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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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11.Using cameras to monitor the activities of cashiers is an example of __________________________. 12.Not permitting the computer programmer to enter the computer room is an example of _______________________________. 13.Sequentially numbering all sales invoices is an example of __________________________. 14.What are the five conditions necessary for an act to be considered fraudulent? 15.What is the.
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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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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.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.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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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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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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Chapter 5—The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures 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.
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8.Misappropriation of assets can involve various schemes: charges to expense accounts, lapping, and transaction fraud. Explain each and give an example. 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.
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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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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? .
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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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4.Why are the computer ethics issues of privacy, security, and property ownership of interest to accountants? 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.
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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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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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SHORT . 1.List two of the three transaction cycles. 2.Documents that are created at the beginning of the transaction are called __________________________. 3.______________________________________ are the two data processing approaches used in modern systems. 4.Give a specific example of a turn-around document. 5.Explain when it is appropriate to use special journals. 6.What are the subsystems of the.
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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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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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31.Which symbol represents a decision? 32.The characteristics that distinguish between batch and real-time systems include all of the following except a.time frame b.resources used c.file format d.efficiency of processing 33.A file that stores data used as a standard when processing transactions is a.a reference file b.a master file c.a transaction file d.an archive file 34.Sequential storage means a.data is stored on tape b.access.
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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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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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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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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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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 type of transaction most suitable for real-time processing is a.recording fixed asset purchases b.recording interest earned on long-term bonds c.adjusting prepaid insurance d.recording a sale on account 22.Which step is not found in batch processing using sequential files? a.control totals b.sort runs c.edit runs d.immediate feedback of data entry errors 23.Both the revenue and the expenditure cycle can be.
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3.What does an entity-relationship diagram represent? Why do accountants need to understand them? 4.Time lag is one characteristic used to distinguish between batch and real-time systems. Explain. Give an example of when each is a realistic choice. 5.There are two subsystems to the revenue cycle. What are they and what occurs within.
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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.Why is the audit trail important? 12.List a method of data processing that uses the destructive update approach? 13.Only four symbols are used in data flow diagrams. What are they? 14.Which flowchart depicts the relationship between processes and the documents that flow between them and trigger activities? 15.What are the three characteristics that are.
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16.How are computer system flowcharts and program flowcharts related? 17.What are the key distinguishing features of legacy systems? 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.
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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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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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11.Is a DFD an effective documentation technique for identifying who or what performs a particular task? Explain. 12.Is a flowchart an effective documentation technique for identifying who or what performs a particular task? Explain. 13.How may batch processing be used to improve operational efficiency? 14.If an organization processes large numbers of transactions that.
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19.In this age of high technology and computer based information systems, why are accountants concerned about physical (human) controls? 6. Rather, they relate to the human activities that initiate such computer logic. In other words, physical controls do not suggest an environment in which clerks update paper accounts with pen and.
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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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Chapter 3—Ethics, Fraud, and Internal Control 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.
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ESSAY 1.Describe the key activities in the revenue, conversion, and expenditure cycles. 2.Categorize each of the following activities into the expenditure, conversion or revenue cycles and identify the applicable subsystem. a.Preparing the weekly payroll for manufacturing personnel. b.Releasing raw materials for use in the manufacturing cycle. c.Recording the receipt of payment for goods sold. d.Recording 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.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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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. 977 (FCPA) is a law that requires all companies registered with the Securities.
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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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Chapter 4—The Revenue Cycle 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.
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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. 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.
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6.Identify to indicate whether each procedure is a preventive or detective control. a.authorizing a credit salePreventiveDetective b.preparing a bank reconciliationPreventiveDetective c.locking the warehousePreventiveDetective d.preparing a trial balancePreventiveDetective e.counting inventoryPreventiveDetective 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.
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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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