Mid Term 435

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Question Answer
What are the four levels of activity in the pyramid?Operational, Operation Management, Middle Management, Top Management
Distinguish Between horizontal and vertical flows of information in the pyramidHorizontal information is very detailed about day to day operations. Vertical is summerized. typcially downwards with quotas and budgets.
What is the relationship among data, information, and information systems?Data is raw, when manipulated and put into a meaningful form it becomes information. Information systems is how they are displayed and orgainized.
What is the difference between AIS and MIS?AIS processes financial transactions or non-financial transactions that will affect financial transactions. AIS are held to a legal and professional standard. MIS handle non-financial transactions outside of the AIS system. MIS expands to multiple areas such as marketing, sales, production, and inventory management.
What are the characteristics of good or useful information?Relevence, accuracy, completness, summarization, and timeliness
What are the three cycles of transaction processing systems?Revenue Cycle, Expenditure cycle, and conversion cycle
What is the role of the accounting function in an orgainizationManage the financial information resources of the firm. 1. record bussiness events. 2. distribute transaction information to cordinate task of different departments.
What is cloud Computing?Share data over a data base on the internet. Three types. SaaS, IaaS, PaaS. Used because its for short use and easy to cancel.
What three transactions cycles exist in all?Expenditure Cycle, Revenue Cycle, and Conversion cycle
Name the Major Subsystems of the revenue cycle?Sales Order Processing system and Cash Reciepts System.
Distinguish between a general journal and journal vouchersJournal vouchers are used as documentation for a transaction while general journals record but don't represent the transaction.
name the two types of ledgersGeneral Ledger and Subsidary Ledger
Distinguish between batch and real-time processingBatch processing is processing similar transactions together. Real-time processing happens right as the event is happening.
Is a data flow diagram an effective documentation technique for identifying who or what peform a particular task?No, a Data Flow Diagram shows what is being performed but not by who. A flowchart will show you who and where a task is being performed.
Why might an auditor us a program flow chart?It will give the auditor detailed information about where data comes from in a program. They can then use this information to design a test to accuretly test the system.
Distinguish between Employee fraud and Management fraudEmployee fraud is commited by non management employees. Used to benefit employee. Management fraud is done by a manager and is shrouded in a nexus of transactions and are hard to disentangle.
The estimates of losses annually resulting from computer fraud vary widely. Why do you think obtaining a good estimate of this figure is difficult?Many companies won't admit it for fear of public opinion or are unaware of how much damage has actually been done.
How has the Sarbanes-Oxley Act had a significant impact on corporate governance?Audit commities now have to be independent and require external auditors now.
discuss whether a firm with fewer employees that there are incompatible tasks should rely more heavily on general authority than specific authority.Small firms are better to have specific authority. More supervision and decisions by management to compensate with the lack of capability of segregation of duties.
Explain the five conditions necessary for an act to be considered fraudulent.False Representation, False Material Fact, Intent to Deceive, Justifiable reliance, injury or loss.
Explain the characteristics of management fraud.Often consist of misrepresentation of information to make it appear as if performance is actually better than it actually is.
give two examples of employee fraud, and explain how the thefts might occur.Stealing something of value, converting asset to cash, concealing crime to avoid detection.
explain the purpose of the public company accounting oversight board.set auditing controls and ethical standards.
why is an independent audit committee important to a company?To protect investors and to continue with trust between investors and corporations.
Distinguish between the Sales order, billing, and AR departmentsSales is in charge of recieving customer orders. Billing bills customers for their purchases. AR department post purchases to customer accounts.
Explain how segregation of duties is accomplished in an integrated data processing environmentIt allows people to access data among different areas but nothing they are not allowed to access. This prevents one employee from completing a fraudulent transaction all by themselves.
How could and employee embezzle funds by issuing an unauthorized sales credit memo if the appropriate segregation of duties and authorization controls were not in place.Someone receiving payments could pocket money they receive that a customer is paying by just saying they paid and pocketing that money.
What task can the AR department engage in to verify that all customers checks have been appropriately deposited and recorded?Monthly send out a statement to allow customers to verify how much they owe or do not owe. Should not be done by those who handle the accounts receivables.
How can re engineering of the sales order processing subsystem be accomplished using the internet?Allows to remove part of the sales department and receive sales coming in online for approval and billing.
How can advanced technology transactions processing systems reduce fraud?It reduces a system where someone by greed could change the numbers and pocket the money to being fully automated. No longer is there a system where everyone involved could be influenced by greed.
Differentiate between a purchase requisition and a purchase orderPurchase requisition is an order for more inventory. Then the purchase order is filled out by the purchasing department and sent out sometimes as one order to take advantage of discounts and lower freight cost.
Distinguish between an accounts payable file and a vouchers payable fileAccounts payable file is organized by date. As due dates become closer they get pulled and paid. Voucher payable file are a series of clumped up receipts to a vendor and are paid together for different invoices. Easier to track because of cash vouchers and fewer checks written.
What are the three logical steps of the cash disbursement system?Authorization of payment, preparation of payment, summation of information to go to accounts payable and cash disbursement.
What general ledger entries does the purchases system trigger?Accounts Payable and Cash Disbursement
From which departments do journal entries arise from? (Purchase system trigger)Inventory Control, Accounts Payable, and Cash
What is a three-way match system?comparison of transactions details between purchase order, receiving report, and invoice.
What steps of independent verification does the general ledger departmeent perform?The general ledger department receives journal vouchers from inventory control, accounts payable, and cash disbursement. It uses these to record increase in inventory and change in whats owed to accounts payable.
What is the purpose of the blind copy of a purchase order?It is to ensure that receiving clerks count and inspect things that come in.
Which department authorizes changes in employee pay rates?The personal department authorizes changes in employee pay rates.
Why should the employee's supervisor not distribute paychecks?Prevents supervisors from commiting fraud. They could make up a worker and say they worked x to x and cash the checks themselves.
Why should employee paychecks be drawn against a special checking account?A separate imprest account allows them to make sure no more money than necessary is going out to workers. If its balence doesn't equal zero when pay checks are cashed, its a red flag for them to investigate.
What documents are included in the audit trail for payroll?time cards, job tickets, disbursement vouchers, journal information, subsidiary ledger, and general ledger
How do fixed asset systems differ from purchases systems?Purchase system is automated for the most part. The fixed asset deals with unique and individual cases. It often requires approval and attention from an individual to determine depreciation.
What are three tasks of the fixed asset system?Asset Acquisition, Asset maintenance, Asset disposal
Which department performs the formal record keeping function for fixed assets?The fixed Asset Department