Exam 2: Transaction Processing in the Ais

Eric and Gloria were recently hired as entry-level accountants for RSP Corporation. They had the following conversation about their duties and responsibilities.Eric: I'm really excited to have this job; I've wanted to work in this industry for a couple years now. Gloria: I completed an internship with RSP last year, and I can tell you it's a terrific place to work. Eric: I wonder what kinds of things we'll be doing in our first few months. Gloria: Well, I can tell you some of the things I did during my internship. I helped input data for the corporate tax return in TaxEasy; I also developed initial estimates of bad debts based on an analysis of credit sales. And, I downloaded cost and budget information from the AIS so I could calculate cost variances. Eric: That's quite a diverse group of tasks for an intern! I was hoping to be able to work with RSP's internal audit department at some point; I hear they are the ones in charge of investigating potential fraud in the company. Gloria: Really? How do they know where fraud might exist? Eric: Well, the company has a dedicated phone line employees can call when they suspect fraud may be occurring; the internal auditors listen to those calls, then determine which cases they should investigate. Also, internal auditors analyze spending patterns throughout the company; if they see a sharp increase in spending, they investigate it further.Required: Analyze Eric and Gloria's conversation for tasks that require human judgment and/or information technology. List five examples of such tasks in the space provided below. For each task, indicate whether it involves human judgment, information technology or both.

Information technology can be an important tool in which of the five generic elements of an AIS?

As a form of internal control, sequential numbering is most likely to be associated with which step in the accounting cycle?

As a form of internal control, transaction limits are most likely to be associated with which step in the accounting cycle?

All of the following are common coding systems used in organizations except:

As an internal control for source documents, sequential numbering is most likely to ___ an error.

Most companies make adjusting entries for depreciation because:

As an internal control for source documents, transaction limits are most likely to ___ an error.

Both human judgment and information technology are important in accounting information systems. In which of the following pairs of tasks will information technology be more critical than human judgment?

The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information is called:

Which of the following is an example of a deferred revenue?

As an internal control, RSR Corporation requires two signatures on all checks over $500, thus illustrating the importance of:

Most organizations use purchase orders to authorize inventory and other purchases. If a company's purchase order contains a column labeled "product code," it most likely uses what kind of coding?

Human judgment is important in which of the following AIS tasks: (i) designing source documents, (ii) recognizing recordable transactions.

In an AIS, human judgment is important in:

Which type of adjusting entry is most likely to involve human judgment?

Adjusting entries for accrued revenues and accrued expenses are similar in that:

TCP Corporation issues a purchase order whenever it buys inventory. Internal controls associated with the purchase order may include:

List the steps in the accounting cycle in their proper order.

Information technology: