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Study Resources (Accounting)

11.Ideally, payroll checks are written on a special bank account used only for payroll. 12.The supervisor is the best person to determine the existence of a “phantom employee” and should distribute paychecks. 13.Payroll processing can be automated easily because accounting for payroll is very simple. 14.Timekeeping is part of the personnel function. 15.Fixed asset.
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16.Where in the purchasing/cash disbursement functions is access control exercised? 17.Explain why a three way match may not be required for transactions covered by a trading partner agreement. 18.Name the key tasks associated with  purchases procedures. 19.What is the purpose of the purchase requisition? 20.What is the purpose of the purchase order? .
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ESSAY 1.When Clipper Mail Order Co. receives telephone and fax orders, the billing department prepares an invoice. The invoice is mailed immediately. A copy of the invoice serves as a shipping notice. The shipping department removes inventory from the warehouse and prepares the shipment. When the order is complete, the goods.
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13.Explain the problems associated with lack of director independence 14.Explain the problems associated with Questionable Executive Compensation Schemes 15.Explain the problems associated with inappropriate accounting practices. 16.Explain the purpose of the PCAOB. .
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21.What is the objective of re-engineering? 22.What are the key segregation of duties related to computer programs that process accounting transactions. 23.How is EDI more than technology? What unique control problems may it pose? 24.What makes point-of-sales systems different from revenue cycles of manufacturing firms? 25.Give three examples of Access Control in a Point-of-Sale.
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APPENDIX QUESTION 22.Contrast procedures for preparing backups in a sequential file environment and direct access file environment. 23.Explain how a hashing structure works and why it is quicker than using an index. Give an example. If it so much faster, why isn't it used exclusively? 24.Explain the following three types of pointers: physical.
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17.Why is an Independent Audit Committee important to a company? 18.What are the key points of the “Issuer and Management Disclosure” of the Sarbanes-Oxley Act? 19.In this age of high technology and computer based information systems, why are accountants concerned about physical (human) controls? 20.How has the Sarbanes-Oxley Act had a significant impact.
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TRUE/FALSE 1.The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to those who share the risks. 2.The ethical principle of informed consent suggests that the decision should be implemented so as to minimize all of the risks and to avoid any unnecessary risks. 3.Employees should be.
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TRUE/FALSE 1.Purchasing decisions are authorized by inventory control. 2.The blind copy of the purchase order that goes to the receiving department contains no item descriptions. 3.Firms that wish to improve control over cash disbursements use a voucher system. 4.In a voucher system, the sum of all unpaid vouchers in the voucher register equals the.
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11.The concept of reasonable assurance suggests that a.the cost of an internal control should be less than the benefit it provides b.a well-designed system of internal controls will detect all fraudulent activity c.the objectives achieved by an internal control system vary depending on the data processing method d.the effectiveness of internal controls is a.
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9.Computer fraud is easiest at the data collection stage. Why? 10.Explain why collusion between employees and management in the commission of a fraud is difficult to both prevent and detect. 11.Since all fraud involves some form of financial misstatement, how is Fraudulent Statement fraud different? 12.Explain the problems associated with lack of auditor.
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ESSAY 1.Differentiate between a purchase requisition and a purchase order. 2.What general ledger journal entries are triggered by the purchases system? From which departments do these journal entries arise? 3.The Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it.
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MULTIPLE CHOICE 1.The purpose of the purchase requisition is to a.order goods from vendors b.record receipt of goods from vendors c.authorize the purchasing department to order goods d.bill for goods delivered 2.The purpose of the receiving report is to a.order goods from vendors b.record receipt of goods from vendors c.authorize the purchasing department to order goods d.bill for goods delivered 3.All.
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21.Which of the following indicates a strong internal control environment? a.the internal audit group reports to the audit committee of the board of directors b.there is no segregation of duties between organization functions c.there are questions about the integrity of management d.adverse business conditions exist in the industry 22.According to SAS 78, an effective accounting.
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31.Firms can expect that proper use of a valid vendor file will result in all of the following benefits except a.purchasing agents will be discouraged from improperly ordering inventory from related parties b.purchases from fictitious vendors will be detected c.the most competitive price will be obtained d.the risk of purchasing agents receiving kickbacks and.
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31.The importance to the accounting profession of the Foreign Corrupt Practices Act of 1977 is that a.bribery will be eliminated b.management will not override the company’s internal controls c.firms are required to have an effective internal control system d.firms will not be exposed to lawsuits 32.The board of directors consists entirely of personal friends of.
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21.The cash disbursement clerk performs all of the following tasks except a.reviews the supporting documents for completeness and accuracy b.prepares checks c.signs checks d.marks the supporting documents paid 22.When a cash disbursement in payment of an accounts payable is recorded a.the liability account is increased b.the income statement is changed c.the cash account is unchanged d.the liability account is.
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11.A clerk embezzles customer payments on account and covers up the theft by making an adjustment to the accounts receivable ledger. Describe a specific internal control procedure that would prevent this fraud. 12.A credit sale is made to a customer, even though the customer’s account is four months overdue. Describe a.
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MULTIPLE CHOICE 1.Which ethical principle states that the benefit from a decision must outweigh the risks, and that there is no alternative decision that provides the same or greater benefit with less risk? a.minimize risk b.justice c.informed consent d.proportionality 2.Individuals who acquire some level of skill and knowledge in the field of computer ethics are involved.
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TRUE/FALSE 1.The packing slip is also known as the shipping notice. 2.The bill of lading is a legal contract between the buyer and the seller. 3.Another name for the stock release form is the picking ticket. 4.Warehouse stock records are the formal accounting records for inventory. 5.The purpose of the invoice is to bill the.
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SHORT ANSWER 1.What are the main issues to be addressed in a business code of ethics required by the SEC? 2.List the four broad objectives of the internal control system. 3.Explain the purpose of the PCAOB 4.What are the five internal control components described in the SAS 78 / COSO framework 5.What are management responsibilities.
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16.What specific internal control procedure would prevent an increase in sales returns since salesmen were placed on commission? 17.What specific internal control procedure would detect the misplacement of a sales invoice after preparation and not mailed to the customer? The invoice was never found. 18.What function does the receiving department serve in.
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11.Customers should be billed for backorders when a.the customer purchase order is received b.the backordered goods are shipped c.the original goods are shipped d.customers are not billed for backorders because a backorder is a lost sale 12.Usually specific authorization is required for all of the following except a.sales on account which exceed the credit limit b.sales of.
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18.What information is provided by a record layout diagram? 19.Comment on the following statement: “Legacy systems use flat file structures.” 20.What factor influences the decision to employ real-time data collection with batch updating rather that purely real-time processing? Explain. 21.How is backup of database files accomplished? .
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SHORT ANSWER 1.Which internally generated document should be compared to the supplier’s invoice to verify the price of an item? 2.Which internally generated document should be compared to the supplier’s invoice to verify the quantity being billed for? 3.List specific jobs that should be segregated in the purchases processing system. 4.List specific jobs that.
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5.According to common law, there are five conditions that must be present for an act to be deemed fraudulent. Name and explain each. 6.Management fraud is regarded as more serious than employee fraud. Three special characteristics have been discussed for management fraud. What are they? Explain. 7.Four principal types of corruption are.
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11.Which document is least important in determining the financial value of a purchase? a.purchase requisition b.purchase order c.receiving report d.supplier’s invoice 12.In a merchandising firm, authorization for the payment of inventory is the responsibility of a.inventory control b.purchasing c.accounts payable d.cash disbursements 13.In a merchandising firm, authorization for the purchase of inventory is the responsibility of a.inventory control b.purchasing c.accounts payable d.cash disbursements 14.When purchasing.
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11.The external auditor is responsible for establishing and maintaining the internal control system. 12.Segregation of duties is an example of an internal control procedure. 13.Controls in a computer-based information system are identical to controls in a manual system. 14.Preventive controls are passive techniques designed to reduce fraud. 15.Ethical issues and legal issues are essentially.
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ESSAY 1.The text describes six internal control activities. List four of them and provide a specific example of each one. 2.Contrast management fraud with employee fraud. 3.Discuss the importance of the Foreign Corrupt Practices Act of 1977 to the accounting profession. 4.Why are the computer ethics issues of privacy, security, and property ownership of.
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SHORT ANSWER 1.Distinguish between a packing slip, shipping notice, and a bill of lading. 2.State two specific functions or jobs that should be segregated in the sales processing system. 3.State two specific functions or jobs that should be segregated in the cash receipts system. 4.List two points in the sales processing system when authorization.
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11.A three way match involves a purchase order, a purchase requisition, and an invoice. 12.Authorization for a cash disbursement occurs in the cash disbursement department upon receipt of the supplier’s invoice. 13.An automated cash disbursements system can yield better cash management since payments are made on time. 14.Permitting warehouse staff to maintain the.
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4.What features of a reengineered cash receipts system contribute to improved control and reduced costs? What complicates the process? 5.What role does each of the following departments play in the sales order processing subsystem: sales, credit, and shipping? Be complete. 6.With regard to segregation of duties, rule one is that transaction authorization.
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21.Internal controls for handling sales returns and allowances do not include a.computing bad debt expense using the percentage of credit sales b.verifying that the goods have been returned c.authorizing the credit memo by management d.using the original sales invoice to prepare the sales returns slip 22.The printer ran out of preprinted sales invoice forms and.
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6.Describe an internal control procedure that would prevent payment of a invoice for goods that were never delivered. 7.Describe an internal control procedure that would prevent issuing two checks in payment of the same invoice. 8.Explain why supervision is so important in the receiving department. 9.What type of error or fraud might happen.
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7.With regard to segregation of duties, rule two is that asset custody and record keeping should be separated. What does this require in the revenue cycle? 8.What role does each of the following departments play in the cash receipts subsystem: mail room, cash receipts, accounts receivable, and general ledger? Be complete. 9.For.
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31.The data processing method that can shorten the cash cycle is a.batch, sequential file processing b.batch, direct access file processing c.real-time file processing d.none of the above 32.Which of the following is not a risk exposure in a microcomputer accounting system? a.reliance on paper documentation is increased b.functions that are segregated in a manual environment may be.
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11.What internal accounting control(s) would be the most effective in preventing a storekeeper from taking inventory home at night? When shortages become apparent, he claims the goods were never received. 12.Why should the copy of a purchase order, which is sent to receiving, be a “blind” copy? 13.What is(are) the purpose(s) of.
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TRUE/FALSE 1.Time cards are used by cost accounting to allocate direct labor charges to work in process. 2.The personnel department authorizes changes in employee pay rates. 3.Most payroll systems for mid-size firms use real-time data processing. 4.To improve internal control, paychecks should be distributed by the employee's supervisor. 5.Employee paychecks should be drawn against a.
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MULTIPLE CHOICE 1.The document that captures the total amount of time that individual workers spend on each production job is called a a.time card b.job ticket c.personnel action form d.labor distribution form 2.An important reconciliation in the payroll system is a.general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable b.personnel.
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7.How does the procedure for determining inventory requirements differ between a basic batch processing system and batch processing with real-time data input of sales and receipts of inventory? What about for the procedures used by the receiving department? 8.What are the key segregation of duties issues in purchasing and cash disbursements? 9.Supervision.
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Use the internal control procedures listed below to complete the statements. segregation of dutiesspecific authorization general authorization accounting records access controlsindependent verification supervision 7.A clerk reorders 250 items when the inventory falls below 25 items. This is an example of __________________________. 8.The internal audit department recalculates payroll for several employees each pay period. This is an.
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MULTIPLE CHOICE 1.The revenue cycle consists of a.one subsystem–order entry b.two subsystems–sales order processing and cash receipts c.two subsystems–order entry and inventory control d.three subsystems–sales order processing, credit authorization, and cash receipts 2.The reconciliation that occurs in the shipping department is intended to ensure that a.credit has been approved b.the customer is billed for the exact quantity shipped c.the.
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6.What task can the accounts receivable department engage in to verify that all checks sent by the customers have been appropriately deposited and recorded? 7.What specific internal control procedure would prevent the sale of goods on account to a fictitious customer? 8.The clerk who opens the mail routinely steals remittances. Describe a specific.
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11.A written customer purchase order is required to trigger the sales order system. 12.Inventory control has physical custody of inventory. 13.The principal source document in the sales order system is the sales order. 14.Sales orders should be prenumbered documents. 15.Integrated accounting systems automatically transfer data between modules. 16.If a customer submits a written purchase order,.
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14.What are the five conditions necessary for an act to be considered fraudulent? 15.What is the objective of SAS 99? 16.Distinguish between exposure and risk. 17.Explain the characteristics of management fraud. 18.The text discusses many questions about personal traits of employees which might help uncover fraudulent activity. What are three? 19.Give two examples of employee.
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4.How does a voucher payable system work? What documents are reconciled? Who prepares the voucher? How is the A/P balance determined? How does the voucher payable system improve control over cash? 5.Before authorizing payment for goods purchased, accounts payable reconciles three documents related to the purchase. Name them and explain what.
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