Information Technology Auditing 4th edition James A Hall

Information Technology Auditing 4e James A Hall

ISBN-10:1133949886 , ISBN-13:978-1133949886

Chapter 9—Auditing the Income Cycle

TRUE/FALSE

The packing slip is also referred to as the transport discover.
ANS: F PTS: 1

The invoice of lading is a authorized contract between the client and the vendor.
ANS: F PTS: 1

One other identify for the inventory launch type is the choosing ticket.
ANS: T PTS: 1

Warehouse inventory data are the formal accounting data for stock.
ANS: F PTS: 1

The aim of the bill is to invoice the client.
ANS: T PTS: 1

In most giant organizations, the journal voucher file has changed the formal common journal.
ANS: T PTS: 1

The money receipts journal is a particular journal.
ANS: T PTS: 1

Within the income cycle, the interior management “restrict entry” applies to bodily property solely.
ANS: F PTS: 1

In real-time processing programs, routine credit score authorizations are automated.
ANS: T PTS: 1

In a computerized accounting system, segregation of capabilities refers to stock management, accounts receivable, billing, and common ledger duties.
ANS: F PTS: 1

A written buyer buy order is required to set off the gross sales order system.
ANS: F PTS: 1

Figuring out that the AR steadiness states its internet realizable worth assessments the administration assertion of existence of incidence.
ANS: F PTS: 1

The principal supply doc within the gross sales order system is the gross sales order.
ANS: T PTS: 1

Gross sales orders must be prenumbered paperwork.
ANS: T PTS: 1

Batch management continues by means of all levels of knowledge processing.
ANS: T PTS: 1

If a buyer submits a written buy order, there isn’t a want to arrange a gross sales order.
ANS: F PTS: 1

Gross sales return entails receiving, gross sales, credit score, and billing departments, however not accounts receivable.
ANS: F PTS: 1

A remittance recommendation is a type of turn-around doc.
ANS: T PTS: 1

A invoice of lading is a request for cost for transport costs.
ANS: F PTS: 1

In level of sale programs, authorization takes the type of validation of bank card costs.
ANS: T PTS: 1

The warehouse is accountable for updating the stock subsidiary ledger.
ANS: F PTS: 1

In a guide system, the billing division is accountable for recording the sale within the gross sales journal.
ANS: T PTS: 1

The inventory launch doc is ready by the transport division to offer proof that the products have been launched to the client.
ANS: F PTS: 1

The accounts receivable clerk is accountable for updating the AR Management accounts to mirror every buyer sale.
ANS: F PTS: 1

When buyer funds are obtained, the mailroom clerk sends the checks to the money receipts clerk and the remittance advices to the AR clerk.
ANS: T PTS: 1

MULTIPLE CHOICE

The income cycle consists of
a.

one subsystem–order entry

b.

two subsystems–gross sales order processing and money receipts

c.

two subsystems–order entry and stock management

d.

three subsystems–gross sales order processing, credit score authorization, and money receipts

ANS: B PTS: 1

The reconciliation that happens within the transport division is meant to make sure that
a.

credit score has been permitted

b.

the client is billed for the precise amount shipped

c.

the products shipped match the products ordered

d.

stock data are decreased for the products shipped

ANS: C PTS: 1

The adjustment to accounting data to mirror the lower in stock resulting from a sale happens within the
a.

warehouse

b.

transport division

c.

billing division

d.

stock management division

ANS: D PTS: 1

Which doc triggers the income cycle?
a.

the gross sales order

b.

the client buy order

c.

the gross sales bill

d.

the journal voucher

ANS: B PTS: 1

Copies of the gross sales order can be utilized for all the following besides
a.

buy order

b.

credit score authorization

c.

transport discover

d.

packing slip

ANS: A PTS: 1

The aim of the gross sales bill is to
a.

report discount of stock

b.

switch items from vendor to shipper

c.

invoice the client

d.

choose objects from stock for cargo

ANS: C PTS: 1

The client open order file is used to
a.

reply to buyer queries

b.

fill the client order

c.

ship the client order

d.

authorize buyer credit score

ANS: A PTS: 1

The inventory launch copy of the gross sales order will not be used to
a.

find and choose the objects from the warehouse cabinets

b.

report any out-of-stock objects

c.

authorize the warehouse clerk to launch custody of the stock to transport

d.

report the discount of stock

ANS: D PTS: 1

The transport discover
a.

is mailed to the client

b.

is a proper contract between the vendor and the transport firm

c.

is at all times ready by the transport clerk

d.

informs the billing division of the portions shipped

ANS: D PTS: 1

The billing division will not be accountable for
a.

updating the stock subsidiary data

b.

recording the sale within the gross sales journal

c.

notifying accounts receivable of the sale

d.

sending the bill to the client

ANS: A PTS: 1

Prospects must be billed for back-orders when
a.

the client buy order is obtained

b.

the backordered items are shipped

c.

the unique items are shipped

d.

clients usually are not billed for backorders as a result of a backorder is a misplaced sale

ANS: B PTS: 1

Often particular authorization is required for all the following besides
a.

gross sales on account which exceed the credit score restrict

b.

gross sales of products on the checklist value

c.

a money refund for items returned and not using a receipt

d.

write off of an uncollectible account receivable

ANS: B PTS: 1

Which of following capabilities must be segregated?
a.

opening the mail and making the journal entry to report money receipts

b.

authorizing credit score and figuring out reorder portions

c.

sustaining the subsidiary ledgers and dealing with buyer queries

d.

offering info on stock ranges and reconciling the financial institution assertion

ANS: A PTS: 1

Which scenario signifies a weak inner management construction?
a.

the mailroom clerk authorizes credit score memos

b.

the report conserving clerk maintains each accounts receivable and accounts payable subsidiary ledgers

c.

the warehouse clerk obtains a signature earlier than releasing items for cargo

d.

the accounts receivable clerk prepares buyer statements each month

ANS: A PTS: 1

The best inner management process to forestall or detect the creation of fictitious credit score memoranda for gross sales returns is to
a.

supervise the accounts receivable division

b.

restrict entry to credit score memoranda

c.

prenumber and sequence examine all credit score memoranda

d.

require administration approval for all credit score memoranda

ANS: D PTS: 1

The accounts receivable clerk destroys all invoices for gross sales made to members of her household and doesn’t report the sale within the accounts receivable subsidiary ledger. Which process is not going to detect this fraud?
a.

prenumber and sequence examine all invoices

b.

reconcile the accounts receivable management to the accounts receivable subsidiary ledger

c.

put together month-to-month buyer statements

d.

reconcile complete gross sales on account to the debits within the accounts receivable subsidiary ledger

ANS: C PTS: 1

Which division is least more likely to be concerned within the income cycle?
a.

credit score

b.

accounts payable

c.

billing

d.

transport

ANS: B PTS: 1

Which doc is included with a cargo despatched to a buyer?
a.

gross sales bill

b.

inventory launch type

c.

packing slip

d.

transport discover

ANS: C PTS: 1

Good inner controls within the income cycle ought to guarantee all the following besides
a.

all gross sales are worthwhile

b.

all gross sales are recorded

c.

credit score is allowed

d.

stock to be shipped will not be stolen

ANS: A PTS: 1

Which management doesn’t assist to make sure that correct data are saved of buyer accounts and stock?
a.

reconcile accounts receivable management to accounts receivable subsidiary

b.

authorize credit score

c.

segregate custody of stock from report conserving

d.

segregate report conserving duties of common ledger from accounts receivable

ANS: B PTS: 1

Inner controls for dealing with gross sales returns and allowances don’t embrace
a.

computing dangerous debt expense utilizing the proportion of credit score gross sales

b.

verifying that the products have been returned

c.

authorizing the credit score memo by administration

d.

utilizing the unique gross sales bill to arrange the gross sales returns slip

ANS: A PTS: 1

The printer ran out of preprinted gross sales bill types and several other gross sales invoices weren’t printed. One of the best inner management to detect this error is
a.

a batch complete of gross sales invoices to be ready in comparison with the precise variety of gross sales invoices ready

b.

sequentially numbered gross sales invoices

c.

visible verification that every one gross sales invoices have been ready

d.

not one of the above will detect this error

ANS: A PTS: 1

Which division prepares the invoice of lading?
a.

Gross sales

b.

Warehouse

c.

Transport

d.

Credit score

ANS: C PTS: 1

A weekly reconciliation of money receipts would come with evaluating
a.

the money prelist with financial institution deposit slips

b.

the money prelist with remittance advices

c.

financial institution deposit slips with remittance advices

d.

journal vouchers from accounts receivable and common ledger

ANS: A PTS: 1

At which level is supervision most crucial within the money receipts system?
a.

accounts receivable

b.

common ledger

c.

mail room

d.

money receipts

ANS: C PTS: 1

A money prelist is
a.

a doc that data gross sales returns and allowances

b.

a doc returned by clients with their funds

c.

the supply of knowledge used to arrange month-to-month statements

d.

not one of the above

ANS: D PTS: 1

A bonus of real-time processing of gross sales is
a.

the money cycle is lengthened

b.

present stock info is out there

c.

exhausting copy paperwork present a everlasting report of the transaction

d.

information entry errors are corrected on the finish of every batch

ANS: B PTS: 1

Business accounting programs have absolutely built-in modules. The phrase “built-in” implies that
a.

segregation of duties will not be potential

b.

switch of knowledge amongst modules happens routinely

c.

batch processing will not be an possibility

d.

separate entries are made within the common ledger accounts and the subsidiary ledgers

ANS: B PTS: 1

The information processing technique that may shorten the money cycle is
a.

batch, sequential file processing

b.

batch, direct entry file processing

c.

real-time file processing

d.

not one of the above

ANS: C PTS: 1

Which of the next will not be a threat publicity in a PC accounting system?
a.

reliance on paper documentation is elevated

b.

capabilities which might be segregated in a guide surroundings could also be mixed in a microcomputer accounting system

c.

backup procedures require human intervention

d.

information are simply accessible

ANS: A PTS: 1

Which journal will not be used within the income cycle?
a.

money receipts journal

b.

gross sales journal

c.

purchases journal

d.

common journal

ANS: C PTS: 1

Periodically, the final ledger division receives all the following besides
a.

complete will increase to accounts receivable

b.

complete of all gross sales backorders

c.

complete of all gross sales

d.

complete decreases in stock

ANS: B PTS: 1

The credit score division
a.

prepares credit score memos when items are returned

b.

approves credit to accounts receivable when funds are obtained

c.

authorizes the granting of credit score to clients

d.

not one of the above

ANS: C PTS: 1

Changes to accounts receivable for funds obtained from clients is predicated upon
a.

the client’s examine

b.

the money prelist

c.

the remittance recommendation that accompanies cost

d.

a memo ready within the mailroom

ANS: C PTS: 1

The income cycle makes use of all the following recordsdata besides
a.

credit score memo file

b.

gross sales historical past file

c.

transport report file

d.

price information reference file

ANS: D PTS: 1

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