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WorksheetsQuiz # 2 IT Chapter 3-6)
Total questions: 60
Worksheet time: 1hrs 1mins
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?
minimize risk
justice
informed consent
proportionality
For an action to be called fraudulent, all of the following conditions are required except
poor judgment
false representation
intent to deceive
injury or loss
One characteristic of employee fraud is that the fraud
is perpetrated at a level to which internal controls do not apply
involves misstating financial statements
involves the direct conversion of cash or other assets to the employee’s personal benefit
involves misappropriating assets in a series of complex transactions involving third parties
Forces which may permit fraud to occur do not include
a gambling addiction
lack of segregation of duties
centralized decision making environment
questionable integrity of employees
Which of the following best describes lapping?
applying cash receipts to a different customer’s account in an attempt to conceal previous thefts of funds
inflating bank balances by transferring money among different bank accounts
expensing an asset that has been stolen
creating a false transaction
Operations fraud includes
altering program logic to cause the application to process data incorrectly
misusing the firm’s computer resources
destroying or corrupting a program’s logic using a computer virus
creating illegal programs that can access data files to alter, delete, or insert values
Computer fraud can take on many forms, including each of the following except
theft or illegal use of computer-readable information
theft, misuse, or misappropriation of computer equipment
theft, misuse, or misappropriation of assets by altering computer-readable records and files
theft, misuse, or misappropriation of printer supplies
All of the following are conditions for fraud except
false representation
injury or loss
intent
material reliance
The four principal types of fraud include all of the following except
bribery
gratuities
conflict of interest
economic extortion
Business ethics involves
how managers decide on what is right in conducting business
how managers achieve what they decide is right for the business
both a and b
none of the above
Who is responsible for establishing and maintaining the internal control system?
the internal auditor
the accountant
management
the external auditor
The concept of reasonable assurance suggests that
the cost of an internal control should be less than the benefit it provides
a well-designed system of internal controls will detect all fraudulent activity
the objectives achieved by an internal control system vary depending on the data processing method
the effectiveness of internal controls is a function of the industry environment
Which of the following is not a limitation of the internal control system?
errors are made due to employee fatigue
fraud occurs because of collusion between two employees
the industry is inherently risky
management instructs the bookkeeper to make fraudulent journal entries
The most cost-effective type of internal control is
preventive control
accounting control
detective control
corrective control
Which of the following is a preventive control?
credit check before approving a sale on account
bank reconciliation
physical inventory count
comparing the accounts receivable subsidiary ledger to the control account
A well-designed purchase order is an example of a
preventive control
detective control
corrective control
none of the above
A physical inventory count is an example of a
preventive control
detective control
corrective control
feedforward control
The bank reconciliation uncovered a transposition error in the books. This is an example of a
preventive control
detective control
corrective control
none of the above
In balancing the risks and benefits that are part of every ethical decision, managers receive guidance from each of the following except
justice
self interest
risk minimization
proportionality
Which of the following is not an element of the internal control environment?
management philosophy and operating style
organizational structure of the firm
well-designed documents and records
the functioning of the board of directors and the audit committee
For good internal control, which of the following duties can be performed by the same individual? choose 2
Approve changes to customer credit limits
Sales order entry
Shipping merchandise
Billing customers
Maintaining accounts receivable
The revenue cycle consists of
one subsystem–order entry
two subsystems–sales order processing and cash receipts
two subsystems–order entry and inventory control
three subsystems–sales order processing, credit authorization, and cash receipts
The reconciliation that occurs in the shipping department is intended to ensure that
credit has been approved
the customer is billed for the exact quantity shipped
the goods shipped match the goods ordered
inventory records are reduced for the goods shipped
The adjustment to accounting records to reflect the decrease in inventory due to a sale occurs in the
warehouse
shipping department
billing department
inventory control department
Which document triggers the revenue cycle?
the sales order
the customer purchase order
the sales invoice
the journal voucher
Copies of the sales order can be used for all of the following except
purchase order
credit authorization
shipping notice
packing slip
The purpose of the sales invoice is to
record reduction of inventory
transfer goods from seller to shipper
bill the customer
select items from inventory for shipment
The customer open order file is used to
respond to customer queries
fill the customer order
ship the customer order
authorize customer credit
The stock release copy of the sales order is not used to
locate and pick the items from the warehouse shelves
record any out-of-stock items
authorize the warehouse clerk to release custody of the inventory to shipping
record the reduction of inventory
The shipping notice
is mailed to the customer
is a formal contract between the seller and the shipping company
is always prepared by the shipping clerk
informs the billing department of the quantities shipped
The billing department is not responsible for
updating the inventory subsidiary records
recording the sale in the sales journal
notifying accounts receivable of the sale
sending the invoice to the customer
The purpose of the purchase requisition is to
order goods from vendors
record receipt of goods from vendors
authorize the purchasing department to order goods
bill for goods delivered
The purpose of the receiving report is to
order goods from vendors
record receipt of goods from vendors
authorize the purchasing department to order goods
bill for goods delivered
All of the following departments have a copy of the purchase order except
the purchasing department
the receiving department
accounts payable
general ledger
The purpose of the purchase order is to
order goods from vendors
record receipt of goods from vendors
authorize the purchasing department to order goods
approve payment for goods received
The open purchase order file in the purchasing department is used to determine
the quality of items a vendor ships
the best vendor for a specific item
the orders that have not been received
the quantity of items received
The purchase order
is the source document to make an entry into the accounting records
indicates item description, quantity, and price
is prepared by the inventory control department
is approved by the end-user department
The reason that a blind copy of the purchase order is sent to receiving is to
inform receiving when a shipment is due
force a count of the items delivered
inform receiving of the type, quantity, and price of items to be delivered
require that the goods delivered are inspected
The receiving report is used to
accompany physical inventories to the storeroom or warehouse
advise the purchasing department of the dollar value of the goods delivered
advise general ledger of the accounting entry to be made
advise the vendor that the goods arrived safely
When a copy of the receiving report arrives in the purchasing department, it is used to
adjust perpetual inventory records
record the physical transfer of inventory from receiving to the warehouse
analyze the receiving department’s process
recognize the purchase order as closed
The financial value of a purchase is determined by reviewing the
packing slip
purchase requisition
receiving report
supplier’s invoice
The document that captures the total amount of time that individual workers spend on each production job is called a
time card
job ticket
personnel action form
labor distribution form
An important reconciliation in the payroll system is
general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable
personnel compares the number of employees authorized to receive a paycheck to the number of paychecks prepared
production compares the number of hours reported on job tickets to the number of hours reported on time cards
payroll compares the labor distribution summary to the hours reported on time cards
Which internal control is not an important part of the payroll system?
Supervisors verify the accuracy of employee time cards.
Paychecks are distributed by an independent paymaster.
Accounts payable verifies the accuracy of the payroll register before transferring payroll funds to the general checking accounting.
General ledger reconciles the labor distribution summary and the payroll disbursement voucher.
Depreciation
is calculated by the department that uses the fixed asset
allocates the cost of the asset over its useful life
is recorded weekly
results in book value approximating fair market value
Depreciation records include all of the following information about fixed assets except
the economic benefit of purchasing the asset
the cost of the asset
the depreciation method being used
the location of the asset
Which control is not a part of the Fixed Asset System?
formal analysis of the purchase request
review of the assumptions used in the capital budgeting model
development of an economic order quantity model
estimates of anticipated cost savings
Objectives of the Fixed Asset System do not include
authorizing the acquisition of fixed assets
recording depreciation expense
computing gain and/or loss on disposal of fixed assets
maintaining a record of the fair market value of all fixed assets
Which of the following is not a characteristic of the Fixed Asset System?
Acquisitions are routine transactions requiring general authorization.
Retirements are reported on an authorized disposal report form.
Acquisition cost is allocated over the expected life of the asset.
Transfer of fixed assets among departments is recorded in the fixed asset subsidiary
In the payroll subsystem, which function should distribute paychecks?
personnel
timekeeping
paymaster
payroll
The philosophy of customer satisfaction permeates the world-class firm.
True
False
Reports generated by the cost accounting system include performance reports and budget reports
True
False
The cost accounting system authorizes the release of raw materials into production.
True
False
Batch processing creates a homogeneous product through a continuous series of standard procedures
True
Fale
The bill of materials specifies the types and quantities of the raw materials and subassemblies used in producing a single unit of finished product.
True
False
A purchase requisition authorizes the storekeeper to release materials to individuals or work centers in the production process.-
True
False
The objective of the Economic Order Quantity model is to reduce total inventory costs by minimizing carrying costs and ordering costs
True
False
The work-in-process file is the subsidiary ledger for the work-in-process control account.-
True
False
Move tickets authorize the storekeeper to release materials to work centers.
True
False
An operating characteristic of modern manufacturing firms is that labor is replaced with capital so that the firm can be more efficient and therefore more competitive.
True
False
