MME-AIS

1. Which of the following are true regarding Only statement 1 is correct.

preventive controls?
5. Terminating an employee who committed severe
computer fraud is a good example of
I. Are designed to be implemented prior to a threat
event and reduce the likelihood and potential Preventive control
impact of a successful threat event.
II. Are designed to be implemented prior to a threat Detective control
event and avoid the likelihood and potential impact
of a successful threat event. Compensating controlCorrect!

I only Correct! Corrective control

Both I and II 6. Which statements is/are incorrect about the flat-

file model of information system?
II only
Statement 1: Individual data files are not related to other
Neither I nor II files.

2. Which type of internal control do written policies Statement 2: It is also known as stand-alone application
and procedures appropriately belong? which means that the system has its own database and
updates only its own database.
Preventive control
Only statement 1 is incorrect. Correct!
Corrective control
Neither statement 1 nor 2 are incorrect.
Detective controlYou Answered
Both statements are incorrect.
Can be preventive, detective, or corrective control.
Only statement 2 is incorrect.
3. Select all statements that are correct about the
picking ticket. 7. An information that is free from material errors is
considered (select the appropriate information
I. It is a document that identifies the items of inventory characteristic)
that must be located and picked from the
warehouse shelves. Timely Correct!
II. It is a document prepared by the sales department
Accurate
and sent to the warehouse.
Relevant
I onlyCorrect!
Complete
Both I and II

Neither I nor II 8. Which of the following is/are considered

incompatible duty/duties in the revenue cycle?
II only
Situation 1: Recording the sales in the sales journal and
4. Which statement/s is/are not incorrect pertaining preparation of sales invoice.
to purchasing/accounts payable and cash
Situation 2: Reconciliation of the journal vouchers with
disbursements systems?
accounts receivable summary report and posting to the
Statement 1: If a company uses actual cost method in general ledger.
costing inventories, the accounts payable department
Situation 3: Updating accounts receivable subsidiary
sends a copy of the vendor’s invoice to the inventory
ledger and preparation of accounts receivable summary
control to update the inventory subsidiary ledger.
report.
Statement 2: If a company is using standard costing as a
Situation 4: Preparation, approval and filing of approved
method of inventory valuation, the accounts payable
sales order.
department does not need to send a copy of the
vendor’s invoice to the inventory control to update the Situations 1 and 4 only
inventory subsidiary ledger.
Situations 1 and 2 only.
Only statement 2 is correct.
Situation 4 only.You Answered
Neither statement 1 nor 2 are correct. Correct!
Situations 1, 2, and 4 only
Both statements are correct.
 9. What is/are the risks of entering more than once
the same data in a computer system? Corrective controlYou Answered

Risk 1: Data redundancy It is a process rather than an internal control.

Risk 2: Data inconsistency 14. The upgrade of the accounting software to the
Correct Answer latest version is a good example of what type of
internal control?
Both risks 1 and 2.
It is not an internal control.
Neither risk 1 nor 2 You Answered
Preventive control Correct!
Risk 1 only.
Corrective control
Risk 2 only.
Detective control
10. Which data is most likely considered the primary
key of the sales orders file in an ERP system? 15. All of the following are tasks usually performed by
the purchasing department when acquiring
Sales order numberYou Answered inventories from vendors except
Customer name
I. Preparation of the purchase requisition.
Customer number II. Preparation of purchase order based on the
approved purchase requisition.
Order date III. Request bids from competing vendors.
IV. Enter new accredited vendors in the computer
11. The best example of an attribute of data isrrect! system

Customer address II, III, and IV onlyCorrect!

Inventory list I only

Vendor subsidiary ledger III and IV only

Accounts receivable file I, II, III, and IV

12. The accounts payable subsidiary ledgers (choose
all of the incorrect statement/s)
Statement 1: Contains information about outstanding
balance of each vendor.
Statement 2: Contains information about vendors’
invoices established by a company as liabilities.
Statement 3: Contains information about payments made
to the vendors.
Statement 4: Contains information of the total
outstanding payables that serve as a basis in the
preparation of financial statements.
Statements 1, 2, 3, and 4Correct!
Statement 4 only
Statements 2, 3, and 4 only
Statements 3 and 4 only
16. Which of the following is/are example(s) of
circumstances that indicate the possibility of the
fraud?
Circumstance 1: Discrepancies in the accounting records
due to transactions that are not recorded in a timely
manner.
Circumstance 2: Missing documents and electronic
evidences.
Circumstance 3: Transactions entered into the computer
system by the authorized user based on the approved
source documents.
Circumstance 4: Usual delays in entering transactions in
the computer system.
Circumstances 1 and 2 only.You Answered
Circumstances 2 and 4 only.
Circumstances 1, 2, and 3 only.

13. Hiring qualified people to do the tasks of Circumstances 1, 2, and 4 only.

encoding transactions into the computer system
is a best example of 17. The control/s that can be implemented by a
company to detect possibility of information
Preventive control generation fraud is/are
Detective control Control 1: Shredding machine to shred printed outputs
from the computer system.
 Control 2: Report generation log in the computer system.
Credit checking of sales order.
Control 3: Using user ID and password when logging into
the computer system.Answered Approval of purchase order.

Controls 1, 2, and 3. Generation of sales and accounts receivable

reports.Correct!
Control 2 only.
Counting of goods received from vendors.
Controls 2 and 3 only.
23. Which is the proper order of activities in the cash
Controls 1 and 2 only. disbursement system?
18. Which are considered product documents of the
sales order processing system?
I. Update accounts payable subsidiary ledger.
II. Identify liabilities due.
I. Sales invoice III. Post to general ledger.
II. Remittance advice attached to the sales invoice IV. Prepare cash disbursement.
Both I and II II, I, IV, and III
II onlyYou Answered II, I, III, and IVCorrect!
I only II, IV, I, and III
Neither I nor II II, IV, III, and I

19. In a computer-based accounting system, all of 24. There are some instances that customers
the following can be reference files when returned the goods they bought from a seller. The
processing a purchase order transaction except seller implements return policies for returned
goods. Which of the following statement/s is/are
I. List of authorized suppliers true about the return policy?
II. Tax tables
III. List of inventory items Statement 1: The return policy is used as a basis for
IV. Price list for preparing customer invoices authorizing the credit memo.

I, II, III, and IV Statement 2: The return policy is a good example of

preventive control.
II and IV onlyCorrect!
Only statement 2 is true.
IV only
Both statements are true.
II, III, and IV only
Both statements are false. You Answered
20. Digital audit trail in a computer-based
accounting system should allow Only statement 1 is true.

Neither transaction tracing nor transaction 25. Signages placed at the front door of the IT
vouching Department is a good example of

Transaction vouching only. Corrective controlCorrect!

Transaction tracing only.Correct! Preventive control

Both transaction tracing and vouching. Detective control

21. The inverted triangle in a document flowchart Compensating control

represents 26. It is the process by which the quality of internal
control design and operation can be assessed.
Off-page connectorCorrect!
Information and communication
File for storing source documents and reports.
Control environment Correct!
Manual operation
Monitoring
Accounting records such as journals, registers, logs
and ledgers. Risk assessment

22. Which process may least likely be automated?

 27. Who should prepare the return slip when a 32. Files are used as internal control. The completed
customer returns the inventories bought from the sales orders are placed in the
company due to defects?orrect!
Sales order pending file
Receiving clerk
Credit records file Correct!
Inventory control clerk
Closed sales order file
Sales clerk
Open sales order file
Billing clerk
33. Which category of physical control activities
28. Training employees on using the accounting pertain to independent checks of the
software before they start encoding transactions accounting system to identify errors and
and generate reports is an example of misrepresentations?

Detective control Accounting records

Corrective control Segregation of dutiesCorrect!

Compensating control Correct! Independent verification

Preventive control Supervision

29. Which statement is/are true regarding the
receiving function in the purchases/accounts
payable system?
Statement 1: The receiving clerk writes the quantity on the
quantity field of the blind copy of the purchase order
document prior the receipt of counted and inspected
inventories delivered by vendors.
Statement 2: The receiving clerk prepares multiple copies
of receiving reports that are later on sent to purchasing
department, inventory control department, and
accounts payable department.
34. Which of the following statements is not true
about the cash receipts system?
The remittance advices are used to record to the
customer’s accounts in the AR subsidiary ledger.
A cash receipts employee verifies the accuracy
and completeness of the checks against the remittance
list. You Answered
The controller periodically reconciles cash receipts
by comparing copy of the remittance list, deposit slips
received from the bank, and related journal vouchers.

Only statement 2 is true. You Answered Upon receipt of the remittance advices, journal
voucher and the account summary, the general ledger
Both statements are true. function reconciles the figures, posts to the cash and AR
control accounts, and files the journal voucher.
Only statement 1 is true.
35. In a voucher register, the sum of unpaid
Both statements are false. vouchersrrect!
30. In a computer-based accounting system, the
magnetic files that generally contains account Represents the company’s total accounts payable
data is called balance.

Transaction filesCorrect! Represents the company’s total paid accounts

payable.
Master files
Represents the company’s total collected
Archive files payments from customers.
Reference files Represents the company’s total quantity of
inventories received from vendors.
31. It involves a perpetrator gaining access to the
system from a remote site by pretending to be an 36. Transaction authorization can be general or
authorized user.orrect! specific. Which of the following is/are a good
example of specific transaction authorizations in
Masquerading
a merchandising business?
Hacking
Transaction 1: Purchase of regular merchandise
Piggybacking inventories.

Social engineering Transaction 2: Acquisition of computer software to

process and manage sale transactions.
Transaction 3: Approval of customer’s credit limit beyond
the normal amount. Document flowchart

Transaction 4: Approval of credit memos for sales return 41. Which document typically triggers the process of
transactions. recording a liability?

Transaction 2 only. Purchase requisition

Transactions 2 and 3 only.You Answered Purchase order

Transactions 2, 3, and 4 only.

Transactions 2 and 4 only.
37. This terminology refers to entering data from a
document to the transaction entry screen on the
computer
Receiving reportCorrect!
Supplier’s invoice
42. Which is a not a financial transaction that is
recorded in the accounting information system?

Terminal Purchase of supplies from vendors.YouAnswered

Correct! Transfer of raw materials from one department to

another department.
Keystroke
Addition of new inventories in the inventory list.
Edit run
Sale of an asset to another company.
Update procedures
43. Which of the following are the benefits of
38. In a computer-based accounting system, which automating sales order?
data serves as a primary key in the inventory
subsidiary ledger file and secondary key in the I. Reduces sales order processing time.
sales order file? II. Enhances customer service.
Item code I only.
Sales order number You Answered II only. Correct!
Quantity Both I and II.
Customer account number Neither I nor II.

39. The component of the accounting information
system that supports daily business operations
with numerous reports, documents, and
messages for users throughout the organization is
called
General Ledger SystemCorrect!
44. All of the following statements are true except
The data collection stage in the information system
is the most vulnerable to both fraud and errors.
Computer fraud is an example of asset
misappropriation.

Transaction Processing System Computer fraud may be done by an employee or

non-employee.Correct!
Financial Reporting System
Operations fraud includes creating illegal programs
Management Reporting System that can access data files to alter, delete, or insert values
into accounting records.
40. Audie is an internal auditor of Company X. The
company is using an accounting software to 45. The department that prepares packing slip and
process payroll. Audie wants to make sure that shipping notice is the
the computer logics in the payroll software are
working as designed. To understand how the Credit department
computer logic of the payroll software works,
which documentation technique should be used Shipping department
by Audie?
Billing departmentorrect!
Record layout diagramCorrect!
Sales department
Program flowchart

System flowchart
 46. The reconciliation and exception reports are
examples of Closed vouchers payable file

Either detective control or corrective control Open purchase order fileYou Answered

Preventive controls You Answered Open vouchers payable file

Corrective controls Closed purchase order file

Detective controls 52. Which of the following control/s qualify as

preventive control?
47. Who is responsible for the preparation of cash
disbursement vouchers? Control 1: Security personnel situated at the entrance
and exit doors of the company premises.
Cash disbursements department
Control 2: Information security policy that is accessible via
Purchasing department company Intranet sites.

Receiving departmentCorrect! Control 3: User ID and password when logging into the
accounting software used by the company.
Accounts payable department
Control 4: Termination of employees who committed
48. The insurance of a building will most likely qualify fraud.
as (select the type of internal control)
Controls 2 and 3 only
Detective control
Controls 2, 3, and 4 only
Corrective control
Control 3 onlyCorrect!
Preventive controlYou Answered
Controls 1, 2, and 3 only
Not qualified as an internal control
53. File backup procedures is an example oforrect!
49. Which of the following statements are true?
Preventive control
Statement 1: As the level of management goes up, the
information needed by the users become aggregated or Corrective control
summarized.
Compensating control
Statement 2: Customers and vendors are sources of data
by a company. Detective control

Statement 2 only. 54. Which controls can be implemented by a

company to prevent the risk of entering incorrect
Both statements are true. data in the computer system?

Neither statement 1 nor 2.You Answered Control 1: Use of source documents that have logical
layout.
Statement 1 only.
Control 2: Supervisor’s review of data on the source
50. Who among the following can perform a system documents.
audit of a company?
Control 2 only.
I. Trained auditors who can be the company’s own Neither control 1 nor 2.
staff.
II. Trained auditors who can be staff of an external Control 1 onlyorrect!
auditing firm.
Both control 1 and 2.
I only.
55. In the COSO internal control framework, all of the
II only. following are subcomponents of the control
environment except
Neither I nor II.Correct!
Integrity and ethical values
Either I or II.
Organizational structure Correct!
51. After recording the payment of a liability, where
does the AP clerk transfer the source documents Risk assessment
PO, receiving report, and vendor invoice?
 Commitment to competence

56. Select all of the following data relevant to the

employee file in a computer-based accounting
system.

I. Photo of employees
II. Employee number
III. Employee name
IV. Hire date

II and III only.

I, II, and III only.

II, III, and IV only. Correct!

I, II, III, and IV.

57. Stamping the sales order document “Rejected”

after review of the credit clerk is an example
ofrect!

Corrective control

Preventive control

Compensating control

Detective control

58. Who is responsible for the recording of payments

on the check register?rrect!

Cash disbursements department

Receiving department

Accounts payable department

Purchasing department

59. Which control will mostly likely ensure that all sales
are recorded in the accounting records?

Use of control number for sales order document.

Review and approval of sales order done by the

credit department.

The use of bill of lading when shipping inventories to

customers. You Answered

Segregation of the accounts receivable and

general ledger functions.

60. Which of the following determines the value of

information?

Reliability

Accuracy You Answered

Relevance

Completeness