Auditing and Accounting Information Systems
Review Questions
Course Introduction
This course provides a comprehensive overview of the principles and practices of auditing while exploring the integral role of accounting information systems (AIS) in organizational control and assurance. Students learn about the audit process, risk assessment, and the evaluation of internal controls within both manual and computerized environments. The course emphasizes the use of AIS for effective gathering, processing, and reporting of financial information, as well as detecting and preventing fraud. Through case studies and practical applications, students gain the skills needed to audit information systems and ensure the integrity and reliability of financial data in compliance with professional standards.
Recommended Textbook
Accounting Information Systems 11th Edition by Marshall B. Romney Paul J. Steinbart
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Chapter 1: Accounting Information Systems
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Q1) How many components are found in an AIS?
A)three
B)four
C)five
D)six
Answer: D
Q2) A decision that is repetitive,routine and well understood is
A)structured
B)semistructured
C)unstructured
D)strategic
Answer: A
Q3) What is the CITP designation and why is it important to AIS?
Answer: The CITP designation stands for "Certified Information Technology Professional." It is awarded to CPAs who have demonstrated a broad range of knowledge and skill sets in the areas of accounting and information systems and technology.The AICPA (American Institute of CPAs)has acknowledged the importance and close relationship that accounting and information systems share in creating this specialty designation for accounting information system professionals.
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Chapter 2: Overview of Business Processes
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Q1) The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky.Since 1996,the owner,Glamdring Elfthrall,has leveraged computer technology to provide a superior level of customer service.In particular,the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible.Price information and condition are also provided for each inventory item.In this database,the data about an individual figure is a(an)
A)entity.
B)attribute.
C)field.
D)record.
Answer: D
Q2) The basic "give and take" functions of a business have been grouped into transaction cycles.The cycle that includes the events of hiring employees and paying them is known as the A)revenue cycle.
B)expenditure cycle.
C)human resources cycle.
D)financing cycle.
Answer: C
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Chapter 3: Systems Development and Documentation Techniques
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Q1) Most processes on a DFD can be identified by
A)data in-flows only.
B)data out-flows only.
C)data flows both into or out of a process.
D)always being followed by a data store.
Answer: C
Q2) An entity that sends or receives data used or produced by the system is called a
A)data source or destination.
B)data store.
C)data flow.
D)data transformation.
Answer: A
Q3) Which of the following is not a true statement?
A)Documentation tools save an organization both time and money.
B)Documentation tools are used extensively in the systems development process.
C)Data flow diagrams and flowcharts are the two most frequently used systems development documentation tools.
D)Data flow diagrams and flowcharts are difficult to prepare and revise using software packages.
Answer: D
Page 5
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Chapter 4: Relational Databases
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Q1) Name the types of attributes that tables possess in a relational database.
Q2) The ___________ acts as an interface between the database and the various application programs
A)Data warehouse
B)Database administrator
C)Database management system
D)Database system
Q3) Name the three "anomalies" that may occur in an improperly designed relational database?
Q4) What is a major advantage of database systems over file-oriented transaction processing systems?
Q5) A set of individual user views of the database is called the A)schema.
B)internal-level schema.
C)external-level schema.
D)meta-schema.
Q6) List the four languages used within a DBMS.
Q7) Discuss the ways in which a well-designed DBMS will facilitate the three basic functions of creating,changing,and querying data.
6
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Chapter 5: Computer Fraud and Security
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Q1) Which AIS threat below would be classified as a software error or equipment malfunction?
A)Earthquake
B)Logic error
C)Operating system crash
D)Sabotage
Q2) The first known examples of the practice of concealing a message within a message comes from the historian Herodotus,who wrote of a case in which a message was tattooed on the shaved head of a slave.When the slave's hair grew back,he traveled to the recipient and delivered the message by having his head shaved again.Modern applications involve concealing data within computer files.This practice is referred to as A)latenography.
B)obfuscography.
C)cryptography.
D)steganography.
Q3) What are the actions recommended by the Treadway Commission to reduce the possibility of fraudulent financial reporting?
Q4) Discuss antivirus software programs.
Q5) What are the two kinds of fraud in business?
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Chapter 6: Control and Accounting Information Systems
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Q1) Which of the following control classifications does not fit with the others listed below?
A)preventative
B)detective
C)administrative
D)corrective
Q2) Petty cash is disbursed by the Fred Haynes in the Cashier's Office.He also maintains records of disbursements,places requests to the Finance Department to replace expended funds,and periodically reconciles the petty cash balance.This represents a(an)___________ segregation of duties.
A)effective
B)partial
C)ineffective
D)limited
Q3) A ________________ helps employees act ethically by setting limits beyond which an employee must not pass.
A)Boundary system
B)Diagnostic control system
C)Interactive control system
D)Internal control system
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Chapter 7: Infromation System Controls for Systems
Reliability
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Q1) According to SysTrust,the reliability principle of integrity is achieved when
A)the system is available for operation and use at times set forth by agreement.
B)the system is protected against unauthorized physical and logical access.
C)the system can be maintained as required without affecting system availability,security,and integrity.
D)system processing is complete,accurate,timely,and authorized.
Q2) This screens individual IP packets based solely on the contents of the source and/or destination fields in the packet header..
A)Access control list
B)Deep packet inspection
C)Stateful packet filtering
D)Static packet filtering
Q3) In a private key system the sender and the receiver have __________,and in the public key system they have __________.
A)different keys; the same key
B)a decrypting algorithm; an encrypting algorithm
C)the same key; two separate keys
D)an encrypting algorithm; a decrypting algorithm
Q4) What are the three fundamental information security concepts?
Page 9
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Chapter 8: Auditing Computer-Based Information Systems
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Sample Questions
Q1) Identify four data entry controls.
Q2) This batch processing data entry control sums a field that contains dollar values.
A)Batch total
B)Financial total
C)Hash total
D)Sequence check
Q3) This protects records from errors that occur when two or more users attempt to update the same record simultaneously.
A)Concurrent update controls
B)Cross-footing balance test
C)Data conversion controls
D)Recalculation of batch totals
Q4) This determines if all required data items have been entered.
A)Completeness check
B)Field check
C)Limit check
D)Range check
Q5) Identify four useful procedures for controlling access to system outputs.
Q6) Identify four processing controls.
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Chapter 9: Auditing Computer-Based Informtion Systems
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Q1) When programmers are working with program code,they often employ utilities that are also used in auditing.For example,as program code evolves,it is often the case that variables defined during the early part of development become irrelevant.The occurrences of variables that are not used by the program are found using
A)program tracing.
B)scanning routines.
C)mapping programs.
D)automated flow charting programs.
Q2) Evaluating effectiveness,efficiency,and goal achievement are objectives of __________ audits.
A)financial
B)operational
C)information systems
D)all of the above
Q3) Why are audit tests and procedures performed on a sample basis?
Q4) List and explain the types of risk possible when conducting an audit.
Q5) List the types of risk possible when conducting an audit.
Q6) How and to whom does an auditor communicate the audit results?
Q7) What are embedded audit modules?
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Chapter 10: The Revenue Cycle: Sales an Cash Collections
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Q1) What is the normal procedure for new customers or customers making a purchase that causes their credit limit to be exceeded?
A)routine approval is granted without authorization
B)specific approval must be granted by the credit manager
C)reject the sale in either case without question
D)check the credit bureau for a credit rating on the customer
Q2) The Squishy Things Toy Company was established in 1948.It recently signed a large contract with a chain of retail toy stores.As a condition of the contract,the Squishy will be required to track and forecast product sales by linking in to the chain's sales database.Squishy will then be responsible for shipping products to the chain's regional warehouses as needed.The technology that is used for communication between Squishy and the chain is
A)vendor-managed inventory.
B)sales force automation.
C)electronic data interchange.
D)optical character recognition.
Q3) Discuss ways in which information technology can be used to streamline cash collections.
Q4) Explain how to effectively segregate duties in the sales order cycle.
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Chapter 11: The Expenditure Cycle: Purchasing and Cash Disbursements
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Q1) Briefly discuss the differences among EOQ,MRP,and JIT.
Q2) There are three basic activities in the expenditure cycle.One of the basic activities is the receiving and storage of goods,supplies,and services.What is the counterpart of this activity in the revenue cycle?
A)the sales order entry process
B)the shipping function
C)the cash collection activity
D)the cash payments activity
Q3) There are several threats that are associated with the process and activity of receiving and storing goods.Identify one of these threats below.
A)errors in counting
B)kickbacks
C)requests for unnecessary items
D)errors in vendor invoices
Q4) Inbound logistics is part of the A)revenue cycle.
B)expenditure cycle.
C)production cycle.
D)general ledger.
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Chapter 12: The Production Cycle
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Q1) What is the production cycle.
Q2) The best control procedure for accurate data entry is
A)the use of on-line terminals.
B)an access control matrix.
C)passwords and user IDs.
D)the automation of data collection.
Q3) Overproduction or underproduction can be a threat to an organization.To which process or activity does this threat relate?
A)product design
B)planning and scheduling
C)production operations
D)cost accounting
Q4) What role does the AIS play in the production cycle?
Q5) The basic activities in the production cycle are
A)product design and production operations.
B)planning,scheduling,and cost accounting.
C)raw materials requisitioning,planning,and scheduling.
D)Both A and B are correct.
Q6) Discuss the criticisms of traditional cost accounting methods.
Q7) What is CIM?
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Chapter 13: The Human Resources Managementpayroll Cycle
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Q1) Which of the following accounting cycles is most likely to be outsourced by a small or midsized business?
A)Revenue cycle
B)HR/Payroll cycle
C)Expenditure cycle
D)Production cycle
Q2) A manufacturing company is likely to use __________ to collect employee time data for payroll and job time.
A)badge readers
B)supervisor's entries
C)preprinted time cards
D)retina scanning
Q3) In the payroll system,checks are issued to
A)employees and to banks participating in direct deposit.
B)a separate payroll bank account.
C)government agencies.
D)All of the above are correct.
Q4) What is a payroll service bureau?
Page 15
Q5) List the various ways used to compensate employees.
Q6) Why are accurate cumulative earnings records important?
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Chapter 14: General Ledger and Reporting System
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Q1) Extensible Business Reporting Language is based on A)HTML.
B)TCP/IP.
C)XML.
D)XL.
Q2) Who provides the adjusting entries for a well-designed general ledger and reporting system?
A)various user departments
B)the treasurer's area
C)the other major AIS subsystems
D)the controller's area
Q3) Most budgets compare a standard budget amount to actual amounts that reflect the true performance of the organization.The budget standard is often a fixed target; however,given that these amounts are static,the budget does not account for unforeseen changes in the operating environment.A solution to this type of problem is to use a(n)
A)operating budget.
B)capital expenditures budget.
C)cash flow budget.
D)flexible budget.
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Chapter 15: Data Modeling and Database Design
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Q1) Cardinalities reflect __________ about the organization being modeled and its business practices.
A)assumptions
B)opinions
C)facts
D)theories
Q2) What is data modeling?
Q3) Which of the following is not one of the rules that describe how the three types of entities should relate to one another in an REA data model?
A)Each event is linked to at least one resource that it affects.
B)Each event is linked to at least one other event.
C)Each event is linked to at least two participating agents.
D)All of the above are important rules.
Q4) How many types of relationships are possible between entities?
A)one
B)two
C)three
D)an infinite number
Q5) What are the three steps in developing an REA diagram?
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Chapter 16: Implementing an Rea Model in a Relational Database
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Q1) Much of the information about an organization's assets that is traditionally recorded in ledgers is stored in ______ tables in an REA-based relational database.
A)Account
B)Agent
C)Event
D)Resource
Q2) In an integrated REA diagram,every event must be must be linked to
A)at least two resources.
B)at least two agents.
C)at least one other event.
D)at least two other events.
Q3) An integrated REA diagram contains multiple copies of A)Accounts
B)Agents
C)Events
D)Resource
Q4) What kinds of databases can the REA data model be used to design?
Q5) Explain a completeness check.
Q6) List the five rules for drawing integrated REA diagrams.
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Chapter 17: Special Topics in Rea Modeling
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Q1) Which is the most likely primary key for the Inventory-Request_Goods table?
A)Product number
B)Product number - Purchase order number
C)Product number - Purchase requisition number
D)Purchase requisition number
Q2) In an REA model,rental transactions differ from sales transactions in that
A)Each rental has a part number.
B)Each rental has a unique serial number
C)Rental transactions require completely different REA models than sales transactions.
D)All of the above.
Q3) Why is cost information stored in several relational tables?
Q4) In the human resources REA model,the relationship between the Employees and Training is
A)1:1
B)1:N
C)M:N
D)None of the above
Q5) Why is the event Issue Debt often modeled as a separate event entity?
Q6) Why might an REA diagram show relationships between resources and agents?
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Chapter 18: Introduction to Systems Development and Systems Analysis
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Q1) The question of what the project should and should not accomplish is determined in what step of systems analysis?
A)feasibility study
B)initial investigation
C)systems analysis report
D)systems survey
Q2) It is appropriate to develop several different design approaches to meeting system requirements for a project.Capital budgeting techniques are used to evaluate the economic merits of each alternative.The technique where estimated future cash flows are discounted back to the present is referred to as
A)the future value method.
B)the internal rate of return.
C)the net present value method.
D)the payback method.
Q3) Discuss the role of the groups that influence the development and implementation of an AIS.
Q4) What are the objectives of a system survey?
Q5) What is the importance of the master plan in systems development?
Q6) What is the physical design stage of the systems development life cycle?
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Chapter 19: Ais Development Strategies
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Q1) When canned software is used for systems acquisition,the physical design phase of the SDLC
A)does not involve designing and coding although modifications may be made.
B)is combined with the conceptual design phase.
C)is eliminated.
D)is the same.
Q2) Since the introduction of the computer,there has been an astronomical demand for information systems.Such demand has resulted in many users becoming involved in the hands-on development,control,and employment of information systems.What term is used to refer to this phenomenon?
A)amateur user computing (AUC)
B)competitive intra-organization systems development approach (CIOSDA)
C)end-user computing (EUC)
D)novice information systems development (NISD)
Q3) The least costly approach to systems acquisition is
A)canned software.
B)custom software.
C)modified software.
D)prototyping.
Q4) What is a help desk? What are the uses of a help disk?
Page 22
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Chapter 20: Systems Design, Implementation and Operation
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Q1) Rules for writing programs are called
A)applications.
B)basic code.
C)common routines.
D)programming standards.
Q2) At the end of the conceptual design phase the development team prepares a conceptual systems design report.What item below is not considered a rationale for issuing the report?
A)it can be used to guide physical systems design activities
B)it communicates how management and user information needs will be met
C)it discusses the design alternatives that were not selected for the project
D)it helps the steering committee assess system feasibility
Q3) The method of system conversion that implements the new AIS system in one branch of an organization is called _____ conversion.
A)direct
B)parallel
C)pilot
D)phase-in
Q4) What are the different types of documentation that should be prepared for a new system?
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