Exam 3: Transaction Processing in the Ais

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

Linda embezzled cash from her employer by forging a signature on a check.Which of the following internal controls for source documents would most likely prevent such occurrences in the future?

The concept of bookkeeping includes: (i) distinguishing relevant from irrelevant information, (ii) calculating amounts to record in the AIS, (iii) reporting financial results.

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.

Accounting information systems have five generic parts, one of which is internal control.Please give two examples of applicable internal controls for each of the remaining parts of the AIS.1) Inputs a.Example 1: _________________________________________________ b.Example 2: _________________________________________________ 2) Processes a.Example 1: _________________________________________________ b.Example 2: _________________________________________________ 3) Outputs a.Example 1: _________________________________________________ b.Example 2: _________________________________________________ 4) Storage a.Example 1: _________________________________________________ b.Example 2: _________________________________________________

Consider the accounting-related tasks below:

At the end of 2014, CNC Corporation's accounting information system produced the following trial balance: CNC completed the following transactions in January 2015: a.Purchased inventory on account, $300. B.Collected cash from customers for prior year sales, $500. C.Paid current month's wages, $900. D.Had land appraised.Cost of doing the appraisal (paid in cash), $700.Appraised value of land, $3,000. E.Sold inventory with a cost basis of $200 on account, $800. F.Declared dividends, $50. G.Hired additional sales staff.Expected monthly salaries, $80. H.Purchased supplies for cash, $150. i.Paid creditors for previous purchases, $150. j.Signed a contract for annual employee retreat, $450.The ninth step in the accounting cycle prepares the accounting information system for a new period.Which of the following accounts in CNC's trial balance will be part of the ninth step?

At the end of 2014, CNC Corporation's accounting information system produced the following trial balance: CNC completed the following transactions in January 2015: a.Purchased inventory on account, $300. B.Collected cash from customers for prior year sales, $500. C.Paid current month's wages, $900. D.Had land appraised.Cost of doing the appraisal (paid in cash), $700.Appraised value of land, $3,000. E.Sold inventory with a cost basis of $200 on account, $800. F.Declared dividends, $50. G.Hired additional sales staff.Expected monthly salaries, $80. H.Purchased supplies for cash, $150. i.Paid creditors for previous purchases, $150. j.Signed a contract for annual employee retreat, $450.The sixth step in the accounting cycle involves six broad types of entries.Which of the indicated transactions is likely to lead to the specified type?

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

As an internal control measure in the accounting cycle, physical security most clearly applies to:

Communicating information to external decision makers is accomplished through ___ as part of the process of ___.

Requiring ___ on certain source documents is associated with transaction limits as an internal control.

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

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

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

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

SRE Corporation is a software development company; it uses block coding in its chart of accounts.Which of the following statements is most true?

Which of the following statements about accounting and bookkeeping is most true?

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

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?