1. (TCO 1) Information that does not omit important aspects of the underlying events or activities that it measures is: Complete. Accessible. Relevant. Timely. 2. (TCO 1) The set of fields that contain data about various attributes of the same entity forms a entity record. file. database. 3. (TCO 1) A graphical description of the sequence of logical operations that a computer performs is called a data flow diagram. a document flowchart. a system flowchart. a program flowchart. 4. (TCO 1) Which of the following is not an example of a common activity in an AIS? Buy and pay for goods and services Sell goods and services and collect cash Summarize and report results to interested parties Recording of sales calls for marketing purposes 5. (TCO 1) All transaction cycles feed information directly into the financial statements. governmental reports. general ledger and reporting system. financing operations. 6. (TCO 1) A data flow diagram (or DFD) has four basic elements. The people and organizations that send data to and receive data from the system are known as data sources and destinations. data flows. transformation processes. data stores. 7. (TCO 2) Which AIS threat below would be classified an unintentional act? A power outage Sabotage High winds A logic error 8. (TCO 2) There are four distinct types of threats to an AIS: 1) software errors and equipment malfunctions; 2) unintentional acts; 3) intentional acts; and 4) __________. computer fraud data transmission errors human carelessness natural and political disasters 9. (TCO 2) Internal control is often referred to as a(n) __________, because it permeates an organization's operating activities and is an integral part of basic management activities. event activity process system 10. (TCO 2) Which of the following is not one of the reasons COSO developed the more comprehensive ERM framework? The internal control framework has too narrow a focus. Long-standing internal control systems often have controls that protect against items that are no longer risks. Risk should be evaluated first, before controls. The Sarbanes-Oxley Act of 2002 required it. 11. (TCO 3) Which of the following is an example of a preventive control? Encryption Log analysis Intrusion detection Emergency response teams 12. (TCO 3) This is an authorized attempt by an internal audit team or an external security consultant to break into the organization's information system. Intrusion detection system Log analysis Penetration test Vulnerability scan 13. (TCO 3) Forms design is an example of this type of control. Data entry controls Data transmission controls Output controls Source data controls 14. (TCO 3) This determines if all required data items have been entered. Completeness check Field check Limit check Range check 15. (TCO 3) The type of audit in which the primary responsibility of the auditors is the management of the organization is an external audit. a governmental audit. an internal audit. a public audits. 16. (TCO 3) An auditor examining a firm's accounting information system sets an embedded audit module to flag all credit transactions in excess of $1,500. The flag causes the system state to be recorded before and after each transaction is processed. This is an example collecting audit evidence using an integrated test facility. the snapshot technique. a system control audit review file. audit hooks. continuous and intermittent simulation. 17. (TCO 4) The revenue cycle is a recurring set of business activities and related information processing operations associated with providing goods and services to customers and collecting cash in payment for those sales. With whom is the primary external exchange of information? Competitors Creditors Customers Marketing organizations 18. (TCO 4) During the sales order entry process, a __________ is performed to compare the quantity ordered with the standard amounts normally ordered. completeness test redundant data check field check reasonableness test 19. (TCO 4) To accomplish the objectives set forth in the expenditure cycle, a number of key management decisions must be addressed. Which of the decisions below is not ordinarily found as part of the expenditure cycle? How can cash payments to vendors be managed to maximize cash flow? What is the optimal level of inventory and supplies to carry on hand? Where should inventories and supplies be held? What are the optimal prices for each product or service? 20. (TCO 4) What aspect below best characterizes a JIT inventory system? Frequent deliveries of smaller quantities of items to the work centers Frequent deliveries of large quantities to be held at the work centers Less frequent deliveries of large quantities of goods to central receiving Infrequent bulk deliveries of items directly to work centers 21. (TCO 4) The __________ is a legal contract that defines responsibility for the goods that are in transit. bill of lading freight bill sales order order acknowledgement 22. (TCO 4) Automating the cash collection process is a desirable goal of the organization. A way to incorporate the advantages of EDI with the electronic funds transfer process is FEDI. EFT. to use procurement cards. an electronic lockbox. 23. (TCO 4) Which of the following would be the least effective control to minimize the loss of inventory? Secure the storage location of inventory. Release inventory only with proper documentation. Periodically back up all perpetual inventory records. Reconcile the physical and book inventories. 24. (TCO 4) There are several threats that are associated with the process and activity of receiving and storing goods. Identify one of these threats below. Errors in counting Kickbacks Requests for unnecessary items Errors in vendor invoices 25. (TCO 4) A purchase order is a document formally requesting a vendor to sell a certain product at a certain price. a request for delivery of certain items and quantities. a contract between the buyer and vendor once accepted by the vendor. All of the above are true. Part 2 1. (TCO 2) What are some of the distinguishing characteristics of fraud perpetrators? 2. (TCO 1) Explain what an AIS is, describe the basic tasks it performs in an organization, and give some examples of the types of accounting transactions it processes. 3. (TCO 3) List and explain the types of risk possible when conducting an audit. 4. (TCO 4) How is the expenditure cycle a "mirror image" of the revenue cycle?