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TEXTBOOK – CHAPTER 3 – END OF CHAPTER QUESTIONS               111.The careful and responsible oversight and use of the assets entrusted to management is called: A.Control environment. B.Stewardship. C.Preventive control. D.Security.               112.Which of the following is not a condition in the fraud triangle? A.Rationalization B.Incentive C.Conversion D.Opportunity               113.There are many possible indirect benefits to management when management fraud occurs..
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31.              Independent checks can serve as a preventive control in that they uncover problems in the data or the processing. 32.Feedback needed by management to assess, manage, and control the efficiency and effectiveness of the operations of an organization relates to both financial and operational information. 33.A sophisticated accounting system will provide.
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41.Controlling access to the operating system is critical because that access opens access to any data or program within the system. 42.A database is often less open to unauthorized access than the physical, paper records, because the database has fewer access points. 43.The workstations and the network cabling and connections represent spots.
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67.This type of authentication uses some unique physical characteristic of the user to identify the user and allow the appropriate access to the system. A.Nonrepudiation card B.Biometric device C.Configuration table D.Computer log 68.Which of the following is not an example of physical characteristics being used in biometric devices? A.Retina scans B.Fingerprint matching C.Social security number D.Voice verification 69.There are.
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21.The longer the encryption key is bits; the more difficult it will be to break the code. 22.The longest encryption keys are 128 bits. 23.Encryption is more important for dial-up networks than for wireless networks. 24.Using a unique service set identifier (SSID) makes it more difficult for an outsider to access the wireless.
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184. Many IT professionals feel that wireless networks pose the highest risks in a company’s network        system. Why do you think this is true? Which general controls can help reduce these risks? 185. Control totals include batch totals, hash totals, and record counts. Which of these totals would        be useful in preventing.
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130.Describe three popular program manipulation techniques.               131.Distinguish between Internet spoofing and e-mail spoofing.               132.What are the objectives of a system of internal control? .
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61.              Management misstatement of financial statements often occurs in order to receive indirect benefits such as: A.Decreased income taxes. B.Delayed cash flows. C.Increased stock prices. D.Increased dividends. 62.Management circumvention of systems or internal controls that are in place is termed: A.Management override. B.Management collusion. C.Management stewardship. D.Management manipulations. 63.The theft of assets by a non-management employee is termed: A.Inventory theft. B.Employee fraud. C.Expense.
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CHAPTER 4 – END OF CHAPTER QUESTIONS:               138.Internal controls that apply overall to the IT system are called: A.Overall Controls B.Technology Controls C.Application Controls D.General Controls               139.In entering client contact information in the computerized database of a telemarketing business, a clerk erroneously entered nonexistent area codes for a block of new clients.  This error.
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127.The data preparation procedures are to be well-defined so that employees will be sure of: A.Which forms to use B.When to use them C.Where to route them D.All of the above               128.Field check, limit check, range check and sequence check are all examples of: A.Input Validation Checks B.Source Document Controls C.Control Reconciliation D.Application Controls               129.This type of input.
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160. Describe some recent news stories you have seen or heard regarding computer viruses. 161. What is the difference between business continuity planning and disaster recovery planning? 162. How can a redundant array of independent disks (RAID) help protect the data of an        organization?  163. What kinds of duties should be segregated.
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117.Internal controls over the input, processing, and output of accounting applications are called: A.Accounting Controls B.Application Controls C.Network Controls D.LAN Controls               118.This type of control is intended to ensure the accuracy and completeness of data input procedures and the resulting data: A.Input Controls B.Internal Controls C.Processing Controls D.Output Controls               119.This type of control is intended to ensure the.
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11.To increase the effectiveness of login restrictions, user Ids must be unique for each user. 12.To increase the effectiveness of login restrictions, passwords must be unique for each user. 13.Biometric devises use unique physical characteristics to identify users.  The most common method used is retina scans. 14.There are a number of methods described.
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87.This type of software should be used to avoid destruction of data programs and to maintain operation of the IT system.  It continually scans the system for viruses and worms and either deletes or quarantines them. A.Penicillin Software B.Antivirus Software C.Infection Software D.Internet Software 88.The process of proactively examining the IT system for weaknesses that.
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151.What are some ways in which a business could promote its code of ethics?               152.Describe why the control environment is regarded as the foundation of a business’ system of internal control.               153.Think of a job you have held, and consider whether the control environment was risky or        conservative..
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TEXTBOOK – CHAPTER 3 – PROBLEMS               156.Identify whether each of the following accounting positions or duties involves authorization, recording, or custody: cashier payroll processor credit clerk mailroom clerk data entry clerk deliver paychecks deliver the bank deposit prepare the bank reconciliation check signer inventory warehouse supervisor staff accountant 157.Identify whether each.
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71.              The theft of proprietary company information is called: A.Vendor fraud. B.Customer fraud. C.Espionage. D.Management fraud. 72.Which of the following is a characteristic of computer fraud? A.A computer is used in some cases to conduct a fraud more quickly and efficiently. B.Computer fraud can be conducted by employees within the organization. C.Computer fraud can be conducted by users.
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77.This form of encryption uses a public key, which is known by everyone, to encrypt data, and a private key, to decode the data. A.Multiple encryptions B.Public key encryption C.Wired encryption D.Symmetric encryption 78.This encryption method, used with wireless network equipment, is symmetric in that both the sending and receiving network nodes must use the.
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81.              The objectives of an internal control system include all of the following except: A.Maintain ongoing education. B.Safeguard assets. C.Maintain accuracy and integrity of accounting data. D.Ensure compliance with management directives. 82.The authors presented their “picture” of internal control as a series of umbrellas which          represent different types of controls. Which of the following is.
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186. Explain how each of the following input validation checks can prevent or detect errors: field,        validity, limit, range, reasonableness, completeness, sign, and a self-checking digit. 187. The IT governance committee should comprise top level managers. Describe why you think that        is important.  What problems are likely to arise with regard.
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31.To the extent possible, IT systems should be installed in locations away from any location likely to be affected by natural disasters. 32.It is not necessary to control the humidity and temperature in the location where the computer system is housed. 33.Disaster recovery planning is a proactive plan to protect IT systems.
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138.Why is a policies and procedures manual considered an element of internal control?               139.Why does a company need to be concerned with controlling access to its records?               140.Many companies have mandatory vacation and periodic job rotation policies. Discuss how these practices can be useful in strengthening internal controls.               141.Name the.
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101.              The ongoing review and evaluation of a system of internal control is referred to as: A.Risk assessment. B.Monitoring. C.Segregating. D.Communication. 102. This level of assurance means that controls achieve a sensible balance of reducing risk when        compared with the cost of the control. A.Absolute assurance B.Probable assurance C.Reasonable assurance D.Convincing assurance 103.              Factors that limit the.
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CHAPTER 4 – SHORT ESSAY 175. Categorize each of the following as either a general control or an application control:  a. validity check b. encryption c. security token d. batch total e. output distribution f. vulnerability assessment g. firewall h. antivirus software 176. Each of the given situations is independent of the other. For each, list the programmed input.
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CHAPTER 4 - MULTIPLE CHOICE 57.Unchecked risks and threats to the IT could result in: A.An interruption of the computer operations B.Damage to an organization C.Incorrect or incomplete accounting information D.All of the above 58.In order to master risks and controls and how they fit together, which of the following is NOT one of the areas.
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156. Why should an organization be concerned about repudiation of sales transactions by the    customer?  157. A firewall should inspect incoming and outgoing data to limit the passage of unauthorized data        flow.  Is it possible for a firewall to restrict too much data flow?  158. How does encryption assist in.
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CHAPTER 4 – PROBLEMS 182. Explain why an organization should establish and enforce policies for its IT systems in the        following areas regarding the use of passwords for log-in: Length of password. The use of numbers or symbols in passwords. Using common words or names as passwords. Rotation of passwords. Writing passwords on paper or sticky.
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21.              If an organization has the policy of allowing employees to work from home via telecommunications, they could be opening themselves up to an opportunity for a hacker to break-in to their network. 22.E-mail spoofing is more of an irritation to an organization that a fraud threat. 23.In order for a code.
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– CHAPTER 3 – MULTIPLE CHOICE 41.The chance for fraud or ethical lapses will not be reduced if management: A.Emphasizes ethical behavior. B.Models ethical behavior. C.Hires ethical employees. D.Is unethical. 42.The Phar-Mor fraud began when management: A.Forgot to change the budgeted figures that had been incorrectly computed. B.Attempted to make the actual net income match the budgeted amounts. C.Overstated.
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CHAPTER 4 – SHORT ANSWER QUESTIONS 151. What is the difference between general controls and application controls?  152. Is it necessary to have both general controls and application controls to have a strong system of        internal controls?  153. What kinds of risks or problems can occur if an organization does not.
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TEXTBOOK – CHAPTER 3 – SHORT ANSWER QUESTIONS               125.Management is held accountable to various parties, both internal and external to the business organization. To whom does management have a stewardship obligation and to whom does it have reporting responsibilities?               126.If an employee made a mistake that resulted in a.
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51.An example of concealment would include: A.Changing the payee on a check improperly paid by the organization. B.Selling a piece of inventory that has been stolen. C.Stealing money from an organization before the related sale and cash receipt has been recorded. D.All of the above are examples of concealment. 52.Changing the accounting records to hide.
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133.Name and distinguish among the three types of internal controls.               134.Identify the COSO report’s five interrelated components of internal controls.               135.Name the COSO report’s five internal controls activities. 136. Distinguish between general and specific authorization.               137.Due to cost/benefit considerations, many business organizations are unable to achieve complete .
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TEXTBOOK – CHAPTER 3 – SHORT ESSAY 148.What possible motivation might a business manager have for perpetrating fraud? 149.Discuss whether any of the following can be examples of customer fraud: An employee billed a customer twice for the same transaction. Answer: This is not an example of customer fraud; rather, the customer is.
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154.Identify the steps involved in risk assessment. Do you think it would be effective for an organization to hire external consultants to develop its risk assessment plan?               155.Discuss the accuracy of the following statements regarding internal control: The more computerized applications within a company’s accounting system, the lower the risk will.
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158.Shown is a list of selected sources of internal control guidelines, given in order of issuance, followed by a list of primary purposes. Match each guideline with its primary purpose. Foreign Corrupt Practices Act – COSO – SAS 99 – Sarbanes-Oxley Act – Trust Services Principles –   .
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91.               The COSO report identified a component of internal control as the policies and procedures that      help ensure that management directives are carried out and that management directives are      achieved The component is: A.Control activities. B.Risk assessment. C.Monitoring. D.Information and communication. 92.              The range of activities that make up the component of internal.
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165. Why should accountants be concerned about risks inherent in a complex software system such        as the operating system?  166. Why is it true that increasing the number of LANs or wireless networks within an organization        increases risks?   167. What kinds of risks are inherent when an organization stores its.
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TRUE / FALSE 1.When management does not act ethically, fraud is more likely to occur. 2.In the Phar-Mor fraud case, management did not write or adopt a code of ethics. 3.Maintaining high ethics can help prevent fraud but will not help to detect fraud. 4.Due to management’s responsibility to monitor operations by examining reports.
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97.General controls for an IT system include: A.Controls over the physical environment only. B.Controls over the physical access only. C.Controls over the physical environment and over the physical access. D.None of the above. 98.A battery to maintain power in the event of a power outage meant to keep the computer running for several minutes after.
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142.What does it mean when information flows “down, across, and up the organization”? 143. Provide examples of continuous monitoring and periodic monitoring.               144.What are the factors that limit the effectiveness of internal controls? 145.Identify and describe the five categories of the AICPA Trust Services Principles.               146.Distinguish between the Trust Services Principles.
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188. Using a search engine, look up the term “penetration testing.” Describe the software tools you        find that are intended to achieve penetration testing. Describe the types of systems that        penetration testing is conducted upon. 189. Visit the AICPA website at www.aicpa.org. Search for the terms “WebTrust” and “SysTrust.”       .
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107.The accuracy, completeness, and timeliness of the process in IT systems are referred to as: A.Availability Risks B.Security Risks C.Confidentiality Risks D.Processing Integrity Risks               108.The software that controls the basic input and output activities of the computer are called: A.Operating System B.Application Software C.Data Base Management System D.Electronic Data Interchange               109.Unauthorized access to the operating system would allow.
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11.              A good set of internal controls may not be as effective in reducing the chance of management fraud as it would be in reducing the change of fraud committed by an employee. 12.The most effective measure to prevent management fraud is to establish a professional internal audit staff that periodically.
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