Question 1

Independent checks and reconciliations, related to cash receipts, include all of the following, except:

Accepted Answer

A) Cash counts should occur on a surprise basis and be conducted by someone not responsible for cash receipts functions. 
B) Cash collections should be deposited in the bank in a timely manner to prevent the risk of theft. 
C) Physical count of cash needs to be conducted from time to time in order to compare actual cash on hand with the amounts in the accounting records. 
D) Daily bank deposits should be compared with the detail on the related remittance advice and in the cash receipts journal. 
A) Cash counts should occur on a surprise basis and be conducted by someone not responsible for cash receipts functions. 
B) Cash collections should be deposited in the bank in a timely manner to prevent the risk of theft. 
C) Physical count of cash needs to be conducted from time to time in order to compare actual cash on hand with the amounts in the accounting records. 
D) Daily bank deposits should be compared with the detail on the related remittance advice and in the cash receipts journal.

Question 2

Immediately upon receiving checks from customers in the mail, a responsible employee working in an environment of adequate internal control should prepare a listing of receipts and forward it to the company's cashier.A copy of this cash receipts listing should also be sent to the company's

Accepted Answer

A) Treasurer for comparison with the monthly bank statement 
B) Internal auditor for investigation of any unusual transactions 
C) Accounts receivable clerk for updating of the accounts receivable subsidiary ledger 
D) Bank for comparison with deposit slips 
A) Treasurer for comparison with the monthly bank statement 
B) Internal auditor for investigation of any unusual transactions 
C) Accounts receivable clerk for updating of the accounts receivable subsidiary ledger 
D) Bank for comparison with deposit slips

Question 3

The source document that initiates the recording of the return and the adjustment to the customer's credit status is the:

Accepted Answer

A) Pick list 
B) Sales journal 
C) Credit memorandum 
D) Sales invoice 
A) Pick list 
B) Sales journal 
C) Credit memorandum 
D) Sales invoice

Question 4

To ensure that all credit sales transactions of an entity are recorded, which of the following controls would be most effective?

Accepted Answer

A) On a monthly basis, the accounting department supervisor reconciles the accounts receivable subsidiary ledger to the accounts receivable control account. 
B) The supervisor of the accounting department investigates any account balance differences reported by customers. 
C) The supervisor of the billing department sends copies of approved sales orders to the credit department for comparison of authorized credit limits and current customer balances 
D) The supervisor of the billing department matches prenumbered shipping documents with entries recorded in the sale journal. 
A) On a monthly basis, the accounting department supervisor reconciles the accounts receivable subsidiary ledger to the accounts receivable control account. 
B) The supervisor of the accounting department investigates any account balance differences reported by customers. 
C) The supervisor of the billing department sends copies of approved sales orders to the credit department for comparison of authorized credit limits and current customer balances 
D) The supervisor of the billing department matches prenumbered shipping documents with entries recorded in the sale journal.

Question 5

In a point of sale system, which of the following is NOT one of the processing integrity risks reduced by having an automated POS system?

Accepted Answer

A) Pricing errors 
B) shrinkage due to theft 
C) cash shortages 
D) Erroneous or invalid sales invoices or voids 
A) Pricing errors 
B) shrinkage due to theft 
C) cash shortages 
D) Erroneous or invalid sales invoices or voids

Question 6

Sales orders are calculated based on current selling prices of the items sold.The source of these prices, which would include the entire set of preestablished and approved prices for each product, is referred to as a(n):

Accepted Answer

A) Price list 
B) Purchase order 
C) Packing slip 
D) Pick list 
A) Price list 
B) Purchase order 
C) Packing slip 
D) Pick list

Question 7

The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of:

Accepted Answer

A) Invalid transactions 
B) Fictitious customers 
C) Omitted transactions 
D) Duplicate transactions 
A) Invalid transactions 
B) Fictitious customers 
C) Omitted transactions 
D) Duplicate transactions

Question 8

Which of the following is not one of the stated physical controls for inventory in a warehouse?

Accepted Answer

A) Surveillance cameras 
B) Alarm systems 
C) Backup copies 
D) Security guards 
A) Surveillance cameras 
B) Alarm systems 
C) Backup copies 
D) Security guards

Question 9

If a company does not prepare an aging of accounts receivable, which of the following accounts is most likely to be misstated?

Accepted Answer

A) Sales revenues 
B) Accounts receivable 
C) Sales returns and allowances 
D) Allowance for uncollectible accounts 
A) Sales revenues 
B) Accounts receivable 
C) Sales returns and allowances 
D) Allowance for uncollectible accounts

Question 10

The advantages of e-commerce, or e-business, include all of the following, except:

Accepted Answer

A) Reduced cost through lower marketing, employee, and paperwork costs. 
B) Shorter sales cycles 
C) Repudiation of sales transactions 
D) Increased accuracy and reliability of sales data 
A) Reduced cost through lower marketing, employee, and paperwork costs. 
B) Shorter sales cycles 
C) Repudiation of sales transactions 
D) Increased accuracy and reliability of sales data

Question 11

Which of the following is not a document that is part of the cash collection process?

Accepted Answer

A) Remittance advice 
B) Cash receipts journal 
C) Bank deposit slip 
D) Packing slip 
A) Remittance advice 
B) Cash receipts journal 
C) Bank deposit slip 
D) Packing slip

Question 12

When a sale occurs, the information resulting from that sale must flow into the sales recording systems, the accounts receivable and cash collection systems, and the inventory tracking systems.In IT accounting systems, these recording and processing systems are referred to as:

Accepted Answer

A) Transaction Processing Systems 
B) Revenue and Cash Processing Systems 
C) Point of Sale System 
D) E-business System 
A) Transaction Processing Systems 
B) Revenue and Cash Processing Systems 
C) Point of Sale System 
D) E-business System

Question 13

Whenever a company grants credit to customers, there is a danger that customers will not pay.In fact, most companies have occasional problems with customers who fail to pay which leads to writing off the accounts receivable.Proper controls related to these uncollectible accounts include all of the following, except:

Accepted Answer

A) Segregation of responsibilities so that no one has the opportunity to write off an account to cover up stolen cash. 
B) Thorough guidelines are to be established for determining the amount of an allowance for uncollectible accounts. 
C) An accounts receivable aging report should be generated to analyze all customer balances and the lengths of time that have elapsed since the payments were due. 
D) Mathematical verification of the cash receipts journal and the accounts receivable ledger. 
A) Segregation of responsibilities so that no one has the opportunity to write off an account to cover up stolen cash. 
B) Thorough guidelines are to be established for determining the amount of an allowance for uncollectible accounts. 
C) An accounts receivable aging report should be generated to analyze all customer balances and the lengths of time that have elapsed since the payments were due. 
D) Mathematical verification of the cash receipts journal and the accounts receivable ledger.

Question 14

When a sales transaction has been authorized, by the signature of the designated employee, it means that the designated employee has done all of the following, except:

Accepted Answer

A) Verified the sale is to an accepted customer 
B) The vendor's credit has been approved 
C) The price is correct 
D) Approval documented by a signature or initials of the designated employee 
A) Verified the sale is to an accepted customer 
B) The vendor's credit has been approved 
C) The price is correct 
D) Approval documented by a signature or initials of the designated employee

Question 15

The documentation accompanying payment that identifies the customer account number and invoice to which the payment applies is referred to as a(n):

Accepted Answer

A) Cash receipts journal 
B) Promissory note 
C) Deposit list 
D) Remittance advice 
A) Cash receipts journal 
B) Promissory note 
C) Deposit list 
D) Remittance advice

Question 16

The risks that may affect the revenue and cash collection processes include all of the following, except:

Accepted Answer

A) Transactions may have been recorded in the wrong customer account. 
B) Transactions may be recorded in the wrong amount. 
C) Invalid transactions may have been omitted from the records. 
D) Transactions may not have been accumulated or transferred to the accounting records correctly. 
A) Transactions may have been recorded in the wrong customer account. 
B) Transactions may be recorded in the wrong amount. 
C) Invalid transactions may have been omitted from the records. 
D) Transactions may not have been accumulated or transferred to the accounting records correctly.

Question 17

The maximum dollar amount that a customer is allowed to carry as an accounts receivable balance:

Accepted Answer

A) Maximum limit 
B) Credit balance 
C) Maximum balance 
D) Credit limit 
A) Maximum limit 
B) Credit balance 
C) Maximum balance 
D) Credit limit

Question 18

Financial Stewardship can be ensured in the revenue process by establishing and maintaining which of the following?

Accepted Answer

A) reliable revenue processes 
B) internal controls 
C) ethical practices 
D) All of the above 
A) reliable revenue processes 
B) internal controls 
C) ethical practices 
D) All of the above

Question 19

An IT system that uses touch screens, bar coded products, and credit card authorization during the sale is called a(n):

Accepted Answer

A) Electronic data interchange system 
B) E-commerce system 
C) Point of sales system 
D) E-payables system 
A) Electronic data interchange system 
B) E-commerce system 
C) Point of sales system 
D) E-payables system

Question 20

When a company sells items over the Internet, it is usually called e-commerce.There are many IT risks related to Internet sales.The risk of invalid data entered by a customer would be a(n):

Accepted Answer

A) Availability risk 
B) Processing integrity risk 
C) Security risk 
D) Confidentiality risk 
A) Availability risk 
B) Processing integrity risk 
C) Security risk 
D) Confidentiality risk

Independent checks and reconciliations, related to cash receipts, include all of the following, except:

Immediately upon receiving checks from customers in the mail, a responsible employee working in an environment of adequate internal control should prepare a listing of receipts and forward it to the company's cashier.A copy of this cash receipts listing should also be sent to the company's

The source document that initiates the recording of the return and the adjustment to the customer's credit status is the:

To ensure that all credit sales transactions of an entity are recorded, which of the following controls would be most effective?

In a point of sale system, which of the following is NOT one of the processing integrity risks reduced by having an automated POS system?

Sales orders are calculated based on current selling prices of the items sold.The source of these prices, which would include the entire set of preestablished and approved prices for each product, is referred to as a(n):

The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of:

Which of the following is not one of the stated physical controls for inventory in a warehouse?

If a company does not prepare an aging of accounts receivable, which of the following accounts is most likely to be misstated?

The advantages of e-commerce, or e-business, include all of the following, except:

Which of the following is not a document that is part of the cash collection process?

When a sale occurs, the information resulting from that sale must flow into the sales recording systems, the accounts receivable and cash collection systems, and the inventory tracking systems.In IT accounting systems, these recording and processing systems are referred to as:

When a sales transaction has been authorized, by the signature of the designated employee, it means that the designated employee has done all of the following, except:

The documentation accompanying payment that identifies the customer account number and invoice to which the payment applies is referred to as a(n):

The risks that may affect the revenue and cash collection processes include all of the following, except:

The maximum dollar amount that a customer is allowed to carry as an accounts receivable balance:

Financial Stewardship can be ensured in the revenue process by establishing and maintaining which of the following?

An IT system that uses touch screens, bar coded products, and credit card authorization during the sale is called a(n):

When a company sells items over the Internet, it is usually called e-commerce.There are many IT risks related to Internet sales.The risk of invalid data entered by a customer would be a(n):

Introduction to AIS

Foundational Concepts of the AIS

Fraud, Ethics, and Internal Control

Internal Controls and Risks in IT Systems

IT Governance

Enterprise Resource Planning ERP Systems

Auditing Information Technology-Based Processes

Expenditures Processes and Controlspurchases

Expenditures Processes and Controlspayroll and Fixed Assets

Conversion Processes and Controls

Administrative Processes and Controls

Data and Databases

E-Commerce and E-Business

Filters

Exam 8: Revenue and Cash Collection Processes and Controls

Independent checks and reconciliations, related to cash receipts, include all of the following, except:

Immediately upon receiving checks from customers in the mail, a responsible employee working in an environment of adequate internal control should prepare a listing of receipts and forward it to the company's cashier.A copy of this cash receipts listing should also be sent to the company's

The source document that initiates the recording of the return and the adjustment to the customer's credit status is the:

To ensure that all credit sales transactions of an entity are recorded, which of the following controls would be most effective?

In a point of sale system, which of the following is NOT one of the processing integrity risks reduced by having an automated POS system?

Sales orders are calculated based on current selling prices of the items sold.The source of these prices, which would include the entire set of preestablished and approved prices for each product, is referred to as a(n):

The comparison of the shipping records with the sales journal and invoices is completed to minimize the related risk of:

Which of the following is not one of the stated physical controls for inventory in a warehouse?

If a company does not prepare an aging of accounts receivable, which of the following accounts is most likely to be misstated?

The advantages of e-commerce, or e-business, include all of the following, except:

Which of the following is not a document that is part of the cash collection process?

When a sale occurs, the information resulting from that sale must flow into the sales recording systems, the accounts receivable and cash collection systems, and the inventory tracking systems.In IT accounting systems, these recording and processing systems are referred to as:

When a sales transaction has been authorized, by the signature of the designated employee, it means that the designated employee has done all of the following, except:

The documentation accompanying payment that identifies the customer account number and invoice to which the payment applies is referred to as a(n):

The risks that may affect the revenue and cash collection processes include all of the following, except:

The maximum dollar amount that a customer is allowed to carry as an accounts receivable balance:

Financial Stewardship can be ensured in the revenue process by establishing and maintaining which of the following?

An IT system that uses touch screens, bar coded products, and credit card authorization during the sale is called a(n):

When a company sells items over the Internet, it is usually called e-commerce.There are many IT risks related to Internet sales.The risk of invalid data entered by a customer would be a(n):

Introduction to AIS

Foundational Concepts of the AIS

Fraud, Ethics, and Internal Control

Internal Controls and Risks in IT Systems

IT Governance

Enterprise Resource Planning ERP Systems

Auditing Information Technology-Based Processes

Expenditures Processes and Controlspurchases

Expenditures Processes and Controlspayroll and Fixed Assets

Conversion Processes and Controls

Administrative Processes and Controls

Data and Databases

E-Commerce and E-Business

Filters