Act 430 Mid 1 fall 2020 

1. People, procedures, and information technology is a component of an

accounting information system.
2/2

Yes
 
No
Maybe

 
2. (a) Customer-based, product-based, access-based or(b) Variety-based,
access-based, and needs-based, which one is strategic?
2/2

a
b
 
 
3. (a)Low cost producer strategy and high quantity producer strategy (b) Low
cost producer strategy and product/service differentiation strategy, which one
was noted in text? *
0/2

a
 
b

Correct answer
b

 
4. Ciba geigy received raw material for medicine *
2/2

Inbound
 
Outbound
Operation
Marketing and sales
Service

 
5. Ciba geigy workers are making medicine
2/2

Inbound
Outbound
Operation
 
Marketing and sales
Service

 
6. Ciba geigy is making an ad where an old man is taking viagra
2/2

Inbound
Outbound
Operation
Marketing and sales
 
Service

 
7. Ciba geigy is delivering medicine through KKKK inc.
2/2

Inbound
Outbound
 
Operation
Marketing and sales
Service

 
8. Dell is repairing computers
2/2
Inbound
Outbound
Operation
Marketing and sales
Service
 
 
9. Management's decisions to optimize the profitability of the company is an
important is an important function of AIS.
0/2

yes
 
No

Correct answer
No

 
10. While an accounting information system supports each of the
organization's primary activities in the value chain as well as many of the
support activities, it can only be categorized into one of the activities. Into
which activity is the accounting information system categorized?
2/2

Purchasing
Service
Firm infrastructure
 
Operation
technology

 
11. List characteristics of information with brief description and example of
each characteristic.
3/7
Five characteristics of high quality information are accuracy, completeness, consistency,
uniqueness, and timeliness. Information needs to be of high quality to be useful and
accurate. The information that is input into a data base is presumed to be perfect as well
as accurate. The information that is accessed is deemed reliable. Flaws do arise with
database design but do not let something in your control, accurate and reliable data, be
one of them. A database design that is accurate and reliable will help achieve the
development of new business ideas as well as promoting the organizational goals.
Completeness is another attribute of high quality information. Partial information may as
well be incomplete information because it is only a small part of the picture.
Completeness is as necessary as accuracy when inputting data into a database.
Consistency is key when entering information into a database. For example, with a
column for a phone number entry 10 digits is the expected length of the field. Once the
fields have been set in the database, a number more or less than 10 digits will not be
accepted. The same applies for any field, whether it is an entry that requires a number, a
series of numbers, an address, or a name, etc. If the fields are not set to a specific limit
for information then consistency is even more important. Uniqueness is the fourth
component of high quality information. In order to add value to any organization,
information must be unique and distinctive. Information is a very essential part of any
organization and if used properly can make a company competitive or can keep a
company competitive. A fifth important aspect of information is timeliness. New and
current data is more valuable to organizations than old outdated information. Especially
now, in this era of high technological advances, out-of-date information can keep a
company from achieving their goals or from surviving in a competitive arena. The
information does not necessarily need to be out of date to have effect, it just needs to not
be the most current. Real-time information is an element of timeliness.

 
12. A manual AIS begins with the capture of information from source
documents. These source documents could vary from scraps of paper to
notepads or even blackboards. However, transaction data are most easily
and effectively captured if the source documents are well designed. Which of
the following is not an element of a well-designed source document?
2/2

Use preprinted data to the maximum extent possible

Minimize the use of codes and checkoffs
 
 
13. Numerous journals are available for the recording of transactions. In
which journal would one record the purchase of a new piece of equipment for
use in production?
2/2

Sales
General
 
Adjusting

 
14. The posting process
2/2

never generates more than one posting for each transaction

occurs as needed
is used to place post-it notes on all items that need attention
is used to meter the outgoing mail
summarizes the amounts recorded in the journals to the ledgers
 
 
15. One of the three basic functions of an AIS is to collect and store data
about the organization's business activities and transactions efficiently and
effectively. In a manual system the process of performing this function
follows the order of:
2/2

source documents, journalizing, posting

 
posting, journalizing, source documents
journalizing, ledgerizing, posting
source documents, ledgerizing, journalizing
source documents, ledgerizing, posting

 
16. A chart of account is
2/2
is a list of all accounts in the organization with each account identified by a three- or four-
digit code
is used to summarize each customer's current balance
provides an audit trail
is a list of all permanent accounts in the organization. Temporary accounts, such as
revenue and expense accounts, are not included in the chart of accounts.
None of the above
 
 
17. An accounting information system produces more than financial
statements. In fact, it is relied upon to produce detailed operational
information about the organization's performance. Where are the data
collected from to generate this operational information?
2/2

Customers
Vendors
Revenue Cycle
Expenditure Cycle
Product Cycle
All of the above
 
 
18. Management by exception:
2/2

is a technique of hands-off management, unless current performance does not meet the
expectations established in the budget
 
is a technique whereby exceptional performance is guaranteed
requires a periodic comparison of each unit's activities with past performance
None of the above

 
19. The third function of the AIS is to provide adequate internal controls to
accomplish three basic objectives. Identify the improper objective.
2/2
Ensure that business activities are performed efficiently and in accordance with
management's objectives while also conforming to any applicable regulatory policies
Safeguard organizational assets, including its data
Ensure that the information that is produced by the system is relevant
 
Ensure that the information that is produced by the system is reliable

 
20. How can management reasonably ensure that business activities are
performed in accordance with their objectives?
2/2

Oversee each employee sufficiently to ensure that he/she is performing all his/her duties
correctly
Spot check each employee to ensure that he/she is performing his/her duties correctly
Provide each employee with written descriptions of company procedures. Periodically
evaluate each employee's performance with regard to compliance with company
procedures.
 
None of the above

 
21. A scheme where the perpetrator steals the cash or check that customer
A mails in to pay its accounts receivable, then the perpetrator takes the
funds from customer B to later cover that account. And so on with Customer
C.
2/2

Computer fraud
Employee fraud
Kiting
Lapping
 
 
22. Which of the following creates an environment where computer fraud is
less likely to occur?
2/2

Hire employees without adequate security and criminal checks.

Assume that corporate security policies are understood by all employees.
Increase the penalties for committing fraud.
 
None of the abov

 
23. Kiting is a scheme in which:
2/2

insufficient funds are covered up by deposits made at one bank by checks drawn at
another bank.
 
a computer system is infiltrated under false pretenses.
an external user impersonates an internal user.
None of the above

 
25. In order for an act to be legally considered fraud it must be all of the
following except
2/2

A material fact.
Justifiable reliance.
A false statement.
No intent to deceive.
 
An injury or loss suffered by the victim.

 
26. According to the opportunity part of the fraud triangle, a person may do
all of the following acts except:
2/2

Convert the theft or misrepresentation for personal gain.

Control the fraud.
 
Commit the fraud.
Conceal the fraud.

 
27. Which of the following pressures are classified as Management
Characteristics that can lead to financial statement fraud?
2/2

High management and/or employee turnover

 
Declining industry
New regulatory requirements that impair financial stability or profitability
Intense pressure to meet or exceed earnings expectations

 
28. All of the following are classification of computer fraud except:
2/2

Input fraud.
Reconciliation fraud.
 
Computer instructions fraud.
Processor fraud.
Output fraud.

 
29. Which of the following actions are used to reduce fraud losses?
2/2

Implement a fraud hotline.

Conduct periodic external and internal audits.
Maintain adequate insurance.
 
Develop a strong system of internal controls.

 
30. Which of the following is considered a financial pressure that can lead to
employee fraud?
0/2

Gambling habit.
 
Greed.
Poor credit ratings.
Job dissatisfaction.

Correct answer
Poor credit ratings.

 
31. Write a memo: You have a new client, Ms. Amy Pemberton, who is in the
process of forming a new company and has asked your assistance in
developing a system of internal control. She would like to start off on a very
positive note and is very concerned about promoting ethical behavior within
her company.She has been reading about COSO's integrated framework and
is curious as to what she should do to make certain that she establishes the
appropriate control environment. She would like you to describe the control
environment component of internal control and the five principles that relate
to it.REMINDER: Your response will be graded for both technical content
and writing skills. Technical content will be evaluated for information that is
helpful to the intended reader and clearly relevant to the issue. Writing skills
will be evaluated for development, organization, and the appropriate
expression of ideas in professional correspondence. Use a standard
business memo or letter format with a clear beginning, middle, and end. Do
not convey information in the form of a table, bullet point list, or other
abbreviated presentation. Start by using following format: Memorandum To:
Ms Amy pemberton Re: The control environment and its underlying
prinicples
15/20

Memorandum to: Ms. Amy Pemberton From: __________ Re: The control environment
and its underlying principles Ms. Amy Pemberton, who is in the process of forming a new
company. I am very glad that she has asked me to assist in developing a system of
internal control. She would like to start off on a very positive note and is very concerned
about promoting ethical behavior within her company. She has been reading about
COSO's integrated framework and is curious as to what she should do to make certain
that she establishes the appropriate control environment. Under COSO internal control
includes the following five components which contain the 17 COSO Internal Control
Principles. The COSO Board added the 17 Internal Control. Principles because they are
presumed essential in assessing that the five components are present and functioning
properly. Here are the 17 listed by internal control component: CONTROL
ENVIRONMENT Control environment is the attitude toward internal control and control
consciousness established and maintained by the management and the employees of an
organization. Control environment helps to Demonstrates commitment to integrity and
ethical values, Exercises oversight responsibility, establishes structure, authority, and
responsibility, demonstrates commitment to competence and finally Enforces
accountability. RISK ASSESSMENT Risks are events that threaten the accomplishment
of objectives. They ultimately impact an organization’s ability to accomplish its mission.
Risk assessment is the process of identifying, evaluating and determining how to manage
these events. At every level within an organization there are both internal and external
risks that could prevent the accomplishment of established objectives Risk assessment
encompasses 4 principles which are Specifies suitable objectives, Identifies and
analyzes risk, assesses fraud risk and finally Identifies and analyzes significant change
CONTROL ACTIVITIES Control activities are the actions established by policies and
procedures that help ensure that management’s directives are carried out. Control
activities encompass 3 principles. 10. Selects and develops control activities 11. Selects
and develops general controls over technology 12. Deploys through policies and
procedures INFORMATION and; COMMUNICATION is the exchange of useful
information between and among people and organizations to support decisions and
coordinate activities. Information and communication encompass three principles such as
Uses relevant information, communicates internally and communicates externally.
MONITORING Management should focus monitoring efforts on internal control and
achievement of organization objectives. Monitoring activities encompass 2 principles.
They are Conducts ongoing and evaluations and Evaluates and communicate
deficiencies.

 
32. Write a memo: In your role as CFO, you are part of the team that
regularly evaluates internal control. In its risk assessment your team has
identified a concern that your work force may not be adequately prepared for
anticipated changes in technology. The change will affect the manufacture of
a specific part that is a device used along with the company's main product.
The team has asked you to identify the alternative ways in which the entity
could respond to this risk and to prepare a memo to the team explaining the
choices and indicating your recommendations.REMINDER: Your response
will be graded for both technical content and writing skills. Technical content
will be evaluated for information that is helpful to the intended reader and
clearly relevant to the issue. Writing skills will be evaluated for development,
organization, and the appropriate expression of ideas in professional
correspondence. Use a standard business memo or letter format with a clear
beginning, middle, and end. Do not convey information in the form of a table,
bullet point list, or other abbreviated presentation. Memo/To: Internal control
evaluation team/ Re: Alternative responses to risks of an untrained work
force
7/17

There are mechanisms regularly evaluates internal control in its risk assessment. The
change will affect the manufacture of a specific part that is a device used along with the
company's main product. Some alternative ways in which the entity could respond to this
risk are given below. The business and economic environment is often unpredictable with
significant technology evolution, rapidly shifting customer behavior, global influences, and
fierce competition—all factors that stress strategic planning and the need to maximize
operational capabilities to survive and thrive. All this creates uncertainty, which provides
both risk and opportunity, and management must determine how to balance those risks
and opportunities in alignment with the objectives of the entity. As you can imagine, this
can be an extremely daunting task without an organized ERM approach to help keep up
with the pace of change facing entities today. To respond to the need for this organized
approach, COSO developed an ERM framework and updated. COSO’s ERM framework
is designed to be applied by all types and sizes of entities to strategically identify events
that may affect the entity and to manage those risks in accordance with the entity’s risk
appetite, to provide reasonable assurance of achieving the entity’s objectives. due to the
increasing complexity of business risks, the accelerated rate of emerging new risks, and
the demand for better risk reporting, the framework, retitled Enterprise Risk Management
—Integrating with Strategy and; Performance, dives deeper to redefine risk in relation to
strategy and performance and focuses on the need to embed ERM proactively
throughout the entity’s COSO touts several benefits to implementing its ERM framework:
Promotes identification and management of entity-wide risks. Increases identification of
opportunities by examining the pros and cons of possibilities. Reduces costs of negative
surprises and maximizes positive outcomes. Some recomendationL Formulates business
objectives 14. Develops portfolio view Review & Revision Assesses substantial
change ursues improvement in ERM Information, Communication & Reporting
Leverages information systems Communicates risk information Reports on risk, culture,
and performance