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Study Resources (Accounting)

131.Which of the following is the most significant disadvantage of auditing around the computer rather than through the computer? A.The time involved in testing processing controls is significant. B.The cost involved in testing processing controls is significant. C.A portion of the audit trail is not tested. D.The technical expertise required to test processing controls.
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179. Visit the ISACA website at www.isaca.org and click the Students and Educators tab and then the        IT Audit Basics tab to find articles covering topics concerning the audit process. Locate an article        on each of the following topics and answer the related question: a) Identify and briefly.
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168. Explain why standards of fieldwork for GAAS are not particularly helpful to an auditor who is        trying to determine the types of testing to be used on an audit engagement.  169. Tyrone and Tyson are assigned to perform the audit of Tylen Company. During the audit, it was        discovered.
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CHAPTER 7 – PROBLEMS 174. Match the standard-setting bodies with their purpose. 175. Identify whether the following audit tests are used to evaluate internal access controls (I),        external access controls (E), or both (B): authenticity, penetration, vulnerability assessments,        review of access logs, and review of policies concerning the issuance of passwords and.
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87.A large part of the work performed by an auditor in the audit planning process is the gathering of evidence about the company’s internal controls.  This can be completed in any of the following ways, except: A.Interviewing key members of the accounting and IT staff. B.Observing policies and procedures  C.Review IT user manuals.
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164. Aaron Preswick is the owner of AP’s Instant Replay, a consignment shop for used sporting        goods.  Aaron accepts consigned goods and offers them for sale to the general public.  Aaron        rents business space, including a retail store where the consigned goods are displayed and sold,        with adjoining.
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177. In order to preserve auditor independence, the Sarbanes-Oxley Act of 2002 restricts the types of        nonaudit services that auditors can perform for their public-company audit clients. 178. Visit the AICPA website at www.aicpa.org and click on Becoming a CPA/Academic Resources.        Use the Careers in Accounting tab to.
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- CHAPTER 8 - MULTIPLE CHOICE 46.In a large company, there are hundreds, possibly thousands, of sales transactions each day.  The company needs to have in place, systems and processes to: A.Capture the results of the sales transactions B.Record the proper and complete sales transactions C.Summarize and report the results of the transactions D.All of.
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166. The following list presents various internal control strengths (S) or risks (R) that may be found         in a company’s revenues and cash collection processes. __­__ Credit is authorized by the credit manager. _­­­___ Checks paid in excess of $5,000 require the signatures of two authorized members of management. (Although this is.
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141. List the advantages of e-commerce systems.  142. Identify two of the biggest risks to companies who use e-commerce, along with controls to        prevent these risks.  143. What controls should a company implement to ensure consistency of sales information between         the front end and back end of its systems?  144..
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171. How is it possible that a review of computer logs can be used to test for both internal access        controls and external access controls? 172. Explain why continuous auditing is growing in popularity. Identify and describe a computer-        assisted audit technique useful for continuous auditing.  173. Each of the.
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11.The existence of good internal controls do not ensure high sales and profits. 12.Effective and efficient internal control often takes up valuable management time that could otherwise be spent on attention to revenue growth and cost controls. 13.Proper sales authorization control requires obtaining approval before processing an order and again before the.
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106.This section of the common forms used as the standard format in EDI data transmission contains data about the file or transmission and identify the end of a particular transaction. A.Header and Trailer Data B.Labeling Interchanges C.Data Segments D.Footer Data               107.Because it can be expensive to develop and maintain a system that links two.
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146. Explain how an audit trail might get “lost” within a computerized system.  147. Explain how the presence of IT processes can improve the quality of information that        management uses for decision making.  148. Distinguish among the focuses of the GAAS standards of fieldwork and standards of reporting. 149. Which professional.
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– CHAPTER 8 – PROBLEMS 162. In 1956, Gussepi DeLucca opened a pizza restaurant that he named DeLucca’s in St. Louis,        Missouri.  Over the years, he opened both company and franchise locations and grew the        business to include over 40 restaurants that serve the three states around the St. Louis area. .
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156. Revenue systems are crucial in the healthcare industry, where hundreds of billions of dollars are        spent annually reconciling revenues and billing data from the perspectives of providers (doctors        and clinics, etc.) and payers (insurance companies).  Briefly describe how EDI would be        beneficial in this industry.  Describe the purpose.
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41.The Sarbanes-Oxley Act has placed greater restrictions on CPAs by prohibiting certain types of services historically performed by CPAs for their audit clients. 42.The Sarbanes-Oxley Act decreased management’s responsibilities regarding the fair presentation of the financial statements. 43.The responsibility of the auditor to search for fraud is less than the responsibility to.
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76.The authorization of sales returns requires that certain individuals within the company be assigned the authority for all of the following, except: A.Authorize Sales Returns B.Approve Credit Memos C.Develop Sales Return Policies D.Record the Credit Memos 77.The segregation of duties related to sales returns would ideally separate the function of performing the credit memo activity.
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107.This is one of the computer-assisted audit techniques, related to processing controls, that involves processing client data through a controlled program designed to resemble the client’s application.  This test is run to find out whether the same results are achieved under different systems. A.Integrated Test Facility B.Embedded Audit Module C.Parallel Simulation D.Test Data Method              .
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67.The generally accepted auditing standards are divided into three groups.  Which of the following is not one of those groups? A.General Standards B.Basic Standards C.Standards of Fieldwork D.Standards of Reporting 68.GAAS, generally accepted auditing standards, provide a general framework for conducting quality audits, but the specific standards - or detailed guidance - are provided by.
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158. Describe how the matching of key information on supporting documents can help a company        determine that its revenue transactions have not been duplicated.  159. Describe how the use of pre-numbered forms for receiving reports and credit memos can help a        company determine that sales return transactions have not been.
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TRUE / FALSE 1.Because different companies conduct business in different manners, there tends to be few similarities in the way the related business processes are carried out. 2.Sales processes need supporting practices such as credit checks and stock authorization. 3.Even though most companies collect order data from customers, the manner of receiving order.
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66.Which of the following is not one of the stated physical controls for inventory in a warehouse? A.Surveillance Cameras B.Alarm Systems C.Backup Copies D.Security Guards 67.In order to protect data files, production programs, and accounting records from unauthorized access, each of the following may be used, except: A.Passwords B.Physical controls (locked cabinets) C.Backup copies D.Surveillance cameras 68.Common types of independent.
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57.This type of audit is performed by independent auditors who are objective and neutral with respect to the company and the information being audited. A.Compliance Audit B.Operational Audit C.Internal Audit D.External Audit 58.              The independence of a CPA could be impaired by: A.Having no knowledge of the company or the company management B.By owning stock of a.
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CHAPTER 7 – SHORT ANSWER QUESTIONS 141. What are assurance services? What value do assurance services provide?  142. Differentiate between a compliance audit and an operational audit.  143. Which type of audit is most likely to be performed by government auditors? Which type of audit        is most likely to be.
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97.                Related audit tests to review the existence and communication of company policies regarding important aspects of IT administrative control include all of the following, except: A.Personal accountability and segregation of incompatible responsibilities B.Job description and clear lines of authority C.Prevention of unauthorized access D.IT systems documentation 98.Controls meant to prevent the destruction of.
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31.Those who handle cash should not have access to the related accounting records. 32.At a minimum, cash receipts should be deposited on a weekly basis. 33.Detailed customer accounts should be maintained and reconciled with customer statements regularly. 34.Access to cash collections needs to limited to those who are expressly authorized to record the.
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– CHAPTER 8 – SHORT ESSAY 154. Describe what is likely to occur if company personnel erroneously recorded a sales transaction        for the wrong customer?  What if a cash receipt was applied to the wrong customer?  Identify        internal controls that would detect or prevent this from occurring.  155. Debate the logic.
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151. List the techniques used for gathering evidence.  152. During which phase of an audit would an auditor consider risk assessment and materiality? 153. What is the significance of Statement on Auditing Standards No. 94?  154. Distinguish between auditing through the computer and auditing with the computer.    .
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163. You are the recent heir of $20,000 cash, with which you are considering opening a sushi bar in         the university community.  You would accept cash and credit card payments, which would be         handled primarily by your servers.  You also plan to offer introductory specials to attract         customers.
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150. What is the purpose of maintaining transaction logs?  Why are they especially important in IT         systems?  151. List some advantages of a POS system.  152. Why are backup systems one of the most important controls for POS systems?  153. Describe a popular fraud scheme where company employees misuse the.
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77.Although there a number of organizations that provide detailed guidance, it is still necessary for auditors to rely on other direction regarding the types of audit tests to use and the manner in which the conclusions are drawn.  These sources of information include: A.Industry Guidelines B.PCAOB C.ASB D.ASACA 78.Claims regarding the financial condition of.
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56.Sales orders are calculated based on current selling prices of the items sold.  The source of these prices, which would include the entire set of preestablished and approved prices for each product, is referred to as a(n): A.Price list B.Purchase order C.Packing slip D.Pick list 57.The maximum dollar amount that a customer is allowed to.
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159. The test data method and an integrated test facility are similar in that they are both tests of        applications controls and they both rely on the use of test data. Explain the difference between        these two audit techniques.  160. Explain the necessity for performing substantive testing even.
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96.Application controls of the IT system would include: A.Availability B.Accuracy and Completeness C.Security D.Processing Integrity 97.This type of highly integrated IT system incorporates electronic processing of sales-related activities and, generally, the sales processes are transacted over the internet. A.E-commerce B.Virtual commerce C.Electronic data interchange D.Point of sale 98.This type of highly integrated IT system, inter-company, computer-to-computer, communicates sales documents electronically.
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180. Refer to the example presented in this chapter describing frauds perpetrated by top managers        in large companies like Enron, Xerox, and WorldCom. Perform an Internet search to determine        the nature of Xerox’s management fraud scheme and to find out what happened to the        company after the problems.
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155. Explain why it is customary to complete the testing of general controls before testing application        controls.  156. Identify four important aspects of administrative control in an IT environment. 157. Think about a place you have worked where computers were present. What are some physical        and environmental controls that you.
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– CHAPTER 8 – END OF CHAPTER QUESTIONS:               115.Within the revenue processes, a signed approval of a sales order indicates all of the following except: A.The date of delivery. B.The sale is to an accepted customer. C.The customer’s credit has been approved. D.The sales price is correct.               116.An example of an independent verification in.
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CHAPTER 7 – END OF CHAPTER QUESTIONS:               120.Which of the following types of audits is most likely to be conducted for the purpose of identifying areas for cost savings? A.Financial Statement Audits B.Operational Audits C.Regulatory Audits D.Compliance Audits               121.Financial statement audits are required to be performed by: A.Governmental Auditors B.CPAs C.Internal Auditors D.IT Auditors               122.Which of the following.
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CHAPTER 7 - MULTIPLE CHOICE 47.Accounting services that improve the quality of information provided to the decision maker, an audit being the most common type of this service, is called: A.Compliance Services B.Assurance Services C.Substantive Services D.Operational Services 48.A type of assurance services that involves accumulating and analyzing support for the information provided by management is.
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134. Why should the person responsible for shipping goods to customers not also have responsibility        for maintaining records of customer accounts?  135. What is the purpose of a credit memorandum?  136. How are sales invoices used (in a manual system) in the preparation of credit memos?  137. How can a.
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86.The internal control of cash receipts related to adequate records and documents would include which of the following? A.Cash receipts listings prepared on a daily basis and reconciled to supporting documentation from the bank deposit. B.Bank deposit receipts should be retained and filed chronologically. C.Detailed customer accounts should also be maintained and reconciled.
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