Accounting Information Systems Exam Practice Tests
Course Introduction
Accounting Information Systems explores the integration of accounting principles with information technology to collect, process, and communicate financial data within organizations. The course covers the design, implementation, and management of computerized accounting systems, emphasizing how information systems support decision-making, internal controls, transaction processing, and audit processes in various business environments. Students will learn to analyze system risks, design appropriate controls, and utilize accounting software to enhance financial reporting and organizational efficiency.
Recommended Textbook
Forensic Accounting and Fraud Examination 1st Edition by Mary Jo Kranacher
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Chapter 1: Core Foundation Related to Fraud Examination and
Financial Forensics
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Sample Questions
Q1) Auditing is responsible for:
A) litigation support and redemption.
B) risk assessment and internal controls.
C) risk assessment and calculation of damages.
D) business valuation and risk assessment.
Answer: B
Q2) Practically speaking, the law generally recognizes a fiduciary duty:
A) for cashiers and accountants.
B) for ordinary employees handling cash and valuables.
C) for officers and directors of a company.
D) All of the above are recognized as having a fiduciary duty.
Answer: C
Q3) Since forensic accounting works with fact as documented by legal records the reports seldom add an adversarial nature to the engagements, and professionals can expect that their work will be accepted by the opposing side.
A)True
B)False
Answer: False
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Chapter 2: Careers in Fraud Examination and Financial
Forensics
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Sample Questions
Q1) The board of directors' primary responsibility is:
A) financial reporting to meet SEC requirements.
B) internal control to protect the interests of shareholders, creditors, and other stakeholders.
C) to minimize the ability of management to expropriate shareholder value through financial statement and other forms of fraud and financial malfeasance.
D) All of the above are correct answers.
Answer: B
Q2) Why are manhole covers round?
Answer: Manhole covers are round because other shaped covers can be maneuvered to fall through the hole e.g., try a square box.
Q3) Digital evidence would not include:
A) voicemails.
B) bank statements.
C) DVDs.
D) XM/Sirius radio players.
Answer: B
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Page 4
Chapter 3: Who Commits Fraud and Why: Criminology and Ethics
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Q1) To be successful in any specialized field like forensic accounting or fraud examination, professionals must have characteristics that set them apart as a profession. What are these five characteristics?
Answer: 1. A specialized body of knowledge.
2. Admission governed by standards and qualifications.
3. Recognition and acceptance by society a characteristic that inflicts social responsibility back on the profession.
4. Standards of conduct for dealing with the public, other professionals, and clients.
5. An organizational body devoted to the advancement and responsibilities of the profession. Text page 79
Q2) Which is considered the lowest threshold for ethical decision making?
A) A professional code of ethics of an accounting organization.
B) Codes of conduct or directives about what is best for society.
C) The law.
D) Codes of conduct guided by trust in the underlying values that guide society.
Answer: C
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Chapter 4: Complex Frauds and Financial Crimes
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Sample Questions
Q1) The main avenues for terrorist financing are:
A)Electorate sponsorship and legal activities
B) Illegal activities and bank ownership
C) State sponsorship and illegal activities
D) Legal activities and bank ownership
Q2) Which of the following is NOT an example of financial statement fraud:
A)The sales manager records as a sale a large shipment of finished goods on January 1, 20X1, the day after year-end in order to earn a large bonus
B) The financial controller increases monies in the reserve account in order to meet analysts' expectations regarding earnings
C) The CEO insists that the payment for current year accrued bonuses be deferred to the next fiscal year
D) The treasurer transfer money from one bank account to another in order to mask a shortage
Q3) "Pyramiding" involves the frequent sale and purchase of securities for the sole purpose of generating a commission.
A)True
B)False
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Chapter 5: Cybercrime: Computer and Internet Fraud
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Q1) The "computer as a symbol" involves using a computer to intercept data transmission.
A)True
B)False
Q2) Cyber-crime involves the use of cell phones.
A)True
B)False
Q3) Computers offer cyber criminals efficient ways to hide fraudulent activities.
A)True
B)False
Q4) An employee, having authorized access to a work computer, commits fraud while using the computer. This is an example of a computer crime.
A)True
B)False
Q5) Computer crime involves the attempt to access data illegally.
A)True
B)False
Q6) Computer crime and computer fraud are synonyms.
A)True
B)False
Page 7
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Chapter 6: Legal, Regulatory, and Professional Environment
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Q1) In the criminal justice system, individuals can be named as defendants, but businesses and other organizations may not be prosecuted.
A)True
B)False
Q2) What common law protections do individuals have during interviews?
Q3) The Sarbanes-Oxley Act mandates that each member of a company's audit committee must be a member of its board of directors and must otherwise be independent.
A)True
B)False
Q4) Because employers do not have the right to place employees in a custodial setting, an employee has limited Fifth Amendment rights.
A)True
B)False
Q5) How did the Sarbanes-Oxley Act address corporate governance and public accounting responsibilities?
Q6) What are the factors that affect the decision to prosecute an entity?
Q7) What are the three major types of negotiated remedies and how do they differ?
Q8) What is meant by demonstrative evidence? Give examples.
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Chapter 7: Fraud Detection: Red Flags and Targeted Risk Assessment
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Sample Questions
Q1) As a result of its significant concern with financial statement fraud, the accounting profession responded in 2002 with:
A) SAS No. 1 - Consideration of Fraud in a Financial Statement Audit.
B) SAS No. 99 - Consideration of Fraud in a Financial Statement Audit.
C) the creation of the Public Company Accounting Oversight Board PCAOB.
D) guidance to overcome the "expectation gap" held by the public.
Q2) Electronic storage of entity financial and nonfinancial records is expensive and access to the information in data warehouses is limited to data mining activities.
A)True
B)False
Q3) Provide at least five examples of typical internal control weaknesses.
Q4) Management must design, implement, and maintain internal controls and nancial reporting processes to produce timely nancial and non nancial information that re ects the underlying economics of the business.
A)True
B)False
Q5) What are the main components of the fraud risk assessment process?
Q6) What is meant by behavioral red flags?
Page 9
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Chapter 8: Detection and Investigations
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Q1) Describe the process by which evidence should be handled.
Q2) A fraudster erases files from his hard drive. This is an example of data alteration.
A)True
B)False
Q3) Lexis-Nexis is a tool used to corroborate net income.
A)True
B)False
Q4) Predication requires hard evidence before it is said to exist.
A)True
B)False
Q5) Searching for changes in behavior patterns prior to and after a crime is a form of invigilation.
A)True
B)False
Q6) A written affidavit given by a witness is classified as testimony.
A)True
B)False
Q7) Data mining software
Q8) Direct evidence
Page 10
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Chapter 9: Effective Interviewing and Interrogation
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Q1) During the body of the interview, the interviewer needs to demonstrate patience, and should be sure to interrupt the interviewee.
A)True
B)False
Q2) Suggested approaches for interviewing witnesses include all EXCEPT:
A) Approach the interview from an adversarial position
B) Start with background information
C) Determine whether the witness is in possession of any pertinent documents
D) Document the witness' connection to suspects, subjects, or targets of the investigation.
Q3) You will encounter some people who choose to be difficulty during an interview. Which step should NOT be taken in that situation?
A) Try to reason with an unreceptive person
B) In some situations, change tactics to reduce hostility
C) There should be two interviewers involved in potentially volatile situations
D) You should not react to anger with hostility
Q4) What is the primary purpose of admission-seeking questions?
Q5) What are some nonverbal clues to deception?
Q6) What are some of the reasons that persons often fail to identify lies?
Page 11
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Chapter 10: Using Information Technology for Fraud
Examination and Financial Forensics
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Sample Questions
Q1) How is case management software used in an investigation?
Q2) An activity that can enhance the ability to recover deleted files is the "Defrag" command.
A)True
B)False
Q3) What is computer forensics?
Q4) What are the two categories of data mining and knowledge discovery software?
Q5) The source documents that support the electronic data systems do not need to be pre-numbered and used in sequence.
A)True
B)False
Q6) Which of the following is not considered CAATTs Computer-Aided Audit Tools and Techniques software:
A) Microsoft Dynamics GP
B) IDEA
C) ACL
D) Picalo
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Q7) List two commercial data extraction and analysis software and list four functions of this software.
Chapter 11: Cash Receipt Schemes and Other Asset
Misappropriations
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Q1) Video cameras can be installed at cash entry points, but serve little use as a deterrent against theft.
A)True
B)False
Q2) A final concealment strategy with stolen deposits is to carry the missing money as:
A) Outstanding checks
B) Open receivables
C) Closes receivables
D) Deposits in transit
Q3) What techniques are generally used to conceal a receivables skimming scheme?
Q4) The process of ______ occurs when an employee steals the deposit from day one then replaces it with day two's deposit. Day tow is replaced with day three, and so on.
A) Lapping
B) Kiting
C) Coring
D) Padding
Q5) List three proactive computer audit steps for detecting skimming from page 304306.
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Chapter 12: Cash Disbursement Schemes
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Q1) Fraudulent endorsement schemes commonly involve the interception of a signed check before mailing.
A)True
B)False
Q2) An employee intercepts a legitimate check made payable to a vendor and changes the payee name to his name. This is an example of a forged maker.
A)True
B)False
Q3) Fictitious revenue schemes are frequently designed around commission plans. A)True B)False
Q4) One way of diverting revenue for personal gain is to charge an amount higher than the price list and keep the difference.
A)True
B)False
Q5) Ghost employees are usually paid in cash.
A)True B)False
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Chapter 13: Corruption and the Human Factor
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Sample Questions
Q1) In this type of scheme, an employee knows his or her employer is seeking to purchase a certain asset and takes advantage of the situation by purchasing the asset himself or herself usually in the name of an accomplice or shell company.
A) Turnaround sale
B) Illegal gratuity
C) Economic extortion
D) Conflict of interest
Q2) Economic extortion schemes are committed when one person demands payment from another.
A)True
B)False
Q3) What is the difference between fraud prevention and fraud deterrence?
Q4) How does the "perception of detection" impact fraud deterrence?
Q5) ________ may be defined as the offering, giving, receiving, or soliciting anything of value to influence an official act.
A) Bribery
B) Conflicts of interest
C) Economic extortion
D) Illegal gratuities
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Chapter 14: Financial Statement Fraud
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Q1) This Periodicity assumption uses the principle of dividing economic activity into specific time intervals, such as monthly, quarterly, and annually as well as a five year time period.
A)True
B)False
Q2) Improper capitalization of expenses was one of the key methods financial statement fraud allegedly used by:
A) Enron
B) Tyco
C) Raptor
D) WorldCom
Q3) The premise of the economic entity assumption is that the activity of a business enterprise should be kept separate and distinct from its owners and other business entities
A)True
B)False
Q4) List four red flags associated with improper disclosure.
Q5) What are the four classifications of financial statement fraud?
Q6) What are the four criteria necessary for a sale to be complete?
Q7) How can financial statement fraud be deterred?
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Chapter 15: Consulting, Litigation Support, and Expert
Witnesses: Damages, Valuations, and Other Engagements
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Q1) Interviews are normally conducted under oath, so they carry the same weight as testimony and are invaluable tools used by the fraud examiner and forensic accountant for gathering information.
A)True
B)False
Q2) The accepted concept for measuring lost revenues or excess expenses over a loss period:
A) Project incremental lost sales or increased expenses
B) Validate opportunity costs
C) Validate sunk costs
D) Validate the fair value of assets
Q3) In Jones and Laughlin vs. Pfeifer, the Supreme Court allowed an option for projection earnings and the appropriate discount rate:
A) Case-by-case method
B) Below market discount method
C) Total-offset method
D) All of the above
Q4) What is included as an expert's work product?
Q5) Define four different measures of value used by a forensic accountant.
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Chapter 16: Remediation and Litigation Advisory Services
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Q1) Remediation is characterized as the steps necessary to "clean up the mess" after a fraud or financial crime has been discovered and investigated, and the results of the investigation have been reported.
A)True
B)False
Q2) Presenting a positive appearance can bolster credibility. Aspects of a positive appearance EXCLUDE:
A) Body language, including attentiveness and sitting up straight
B) Eye contact
C) Business attire
D) Abrupt or argumentative responses
Q3) What steps should the forensic professional take, assuming that legal counsel initiated the fraud investigation?
Q4) A company should develop a system of internal controls that provides absolute assurance that assets are protected and financial statements are fairly presented.
A)True
B)False
Q5) What are the types of losses available for recovery?
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