The most effective internal control procedure to prevent or detect the creation of order goods from vendors

fictitious credit memoranda for sales returns is to

require management approval for all credit memoranda The open purchase order file in the purchasing department is used to determine
the orders that have not been received

Internal controls for handling sales returns and allowances do not include The receiving report is used to
computing bad debt expense using the percentage of credit sales accompany physical inventories to the storeroom or warehouse

When a copy of the receiving report arrives in the purchasing department, it is used to
The printer ran out of preprinted sales invoice forms and several sales invoices were
recognize the purchase order as closed
not printed. The best internal control to detect this error is
a batch total of sales invoices to be prepared compared to the actual number of
In a merchandising firm, authorization for the payment of inventory is the
sales invoices prepared
responsibility of
accounts payable
An advantage of real-time processing of sales is
current inventory information is available
In a merchandising firm, authorization for the purchase of inventory is the
responsibility of
Commercial accounting systems have fully integrated modules. The word "integrated"
inventory control
means that
transfer of information among modules occurs automatically
When purchasing inventory, which document usually triggers the recording of a
liability?
The data processing method that can shorten the cash cycle is
supplier's invoice
real-time file processing
Usually the open voucher payable file is organized by
Periodically, the general ledger department receives all of the following except
payment due date
total of all sales backorders
Which of the following statements is not correct?
Adjustments to accounts receivable for payments received from customers is based
the sum of the paid vouchers represents the voucher payable liability of the firm
upon
the remittance advice that accompanies payment
Of the following duties, it is most important to separate
warehouse from inventory control
Which document is NOT prepared by the sales department?
bill of lading
The major risk exposures associated with the receiving department include all of the
following except
Which type of control is considered a compensating control?
the audit trail is destroyed
supervision
n regards to the accounts payable department, which statement is not true?
Which of the following is NOT a common method for achieving multilevel security?
the purchase order proves that the purchase was required
Application integrity
In a computerized system that uses an economic order quantity (EOQ) model and the
In an integrated cash receipts system, which of the following is not a task of the mail
perpetual inventory method, who determines when to reorder inventory?
room clerk?
Make bank deposit the computer system
The purpose of the purchase requisition is to The document which will close the open purchase requisition file is the
authorize the purchasing department to order goods receiving report
The purpose of the purchase order is to If a company uses a standard cost system, inventory records can be updated from the
receiving report
If a company uses an actual cost system, inventory records can first be updated from
the
vendor invoice
The receiving report accompanies the goods to the storeroom
A supplier invoice is sent by vendor to accounts payable
The cash disbursement function is a treasury function
Which of the following is not a characteristic of the Fixed Asset System?
Acquisitions are routine transactions requiring general authorization.
Which of the following statements is not true?
Payroll clerks must verify the hours reported on the time cards.
Why would an organization require the paymaster to deliver all unclaimed paychecks
to the internal audit department?
to detect a "phantom employee" for whom a check was produced
The payroll department performs all of the following except
distributes paychecks
The Fixed Asset System performs all of the following except
determines the need for new assets
Which of the following works through wallets, purses and card holders?
Proximity cards
Which of the following is NOT an input control to reduce the risks of data entry errors
and payroll fraud for a company with a mobile or distributed work force?
Multilevel security that achieves segregation of duties
An example of a continuous process is the production of
milk products
A move ticket
records the work done in each work center
Inventory control performs all of the following tasks except it
prepares a materials requisition for each production batch
The storekeeper releases raw materials based on the
materials requisition
Which of the following is not an assumption of the Economic Order Quantity model?
total cost per year of placing orders is fixed
Which of the following is not a problem associated with standard cost accounting? All
Computer integrated manufacturing includes all of the following technologies except
materials requirements planning
Process simplification focuses on
reducing the complexity of the physical manufacturing layout of the shop floor
A manufacturing process that is organized into group technology cells utilizing no
human labor is called
computer integrated manufacturing
An example of automation of manufacturing design is
Computer Aided Engineering
An example of automation of manufacturing planning is
Materials Requirements Planning
Which of the following is not true?
Value stream accounting captures costs related to value added activities within a
specified department or activity.
Characteristics of lean manufacturing include all of the following except
push manufacturing
The cost of poor quality includes all of the following except
proceeds from the sale of scrap
A flexible manufacturing system
shortens the physical distance between activities
Deficiencies of the traditional cost accounting information system include all of the
following except
immediate feedback about deviations from the norm
Which statement is not correct?
cost object describes the work performed in a firm
Firms are abandoning Activity Based Costing (ABC) because
it is complex and time consuming
In traditional firms, information reporting
provides financially oriented information relating to operations
Which of the following statements about the EOQ inventory model assumptions is
incorrect?
The lead time is a variable.
Which statement is not correct?
Inventories provide a competitive advantage.
All of the following are documents in batch process production systems except
bill of manufacturing
Transaction authorization occurs in a traditional manufacturing environment in all of
the following ways except
the sales department modifies work orders to match changes in demand
Which of the following is not a principle of lean manufacturing?
Products are pushed from the production end to the customer
All of the following are problems with traditional accounting information except:
a.Managers in a lean setting require immediate information.
b.The measurement principle tends to ignore standards other than money.
c.Standard costing motivates nonlean behavior in operations.
d.The overhead component in a manufacturing company is usually very large.
e.All of the above are problems associated with traditional accounting information.
Which statement is not true/
Journal vouchers are not used to make adjusting entries and closing entries in the
general ledger.
Entries into the General Ledger System (GLS) can be made using information from
a.the general journal
b.a journal voucher which represents a summary of similar transactions
c.a journal voucher which represents a single, unusual transaction
d.all of the above
Which statement is not correct?
The general ledger master file is an output of the Financial Reporting System (FRS)
What type of data is found in the general ledger master file?
the balance of each account in the chart of accounts
Which report is not an output of the Financial Reporting System (FRS)?
variance analysis report
Which steps in the Financial Accounting Process are in the correct sequence?
record the transaction, post to the ledger, prepare the adjusted trial balance, prepare
financial statements, record closing entries
Which statement is not correct?
financial statements are prepared based on the unadjusted trial balance
What account appears on the post closing trial balance?
machinery
Financial statements are prepared from the
adjusted trial balance
Risk exposures in the General Ledger and Financial Reporting Systems include all of
the following except
loss of physical assets
Which situation indicates an internal control risk in the General Ledger/Financial
Reporting Systems (GL/FRS)?
the employee who maintains the cash receipts journal records transactions in the
accounts receivable subsidiary ledger
With a limited work force and a desire to maintain strong internal control, which
combination of duties performed by a single individual presents the least risk
exposure?
maintaining the cash disbursements journal and recording direct labor costs applied to
specific jobs
Which best describes a batch process General Ledger System (GLS)
there is a time lag between transaction processing and posting to the general ledger
An advantage of a batch General Ledger System (GLS) is that updates and
reconciliation of transactions occur as a step within the transaction cycle
XBRL
was designed to provide the financial community with a standardized method for
preparing
An XBRL taxonomy:
is a classification scheme.
A characteristic of the Management Reporting System (MRS) is
the MRS focuses on internal decision-making information
Which statement is not true?
authority refers to an individual's obligation to achieve desired results
Which statement is not true? The manager's span of control
is narrow for routine and repetitive tasks
Short-range planning involves
planning the production schedule for the next quarter
Long-range planning involves
deciding the optimum size of the firm

The level of management that makes tactical planning decisions is
middle management
The decision to enter a new market is an example of
strategic planning
All of the following are elements of operational control decisions except
determining the scope of the activity
In contrast to tactical planning decisions, management control decisions, and
operational control decisions, strategic planning decisions usually
are unstructured
Which of the following management principles affects the management reporting
system?
a. formalization of tasks
b.authorization
c.span of control
d.all of the above
All of the following are elements of problem structure except
certainty
All of the following are examples of programmed reports except
year-to-date local income tax payments made by all employees living in City X and
working in City Y
A fundamental principle of responsibility accounting is that
managers are accountable only for items they control
Which statement is not true? Responsibility accounting
acknowledges that some economic events cannot be traced to any manager
What mechanism is used to convey to managers the standards by which their
performance will be measured?
the budget
All of the following concepts encourage goal congruence except
detailed information reporting at all management levels
Which of the following statements is NOT true?
XML stands for eXperimental Markup Language.
Which file has as its primary purpose to present comparative financial reports on a
historic basis?
general ledger history file
All of the following are characteristics of the strategic planning process except the
emphasis on both the short and long run.
Which of the following performance measures cannot result in dysfunctional behavior?
a. price variance
b.quotas
c.ROI
d.net income
e.all of the above can result in dysfunctional behavior
Which of the following best describes a profit center:
authority to make decisions affecting the major determinants of profit, including the
power to choose its markets and sources of supply.
Which of the following budgeting processes is least likely to motivate managers
toward organizational goals?
setting budget targets at attainable levels
Management reporting is often called discretionary reporting because
it is not mandated as is financial reporting.
Lean manufacturing evolved from the Toyota Production System (TPS), which is
based on the just-in-time (JIT) production model.
True
One reason for authorizing purchases is to enable efficient inventory management.
True
What is a process cost system?
homogeneous product, steel aluminum, glass, continuous production
What types of industries use a continuous process cost system?
steel, cement, flour
What are the primary characteristics of batch processing systems?
process in huge quantities
What are ERP systems and what are some of their characteristics?
enterprise resource planning systems
integrated data processing system
What is a production schedule?
Formal plan and authorization to begin production
--document that tells us when we are going to produce something
What is a move ticket?
Document that records work done in each work center and authorizes the movement of
the job or batch from one work center to the next
--document that follows a batch through its process to see where its at
What is the internal control significance of the excess materials requisition?
designed to control materials, prevents people from taking too much material
What tasks does inventory control performs?
responsible for controlling inventory and reproduction
The storekeeper releases raw materials based on what document?
materials requisition
What are the assumptions of the Economic Order Quantity model?
...The cost of the ordering remains constant.
The demand rate for the year is known and evenly spread throughout the year.
The lead time is not fluctuating (lead time is the latency time it takes a process to
initiate and complete).
No cash or settlement discounts are available, and the purchase price is constant for
every item.
The optimal plan is calculated for only one product.
There is no delay in the replenishment of the stock, and the order is delivered in the
quantity that was demanded, i.e. in whole batch.
What is used to make entries into the General Ledger System (GLS)?
voucher journal
What are the risk exposures in the General Ledger and Financial Reporting Systems
errors can occur
What are the primary internal controls in the General Ledger/Financial Reporting
Systems (GL/FRS)?
access controls, segregation of duties, supervision controls
What are the advantages of a batch General Ledger System (GLS)?
real time, post automatically, control
What is XBRL
(eXtensible Business Reporting Language)
XML-based language that was designed to provide the financial community with a
standardized method for preparing, publishing, and automatically exchanging financial
information, including financial statements of publicly held companies
Extensible Business Reporting Language - uses data tags to describe financial
information for business and financial reporting, tells computers how to interpret
information.
Taxonomy - specific tags used for individual items of business and financial data
(GAAP, IFRS, etc..)
What does short-range planning involve?
day to day operations, data is fairly well known, short range planning