Chapter 9 c.

Both <documentType>invoice</documentType> and <totalAssets>10000</totalAssets>

Quiz-1 d. Neither <documentType>invoice</documentType> nor <totalAssets>10000</totalAssets>
8. The text discussed five terms related to the structure of XBRL. Which of the following pairs of items includes two
NAME: ____________________________________________ SECTION: 3-________ examples of the same term?
1. Which of the following terms best explains the idea that anyone can add to XBRL? a. XML, XBRL
a. Extensible b. Global Ledger, <documentType>invoice</documentType>
b. Specification c. Global Ledger, XBRL
c. Taxonomy d. None of these
d. Namespace 9. When organizations use XBRL, they can free themselves from:
2. The Internet address that defines XBRL tags is called a(n): a. Proprietary systems.
a. Specification b. The steps in the accounting cycle.
b. Taxonomy c. Both proprietary systems and the steps in the accounting cycle.
c. Namespace d. Neither proprietary systems nor the steps in the accounting cycle.
d. Instance document 10. Benefits of XBRL include:
3. The accounting cycle comprises ten steps. In which step is an XBRL taxonomy first likely to be used? a. Achieving quicker and more efficient decisions.
a. Post from the journal to the ledger. b. Improving investor relations through provision of more transparent and user-friendly information.
b. Record the transactions in a journal. c. Both achieving quicker and more efficient decisions and improving investor relations through provision
c. Prepare financial statements. of more transparent and user-friendly information.
d. Close the nominal accounts to retained earnings. d. Neither achieving quicker and more efficient decisions nor improving investor relations through
4. Most accounting information systems comprise five generic elements. As a tool for preparing financial statements, provision of more transparent and user-friendly information.
XBRL is most closely associated with: 11. The text discussed five terms related to the structure of XBRL. Which of the following pairs of items includes two
a. Processing examples of the same term?
b. Input a. Balance sheet, Form 10-K
c. Output b. Global Ledger, International Financial Reporting
d. Storage c. Both balance sheet, Form 10-K and global Ledger, International Financial Reporting
5. XBRL's structure is flexible, so companies can extend it when the need arises. Which of the following terms is most d. Neither balance sheet, Form 10-K nor global Ledger, International Financial Reporting
likely to require an extension of an existing XBRL taxonomy? 12. From an accountant's perspective, one of the benefits of XBRL is the ability to focus effort on analysis and value-
a. Asset added work. Value-added work includes such items as
b. Operating cash flow a. Posting entries from the journal to the ledger.
c. Both Asset and Operating cash flow will likely require an extension of an existing taxonomy. b. Interpreting financial statement ratios.
d. Neither Asset nor Operating cash flow will likely require an extension of an existing taxonomy. c. Both posting entries from the journal to the ledger and interpreting financial statement ratios.
6. XBRL is structured into taxonomies which reside in namespaces. All of the following are namespaces except: d. Neither posting entries from the journal to the ledger nor interpreting financial statement ratios.
a. http://xbrl.us/country/2008-10-31 13. XBRL allows organizations to simplify the process and reduce the costs involved in regulatory reporting to
agencies such as:
b. http://xbrl.us/rr/2008-12-31
a. The IRS.
c. http://xbrl.us/mda/2008-10-31 b. The SEC.
d. http://xbrl.org c. Both the IRS and the SEC.
7. XBRL's global ledger taxonomy can be used for transaction processing, while the financial reporting taxonomy is d. Neither the IRS nor the SEC.
focused on output reports. Which of the following XBRL tags would you expect to find as part of the financial 14. Examples of XBRL tagging software include:
reporting taxonomy? a. Internet Explorer
a. <documentType>invoice</documentType> b. PowerPoint
b. <totalAssets>10000</totalAssets> c. Both Internet Explorer and PowerPoint
 d. Neither Internet Explorer nor PowerPoint a. The risk management framework only.
15. Most organizations use ___ to prepare XBRL instance documents. b. The internal control framework only.
a. Tagging software c. Both the risk management and internal control frameworks.
b. Document flowcharts d. Neither the risk management nor the internal control framework.
c. Both tagging software and document flowcharts 22. A disaster recovery plan is a good internal control for which of the following risks associated with XBRL?
d. Neither tagging software nor document flowcharts a. Tagging errors
16. XBRL allows organizations to focus effort on analysis, forecasting and decision making. Which of the following b. Software failure
includes one example of each of those tasks? c. Both tagging errors and software failure
a. Interpreting financial statement ratios, preparing a sales budget, raising or lowering prices d. Neither tagging errors nor software failure
b. Preparing a sales budget, forecasting future risks using the COSO framework, adopting new internal 23. Bumble Beasley commented: "I understand the benefits of XBRL, but tagging all our company's journal entries and
controls financial statements is too much work." Which of the following is the best response to Bumble's comment?
c. Interpreting financial statement ratios, forecasting future risks using the COSO framework, raising sales a. XBRL cannot be used to tag journal entries.
prices b. The tagging process can be automated.
d. Preparing a sales budget, lowering sales prices, creating a systems flowchart c. Both XBRL cannot be used to tag journal entries and the tagging process can be automated.
17. Tagging software is used to prepare XBRL: d. Neither XBRL cannot be used to tag journal entries nor the tagging process can be automated.
a. Instance documents 24. In connection with spreadsheets, Rivet Software and Ez-XBRL are best used for which of the following tasks?
b. Taxonomies a. Creating XBRL instance documents.
c. Namespaces b. Preparing presentations on XBRL.
d. Internal controls c. Both creating XBRL instance documents and preparing presentations on XBRL.
18. In connection with spreadsheets, Rivet Software and Ez-XBRL are best used for which of the following tasks? d. Neither creating XBRL instance documents nor preparing presentations on XBRL.
a. Creating XBRL instance documents. 25. Internal controls have four fundamental purposes. Which of the following pairs an internal control for XBRL with an
b. Preparing presentations on XBRL. appropriate purpose of internal control?
c. Both creating XBRL instance documents and preparing presentations on XBRL. a. Electronic tagging, promoting operating efficiency
d. Neither creating XBRL instance documents nor preparing presentations on XBRL. b. Centralized approval process for taxonomy additions, safeguarding assets
19. Internal controls have four fundamental purposes. Which of the following pairs an internal control for XBRL with an c. Both electronic tagging, promoting operating efficiency and centralized approval process for taxonomy
appropriate purpose of internal control? additions, safeguarding assets
a. Centralized approval process for taxonomy additions, encouraging compliance with management d. Neither electronic tagging, promoting operating efficiency nor centralized approval process for taxonomy
directives additions, safeguarding assets
b. Daily data backups, safeguarding assets 26. Compromised data and tagging errors are most closely associated with which element of the COSO enterprise risk
c. Both centralized approval process for taxonomy additions, encouraging compliance with management management framework?
directives and daily data backups, safeguarding assets a. Objective setting
d. Neither centralized approval process for taxonomy additions, encouraging compliance with management b. Internal environment
directives nor daily data backups, safeguarding assets c. Risk assessment
20. An internal auditor is given responsibility for reviewing selected XBRL-tagged documents as a form of internal d. Monitoring
control. If the internal auditor does not fulfill that responsibility, which of the following may help explain and correct 27. ABC Corporation, a manufacturer, files its 10-K annual report with the SEC using XBRL. Being a US manufacturer
the problem? tells ABC which ___ to use; the 10-K is a(n) ___.
a. Expectancy theory a. Taxonomy; instance document
b. Weighted-rating model b. Taxonomy; specification
c. Generic AIS elements c. Specification; instance document
d. AICPA Core Competencies framework d. Specification; taxonomy
21. COSO published two integrated frameworks to assist organizations in managing risk and developing internal 28. Because XBRL is an "open source" information technology tool, companies can:
controls. Organizations adopting XBRL could use: a. Add tags as necessary.
 b. Choose which tagging software they will use. b. Using XBRL for required SEC filings.
c. Both add tags as necessary and choose which tagging software they will use. c. Implementing general ledger software.
d. Neither add tags as necessary nor choose which tagging software they will use. d. Ensuring that the company is no lower than Level 3 on the capability maturity model.
29. Which of the following would most effectively be used to select XBRL tagging software? 6. The CEO and CFO of TNS Corporation wanted to expand into e-business, but the company's board of
a. Expectancy theory directors was unwilling to approve their plan. Which of the following theories will best help the CEO and
b. Weighted-rating model CFO persuade the board of directors to support their idea?
c. COSO enterprise risk management framework a. Capability maturity model
d. Accounting cycle b. Systems development life cycle
30. As a form of internal control to address the risk of inappropriate/missing authorizations, internal audit review of c. Expectancy theory
selected transactions is best described as: d. COSO enterprise risk management framework
a. A general control. 7. When the Internal Revenue Service encourages individual taxpayers to submit forms electronically, it is
b. An application control. engaging in which form of e-business?
c. A behavioral control. a. B2C
d. A financial control. b. G2C
c. C2C
Chapter 10
d. B2B
Quiz 2
8. Hewlett-Packard builds and sells computers and related accessories. It can engage in which of the
NAME: _________________________________________ SECTION: 3-____
following forms of e-business?
a. B2C
1. Which of the following is most closely related to one of the benefits of e-business discussed in the
b. B2B
text?
c. Both of these.
a. Internal controls
d. None of these.
b. Company finances
9. Which of the following statements about B2B e-business is most true?
c. Selling to a broader range of customers
a. Companies engaged in B2B can benefit from the COSO internal control and enterprise risk
d. All of these are related to benefits of e-business.
management frameworks.
2. WebTrust and SysTrust can be incorporated into an organization's:
b. Companies engaged in B2B must be at Level Three of the capability maturity model.
a. Internal control plan
c. The weighted-rating technique is irrelevant to companies engaged in B2B.
b. Enterprise risk management plan
d. Expansion into B2B is based on requirements analysis, the first step in the systems
c. Both internal control plan and enterprise risk management plan
development life cycle.
d. Neither internal control plan nor enterprise risk management plan
10. SBL Corporation is preparing to expand into B2B e-business. It is least likely to need which of the
3. TNS Corporation had been doing business via traditional brick-and-mortar methods for many years,
following database tables as part of its network?
then decided to expand into e-business. Based on the benefits and costs of e-business listed in the text,
a. Customer
which of the following numbers is likely to increase?
b. Employee
a. Sales
c. Business
b. Profits
d. Order
c. Prepaid assets
11. A modular information technology designed to provide comprehensive information about a company is
d. Retained earnings
called:
4. Costs associated with e-business include:
a. An enterprise resource planning system.
a. Financial costs associated with setting up networks.
b. A spreadsheet.
b. Need to develop different, better internal control systems.
c. A risk management plan.
c. Potential for customer distrust.
d. The accounting cycle.
d. All of these.
12. In which module of an ERP system would you expect to find the most detailed information about
5. The central feature of e-business is:
purchase orders?
a. Transacting business over a computer network.
 a. Customer relationship management 19. An organization is at the "chaotic" level of the capability maturity model. If it attempts to implement an
b. Human resource management ERP system, which of the following is most likely to cause the implementation to fail?
c. Supply chain management a. A bad match between ERP software and organizational processes.
d. Financial management b. Significant technical difficulties.
13. RVW Corporation uses an enterprise resource planning system. An accountant wants to create a report c. Both a bad match between ERP software and organizational processes and significant
of the last month's purchases sorted by vendor that also includes the name of the purchasing agent technical difficulties.
who assisted with each transaction. Which modules of the ERP system will provide the relevant d. Neither a bad match between ERP software and organizational processes nor significant
information? technical difficulties.
a. Supply chain management and human resource management 20. Expectancy theory is most likely to be helpful in addressing which of the following common causes of
b. Supply chain management and customer relationship management ERP implementation failure?
c. Customer relationship management and supply chain management a. Poor leadership from top management
d. Such a report cannot be generated from the ERP system. b. Automating existing redundant processes
14. Which modules in an ERP system are likely to contain information about a company's plant assets? c. Inaccurate data in the system
a. Supply chain management d. Significant technical difficulties
b. Financial management 21. Which of the following are conditions commonly associated with a successful ERP implementation?
c. Both supply chain management and financial management a. Obtaining organizational commitment
d. Neither supply chain management nor financial management b. Communicating strategic goals clearly
15. Modules in an ERP system that contain information about inventory include all the following except: c. Both obtaining organizational commitment and communicating strategic goals clearly
a. Customer relationship management d. Neither obtaining organizational commitment nor communicating strategic goals clearly
b. Human resource management 22. Umble and Umble suggested six necessary conditions for a successful ERP implementation. Which of
c. Supply chain management the conditions is most clearly related to the "internal environment" component of the COSO frameworks
d. Financial management on internal control and enterprise risk management?
16. An ERP system is a sophisticated form of relational database software; within each module, data are a. Obtain organizational commitment.
stored in tables. In which modules would you expect to find "employee ID" as a field in one or more b. Ensure data accuracy.
tables: (i) customer relationship management, (ii) human resource management, (iii) supply chain c. Select a compatible ERP system.
management? d. All of these.
a. I and II only 23. SPL Corporation is an information technology consulting firm with offices in six states. In implementing
b. I and III only an ERP system for its own use, management should be careful to:
c. II and III only a. Resolve multisite issues.
d. I, II and III b. Select a compatible ERP system.
17. Common causes of ERP implementation failure include: c. Both resolve multisite issues and select a compatible ERP system
a. Poor leadership from top management. d. Neither resolve multisite issues nor select a compatible ERP system
b. Unrealistic expectations. 24. Umble and Umble suggested six necessary conditions for a successful ERP implementation.
c. Both poor leadership from top management and unrealistic expectations. Expectancy theory can be useful in achieving all of the following conditions except:
18. Neither poor leadership from top management nor unrealistic expectationsTNG Corporation a. Obtaining organizational commitment.
implemented an ERP system using the steps in the systems development life cycle. Which of the b. Viewing ERP as an enterprise-wide venture.
following statements is most true? c. Resolving multisite issues.
a. The systems development life cycle is an inappropriate tool for implementing an ERP system. d. Ensuring data accuracy.
b. TNG is unlikely to suffer from poor project management. 25. An organization that provides a contractual service to deploy, host and manage applications for
c. Top management leadership is unnecessary when a company uses the systems development customers remotely from a centralized location is called an:
life cycle. a. Enterprise resource planning consultant
d. TNG can omit requirements analysis as a step in the systems development life cycle. b. Application service provider
c. Enterprise service provider
 d. Application service planning consultant 2. The terms target, instrumentality, incidental and associated from Carter's taxonomy are most closely associated
26. An ASP specializes in software applications for government agencies. It is best described as which type with which form of risk from Brown's taxonomy?
of ASP? a. Human error
a. Enterprise b. Liquidity
b. Vertical market c. Systems
c. Volume business d. Market
d. Application 3. George received an e-mail that threatened to release his personal financial data unless he paid a fee. Which
27. A corporation hired an ERP consultant to recommend an ASP for its payroll processing. In a systems category of computer crime best describes that situation?
flowchart of the payroll process, which of the following is most likely to be outside the system a. Target
boundary? b. Instrumentality
a. ERP consultant c. Incidental
b. ASP d. Associated
c. Both ERP consultant and ASP 4. George received an e-mail that threatened to release his personal financial data unless he paid a fee. That situation
d. Neither ERP consultant nor ASP is an example of:
28. With respect to an ASP, service interruptions and compromised data would be most effectively a. Extortion
addressed with:
b. Intrusion
a. An enterprise risk management plan.
c. Information manipulation
b. A systems flowchart.
d. Error
c. The steps in the accounting cycle.
5. Computer crimes that fall under Carter's "target" category are most closely associated with which generic element
d. The capability maturity model.
of an accounting information system?
29. Both e-business and ASPs can provide benefits for organizations. Which of the following best pairs a
potential benefit of e-business with a potential benefit of using an ASP? a. Processing
a. Quicker service delivery, increased flexibility b. Storage
b. Geographic market expansion, role in disaster recovery plans c. Both processing and storage
c. Quicker service delivery, role in disaster recovery plans d. Neither processing nor storage
d. Geographic market expansion, reduced consequences for technology breakdowns 6. Consider the following examples of computer crime as you answer the question:
30. Both e-business and ASPs create risks and costs for organizations. Which of the following best pairs a i. Social Security numbers are stolen from a company's database.
potential cost of e-business with a potential risk of using an ASP? ii. A fraudster uses a computer to identify people over the age of 80 with annual incomes of $250,000 or more.
a. Potential for customer distrust, inability to pay monthly fees iii. An employee receives threats from a co-worker via e-mail.
b. Financial costs associated with setting up networks, reduced flexibility iv. An unhappy customer launches a denial-of-service attack.
c. Potential for customer distrust, psychological & behavioral factors Carter's taxonomy of computer crime comprises four categories. Which of the following pairs includes two items
d. Financial costs associated with setting up networks, psychological & behavioral factors from the same category?
CHAPTER 11 a. I and II
QUIZ 3 b. II and III
c. II and IV
NAME: __________________________________________ SECTION 3-________ d. I and IV
1. According to Carter's taxonomy, use of a computer to further a criminal end refers to which of the following 7. Disclosure of confidential information is one risk associated with information technology. Which of the following
categories? would be considered confidential information?
a. Target a. The stock price of Microsoft
b. Instrumentality b. The book value of Disney Corporation's fixed assets
c. Incidental c. The social security numbers of GE's board of directors
d. Associated d. All of these are examples of confidential information.
8. The difference between "error" and "information manipulation" as business risks associated with information a. developing a comprehensive organizational budget.
technology is: b. deciding the dollar amount of an upcoming dividend.
a. The person's intent c. Both developing a comprehensive organizational budget and deciding the dollar amount of an upcoming
b. The kind of information involved dividend.
c. The potential dollar amount of the loss d. Neither developing a comprehensive organizational budget nor deciding the dollar amount of an
d. The classification on Carter's taxonomy upcoming dividend.
9. A firewall is an example of which type of control? 16. According to COBIT 5, an organization's information technology governance and management should cover the
a. Physical security enterprise end-to-end. Which of the following parts of an organization would likely need information on inventory
b. Technical security levels?
c. Administrative security a. production and operations
d. Enterprise security b. marketing
10. Which COBIT enabler focuses on things like product demand, employee satisfaction and vendor reliability? c. accounting
a. organizational structures d. all of these
b. information 17. COBIT's enablers include culture, ethics and behavior. Which element of the COSO internal control framework is
c. separating governance from management most closely related to that enabler?
d. meeting stakeholder needs a. control environment
11. At HCK Corporation, only employees in the information systems department can install new software on a b. control behaviors
computer. Which type of security control best describes that practice? c. behavioral environment
a. Physical d. all of these
b. Technical 18. COBIT's enablers include "information." According to ISACA, information is very often the key product of the
c. Administrative enterprise itself. Which of the following best exemplifies ISACA's explanation?
d. Practice a. A CPA firm
12. COBIT's enablers include services, infrastructure and applications. Which of the following best pairs one of those b. A computer manufacturer
with an example based on ISACA's explanation of the enabler? c. A textbook publisher
a. services, payroll department d. A college bookstore
b. applications, software that calculates payroll amounts 19. COBIT's enablers include people, skills and competencies. Functional competencies needed by accounting
c. Both services, payroll department and applications, software that calculates payroll amounts professionals include:
d. Neither services, payroll department nor applications, software that calculates payroll amounts a. legal/regulatory perspective
13. COBIT's enablers include organizational structures. Based on ISACA's explanation, which of the following are most b. measurement
appropriately paired? c. professional demeanor
a. sales/collection process, vice president of marketing d. all of these
b. conversion process, vice president of conversion 20. COBIT's enablers include people, skills and competencies. According to the AICPA, broad business perspective
c. human resources process, payroll clerk competencies needed by accounting professionals include:
d. financing process, bank teller a. legal and global
14. COBIT's enablers include principles, policies and frameworks. Which of the following provides the best example of b. legal and measurement
that enabler based on ISACA's explanation? c. global and measurement
a. a risk/control matrix d. legal, global and measurement
b. a comprehensive set of financial statements 21. Carter suggested a four-part taxonomy for classifying computer crime. Which of the following contains elements
c. a corporate tax return that would help an accounting professional prevent one or more of the four types?
d. all of these a. COBIT
15. According to COBIT 5, an organization's information technology governance and management should separate b. AICPA Core Competencies framework
governance from management. In that context, examples of governance include: c. Both COBIT and AICPA Core Competencies framework
 d. Neither COBIT nor AICPA Core Competencies framework d. none of these
22. COBIT's enablers include culture, ethics and behavior. Establishing an organizational culture that values honesty is 29. According to COBIT 5, an organization's information technology governance and management should apply a
least likely to prevent which of the following risks to information systems? single integrated framework for managing information. Which of the following best pairs an established framework
a. error with an element of the framework?
b. fraud a. FASB Conceptual Framework of Accounting, qualitative characteristics of internal control
c. extortion b. FASB Conceptual Framework of Accounting, elements of financial statements
d. malicious processes c. Both FASB Conceptual Framework of Accounting, qualitative characteristics of internal control and FASB
23. Which of the following best pairs a COBIT enabler with an element of the FASB conceptual framework of Conceptual Framework of Accounting, elements of financial statements
accounting? d. Neither FASB Conceptual Framework of Accounting, qualitative characteristics of internal control nor
a. processes, the process of producing financial statements FASB Conceptual Framework of Accounting, elements of financial statements
b. information, elements of financial statements 30. According to COBIT 5, an organization's information technology governance and management should apply a
c. culture, international elements of the conceptual framework single integrated framework for managing information. Which of the following best pairs an established framework
d. organizational structures, assumptions/principles/constraints on those structures with an element of the framework?
24. COBIT's principles include the need to separate governance from management. Based on Carter's taxonomy, which a. COSO enterprise risk management, cost of managing risk
types of computer crime are most likely to occur if governance and management are not separated? b. COSO internal control, risk/control matrix
a. target and instrumentality c. Both COSO enterprise risk management, cost of managing risk and COSO internal control, risk/control
b. incidental and associated matrix
c. target and associated d. Neither COSO enterprise risk management, cost of managing risk nor COSO internal control, risk/control
d. Cannot be determined from the information given matrix
25. According to ISACA, one of COBIT's enablers is required for keeping the organization running and well governed;
that enabler is often the key product of the enterprise itself. It is therefore most closely related to which generic CHAPTER 12
element of the accounting information system? QUIZ 4
a. inputs NAME: ___________________________________ SECTION 3- ______
b. internal control
c. storage 1. The fundamental purpose of the sales/collection process is to:
d. outputs a. Provide goods and services to clients.
26. Following the principles and enablers of COBIT will enable organizations to better: b. Collect payment from them.
a. apply the systems development life cycle. c. Both provide goods and services to clients and collect payment from them.
b. address all elements of the C-I-A triad. d. Neither provide goods and services to clients nor collect payment from them.
c. focus on technical controls, since they are generally more important than physical and administrative 2. The sales/collection process is important in organizations because:
controls. a. Without it, an organization may soon cease to exist.
d. ensure that they address all categories of Brown's risk taxonomy. b. It is the only method an organization has for generating cash flow.
27. Which of the following best pairs a COBIT enabler with a broad category of information technology controls? c. Both without it, an organization may soon cease to exist and it is the only method an organization has for
a. processes, process controls generating cash flow.
b. policies, administrative controls d. Neither without it, an organization may soon cease to exist nor it is the only method an organization has
c. behavior, behavioral controls for generating cash flow.
d. information, C-I-A triad controls 3. Which of the following internal controls can be applied to the sales/collection process based on the role and
28. According to ISACA, one of COBIT's enablers is an organized set of practices and activities to achieve certain purpose of the process?
objectives. That enabler is most closely related to: a. Separation of duties
a. the steps in the accounting cycle b. Bank reconciliation
b. Brown's risk taxonomy c. Both separation of duties and bank reconciliation
c. Carter's taxonomy d. Neither separation of duties nor bank reconciliation
4. Which of the following statements about the role and purpose of the sales/collection process is most true? 10. Accounting information systems have five generic elements. Which of the following would most appropriately be
a. Only organizations that sell goods on credit have a true sales/collection process. labeled "storage" within the context of the sales/collection process?
b. Government organizations do not need a sales/collection process. a. A paper file of outstanding customer invoices
c. Both only organizations that sell goods on credit have a true sales/collection process and government b. An electronic database of sales transactions
organizations do not need a sales/collection process are true. c. Both a paper file of outstanding customer invoices and an electronic database of sales transactions
d. Neither only organizations that sell goods on credit have a true sales/collection process nor government d. Neither a paper file of outstanding customer invoices nor an electronic database of sales transactions
organizations do not need a sales/collection process is true. 11. The adjective "pre-numbered" is associated with which generic element of an accounting information system?
5. Which of the following is an example of the second step in the sales/collection process? a. Input
a. A customer completes a form on the Internet. b. Internal control
b. A sales clerk scans the customer's credit card. c. Both input and internal control
c. The accounting department sends an invoice to the customer. d. Neither input nor internal control
d. The cash receipts department processes the customer's check. 12. A remittance advice is an example of which generic element of an accounting information system?
6. In a paper on the role and purpose of the sales/collection process, Bumble Beasley wrote: "The sales/collection a. Document
process is exclusively concerned with selling products on credit and collecting cash from clients." Which of the b. Storage
following should be deleted from his statement? c. Both document and storage
a. Exclusively d. Neither document nor storage
b. Selling products on credit 13. The phrase "primary key" is most closely associated with which generic element of an accounting information
c. Collecting cash system?
d. From clients a. Storage
7. "The appropriate department processes the customer's check" is an example of which step in the sales/collection b. Database
process? c. Both storage and database
a. Third d. Neither storage nor database
b. Fifth 14. Common transactions in the sales/collection process include:
c. Sixth a. Selling goods on credit.
d. Last b. Receiving cash on account.
8. As a form of internal control, pre-numbered documents can be related to which steps in the sales/collection c. Both selling goods on credit and receiving cash on account.
process? d. either selling goods on credit nor receiving cash on account
a. First 15. Which of the following transactions would be appropriately processed in the sales/collection process?
b. Fifth a. THT Corporation purchased merchandise on account from HRS Corporation.
c. Both first and fifth b. HRS Corporation received cash from THT Corporation for a previous sale on account.
d. Neither first nor fifth c. Both THT Corporation purchased merchandise on account from HRS Corporation and HRS Corporation
9. Consider the following statements as you answer the question: received cash from THT Corporation for a previous sale on account.
i. Felix, a cash receipts clerk, applied Allison's payment to the invoices indicated on her remittance advice. d. Neither THT Corporation purchased merchandise on account from HRS Corporation nor HRS Corporation
ii. In purchasing books, Allison filled out a form on a bookstore's web site. received cash from THT Corporation for a previous sale on account.
iii. The bookstore's web site verified Allison's credit limit. 16. Internal controls that address liquidity risk include:
iv. William, a warehouse worker, prepared Allison's books for shipment. a. Sales and cash collections budgets.
Which of these statements most clearly relates to the third step in the sales/collection process? b. Aggressive collection policies.
a. i c. Both sales and cash collections budgets and aggressive collection policies.
b. ii d. Neither sales and cash collections budgets nor aggressive collection policies.
c. iii 17. Internal controls in the sales/collection process include:
d. iv a. Pre-numbered documents.
b. Adequate supervision.
 c. Bank reconciliations. 24. Consider the following information items as you respond to the question:
d. All of these. i. Customer master file
18. Sally, a sales representative for WER Corporation, ensures that she does a thorough credit check for customers ii. Journal entry to record the receipt of cash
who want to purchase goods on account. The most important internal control WER should implement is: iii. Pre-numbered documents
a. Separation of duties. iv. Schedule of accounts receivable
b. Adequate documentation. Accounting information systems have five generic elements, one of which can be directly applied to the other four.
c. A risk management plan. Which information item above best exemplifies that element?
d. Employee training. a. Customer master file as an output of the AIS
19. Internal controls that address liquidity risk include: b. Journal entry to record the receipt of cash as a process of the AIS
e. Sales and cash collections budgets. c. Pre-numbered documents as an internal control in the AIS
f. Aggressive collection policies. d. None of these.
g. Both sales and cash collections budgets and aggressive collection policies. 25. Consider the following information items as you respond to the question:
h. Neither sales and cash collections budgets nor aggressive collection policies. i. Customer master file
20. Internal controls in the sales/collection process include: ii. Journal entry to record the receipt of cash
e. Pre-numbered documents. iii. Pre-numbered documents
f. Adequate supervision. iv. Schedule of accounts receivable
g. Bank reconciliations. Accounting information systems have five generic elements. Which of the following statements is most true?
h. All of these. a. All five generic elements are represented in the four information items.
21. Sally, a sales representative for WER Corporation, ensures that she does a thorough credit check for customers b. The information items omit anything related to outputs of the AIS.
who want to purchase goods on account. The most important internal control WER should implement is: c. The information items omit anything related to processing in the AIS.
e. Separation of duties. d. Both the information items omit anything related to outputs of the AIS and the information items omit
f. Adequate documentation. anything related to processing in the AIS are true.
g. A risk management plan. 26. Consider the following information items as you respond to the question:
h. Employee training. i. Customer master file
22. CRX Corporation uses general ledger software as a processing tool in its accounting information system, which ii. Journal entry to record the receipt of cash
creates certain risk exposures. Internal controls to address those risk exposures include: iii. Pre-numbered documents
a. Daily file backup. iv. Schedule of accounts receivable
b. Periodic employee training. Accounting information systems have five generic elements. Which of the following is an example of the same
c. Both daily file backup and periodic employee training. element as "pre-numbered documents?"
d. Neither daily file backup nor periodic employee training. a. Adequate supervision
23. Consider the following information items as you respond to the question: b. Balance sheet
i. Customer master file c. Both adequate supervision and balance sheet
ii. Journal entry to record the receipt of cash d. Neither adequate supervision nor balance sheet
iii. Pre-numbered documents 27. Consider the following short case as you respond to the question:
iv. Schedule of accounts receivable VLC Corporation sold merchandise with a cost of P200.00 on account for P300.00 to PRT Corporation; credit terms
Accounting information systems have five generic elements. Which of the following statements is most true? were 2/10, n/30. VLC paid the outgoing freight charge of P10.00. PRT paid the invoice within the discount period.
a. "Pre-numbered documents" can be an example of three of the five elements. Inclusive of all the transactions that affect the income statement, VLC's gross profit on the sale was:
b. "Schedule of accounts receivable" can be an example of all five elements. a. P100.00
c. Both "Pre-numbered documents" can be an example of three of the five elements and "Schedule of b. P90.00
accounts receivable" can be an example of all five elements are true. c. P94.00
d. Neither "Pre-numbered documents" can be an example of three of the five elements nor "Schedule of d. P84.00
accounts receivable" can be an example of all five elements is true. 28. Internal controls that address liquidity risk include:
 a. Sales and cash collections budgets. 5. Which of the following balance sheet items is least likely to be associated with the acquisition/payment process?
b. Aggressive collection policies. a. Cash
c. Both sales and cash collections budgets and aggressive collection policies. b. Accounts payable
d. Neither sales and cash collections budgets nor aggressive collection policies. c. Raw materials
29. Internal controls in the sales/collection process include: d. Treasury stock
a. Pre-numbered documents. 6. Which of the following balance sheet items are commonly associated with the acquisition/payment process?
b. Adequate supervision. a. Inventory and accounts payable
c. Bank reconciliations. b. Purchases and accounts receivable
d. All of these. c. Cash paid to vendors
30. Sally, a sales representative for WER Corporation, ensures that she does a thorough credit check for customers d. Cash received from the sale of inventory
who want to purchase goods on account. The most important internal control WER should implement is:
a. Separation of duties. 7. Which of the following can serve as the basis for completing the first step in the acquisition/payment process?
b. Adequate documentation. a. Information technology
c. A risk management plan. b. Human judgment
d. Employee training. c. The passage of time
1. The primary purpose of the acquisition/payment process is to: d. All of these
a. Obtain the resources the organization needs.
b. Pay for the resources the organization needs. 8. The second step in the acquisition/payment process promotes strong internal control through:
c. Both obtain the resources the organization needs and pay for the resources the organization needs. a. Properly labeled documents.
d. Neither obtain the resources the organization needs nor pay for the resources the organization needs. b. Separation of duties.
2. The acquisition/payment process helps an organization create value for its stakeholders. Which of the following c. Both properly labeled documents and separation of duties.
authors developed a model that assists in understanding value creation? d. Neither properly labeled documents nor separation of duties.
a. Porter
b. Vroom 9. The acquisition/payment process includes all of the following steps except:
c. Pacioli a. Authorize a purchase.
d. Gates b. Prepare adjusting journal entries.
3. The acquisition/payment process: c. Receive goods and services.
a. Helps an organization create value for its stakeholders. d. Disburse cash.
b. Can only be applied if an organization sells a product.
c. Both helps an organization create value for its stakeholders and can only be applied if an organization 10. SCP Corporation purchased inventory on account from OBP Corporation. Which of the following occurred first?
sells a product. a. The first step in OBP's sales/collection process
d. Neither helps an organization create value for its stakeholders nor can only be applied if an organization b. The first step in SCP's acquisition/payment process
sells a product. c. A value chain analysis of the transaction
4. The items and activities commonly associated with the acquisition/payment process can be seen in: d. Management approval of the transaction
a. The income statement only.
b. The balance sheet only. 11. Which of the following statements about the acquisition/payment process is least true?
c. The statement of cash flows only. a. The same document is an output of the first step and an input to the second step.
d. All of these. b. The document commonly used in the second step is both an output and an input.
c. The document commonly used in the second step is never used in other steps of the acquisition/payment
process.
d. Many documents from the first step can be combined into a single document in the second step.
12. The fifth step in the acquisition/payment process promotes strong internal control through: a. Purchase order prepared by hand
a. Bank reconciliations. b. Schedule of accounts payable prepared with Excel
b. Separation of duties. c. Both purchase order prepared by hand and schedule of accounts payable prepared with Excel
c. Both bank reconciliations and separation of duties. d. Neither purchase order prepared by hand nor schedule of accounts payable prepared with Excel
d. Neither bank reconciliations nor separation of duties.
19. Accounting information systems have five generic elements. Which of the following pairs includes examples of two
13. Which of the following statements about the acquisition/payment process is most true? different elements within the context of the acquisition/payment process?
a. A single document can be either an input or an output, but never both. a. Purchase requisition and schedule of accounts payable
b. Many documents from the first step can be combined into a single document in the second step. b. Journal entry that debits inventory and credits cash
c. Both a single document can be either an input or an output, but never both, and many documents from c. Separation of duties and a blind copy of the receiving report
the first step can be combined into a single document in the second step are true. d. All of these
d. Neither a single document can be either an input or an output, but never both, nor many documents from
the first step can be combined into a single document in the second step is true. 20. Accounting information systems have five generic elements. Which of the following pairs includes two examples of
the same element within the context of the acquisition/payment process?
14. Transactions involved in the acquisition/payment process include: a. Purchase order and schedule of accounts payable
a. Debit inventory, credit cash b. Purchase order and adequate documentation
b. Debit inventory, credit accounts payable c. Schedule of accounts payable and adequate documentation
c. Debit accounts payable, credit cash d. All of these
d. All of these
21. Journal entries commonly processed as part of the acquisition/payment process can include:
15. As a form of internal control, separation of duties can be applied to which steps in the acquisition/payment a. Debits to inventory.
process? b. Credits to accounts payable.
a. Second step c. Credits to cash.
b. Fourth step d. All of these.
c. Fifth step
d. All of these 22. The journal entry to record the purchase of inventory on account is:
a. Debit inventory, credit accounts payable.
16. Which of the following documents associated with the acquisition/payment process is most likely to lead to a b. Debit accounts payable, credit inventory.
journal entry that debits inventory and credits accounts payable? c. Debit inventory, credit cash.
a. Purchase requisition, purchase order and receiving report d. Debit accounts payable, credit cash.
b. Purchase order, receiving report and invoice
c. Purchase requisition, receiving report and invoice 23. BSP Corporation wrote a check to RSR Corporation, one of its vendors. On the remittance advice, BSP indicated
d. None of these which invoices it was paying. Which of the following statements is most true?
a. BSP Corporation uses the open invoice method.
17. Which of the following can serve as both an input to and an output of the acquisition/payment process? b. RSR Corporation uses the open invoice method.
a. Check c. BSP Corporation uses the balance forward method.
b. Purchase order d. If RSR uses the open invoice method, BSP must also use the open invoice method.
c. Both check and purchase order
d. Neither check nor purchase order 24. One output of the accounting information system is the balance sheet. Transactions commonly associated with an
organization's acquisition/payment process are most likely to be reflected in which sections of balance sheet?
18. Which of the following items associated with the acquisition/payment process is likely to expose an organization to a. Current assets and current liabilities
one or more forms of operational risk? b. Current assets and long-term liabilities
 c. Long-term assets and current liabilities b. Human error risk and liquidity risk.
d. Long-term assets and long-term liabilities c. Liquidity risk and systems risk.
d. Human error risk, systems risk and liquidity risk.
25. One output of the accounting information system is the statement of cash flows. Transactions commonly
associated with an organization's acquisition/payment process are most likely to be reflected in which section of 30. Which of the following serve as examples of strong separation of duties within the context of the
the statement of cash flows? acquisition/payment process?
a. Operating a. Establishing a purchasing department
b. Investing b. Requiring all purchases over $500 to be approved by a manager
c. Financing c. Both establishing a purchasing department and requiring all purchases over $500 to be approved by a
d. Non-cash investing and financing manager
26. Internal controls associated with the acquisition/payment process include: d. Neither establishing a purchasing department nor requiring all purchases over $500 to be approved by a
a. Separation of duties. manager
b. Adequate documentation. 1. The purpose of an organization's conversion process is:
c. Both separation of duties and adequate documentation. a. To transform raw materials into finished products.
d. Neither separation of duties nor adequate documentation. b. To determine if the company should use process costing.
c. Both to transform raw materials into finished products and to determine if the company should use
27. As a form of internal control within the acquisition/payment process, internal auditors are most likely to: process costing.
a. Prevent or detect a problem. d. Neither to transform raw materials into finished products nor to determine if the company should use
b. Prevent or correct a problem. process costing.
c. Detect or correct a problem.
d. None of these; internal auditors are not a form of internal control for the acquisition/payment process. 2. The conversion process involves three common resources: material, direct labor and overhead. Which of the
following is an example of material in that context?
28. Internal controls in the acquisition/payment process should address which of the following forms of risk? a. Paper used to create a textbook.
a. Liquidity risk b. Tires used to manufacture a truck.
b. Human error risk c. Both paper used to create a textbook and tires used to manufacture a truck.
c. Both liquidity risk and human error risk d. Neither paper used to create a textbook nor tires used to manufacture a truck.
d. Neither liquidity risk nor human error risk
3. The purpose of the conversion process is to transform material, labor and overhead into a finished product. Which
29. Consider the following short case as you respond to the question: system would an organization that manufactures decks of playing cards use for that purpose?
Abruzzi's Italian Kitchen is a small family restaurant with an administrative staff of four people. Giuseppi Abruzzi is a. Job order
the chief executive officer; his wife Maria is the chief financial officer. Their son Antonio is responsible for all b. Process
transactions dealing with kitchen supplies, including the raw materials for menu items; their son Carlo is c. Hybrid
responsible for all transactions dealing with dining room supplies, such as eating utensils. The restaurant's d. Some other system
administrative practices have developed over the ten years of its existence with minimal reliance on information
technology and formal procedures and a stronger emphasis on interpersonal relationships with a few reliable 4. The purpose of the conversion process is to transform material, labor and overhead into a finished product. To
vendors. Once a month, Antonio places orders for kitchen supplies with one of four vendors based on price; the accomplish that purpose, organizations can use one of three systems. Which of the following pairs includes
supplies are usually received within ten calendar days. On receipt of the supplies, Antonio pays the vendor with a examples of products that would use the same system?
company check. Carlo follows a similar process for dining room supplies, but works with a set of three vendors, a. Decks of playing cards, compact discs
none of which sell kitchen supplies. b. Compact discs, made-to-order smoothies
c. Decks of playing cards, made-to-order smoothies
Abruzzi's Italian Kitchen is exposed to: d. All of the pairs would use the same system.
a. Systems risk and human error risk.
5. The purpose of the conversion process is to transform material, labor and overhead into a finished product. To c. Hours worked
accomplish that purpose, organizations can use one of three systems. Which of the following pairs includes d. Total amount paid
examples of products that would use different systems?
a. Decks of playing cards, compact discs 11. Which of the following internal controls could be applied to the creation of Form W-2 in the human resources
b. Compact discs, made-to-order smoothies process?
c. Custom-built homes, original works of art a. Use of information technology
d. Plastic bottles, aluminum cans b. Internal audits
c. Both use of information technology and internal audits
6. The purpose of the conversion process is to transform material, labor and overhead into a finished product. To d. Neither use of information technology nor internal audits
accomplish that purpose, organizations can use one of three systems. Which of the following pairs would be
accounted for using a job costing system? 12. One of the transactions commonly associated with the financing process is the distribution of dividends.
a. Decks of playing cards, compact discs Information needed to process that transaction includes:
b. Plastic bottles, aluminum cans a. Shareholder identification data.
c. Custom-built homes, original works of art b. Type of dividend.
d. Decks of playing cards, made-to-order smoothies c. Both shareholder identification data and type of dividend.
d. Neither shareholder identification data nor type of dividend.
7. Accounting information systems have five basic elements. Which of the following would be associated with the
human resource process? 13. On May 1, CGI Corporation declared cash dividends on its common stock. The dividend was payable on May 15 to
a. Payroll transactions shareholders of record on May 5. Which of the following entries will CGI make on May 5 in its accounting
b. Performance evaluations information system?
c. Both payroll transactions and performance evaluations a. Debit retained earnings, credit dividends payable
d. Neither payroll transactions nor performance evaluations b. Debit dividends payable, credit cash
c. Debit retained earnings, credit cash
8. Accounting information systems have five basic elements. Which of the following is an internal control associated d. None of these
with the human resources process?
a. Adequate supervision 14. As part of the financing business process, corporations may need to account for an initial public offering. How
b. Procedures manuals many different forms of a prospectus are parts of the IPO based on the seven steps listed in the text?
c. Both adequate supervision and procedures manuals a. Two
d. Neither adequate supervision nor procedures manuals b. Three
c. Four
9. CGI Corporation uses a process costing system to manufacture its product. As part of the processing activities in d. Some other number
its human resource process, which of the following would CGI use to record payroll costs of its factory workers?
a. Debit work in process, credit wages payable 15. CGI Corporation was preparing to issue long-term debt securities. They planned to pay 10% interest semi-annually,
b. Debit wages expense, credit wages payable although investments of similar risk were paying 12% at the time. Which of the following terms best describes the
c. Debit wages payable, credit cash 12% interest rate?
d. Debit wages expense, credit retained earnings a. Coupon
b. Market
10. CGI Corporation requires new employees to establish their payroll withholding information for its human resources c. Relevant
process; CGI reports year-end information for tax purposes electronically to its employees. Which of the following d. Current
pieces of information is both an input for the former and an output of the latter?
a. Employee identification data 16. Separation of duties can promote strong internal control in the conversion process. Which three duties should be
b. Employer identification data separated?
 a. Physical custody, authorization and recordkeeping
b. Direct material, labor and overhead processing 22. A systems flowchart of the financing process is likely to include which of the following column headings?
c. Assets, liabilities and equity a. Debt and equity
d. Job order, process and hybrid b. Cash dividends and stock dividends
c. Both debt and equity and cash dividends and stock dividends
17. In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due d. Neither debt and equity nor cash dividends and stock dividends
to poor quality in a recent batch of raw materials, he used an average of four pounds. Which of the following 23. Missouri Can Corporation (MCC) manufactures and sells a variety of can types, such as soft drink cans, oil cans
internal controls would prevent the problem in the future? and many others. MCC has adopted a functional organization structure that includes departments for accounting,
a. Closer inspection of deliveries marketing, manufacturing, human resources and information systems. Which of the following departments deal
b. More frequent performance evaluations for Mike with support activities in Porter's value chain?
c. Both closer inspection of deliveries and more frequent performance evaluations for Mike a. information systems and human resources
d. Neither closer inspection of deliveries nor more frequent performance evaluations for Mike b. marketing and manufacturing
c. information systems and marketing
18. Factory workers at OMI Corporation are scheduled to work forty hours per week, but frequently work forty-five d. human resources and manufacturing
hours per week, leading to increased payroll costs for OMI. Which of the following statements is most true?
a. OMI is exposed to liquidity risk. 24. Within the context of the financing process, separation of duties means:
b. OMI should consider expanding its workforce as a form of internal control. a. The accounting department cannot issue dividend checks without the approval of the board of directors.
c. Both OMI is exposed to liquidity risk and OMI should consider expanding its workforce as a form of b. An accountant who prepares dividend checks cannot also prepare checks for repayment of long-term
internal control are true. debt.
d. Neither OMI is exposed to liquidity risk nor OMI should consider expanding its workforce as a form of c. Both the accounting department cannot issue dividend checks without the approval of the board of
internal control is true. directors and an accountant who prepares dividend checks cannot also prepare checks for repayment of
long-term debt are true.
19. Which of the following best pairs a financing process risk with an internal control that will address the risk? d. Neither the accounting department cannot issue dividend checks without the approval of the board of
a. Sending a dividend check to the wrong shareholder, electronic database directors nor an accountant who prepares dividend checks cannot also prepare checks for repayment of
b. Falling stock prices due to profit restatements, independent audits long-term debt is true.
c. Failure to receive IPO approval from the SEC, separation of duties
d. Inability to pay dividends because of a cash shortage, corporate line of credit 25. In manufacturing units of Product A27, Mike is supposed to use three pounds of raw material for each unit. But, due
to poor quality in a recent batch of raw materials, he used an average of four pounds. Mike's company is therefore
20. Which of the following best pairs a financing process risk with an internal control that will address the risk? exposed to ___ risk.
a. Poorly trained employees in the finance department, required annual training a. Hazard
b. Inability to make required payments on long-term debt, properly developed cash budget b. Human error
c. Both poorly trained employees in the finance department, required annual training and inability to make c. Credit
required payments on long-term debt, properly developed cash budget d. Market
d. Neither poorly trained employees in the finance department, required annual training nor inability to make
required payments on long-term debt, properly developed cash budget 26. Adequate documentation can promote strong internal control in the conversion process. All of the following
documents are used in the conversion process except:
21. NCD Corporation pays annual dividends to its shareholders. A REA model of that process is likely to include which a. Materials requisition.
of the following as internal agents? b. Labor time ticket.
a. Shareholders c. Materials move ticket.
b. Board of directors d. Form W-2.
c. Both shareholders and board of directors
d. Neither shareholders nor board of directors
27. Separation of duties can promote strong internal control in the conversion process. Which three duties should be d. More than five, since there were more than five applicants.
separated? 1. When a decision maker reaches the point where the amount of information actually integrated into a decision
a. Physical custody, authorization and recordkeeping begins to decline, the decision maker is experiencing:
b. Direct material, labor and overhead processing a. Information asymmetry.
c. Assets, liabilities and equity b. Information overload.
d. Job order, process and hybrid c. Enterprise risk.
d. Relapse errors.
28. CGI Corporation had 10,000 shares of P2.00 par common stock outstanding; the shares had been issued at P5.00
per share. At the end of March 2011, CGI declared a P3.00 cash dividend per share when the market price of the 2. In response to information overload, decision makers can:
stock was P8 .00 per share. After processing the dividend transaction, the balance in CGI's common stock account a. Allow more time to complete important tasks.
will be: b. Rely on informal language to describe information.
a. P20,000. c. Both allow more time to complete important tasks and rely on informal language to describe information.
b. P30,000. d. Neither allow more time to complete important tasks nor rely on informal language to describe
c. P50,000. information.
d. Some other amount.
3. Jon attempted to read an advanced accounting text after sleeping four hours the previous night. Which of the
29. CGI Corporation had 10,000 shares of P2.00 par common stock outstanding; the shares had been issued at P5.00 following statements is most true?
per share. At the end of March 2011, CGI declared a P3.00 cash dividend per share when the market price of the a. He is experiencing information overload from personal factors.
stock was P8.00 per share. Which of the following statements is most true? b. He is experiencing information overload from information characteristics.
c. Both he is experiencing information overload from personal factors and he is experiencing information
overload from information characteristics.
a. The P3.00 cash dividend per share is determined by analyzing the difference between the issuance price d. Neither he is experiencing information overload from personal factors nor he is experiencing information
and the market value of the stock. overload from information characteristics.
b. The P3.00 cash dividend per share is determined by analyzing the difference between the issuance price
and the par value of the stock. 4. Jon continually worked on a team that experienced a lot of non-productive conflict. Which of the following best
c. CGI can process the dividend payment using only the information specified above. describes Jon's behavior?
d. None of these statements is true. a. Satisficing
b. Bounded rationality
30. Consider the following short case as you respond to the question: c. Relapse errors
When the CEO of NTL Corporation resigned, the board of directors hired a recruitment firm to look for a d. Knowledge management
replacement. The recruitment firm prepared several job announcements, then presented them to the board of
directors. The board of directors approved one of the job announcements; the recruitment firm used it to advertise 5. Ways to combat information overload include:
the position on the Internet and in relevant newspapers and professional publications. After receiving several a. Applying effective models for making decisions.
applications, the recruitment firm selected a pool of ten to pass on to NTL's board of directors. The board of b. Managing knowledge.
directors, with the assistance of the recruitment firm, went through three rounds of interviews, narrowing the pool c. Both applying effective models for making decisions and managing knowledge.
from ten to three. Each of the three finalists prepared a presentation on the strategic future of NTL and delivered the d. Neither applying effective models for making decisions nor managing knowledge.
presentation at a meeting of NTL shareholders. The board of directors then made the final choice for a new CEO.
6. The generalized set of processes people use to gather, organize and retain information is often called:
A systems flowchart of the case is likely to be divided into how many columns? a. Bounded rationality.
a. One, since all activities are associated with the human resource process. b. Knowledge management.
b. Two or three, one of which may be "applicants" c. Enterprise risk management.
c. Four or five, one of which would be "NTL shareholders" d. Enterprise resource planning.
7. Objectives of knowledge management include: 13. After attending a seminar on the importance of knowledge management, the managers of TCH Corporation
a. Creating knowledge repositories. developed a set of objectives their knowledge management system should address. As their next step, the
b. Improving knowledge access. managers should:
c. Both creating knowledge repositories and improving knowledge access. a. Lay out database specifications for the system.
d. Neither creating knowledge repositories nor improving knowledge access. b. Interview employees to determine their level of knowledge and misunderstanding of organizational
processes.
8. Knowledge: c. Both lay out database specifications for the system and interview employees to determine their level of
a. Is an element of financial statements. knowledge and misunderstanding of organizational processes.
b. Should be managed. d. Neither lay out database specifications for the system nor interview employees to determine their level of
c. Both is an element of financial statements and should be managed. knowledge and misunderstanding of organizational processes.
d. Neither is an element of financial statements nor should be managed. 14. After developing a set of objectives their knowledge management system should address, the managers of TCH
9. Brown's taxonomy of risk includes "systems risk" as a form of operational risk. An organization creating a Corporation distributed a survey to employees, followed by a series of focus groups designed to identify issues
knowledge management system has the greatest exposure to systems risk in which of the seven steps for creating such as duplication, gaps and overlaps in knowledge. To complete the next step in creating TCH's knowledge
the knowledge management system? management system, the managers could use a:
a. The fourth step a. Flowchart.
b. The fifth step b. Data flow diagram.
c. The sixth step c. REA model.
d. All seven steps d. None of these.
15. The systems development life cycle would be most useful in the ___ step to create a knowledge management
10. Isabella is the CEO of BHR Corporation. By virtue of her position, she is in the best position to complete which of system.
the seven steps involved in creating a knowledge management system? a. First
a. The first step b. Sixth
b. The third step c. Both the first and the sixth
c. The fourth step d. Neither the first nor the sixth
d. The sixth step
16. After developing a set of objectives their knowledge management system should address, the managers of TCH
11. In preparation for her retirement, Debra, the chief information officer of TPC Corporation, developed a diagram that Corporation distributed a survey to employees, followed by a series of focus groups designed to identify issues
showed all her areas of responsibility and how they were related to one another. Her actions contributed to which of such as duplication, gaps and overlaps in knowledge. To complete the next step in creating TCH's knowledge
Call's seven steps for creating a knowledge management system? management system, the managers could use a:
a. The first step only. a. Flowchart.
b. The fourth step only. b. Data flow diagram.
c. Both the first and fourth steps. c. REA model.
d. Neither the first nor the fourth step. d. None of these.

12. One step in developing a knowledge management system is to create a visual map that describes units of 17. Which of the following statements about information overload and accounting information systems is most true?
knowledge and the relationships between them. In creating a knowledge management system focused on internal a. Even with a properly designed AIS, decision makers can experience information overload.
control, such a map might include which of the following? b. A well designed AIS can help decision makers manage information overload.
a. COSO framework c. Both even with a properly designed AIS, decision makers can experience information overload and a well
b. COBIT framework designed AIS can help decision makers manage information overload are true.
c. Both COSO framework and COBIT framework d. Neither even with a properly designed AIS, decision makers can experience information overload nor a
d. Neither COSO framework nor COBIT framework well designed AIS can help decision makers manage information overload is true.
18. Knowledge management is important to the study of accounting information systems because, like business 23. Examples of Step 1 in Steps for Better Thinking include:
processes, it: a. Recognizing the need to create an enterprise risk management plan.
a. Represents one way to create value for stakeholders. b. Learning about the eXtensible Business Reporting Language.
b. Crosses functional boundaries such as the accounting department and the purchasing department. c. Both recognizing the need to create an enterprise risk management plan and learning about the
c. Both represents one way to create value for stakeholders and crosses functional boundaries such as the eXtensible Business Reporting Language.
accounting department and the purchasing department. d. Neither recognizing the need to create an enterprise risk management plan nor learning about the
d. Neither represents one way to create value for stakeholders nor crosses functional boundaries such as eXtensible Business Reporting Language.
the accounting department and the purchasing department.
24. In which stage of Steps for Better Thinking should a decision maker interpret and organize information?
19. Knowledge management is important to the study of accounting information systems because: a. Identifying
a. Information technology is an essential part of both knowledge management and AIS. b. Exploring
b. Knowledge is an important asset on the balance sheet. c. Prioritizing
c. Both information technology is an essential part of both knowledge management and AIS and knowledge d. Envisioning
is an important asset on the balance sheet.
d. Neither information technology is an essential part of both knowledge management and AIS nor 25. The COSO internal control framework includes "monitoring" as one component. Monitoring is most similar to which
knowledge is an important asset on the balance sheet. step in Steps for Better Thinking?
a. Identifying
20. Amanda is a partner in a CPA firm; she supervises a staff of ten professionals, some of whom are already licensed b. Exploring
CPAs and some of whom are still working toward licensure. She is responsible for audits of independent c. Prioritizing
bookstores in California, Nevada and Arizona. Amanda is concerned that the less experienced professionals she d. Envisioning
supervises are repeating the mistakes she and the more experienced professionals on her team made when they
began auditing. She therefore wants to create a knowledge management system. 26. Big Data can arise from two broad types of sources. Which of the following best pairs one type with an example?
a. accounting, trial balance
The less experienced accountants on Amanda's team are suffering from: b. marketing, customer preferences
a. Relapse errors. c. digital, query results from a relational database
b. Satisficing. d. All of these
c. Bounded rationality.
d. Lack of information technology. 27. Big Data can originate:
21. Call suggested seven steps for creating a knowledge management system. How are those seven steps similar to the a. from inside a company only.
COSO internal control framework? b. from outside a company only.
a. They both involve organizational culture. c. either inside or outside a company.
b. They both require some form of system documentation, such as a flowchart. d. only from the accounting information system.
c. Both involve organizational culture and require some form of system documentation, such as a flowchart
d. Neither involve organizational culture nor require some form of system documentation, such as a 28. All of the following are types of Big Data except:
flowchart a. big transaction data.
b. web and social media data.
22. Steps for Better Thinking involves all of the following stages except: c. biometric data.
a. Identifying. d. accounting data.
b. Exploring. 29. Decision makers can analyze Big Data using all of the following techniques except:
c. Prioritizing. a. descriptive analytics.
d. Thinking. b. predictive analytics.
 c. decision making analytics. a. FASB.
d. prescriptive analytics. b. COSO.
c. PCAOB.
30. Time-series forecasting is an example of ___ analytics. d. All of these.
a. predictive
b. prescriptive 7. The PCAOB has:
c. descriptive a. Eliminated autonomy of practice in the accounting profession.
d. evaluative b. Limited autonomy of practice in the accounting profession.
1. McDonald wrote that professionals utilize a specialized knowledge base. Which of the following is the best example c. Had no effect on autonomy of practice in the accounting profession.
of the specialized knowledge base in accounting? d. Worked with FASB to enhance autonomy of practice in the accounting profession.
a. Reconciling a bank statement
b. Writing a check 8. According to Bell, a professional integrates knowledge from many disciplines. Knowledge about ethics requires an
c. Making adjusting entries accountant to integrate knowledge from:
d. Using spreadsheet software a. Philosophy.
b. Communication.
2. Bell's characteristics of a professional include the ability to think in which of the following ways? c. Science.
a. Rationally d. Psychology
b. Logically 9. Which of the following best pairs a characteristic of a professional with an example of that characteristic?
c. Coherently a. Appropriately uses technical knowledge, closed nominal accounts at the end of the fiscal year
d. All of these b. Integrates knowledge from many disciplines, closed nominal accounts at the end of the fiscal year
c. Appropriately uses technical knowledge, prepared a schedule of cash receipts and cash payments in
3. Which of the following demonstrates the least professional behavior based on Bell's characteristics? Excel
a. Developing a presentation based on the characteristics of the audience d. Integrates knowledge from many disciplines, prepared a schedule of cash receipts and cash payments in
b. Correctly applying FASB standards for short-term investments Excel
c. Completing continuing professional education courses 10. Which of the following pairs provides examples of integrating knowledge from other disciplines in accounting?
d. Ignoring principles from management and finance a. Completes the steps in the systems development life cycle, applies expectancy theory to improve
motivation
4. As professionals, accountants often use a specialized knowledge base. That specialized knowledge base can come b. Selects software using the weighted-rating model, analyzes internal controls in the sales/collection
from: process
a. FASB pronouncements. c. Analyzes internal controls in the sales/collection process, applies expectancy theory to improve
b. Textbooks in accounting and other fields. motivation
c. Both FASB pronouncements and Textbooks in accounting and other fields. d. Prepares a schedule of cash receipts in Excel, gives two examples of COSO documents
d. Neither FASB pronouncements nor Textbooks in accounting and other fields.
11. Bumble Beasley remarked: "The only way to be an accounting professional is to earn a CPA license." Which of the
5. According to Bell, accountants should recognize the influence of: following statements is most true?
a. The Sarbanes-Oxley Act of 2002. a. There are many ways to be an accounting professional.
b. Foreign currency exchange rates. b. All accounting professionals have degrees in accounting.
c. Both the Sarbanes-Oxley Act of 2002 and foreign currency exchange rates. c. Both there are many ways to be an accounting professional and all accounting professionals have
d. Neither the Sarbanes-Oxley Act of 2002 nor foreign currency exchange rates. degrees in accounting.
d. Neither there are many ways to be an accounting professional nor all accounting professionals have
6. McDonald stated that professionals have autonomy of practice. In the accounting profession, autonomy of practice degrees in accounting.
has been limited by:
 18. Schools of ethical thought are:
12. Which of the following best pairs a characteristic of a professional with an example of that characteristic? a. points of view that help decision makers determine what is ethical.
a. Communicates effectively, selects software using the weighted-rating model b. determined by the accounting profession.
b. Integrates knowledge from many disciplines, completes the steps in the systems development life cycle c. Both points of view that help decision makers determine what is ethical and determined by the
c. Communicates effectively, analyzes internal controls in the sales/collection process accounting profession.
d. Integrates knowledge from many disciplines, gives two examples of COSO documents d. Neither points of view that help decision makers determine what is ethical nor determined by the
accounting profession.
13. Which of the following pairs provides examples of integrating knowledge from other disciplines in accounting?
a. Completes the steps in the systems development life cycle, applies expectancy theory to improve 19. Which of the following schools of ethical thought teaches that individuals have rights and that ethical principles are
motivation developed through reasoning?
b. Selects software using the weighted-rating model, analyzes internal controls in the sales/collection a. ethical egoism
process b. utilitarianism
c. Analyzes internal controls in the sales/collection process, applies expectancy theory to improve c. deontology
motivation d. virtue ethics
d. Prepares a schedule of cash receipts in Excel, gives two examples of COSO documents
20. Langenderfer and Rockness proposed:
14. Ethics is a set of standards that: a. that deontology is the best ethical viewpoint for professional accountants.
a. Is established by a particular group. b. an eight-step model for dealing with ethical dilemmas.
b. Is imposed on members of the group to regulate behavior. c. the Sarbanes-Oxley Act of 2002.
c. Both established by a particular group and imposed on members of the group to regulate behavior. d. standards of professionalism for accountants.
d. Neither established by a particular group nor imposed on members of the group to regulate behavior.
21. Which of the following steps in the Langenderfer and Rockness model comes first?
15. Ethics is a discipline that: a. Identify the alternative courses of action.
a. Studies values and guidelines for living. b. Reach a decision as to the appropriate course of action.
b. Explains why ethical egoism is the best school of ethical thought. c. Discuss the alternative with a trusted person.
c. Both studies values and guidelines for living and explains why ethical egoism is the best school of d. Define the norms, principles and values related to the situation.
ethical thought.
d. Neither studies values and guidelines for living nor explains why ethical egoism is the best school of 22. The first step in the Langenderfer and Rockness model is:
ethical thought. a. Decide the best course of action.
b. Identify ethics issues and stakeholders.
16. In accounting, ethics issues can arise in: c. Identify the facts.
a. Determining the best school of ethical thought. d. Determine which school of ethical thought to follow.
b. Asset valuation.
c. Both determining the best school of ethical thought and asset valuation. 23. Which of the following is most closely associated with the second step of the Langenderfer and Rockness model?
d. Neither determining the best school of ethical thought nor asset valuation. a. asset valuation
17. Which of the following schools of ethical thought teaches that people are fundamentally solitary creatures, each b. utilitarianism
pursuing their own best interest? c. Bernie Madoff
a. ethical egoism d. autonomy of practice
b. utilitarianism
c. deontology 24. Jon is a new employee at ADX Corporation. He was working late one night when he saw Beatrice, a long-time ADX
d. virtue ethics employee, leaving the building with a company computer. Based on the Langenderfer and Rockness model, what
should Jon do?
 a. Inform Beatrice's supervisor. a. In making ethical decisions, Annie strives to be true to her basic ethical nature.
b. Ask Beatrice why she was leaving the building with a company computer. b. Jeff inflated his division's sales to get a bigger bonus for himself.
c. Consult ADX's code of ethics. c. Michelle reported fraud she had discovered because she believes that lying is always wrong.
d. Take a photo of Beatrice leaving the building with the company computer. d. Shan agreed to coach as many CPA exam candidates as possible, in spite of his busy schedule.
25. Which of the following companies was created in 1985 from the merger of two other companies in the natural gas
and pipeline industries?
a. Enron
b. Arthur Andersen
c. BMIS
d. Adelphia Communications Corporation

26. Debra and Dexter are CPAs specializing in tax planning and preparation. Recently, Dexter commented that there is
nothing ethically wrong with tax evasion, so long as the number of people who benefit is greater than the number of
people harmed. Which school of ethical thought does Dexter follow?
a. ethical egoism
b. utilitarianism
c. deontology
d. virtue ethics

27. McDonald identified four criteria to be considered a professional. One of them requires accounting professionals to
adopt the ___ school of ethical thought.
a. utilitarian
b. ethical egoism
c. professional
d. none of these

28. Arnold, having arrived at a preliminary decision about how to resolve an ethical dilemma, discussed his alternatives
with a trusted co-worker. Based on the Langenderfer and Rockness model, what should he do next?
a. Determine the stakeholders involved in the ethical dilemma.
b. Evaluate the consequences of his proposed action.
c. Decide what to do.
d. Determine which school of ethical thought his co-worker follows.

29. Lenise laid out three potential responses for a violation of her company's ethics code. Based on the Langenderfer
and Rockness model, what should she do next?
a. Determine who will be affected by each potential response.
b. Speculate about what will happen for each of the three responses.
c. Talk with a trusted co-worker.
d. Determine if her company's ethics code is based primarily on ethical egoism or some other school of
ethical thought.

30. Which of the following is most reflective of ethical egoism?