ACC 544 Inspiring Communication / snaptutorial.com

1. ACC 544 Entire Course For more classes visits www.snaptutorial.com ACC 544 Week 1 Individual Assignment Recommendation Brief for an Internal Accountant ACC 544 Week 2 Individual Assignment Justification for an Internal Control System ACC 544 Week 3 Individual Assignment Checklist for Evaluating Internal Controls ACC 544 Week 4 Learning Team Assignment Controls for Inflows ACC 544 Week 5 Learning Team Assignment Controls for Outflows ACC 544 Week 6 Individual Assignment Controls for Information Technology (IT) and Reporting and Evaluation ********************************************* ACC 544 Quiz 1

2. For more classes visit www.snaptutorial.com ACC 544 Quiz 1 • Question 1 under Rule 504 of Regulation D of the Securities Act of 1933. Under Rule 504, Imperial is required to Imperial Corp. is offering $450,000 of its securities • Question 2 be made pursuant to the provisions of Rule 506 of Regulation D of the Securities Act of 1933 would not be exempt under Rule 506 if A $10,000,000 offering of corporate stock intended to • Question 3 in addition to companies whose securities are traded on a national exchange, what class of companies is subject to the SEC’s continuous disclosure system? Under Section 12 of the Securities Exchange Act of 1934, • Question 4 common stock to the public in interstate commerce after its registration statement with the SEC becomes effective. What, if anything, must Tweed do in respect to those states in which the securities are to be sold? Tweed Manufacturing, Inc. plans to issue $10 million of

3. • Question 5 states of 250,000 shares of its common stock. Under the Securities Act of 1933, Acme Corp. intends to make a public offering in several • Question 6 to the Securities Exchange Act of 1934? Which of the following statements is correct with respect • Question 7 held liable for any materially false or misleading financial statements, including an omission of a material fact therefrom, provided the purchaser Under the Securities Act of 1933, an accountant may be • Question 8 issuers without regard to the dollar amount of an offering only when the Regulation D of the Securities Act of 1933 is available to • Question 9 The provisions of the Securities Exchange Act of 1934 • Question 10 Which of the following is required under the Securities Exchange Act of 1934 or the SEC’s reporting requirements issued pursuant thereto? • Question 11 Act of 1934, a corporation whose common stock is listed on a national stock exchange Under the provisions of the Securities Exchange • Question 12 Which of the following are exempt from the registration requirements of the Securities Act of 1933? • Question 13 Wane Corporation has issued securities that are traded on a national securities exchange. Wane just had a significant change in its assets due to a large acquisition of real property. Which of the following is true? • Question 14 Which of the following statements is(are) correct concerning issuers of securities registered under the Securities Exchange Act of 1934?

4. • Question 15 Under Regulation D of the Securities Act of 1933, what is the maximum time period during which an exempt offering may be made? ********************************************* ACC 544 Quiz 2 For more classes visit www.snaptutorial.com ACC 544 Quiz 2 • Question 1 financial statements. The management of Mead informed Dex that it suspected that the accounts receivable were materially overstated. Although the financial statements audited by Dex did, in fact, include a materially overstated accounts receivable balance, Dex issued an unqualified opinion. Mead relied on the financial statements in deciding to obtain a loan from City Bank to expand its operations. City relied on Mead Corp. orally engaged Dex& Co., CPAs, to audit its

5. the financial statements in making the loan to Mead. As a result of the overstated accounts receivable balance, Mead has defaulted on the loan and has incurred a substantial loss. If Mead sues Dex for negligence in failing to discover the overstatement, Dex’s best defense would be that • Question 2 2012 financial statements of Marx Corp. These financial statements were included in Marx’s annual report and Form 10K filed with the SEC. Doe did not detect material misstatements in the financial statements as a result of negligence in the performance of the audit. Based upon the financial statements, Fitch purchased stock in Marx. Shortly thereafter, Marx became insolvent, causing the price of the stock to decline drastically. Fitch has commenced legal action against Doe for damages based upon Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. Doe’s best defense to such an action would be that Doe and Co., CPAs, issued an unqualified opinion on the • Question 3 statements contained in a Form 10-K filed with the SEC. If an injured third party decided to file suit against the CPA, it would most likely be filed under A CPA firm was negligent in the audit of financial • Question 4 the 2012 financial statements of Bart Corp. Late in 2010, Bart determined that its treasurer had embezzled over $1,000,000. Dexter was unaware of the embezzlement. Bart has decided to sue Dexter to recover the $1,000,000. Bart’s suit is based upon Dexter’s failure to discover the missing money while performing the audit. Which of the following is Dexter’s best defense? Dexter and Co., CPAs, issued an unqualified opinion on • Question 5 avoidance is a significant purpose that is marketed to potential investors. According to Treasury Department Circular 230 Hugh, CPA, has developed an opinion for which tax • Question 6 Securities Act of 1933, a CPA who certifies financial statements Under the liability provisions of Section 11 of the

6. included in a registration statement generally will not be liable to a purchaser of the security • Question 7 accountant’s liability under Section 11 of the Securities Act of 1933 for misstatements and omissions of material facts contained in a registration statement? Which of the following circumstances is a defense to an • Question 8 subpoenaed or without the client’s consent, make client workpapers available to A CPA partnership may, without being lawfully • Question 9 an audit. The company needed the audit report in order to obtain a loan from a bank. The bank lent $500,000 to the company based on the auditor’s report. Fifteen months later, the company declared bankruptcy and was unable to repay the loan. The bank discovered that the accounting firm failed to discover a material overstatement of assets of the company. Which of the following statements is correct regarding a suit by the bank against the accounting firm? The bank An accounting firm was hired by a company to perform • Question 10 In accordance with the AICPA Statements on Standards for Tax Services, if after having provided tax advice to a client there are legislative changes which affect the advice provided, the CPA • Question 11 Alex Stone, CPA, prepared Ray Pym’s 2012 federal income tax return. Pym advised Stone that he had paid doctors’ bills of $15,000 during 2012, when in fact Pym had paid only $3,000 of bills. Based on Pym’s representations, Stone properly computed the medical expense deduction, with consequent understatement of tax liability of more than $5,000. Pym’s total tax liability shown on the return was $40,000. Stone had no reason to doubt the accuracy of Pym’s figures, although Stone did not request documentation for the expenses claimed; but he was assured by Pym that sufficient corroborative evidence of these expenses existed. In connection with Stone’s preparation of Pym’s 2012 return, Stone is

7. • Question 12 The Ultramares decision is a leading case that helps define when a CPA is liable to different parties. If a CPA has committed negligence, under this decision the CPA is liable to which of the following parties? • Question 13 Clark, a professional tax return preparer, prepared and signed a client’s 2012 federal income tax return that resulted in a $600 refund. Which one of the following statements is correct with regard to an Internal Revenue Code penalty Clark may be subject to for endorsing and cashing the client’s refund check? • Question 14 Jay, CPA, gave an unqualified opinion on Nast Power Co.’s financial statements. Larkin bought Nast bonds in a public offering subject to the Securities Act of 1933. The registration statement filed with the SEC included Nast’s financial statements. Larkin sued Jay for misstatements contained in the financial statements under the provisions of Section 11 of the Securities Act of 1933. To prevail, Larkin must prove • Question 15 The Joint Ethics Enforcement Program involves joint enforcement of the ethics rules of ********************************************* ACC 544 Quiz 3 For more classes visit

8. www.snaptutorial.com ACC 544 Quiz 3 • Question 1 decision models is true? Which of the following statements about investment • Question 2 internal rate of return of a proposed asset purchase? Which of the following events would decrease the • Question 3 rate of return as a method of evaluating investments? Which of the following is a disadvantage of the internal • Question 4 differ in that Net present value (NPV) and internal rate of return (IRR) • Question 5 advantage of the internal rate of return technique over the accounting rate of return technique in evaluating a project? Which of the following characteristics represent an • Question 6 earned by the investment in which of the following capital budgeting techniques? It is assumed that cash flows are reinvested at the rate • Question 7 highest present value? Which of the following changes would result in the • Question 8 value modeling? Which of the following is an advantage of net present

9. • Question 9 machine which it will depreciate on a straight-line basis over a 10-year period. A full year’s depreciation will be taken in the year of acquisition. The machine is expected to produce cash flow from operations, net of income taxes, of $3,000 in each of the 10 years.; The accounting (book value) rate of return is expected to be 10% on the initial increase in required investment. The cost of the new machine will be The Bread Company is planning to purchase a new • Question 10 Net present value as used in investment decision-making is stated in terms of which of the following options? • Question 11 On January 1, 2012, Colt Company issued 10-year bonds with a face amount of $1,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows: • Question 12 Assume that management of Trayco has generated the following data about an investment project that has a five-year life: • Question 13 Assume that management of Trayco has generated the following data about an investment project that has a five-year life: • Question 14 Which of the following statements is correct regarding payback method as a capital budgeting technique? • Question 15 A client wants to know how many years it will take before the accumulated cash flows from an investment exceed the initial investment, without taking the time value of money into account. Which of the following financial models should be used? • Question 16 Which of the following limitations is common to the calculations of payback period, discounted cash flow, internal rate of return, and net present value? • Question 17 A project has an initial outlay of $1,000. The projected cash inflows are

10. • Question 18 Harvey Co. is evaluating a capital investment proposal for a new machine. The investment proposal shows the following information: • Question 19 How are the following used in the calculation of the net present value of a proposed project? Ignore income tax considerations. • Question 20 In considering the payback period for three projects, Fly Corp. gathered the following data about cash flows: • Question 21 The discount rate (hurdle rate of return) must be determined in advance for the • Question 22 Which of the following statements is correct regarding financial decision making? • Question 23 Which of the following is necessary in order to calculate the payback period for a project? • Question 24 An efficient portfolio is one that • Question 25 Which of the following scenarios would encourage a company to use short-term loans to retire its ten-year bonds that have five years until maturity? • Question 26 What is the formula for calculating the profitability index of a project? • Question 27 The profitability index is a variation on which of the following capital budgeting models? • Question 28 Assume that management of Trayco has generated the following data about an investment project that has a five-year life: • Question 29 A company purchases an item for $43,000. The salvage value of the item is $3,000. The cost of capital is 8%. Pertinent information related to this purchase is as follows:

11. • Question 30 A project has a present value of future net cash inflows of $120,000 and an initial investment of $110,000. Calculate the excess present value index for the project. ********************************************* ACC 544 Quiz 4 For more classes visit www.snaptutorial.com ACC 544 Quiz 4 • Question 1 Estimated demand for product A was 10,000 bottles and for product B was 30,000 bottles. The estimated sales price per bottle for A was $6.00 and for B was $8.00. Actual demand for product A was 8,000 bottles and for product B was 33,000 bottles. The actual price per bottle for A was $6.20 and for B was $7.70. What amount would be the total selling price variance for Central Winery? Central Winery manufactured two products, A and B.

12. • Question 2 incurred $2,500,000 in actual design costs to date for a guidance system whose total budgeted design cost is $3,000,000. If the design phase of the project is 60% complete, what is the amount of the contractor’s current overrun/savings on this design work? A defense contractor for a government space project has • Question 3 communicated, the next step in the planning process would be the development of the After the goals of the company have been established and • Question 4 2012 and has prepared the following budget data based on a zero advertising expenditure: Birney Company is planning its advertising campaign for • Question 5 The cash receipts budget includes • Question 6 Breakeven analysis assumes over the relevant range that • Question 7 most likely would result in An increase in production levels within a relevant range • Question 8 expected operations and controlling the operations to help carry out those plans is known as The process of developing plans for a company’s • Question 9 February 2012. No change in inventory level during the month is planned. Selected data from estimated amounts are as follows: Sussex Company has budgeted its operations for • Question 10 A company is attempting to determine if there is a cause and effect relationship between scrap value and output produced. The following exhibit presents the company’s scrap data for the last fiscal year: • Question 11 A professional organization is planning to conduct a series of one-day continuing education programs in various cities. The projected costs related to these programs are

13. • Question 12 A company wants to determine its marketing costs for budgeting purposes. Activity measures and costs incurred for four months of the current year are presented in the table below. Advertising is considered to be a discretionary cost. Salespersons are paid monthly salaries plus commissions. The sales force was increased from 20 to 21 individuals during the month of May. • Question 13 Ajax Division of Carlyle Corporation produces electric motors, 20% of which are sold to Bradley Division of Carlyle and the remainder to outside customers. Carlyle treats its divisions as profit centers and allows division managers to choose their sources of sale and supply. Corporate policy requires that all interdivisional sales and purchases be recorded at variable cost as a transfer price. Ajax Division’s estimated sales and standard cost data for the year ending December 31, 2012, based on the full capacity of 100,000 units, are as follows: • Question 14 Light Company has 2,000 obsolete light fixtures that are carried in inventory at a manufacturing cost of $30,000. If the fixtures are reworked for $10,000, they could be sold for $18,000. Alternately, the light fixtures could be sold for $3,000 to a jobber located in a distant city. In a decision model analyzing these alternatives, the opportunity cost would be • Question 15 Multiple regression differs from simple regression in that it • Question 16 Gata Co. plans to discontinue a department with $48,000 contribution to overhead, and allocated overhead of $96,000, of which $42,000 cannot be eliminated. What would be the effect of this discontinuance on Gata’s pretax profit? • Question 17 A professional organization is planning to conduct a series of one-day continuing education programs in various cities. The projected costs related to these programs are

14. • Question 18 Rodder, Inc. manufactures a component in a router assembly. The selling price and unit cost data for the component are as follows: • Question 19 Lincoln Company, a glove manufacturer, has enough idle capacity available to accept a special order of 20,000 pairs of gloves at $12.00 a pair. The normal selling price is $20.00 a pair. Variable manufacturing costs are $9.00 a pair, and fixed manufacturing costs are $3.00 a pair. Lincoln will not incur any selling expenses as a result of the special order. What would be the effect on operating income if the special order could be accepted without affecting normal sales? • Question 20 JacKue Co. plans to produce 200,000 pairs of roller skates during January of next year. Planned production for February is 250,000 pairs. Sales are forecasted at 180,000 pairs for January and 240,000 pairs for February. Each pair of roller skates has eight wheels. JacKue’s policy is to maintain 10% of the next month’s production in inventory at the end of a month. How many wheels should JacKue purchase during January? • Question 21 Which of the following is a characteristic of a flexible budget? • Question 22 All else being equal, the breakeven point in units will be higher if • Question 23 The ratio of fixed costs to the contribution margin is • Question 24 Oslo Co.’s industrial photo-finishing division, Rho, incurred the following costs and expenses in 2012: • Question 25 Crisper, Inc. plans to sell 80,000 bags of potato chips in June, and each of these bags requires five potatoes. Pertinent data includes: • Question 26 At annual sales of $900,000, the Ebo product has the following unit sales price and costs:

15. • Question 27 Which of the following is a disadvantage of participative budgeting? • Question 28 For the current period production levels, Woodwork Co. budgeted 11,000 board feet of production and purchased 15,000 board feet. The material cost was budgeted at $7 per foot. The actual cost for the period was $8.50 per foot. What was Woodwork’s material price variance for the period? • Question 29 In the past, four direct labor hours were required to produce each unit of product Y. Material costs were $200 per unit, the direct labor rate was $20 per hour, and factory overhead was 3 times direct labor cost. In budgeting for next year, management is planning to outsource some manufacturing activities and to further automate others. Management estimates that these plans will reduce labor hours by 25%, increase the factory overhead rate to 3.6 times direct labor costs, and increase material costs by $30 per unit. Management plans to manufacture 10,000 units. What amount should management budget for cost of goods manufactured? • Question 30 A company produces widgets with budgeted standard direct materials of 2 pounds per widget at $5 per pound. Standard direct labor was budgeted at 0.5 hour per widget at $15 per hour. The actual usage in the current year was 25,000 pounds and 3,000 hours to produce 10,000 widgets. What was the direct labor usage variance? ********************************************* ACC 544 Week 1 Coso Framework (2 Papers)

16. For more classes visit www.snaptutorial.com This Tutorial contains 2 Papers Imagine you are the Director of Internal Audit and the Chairman of the Audit Committee and asks you to prepare a report for the Board of Directors explaining the 2012 COSO framework for internal control and the benefits for adopting the framework.  Write a report of approximately 700 to 1,050 words explaining the five interrelated components of internal control.  Describe the benefits for adopting this framework. Justify why this is the appropriate framework and will encourage integrity and ethical values for the organization. *********************************************  ACC 544 Week 1 Individual Assignment Recommendation Brief for an Internal Accountant

17. For more classes visits www.snaptutorial.com A client has an out-of-control system. A recommendation has been made to hire an internal accountant.  Write a recommendation brief of no more than 700 words for the client, justifying the benefits of using an internal auditor.  Conclude your recommendation by referring a person for the job based on their background.  Explain how the background benefits the client.    ********************************************* ACC 544 Week 2 Individual Assignment Justification for an Internal Control System For more classes visits www.snaptutorial.com

18. Leadership confronts you, as a controller, and questions the need for an internal control system.  Write a report of no more than 700 words, justifying the need for the system when controls are in place with insurance and portfolio approaches. Explain why current approaches are valid but why an internal system will be more beneficial. *********************************************  ACC 544 Week 2 Risk Assessment (2 Papers) For more classes visit www.snaptutorial.com This Tutorial contains 2 Papers

19. The Chief Risk Officer has asked you to perform an enterprise-wide risk assessment. · your plan for the risk assessment project. Write a proposal of approximately 700 to 1,050 words that shows · likelihood, magnitude, velocity, and persistence. Identify risk areas and the criteria to be used to determine · Link risk categories to financial statement assertions. · rationalization related to fraud. Include fraud risks and the incentives, opportunities, and ********************************************* ACC 544 Week 3 Individual Assignment Checklist for Evaluating Internal Controls For more classes visits www.snaptutorial.com  Prepare a comprehensive checklist for evaluating internal controls.  Apply the checklist to outline phases of the control evaluation.

20. ACC 544 Week 3 Quiz Federal Securities ********************************************* For more classes visit www.snaptutorial.com ACC 544 Week 3 Quiz Federal Securities • Question 1 Rule 504 of Regulation D of the Securities Act of 1933. Under Rule 504, Imperial is required to Imperial Corp. is offering $450,000 of its securities under • Question 2 made pursuant to the provisions of Rule 506 of Regulation D of the Securities Act of 1933 would not be exempt under Rule A $10,000,000 offering of corporate stock intended to be

21. • Question 3 in addition to companies whose securities are traded on a national exchange, what class of companies is subject to the SEC’s continuous disclosure system? Under Section 12 of the Securities Exchange Act of 1934, • Question 4 common stock to the public in interstate commerce after its registration statement with the SEC becomes effective. What, if anything, must Tweed do in respect to those states in which the securities are to be sold? Tweed Manufacturing, Inc. plans to issue $10 million of • Question 5 states of 250,000 shares of its common stock. Under the Securities Act of 1933, Acme Corp. intends to make a public offering in several • Question 6 to the Securities Exchange Act of 1934? Which of the following statements is correct with respect • Question 7 held liable for any materially false or misleading financial statements, including an omission of a material fact therefrom, provided the purchaser Under the Securities Act of 1933, an accountant may be • Question 8 issuers without regard to the dollar amount of an offering only when the Regulation D of the Securities Act of 1933 is available to • Question 9 The provisions of the Securities Exchange Act of 1934 • Question 10 Which of the following is required under the Securities Exchange Act of 1934 or the SEC’s reporting requirements issued pursuant thereto? • Question 11 Under the provisions of the Securities Exchange Act of 1934, a corporation whose common stock is listed on a national stock exchange • Question 12 Which of the following are exempt from the registration requirements of the Securities Act of 1933?

22. • Question 13 Wane Corporation has issued securities that are traded on a national securities exchange. Wane just had a significant change in its assets due to a large acquisition of real property. Which of the following is true? • Question 14 Which of the following statements is(are) correct concerning issuers of securities registered under the Securities Exchange Act of 1934? • Question 15 Under Regulation D of the Securities Act of 1933, what is the maximum time period during which an exempt offering may be made? ********************************************* ACC 544 Week 3 Team Developing Internal Controls (2 Papers) For more classes visit www.snaptutorial.com

23. This Tutorial contains 2 Papers ACC 544 Week 3 Team Developing Internal Controls ********************************************* ACC 544 Week 4 Learning Team Assignment Controls for Inflows For more classes visits www.snaptutorial.com Design a proposal for appropriate controls to cover cash, sales, accounts receivable, inventory, and production *********************************************

24. ACC 544 Week 4 Team Internal Control for purchases, payroll and Fixed Assets (2 Papers) For more classes visit www.snaptutorial.com This Tutorial contains 2 Papers Include specific internal controls that include authorization of transactions, segregation of duties, adequate records and documentation, security of assets, and independent checks and reconciliation for each business area. The CFO, has again, asked for your assistance in developing internal controls, but this time, in the purchases, payroll, and fixed assets business areas. Write a report of approximately 1,400 to 2,450 words. · Describe typical activities · fixed assets business areas. Create a system of internal controls for the purchases, payroll, and · Discuss the associated risk in these areas.

25. Include specific internal controls that include authorization of transactions, segregation of duties, adequate records and documentation, security of assets, and independent checks and reconciliation for each business area ********************************************* ACC 544 Week 5 Learning Team Assignment Controls for Outflows For more classes visits www.snaptutorial.com Design a proposal for appropriate controls to cover purchasing, accounts payable, cash disbursements, finance, investment, and payroll. ********************************************* ACC 544 Week 5 Team Asset Governance (2 Papers)

26. For more classes visit www.snaptutorial.com This Tutorial contains 2 Papers ACC 544 Week 5 Team Asset Governance ********************************************* ACC 544 Week 6 Evaluating Internal Controls (2 Papers) For more classes visit www.snaptutorial.com

27. This Tutorial contains 2 Papers You have been hired to evaluate internal controls for your client organization. The CFO for your client wants a report outlining the evaluation to share with the Board of Directors. · deficiencies Evaluate the criteria to identify and report identified control · organizations. Analyze the reporting requirements for both public and private · major points. Paper provides sufficient background on the topic and previews · At least three sources are used · internal controls. Write a 1,400- to 2,450-word report showing your plan to evaluate · deficiencies. Evaluate the criteria to identify and report identified control · organizations. Analyze the reporting requirements for both public and private *********************************************

28. ACC 544 Week 6 Individual Assignment Controls for Information Technology (IT) and Reporting and Evaluation For more classes visits www.snaptutorial.com  Imagine you are a company controller.  Identify the internal control reporting options.  Create criteria against which the options may be evaluated. Include internal controls for IT. *********************************************  ACC 544 Week 6 Quiz (Auditing)

29. For more classes visit www.snaptutorial.com ACC 544 Week 6 Quiz (Auditing) • Question 1 a disadvantage for an entity that keeps microcomputer-prepared data files rather than manually prepared files? Which of the following statements most likely represents • Question 2 in the audit of an advanced computer system is that it enables the auditor to A primary advantage of using generalized audit packages • Question 3 a disadvantage for an entity that keeps microcomputer-prepared data files rather than manually prepared files? Which of the following statements most likely represents • Question 4 can be audited without examining or directly testing computer programs of the system? Which of the following client computer systems generally • Question 5 computer system. The auditor's study includes tests of controls that might include which of the following? An independent auditor studies and evaluates a client's • Question 6 amount over $1,000,000 that are included in a relational database, a likely approach to obtaining the list would be through a If a CPA wishes to identify all checks written for an

30. • Question 7 information technology used for internal control? Which of the following outcomes is a likely benefit of • Question 8 related to the computer portion of the client’s controls. Which of the following would not be a valid reason for choosing to omit tests of controls? An auditor may decide not to perform tests of controls • Question 9 added network for EDI transactions? Which of the following is an advantage of using a value- • Question 10 Which of the following is an auditor’s client most likely to use to perform queries requested by the auditor of a relational database? • Question 11 Which of the following are essential elements of the audit trail in an electronic data interchange (EDI) system? • Question 12 An auditor may use a "join" command in a database query to combine • Question 13 A CPA might find information on the structure of relational database tables through which language interface? • Question 14 Which of the following statements is correct concerning internal control in an electronic data interchange (EDI) system? • Question 15 Which of the following is usually a benefit of transmitting transactions in an electronic data interchange (EDI) environment? • Question 16 Which of the following is usually a benefit of using electronic funds transfer for international cash transactions? • Question 17 In building an electronic data interchange (EDI) system, what process is used to determine which elements in the entity's computer system correspond to the standard data elements?

31. • Question 18 Which of the following statements is correct concerning the security of messages in an electronic data interchange (EDI) system? • Question 19 In which of the following circumstances would an auditor expect to find that an entity implemented automated controls to reduce risks of misstatement? • Question 20 Carmel Department Store has an ERP information system and is planning to issue credit cards to creditworthy customers. To strengthen internal control by making it difficult for one to create a valid customer account number, the company’s independent auditor has suggested the inclusion of a check digit which should be placed • Question 21 Which of the following characteristics distinguishes electronic data interchange (EDI) from other forms of electronic commerce? • Question 22 Which of the following is an engagement attribute for an audit of an entity that processes most of its financial data in electronic form, without any paper documentation? • Question 23 Which of the following computer-assisted auditing techniques processes client input data on a controlled program under the auditor's control to test controls in the computer system? • Question 24 An auditor would least likely use computer software to • Question 25 Which of the following statements is not true of the test data approach to testing an accounting system? • Question 26 When an auditor tests a computerized accounting system, which of the following is true of the test data approach?When an auditor tests a computerized accounting system, which of the following is true of the test data approach?

32. • Question 27 A primary advantage of using generalized audit software packages to audit the financial statements of a client that uses an EDP system is that the auditor may • Question 28 Which of the following strategies would a CPA most likely consider in auditing an entity that processes most of its financial data only in electronic form, such as a paperless system? • Question 29 Which of the following is an engagement attribute for an audit of an entity that processes most of its financial data in electronic form, without any paper documentation? • Question 30 Which of the following computer-assisted auditing techniques processes client input data on a controlled program under the auditor's control to test controls in the computer • Question 31 In auditing an entity's computerized payroll transactions, an auditor would be least likely to use test data to test controls concerning • Question 32 Processing data through the use of simulated files provides an auditor with information about the operating effectiveness of control policies and procedures. • Question 33 An auditor would most likely be concerned with which of the following controls in a distributed data processing system? • Question 34 A retailing entity uses the Internet to execute and record its purchase transactions. The entity's auditor recognizes that the documentation of details of transactions will be retained for only a short period of time. To compensate for this limitation, the auditor most likely would • Question 35 Which of the following is a general control that would most likely assist an entity whose systems analyst left the entity in the middle of a major project?

33. • Question 36 When an auditor tests the internal controls of a computerized accounting system, which of the following is true of the test data approach? • Question 37 Which of the following most likely represents a significant deficiency in the internal control structure? • Question 38 Which of the following types of evidence would an auditor most likely examine to determine whether internal control structure policies and procedures are operating as designed? • Question 39 If a control total were computed on each of the following data items, which would best be identified as a hash total for a payroll EDP application? • Question 40 An auditor most likely would test for the presence of unauthorized EDP program changes by running a • Question 41 Which of the following controls most likely would assure that an entity can reconstruct its financial records? • Question 42 An auditor most likely would introduce test data into a computerized payroll system to test internal controls related to the • Question 43 Which of the following controls is a processing control designed to ensure the reliability and accuracy of data processing? • Question 44 Which of the following are essential elements of the audit trail in an electronic data interchange (EDI) system? • Question 45 Which of the following is an example of a validity check? • Question 46 Which of the following control procedures most likely could prevent EDP personnel from modifying programs to bypass programmed controls?

34. • Question 47 When evaluating internal control of an entity that processes sales transactions on the Internet, an auditor would be most concerned about the • Question 48 Which of the following procedures would an entity most likely include in its disaster recovery plan? • Question 49 An auditor who wishes to capture an entity's data as transactions are processed and continuously test the entity's computerized information system most likely would use which of the following techniques? • Question 50 In auditing an entity’s computerized payroll transactions, an auditor would be least likely to use test data to test controls concerning • Question 51 Which of the following is a computer-assisted audit technique that permits an auditor to use the auditor’s version of a client’s program to process data and compare the output with the client’s output? • Question 52 Which of the following could be difficult to determine because electronic evidence may not be retrievable after a specific period? • Question 53 When companies use information technology (IT) extensively, evidence may be available only in electronic form. What is an auditor’s best course of action in such situations? • Question 54 When an auditor tests the internal controls of a computerized accounting system, which of the following is true of the test data approach? • Question 55 When conducting fieldwork for a physical inventory, an auditor cannot perform which of the following steps using a generalized audit software package?

35. • Question 56 Which of the following is not a problem associated with the use of test data for computer-audit purposes? • Question 57 In parallel simulation, actual client data are reprocessed using an auditor software program. An advantage of using parallel simulation, instead of performing tests of controls without a computer, is that • Question 58 Which of the following is necessary to audit balances in an on-line EDP system in an environment of destructive updating? • Question 59 Which of the following passwords would be most difficult to crack? • Question 60 A computer-assisted audit technique that is most likely to be effective in a continuous auditing environment is • Question 61 Smith Corporation has numerous customers. A customer file is kept on disk storage. Each customer file contains name, address, credit limit, and account balance. The auditor wishes to test this file to determine whether credit limits are being exceeded. The best procedure for the auditor to follow would be to • Question 62 When an auditor tests a computerized accounting system, which of the following is true of the test data approach? • Question 63 An audit technique which involves actual analysis of the logic of a computer program’s processing routines is referred to as • Question 64 In auditing through a computer, the test data method is used by auditors to test the • Question 65 A primary advantage of using generalized audit software packages to audit the financial statements of a client that uses a computer system is that the auditor may

36. • Question 66 Which of the following is an advantage of generalized computer audit packages? • Question 67 The individual with whom an auditor would be most likely to discuss specific access controls within a client’s relational database management system is the • Question 68 Which of the following is not a technique to continuously test controls within a computer system? • Question 69 To obtain evidence that user identification and password controls are functioning as designed, an auditor would most likely • Question 70 When testing a computerized accounting system, which of the following is not true of the test data approach? • Question 71 Which of the following is not a major reason for maintaining an audit trail for a computer system? • Question 72 In building an electronic data interchange (EDI) system, what process is used to determine which elements in the entity's computer system correspond to the standard data elements? • Question 73 Which of the following is not a major reason for maintaining an audit trail for a computer system? • Question 74 Auditing by testing the input and output of a computer system instead of the computer program itself will • Question 75 An auditor anticipates assessing control risk at a low level in a computerized environment. Under these circumstances, on which of the following controls would the auditor initially focus? *********************************************

37. ACC 544 Week 6 Quiz (Internal Controls) For more classes visit www.snaptutorial.com ACC 544 Week 6 Quiz (Internal Controls) • Question 1 most effectively ensure that payment is made only for work performed? Which of the following payroll control activities would • Question 2 include which of the following? Effective internal control over the payroll function would • Question 3 distribution of payroll checks is to determine that every name on the payroll is that of a bona fide employee. The payroll observation is an auditing procedure that is generally performed for which of the following reasons? One of the auditor’s objectives in observing the actual • Question 4 requires that the paymaster deliver all unclaimed payroll checks to the A large retail enterprise has established a policy which

38. internal auditing department at the end of each payroll distribution day. This policy was most likely adopted in order to • Question 5 oriented enterprises would the auditor be most likely to place special emphasis on testing the controls over proper classification of payroll transactions? In the audit of which of the following types of profit- • Question 6 reliance placed on internal control varies in a relationship that is ordinarily The reliance placed on substantive tests in relation to the • Question 7 misstatement to An auditor uses the assessed level of the risk of material • Question 8 and distributing payroll checks is to separate the The purpose of segregating the duties of hiring personnel • Question 9 manuals and organizational flowcharts. What should the auditor do in an audit of financial statements? An audit client failed to maintain copies of its procedures • Question 10 As a result of tests of controls, an auditor assesses control risk too high. This incorrect assessment most likely occurred because • Question 11 To provide assurance that each voucher is submitted and paid only once, an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is • Question 12 A client erroneously recorded a large purchase twice. Which of the following controls would be most likely to detect this error in a timely and efficient manner? • Question 13 A client’s materials-purchasing cycle begins with requisitions from user departments and ends with the receipt of materials and the recognition of a liability. An auditor’s primary objective in reviewing this cycle is to

39. • Question 14 The company being audited has an internal auditor that is both competent and objective. The independent auditor wants to assign tasks for the internal auditor to perform. Under these circumstances, the independent auditor may • Question 15 An effective control that protects against the preparation of improper or inaccurate disbursements would be to require that all checks be • Question 16 During a financial statement audit an internal auditor may provide direct assistance to the independent CPA in performing • Question 17 When assessing internal auditors' objectivity, an independent auditor should • Question 18 Which of the following factors most likely would assist an independent auditor in assessing the objectivity of the internal auditor? • Question 19 Which of the following is the most effective control to detect vouchers that were prepared for the payment of goods that were not received? • Question 20 Miller Retailing, Inc. maintains a staff of three full-time internal auditors who report directly to the controller. In planning to use the internal auditors to provide assistance in performing the audit, the independent auditor most likely will • Question 21 The accounts payable department receives the purchase order form to accomplish all of the following except • Question 22 The independent auditor should acquire an understanding of the internal audit function as it relates to the independent auditor’s consideration of internal control because • Question 23 For effective internal control purposes, the vouchers payable department generally should

40. • Question 24 For which of the following judgments may an independent auditor share responsibility with an entity’s internal auditor who is assessed to be both competent and objective? • Question 25 If the independent auditor decides that the work performed by internal auditors may have a bearing on the independent auditor’s own procedures, the independent auditor should consider the objectivity of the internal auditors. One method of judging objectivity is to • Question 26 While obtaining an understanding of a client’s risk assessment policies, an auditor ordinarily considers how management • Question 27 Management’s attitude toward aggressive financial reporting and its emphasis on meeting projected profit goals most likely would significantly influence an entity’s control environment when • Question 28 Which of the following statements is correct regarding internal control? • Question 29 Which of the following factors is most relevant when an auditor considers the client’s organizational structure in the context of control risk? • Question 30 Which of the following analytical procedures most likely would be used during the risk assessment stage of an audit? • Question 31 Analytical procedures performed during the risk assessment phase of an audit should focus on • Question 32 Which of the following is an analytical procedure that an auditor most likely would perform when performing the risk assessment of an audit? • Question 33 Which of the following most likely would cause an auditor to consider whether a client’s financial statements contain material misstatements?

41. • Question 34 To help plan the nature, timing, and extent of substantive auditing procedures, preliminary analytical procedures should focus on • Question 35 When a customer fails to include a remittance advice with a payment, it is a common practice for the person opening the mail to prepare one. Consequently, mail should be opened by which of the following four company employees? • Question 36 Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom? • Question 37 An auditor’s tests of controls for completeness for the revenue cycle usually include determining whether • Question 38 An auditor reviews a client’s accounting policies and procedures when considering which of the following planning matters? • Question 39 An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using • Question 40 An auditor has identified the controller's review of the bank reconciliation as a control to test. In connection with this test, the auditor interviews the controller to understand the specific data reviewed on the reconciliation. In addition, the auditor verifies that the bank reconciliation is properly prepared by the accountant and reviewed by the controller as evidenced by their respective sign-offs. Which of the following types of audit procedures do these actions illustrate? • Question 41 Which of the following best represents a key control for ensuring sales are properly authorized when assessing control risks for sales? • Question 42 An auditor who uses a transaction cycle approach to assessing control risk most likely would test control activities related to transactions involving the sale of goods to customers with the

42. • Question 43 To determine whether internal control relative to the revenue cycle of a wholesaling entity is operating effectively in minimizing the failure to prepare sales invoices, an auditor most likely would select a sample of transactions from the population represented by the • Question 44 For effective internal control, the billing function should be performed by the • Question 45 At which point in an ordinary sales transaction of a wholesaling business would a lack of specific authorization be of least concern to the auditor in the conduct of an audit? • Question 46 Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal control in the revenue cycle? • Question 47 To verify that all sales transactions for which shipment has occurred have been recorded, a test of transactions should be completed on a representative sample drawn from • Question 48 After testing a client’s internal control activities, an auditor discovers a number of significant deficiencies in the operation of a client’s internal control. Under these circumstances the auditor most likely would • Question 49 Which of the following is true regarding significant deficiencies? • Question 50 During the audit the independent auditor identified the existence of a significant deficiency in the client’s internal control and communicated this finding in writing to the client’s management and to those charged with governance. The auditor should • Question 51 Which of the following statements is correct concerning an auditor’s communication on internal control related matters noted in an audit?

43. • Question 52 Which of the following would not typically be a control relied upon during an audit? • Question 53 The auditor would be least likely to be concerned about internal control as it relates to • Question 54 When preparing a record of a client’s internal control, the independent auditor sometimes uses a flowchart, which can best be described as a • Question 55 One important reason why a CPA, during the course of an audit engagement, prepares internal control flowcharts is to • Question 56 In an audit of financial statements, an auditor’s primary consideration regarding a control is whether the control • Question 57 Effective internal control requires organizational independence of departments. Organizational independence would be impaired in which of the following situations? • Question 58 An auditor would most likely be concerned with controls that provide reasonable assurance about the • Question 59 Proper segregation of functional responsibilities calls for separation of the • Question 60 Which of the following sets of duties would ordinarily be considered basically incompatible in terms of good internal control? • Question 61 A primary objective of procedures performed to obtain an understanding of internal control is to provide an auditor with • Question 62 Which of the following factors is most likely to affect the extent of the documentation of the auditor’s understanding of a client’s system of internal controls? • Question 63 Walk-throughs provide evidence that helps auditors to

44. • Question 64 An auditor’s tests of controls over the issuance of raw materials to production would most likely include • Question 65 Well functioning internal control for the inventory/production functions would provide that finished goods are to be accepted for stock only after presentation of a completed production order and a(n) • Question 66 Tests of controls are performed in order to determine whether • Question 67 Which of the following would be least likely to be included in an auditor’s tests of controls? • Question 68 Which of the following is not a step in an auditor’s decision to conclude that controls operate effectively? • Question 69 When an auditor plans to rely on controls that have changed since they were last tested, which of the following courses of action would be most appropriate? • Question 70 Which of the following is a step in an auditor’s decision to assess the risk of material misstatement at a low level by relying on controls? • Question 71 A client maintains a large data center where access is limited to authorized employees. How may an auditor best determine the effectiveness of this control activity? • Question 72 Which of the following is an inherent limitation of internal controls? • Question 73 An independent auditor has concluded that the client’s records, procedures, and representation can be relied upon based on tests made during the year when internal control was found to be effective. The auditor should test the records, procedures, and representations again at year-end if

45. • Question 74 When considering internal control to determine whether the necessary procedures are designed and operating effectively, an auditor must • Question 75 Which of the following is required documentation in an audit in accordance with generally accepted auditing standards? *********************************************