Figure 1-4 shows that organizational culture and the design of an AIS influence one another. What does this imply about the degree to which an innovative system developed by one company can be transferred to another company?
> The Journal of Accountancy (available at www.aicpa.org) has published a series of articles that address different aspects of disaster recovery and business continuity planning: 1. Gerber, J. A., and Feldman, E. R. 2002. “Is Your Busines
> During a recent review, ABC Corporation discovered that it has a serious internal control problem. It is estimated that the impact associated with this problem is $1 million and that the likelihood is currently 5%. Two internal control procedures have be
> a. Prepare and file a tax return with the tax owed to the Internal Revenue Service. b. A customer pays an invoice with a check. Accounts receivable is updated to reflect the payment. The check is recorded and deposited into the bank. c. A customer places
> Nino Moscardi, president of Greater Providence Deposit & Trust (GPD&T), received an anonymous note in his mail stating that a bank employee was making bogus loans. Moscardi asked the bank’s internal auditors to investigate the transactions detailed in th
> What is the difference between using check digit verification and a validity check to test the accuracy of an account number entered on a transaction record?
> The following description represents the policies and procedures for agent expense reimbursements at Excel Insurance Company. Agents submit a completed expense reimbursement form to their branch manager at the end of each week. The branch manager reviews
> For each of the three basic options for replacing IT infrastructure (cold sites, hot sites, and real-time mirroring) give an example of an organization that could use that approach as part of its DRP. Be prepared to defend your answer.
> Explain how the principle of separation of duties is violated in each of the following situations. Also, suggest one or more procedures to reduce the risk and exposure highlighted in each example. a. A payroll clerk recorded a 40-hour workweek for an emp
> Create data validation rules in a spreadsheet to perform each of the following controls: a. Limit check – that values in the cell are < 70 b. Range check – that values in the cell are between 15 and 65 c. Sign check – that values in the cell are positive
> Apply the value chain concept to S&S. Explain how it would perform the various primary and support activities.
> The department of taxation in your state is developing a new computer system for processing individual and corporate income-tax returns. The new system features direct data input and inquiry capabilities. Identification of taxpayers is provided by using
> An accountant with the Atlanta Olympic Games was charged with embezzling over $60,000 to purchase a Mercedes-Benz and to invest in a certificate of deposit. Police alleged that he created fictitious invoices from two companies that had contracts with the
> PriceRight Electronics (PEI) is a small wholesale discount supplier of electronic instruments and parts. PEI’s competitive advantage is its deep-discount, three-day delivery guarantee, which allows retailers to order materials often to minimize in-store
> The Langston Recreational Company (LRC) manufactures ice skates for racing, figure skating, and hockey. The company is located in Kearns, Utah, so it can be close to the Olympic Ice Shield, where many Olympic speed skaters train. Given the precision requ
> Compare the guidelines for preparing flowcharts, BPDs, and DFDs. What general design principles and limitations are common to all 3 documentation techniques?
> A bank auditor met with the senior operations manager to discuss a customer’s complaint that an auto loan payment was not credited on time. The customer said the payment was made on May 5, its due date, at a teller’s window using a check drawn on an acco
> Your classmate asks you to explain flowcharting conventions using real-world examples. Draw each of the major flowchart symbols from memory, placing them into one of four categories: input/output, processing, storage, and flow and miscellaneous. For ea
> Practice encryption using both any encryption capabilities provided by your computer’s operating system and by using third-party encryption software. Required: a. Use your computer operating system’s built-in encryption capability to encrypt a file. b. D
> The data processing cycle in Figure 2-1 is an example of a basic process found throughout nature. Relate the basic input/process/store/output model to the functions of the human body. Data Storage Data Information Data Input Processing Output
> In recent years, Supersmurf’s external auditors have given clean opinions on its financial statements and favorable evaluations of its internal control systems. Discuss whether it is necessary for this corporation to take any further action to comply wit
> Download a hash calculator that can create hashes for both files and text input. Use it to create SHA-256 (or any other hash algorithm your instructor assigns) hashes for the following: a. A document that contains this text: “Congratulations! You earned
> The chart of accounts must be tailored to an organization’s specific needs. Discuss how the chart of accounts for the following organizations would differ from the one presented for S&S in Table 2-4.
> Match the following terms with their definitions: Тегр Definition 1. Vulnerability a. Code that corrects a flaw in a program. 2. Exploit b. Verification of claimed identity. 3. Authentication c. The firewall technique that filters traffic by examini
> The ABC Company runs two shifts, from 8:00 AM to Midnight. Backups and system maintenance are performed between midnight and 8:00 AM. For each of the following scenarios, determine whether the company’s current backup procedures enable it to meet its rec
> Lancaster Company makes electrical parts for contractors and home improvement retail stores. After their annual audit, Lancaster’s auditors commented on the following items regarding internal controls over equipment: 1. The operations department that ne
> Figure 1-4 shows that developments in IT affect both an organization’s strategy and the design of its AIS. How can a company determine whether it is spending too much, too little, or just enough on IT?
> Spring Water Spa Company is a 15-store chain in the Midwest that sells hot tubs, supplies, and accessories. Each store has a full-time, salaried manager and an assistant manager. The sales personnel are paid an hourly wage and a commission based on sales
> Discuss the following statement by Roswell Steffen, a convicted embezzler: “For every foolproof system, there is a method for beating it.” Do you believe a completely secure computer system is possible? Explain. If internal controls are less than 100% ef
> You are an audit supervisor assigned to a new client, Go-Go Corporation, which is listed on the New York Stock Exchange. You visited Go-Go’s corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company
> Tralor Corporation manufactures and sells several different lines of small electric components. Its internal audit department completed an audit of its expenditure processes. Part of the audit involved a review of the internal accounting controls for pay
> Two ways to create processing integrity controls in Excel spreadsheets are to use the built-in Data Validation tool or to write custom code with IF statements. What are the relative advantages and disadvantages of these two approaches?
> The Howard Leasing Company is a privately held, medium-sized business that purchases school busses and leases them to school districts, churches, charitable organizations, and other businesses. To better serve its customers and, more important, to protec
> One function of the AIS is to provide adequate controls to ensure the safety of organizational assets, including data. However, many people view control procedures as “red tape.” They also believe that, instead of producing tangible benefits, business
> The value of information is the difference between the benefits realized from using that information and the costs of producing it. Would you, or any organization, ever produce information if its expected costs exceeded its benefits? If so, provide some
> What are some business processes for which an organization might use batch processing?
> Use the numbers 10–19 to show why transposition errors are always divisible by 9.
> a. Prepare a context diagram and at least two levels of DFDs for this process. b. Prepare a flowchart to document this process.
> What do you think an organization’s duty or responsibility should be to protect the privacy of its customers’ personal information? Why?
> Cost-effective controls to provide confidentiality require valuing the information that is to be protected. This involves classifying information into discrete categories. Propose a minimal classification scheme that could be used by any business, and pr
> Match the terms with their definitions: 15. Asymmetric encryption O. An encryption process that uses a pair of matched keys, one public and the other private. Either key can encrypt something, but only the other key in that pair can decrypt it. 16.
> 1. How does Miller fit the profile of the average fraud perpetrator? 2. Explain the three elements of the opportunity triangle (commit, conceal, convert) and discuss how Miller accomplished each when embezzling funds from Associated Communications. What
> Match the internet related computer fraud and abuse technique in the left column with the scenario in the right column. Terms may be used once, more than once, or not at all.
> What motives do people have for hacking? Why has hacking become so popular in recent years? Do you regard it as a crime? Explain your position.
> You were hired to assist Ashton Fleming in designing an accounting system for S&S. Ashton has developed a list of the journals, ledgers, reports, and documents that he thinks S&S needs (see Table 2-6). He asks you to complete the following tasks: a. Spec
> Assume you have interviewed for a job online and now receive an offer of employment. The job requires you to move across the country. The company sends you a digital signature along with the contract. How does this provide you with enough assurance to tr
> Can the characteristics of useful information listed in Table 1-1 be met simultaneously? Or does achieving one mean sacrificing another?
> For each of the following scenarios identify which data processing method (batch or online, real-time) would be the most appropriate. a. Make an airline reservation b. Register for a university course c. Prepare biweekly payroll checks d. Process an orde
> You were asked to investigate extremely high, unexplained merchandise shortages at a department store chain. Classify each of the five situations as a fraudulent act, an indicator of fraud, or an event unrelated to the investigation. Justify your answers
> Draw a context diagram and at least two levels of DFDs for the preceding operations.
> Enter the tables in Table 4-15 into a relational DBMS package. Write queries to answer the following questions. Note: For some questions, you may have to create two queries—one to calculate a total and the second to answer the question asked. a. Which c
> Compare and contrast the following three frameworks: COBIT, COSO Integrated Control, and ERM.
> Retrieve the S&S In-Chapter Database (in Microsoft Access format) from the text’s website (or create the tables in Table 4-5 in a relational DBMS product). Write queries to answer the following questions. Note: For some questions, you may have to create
> Create a spreadsheet to compare current monthly mortgage payments versus the new monthly payments if the loan were refinanced, as shown (you will need to enter formulas into the two cells with solid borders like a box: D9 and D14) a. Restrict access to t
> From the database created in the comprehensive problem, perform queries based on the tables and query grid shown in Table 4-19. a. Which borrowers use Advent Appraisers? b. What is the average amount borrowed from National Mortgage? c. List all of the pr
> Create relational tables that solve the update, insert, and delete anomalies in Table 4-18.
> Create relational tables that solve the update, insert, and delete anomalies in Table 4-17.
> You want to extend the schema shown in Table 4-16 to include information about customer payments. Some customers make installment payments on each invoice. Others write a check to pay for several different invoices. You want to store the following inform
> As in all areas of IT, DBMSs are constantly changing and improving. Research how businesses are using DBMSs, and write a report of your findings. Address the following issues: 1. Which popular DBMS products are based on the relational data model? 2. Whic
> The relational data model represents data as being stored in tables. Spreadsheets are another tool that accountants use to employ a tabular representation of data. What are some similarities and differences in the way these tools use tables? How might an
> Contrast the logical and the physical views of data and discuss why separate views are necessary in database applications. Describe which perspective is most useful for each of the following employees: a programmer, a manager, and an internal auditor. Ho
> Compare and contrast the file-oriented approach and the database approach. Explain the main advantages of database systems.
> Some restaurants use customer checks with prenumbered sequence codes. Each food server uses these checks to write up customer orders. Food servers are told not to destroy any customer checks; if a mistake is made, they are to void that check and write
> An audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from amounts in the financial statements to source documents. Describe in detail the audit trail for the following: a. The audit tr
> What is a data dictionary, what does it contain, and how is it used?
> Accountants often need to print financial statements with the words “CONFIDENTIAL” or “DRAFT” appearing in light type in the background. a. Create a watermark with the word “CONFIDENTIAL” in a Word document. Print out a document that displays that water
> Why is it so important to have good data?
> Relational DBMS query languages provide easy access to information about the organization’s activities. Does this mean that online, real-time processing should be used for all transactions? Does an organization need real-time financial reports? Why or wh
> Some people believe database technology may eliminate the need for double-entry accounting. This creates three possibilities: (1) the double-entry model will be abandoned; (2) the double-entry model will not be used directly, but an external-level sche
> a. Prepare a context diagram and level 0 DFD to document the payroll processing system at No-Wear Products. b. Prepare a document flowchart to document the payroll processing system at No-Wear Products.
> Prepare a BPD that documents Beccan’s business processes.
> At Angic Insurance Company begins processing casualty claims when the claims department receives a notice of loss from a claimant. The claims department prepares and sends the claimant four copies of a proof-of-loss form on which the claimant must detail
> a. Prepare a system flowchart of the process described. b. Prepare a business process diagram for the process described.
> When you go to a movie theater, you buy a prenumbered ticket from the cashier. This ticket is handed to another person at the entrance to the movie. What kinds of irregularities is the theater trying to prevent? What controls is it using to prevent th
> The CISO of the ABC Company is considering how to increase the strength of employee passwords. Currently, passwords must be eight characters, they must be case-sensitive, and they must contain at least two numbers. a. Calculate the size of the search sp
> The following discussion took place between Tony Cork, the office manager of Hallmark Data Company, and a new accountant, Cassie Miles: Cassie: I’ve been thinking about our method of recording entries. It seems inefficient. Tony: In what way? Cassie: Wel
> Outdoor Leadership School is a newly organized business that teaches people how to inspire and influence others. The list of accounts to be opened in the general ledger is as follows: Accounts Payable Accounts Receivable Cash Equipment Fees Earned Lorri
> Bozeman College requires students to pay tuition each term before classes begin. Students who have not paid their tuition are not allowed to enroll or to attend classes. What journal entry do you think Bozeman College would use to record the receipt of t
> The complexity of the current business and regulatory environment has increased the demand for individuals in all fields of business who have the ability to analyze business transactions and interpret their effects on the financial statements. Search the
> The transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business’s operations: July 1. Peyton Smith made an additiona
> On August 1, 2019, Rafael Masey established Planet Realty, which completed the following transactions during the month: a. Rafael Masey transferred cash from a personal bank account to an account to be used for the business, $17,500. b. Purchased supplie
> Indicate which of the following errors, each considered individually, would cause the trial balance totals to be unequal: a. A fee of $21,000 earned and due from a client was not debited to Accounts Receivable or credited to a revenue account, because th
> The accounts in the ledger of Hickory Furniture Company as of December 31, 2019, are listed in alphabetical order as follows. All accounts have normal balances. The balance of the cash account has been intentionally omitted. Prepare an unadjusted trial
> Based upon the data presented in Exercise 2-13, (a) Prepare an unadjusted trial balance, listing the accounts in their proper order. (b) Based upon the unadjusted trial balance, determine the net income or net loss. In Exercise 2-13 National Park Tours
> Ken Jones, an architect, opened an office on April 1, 2019. During the month, he completed the following transactions connected with his professional practice: a. Transferred cash from a personal bank account to an account to be used for the business, $1
> Based upon the T accounts in Exercise 2-13, prepare the nine journal entries from which the postings were made. Journal entry explanations may be omitted. In Exercise 2-13 National Park Tours Co. is a travel agency. The nine transactions recorded by Nat
> Assume that Sunshine Realty Co. borrowed $300,000 from Columbia First Bank and Trust. In recording the transaction, Sunshine erroneously recorded the receipt as a debit to Cash, $300,000, and a credit to Fees Earned, $300,000. (a) How would this error af
> Two income statements for Paragon Company follow: Prepare a horizontal analysis of Paragon Company’s income statements. Paragon Company Income Statements For Years Ended December 31 2019 2018 Fees earned $1416,000 $1,200,000 Opera
> Two income statements for Fuller Company follow: Prepare a horizontal analysis of Fuller Company’s income statements. Fuller Company Income Statements For Years Ended December 31 2019 2018 Fees earned $680,000 $850,000 Operating e
> Assume that Muscular Consulting erroneously recorded the payment of $7,500 of owner withdrawals as a debit to Salary Expense. (a) How would this error affect the equality of the trial balance? (b) How would this error affect the income statement, stateme
> The following errors took place in journalizing and posting transactions: a. The receipt of $8,400 for services rendered was recorded as a debit to Accounts Receivable and a credit to Fees Earned. b. The purchase of supplies of $2,500 on account was reco
> National Park Tours Co. is a travel agency. The nine transactions recorded by National Park Tours during May 2019, its first month of operations, are indicated in the following T accounts: Indicate for each debit and each credit (a) whether an asset, l
> The following errors took place in journalizing and posting transactions: a. Rent expense of $4,650 paid for the current month was recorded as a debit to Miscellaneous Expense and a credit to Rent Expense. b. The payment of $3,700 from a customer on acco
> Assume that when a purchase of supplies of $2,650 for cash was recorded, both the debit and the credit were journalized and posted as $2,560. (a) Would this error cause the trial balance to be out of balance? (b) Would the trial balance be out of balance
> For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is highe
> Tech Support Services has the following unadjusted trial balance as of January 31, 2019: The debit and credit totals are not equal as a result of the following errors: a. The cash entered on the trial balance was overstated by $8,000. b. A cash receipt
> For each of the following errors, considered individually, indicate whether the error would cause the trial balance totals to be unequal. If the error would cause the trial balance totals to be unequal, indicate whether the debit or credit total is highe
> Identify each of the following accounts of Dispatch Services Co. as asset, liability, owner’s equity, revenue, or expense and state in each case whether the normal balance is a debit or a credit: a. Accounts Payable b. Accounts Receivable c. Ashley Griff
> On August 1, the supplies account balance was $1,025. During August, supplies of $3,110 were purchased, and $1,324 of supplies were on hand as of August 31. Determine supplies expense for August.
> On July 1, the cash account balance was $37,450. During July, cash payments totaled $115,860 and the July 31 balance was $29,600. Determine the cash receipts during July.
> During the month, Midwest Labs Co. has a substantial number of transactions affecting each of the following accounts. State for each account whether it is likely to have (a) Debit entries only, (b) Credit entries only, or (c) Both debit and credit entrie
