ACCTG 503 Questions Compilation (11:30-1:00)

Chapter 4
1. S1: The backup and recovery feature of DBMS is said to be of great help in the event of
a disaster for it absolutely recovers all data and with that, there would be no data loss.
S2: With access to full domain of entity data, changes in user information needs can be
satisfied without obtaining additional private data sets.
a. Both statements are true
b. Both statements are false
c. Only S1 is true
d. Only S2 is true

2. S1: The only way to access the data in a database is through the DBMS.
S2: An advantage of database systems is that you needn't perform frequent updates and
apply latest patches.
a. Both statements are true
b. Both statements are false
c. Only S1 is true
d. Only S2 is true

3. It is a piece of information that determines the properties of a field or tag in a database.

a. Data Element
b. Attribute
c. Record type
d. Query

4. S1: One of the operation and maintenance function of the database administrator is to
establish programming standards.
S2: Both the hierarchical and relational model are termed navigational model because of
explicit linkages or paths among their data elements.
a. Both statements are true
b. Both statements are false
c. Only S1 is true
d. Only S2 is true

5. Which of the following association best describes the relationship of data in hierarchical
model?
a. One-to-One Relationship
b. One-to-Many Relationship
c. Many-to-Many Relationship
d. Data has no relationship

6. Which of the following characteristics is true in a properly designed table of a relational

model?
a. All occurrences at the intersection of a row and a column may have multiple values
b. The attribute values in any column comes from different classes
c. Each column in a given table must be uniquely named
d. Each column in the table must be unique in at least one attribute. This attribute is the
primary key.
 7. Which of the following is true about deadlock resolution?
a. It involves terminating all transactions to complete processing the other transactions.
b. The preempted transaction doesn’t need to be reinitiated.
c. In preempting transactions, the deadlock resolution software doesn’t care about cost
of breaking the deadlock, as long as it solves the problem.
d. In general, deadlock resolution software will avoid terminating transaction that
is close to completion.

8. Which of the following is not a characteristic of replicated databases?

a. It supports read-only queries.
b. Effective in companies where there exists a high degree of data sharing and no
primary user.
c. Lockouts and delays due to traffic are minimized.
d. Primary users are allowed on special circumstances to alter the database for
the benefit of the other users.

9. In GFS Backup Technique, who determines the desired number of backup master files?
a. IS auditor
b. Security Administrator
c. System Designer
d. Database Administrator

10. When the system is in a quite state, the audit trail of all processed transactions as well
as database change log is reconciled against the database.
a. True
b. False

Chapter 5
1. The following are the responsibilities of a systems steering committee of an organization,
except:
a. Resolving conflicts arising from existing systems
b. Budgeting funds for systems development
c. Reviewing alternative project systems
d. None of the above

2. When performing a cost-benefit analysis, the escapable costs of the current system shall
be treated as a/an:
a. Increase in total costs
b. Decrease in tangible benefits
c. Increase in tangible benefits
d. A and B
3. When doing an operational feasibility of a project, one determines if:
a. the project, when put into operations, would bring benefits that would outweigh costs
b. the company’s operations are able to comply with regulations and statutes
c. the firm’s operational procedures and skills are compatible with the
requirements of the new system
d. the project would help increase the efficiency and effectiveness of the operations of
the firm
4. You are tasked to choose between two competing designs, using the net present value.
Design A has a net present value of PhP 32,000, while Design B generated a net present
value of PhP 38,000. Limited to these information, which design must you choose, and
why?
a. Design A, because it will also entail a lower payback period
b. Design A, because the project would breakeven within a shorter period of time
c. Design B, because the present value of all costs would be outweighed by the present
value of total benefits
d. None of the above

5. The following are recurring costs of a system, except:

a. Premiums of insurance covering the system from hazards and disasters
b. General office supplies used
c. Repairs and maintenance costs of the computer and peripheral equipment
d. Costs related to personnel, like salaries and training costs

6. Among the following approaches in a system cutover, which of the following is the most
inefficient?
a. Cold Turkey Cutover
b. Big Bang Cutover
c. Phased Cutover
d. Parallel Operation Cutover

7. Which of the following is not a role designated to an internal auditor during the systems
development life cycle?
a. Verifying the consistency of the system with the organization’s goals and objectives
b. Completely and accurately reporting one-time and recurring costs in a feasibility
study
c. Specifying adequate and effective documentation standards of the systems
d. Certifying the compliance of the proposed system with statutory legislations

8. When determining that program changes of applications were authorized, an auditor must
perform the following tests of controls, except:
a. Reconciling program change authorization documents with the version numbers of the
application
b. Confirming the nature and the date of the change contained in the maintenance
authorization documentation
c. Verifying the signatures of authorizing managers involved in the maintenance
authorization documentation
d. Reviewing the authority table specifying the libraries a programmer may access
 9. An internal auditor is qualified to determine whether the considered system is a good
candidate for an integrated audit feature. This involvement of the internal auditor typically
occurs in which phase of the SDLC?
a. Systems Planning
b. Conceptual Systems Design
c. Systems Evaluation and Selection
d. Detailed Systems Design

10. Which of the following must not be done by systems analysts when gathering facts about
a firm’s current sales order system during the systems analysis phase?
a. Overtly watching the preparation of sales orders
b. Working on the sales desk taking orders from customers and preparing sales orders
c. Asking employees an open-ended question regarding their suggestions for the new
system
d. Reviewing the job descriptions of each employee in the sales order department
Chapter 6.1
1. A transaction cycle that starts with the acquisition of materials, property, and labor in
exchange.
A. Expenditure Cycle
B. Conversion Cycle
C. Revenue Cycle
D. None of the above

2. It is the result of transaction processing rather than the triggering mechanism for the
process.
A. Source Documents
B. Product Documents
C. Turnaround Documents
D. All of the above

3. This are kept in various accounting departments of the firm, including inventory,
accounts payable, payroll and accounts receivable.
A. General Ledger
B. Special Journals
C. Subsidiary Ledger
D. None of the above

4. Modern systems tend to be __________(network)-based and process transaction in real

time.
A. user-server
B. client-server
C. system-server
D. modern-server
5. S1: The destructive update approach leaves no backup copy of the original file. Only the
original value is available to the user.
S2: Terminals at distributed sites throughout the organization are used for receiving,
processing, and sending information about current transactions.
A. Both statements are true.
B. Both statements are false.
C. Statement 1 is true while Statement 2 is false.
D. Statement 1 is false while Statement 2 is true.

6. It shows the logic associated with a computer program.

A. System Flowchart
B. Document Flowchart
C. Program Flowchart
D. Record Layout Diagrams
E. None of the above

7. S1: System flowchart is the graphical representation of the abstract relationships among
key elements of a system. S2: Not all symbols on the flowchart should be labelled.
A. Both statements are TRUE
B. Both statements are False
C. S1 is true, S2 is false
D. S1 is false, S2 is true

8. A temporary file of transaction records used to change or update data in a master file.
(sales orders, inventory receipts, cash receipts)
A. Master file
B. Archive file
C. Data file
D. Transaction file

9. This uses symbols to represent entities, processes, data flows and data stores.
A. Data store flowchart
B. Data diagram
C. Data flowchart
D. Data flow diagram

10. The degree of the relationship which can be one-to-one, one-to-many or many-to-many.
A. Hierarchical
B. Ordinality
C. Cardinality
D. Mutuality
Chapter 6.2
1. The data in this file in conjunction with the responsibility center file, are the basis for
responsibility accounting.
a. General ledger master file
b. General ledger history file
c. Journal voucher file
d. Budget master file

2. It is an interner standard which has the objective to facilitate publication exchange and
processing of financial business information
a. eXtensive Markup Language
b. eXtensive Business Reporting Language
c. Internet Protocol
d. Hypertext Markup Language

3. A coding scheme which permits detailed analysis and reporting both within an itme class
and across different classes of items is
a. Group codes
b. Block codes
c. Sequential codes
d. Hierarchical codes

4. It can be used to represent whole classes of items by restricting each class to a specific
range within the coding scheme
a. Group Codes
b. Block Codes
c. Alphabetic Codes
d. Mnemonic Codes

5. S1: eXtensible Markup Language is a derivative of XBRL

S2: The XBRL instance document can be placed on an extranet server for internal use
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false

6. Unique sequential codes become the () that allows the system to track each transaction
processed and to identify any lost or out of sequence documents
a. Transaction number
b. Order number
c. Track code
d. Identification Verification
 7. What type of date is found in the general ledger master file
a. A chronological record of all transactions
b. The balance of each account in the chart of accounts
c. Budget records for each account in each chart of accounts
d. Subsidiary details supporting a control account

8. It requires that management design and implement controls over the financial reporting
process
a. Sarbanes-Oxley Act
b. Securities and Exchange Commission
c. Financial Accounting Standards Board
d. Public Company Accounting Oversight Board

9. Which of the following is not a potential exposure of the FRS?

a. Defective audit trail
b. General Ledger Accounts that are out of balance with subsidiary accounts
c. Unauthorized access to the check register
d. Unauthorized access to the general ledger

10. Which has as its primary purpose to provide historical financial data for comparative
reports?
a. Journal Voucher history file
b. Budget master file
c. Responsibility file
d. General Ledger history file
Chapter 7
1. Which of the following is not an Unauthorized acts that may occur in an output
spooling?
a. Access the output file and change critical values. Then the printer program will
print the corrupted output as if they were produced by the output run.
b. Access the file and change the number of copies of output to be printed. The
extra copies may then be removed without notice during the printing stage.
c. Make a copy of the output file to produce illegal output reports.
d. Destroy the output file before output printing takes place.
e. All stated above are unauthorized acts that may occur in an output
spooling

2. Which of the following is not a distribution technique to be used for highly sensitive
reports?
a. The reports may be placed in a secure mailbox to which only the sender
has the key.
b. The user may be required to appear in person at the distribution center and sign
for the report.
c. A security officer or special courier may deliver the report to the user.
d. All stated above is a distribution technique to be used for highly sensitive reports.
e. All stated above is not a distribution technique to be used for highly sensitive
reports.
3. This Involves programmed procedures that examine the characteristics of the data in
the field.
a. Field interrogation
b. Record interrogation
c. File interrogation
d. Police interrogation

4. _____ are tests to see if the sign of a field is correct for the type of record being
processed.
a. Reasonableness checks
b. Sign checks
c. Seductive chicks
d. Sequence checks

5. How many statement/s is/are not incorrect?

I. Three documents are often used to capture and communicate batch control data.
(F)
II. The data control group prepares the batch transmittal sheet and submits it to the
data entry clerk. (F)
III. The total dollar value of a financial field is known as the control total. (T)
IV. Errors detected in each run are flagged and placed in an error file. (T)
V. Too few records in a batch make batch processing inefficient. (T)
a. 1
b. 2
c. 3
d. 4
e. 5
6. How many statement/s is/are not correct?

I. The user will reconcile and distribute the output results when processing is
complete. (F)
II. The data entry clerk enters the relevant data from the source documents to create
a transaction file. (T)
III. The user department updates the batch control log to record the processing of the
batch was completed. (F)

a. 1
b. 2
c. 3
d. None of the above

7. Which of the following statements best describes Accuracy Tests?

a. It includes obtaining evidence that the application records all transactions in a
journal
b. They involve range and reasonableness tests including transaction approvals
c. Ensure that calculations were precise and posted into correct accounts
d. All of the above
 8. What is the main difference between the Black Box Approach and the White Box
Approach?
a. The Black Box approach requires the auditor to have a sufficient knowledge
about the application’s internal logic and the White box approach does not.
b. The White Box approach requires the auditor to have a sufficient
knowledge about the application’s internal logic and the Black box
approach does not.
c. The White Box approach is feasible for transactions which are relatively simple
while the Black Box approach is not feasible for such.
d. None of the above
9. Which of the following computer-aided audit tools and techniques confirm exception
reporting facilities by inputting a batch of transaction with known exceptions and
comparing the exception report with the expected results?

a. Test Data
b. Parallel Simulation
c. Base Case System Evaluation
d. Tracing

10. Parallel simulation is useful in the following areas, except:

a. To test the accuracy of large volumes of transactions.
b. To facilitate the substantive testing of client account balances.
c. To perform reasonableness checks on input by inputting transactions
outside predetermined ranges
d. To help the auditor process the entire set of the relevant client data.
Chapter 8
1. Designing relational database is important because it eliminates data redundancy
and ensures data integrity and accuracy. With these, six phases of database
designing also known as view modeling include all of the following except:
a. Identify organization’s primary entities
b. Normalize data model and add foreign keys
c. Prepare the physical user views
d. Construct data reports to database

2. S1: Embedded Audit Module is also known as continuous auditing

S2: One of the disadvantages of Embedded Audit Module is Operation Efficiency.
Operation Efficiency increases performance from a user’s point of view, especially if
testing is extensive.
a. Both are true
b. Both are false
c. Only S1 is not true
d. Only S2 is not true

3. What does GAS mean?

a. Generalized auditing system
b. Generalized auditing software
c. Generalized access system
d. Generalized access software
4. S1: GAS is the most widely used by the CAATT
S2: ACL is the most commonly used GAS
a. Both are true
b. Both are false
c. Only S1 is not true
d. Only S2 is not true

5. () occur when non-key attributes are defined by other non-key attributes

a. Transitive dependencies
b. Partial dependencies
c. Full dependencies
d. Data dependencies

6. S1: Partial dependencies only occur in tables that have composite primary keys
S2: All of the non-key attributes will be dependent on other non-key attributes
a. Both are true
b. Both are false
c. Only S1 is not true
d. Only S2 is not true

7. All of the following are types of anomalies except.

a. Deletion Anomaly
b. Update Anomaly
c. Data Anomaly
d. Insertion Anomaly

8. To be free from anomalies, tables must be normalized to the

a. 4NF level
b. 2NF level
c. 3NF level
d. 1NF level

9. This contains the relative position of a record in the file

a. Physical address
b. Relative address
c. Logical key pointer

10. This structure employs an algorithm that converts the primary key of a record directly
into a storage address
a. Indexed Structure
b. Hashing Structure
c. Pointer Structure
Chapter 9
1. In performing audit test, the auditor must understand some points regarding file
preparation. What is the first step that auditor should do in file preparation?
a. Verify all relevant records from the original copy were transferred to the copy for
analysis
b. Use batch control totals to verify data integrity
c. Verify that he/she is working with the correct version of the file to be analyzed
d. None of the above

2. These are all general types of validation test except?

a. Numeric-alphabet data checks
b. Limit checks
c. Data checks
d. Check digit

3. Companies that engage in business to business transactions often use the cash receipts
file as a substitute for the traditional sales journal and accounts receivable subsidiary
ledger
a. True
b. False

4. Evidence from testing the product prices charges to customer supports what audit
objective
a. Valuation
b. Accuracy
c. Completeness
d. Occurence

5. Confirmation of accounts receivable involves direct contact between the auditors and the
client’s customers to confirm account balances and transactions
a. True
b. False

6. S1: General ledger accounts are used to prepare financial statements; they contain only
summary figures with no supporting detail
S2: Remittance advices contain information needed to service group customer’s
accounts
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
 7. The shipping clerk performs the following tasks except:
a. Files one copy each of the BOL and the shipping document
b. Records the shipment in the shipping log
c. Sends the shipping notice to the billing department as proof of shipping
d. Produces a hard copy print out of the transmitted sale transaction documents

8. This document refers to the authorization for the customer to receive credit for the
merchandise returned
a. Return purchase slip
b. Inventory return slip
c. Credit Memo
d. Return slip

9. Periodically, a clerk from the controller’s office or an employee involved with the cash
receipts reconciles cash receipts by comparing documents
a. True
b. False

10. S1: The auditor’s concern in the revenue cycle pertain to the potential for overstatement
of revenues and AR
S2: The auditor should focus on large and unusual transactions at or near period end
a. Only S1 is true
b. Only S2 is true
c. Both are true
d. Both are false
Chapter 10
1. This file was created in the revenue cycle when inventories fell to their reorder points
due to customer sales.
a. Purchase requisitions file
b. Inventory requisitions file
c. Accounts payable file

2. Which of the following is not affected by the expenditure cycle?

a. Purchase discount
b. Purchase returns and allowances
c. Accounts payable
d. Inventories

3. Batch job updates inventory subsidiary file, removes “on order” flag, closes PO file and
calculates batch totals of receipts for GL update
a. True
b. False
 4. The AP clerk reconciles invoice with supporting documents and prepares a
a. Cash receipt voucher
b. Cash disbursement voucher
c. Purchase order
d. Open voucher file

5. Batch totals of open and closed AP, inventory increases and cash disbursements posted
to control accounts
a. True
b. False

6. Soft copy POs are prepared and sent to vendors

a. True
b. False

7. Quantities of items received are matched against the closed PO record, and the PO is
opened by placing the receiving report number in PO number flag.
a. True
b. False

8. Pack allows a clerk to perform a () match

a. 1-way
b. 2-way
c. 3-way
d. 4-way

9. () calculates and posts payroll, prints paychecks and a fund transfer check, a payroll
register and prepares records for posting
a. Batch computer program
b. Digital check register
c. Payroll register file
d. Employee payroll file

10. These are designed to ensure that the transactions are valid, accurate and correct
a. Batch controls
b. Purchase authorization controls
c. Input controls
d. Access controls
Chapter 11
1.) True or False? In a traditional information system, each system tends to be designed as
a part of an overall strategy rather than a solution to a specific operational problem. –
FALSE
2.) True or False? Production planning involves the detailed production scheduling,
dispatching and job costing activities associated with the actual production process. –
FALSE
 3.) True or False? Some ERP vendors use TWO-TIER MODEL for wide area networks (WAN)
applications for which the demand on the server is restricted to a relatively small
population of users. – FALSE
4.) These are common analytical operations which OLAP servers support except:
A.) Drill-down
B.) Configuration
C.) Slicing and dicing
D.) Consolidation
5.) True or False? Choosing table settings involves decisions to reengineer the company’s
processes so that they comply with the best business practices in use. - TRUE
6.) True or False? In the data warehouse model, the relationship among attributes does not
change. - TRUE
7.) The primary reason for data warehousing is to optimize business performance.- TRUE
8.) To improve efficiency, data can be transformed into summary views before being loaded.
- TRUE
9.) Which of the following audit issues concerning the ERP is the most important for an I.S.
auditor?
A.) Supervisors in an ERP environment are not providing substantial efficiency benefits to
the ERP system.
B.) Corrupt records are injected into the ERP system.
C.) An entity that implemented an ERP system is employing a traditional access control
model.
D.) Independent verification efforts on the ERP are inadequate.
E.) All are equally important.
10.) All of the following risks are the same in terms of one characteristic, except for one.
Which risk is different?
A.) Choosing the wrong ERP
B.) Big bang vs. Phased-in implementation
C.) Opposition to changes in the business culture
D.) Choosing the wrong consultant
E.) All of the risks belong to the group
Chapter 12
1. It is a level of computer ethics that relates to taking a real interest in computer ethics and
acquiring some level of skill and knowledge.
a. Pop
b. Para
c. Theoretical
d. Level four

2. S1: Privacy is an attempt to prevent loss on confidentiality or data integrity. S2: Computer
security relates to the desire to control what information is available to others
a. True; True
b. True; False
c. False; True
d. False; False
3. A fraudulent act must meet all conditions except
a. material fact
b. justifiable reliance
c. motive
d. injury or loss

4. S1: Employee fraud generally designed to convert other assets or cash to employee’s
personal benefit.
S2: Management fraud often escapes detection until damage or loss has
occurred.
a. Both are true
b. Both are false
c. Only S1 is false
d. Only S2 is false

5. Choose from the following instances example/s of financial statement fraud.

I. Misstating cash account balance to cover the theft of cash
II. Understating liabilities to present a more favourable financial picture of the
organization to drive up stock prices
a. I only
b. II only
c. I and II
d. None of the above

6. It involves giving, offering, soliciting, or receiving something of value because an official

act has been taken.
a. Bribery
b. Illegal Gratuity
c. Conflict of Interest
d. Economic Extortion
7. S1. Cash larceny involves stealing unrecorded cash. S2. In providing information, a
system designer should sacrifice the timeliness of an information in order to obtain
absolute accuracy.
a. True, True
b. False, False
c. True, False
d. False, True

8. This vendor fraud technique involves an actual transaction with inflated price where the
fraudster pockets difference between the market and higher price.
a. Mailroom fraud
b. Shell company fraud
c. Pass-through fraud
d. Pay-and-return fraud
9. The auditor should refer the matter to an appropriate level of management at least one
level above those involved when:
a. The auditor has determined that error exists on the financial statements.
b. The auditor has determined that fraud exists but has no material effect on the
financial statements.
c. The fraud has had a material effect on the financial statements.
d. The auditor wants a new copy of printed financial statements.

10. The following are audit procedures for detecting payroll fraud except:
a. Test of Excessive Hours Worked
b. Test of Nonexistent Employees
c. Test of Duplicate Payments
d. Test of Employee Names and Addresses