FINALS (Audit Theory)

1. In determining the primary responsibility of the external auditor for an audit

of a companys financial statements, the auditor owes primary allegiance
to:
a. Stockholders, creditors and the investing public
b. The management of the audit client because the auditor is hired and
paid by management
c. The Auditing and Assurance Standards Council because it determines
auditing standards and auditors responsibility
d. The audit committee of the audit client because the committee is
responsible for coordinating and reviewing all audit activities within the
company.

2. An audit involves ascertaining the degree of correspondence between

assertions and established criteria. In the case of an audit of financial
statements, which of the following would not be a valid criterion
a. International Accounting Standards
b. Philippine Financial Reporting Standards (PFRS)
c. Generally accepted auditing standards
d. PFRS for SMEs

3. Most of the independent auditors work in formulating an opinion on

financial statements consists of
a. Studying and evaluating internal control
b. Obtaining and examining evidence
c. Examining cash transactions
d. Comparing recorded accountability with assets

4. Which of the following is more difficult to evaluate objectively?

a. Efficiency and effectiveness of operations
b. Compliance with applicable government regulations
c. Presentation of financial statements in accordance with the applicable
financial reporting criteria
d. All the given criteria are equally difficult to evaluate objectively

5. An audit that involves obtaining and evaluating evidence about the

efficiency and effectiveness of an entitys operating activities in relation to
specified objectives is a (n)
a. External audit
b. Compliance audit
c. Operational audit
d. Financial statement audit

6. Which of the following statements is not distinction between independent

auditors and internal auditors
a. Independent auditors represent third party users external to the
auditee entity, whereas internal auditors report directly to
management
 b. Although independent auditors strive for both validity and relevance,
internal auditors are concerned almost exclusively with validity
c. Internal auditors are employees of the auditee, whereas independent
auditors are independent contractors.
d. The internal auditors span of coverage goes beyond financial auditing
to encompass operational and performance auditing

7. Which of the following has the primary responsibility for the fairness of the
representations made in the financial statements?
a. Clients management
b. Audit committee
c. Independent auditor
d. Board of accountancy

8. An audit of the financial statements of JMV Corporation is being conducted by

an external auditor. The external auditor is expected to
a. Express an opinion as to the fairness of JMVs financial statements
b. Express an opinion as to the attractiveness of JMV for investment
purposes
c. Certify the correctness of JMVs financial statements
d. Examine all evidence supporting JMVs financial statements

9. Which of the following statements about independent financial statement

audit is correct?
a. The audit of financial statements relieves management of its
responsibilities for the financial statements
b. An audit is designed to provide limited assurance that the financial
statements taken as a whole are free from material misstatement
c. The procedures required to conduct an audit in accordance with PSAs
should be determined by the client who engaged the services of the
auditor
d. The authors opinion is not an assurance as to the future viability of the
entity as well as the effectiveness and efficiency with which
management has conducted the affairs of the entity

10.The primary purpose of an independent financial statement audit is to

a. Provide a basis for assessing managements performance
b. Comply with government regulatory requirements
c. Assure management that the financial statements are unbiased and
free from material error
d. Provide users with an unbiased opinion about the fairness of
information reported in the financial statement

11.Independent auditors of financial statements perform audits that reduce

and control
a. The business risks faced by investors
b. The information risk faced by investors
c. The complexity of financial statements
d. Qualify reviews performed by other CPA firms
12.In auditing accounting data, the concern is with
a. Determining whether recorded information properly reflects the
economic events that occurred during the accounting period.
b. Determining if fraud has occurred
c. Determining if taxable income has been calculated correctly
d. Analyzing the financial information to be sure that it complies with
government requirements

13.The expertise that distinguishes auditors from accountants is in the

a. Ability to interpret financial reporting standards
b. Requirement to possess education beyond the Bachelors degree
c. Accumulation and interpretation of evidence
d. Ability to interpret PAS

14.An audit of financial statements is conducted to determine if the

a. Organization is operating efficiently and effectively
b. Auditee is following specific procedures or rules set down by some
higher authority
c. Overall financial statements are stated in accordance with specified
criteria
d. None of the above

15.An audit can have a significant effect on

a. Information risk
b. Business risk
c. The risk-free interest rate
d. All of these

16.When a professional accountant learns of a material error or omission in a

tax return of a prior year, he/she has the responsibility to do the following,
except

a. Promptly advise the client or employer of the error or omission and

recommend that disclosure be made to the revenue authorities.
b. Promptly inform the revenue authorities even without the permission of
the client.
c. Advice the employer to correct the error and recommend that
disclosure be made to the revenue authorities.
d. Consider discontinuing the association with the client if the client does
not correct the error.

17. This threat to independence occurs when a firm or a member of the

assurance firm has a direct financial interest or material indirect financial
interest in an assurance client.

a. Self-review threat.
b. Advocacy threat.
c. Intimidation threat.
d. Self-interest threat.
 18. In which of the following situations would a public accounting firm have
violated the code of ethics in determining its fee?

a. A fee is based on whether or not the public accounting firms audit

report leads to the approval of the client application for bank is
financing.
b. A fee is to be established at a later date by the Bankruptcy Court.
c. A fee is based upon the nature of the engagement rather than upon
the actual time spent on the engagement.
d. A fee is based on the fee charged by the clients former auditors.

19. A public accounting firm would least likely be considered in violation of

the independence rules in which of the following instances?

a. A partners checking account, which is fully insured by the Philippine

Deposit Insurance Corporation, is held at a financial institution for
which the public accounting firm performs attest services.
b. A manager of the firm donates services as vice president of a
charitable organization that is an audit client of the firm.
c. An attest client owes the firm fees for this and last years annual
engagement.
d. A covered members dependent son owns stock in an attest client.

20. Juan, CPA, has a public accounting practice. He wishes to establish a

separate to offer data processing services to the public and other public
accountants.

a. Juan cannot be a partner in any separate partnership which offers

data processing services.
b. Juan may form a separate partnership
c. Juan may form a separate partnership as long as partners are CPAs.
d. Juan may form a separate partnership, but he must give up his
public accounting practices

21. The auditor's responsibility for failure to detect fraud arises

a. When such failure clearly results from failure to comply with

auditing standards.
b. Whenever the amounts involved are material.
c. Only when the examination was specifically designed to detect
fraud.
d. Only when such failure clearly results from negligence so gross as
to sustain an interference of fraud on the part of the auditor.

22. The risk that the audit will fail to uncover a material misstatement is
eliminated

a. If client has good internal control.

b. If client follows financial reporting standards.
c. When the auditor has complied with Standards on Auditing.
d. Under no circumstances.
23. Most accounting and auditing professionals agree that when an audit has
failed to uncover material misstatements, and the wrong type of audit
opinion is issued, the audit firm

a. has failed to follow Standards on Auditing.

b. deserves to lose the lawsuit.
c. should be asked to defend the quality of the audit.
d. should not be held responsible for the financial loss suffered by
others.

24. In rare cases auditors have been held liable for criminal acts. A criminal
conviction against an auditor can result only when it is demonstrated that the
auditor

a. Was negligent.
b. Was grossly negligent.
c. Intended to deceive or harm others.
d. Caused a financial loss to an innocent third-party.

25. When a business is unable to repay its lenders because of economic

conditions, such as recession, it suffers from

a. Business failure.
b. Audit failure.
c. Audit risk.
d. All of these.

26. The primary reason why a CPA firm establishes quality control policies
and procedures for human resources is to

a. comply with the continuing educational requirements imposed for all

staff accountants in CPA firms.

b. establish in fact as well as in appearance that staff accountants are

increasing their knowledge of accounting and auditing matters.

c. provide a forum for staff accountants to exchange their experiences and

views concerning firm policies and procedures.

d. provide reasonable assurance that staff personnel will have the

capability, competence and commitment to ethical principles required
to enable them to fulfill their responsibilities in accordance with
professional standards and regulatory and legal requirements.

27. In pursuing its quality control objectives with respect to assigning

personnel to engagements, a CPA firm may use policies and procedures such
as the following
 a rotating employees from assignment to assignment on a random basis
. to aid in the staff training effort.

b requiring timely identification of the staff requirements of specific

. engagements so that enough qualified personnel can be made
available.

c allowing staff to select the assignments of their choice to promote

. better client relationships.

d assigning a number of employees toeach engagement in excess of the

. number required so as not to overburden the staff and interfere with the
quality of the audit work performed.

28. The accounting firm should establish policies and procedures assigned to
promote an internal culture based on the recognition that quality is essential
in performing engagements. This may be communicated through the
following means except

a Training seminars.
.

b Formal and informal dialogue.

.

c Publication in PICPA newsletter.

.

d Mission statements.
.

29. The primary factor that should be considered in determining the extent of
supervision needed by an assistant is the assistants

a. Willingness to exercise due care

b. Competence

c. Professional certification

d. Independence

30. The primary purpose of establishing quality control policies and

procedures for deciding whether to accept a new client is to

a. Enable the CPA firm to attest to the integrity of the client

management.
 b. Satisfy the CPA firms duty to the public concerning the acceptance
of new clients.

c. Minimize the likelihood of association with clients whose

management lacks integrity.
d. Anticipate before performing any field work whether an unmodified
opinion can be expressed.

31.This involves developing an overall strategy for the expected conduct and
scope of the examination; the nature, extent, and timing of which vary
with the size and complexity, and experience with and knowledge of the
entity
a. Audit planning
b. Audit procedure
c. Audit program
d. Audit working pen

32.Which of the following procedures would a CPA ordinarily perform during

audit planning?
a. Obtain understanding of the clients business and industry
b. Review the clients bank reconciliation
c. Obtain clients representation letter
d. Review and evaluate clients internal control

33.Early appointment of the independent auditor will enable:

a. A more thorough examination to be performed.
b. A proper study and evaluation of internal control to be performed.
c. Sufficient competent evidential matter to be obtained.
d. A more efficient examination to be planned.

34.The audit team gathers information about a new clients business and
industry in order to obtain
a. An understanding of the clients internal control system for financial
reporting
b. An understanding of how economic events and transactions affect the
companys financial statements
c. Information about engagement risk
d. Information regarding whether the company is engaging in financial
statement fraud
35.The risk that a material misstatement in an assertion will not be prevented
or detected on a timely basis by internal control is
a. Detection risk
b. Control risk
c. Inherent risk
d. Audit risk

36.Which of the following may represent the bigger challenge smaller public
companies face in implementing effective control?
a. lack of expertise
b. Reduced importance
c. Limited resources
 d. Limited available guidance

37.A small entity may use less formal means to ensure that internal control
objectives are achieved. For example, extensive accounting procedures,
sophisticated accounting records, or formal controls are least likely to be
needed if
a. Management is closely involved in operations
b. The entity is involved in complex transactions
c. The entity is subject to legal or regulatory requirements, also found in
larger entities
d. Financial reporting objectives have been established

38.Which of the following best describes the purpose of control activities?

a. The actions, policies and procedures that reflect the overall attitude of
management
b. The identification and analysis of risk relevant to the preparation of
financial statements
c. The policies and procedures that help ensure that necessary actions
are taken in order to achieve the entitys objectives
d. Activities that deal with the ongoing assessment of the quality of
internal control by management

39.Which of the following activities would be least likely to strengthen a

companys internal control?
a. Separating accounting from other financial operations
b. Maintaining insurance for fire and theft
c. Fixing responsibility for the performance of employee duties
d. Carefully selecting and training employees

40.Proper segregation of functional responsibilities in an effective structure of

internal control calls for separation of the functions of
a. Authorization, execution and payment
b. Authorization, recording and custody
c. Custody, execution and reporting
d. Authorization, payment and recording

41.Material misstatements may emanate from all of the following except

a. fraud
b. limitations of the audit
c. error
d. non-compliance with laws and regulations

42.An intentional act by one more individuals among management,

employees, or third parties which results in misrepresentation of financial
statement refers to
a. Error
 b. Noncompliance
c. Fraud
d. Illegal acts

43.The responsibility for the detection and prevention of errors, fraud and
noncompliance with laws and regulations rests with
a. Auditor
b. Clients legal counsel
c. Client Management
d. Internal auditor

44.When the auditor assesses inherent risk, he considers among others the
following factors except
a. Integrity of management
b. Nature of the entitys business
c. Unusual pressures on management
d. Results of the interim tests

45.The revenue cycle of a company generally includes these accounts:

a. Inventory, accounts payable, and general expenses
b. Inventory, general expenses, and payroll
c. Cash, accounts receivable, and sales
d. Cash, notes payable, and capital stock

46.All of the following are parts of corporate government except:

a. Oversight of the management by the board of directors
b. Established processes to provide accountability to stockholders.
c. Whistle-blowing processes.
d. Independent review of financial statements by the SEC.

47.Which of the following would not be correct regarding corporate

governance failures that took place in the past two decades?

a. Boards of director approve stock option plans that did not align
management and shareholder objectives.
b. Audit committees met infrequently, often for only an hour at a time.
c. Boards of directors were often dominated by management.
d. Accounting rules became more specific to address the complexities
that existed in new transaction.
48.Which of the following is an appropriate description of managements role
in preparing financial statements and reports on internal control over
financial reporting? Management has the primary responsibility for:
a. Determining the scope of internal and external audit activities.
b. Preparing financial statements that are fairly presented in accordance
with PFRS.
c. Selecting accounting principles that best portray the economic reality
of the organizations transaction and current state.
d. Developing, implementing, and assessing the internal control
processes over financial reporting.
49.Which of the following would not be required to be communicated to the
audit committee by the outside auditor?
a. Significant audit adjustments made during the course of the audit.
b. Significant disagreement with management regarding accounting
principles
c. The auditors knowledge of managements consultation with other
public accounting firms regarding the proposed treatment of a
controversial accounting item.
d. The extent to which the internal auditors assisted in the conduct of the
audit.

50.The applications of due professional care means that the auditors work
conforms with all of the following except:
a. Current auditing standards as defined by Philippine standards on
auditing (PSAs).
b. The work that a reasonable prudent auditor would have performed in
the same situation.
c. The work that would have been performed by a reasonable person who
was not necessarily trained in auditing.
d. The work was at least equal to that which had been performed on the
audit engagement during the preceding year.

51.Which of the following best describes the primary purpose of audit

procedures?

a. To detect errors or irregularities

b. To comply with financial reporting standards
c. To gather corroborative evidence
d. To verify the accuracy of account balances

52.As a result of analytical procedures, the independent auditor determines

that the gross profit has declined from 30% in the preceding year to 20%
in the current year. The auditor should
a. Document managements intentions with respect to plans for reversing
this trend
b. Evaluate managements performance in causing this decline
c. Require footnote disclosure
d. Consider the possibility of an error in the financial statements

53.The auditor will most likely to perform extensive tests for possible
understatement of
a. Revenues
b. Assets
c. Liabilities
d. Capital
54.Which of the following elements ultimately determines the specific
auditing procedures necessary under the circumstances to afford a
reasonable basis for an opinion?
a. Auditor judgment
b. Materiality
 c. Relative risk
d. Reasonable assurance

55.In testing the existence assertion for an asset, an auditor ordinarily works
from the
a. Financial unrecorded items to the financial statement
b. Potentially unrecorded items to the financial statement
c. Accounting records to the supporting evidence
d. Supporting evidence to the accounting records

56.The information obtained by the auditor in arriving at the conclusions on

which the audit opinion is based is called:
a. Audit working papers
b. Audit assertions
c. Audit evidence
d. Audit standards

57.The major reason an independent auditor gathers evidence is to

a. Form an opinion on the financial statements
b. Detect fraud
c. Evaluate management
d. Evaluate internal control

58.Which of the following is the best example of a corroborating evidence

a. General journal
b. Worksheet cost allocations
c. Vendors invoice
d. Cash receipts journal

59.Which of the following statements relating to the competence of evidential

matter is always true?
a. Evidence from outside an enterprise is always reliable
b. Accounting data developed under satisfactory conditions of internal
control are more relevant than data developed under unsatisfactory
internal control conditions
c. Oral representations made by management are not reliable evidence
d. Evidence must be both reliable and relevant to be considered
appropriate

60.Which of the following is correct about the appropriateness of evidence?

a. Audit evidence from external sources is more relevant than evidence
generated internally
b. Audit evidence is more persuasive when items of evidence from
different sources or of different nature are not consistent
c. Audit evidence generated internally is more reliable when the related
accounting and internal control systems are effective
d. Sufficiency refers to the amount of evidence needed

61.In an audit sampling application, an auditor:

 a Performs procedures on all the items in a balance and makes a
conclusion about the whole balance.
b Performs procedures on less than 100 percent of the items in a
balance and formulates a conclusion about the whole balance.
c Performs procedures on less than 100 percent of the items in a class of
transactions for the purpose of becoming familiar with the clients
accounting system.
d Performs analytical procedures on the clients unaudited financial
statements when planning the audit.

62.Auditors consider statistical sampling to be characterized by the following:

a Representative sample selection and nonmathematical consideration
of the results.
b Carefully biased sample selection and statistical calculation of the
results.
c Representative sample selection and statistical calculation of
the results.
d Carefully biased sample selection and nonmathematical consideration
of the results
.
63.In audit sampling applications, sampling risk is:
a Characteristics of statistical sampling applications but not of non-
statistical applications.
b The probability that the auditor will fail to recognize erroneous
accounting in the clients documentation.
c Probability that accounting errors will arise in transactions and enter
the accounting system.
d The probability that an auditors conclusion based on a sample
might be different from the conclusion based on an audit of
the entire population.

64.Which of the following should be considered an audit procedure for

obtaining evidence?
a An audit sampling application in accounts receivable selection.
b The accounts receivable exist and are valued properly.
c Sending a written confirmation on a customers account
balance.
d Non-statistical consideration of the amount of difference reported by a
customer on a confirmation response.

65.Which of the following elements in the audit risk model is/are a product of
the auditors professional judgment?
a Control risk,
b Analytical procedure risk.
c Test of details risk of incorrect acceptance.
d All of the above.

66.An auditor is reviewing internal control for accounts receivable:

 I The billing function should not be assigned to the person who is
responsible for maintaining accounts receivable records.
II II. Responsibility for approval of the write-off of accounts receivable
that are uncollectible should not be assigned to the cashier.

a. Only I is true c. Both I and II are true

b. Only II is true d. Neither I nor II is true

67.Statistical sampling may be applied to test controls when a clients control

procedures
a. Depend primarily on segregation of duties.
b. Are carefully reduced to writing and are included in client accounting
manuals.
c. Leave an audit trail as evidence of compliance.
d. Enable the detection of fraud.

68.The deviation rate the auditor will permit in the population and still be
willing to reduce the assessed level of control risk is called the
a. Tolerable deviation rate c. Acceptable risk of over-
reliance
b. Estimated population deviation rate d. Sample deviation rate

69.Which of the following statements is correct?

a. The expected population deviation rate has little or no effect on sample
size.
b. As the population size doubles, the sample size also should double.
c. For a given tolerable rate, a larger sample size should be selected as
the expected population deviation rate decreases.
d. The population size has little or no effect on sample size except
for very small populations.

70.For which of the following audit tests would an auditor most likely use
attribute sampling?
a. Making an independent estimate of the amount of a FIFO inventory.
b. Examining invoices in support of the valuation of fixed asset additions.
c. Selecting accounts receivable for confirmation of account balances.
d. Inspecting employee time cards for proper approval by
supervisors

71.Which of the following would be the best protection for a company that
wishes to prevent the lapping of trade accounts receivable?

a. Segregate duties so that the bookkeeper in charge of the general

ledger has no access to incoming mail.
b. Segregate duties so that no employee has access to both checks from
customers and currency from daily cash receipts.
c. Have customers send payments directly to the companys depository
bank.
d. Request that customers payment checks be made payable to the
company and addressed to the treasurer.
72.Which of the following controls would be most effective in assuring that
recorded purchases are free of material errors?
a. The receiving department compares the quantity ordered on purchase
orders with the quantity received on receiving reports.
b. Vendors invoices are compared with purchase orders by an employee
who is independent of the receiving department.
c. Receiving reports require the signature of the individual who
authorized the purchase.
d. Purchase orders, receiving reports, and vendors invoices are
independently matched in preparing vouchers.
73.The purpose of segregating the duties of hiring personnel and distributing
payroll checks is to separate the
a. administrative controls from the internal accounting controls.
b. human resources function from the controllership function.
c. operational responsibility from the recordkeeping responsibility.
d. authorization of transactions from the custody of related assets.

74.When goods are received, the receiving clerk should match the goods with
the
a. purchase order and the requisition form
b. vendors invoice and the receiving report
c. vendors shipping document and the purchase order
d. receiving report and the vendors shipping document

75.Tracing bills of lading to sales invoices provides evidence that

a. shipments to customers were invoiced
b. shipments to customers were recorded as sales
c. recorded sales were shipped
d. invoiced sales were shipped

76.Effective internal control procedures over the payroll function may include
a. Reconciliation of totals on job time tickets with job reports by
employees responsible for those specific jobs.
b. Verification of agreement of job time tickets with employee clock card
hours by a payroll department employee.
c. Preparation of payroll transaction journal entries by an employee who
reports to the supervisor of the personnel department.
d. Custody of rate authorization records by the supervisor of the payroll
department.

77.A sales clerk at Schackne Company correctly prepared a sales invoice for
$5,200, but the invoice was entered as $2,500 in the sales journal and
similarly posted to the general ledger and accounts receivable ledger. The
customer remitted only $2,500, the amount on his/her monthly statement.
The most effective procedure for preventing this type of error is to
a. Use predetermined totals to control posting routines.
b. Have an independent check of sales invoice serial numbers, prices,
discounts, extensions, and footings.
c. Have the bookkeeper prepare monthly statements that are verified and
mailed by a responsible person other than the bookkeeper.
 d. Have a responsible person who is independent of the accounts
receivable department promptly investigate unauthorized remittance
deductions made by customers or other matters in dispute.

78.The authority to accept incoming goods in receiving should be based on

a(an)
a. vendors invoice
b. materials requisition
c. bill of lading
d. approved purchase order

79.Which of the following controls most likely would be effective in offsetting

the tendency of sales personnel to maximize sales volume at the expense
of high bad debt write offs?
a. Employees responsible for authorizing sales and bad debt write offs
are denied access to cash.
b. Shipping documents and sales invoices are matched by an
employee who does not have authority to write off bad debts.
c. Employees involved in the credit granting function are separated
from the sales function.
d. Subsidiary accounts receivable records are reconciled to the control
account by an employee independent of the authorization of credit.

80.Which of the following controls most likely would help ensure that all
credit sales transactions of an entity are recorded?
a. The billing department supervisor sends copies of approved sales
orders to the credit department for comparison to authorized credit
limits and current customer account balances.
b. The accounting department supervisor independently reconciles the
accounts receivable subsidiary ledger to the accounts receivable
control account monthly.
c. The accounting department supervisor controls the mailing of
monthly statements to customers and investigates any differences
reported by customers.
d. The billing department supervisor matches pre-numbered shipping
documents with entries in the sales journal

81.A procedure that directly test accounts or classes of transactions to detect

material monetary errors or misstatements in financial statement
assertions.
a Analytical Procedures
b Substantive Test
c Test of Transaction
d Test of Balances

82.For efficiency, tests of controls are frequently done at the same time as:
a Analytical Procedure
b Compliance test
c Test of transaction
d Test of balances
83.Which of the following procedures are frequently performed in response to
the auditors assessment of the risk of material misstatement?
a Ratio Analysis
b Test of controls
c Test of details of balances
d Risk assessment procedure

84.The primary emphasis in most tests of details of balances is on the:

a Balance sheet accounts
b Revenue accounts
c Cash flow statement accounts
d Expense account
85.Tests of Transactions are used to determine whether _________ have been
satisfied.
a Compliance test requirements
b Balance coverage requirements
c Transaction-related audit objectives
d Existence assertions

86.A listing of all the things which the auditor will do to gather sufficient,
competent evidence is the:
a Audit strategy
b Audit program
c Audit procedure
d Audit risk model

87.Means the record of audit procedures performed, relevant audit evidence

obtained, and conclusions the auditor reached. It is also called working
paper.
a Audit file
b Risk assessment
c Audit documentation
d Ratio Analysis

88.Which of the following is not a type of audit program

a Standard all-purpose
b Tailor-made audit program
c Modified standard form
d Supporting Schedule

89.It include symbols in the working paper that describe the audit procedures
performed
a Heading
b Tick Marks
c Cross referencing
d Indexing
90.The following are circumstances where professional accountants are or
may be required to disclose confidential information. Which of the
following is not included?
a Disclosure is required by law
b There is a professional duty or right to disclose, when not prohibited
by law
c Disclosure is required by third party
d Disclosure is permitted by law and is authorized by the client or the
employer

91.What is the computer process called when data processing is performed

concurrently with a particular activity and the results are available soon
enough to influence the particular course of actions being taken or the
decision being made?

a. Real-time processing
b. Batch processing
c. Random Access Processing
d. Integrated data Processing
92.All activity related to a particular application in a manual system is
recorded in a journal. The name of the corresponding item in a
computerized system is a
a. Master file c. transaction file
b. Year-to-date file d. current balance file

93.The initial debugging of a computer program should normally be done by

the
a. Programmer c. machine operator
b. Internal auditor d. control group

94.The purpose of using generalized computer programs is to test and

analyze a clients computer
a. Systems c. records
b. Equipment d. processing logic

95.Which of the following is not a major reason for maintaining an audit trail
for a computer system
a. Deterrent to fraud c. analytical procedures
b. Monitoring purposes d. query answering

96.Which of the following employees normally would be assigned the

operating responsibility for designing a computerized accounting system,
including documentation of application systems?
a. Computer programmer
b. Data processing manager
c. Systems analyst
d. Internal auditor
97.When erroneous data are detected by computer program controls, such
data may be excluded from processing and printed on an error report. The
error report should most probably reviewed and followed up by the
a. Control group
b. Systems analyst
c. Supervisor of computer operation
d. Computer programmer

98.A procedural control used in the management of a computer center to

minimize the possibility of data or program file destruction through
operator error includes
a. Control figures.
b. Cross-footing tests.
c. Limit checks.
d. External labels.

99.Totals of amounts in computer-record data fields which are not usually

added but are used only for data processing control purposes are called
a. Record totals
b. Hash totals
c. Processing data totals
d. Field totals
100. In updating a computerized accounts receivable file, which one of the
following would be used as a batch control to verify the accuracy of the
posting of cash receipts remittances?

a. The sum of the cash deposits plus the discounts less the sales
returns.
b. The sum of the cash deposits.
c. The sum of the cash deposits less the discounts taken by
customers.
d. The sum of the cash deposits plus the discounts taken by
customers.