Quiz Chapter 1
1. What is data? What is information? (p.10)
Data are facts, which may or may not be processed and have no direct effect on a user’s actions.
Information causes the user to take an action that he or she otherwise could not, or would not have taken.
2. List tasks of database management. (p.12)
Three database management tasks are data storage, data retrieval, and data deletion.
3. What services could not public accountings provide with their audit clients? (p.22)
There are:
Bookkeeping or other services related to the accounting records or financial statements of the audit client;
Financial information systems design and implementation;
Appraisal or valuation services, fairness opinions, or contribution-in-kind
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4. What are the three broad categories of IT application controls? (p.118)
They are: input controls, processing controls, and output controls.
Quiz Chapter 5
1. What document triggers the purchase process? (p.212)
It is the purchase requisition.
2. What is the purpose of a blind copy of purchase order? (p.214)
A blind copy could force the receiving clerk to count and inspect inventories prior to completing the receiving report, thus the quantity and condition of the goods could be verified.
3. What are the documents in the three-way match? (p.217)
They are: the supplier’s invoice, the receiving report and the purchase order in the AP pending file.
4. What traditional accounting records does vendor invoice file substitute in the integrated purchase system? (p.232)
Purchase journal and accounts payable subsidiary ledger.
5. In the receiving area, what activities need supervision? (p.226)
Supervision should be in place to ensure that the clerks inspect and count the items received to protect the firm from unintentionally accepting incomplete orders and damaged goods.
Also, incoming goods are exposed to theft until they are securely placed in the warehouse. Supervision should be in place to prevent such
SMW’s current accounting information system is a cutting edge relational database system through Microsoft Access with internal controls set to adequately prevent and detect errors and fraud. This relational database system tracks sales orders, shipments, accounts receivable, cash receipts, purchases, accounts payable, cash disbursements, inventory levels and other relevant accounting information. The system’s output is compliant with Generally Accepted Accounting Principles (GAAP). The database processes currently in use at SMW are described below.
Classification: Posting of sales transaction to proper account: tested when accuracy tested; focus on unusual items
This control is directly related to the accuracy transaction-related audit objective for sales. The auditor might test the effectiveness of this control by examining a sample of duplicate sales invoices for the clerk’s initials indicating that the unit selling price was verified.
Sales invoices are prepared in batches on a daily basis using numbered sales invoices. Sales invoice numbers are automatically generated by the company’s computer system. The accounts receivable clerk does not have appropriate computer rights to override the computer-generated invoice number. Upon preparing sales invoices, the accounts receivable clerk verifies that the first invoice number of the batch is consistent with the last invoice number of the previous batch. Inconsistencies or skipped sales invoice numbers are investigated and resolved before new sales invoices are prepared. The items shipped are compared to the items billed for proper quantity, price, and other sales order terms.
Data is defined as useful raw material which is intended to be useful for both the originator and for the intended receiver. Data consists largely of facts and figures ideal for communicating the intended meaning. This data can be interpreted and can be categorised as follows;
This worker should be restricted from taking stock. Close surveillance ought to diminish this danger. Pre-numbered dispatching forms that should be held responsible for may prevent this representative from transporting any merchandise to themselves or companions. Carrying out occasional surprise stock and resource counts and resolving the counts to the quantity documented in the records should make surveillance more practical. Utilizing systematic analysis to screen for bizarre patterns, for example, rising stock deficiencies is needed. Occasionally contrasting client and vendor addresses with those of representatives to keep workers from delivering products to themselves is likewise imperative. The bookkeeping function ought to be shared between the remaining two representatives and close surveillance ought to be carried out.
The entries used to record the disposition when the receivables are sold to a factor often detail the cash received plus the service charge. The company can then balance their receivables account. When a credit card company records a credit card
With every internal control weakness a company needs to identify either a control policy or control procedure that will help prevent error or fraud from occuring in the future. Based on my suggestions as to what weaknesses existed at Goodner Brothers, Inc. I have suggested the policies or procedures that could be implemented to help prevent future issues. The internal control I would implement to hinder employee access to the accounting system would be to secure all computer programs with individual usernames and passwords to prevent access from others. The bookkeeper should be the only employee with access to the accounting system and to test this procedure the company would need to try and access the software without a username and password. To monitor the storage warehouse situation, the company should install computer scanning systems and video cameras at each location to supervize whether tires are being scanned in and out upon delivery and pick-up and to determine who and when these transactions are taking place. Semi-annual reviews should be conducted by sales managers to evaluate their sales representative. In addition, strengthening the tone at the top mentality should lie in the hands of each owner by personally reviewing all sales managers to create a top down effect.
By implementing and maintain multi-person checking systems, physical and electronic barriers and only allowing the minimum number of necessary people access to areas, cash and the ability to do certain tasks it helps ensure the safety of the company's assets. Different employees in the accounts department having checks in place to confirm balances match ensures that cash and equivalents are
Lower the risk of employees mis-ringing items, for example, just to complete the transaction and keep customers from waiting.
The company accounts for these transactions as sales in accordance with Statement of Financial Accounting Standards No. 77, ‘’Reporting
Data comprises of factual information. Data are the facts from which information is derived. Data is not necessarily informative on its own but needs to be structured, interpreted, analysed and contextualised. Once data undergoes this process, it transforms in to information. Information should be accessible and understood by the reader without needing to be interpreted or manipulated in any way.
Trace items returned to the receiving report, taking note of quantity and date received (S‑4).
d. Trace the date, check number, and amount of outstanding item – Occurrence & Completeness. (AU-C 315.A114 a.i-ii)
Feedback: Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers inside the enterprise. LO 4