchase order c.

Listing of daily purchase orders prepared d.

Prenumbered receiving report e.

Invoice 13-70. Which of the following steps is least likely to be performed by an on-line receiving system? a.

Printing a prenumbered receiving report b.

Computing and displaying the difference between quantities received and quantities ordered c.

Verifying the count of quantities received d.

Updating the inventory master file to reflect quantities received e.

Noting the quantities received in the open purchase order

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13-71. Which of the following steps is least likely to be performed during an on-line accounts payable processing procedure? a.

Precornputing a batch total based on a batch of supplier invoices b.

Validating entered data from supplier invoices c.

Comparing ordered quantities against quantities on supplier invoices d.

Updating the supplier records in the accounts payable master file to reflect amounts on approved supplier invoices e.

Printing prenumbered disbursement vouchers 13-72. Which of the following is not an improvement that computerized processing within the expenditure cycle provides over manual processing? a.

Greater processing efficiency b.

More up-to-date data in the accounts payable and inventory master files c.

More accurate data in files due to complete validation of input data d.

Greater variety of control reports and summaries e.

Reduced payments to suppliers for goods and services 13-73. Which of the following is not viewed as a risk exposure that exists within the expenditure cycle? a.

Goods may be ordered that are not needed. b.

Accounts payable balances may be accessed by unauthorized persons. c.

Freight may be charged on goods purchased. d.

Invoices from suppliers may be paid more than once. e.

Goods may be damaged when received.

13-74. A type of embezzlement that involves covering cash shortages by transferring checks among bank accounts is known as: a. kiting. b. lapping. c. stealing. d. floating. e. colliding.

13-75. Which of the following risk exposures is likely to be experienced by a firm due to control weakness in its expenditure cycle? a.

Understatement of bank balances due to kiting of checks by employees b.

Excessive inventory quantities on hand due to duplicate payments of invoices from suppliers c.

Understatement of accounts payable due to missed posting of purchases from suppliers d.

Overpayment for goods due to errors in suppliers' invoices e.

Excessive purchases cost due to improper disbursements for goods not received 13-76. Which of the following is not a control objective of the expenditure cycle? a.

To ensure that all goods are ordered as needed b.

To ensure that ordered goods are received in good condition c.

To ensure that ordered goods are promptly and accurately recorded and posted to the correct suppliers' accounts d.

To ensure that all obligations are promptly paid to the correct suppliers as soon as authorized e.

To ensure that cash disbursements are accurately classified, posted, and summarized

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13-77. The organizational independence concept requires that the storeskeeping function be separated from which of the following functions in a merchandising firm? a.

Inventory record-keeping b.

Accounts payable c.

Purchasing d. a and b, above e. a, b, and c, above 13-78. The concept of organizational independence requires that which trio of expenditure related functions be located in separate organizational units? a.

Accounts payable, accounts receivable, and cost accounting b.

Purchasing, timekeeping, and credit c.

Warehouse, cashier, and receiving d.

Purchasing, accounts payable, and stores e.

Payroll, property control, and billing 13-79. Which of the following organizational pairings is not acceptable for good internal control within the expenditure cycle? a.

Reviewing suppliers' records and ordering merchandise b.

Physically handling merchandise received and preparing received reports c.

Signing and mailing, disbursement checks d.

Reviewing suppliers invoices (and other supporting documents) and signing disbursement checks e.

Vouching suppliers' invoices and preparing disbursement checks 13-80. Which of the following procedures pertaining to purchasing and inventory control is unsound? a.

The receiving and store departments are separated b.

Physical inventories are taken at the end of each quarter c.

The storeskeeper maintains the inventory records d.

The receiving report is used to reflect acknowledgment that received goods are moved into the storeroom e.

The copy of the purchase order sent to the receiving department is incomplete, in that it does not show quantities ordered 13-81. Which of the following groups of duties is most acceptable in an expenditure cycle? a.

Preparing receiving reports and approving purchase orders b.

Preparing purchase requisitions and purchase orders c.

Signing checks, mailing documents, and canceling supporting documents d.

Signing checks and preparing bank reconciliations e.

Approving vouchers for payment and preparing checks +13-82. Which of the following procedures is most appropriate to minimize the risk that one of the firm's buyers will purchase from a supplier that is a relative or close associate? a.

Establish an economic order quantity for each inventory item b.

Establish a predetermined reorder point for each inventory item c.

Maintain an approved list of suppliers for all purchases d.

Separate the purchase function from the vouching function e.

Perform a risk analysis for the purchasing function

208

13-83. What control should inhibit a buyer of a firm from ordering supplies from a supplier and requesting the supplier to deliver the supplies to his home address for his personal use? a.

Requiring the accounts payable department to match the supplier's invoice to the purchase order b.

Requiring buyers to select only well-established suppliers c.

Assigning responsibility for signing checks to the treasurer d.

Requiring the accounts payable department to match the supplier's invoice to the receiving report e.

Requiring all received goods to be immediately sent to a storeroom 13-84. Which document is needed to show that unwanted goods have been returned to the supplier? a.

Debit memo b.

Credit memo c.

Purchase order d.

Supplier's invoice e.

Shipping notice 13-85. A supplier delivers merchandise having a value of $800 to a retail firm. It then mails an invoice to the firm showing a total amount of $1,000. Which of the following controls will most likely expose the overbilling by the supplier? a.

Accept merchandise only if it can be matched to a purchase order. b.

Compare each supplier's invoice to a written receiving report. c.

Recompute the extensions and footings on each supplier's invoice. d.

Require two persons to sign each disbursement check. e.

Compare each supplier's invoice to a written purchase order.

13-86. A reasonable batch control total to use with respect to the cash disbursements portion of the expenditure cycle during a particular day is: a. the total of daily purchases. b. the total of the invoice amounts being paid. c. the total of the amounts shown on vouchers being paid. d. b and c, above e. a, b, and c, above 13-87. A disbursement voucher is prepared in the amount of $765, but is incorrectly posted as $756 in the accounts payable subsidiary ledger. Which of the following is the most effective control to detect this error? a.

A precomputed total of all voucher amounts b.

A well-designed disbursement voucher c.

A monthly statement received from the supplier d.

An audit of all supplier invoices e.

An independent posting to the general ledger 13-88. A computer program used to process accounts payable is found to be unreliable. A control that would have detected this problem at an earlier date is the preparation and use of: a. test data. b. a console run book. c. an exception and summary report. d. a data dictionary. e. a user's manual.

209

13-89. The best person to sign checks (if only one person signs) is the: a. person preparing the checks. b. purchasing agent. c. accounts payable clerk. d. treasurer or cashier. e. controller.

13-90. Expense summaries are prepared daily by the computer center of a firm. Which control technique enables an accountant to locate one of the source documents that supports an amount within the summary? a.

An exception and summary report b.

An audit trail c.

A distribution log d.

A program listing e.

A programmed edit check 13-91. Which of the following programmed edit checks would not be employed by an on-line purchases processing system? a.

A validity check of the supplier numbers b.

A limit check on purchased amounts c.

A field check of all identification numbers d.

A sequence check of disbursement voucher numbers e.

An echo check that shows each supplier name after the number has been entered 13-92. Which of the following programmed edit checks would not be employed by a batch processing purchases system that uses magnetic tape files? a.

A validity check of the supplier numbers b.

A limit check on invoice amounts c.

A sign check of the updated inventory balances d.

A sequence check of all purchase order numbers e.

An echo check that shows supplier names after the numbers have been entered 13-93. What type of programmed check is most appropriate for comparing inventory quantities in receipts transactions with on-order quantities in open purchase order records? a.

Field check b.

Relationship check c.

Check digit verification d.

Limit check e.

Echo check 13-94. Which of the following entered items cannot be appropriately verified by means of a selfchecking digit? a.

Supplier account number b.

Inventory item number c.

Unit price d.

Invoice amount e. a and d, above

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13-95. The expense account codes of a firm are in the range between 700-799, and the account code for electric utility expense is 749. If a clerk mistakenly enters the code 947, which check would be appropriate to detect the error? a.

Key verification check b.

Batch total check c.

Validity check d.

Field check e.

Sequence check 13-96. In a computerized purchases system which type of programmed edit check might be employed to verify that estimated unit prices listed on purchase orders are not too high? a.

Limit check b.

Range check c.

Relationship check d.

Validity check e.

Field check 13-97. Which of the following programmed edit checks should have detected an inventory item description that was entered in a purchase order as Tie R7D? a.

A validity check b.

A limit check c.

Afield check d.

A relationship check e.

A range check.

13-98. Two supplier invoices were lost during their processing and their loss was not detected until the suppliers complained about their checks. Which of the following would not aid in the early detection of such missing documents? a.

A batch control total on invoice amounts b.

A record count of supplier invoice amounts c.

An invoice register d.

A limit check e.

All of the above are useful in detecting lost documents. **13-99. An employee in the receiving department keyed in an incoming shipment via a department terminal and inadvertently omitted the purchase order number. The most appropriate input control to employ to detect this error is a: a. batch total. b. completeness check. c. sequence check. d. reasonableness check. e. compatibility check.

13-100. A bank disburses cash to depositors via automatic teller machines (ATMs). One of the vital controls in such a system checks the personal identification number (PIN) of the depositor against a list of authorized and issued numbers. This check is known as a: a. field check. b. limit check. c. validity check. d. range check. e. relationship check.

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13-101. An on-line purchases transaction processing system employs a programmed edit check that compares entered supplier numbers against entered supplier names, in order to detect when incorrect supplier numbers have been entered. This edit check is called a: a. self-checking digit check b. redundancy matching check. c. validity check. d. field check. e. relationship check.

13-102. An error that is detected during an edit run of cash disbursement transactions should be listed on: a. a disbursement voucher. b. the supplier's monthly statement c. the purchase journal. d. an exception and summary report. e. no record, since the transaction is invalid.

13-103. A transaction involving the receipt of ordered merchandise is found to be erroneous. The transaction data are sent back to the originating department to be corrected. The following week the inventory control department complains that the inventory balance, as reflected in the records, is too low. It is not possible for the data control section to determine if the transaction above has been corrected and reprocessed. The control mechanism that would facilitate this determination is a(n): a. suspense log. b. error listing. c. exception and summary report. d. programmed edit check. e. inventory status report.

13-104. What control procedure should be employed to detect that orders are being placed for materials that at the same time are being disposed of as surplus? a.

Have all purchase requisitions approved by the purchasing agent b.

Schedule purchases based on past orders placed. c.

Employ reorder points for all materials. d.

Develop and distribute periodic reports of surplus materials. e.

Employ economic order quantities for all materials purchases.

13-105. Which of the following reports is least likely to be generated as an output of purchases transaction processing? a.

Open payables report b.

Shipping register c.

Voucher register d.

Inventory status report e.

Open purchase orders report 13-106. Which of the following reports would be least useful to the purchasing manager? a.

Vendor performance report b.

Overdue deliveries report c.

Purchase analysis by buyer d.

Open purchase orders report e.

Open payables report

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**13-107. For the most effective operation of a purchasing system and the related inventory control activities, the basic reports and/or reporting functions should include a(n): a. overdue deliveries report, on-order report, and invoices due report b. overdue deliveries report, backorder log, and invoices due report c. inventory master file, vendor master file, purchasing transaction file, and cash flow commitment report d. purchase order report, vendor performance report, and stock status report e. cash flow commitment report, open requisitions report, vendor performance report, and stock status report +13-108. Your firm has recently converted its purchasing cycle from a manual to an on-line computer system. You have been placed in charge of the first post-implementation audit of the new system and have access to a generalized audit software package. One of your objectives is to determine whether all material liabilities for trade accounts payable have been recorded. Which of the following would most help you achieve this objective? a.

A listing of all purchase transactions processed after the cut off date b.

A listing of all accounts payable ledger accounts with a post office given as the vendor mailing address c.

A listing of all duplicate purchase orders, receiving reports, and vendor invoices d.

A listing of all vendors with a debit balance in the accounts payable ledger

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13-1.

13-2.

13-3.

13-4.

13-5.

13-6.

13-7.

13-8.

13-9.

13-10.

13-11.

13-12.

13-13.

13-14.

13-15.

13-16.

13-17.

13-18.

13-19.

13-20.

13-21.

13-22.

13-23.

13-24.

13-25.

13-26.

13-27.

13-28.

13-29.

13-30.

13-31.

13-32.

13-33.

13-34.

13-35.

13-36.

13-37.

13-38.

13-39.

13-40.

B D C D A E B B C E E B C A C B E D B C B C D C A D C B A D A E E B C B C B D D

13-41.

13-42.

13-43.

13-44.

13-45.

13-46.

13-47.

13-48.

13-49.

13-50.

13-51.

13-52.

13-53.

13-54.

13-55.

13-56.

13-57.

13-58.

13-59.

13-60.

13-61.

13-62.

13-63.

13-64.

13-65.

13-66.

13-67.

13-68.

13-69.

13-70.

13-71.

13-72.

13-73.

13-74.

13-75.

13-76.

13-77.

13-78.

13-79.

13-80.

E B C D B D E B B D B C B C B D D B B E E E C B A B C D E C A E C A C D E D E C

13-81.

13-82.

13-83.

13-84.

13-85.

13-86.

13-87.

13-88.

13-89.

13-90.

13-91.

13-92.

13-93.

13-94.

13-95.

13-96.

13-97.

13-98.

13-99.

13-100.

13-101.

13-102.

13-103.

13-104.

13-105.

13-106.

13-107.

13-108.

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C C D E B D A A D B D E B E C B C D C C B D B D B E E A

CHAPTER 14 14-1. a. b. c. d. e.

Which of the following is the deliverable from the analysis phase of systems development?

Approved project proposal Requirements Specifications Selected hardware and software Installed physical system

14-2. a. b. c. d. e.

Which of the following is deliverable from the design phase of systems development?

Approved project proposal Requirements Specifications Selected hardware and software Installed physical system

14-3.

Which of the following is not a direct reason for surveying the present information firm as a part of the analysis phase?

To determine a better way of performing procedures To detect problems and weaknesses To gather data for making cost comparisons To gain the participation of users of the system To determine essential data flows, operations, and interrelationships

a. b. c. d. e.

14-4. a. b. c. d. e.

14-5. a. b. c. d. e.

Which of the following describes the correct sequence of steps in the systems analysis phase?

Analyze findings, survey present system, identify information needs and system requirements, submit systems analysis report.

Survey present system, identify information needs and system requirements, analyze findings, submit systems analysis report.

Submit systems analysis report, identify information needs and system requirements, analyze findings, survey present system.

Survey present system, analyze findings, identify information needs and system requirements, submit systems analysis report.

Identify information needs and requirements, survey present system, analyze findings, submit systems analysis report.

Which of the following is not within the scope of a survey (investigation) of a present system, with reference to a typical systems project such as the sales transaction processing system?

Resource flow Interfaces with adjoining modules Managerial decision making and information flows Relationships with relevant aspects of the firm's environment All of the above are within the scope.

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14-6. a. b. c. d. e.

14-7. a. b. c. d. e.

Which of the following is not an example of typical data gathered during an information system survey?

Volumes of transactions processed Types of computers that can handle transaction volumes Costs of information system resources Sequence of data processing steps Errors made in processing transactions Which of the following does not represent a likely source of facts during a survey (investigation) of a present information subsystem?

Documents and records Paperwork and physical operations Managers and employees Encyclopedias Industry trade associations

**14-8. A survey (investigation) of an existing system and planning for improvements generally includes a study of the volume of input transactions. The most relevant base of counting those transactions is: a. an average count for a period of time. b. an actual count for several periods selected at random. c. an actual count for only the peak periods . d. an actual count and their distribution within various time periods. e. the actual low count and the actual high count during any given time period. **14-9. a. b. c. d. e.

Documentation of a computerized business system should begin: when computer programs are being written. as soon as the proposed system flowcharts have been completed. once a smooth conversation has been assured. at the time of the original analysis. when the first post-implementation audit has taken place.

14-10. The system analyst must respect the "people" factor during a systems project mainly in order to: a. maintain harmony among all employees. b. develop respect for the systems function. c. gain acceptance for the new system. d avoid lawsuits and high turnover. e. assure the best organizational structure.

14-11. Which of the following actions can help to overcome the resistance of such users as employees and managers to the development of a new information system? a.

Keeping the users fully informed b.

Gaining the active participation of the users c.

Showing the users how the new system can benefit them d.

Designing the system to be as user-friendly as possible e.

Keeping the development secret from those who will use the new system

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**14-12. A systems survey involves the process of obtaining an accurate perspective on the existing system in order to identify weaknesses that can be corrected in the new system. Which one of the following steps is not considered part of this system survey? a.

Interviews are conducted with operating people and managers. b.

The complete documentation of the system is reviewed. c.

Measures of processing volumes are obtained for each operation. d.

Equipment sold by various computer manufacturers is reviewed in terms of capability, cost, and availability. e.

Work measurement studies are conducted to determine the times required to complete various tasks or jobs.

14-13. Which of the following is not a question that would normally be asked during the step that involves an analysis of the survey findings? a.

Why is it done? b.

How well is it done? c.

Where is it done? d.

Should it be done at all? e.

Is there a better way of doing it?

14-14. Which of the following does not represent a typical physical performance system requirement? a.

Required throughput b.

Maximum allowable number of errors c.

Required response time d.

Frequency of required reports e.

Content of required reports 14-15. Which of the following is not generally viewed as being a desired capability of an information system? a.

Timeliness in providing information b.

Economical operations c.

Sophisticated procedures d.

Flexibility and adaptability to change e.

Reliability of hardware and software 14-16. In order to determine information needs during the systems analysis phase, it is necessary to perform a: a. decision analysis. b. system Survey. c. work distribution analysis. d. function analysis. e. data flow analysis.

14-17. Information needs analysis stresses that which of the following should be assessed before designing any system elements? a.

What data are needed to provide useful information. b.

What type of systems are used by competitors. c.

What information is needed by managers for decision making. d.

What controls are needed. e.

What processing procedures are needed to generate information.

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14-18. Which of the following is not a desirable technique to gain the fruitful participation of managers during the compilation of information needs? a.

Encourage a review of the managers' responsibilities. b.

Discuss the process by which decisions are made by managers. c.

Have the president issue a directive ordering the participation in the information needs analysis. d.

Present check lists that relate categories of information needs to specific decision processes. e.

Have present reports discontinued, so that managers can observe the impact of such missing reports upon their decision making. **14-19. The Kesta Company is doing a systems development study. The study started with broad organizational goals and the types of decisions made by organizational executives. This study supports a model of information flow and ultimate design requirements. This approach to systems development is called: a. bottom-up. b. network. c. top-down. d. strategic. e. sequential.

14-20. Which of the following would not likely appear in a systems analysis report pertaining to an approved project? a.

Systems requirements b.

Objectives of the project c.

Alternative designs that appear feasible d.

Summary of problems in the present system e.

Revised cost budget 14-21. Which of the following fact gathering techniques is not generally employed during the system analysis phase? a.

Interviewing b.

Document review c.

Cost comparison d.

Questionnaire survey e.

Observation 14-22. Which of the following is a desirable practice with respect to the interviewing technique? a.

Do not ascertain any facts concerning the interviewee prior to the interview, so that the interviewee can answer all such questions personally. b.

Ask for the interview without prior notice, so that the interviewee's answer will be spontaneous. c.

Require the interviewee to followed pre-established list of questions strictly, in order that digressions can be minimized. d.

Express no personal opinions to the interviewee. e.

Interrupt the interviewee's answers whenever they stray from the particular question at hand.

14-23. Which one of the following procedures is an undesirable interviewing technique? a.

The interviewer should gather facts beforehand. b.

The interviewer should be advised as to the purpose for the interview. c.

The interviewer should use natural and understandable terms. d.

The interview should be conducted in the interviewee's office or other relaxed environment. e.

The interviewer should take no notes but turn a tape recorder on at once.

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14-24. Which of the following techniques is widely used in the analysis and evaluation of the internal control structure of a firm? a.

Past financial statements b.

Review of physical operations c.

Questionnaire comparison d.

Benefit/cost comparison e.

Interviews with higher-level managers 14-25. Which fact-gathering technique is most appropriate to ascertain if accounting procedures are being performed as prescribed? a.

Observations b.

Review of manuals c.

Interviews d.

Questionnaires e.

All of the above. +14-26. You have undertaken a preliminary survey of a manufacturing operation. Which of the following is the objective of a “walk-through”? a.

Determine the layout of the plant facilities b.

Gather information to prepare flowcharts c.

Observe the physical flow of materials among production departments d.

Obtain an understanding of the process and control points by following the process style e.

All of the above.

14-27. Which of the following techniques is the best to use to ascertain if an adequate segregation of duties related to transaction processing is in effect? a.

Prepare a document system flowchart that shows the duties assigned to the employees in the various organizational units involved in transaction processing. b.

Interview the managers of the involved organizational units as to the organizational controls in effect during this period. c.

Review written job descriptions that have been prepared by the personnel department. d.

Observe the employees in the various organizational units as they perform their duties. e.

Distribute a questionnaire to the employees concerning the duties that they are assigned. **14-28. A system flowchart is most important in systems analysis and design because it documents: a. all the inputs for a given system. b. the relationships between the documents and procedures in an organization. c. all the outputs for a given system. d. the disposition of each document. e. the interrelationship between document and program decisions.

14-29. A technique that can be used to evaluate the productivity of departments and employees, as well as to establish standard times for performing tasks, is known as: a. systems flowcharting. b. work distribution analysis. c. work measurement analysis. d. checklists. e. work scheduling.

14-30. A technique that helps to allocate tasks to employees in an equitable manner is known as:

219

a. b. c. d. e.

work measurement. work distribution. work space layout. flowcharting. documentation.

**14-31. Which of the following is the most widely used device for documenting computer-based systems? a.

Decision tables b.

System flowcharts c.

Automated flowcharts generated from software d.

Hierarchy charts e.

Gantt charts 14-32. Which of the following is the least useful type of matrix for systems analysis? a.

Inputs versus outputs b.

Users versus reports they receive c.

Data elements versus files in which they are stored d.

Decision makers versus data elements that they need e.

Decision makers versus specific decisions for which they are responsible 14-33. Which of the following would not be a useful type of matrix? a.

Inputs versus outputs b.

Users versus reports received c.

Data versus files d.

Organizational units versus related responsibilities e.

Outputs versus data sources 14-34. Which of the following is not a traditional development technique? a.

Work distribution charting b.

Work sampling c.

Data flow diagram. d.

Space layout diagram e.

Systems flowchart 14-35. Which of the following is not a feature of structured systems development? a.

Integrated view of project modules b.

Emphasis on physical rather than logical flows c.

Improved communication between analysts and users d.

Easy-to-understand diagrams e.

Decomposition of project module into smaller modules 14-36. Which of the following is not a structured systems development technique? a.

Structure chart b..

Data flow diagram c.

Entity-relationship diagram d.

Work distribution diagram e.

Data hierarchy diagram

14-37. Which of the following techniques is best suited for analyzing a processing situation or need?

220

a. b. c. d. e.

Data flow diagram System flowchart Entity-relationship diagram HIPO diagram Data structure diagram.

14-38. The top level of data flow diagram is called a: a.

HIPO diagram. b. hierarchy diagram. c. context diagram. d. data structure diagram. e.

Wamier-Orr diagram.

14-39. Which of the following is not a diagram that focuses upon the logical requirements of a computer-based system and that ignores physical systems components? a.

Data flow diagram b.

Hierarchical function diagram c.

Decision flow diagram d.

System flowchart e.

Input/output matrix +14-40. The body of systems development techniques that consist of decomposing systems procedures and requirements is known as: a. traditional systems development. b. prototyping development. c. structured systems development. d. hierarchical input process output development e. top down development.

14-41. A structure chart describes the __________ and __________ within a system. a. hierarchy; relationships b. process; flows c. data structures; relationships d. data structures; flows e. processes; relationships 14-42. Each submodule or “box” in a structure chart corresponds to a __________ in a data flow diagram. a. data store b. entity c. process d. flow e. data structure 14-43. A key feature of both a structure diagram and data flow diagram is that the diagrams consist of multiple levels that: a. parallel each other. b. articulate with each other. c. oppose each other. d. provide a single structure. e. overlap with each other.

14-44. A data flow diagram at a particular level centers around: a. a group of entities and their relationships.

221

b. c. d. e.

a collection of data stores and structures. a series of processes and data flows into and out of these processes. the configuration of physical data processing devices. the flows of data to and from several organizational units.

14-45. The systems development phase that results in specifications for a new information system pertaining to data resources, processing features, controls, data bases, and information products is known as: a. systems planning. b. systems analysis. c. systems design. d. systems implementation. e. systems modification. **14-46. An activity that normally would not be considered part of the system analysis phase of systems development is: a. conducting interviews with employees to determine if the current system operates as it was designed. b. preparing informational flow diagrams that identify information requirements of managers and the flows of needed information to managers from the sources. c. preparing specifications for system controls and security measures. d. preparing work distribution charts that portray the times worked by each employee on various tasks. e. surveying information system resources such as personnel, equipment, and supplies.

14-47. Which of the following do all authorities agree to be a key step during the systems design phase? a.

Determination of system requirements b.

Developing design details concerning file formats, computer programs, etc. c.

Determining the economic feasibility of a specific design d.

Evaluating alternative systems designs e.

All of the above, by common agreement, are steps during the design phase. **14-48. An activity that is not considered part of the systems design phase is: a. file record layout analysis. b. document flowcharting. c. specification of format and content of report documents. d. work distribution analysis. e. systems surveying. **14-49. An activity that normally would not be considered part of the systems design phase of systems development is: a. preparing a forms checklist that identifies relevant factors that should be considered in developing forms. b. formulating specific systems specifications for a system to be reviewed and approved by top management. c. soliciting hardware and software proposals from alternative suppliers. d. preparing a explicit diagram showing the capabilities and peculiarities of a specific system. e. preparing a data hierarchy diagram that arrays data according to their levels within a hierarchy.

14-50. The aim of the design phase is to produce a(n): a. fully installed system.

222

b. c. d. e.

set of specifications for a new or improved system. economic feasibility analysis. contract for equipment. justification for the application.

**14-51. In selecting among alternative designs of new information systems, one of the most useful techniques is a: a. new set of system specifications. b. cost-benefit analysis. c. decision tree analysisd. reliability analysis. e. decision table analysis.

14-52. Determining whether a new system design will be acceptable and successfully used by the personnel of a organization concerns: a. technical feasibility. b. economic feasibility. c. operational feasibility. d. audit feasibility. e.

None of the above.

14-53. Determining whether a proposed system design is attainable, given the existing state of technology, concerns: a. technical feasibility. b. economic feasibility. c. operational feasibility. d. audit feasibility. e.

None of the above.

14-54. A firm has just designed a new computer-based logistics system, and it has determined that the system can be implemented with existing technology and with benefits that exceed costs. Which of the following has apparently been neglected? a.

Technical feasibility b.

Economic feasibility c.

Operational feasibility d.

Hardware feasibility e.

Software feasibility 14-55. Accountants are most knowledgeable concerning techniques relating to: a. technical feasibility. b. economic feasibility. c. operational feasibility. d. software feasibility. e. hardware feasibility.

**14-56. When evaluating a new system design, technical feasibility refers to whether: a. a proposed system is attainable, giving the existing technology.

223

b. c. d. e.

the system's manager can coordinate and control the activities of the systems department. an adequate computer site exists for the proposed system. the proposed system will produce economic benefits which exceeds its costs. the system will be effectively used within the operating environment of an organization.

**14-57. When evaluating a new system design, operational feasibility refers to whether: a. a proposed system is attainable, giving the existing technology. b. the system's 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 which the exceeds its costs. e. the system will be effectively used within the operating environment of an organization. **14-58. While systems analysis focuses on system and information needs, system design concentrates on: a. writing programs. b. providing for controls. c. testing completed modules. d. what to do and how to do it. e. estimating costs and benefits.

14-59. Which of the following would least likely be included in a formal systems design proposal? a.

Design specifications b.

Design objectives c.

Expected benefits d.

Computer program printouts e.

Statement of expected impacts upon the organization 14-60. Which of the following would not typically be included as a design specification for a new information system? a.

Expected cost of the system b.

Data input screens c.

Data processing cycles d.

Report contents and formats. e.

Data structures 14-61. In designing a computer-based information system, which of the following should generally be considered first? a.

Inputs b.

Processing operations c.

Files d.

Outputs e.

Hardware.

+14-62. Which of the following is not a general objective of all information systems?

224

a. b. c. d. e.

A system should provide information which is timely and relevant for decision making by management and operating personnel.

The output of a system should be highly accurate.

A system should have sufficient capacity to accommodate levels of normal activity; any additional capacity proves too costly in the long run.

A system should be as simple as permitted so that its structure and operations can be easily understood and its procedures easily accomplished.

A system should be flexible to accommodate changes of a reasonable magnitude when required.

14-63. Which of the following is not a general system design consideration? a.

A system design should balance economy and performance. b.

A system design should be “user-friendly.” c.

A system design should be computerized to the fullest extent. d.

A formal system design should be tailored to the firm's circumstances. e.

A system design should serve the needs of multiple users.

14-64. Which of the following is not a basic design trade-off in the design of information systems? a.

Between processing efficiency and data accessibility b.

Between accuracy and timeliness c.

Between economy and timeliness d.

Between data accessibility and economy e.

Between accuracy and reliability **14-65. A system analyst is responsible for: a. the development of information systems that satisfy user information requirements by employing sound design principles. b. programming internal controls into the computerized accounting system. c. assuring the integrity and efficiency of the operating system. d. supervising the programmers in a data processing area. e. determining objectives to be used in the development of the information system.

14-66. Which of the following is not a sound design principle with respect to transaction processing systems? a.

Transaction processing systems should avoid peaks and backlogs. b.

Transaction processing systems should minimize backtracking and bottlenecks. c.

Transaction processing systems involving large volumes of transaction data should normally employ the on-line processing approach. d.

Transaction processing systems that share common resources should be integrated. e.

Transaction processing systems should be standardized except where particular conditions dictate customized approaches.

14-67. Which of the following is not a sound design consideration with respect to data inputs? a.

Input data should be captured at the source whenever possible. b.

Input data should be captured in computer-readable form whenever feasible. c.

Input data should be captured with computer-assistance whenever possible. d.

Input data should be captured at least twice a with respect to each event, so that cross-checking is possible. e.

Input data should be coded whenever possible, in order to minimize the number of characters inputted.

14-68. Which of the following statements concerning designed information systems most generally is correct?

225

a. b. c. d. e.

A typical modem system is fully computerized.

The added costs incurred in designing and acquiring a system should not exceed its added benefits.

If the efficiency of a system is enhanced, generally the costs of operating the system are also increased.

A firm' s information system may not contain both batch processing and on-line processing applications.

The on-line processing approach is the preferable choice for a firm’s transaction processing applications.

14-69. Which of the following is not a benefit of currently-available systems design methodologies? a.

Provide structured guidance to the designer during the analysis and design phases. b.

Relieve the designer of certain onerous tasks. c.

Aid the designer in determining information needed for decision-making. d.

Aid the designer in spotting inconsistencies and omissions in the design of input data forms and files. e.

Provide documentation as a by-product. **14-70. When designing and documenting a computer-based information system, a system analyst is most likely to use: a. emulators. b. compilers. c. decision tables. d. hierarchy charts. e. system flowcharts.

14-71. Which of the following system-design methodologies is not designed to involve computer assistance? a.

Automated Data Systems Analysis Technique b.

Time Automated Grid System c.

CASE d.

Storyboarding e.

Structure System Development and Requirements Definition 14-72. An application generator usually provides modules that perform all except which of the following functions? a.

Accepting inputs via interactive devices b.

Validating inputs c.

Updating data sets d.

Making nonroutine decisions. e.

Generating user-specific reports 14-73. Which of the following is not a component of an integrated CASE tool? a.

System specifications b.

Encyclopedia c.

Generator d.

Work bench e.

User interface software (e.g., definitions) 14-74. Which of the following is not a benefit of an integrated CASE tool? a.

Enables new systems to be developed more quickly

226

b. c. d. e.

Provides documentation as a by-product Eliminates need for users to be involved in the design process Results in higher quality systems Eliminates inconsistencies in system components

**14-75. The three major activities of systems design are: a. user interface design, data manipulation, and output analysis. b. process design, output design, and output analysis. c. user interface design, data design, and process design. d. data design, input validation, and processing. e. logical analysis, physical application, and theoretical review.

14-76. Which of the following is the most suitable sequence of steps during the systems justification and selection phase? a.

Determine design feasibility, solicit proposals from suppliers, evaluate proposals, select system resources b.

Solicit proposals from suppliers, evaluate proposals, determine design feasibility, select system resources c.

Solicit proposals from suppliers, determine design feasibility, evaluate proposals, select system resources d.

Determine design feasibility, select system resources, solicit proposals from suppliers, evaluate proposals e.

Select system resources, determine design feasibility, solicit proposals from suppliers, evaluate proposals 14-77. Which of the following categories of information that appears in a request for proposal (RFP) is least likely to appear in a system design proposal? a.

Design objectives b.

Design specifications c.

Plan for implementing the new system d.

System support specifications. e.

System hardware/software requirements 14-78. The document that contains a statement of resource specifications and is sent to a variety of hardware and software suppliers is known as a(n): a.

POS. b.

PDQ. c.

EDP. d.

RFP. e.

ITF. 14-79. The principle that additional information should be gathered and provided to decision makers as long as its marginal value exceeds its marginal cost is based upon the area of study known as: a. economic feasibility. b. information economics. c. managerial decision making. d. information system analysis. e. discounted cash flow analysis. **14-80. The primary justification for installation of a computer-based system is that the: a. benefits of the system are greater than the costs.

227

b. c. d. e.

information provided by the system is useful. work force can be cut back in size. communication provided by a system is improved. system coordinates the parts of a business.

**14-81. Accountants are often asked to recommend a course of action upon completion of analysis.

However, a high degree of uncertainty may still exist because of doubts about the accuracy of the data used in the analysis, e.g., the accuracy of cash flow in a capital budgeting analysis. In this situation an accountant could make his recommendation with the current information or decide to purchase additional information. In making this latter decision, the concept of expected value of perfect information could be employed. The expected value of perfect information (EVPI) measures: a. the total cost of perfect information. b. the expected cost of generating perfect information. c. the net increase in expected value for an act. d. the expected monetary value for an act. e.

None of the above.

(Note: EVPI is not explicitly explained in the chapter, but related concepts are discussed.)

14-82. Which of the following is least likely to be part of the initial acquisition cost of a new online computer-based system? a.

Terminals b.

Central processing unit c.

Operating system d.

Training of computer personnel e.

Electrical power service 14-83. Which of the following is an example of a recurring cost of operating a computer-based system? a.

Preparation of the computer site b.

Data control clerk salary c.

Parallel operation d.

File conversion e.

Initial systems analysis and programming 14-84. Which of the following factors is least important when evaluating present and proposed computer systems (assuming tax effects are ignored)? a.

Cash inflows and outflows b.

Expected economic life c.

Required rate of return d.

Purchase price of present system e.

Salvage value of proposed system 14-85. The costs employed in the determination of the economic feasibility of a new computer system should include those pertaining to the: a. initial outlays and yearly operations for proposed alternatives. b. comparisons of the various computer hardwares listed in information processing journals. c. initial outlays for proposed alternatives. d. yearly operations for proposed alternatives. e.

None of the above.

14-86. Which of the following costs would not be viewed as a recurring cost of a new information system?

228

a. b. c. d. e.

Salaries of maintenance programmers Training of newly-hired computer operators Supplies for the computer operations center Rental fees for high-speed printers Insurance on the computer center

14-87. Which is the most common type of benefit to be expected from a new computer-based system? a.

Increased sales b.

Faster processing c.

Reduced investment in inventory d.

Savings in operating and maintenance costs e.

Improved customer service 14-88. Which of the following is least likely to be an intangible benefit for a new information system? a.

Better information for decision making b.

Fewer errors in processing c.

Reduced inventory levels d.

Higher levels of customer service e.

Fewer lost sales from stockouts 14-89. Which of the following factors related to economic feasibility of a new information system is most difficult to estimate? a.

Recurring costs b.

One-time costs c.

Tangible benefits d.

Intangible benefits e.

Income tax rate **14-90. Estimates for economic feasibility calculations which ordinarily would have the greatest uncertainty as to precise value are: a. the tangible costs. b. the intangible costs. c. the tangible benefits. d. the intangible benefits. e.

None of the above because they are equally precise.

14-91. Which of the following is not an approach that may be employed to estimate the benefits and costs relating to a proposed information system? a.

Obtain the estimates of experts, such as consultants. b.

Create a focus group of knowledgeable employees, such as accountants, to assign values. c.

Perform an incremental analysis. d.

Develop a payoff analysis graph. e.

Perform a reliability analysis.

**14-92. Which of the following statements best describes what is generally true regarding the estimates employed in economic feasibility calculations?

229

a. b. c. d. e.

Development costs are generally less than estimated; benefits are stated accurately.

Development costs are generally less than estimated; benefits are generally greater than estimated.

Development costs and benefits are generally greater than estimated; development time is generally less than estimated.

Development costs are generally greater than estimated; benefits are generally less than estimated.

Development costs and benefits are generally greater than estimated.

14-93. Which of the following is not a factor in the determination of the economic feasibility of a new computer that is to replace a variety of calculators and bookkeeping machines? a.

Benefits to be derived from the computer b.

Physical life of the computer c.

Salvage value of the computer at the end of its life d.

Acquisition cost of the computer e.

Operating cost of the computer 14-94. The most sound approach to determining economic feasibility is the: a. payback method. b. accounting method. c. performance/cost method. d. net present value method. e. net income method.

14-95. Which of the following economic criteria provides the soundest basis for choosing among alternative system designs as well as other competing investments? a.

Net present value b.

Payback period c.

Performance/cost ratio d.

Benefit-cost ratio e.

Cost effectiveness (The following data pertain to questions 14-96 through 14-101.)

Hardware and software costs for a new computer-based information system

$300,000

Design and installation costs for a new system

$200,000

Expected annual operating costs for a new system

$150,000

Average annual operating costs for the present information system

$330,000

Expected economic life of the new system

5 years

Salvage value of the new computer

$100,000

Salvage value of the present system

-0-

Required rate of return

20%

Marginal tax rate

30%

Method of depreciating the new system

Straight-line

Present value of $1.00 at 20%, 5 years hence:

$0.40

230

Present value of $ 1. 00 at 20%, 4 years hence:

$0.48

Present value of $1.00 at 20%, 3 years hence:

$0.58

Present value of $ 1. 00 at 20%, 2 years hence:

$0.69

Present value of $1.00 at 20%, 1 year hence:

$0.83

Present value of $1.00 received annually for 5 years at 20%

$2.99

14-96. The amount of the initial investment in the new system is: a. $200,000. b. $300,000. c. $400,000. d. $500,000. e.

None of the above.

14-97. The present value of the salvage value for the new system is: a. $29,900. b. $40,000. c. $50,000. d. $59,900. e. $100,000.

14-98. The after-tax annual cost saving of the new system over the present system is: a. $78,000. b. $150,000. c. $180,000. d. $182,000. e. $330,000.

14-99. The total of the after-tax cash inflows over the economic life of the new system, at present value, is closest to: a. $72,000. b. $234,000. c. $450,000. d. $490,000. e. $540,000.

14-100. The net present value of the new system is: a. less than $100,000, positive. b. more than $ 1 00,000, positive. c. zero. d. less than $100,000, negative. e. more than $100,000, negative.

14-101. The payback period of the new system is: a. between 1 and 2 years.

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b. c. d. e.

between 2 and 3 years. between 3 and 4 years. between 4 and 5 years. exactly 5 years.

(The following data pertain to questions 14-102 through 14-107.)

Acquisition cost of computer hardware and software for a new system

$450,000

System development costs

$150,000

Expected annual operating cost of the new computer system

$140,000

Annual operating cost of the present system

$340,000

Added annual contribution from increased sales

$100,000

Book value of present system

-0-

The computer hardware, software, and installation costs will be depreciated over a 4-year period (the economic life of the new system) on a straight-line basis. The desired rate of return is 16% and the marginal tax rate is 34%. The salvage values for the present and new systems are 0 and $80,000, respectively. Assume that the development costs are to be amortized over the life of the investment.

Present value of $1.00 at 16%, 5 years hence

$0.48

Present value of $ 1.00 at 16%, 4 years hence

$0.55

Present value of $1.00 at 16%, 3 years hence

$0.64

Present value of $1.00 at 16%, 2 years hence

$0.74

Present value of $1.00 at 16%, 1 year hence

$0.86

Present value of $1.00 received annually for 4 years at 16%

$2.80

14-102. The amount of the investment in the new system is: a. $450,000. b. $150,000. c. $600,000. d. $780,000. e.

None of the above.

14-103. The after-tax annual cost saving of the new system over the present system is closest to: a. $130,000. b. $180,000. c. $200,000. d. $240,000. e. $330,000.

14-104. The total of the after-tax cash inflows (excluding salvage value) over the economic life of the new system, at present value, is between:

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a. b. c. d. e.

$100,000 and $300,000. $300,000 and $500,000. $500,000 and $700,000. $700,000 and $900,000. $900,000 and $1,100,000.

14-105. The present value of the salvage value of the new system is between: a. $0 and $30,000. b. $30,000 and $40,000. c. $40,000 and $50,000. d. $50,000 and $60,000. e. $60,000 and $80,000.

14-106. The net present value of the new system is: a. less than $100,000 positive. b. more than $100,000 positive. c. zero. d. less than $100,000 negative. e. more than $100,000 negative.

14-107. The payback period of the new system is: a. between 0 and I year. b. between I and 2 years. c. between 2 and 3 years. d. between 3 and 4 years. e. exactly 4 years. **14-108.Short-term computer leasing offers some advantages over purchasing. Which of the following is not a typical advantage of short-term computer leasing? a.

The initial cash outlay required is small. b.

The total cash outlay over time is less. c.

Leasing provides more flexibility in the selection and acquisition of computer equipment. d.

The risk that the equipment will become obsolete is avoided. e.

The risk that the user may outgrow the equipment configuration sooner than expected is avoided.

14-109. Which of the following options should a small firm select if it desires the benefits of computerized data processing, has a relatively small volume of transactions, needs to have a direct access to its files at all times, has cash flow problems, and has always employed manual transaction processing? a.

Purchase a computer b.

Lease a computer c.

Subscribe to a service bureau d.

Subscribe to a time-sharing service center e.

None of the above

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14-110. Which of the following options is likely to be the best choice for a small firm if it desires the benefits of computerized data processing, has a growing volume of transactions, has satisfactory cash flows, but has always employed manual transaction processing? a.

Purchase a computer b.

Lease a computer c.

Subscribe to a service bureau d.

Subscribe to a time-sharing service center e.

None of the above.

14-111. The use of which of the following types of organizations results in turning over control of the using firm’s information system to outsiders? a.

Computer manufacturer b.

Service bureau c.

Time-sharing service center d.

Facilities management vendor e.

Computer-leasing firm +14-112. An advantage in using an outside computing services rather than its own internal computing system is that: a. data are more secure because data are handled by fewer organizational personnel. b. processing priorities can be established and enforced internally. c. more direct control can be exercised over computer operations. d. the using organization pays only for the amount of computer capacity that is used. e. there is greater user involvement because of the need to better communicate user needs.

14-113. Which of the following is not a reason for subscribing to an outside computing service? a.

Payment required only for time used b.

Availability of professional assistance and excellent service c.

Access to specialized data bases d.

Added control and security over transaction records and files e.

Handy availability of backup or peak-load capacity **14-114. Futura Engineering Inc. finds that its Research and Development Department (R&D) desires capabilities beyond the scope of the company's current computer, which is used primarily for accounting. To acquire a computer which would fulfill the needs of R&D would mean that the computer system would be underutilized most of the time. Management proposes solving this problem by providing access to a time-sharing system. This means that Futura would: a. purchase software packages of standard statistical routines which R&D would utilize. b. purchase a mini-computer on which R&D would have first priority and any unused time would be shared with accounting. c. purchase time from a network and R&D would have access with other users through terminals to a large computer system and many standard routines. d. purchase programming services and computer time from a nearby company for R&D and use that company's computer to process R&D's jobs. e. acquire some system not described above.

14-115. Which of the following statements is most likely to be incorrect concerning service bureaus?

234

a. b. c. d. e.

Normally performs batch processing jobs Requires longer average turnaround time than time-sharing service Normally involves higher costs for service than time-sharing service centers Often employed by firms that have in-house computers Often employed by small firms

14-116. Which of the following is not a viable alternative source when considering the use of computers? a.

General purpose computer manufacturer b.

Computer-leasing firm c.

Used-computer broker d.

Time-sharing service center e.

All are viable alternatives **14-117. A major advantage of obtaining a package of applications programs from a software supplier is: a. the likelihood of reducing the time span from planning to implementation. b. the ability to more easily satisfy the unique needs of users. c. greater operating efficiency from the computer. d. the assurance the programs will be written in a high level language. e. the ease of making changes to such well-documented programs.

14-118. Which of the following is likely to be an advantage from dealing with a single supplier when acquiring a new computer system? a.

Initial cost savings b.

Higher level of service c.

Long-term cost savings d.

Better quality of products e.

None of the above.

14-119. A typical set of resource specifications includes all except: a. system design specifications. b. system analysis specifications. c. hardware specifications. d. software specifications. e. system support specifications.

14-120. The method of evaluating hardware or software from suppliers by running typical data processing jobs on the computer systems being evaluated and comparing run times is known as the: a. benchmark problem method. b. simulation model method. c. weighted rating analysis method. d. performance-cost ratio method. e. computer analysis method. **14-121.A common procedure employed in computer selection to compare the hardware and software performance of alternative computer systems is the use of: a. a source program. b. computer utilities. c. peripheral equipment validation. d. the benchmark problem. e. aA monitor or supervisor program.

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14-122. Which of the following is not a disadvantage of the simulation model method of evaluating alternative computer systems? a.

It is expensive to apply. b.

Its results are often difficult for management to understand. c.

It cannot be applied in the evaluation of advanced computer systems, e.g., real-time computer systems. d.

The validity of its results is often doubtful, or at least difficult to prove. e.

It ignores certain factors that may be critical to the success of a new system.

14-123. Perhaps the major advantage of the weighted-rating analysis method for evaluating proposals from hardware suppliers is that it: a. is simple to apply. b. always provides clear-cut choices. c. is also a method of determining economic feasibility. d. takes into account more criteria, such as the support provided by the suppliers. e. eliminates subjective evaluations.

14-124. Which of the following is least likely to be an activity to be performed prior to implementation activities? a.

Preparing a cost budget b.

Scheduling times of activities c.

Negotiating contracts with hardware/software suppliers d.

Evaluating users of new systems e.

Reorganizing project team.

14-125. Which of the following is least likely to be included in implementation planning? a.

Cost budget b.

Time schedule c.

Implementation activities d.

Actual time spent on activities e.

Work plan 14-126. Which of the following is not a control over the progress of computer system projects? a.

Progress review meetings b.

Network diagrams c.

GANTT charts d.

Computer logs e.

Periodic exception reports

14-127. The most serious drawback to the GANTT chart is that it: a. is most difficult to prepare and maintain. b. is hard to read. c. is not fully tested as yet. d. does not show interrelationships among activities. e. cannot be used to control projects.

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14-128. Which of the following would likely be the best choice as the project leader during the implementation of a new personnel information system? a.

Systems analyst b.

Cost accountant c.

Information systems director d.

Personnel manager e.

Auditor 14-129. Which of the following activities should come first in the implementation process? a.

Personnel training b.

Dissemination of information to employees c.

System testing d.

Site preparation e.

Parallel operations 14-130. Which of the following is not a significant activity during the phase of implementing a new information system? a.

File conversion b.

System testing c.

System maintenance d.

Site preparation e.

Personnel selection and training 14-131. An activity during an implementation phase of a systems project that often requires considerable time and cost is: a. physical preparation of a computer site. b. testing of programs and the system. c. training of affected personnel. d. file conversion. e.

All of the above are generally costly and time-consuming. **14-132.Alex, Inc. has been in the process of designing a new sales order processing system. The data processing department has completed the process of design, programming and debugging. Before going operational, the programmer should test not only with typical transaction data, but also with: a. documentation data. b. incorrect or incomplete data. c. live data. d. source data. e. debug data.

14-133. Which of the following is not a reason why newly created computer-based systems positions are often filled by firms “from within”? a.

Costs are less b.

Current employees understand the firm's operations c.

Current employees are more likely to have computer-related expertise d.

Employee morale is enhanced e.

All of the above are valid reasons.

237

14-134. Which of the following is not a typical required step during the file conversion activity? a.

Cleaning up the present files b.

Physically loading data onto the new file storage medium c.

Writing special programs to transfer data from the current storage medium to the new storage medium d.

Reconciling transferred data with data in current files e.

Destroying data in current files after reconciliation **14-135.Complete documentation is important for efficient operation and control of a computer-based processing system. Which of the following is not a benefit of good documentation? a.

Documentation provides various types of batch or control totals that are used to indicate a loss of records or errors in processing. b.

Documentation simplifies the program maintenance function. c.

Documentation facilitates communication among system users, analysts and programmers during systems development. d.

Documentation facilitates regular progress reviews of systems development work. e.

Documentation provides a referral and training tool for system users, operators, and new systems employees. **14-136.Choosing existing employees and providing them with the necessary technical training is preferable to hiring data processing specialists from the outside because: a. there is a declining base of available experienced people. b. the technical training needed is not extensive. c. using newly hired people tends to slow down programming efforts. d. existing employees are not likely to resist any changes that result from computerization. e. existing employees are knowledgeable about the firm’s business activities. **14-137.An activity that normally would least likely be part of the systems implementation phase of systems development is: a. testing of individual computer programs. b. operating the present system and the new system concurrently for a reasonable period of time. c. conducting parallel operation conversion. d. developing cost budgets and time schedules for the activities involved in installing a new system. e. conducting a feasibility study to determine if the system will be operationally feasible. **14-138.Which of the following academic backgrounds and personal characteristics is least needed to be a systems analyst? a.

An understanding of human behavior b.

A knowledge of accounting fundamentals c.

Experience as a programmer d.

Ability to work with people e.

A knowledge of how the firm he/she works for operates **14-139.In the life cycle of systems development and implementation, the optimal timing for completing the documentation of a computer-based system would be: a. after the entire systems project is completed but before the post-audit is conducted. b. after the post-audit phase of the systems project is completed. c. in time for the go or no-go decision phase of the steering committee. d. before starting the programming phase. e. as each phase of the systems life cycle is completed.

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**14-140.Which of the following activities is least likely to be included in the implementation phase of developing a new information system? a.

Training b.

Documentation c.

Design of system components d.

Testing e.

Final conversion +14-141. The implementation phase of systems development includes all of the following activities except: a. coding of computer programs. b. testing of computer programs. c. evaluation of user information needs. d. detailed design of inputs and outputs. e. final conversion.

14-142. A form of system testing in which two or more application programs are linked together is known as: a. prototyping. b. string testing. c. desk checking. d. modular testing. e. walkthroughs.

14-143. Which of the following is not an aid in program testing? a.

Walkthroughs b.

Interactive terminal tests c.

Desk checks d.

Test data e.

Rebugging 14-144. Which of the following activities should come lag in the implementation process? a.

Training of computer-related personnel b.

File conversion c.

System testing d.

Site preparation e.

Parallel operation 14-145. One approach to final systems checkout is called parallel operation. An alternative approach is known as: a. on-line operations. b. cutover operations. c. file conversion. d. modular conversion. e. serial operation.

239

**14-146.Jones Auto Parts Company, a small sole proprietorship, has decided to change from manual to computerized inventory management. Frequently, in implementing a new system, both the old and new systems are maintained during the shakedown period. This changeover technique is called: a. parallel running conversion. b. pilot testing. c. back-up system conversion. d. debugging. e. systems conversion management **14-147. Parallel operation refers to: a. using both direct access and sequential access files at the same time. b. using both on-line and off-line equipment c. using two computers to handle different types of applications, such as one for batch processing and another for on-line, real-time processing. d. using verification techniques on data entering the system. e. operating both a new and an old system until the new system proves itself to be reliable.

14-148. Which of the following is a disadvantage of the parallel operation conversion approach? a.

High risk of failure of new system b.

Costly and burdensome process c.

Laborious phasing-in of the various modules d.

Sudden change imposed upon users e.

Excessive errors often introduced into new system 14-149. Which approach to systems conversion is most appropriate when a number of branches of a savings and loan institution are to be incorporated within an on-line computer-based system? a.

Direct approach b.

Parallel operation c.

Pilot operation, i.e., modular conversion d.

On-line operation e.

None of the above. +14-150. A convenience store chain is developing a new integrated computer-based sales and inventory system for all stores. Which of the following final conversion approaches would involve the most risk? a.

Direct conversion b.

Modular conversion c.

Phased conversion d.

Parallel operation e.

Pilot operation **14-151.Hamilton Company, with five divisions, has acquired a new data base management software package to handle sales and accounts receivable. In order to determine if the new system functions properly and satisfactorily, the firm decides to implement it first in the Kansas City division. This type of implementation is known as: a. parallel conversion. b. direct conversion. c. initial conversion. d. modular conversion. e. crash conversion.

14-152. Which of the following is not a purpose of the post-implementation evaluation?

240

a. b. c. d. e.

To access the extent to which pre-established objectives are being met To determine if significant system modifications are needed To determine the extent to which the new system is operationally feasible To evaluate the performance of the project team To comply with government regulations

14-153. Which of the following is not a detailed systems design technique? a.

Decision table b.

System flowchart c.

Program flowchart d.

Warnier-Orr diagram e.

Data hierarchy diagram **14-154.In preparing flowcharts for a new computer-based processing system, the analyst should: a. develop one system flowchart and then allow each programmer to develop his own program flowchart. b. begin developing the program flowcharts and work toward the system flowchart. c. develop the system flowchart first, followed by a coordinated series of program flowcharts. d. develop one flowchart that includes both system and program attributes. e. not spend much effort on them, because flowcharts are rarely used after being prepared. **14-155.The representation of the sequence of logical operations performed by a computer in executing a program is a: a. document flowchart. b. macro flowchart. c. micro flowchart. d. program flowchart. e. system flowchart.

14-156. The program flowcharting symbol representing a decision is a: a. triangle. b. circle. c. rectangle. d. diamond. e. parallelogram. **14-157.In preparing a detailed program flowchart of the input edit run for batched inventory transactions, which flowchart symbol adopted by the American National Standards Institute (ANSI) would you use to represent the inputting of transaction data?

241

a.

c.

b.

d.

e.

**14-158.A useful tool for designing the format of computer generated reports on pre-printed forms is a: a. document flowchart. b. printer layout (spacing) chart. c. record layout sheet. d. work distribution analysis. e. decision table. **14-159.The process of locating and correcting an error in a computer program is referred to as: a. problem solving. b. debugging. c. diagnostic reviewing. d. file maintenance. e. utility routining. +14-160. In the design of computer programs, the technique known as “structured programming” is used to: a. facilitate program maintenance. b. permit the development of program modules. c. allow a team to code a program. d. isolate programming errors. e.

All of the above. **14-161.A systems analysis and documentation technique listing all the rules and conditions to be considered in the description of a problem together with the corresponding actions to be taken is best described as a: a. system flowchart b. decision table. c. feasibility study. d. compilation procedure. e. programming study.

**14-162. Decision tables are:

242

a. b. c. d. e.

used in conjunction with flowcharts to help describe decision points and activities resulting therefrom. primarily prepared to show the sequence of processing steps. more useful than flowcharts to illustrate the total picture of a procedure. more difficult to change than flowcharts. frequently prepared but are not worth the time because very few people can use them.

14-163. The number of diamond symbols in a program flowchart equals the number of __________ in a decision table. a. conditions b. actions c. branches d. rules e. sequences +14-164. A decision table indicates the: a. persons who are primarily responsible for each step of the systems analysis and design process. b. sequence of logical operations in a process or procedure. c. sequence of operations in a system. d. relationships among logic conditions and the actions to be taken in a process or procedure. e. flow of documents regarding a transaction.

14-165. A decision table may be prepared to supplement or replace the preparation of: a. an internal control questionnaire when the number of alternative responses is large. b. a narrative description of a system where transactions are not processed in batches. c. program flowcharts when the number of alternative logical relationships and decision points are numerous. d. an internal control questionnaire not specifically designed for a computer-based system. e. computer programs when numerous logic branches are required.

14-166. Generally speaking, a decision table should be viewed as a: a. logic diagram. b. supplement to a program flowchart. c. replacement for a program flowchart. d. both a and c. e. goth a and b.

14-167. Which of the following is not a structured detailed design technique? a.

Program flowchart b.

Decision table c.

Data hierarchy diagram d.

Structured English e.

Warnier-Orr diagram 14-168. Warnier-Orr diagrams can be used to represent which of the following? a.

Processing sequence b.

File structure c.

Report structure d. a and b, above e. a, b, and c, above 14-169. Which of the following techniques may be used as an alternative to a Wamier-Orr diagram? a.

Data flow diagram

243

b. c. d. e.

Data hierarchy diagram Program flowchart Structure chart Decision table

14-170. Which of the following is least likely to be a form of resistance exhibited by employees and/or managers in the face of a newly implemented computer-based information system? a.

Intentionally entering incorrect data into the system b.

Bypassing the controls, of the new system c.

Demanding that their supervisor or superior be fired d.

Blaming the system for errors that they make e.

Ignoring reports generated by the new system 14-171. Which of the following actions can help to overcome the resistance of such users as employees and managers to the implementation of a new information system? a.

Keeping the users fully informed b.

Gaining the active participation of users c.

Showing the users how the new system can benefit them in their jobs d.

Designing the system to be as user-friendly as possible e.

All of the above are positive and helpful actions **14-172.A construction firm builds homes, subcontracting all major operations, e.g., plumbing, heating, excavation, etc. Several of the operations must be completed before others begin (e.g., excavation before brickwork), while others can be performed in parallel (e.g., heating and plumbing). A contract is signed in April for a house that is to be completed by October 15. In order to schedule the start and completion times of the numerous operations, the firm could use: a.

Markov analysis. b. random sampling. c. linear programming. d. regression analysis. e. network analysis. **14-173.A quantitative technique used most for planning and controlling system engagement is known as: a. trend analysis. b. linear programming. c. correlation and regression techniques. d. queuing theory. e. network analysis.

14-174. Network analysis techniques such as PERT would be least useful in which of the following situations? a.

Constructing a new building b.

Planning a large audit engagement c.

Marketing a new product d.

Planning and controlling monthly production operations e.

It would be equally useful in all of the above

**14-175.When using the PERT method for network analysis, the critical path through the network is the: a. shortest path through the network.

244

b. c. d. e.

longest path through the network with the least slack. path with the most slack. path with the most variability in estimated time. most costly path through the network.

14-176. Which of the following is incorrect concerning the critical path of a network analysis technique? a.

More than one critical path is possible b.

The overall project time represents the time required to complete all activities along the critical path c.

Slack times are zero for all activities (and events) along the critical path d.

The critical path for a particular network can never change e.

None of the above is incorrect.

14-177. Which of the following statements is incorrect concerning an activity not on the critical path? a.

Slack time has a nonzero value. b.

It is bounded by two events. c.

It may not be a dummy activity. d.

It must be completed before the entire project is completed. e.

If it is completed late, the overall project completion data may or may not be delayed. **14-178.A firm is planning a multi-phase construction project. The time estimates for a particular activity of the project are: Optimistic 2 months Most likely 4 months Pessimistic 9 months Using PERT, the expected completion time for this particular activity would be: a.

4 months. b.

4-1/2 months. c.

9 months. d.

5 months. e. some time other than those given above.

(The data below pertains to questions 14-179 through 14-183).

In the following network analysis diagram, the numbers stated along the activities represent expected days required for completion:

245

2

G=2

A=3

6

H=4 1

C=5

3

F=3 J=1

B=6

D=2

4

5

E=3

14-179. The overall expected time for the project depicted by the network is: a.

10 days. b.

12 days. c.

13 days. d.

15 days. e.

None of the above.

14-180. The critical path is: a.

A-G. b.

C-J-F. c.

B-E-F. d.

C-D-E-F. e.

A-H-F. 14-181. The earliest time for event 5 is: a.

6 days. b.

7 days. c.

9 days. d.

10 days. e.

12 days.

14-182. The latest time for event 2 is: a.

3 days. b.

6 days. c.

7 days. d.

9 days. e.

11 days.

14-183. The largest amount of slack along any noncritical path is: a.

1 day. b.

3 days. c.

5 days. d.

7 days. e.

None of the above.

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(The data below pertains to questions 14-184 through 14-186). The numbers along the activities represent weeks in the following network analysis diagram.

C

7

4 3 3 A

4

B

6

E

F

2

1

5 D

**14-184.The critical path for the systems project is: a.

A-B-C-F. b.

A-B-C-E-F. c.

A-B-D-E-F. d.

A-B-E-F. e.

A-B-D-F. **14-185.An activity that does not have slack time for the terms project is: a.

B-D. b.

B-E. c.

C-F. d.

D-F. e.

E-F. **14-186.A reduction in the time to perform activity E-F from 6 weeks to 3 weeks would reduce the expected total to complete the entire systems project by: a.

14 weeks. b.

3 weeks. c.

2 weeks. d.

1 week. e. some amount other than those given above. **14-187.Which of the following statement is correct concerning network analysis techniques such as PERT and CPM? a.

Costs as well as times can be planned and controlled by the techniques. b.

They are not usually suitable during the implementation of information system. c.

They cannot be programmed for use in computers. d.

They are identical to GANTT charting. e.

They are useful in project control but have scant usefulness in the planning of projects.

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**14-188.A systems analyst is currently involved in the hiring and training of new employees and the testing of new procedures. In which stage of the systems development cycle is the analyst? a.

Analysis b.

Detailed design c.

Conceptual design d.

Implementation e.

Operation **14-189.In the systems development cycle, coding is: a. a form of testing and debugging. b. part of the detailed design phase. c. part of the data flow diagram. d. a form of program maintenance. e. part of the feasibility study.

14-190. Which of the following is not advocated by information resources management (IRM)? a.

Information should be managed like a valuable resource. b.

Information processing should enable firms to compete more effectively. c.

Information technology is the most important element of information systems. d.

Information systems should be facilitated by information technology. e.

Information should be viewed as cutting across all the departments and other organizational units of firms.

14-191. Which of the following is not a reason that information systems management is important to accountants? a.

Accountants, as a professional group, are very actively involved in systems development activities. b.

Accountants make extensive use of financial reports and other outputs from an information system. c.

Those accountants who perform audits are vitally concerned with the adequacy of accounting controls, an important component of information systems. d.

Accountants are the principal group involved in the development of computer-based information systems. e.

Accountants often serve as user representatives on system design projects.

14-192. Traditionally, the responsibility for providing information to various internal and external users has been assigned to the: a. accounting function. b. management information systems function. c. administrative function. d. finance function. e. data processing function.

14-193. Which of the following is not a reason why the information systems function is located under the controller or chief accountant in many organizations? a.

It is the traditional and thus accepted location. b.

Most systems analysts have accounting backgrounds. c.

The accounting function has a central role in transaction processing and financial reporting. d.

Many of the successful applications of computer-based processing relate to accounting activities. e.

All of the above are valid reasons.

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14-194. In most firms the least likely location of the information systems function is under the jurisdiction of the: a. president. b. vie-president for administration. c. controller. d. vice-president for finance. e. vice-president for marketing.

14-195. Which of the pairs best represents recent trends with respect to the information systems function? a.

Moving higher in the organization and becoming smaller in size b.

Staying at the same level in the organization and becoming more independent of user functions c.

Moving higher in the organization and becoming more independent of user functions d.

Moving lower in the organization and becoming smaller in size e.

Reporting to the board of directors and becoming larger in size 14-196. A reasonable compromise in the question concerning the proper location of the information systems function is to have the information systems manager report to the: a. president. b. vice-president for administrative services. c. controller. d. vice-president for finance. e. vice-president for marketing.

14-197. Which of the following is not a responsibility of a typical information system manager? a.

Setting objectives for the information systems function b.

Supervising and evaluating the performances of key systems managers c.

Approving systems projects and establishing priorities d.

Providing close guidance control over system activities e.

Hiring and training new systems managers 14-198. Which of the following responsibilities is least likely to be assigned to a chief information officer, assuming that a firm establishes such a position? a.

Developing policies that govern the standardization, generation, and dissemination of information throughout the firm. b.

Developing budgets for the information systems function. c.

Keeping abreast of new technological developments in information technology. d.

Supervising the technical activities of the information systems function. e.

Searching for ways to improve the information system.

14-199. Which of the following has responsibility for maintaining the software needed to coordinate the operations of the system's computer hardware? a.

Applications manager b.

Technical services manager c.

Systems development manager d.

Information center manager e.

Staff technician

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14-200. Which of the following prepare program flowcharts and then write computer programs for the accounting transaction processing system? a.

Application programmer b.

Systems programmer c.

Computer operator d.

Systems analyst e.

Accounting programmer 14-201. Which of the following is (are) normally assigned to perform system maintenance? a.

Application programmer b.

Computer operator c.

Systems analyst d. a and c, above. e. a, b, and c, above.

14-202. Which of the following has the responsibilities of providing internal consulting services and support facilities for end-user applications? a.

Technical services manager b.

Information center manager b.

Applications manager d.

Systems development manager e.

Information systems manager 14-203. Which of the following managers has direct responsibility for compiling the data dictionary? a.

Systems development manager b.

Data base administrator c.

Information systems manager d.

Data processing manager e.

Systems project manager 14-204. Which of the following is least likely to be a responsibility of the data base administrator? a.

Define the schema and subschema of the data base. b.

Standardize the data items throughout the firm. c.

Access data from the data base to meet user requirements. d.

Establish security measures (e.g., passwords) relative to the use of the data base. e.

Control all changes in data and programs that draw upon the data base. **14-205.The key functions of a data base administrator are: a. data input preparation, database design, and database operations. b. data base design, database operations, and database security. c. data base design, database operations, and equipment operations. d. data base design software support, and database security. e. data base operations, hardware support, and software support.

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14-206. Decentralization of the information system functions should provide all of the following benefits except: a.

Reduction of the central or corporate group of systems managers and staff. b.

Better understanding of the needs of users, especially those located in places remote to the home office. c.

Faster service when users request changes in the information system. d.

More harmonious relationships with the users. e.

Better overall management coordination and standardization.

14-207. Which of the following statements represents an undesirable practice? a.

Encouraging close personal relationships between the sales representatives of hardware/software suppliers and the employees of a firm's information system function b.

Assigning accountants to systems project teams c.

Hiring outside consultants occasionally to advise with respect to system development activities d.

Appointing the information systems manager to the firm's steering committee e.

Separating the systems development department organizationally from the data processing department 14-208. Which of the following statements generally represents an undesirable practice? a.

Encouraging close relationships between the systems function and accounting function b.

Employing outside consultants to install an information system c.

Assigning internal auditors to evaluate the performance of the information system d.

Acquiring computer hardware and software from more than one supplier e.

Focusing on both data processing and information processing purposes 14-209. Which of the following responsibilities should not be assigned to accountants within a firm that has a computer-based information system? a.

Members of the information system steering committee b.

Members of system design project team c.

Coordinators of the accounting and information systems departments d.

Operators of the information system e.

Members of an internal audit group 14-210. Which of the following is not generally an underlying cause for a firm to undertake an extensive information system development program? a.

Significant developments in information technology b.

Significant shortcomings in the present information system c.

Significant growth in products, number of employees, operations, etc. d.

Significant new laws, e.g.., deregulation of the airline and trucking industry e.

Significant changes in the top management of a firm 14-211. Too many rush jobs, experienced by a manufacturing firm, is likely to be a symptom of: a. poor customer service. b. poor product scheduling. c. excessive idle production capacity. d. delayed product shipments. e. cash shortages.

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14-212. A complaint from a manager concerning a late report is likely to be a symptom of: a. poor decision support systems. b. poor data processing procedures. c. inadequate internal controls. d. insufficient data input facilities. e. unsound delegation of organizational responsibilities. **14-213.The proper sequence of steps in the traditional systems development life cycle are: a. analysis, planning, design, implementation, and maintenance. b. design, planning, analysis, and implementation. c. planning, analysis, design, implementation, and maintenance. d. analysis, design, implementation, planning, and maintenance. e. planning, design, analysis, and implementation.

14-214. The systems development phase that precedes the system operation and maintenance phase is the: a. system planning phase. b. system analysis phase. c. system design phase. d. system justification and selection phase. e. system implementation phase.

14-215. The system development phase that precedes the system design phase is the: a. system planning phase. b. system analysis phase. c. system justification and selection phase. d. system implementation phase. e. system operation and maintenance phase.

14-216. Which of the following approaches emphasizes the development of flexible and manageable information systems? a.

Modular approach b.

Sequenced approach c.

Tailored approach d.

Evolutionary approach e.

Piecemeal approach 14-217. The approach to systems development that consists of initially devising a simplified system and then fine-tuning the design during continued use of the system is the: a. top-down approach b. systems approach. c. prototyping approach. d. modular approach. e. evolutionary approach.

14-218. Which approach to systems development is best suited for developing systems that support managerial decision making? a.

Bottom-up b.

Top-down c.

Modular. d.

Traditional e.

Structured

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+14-219. Which of the following is a distinguishing feature of the prototyping approach to systems development? a.

User statements of system requirements are accepted as complete and final. b.

Formal procedures are employed at the end of each phase to verify compliance with system requirements. c.

Specifications are revised as needed by returning to the initial requirements established by users. d.

Systems requirements are determined to be adequate and correct through actual user experience with developed systems. e.

Systems requirements are established by a project team rather than by users.

14-220. The bottom-up approach involves building block development of the information systems beginning at the transaction processing level, with emphasis upon: a. growth and sophistication. b. efficiency and integration. c. efficiency and independence. d. flexibility and needed information. e. growth and economy.

14-221. Which of the following is not a reason for the increase in user developed systems? a.

Increasing cost of conventional systems developments b.

Increasing lead time in developing systems through the use of systems professionals c.

Increasing price of computer hardware d.

Increasing availability of computerized system development tools e.

All of the above are valid reasons.

14-222. Which of the following applications is most suited to user development? a.

Payroll transaction system b.

Airline reservation system c.

General ledger accounting package d.

Sales forecasting system e.

Inventory control system 14-223. Which of the following is not a feature of strategic systems planning in a business firm? a.

Long-range in time b.

Focus on those activities requiring computerization c.

Integrate with the broad capital budgeting process d.

Incorporate all changes in priorities and conditions e.

Span all the activities of the firm 14-224. Which of the following is not a reason for the growing attention given by firms to strategic systems planning? a.

Rapid changes are occurring in the system area. b.

Long lead times are often required when acquiring systems hardware and software. c.

Larger systems-related costs are being incurred. d.

This type of planning is more effective than the capital budgeting process. e.

Lack of planning leads to greater difficulties and costs.

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**14-225.Knad Supply Company has a computer-based system. The applications implemented have not required as much time as planned. Consequently the company has excess capacity and has decided to explore potential use for this capacity. The most logical first step in the process to determine how this excess capacity can best be used is referred to as: a. program development. b. system planning and investigation. c. system design d. system analysis. e. system implementation.

14-226. Which of the following is not a step in the systems planning phase? a. preparing a strategic systems plan. b. organizing a steering committee. c. gaining top management s support. d. clarifying systems objectives. e. analyzing the problems in the system projects.

14-227. Objectives for an information system should, if possible, be specified in _____ terms and for a ________. a. qualitative; long-range future b. quantitative; definite point in the future c. quantitative; short-range future d. qualitative; future point in time or future time period e. positive; particular part of the system **14-228.The most important factor in planning for a major change in a computer-based system is: a. the organization of the systems department. b. the ability of the system programmers to write appropriate software. c. the selection of the most advanced computer changes. d. giving the systems people a free hand in all changes. e. the participation of top management in the planning process. **14-229.The role of an executive-level information system steering committee should be to: a. initiate all computer applications, set computer applications priorities, control access to the compute room, keep the computer file library. b. prepare control totals, maintain systems documentation, perform follow-up on errors. c. assign duties to system personnel, prepare and monitor systems implementation plans, flowchart systems applications. d. review systems project proposals, review long-range systems plans, review the performance of the system function, approve major acquisitions in consideration of overall system plans. e. decide upon specific information needs, prepare detailed plans for systems evaluations, set priorities for writing of programs, decide which equipment will be purchased.

14-230. A preliminary investigation that explores the desirability of undertaking information system projects, perhaps involving the acquisition of new computer systems, is known as: a. strategic planning. b. systems development. c. a feasibility study. d. a systems survey. e. a project analysis.

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+14-231. During the preliminary investigation of a proposed new systems development, a firm decides to perform a feasibility study. Which of the following would be primarily addressed during the feasibility study? a.

Conversion, maintenance, and post-audit evaluations b.

Technical, economic, and operational feasibility concerns c.

Project work plans and scheduling considerations d.

Systems and informational requirements e.

Systems specifications 14-232. Overall guidance and approval of systems projects should be provided by: a. the project team. b. the information systems director. c. the management accountant. d. the steering committee. e.

None of these.

14-233. In planning a computer-based information system, which of the following is least urgent? a.

Assigning priorities to system-projects b.

Selecting the specific hardware and software c.

Estimating costs and benefits of each system project d.

Determining specific systems objectives e.

Preparing the strategic systems plan +14-234. Many people believe that a information system function should have a long-range plan. Which of the following is not likely to appear in a long range plan? a.

Organizational objectives and policies b.

Detailed flowcharts for each application that will be developed c.

Time schedule of the development of each project d.

Identification of the hardware, personnel, and financial resources that will be required e.

Forecast of future systems projects and their priorities 14-235. Which of the following is not a benefit of a strategic systems plan? a.

To provide a tentative blueprint for long-term systems development b.

To provide a vehicle for coordinating systems planning with other strategic planning c.

To provide details of all systems projects to be undertaken during the life of the firm d.

To provide documented assurance that wasteful duplications will be minimized e.

To provide a standard against which to evaluate the performance of the information systems function 14-236. Which of the following is a pitfall (i.e., a critical misstep) when planning the development of an information system? a.

Obtaining the support of top management b.

Organizing a steering committee c.

Establishing priorities for the respective systems projects d.

Keeping the details of the project confidential e.

Establishing controls over approved systems projects

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14-237. In the process of assigning priorities to systems projects, various criteria should be applied.

Which of the following is the least satisfactory criterion from the viewpoint of the firm as a whole? a.

The acceptance by users b.

Long-term viability c.

Urgent need to correct intolerable conditions d.

Opportunity to install a state-of-the-art system e.

Opportunity for profit improvement 14-238. A project proposal should include all of the following except: a. the definition of the problems to be corrected. b. the project scope. c. an analysis of present procedures. d. tThe time schedule. e. tThe benefits versus the costs.

14-239. If the composition of a project team assigned to design an improved computer-based general ledger system is limited to two persons, which of the following combinations is the best? a.

Systems analyst and accountant b.

Systems analyst and programmer c.

Programmer and accountant d.

Programmer and computer operator e.

Systems analyst and auditor 14-240. A deliverable from the planning phase of systems development is: a. a project proposal. b. a set of system requirements. c. a strategic system plan. d. a and b above. e. a and c above.

14-241. Which of the following is not a step to be completed before a systems project is commenced? a.

Obtain approval of the project proposal. b.

Inform employees and managers of the project. c.

Assemble the project team. d.

Establish project controls. e.

Perform a systems survey.

14-242. What is one tangible product from the systems planning phase? a.

System specifications b.

Approved project proposals c.

Installed information system d.

Announcement of new systems development e.

Detailed benefit/cost analysis 14-243. At which point in the development of a new system do the management activities end? a.

When feasibility is proven b.

When hardware is received c.

When the implementation is completed d.

When the computer programming begins e.

They continue throughout the operational phase

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14-244. Which of the following is the least suitable means of collecting and/or reporting on day-by-day computer utilization? a.

Hardware monitor b.

Software monitor c.

Equipment utilization report d.

Computer log e.

GANTT chart 14-245. Which of the following is not a question to be settled in accounting for system-related costs? a.

Should users be charged for system-related services? b.

Should chargeback rates be market-based or cost-based? c.

Should established chargeback rates be modified to accommodate special conditions? d.

Should the activity base of a chargeback rate be determined by a single factor (e.g., CPU time) or by a combination of factors. e.

Should users be provided system-related services?

14-246. Which of the following is not a benefit of using chargeback rates in accounting for system-related costs? a.

To stimulate the involvement of users b.

To enable the information systems function to be evaluated c.

To aid in planning the expansion of information system services d.

To ensure that users will use the maximum amount of system-related services e.

To ensure that resources will be used effectively 14-247. Which of the following is not a criterion for a chargeback rate? a.

Fairness to all users b.

Understandability by users c.

Confidentiality, i.e., known only by users d.

Ease of computation e.

Consistency, i.e., comparable pricing 14-248. Which statement is least correct with respect to the accounting for system-related services? a.

A chargeback rate based on a single factor is generally fairer to users than a rate based on several factors or components. b.

A chargeback rate based on standard costs is sounder than one based on actual costs. c.

The use of market prices as chargeback rates is associated with the use of the profit center concept. d.

Adjustable chargeback rates can aid in achieving an objective of reducing peak operating levels. e.

Certain systems-related costs may reasonably be omitted from a chargeback system.

14-249. Which of the following statements is most correct with respect to accounting for system-related costs? a.

All system-related costs, even those pertaining to projects that may benefit several departments and functions, should be allocated by means of chargeback rates. b.

A single chargeback rate should be applied throughout a firm, even if the information systems function has several different cost centers, e.g., data-entry, operations. c.

Market-based chargeback rates have been adopted by a large proportion of firms. d.

Cost-based chargeback rates are intended to provide sufficient returns to enable the information systems function to recover its operating expenses. e.

When actual or average cost-based chargeback rates are employed, the rates are high when the total activity base is high.

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14-250. A report that compares keystrokes per hour to standard output rates is used to evaluate the performance of: a. computer operators. b. data entry clerks. c. programmers. d. systems analysts. e.

All of the above.

14-251. Which of the following aspects of performance is likely used to measure productivity of computer programmers? a.

Keystrokes per unit of time b.

Processing times for computer jobs c.

Number of instructions written per unit of time d.

Progress on systems projects e.

Machine utilization 14-252. Which of the following questions would systems operations managers be least concerned with respecting the utilization of computer and other information system equipment? a.

How many hours of computer time were devoted to productive uses during a specific period of time? b.

Were sufficient hours devoted to preventive maintenance, in order to avoid undue downtime? c.

Are controls adequate to prevent programmers from making and testing program changes without approval? d.

What percentage of time was the equipment out-of-service due to failures, idle time, training, etc.? e.

Do the actual number of nonchargeable hours for equipment show an unfavorable variance when compared to the standard for nonchargeable hours? +14-253. The best measure of the effectiveness of an application within a computer-based system is the: a. performance of the computer system in terms of speed, reliability, and so forth. b. variety of edits performed. c. degree of user satisfaction. d. number of reports provided. e. period of time since being developed.

14-254. Which of the following is not a means of determining the effectiveness (as opposed to the efficiency) of an informational system? a.

Polls of users b.

Analyses of key factors, such as response times c.

Preparation of employee productivity reports d.

Modeling of systems functions e.

Performance of operational audits **14-255.An organization desiring to change its information system generally goes through the phases of the systems development life cycle. This cycle includes which set of activities? a.

Planning, analysis, design, and follow-up b.

Planning, design, implementation, and follow-up c.

Development, analysis, feasibility study, and implementation d.

Planning, analysis, design, implementation, and follow-up e.

Systems study, feasibility study, design and implementation

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**14-256.Systems analysts are the personnel within an organization who are responsible for the development of the company’s information system.Which one of the following functions are least likely to be performed by a systems analyst? a.

Design of computer applications b.

Preparation of specifications for computer programming c.

Developing, coding, and testing of computer programs d.

Examining user information systems e.

Developing system flowcharts Use the following information to answer questions 14-257 through 14-266.

A large bank has 24 major application systems supporting more than 200 different kinds of customer accounts ranging from standard checking and savings accounts to sophisticated trust accounts. The systems have been developed over two decades in several languages and database systems. Individually, the systems work as intended with minimal errors. However, different systems have different user interfaces, and that increases both the training time for new account representatives and the likelihood of misuse of the systems.

Ten years ago, account representatives were generally familiar with all the account types and could make good recommendations to the customers regarding which account to select. Now, however, only a few account representatives are familiar with most of the account types, and even they have trouble helping customers select the best portfolio of accounts for their individual financial situations.

Management became concerned that the quality of customer service was dependent upon which account representative was contacted by the customer. The customer received good service if the account representative was familiar with the account types most suitable for the customer.

After many discussions, management is convinced the bank will fall behind its competitors if it does not do better at managing its relationships with customers. It is also clear that the bank cannot implement all new systems at once. After many meetings, management and the account representatives could not agree, however, on how the new system should work or what the user interfaces should include. +14-257. The new account management system is characterized by: a. uncertain requirements and unstructured tasks b. certain requirements and unstructured tasks c. uncertain requirements and high user understanding of tasks d. certain requirements and low user understanding of tasks +14-258. The best development approach for the new account management system is: a. life cycle. b. bottom-up cycle. c. prototyping. d. top-down design. +14-259. Compared to prototyping, life cycle methodologies are appropriate for problems involving: a. high user understanding of tasks and large project size. b. low user understanding of tasks and small project size. c. low user understanding of tasks and uncertainty of requirements. d. uncertainty of requirements and large project size. +14-260. The major phases in a life cycle methodology are: a. define requirements, design system, refine requirements, and revise/enhance system b. define requirements, design system, develop code, test system, install system, and operate system c. define requirements, create initial system, develop code, install system, and operate system d. define requirements, create initial system, refine requirements, and revise/enhance system +14-261. In addition to specifying requirements, user responsibilities in prototyping are to: a. modify programs, refine requirements, and evaluate iterations.

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b. c. d.

modify programs, develop code, and operate systems. create initial systems, communicate requirements, and operate systems. evaluate iterations, refine requirements, and communicate refined requirements.

+14-262. Advantages of life cycle methodologies are: a. lower overall development costs when requirements change frequently. b. ability to give users a functioning system quickly. c. reduced application development time to achieve a functioning system. d. enhanced management and control of the development process. +14-263. Advantages of prototyping are: a. ability to try out implementations without incurring large development costs. b. early definition of complete requirements and conceptual design. c. easy specification of control points and associated control procedures. d. enhanced management and control of the development process. +14-264. Assume that after some time, the bank developed its account management system and trained its account representatives who were then able to use it successfully, much to the delight of the customers. Further, suppose that after a period of use, the bank intends to add another type of account. Implementing the new account type would require revising system menus, adding data fields, and expanding the update cycle to another master file. The best development approach for the new account type is: a. prototyping. b. hierarchy-input-process-output (HIPO). c. life cycle. d. simulation. +14-265. A contingency approach to choosing an application development strategy means that an organization adopts: a. a single requirements development assurance method. b. multiple methods as appropriate for individual projects. c. any one of several common life cycle methodologies. d. prototyping for all projects with uncertain requirements. +14-266. The principal rationale for prototyping is that it is easier to: a. divide a project into manageable segments at the beginning rather than to impose control after development is underway. b. react to an existing application system rather than to specify desired features for a future system. c. anticipate and plan for resource use rather than to acquire resources on short notice. d. convert data files once rather than to reformat data continually with new project iterations. +14-267.A systems development approach used to quickly produce a model of user interfaces, user interactions with the system, and process logic is called: a. neural networking. b. prototyping. c. re-engineering. d. focus groups.

+14-268. Which of the following is not a method for implementing a new application system? a.

Direct cutover b.

Parallel c.

Pilot

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d.

Test +14-269. Which of the following manage an organization’s in-house data processing facility for a fee while operating under guidelines established by the user? a.

Computer leasing companies b.

Facilities management organizations c.

Service bureaus d.

Time-sharing vendors

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14-269.

C B D B B C D D C A E E B E E E D C A D B C C C C D C A C A B D D A C B B B D B

264