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Study Resources (Accounting)

1.1   Multiple Choice Questions 1) Which of the following is not a reason for a company to expand through a combination, rather than by building new facilities? A) A combination might provide cost advantages. B) A combination might provide fewer operating delays. C) A combination might provide easier access to intangible assets. D) A combination.
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130) Presented below is a list of terms relating to accounting information systems, followed by definitions of those terms. Required: Match the letter next to each definition with the appropriate term. Each answer will be used only once. ________ 1. DBA ________ 2. Inheritance ________ 3. Occurrence ________ 4. Branch ________ 5. Database model ________ 6. Record ________.
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14) On December 31, 2013, Peris Company acquired Shanta Company's outstanding stock by paying $400,000 cash and issuing 10,000 shares of its own $30 par value common stock, when the market price was $32 per share. Peris paid legal and accounting fees amounting to $35,000 in addition to stock issuance.
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11) With respect to goodwill, an impairment A) will be amortized over the remaining useful life. B) is a two-step process which first compares book value to fair value at the business reporting unit level. C) is a one-step process considering the entire firm. D) occurs when asset values are adjusted to fair value.
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3. Pancake Corporation saw the potential for vertical integration and purchases a 15% interest in Syrup Corp. on January 1, 2013, for $150,000. At that date, Syrup's stockholders' equity included $200,000 of $10 par value common stock, $300,000 of additional paid in capital, and $500,000 retained earnings.  The companies began.
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21) Specific documentation showing the nature of application controls in a system is known as control flowcharting. 22) Most information system audits follow a four-phase structure, which is followed by analysis and reporting of results. 23) An audit program is a detailed list of the audit procedures to be applied on a.
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122) How have personal computers likely affected information systems audits? 123) Because resources are usually limited, not all applications can be audited each year. What factors should an internal or external auditor consider when deciding which applications to audit? .
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133) Listed below are ten examples of file organization. Required: From the following three choices, match the file organization technique with each of the ten examples listed. All techniques will be used more than once. S = Sequential IS = Indexed-sequential D = Direct access ________ 1. A large manufacturing company pays all employees once.
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3.1   Multiple Choice Questions 1. What method must be used if FASB Statement No. 94 prohibits full consolidation of a 70% owned subsidiary? A. The cost method B. The Liquidation value C. Market value D. Equity method 2. From the standpoint of accounting theory, which of the following statements is the best justification for the preparation.
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90) Which of the following information system auditing technologies produces a printed audit trail of computer processing? A) Extended records B) Snapshot C) Sample audit review file D) System control audit review file 91) Tracing of a program's execution provides A) programmed edits for input data items. B) test data for subsequent processing. C) a detailed listing of.
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31) Audits of computer service centers do not require as high a degree of technical expertise as do audits of computerized applications. 32) Risk-based auditing provides assurances relating to the effectiveness of an organization's enterprise risk management process. 33) In RBA, the subject of the audit is how well the management prevents.
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8) On January 2, 2013, Pilates Inc. paid $900,000 for all of the outstanding common stock of Spinning Company, and dissolved Spinning Company. The carrying values for Spinning Company's assets and liabilities are recorded below. Cash$200,000 Accounts Receivable220,000 Copyrights (purchased)400,000 Goodwill120,000 Liabilities(180,000) Net assets$760,000 On January 2, 3, Spinning anticipated collecting $185,000 of the recorded Accounts Receivable..
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18. On January 1, 2013, Petrel, Inc. purchased 70% of the outstanding voting common stock of Ocean, Inc., for $2,600,000. The book value of Ocean's net equity on that date was $3,100,000. Book values were equal to fair values except as follows: BookFair Assets & LiabilitiesValuesValues Equipment$ 250,000$ 190,000 Building600,000700,000 Note payable270,000240,000 Required: Prepare a schedule to.
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3) At December 31, 2013, Pandora Incorporated issued 40,000 shares of its $20 par common stock for all the outstanding shares of the Sophocles Company. In addition, Pandora agreed to pay the owners of Sophocles an additional $200,000 if a specific contract achieved the profit levels that were targeted by.
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1.2   Exercises 1) Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31, 2013. Parrot borrowed $2,000,000 to complete this transaction, in addition to the $640,000 cash that they paid directly. The fair value and book value of Sparrow's recorded assets and liabilities.
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131) Presented below is a list of terms relating to accounting information systems, followed by definitions of those terms. Required: Match the letter next to each definition with the appropriate term. Each answer will be used only once. ________ 1. Ring structure ________ 2. Alias ________ 3. ISAM ________ 4. Relational algebra ________ 5. Tuple ________ 6..
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16) Pony acquired Spur Corporation's assets and liabilities for $500,000 cash on December 31, 2013. Spur dissolved on the date of the acquisition. Spur's balance sheet and related fair values are shown as of that date, below. Book ValueFair Value Cash$20,000$20,000 Accounts Receivable40,00038,000 Land45,00050,000 Plant and Equipment — net460,000410,000 Franchise Agreement         0160,000 Total Assets$565,000 Accounts Payable$70,000$70,000 Other Liabilities120,000110,000 Common Stock180,000 Additional.
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139) Describe the duties of the database administrator (DBA) regarding the data dictionary. 140) Describe the index, prime area, and overflow area in an ISAM file structure. 141) Describe how list organization and multilist organization work in tree and network databases. Also, distinguish between a list structure and a ring structure in.
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2.1   Multiple Choice Questions 1. What method of accounting will generally be used when one company purchases less than 20% of the outstanding stock of another company? A. Only the fair value method may be used. B. Only the equity method may be used. C. Either the fair value method or the equity method.
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100) Information systems application audits differ from information systems audits because application audits A) are divided into four general areas, each of which has three phases. B) involve reviewing input, processing, and output controls. C) are directed at the activities of systems analysts and programmers. D) focus primarily on fact-finding in the areas selected.
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116) Presented below is a list of terms relating to accounting information systems, followed by definitions of those terms. Required: Match the letter next to each definition with the appropriate term. Each answer will be used only once. ________ 1. Audit program ________ 2. System control audit review file ________ 3. Auditing around-the-computer ________ 4..
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6) Bigga Corporation purchased the net assets of Petit, Inc. on January 2, 2013 for $380,000 cash and also paid $15,000 in direct acquisition costs. Petit, Inc. was dissolved on the date of the acquisition. Petit's balance sheet on January 2, 2013 was as follows: Accounts receivable-net$90,000Current liabilities$75,000 Inventory 220,000 Long term.
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7. On January 1, 2013, Pendal Corporation purchased 25% of the outstanding common stock of Sedda Corporation for $100,000 cash. Book value and fair value of Sedda's assets and liabilities at the time of acquisition are shown below. AssetsBookFair ValuesValues Cash$40,000$40,000 Accounts receivable100,00090,000 Inventories40,00050,000 Equipment   180,000  210,000  $360,000$390,000 Liabilities & Equities Accounts payable$110,000$110,000 Note payable50,00040,000 Capital stock100,000 Retained earnings 100,000                                $360,000$150,000 Required: Prepare.
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11) ITF is a powerful information system audit technology. 12) Parallel simulation processes test data through real programs. 13) Parallel simulation is appropriate where transactions are sufficiently important to require a 100 percent audit. 14) GAS has a long history of usage because public accounting firms developed it in the 1960s. 15) Some embedded.
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40) ________ auditors commonly undertake audits that are reviewed and relied upon by ________ auditors. 41) When batch processing was the dominant method used in computerized data processing, the ________ approach provided an adequate audit. 42) A clear and obvious benefit is obtained from the ________ analysis capability provided by information technology. 43).
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17. For 2012, 2013, and 2014, Squid Corporation earned net incomes of $40,000, $70,000, and $100,000, respectively, and paid dividends of $24,000, $32,000, and $44,000, respectively. On January 1, 2012, Squid had $500,000 of $10 par value common stock outstanding and $100,000 of retained earnings. On January 1 of each of.
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117) Below are listed four procedures typically performed during an audit of accounts payable: Audit procedures: a. Test the mathematical accuracy of the accounts payable subsidiary ledger. b. Select samples of vouchers to examine in detail. c. Determine whether cash discounts were properly applied. d. Stratify accounts by value. Required: Briefly state a generalized audit software.
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132) Presented below is a list of terms relating to accounting information systems, followed by definitions of those terms. Required: Match the letter next to each definition with the appropriate term. Each answer will be used only once. ________ 1. Logical data structure ________ 2. Key ________ 3. Node ________ 4. DQL ________ 5. Element ________ 6..
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2.2   Exercises 1. Plum Corporation paid $700,000 for a 40% interest in Satin Company on January 1, 2013 when Plum's stockholders' equity was as follows: 10% cumulative preferred stock, $100 par$500,000 Common stock, $10 par value300,000 Other paid-in capital 400,000 Retained earnings     800,000 Total stockholders' equity$2,000,000 On this date, the book values of Plum's assets and.
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11. On January 1, 2014, Packaging International purchased 90% of Shipaway Corporation's outstanding shares for $135,000 when the fair value of Shipaway's net assets were equal to the book values.  The balance sheets of Packaging and Shipaway Corporations at year-end 2013 are summarized as follows: PackagingShipaway Assets$590,000$180,000 Liabilities$70,000$30,000 Capital stock360,00090,000 Retained earnings160,00060,000 A. $9,000. B. $13,500. C. $15,000. D..
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80) Which of the following should be developed when the related application system is developed? A) Test data approach B) Integrated test facility C) Parallel simulation approach D) Artificial intelligence software 81) Which of the following processes real data through a test program? A) Test data approach B) Integrated test facility C) Parallel simulation approach D) Artificial intelligence software 82).
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134) A database contains the following data: Student Schedule (Student#, Student_name, Major, Course#1, ClassTime1, Location1, Course#2, ClassTime2, Location2, Course#3, ClassTime3, Location3) Required: Normalize this relation through the third normal form. 135) Assume that the customer master file and the transaction file consist of the record numbers shown in the following sequence: Master file3, 7,.
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11. Assume that Pansy Incorporated used the cost method of accounting for its investment in Sunflower. The balance in the Investment in Sunflower account at December 31, 2015 was A. $76,700. B. $80,000. C. $83,300. D. $95,000. 12. Assume that Pansy has significant influence and uses the equity method of accounting for its investment in.
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50) ________ can be effectively used in conjunction with a test data technique. 51) Application controls are divided into ________ general areas. 52) The primary audit technique used in an information systems development audit is the review and testing of related ________. 53) Documentation governing the design, development, and implementation of application systems.
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20. Keynse Company owns 70% of Subdia Incorporated. The Investment in Subdia qualifies as a business reporting unit under FASB 142, and Keynse has reported goodwill in the amount of $200,000 with respect to its acquisition of Subdia. Subdia's $10 par common stock is currently trading for $92 per share,.
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60) "Auditing with the computer" A) is only performed by external auditors. B) involves activities related to compliance testing. C) is only performed by internal auditors. D) involves activities related to substantive testing of account balances. 61) "Auditing through the computer" refers to A) substantive tests. B) compliance tests. C) transaction tests. D) application control tests. 62) An interim audit A).
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15. Shoreline Corporation had $3,000,000 of $10 par value common stock outstanding on January 1, 2012, and retained earnings of $1,000,000 on the same date. During 2012, 2013, and 2014, Shoreline earned net incomes of $400,000, $700,000, and $300,000, respectively, and paid dividends of $300,000, $550,000, and $100,000, respectively. On January.
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115) Presented below is a list of terms relating to accounting information systems, followed by definitions of those terms. Required: Match the letter next to each definition with the appropriate term. Each answer will be used only once. ________ 1. Mapping ________ 2. Compliance testing ________ 3. Extended records ________ 4. Substantive testing ________ 5. Interim.
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70) Information technology is used to perform some audit work that otherwise would be done manually. The use of information technology by auditors is A) essential. B) mandatory under AICPA Statements of Auditing Standards. C) optional. D) at the sole discretion of the manager in charge of the audit. 71) An external auditor conducts an.
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119) Listed below are five examples of auditing situations and five information systems auditing techniques. Required: First, match the letter of the information system auditing technique which best identifies the example. Then, in the space below each item, write a brief explanation of how the technique works in the situation. A.Integrated test.
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1) Auditing activities undertaken during substantive testing of account balances can be described as "auditing through the computer." 2) The external auditor serves the firm's stockbrokers, the government, and the general public. 3) Total audit cost is increased significantly when some audit resources are directed at reviewing and verifying the internal controls.
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