CH9 MULTIPLE CHOICE 1. The two primary steps in preparing the control matrix include a.

specifying control goals, recommending control plans b. specifying control plans, specifying input goals c. specifying the control environment, identifying information process goals d. specifying control procedures, identifying process goals ANS: A 2. The purpose of __________ control goals is to ensure the successful accomplishment of the goals set forth for the business process under consideration. a. efficiency b. effectiveness c. security d. input ANS: B 3. The purpose of __________ control goals is to ensure that all resources used throughout the business process are being employed in the most productive manner. a. efficiency b. effectiveness c. security d. input ANS: A 4. The purpose of __________ control goals is to ensure that entity resources are protected from loss, destruction, disclosure, copying, sale, or other misuse.. a. efficiency b. effectiveness c. security d. input ANS: C 5. Immediately endorsing incoming checks satisfies the control goal of a. ensure effectiveness of operations b. update completeness and accuracy c. input accuracy d. ensure security of resources ANS: D

6. The purpose of input goals is to ensure that a. input validity, completeness, and accuracy b. update completeness and accuracy c. input accuracy d. none of the above

ANS: A 7. In a control matrix the coding P-1 means a. process 1 b. process 1 is present c. process 1 is missing d. none of the above ANS: B 8. In a the columns representing control goals in a control matrix, the coding M-1 means a. a major control plan b. a missing control plan c. process 1 is missing d. none of the above ANS: C 9. The most error prone and inefficient steps in an operations or information process is a. report generation b. master data update c. data entry d. none of the above ANS: C 10. The columns in a control matrix contain headings describe the system's: a. control goals b. control plans c. control environment d. control procedures ANS: A 11. In the control matrix, the rows represent: a. control goals of the operations system b. recommended control plans including present and missing controls c. control goals of the information system d. control goals of the management system ANS: B 12. Having too many control plans directed at the same control goal is called: a. control efficiency b. control effectiveness c. control redundancy d. control completeness ANS: C 13. Which of the following symbols represents manual keying? a.

b.

c.

d.

a. b. c. d.

Symbol a. Symbol b. Symbol c. Symbol d.

ANS: B 14. Which of the following symbols represents a manual process? a.

b.

c.

d.

a. b. c. d.

Symbol a. Symbol b. Symbol c. Symbol d.

ANS: C 15. Which of the following symbols represents a computer process? a.

b.

c.

d.

a. b. c. d.

Symbol a. Symbol b. Symbol c. Symbol d.

ANS: A

16. As an exception to the general rule, which one of the following is not necessarily included in the systems flowchart? a. control plan for input accuracy b. control plan for ensuring efficient employment of resources c. control plan for ensuring effective employment of resources d. none of the above ANS: B 17. Which of the following control plans does not address the control goal of input accuracy? a. document design b. written approvals c. preformatted screens d. online prompting ANS: B 18. Which of the following is a control plan in which the source document is designed to make it easier to prepare the document for input? a. document design b. written approval c. preformatted screens d. online prompting ANS: A 19. Which of the following is a control plan that takes the form of signatures or initials on a document to indicate that a person has authorized the event? a. document design b. written approval c. preformatted screens d. online prompting ANS: B 20. Which of the following is a control plan that controls the entry of data by defining the acceptable format of each data field? a. document design b. written approval c. preformatted screens d. online prompting ANS: C 21. Which of the following is a control plan that requests user input or asks questions that the user must answer? a. document design b. written approval c. preformatted screens d. online prompting ANS: D

22. A user mistakenly enters the data June 31. The programmed edit check that will detect this error is: a. online prompting b. mathematical accuracy check c. preformatted screen d. reasonableness check ANS: D 23. Which of the following reflects a summarization of any numeric data field within the input document or record? a. reasonableness check or limit check b. document/record hash totals c. mathematical accuracy check d. check digit verification ANS: B 24. Which of the following compares manual calculations to computer calculations? a. reasonableness check or limit check b. document/record hash totals c. mathematical accuracy check d. check digit verification ANS: C 25. A control that can be used to ensure that all of the characters of a social security number are entered by a data entry clerk is: a. dependency check b. rejection procedures c. preformatted screens d. turnaround documents ANS: C 26. A written approval in the form of a signature or initials on a document indicating that a person has authorized the event achieves the control goal of: a. input validity b. input completeness c. input accuracy d. update accuracy ANS: A 27. A control that can be used to reduce the likelihood of a transposition occurring when an account number is entered through a remote terminal is: a. check digit verification b. data encryption c. preformatted screens d. reasonableness checks ANS: A

28. Which of the following control plans is designed to achieve the goal of input completeness? a. key verification b. interactive feedback check c. programmed edit check d. written approvals ANS: B 29. A control whose primary purpose is to ensure greater input accuracy is: a. tickler file b. preformatted screens c. interactive feedback checks d. procedures for rejected inputs ANS: B 30. Not knowing whether input data has been accepted by the information system, the user enters the data again, resulting in duplicate event data. The control plan that helps to prevent this error is: a. key verification b. interactive feedback check c. check digit verification d. online prompting ANS: B 31. Which of the following control plans is designed to achieve the goal of input accuracy? a. key verification b. interactive feedback check c. batch sequence check d. cumulative sequence check ANS: A 32. A control in which two people key the same inputs into a system where they are automatically compared is called: a. online prompting b. key verification c. computer matching procedures d. a redundancy check ANS: B 33. Which of the following control plans is designed both to authenticate a system user's identity and to verify the integrity of a message transmitted by that user? a. coding schemes b. digital signature c. preformatted screens d. checking of digit verification ANS: B

34. A control that is primarily directed at ensuring input validity is: a. digital signature b. preformatted screens c. interactive feedback checks d. online prompting ANS: A 35. In the control matrix for data entry with master data, digital signatures addresses all of the following control goals except: a. ensure security of resources b. input completeness c. input validity d. input accuracy ANS: C 36. A sales representative enters the customer's account number and the system retrieves certain data about the customer from master data. This control plan addresses all of the control goals except: a. ensure efficient employment of resources b. input completeness c. input accuracy d. update completeness ANS: D 37. A digital signature is aimed primarily at ensuring which of the following information system control goals? a. input validity b. input completeness c. input accuracy d. update completeness ANS: A 38. All of the following are types of programmed edit checks except: a. a proximity check b. a document/record hash total c. a mathematical accuracy check d. a reasonableness check ANS: A 39. Which of the following is not a programmed edit check? a. online prompting b. check digit verification c. dependency checks d. limit checks ANS: A

40. A control report generated by a system that shows data about transactions that were accepted or rejected during a transaction processing step is called a(n): a. violation report b. exception and summary report c. variance report d. program change log ANS: B 41. Which of the following is a batch control total that represents the minimum level of control for input completeness? a. dollar totals b. record counts c. hash totals d. item counts ANS: B 42. A summation of customer account numbers taken from a batch of sales invoices would be classified as a: a. record count b. line count c. dollar total d. hash total ANS: D 43. Which batch control total generally has no other purpose than control? a. dollar totals b. record counts c. hash totals d. item counts ANS: C 44. Which of the following types of batch totals is likely to be most effective in assuring the control goal of input accuracy? a. line counts b. document/record counts c. item counts d. hash totals ANS: D 45. When they are sent to a customer and returned with the payment, remittance advices are examples of: a. batch control totals b. computer-prepared documents c. written approval controls d. turnaround documents ANS: D

46. Which of the following activities is not part of the computer agreement of batch totals: a. A batch total is manually computed prior to data entry. b. Data shown on source documents are key entered or scanned. c. The computer produces a report that includes a batch total. d. A person reconciles the manual and computer batch totals. ANS: D 47. Which of the following controls requires that documents be prenumbered before it can be implemented? a. completeness check b. sequence check c. batch total matching d. key verification ANS: B 48. Inputting a range of numbers comprising a batch and then inputting each serially numbered document is characteristic of the control plan called: a. cumulative sequence check b. batch sequence check c. suspense file of missing numbers d. computer agreement of batch totals ANS: B 49. Which of the following statements related to tickler files is false? a. A tickler file is reviewed on a regular basis for items that do not clear the file on a timely basis. b. A tickler file can consist of documents or computer records. c. A tickler file addresses the control goal of update accuracy. d. A tickler file addresses the control goal of input completeness. ANS: C 50. The process of encoding data so that it may only be read by someone having a key is called: a. a coding scheme b. encryption c. dependency checks d. check digit verification ANS: B 51. Plaintext and ciphertext are terms associated with __________. a. coding schemes b. hash totals c. programmed edit checks d. data encryption ANS: D

CH10 MULTIPLE CHOICE 1. The order entry/sales (OE/S) process is part of the __________ cycle. a. revenue b. expenditure c. conversion d. general ledger/financial reporting ANS: A 2. The order entry/sales (OE/S) process handles the processing and shipment of a customer order while another process actually bills the customer. With such a configuration, you would not expect the OE/S system to interface directly with the __________. a. billing/accounts receivable/cash receipts process b. inventory process c. general ledger process d. human resource process ANS: D 3. The OE/S process includes the first four steps in the order to sales process. The order of these four steps is a. pre-sales activities, sales order processing, picking and packing, shipping b. pre-sales activities, picking and packing, sales order processing, shipping c. pre-sales activities, picking and packing , shipping, sales order processing d. none of the above ANS: A 4. The primary function of the order entry/sales (OE/S) process includes: a. identifying decisions made by marketing personnel b. highlighting the key organizational features of the marketing function c. producing financial statements d. meeting the decision needs of those who manage various sales and marketing functions ANS: D 5. In addition to the warehousing function, the three primary departments that you would expect to be part of a typical order entry/sales (OE/S) process are: a. sales order, shipping, and credit b. sales order, shipping, and accounts receivable c. sales order, credit, and accounts receivable d. credit, shipping, and accounts receivable ANS: A 6. The ultimate goal of the OE/S process is a. to ensure accuracy of order entry and sales events b. to ensure increasing sales volume through the OE/S process c. to provide value to the customer d. none of the above ANS: C

7. From the standpoint of good internal control, which of the following managers should not report (either directly or through an intermediate supervisor) to the vice president of marketing? a. manager--new product development b. manager--customer sales and service c. manager--credit department d. manager--sales order department ANS: C 8. When the sales order department acknowledges a customer order, it is an example of a: a. vertical information flow b. horizontal information flow c. both vertical and horizontal information flow d. neither vertical nor horizontal information flow ANS: B 9. When the sales-related data are captured in the sales order department and then the information flows to the managers housed in the marketing department, it is an example of a: a. vertical information flow b. horizontal information flow c. both vertical and horizontal information flow d. neither vertical nor horizontal information flow ANS: A 10. Which of the following is a horizontal information flow? a. sales order department requests credit approval from credit department b. sales order department acknowledges the order to the customer c. warehousing sends completed picking ticket to shipping d. all of the above are horizontal information flows ANS: D 11. With companies facing global competition, firms are recognizing that their most important asset is? a. inventory b. machinery and equipment c. cash d. a happy customer ANS: D 12. The OE/S process addresses the decision needs of managers of various sales and marketing functions through the use of: a. vertical information flows b. horizontal information flows c. both vertical and horizontal information flows d. neither vertical nor horizontal information flows ANS: C

13. When the sales manager uses ZIP code data taken from customer order forms to plan an advertising campaign, she is using ____________ that might be associated with the OE/S process. a. horizontal information flows b. vertical information flows c. both vertical and horizontal information flows d. neither vertical nor horizontal information flows ANS: B 14. Which of the following statements related to ERP support for horizontal information flows in the OE/S process is false? a. Once the sales order department releases the order to credit approval, the document would be automatically routed electronically to the credit department and queued for their approval. b. Once the shipping department releases the shipment, the information would be entered into the ERP system at the shipping location to record the order as shipped. c. An ERP system requires the business to change the information flows of the business process. d. The sales order departments response to the customer would be automatically triggered by the ERP system. ANS: C 15. Which of the following statements identifies a recent trend in today's business environment? a. Establishing an E-Business web site provides the business with a competitive advantage. b. The most important asset of a business today is its IT infrastructure. c. IT managers must increase their annual expenditures for hardware, software, and telecommunication technology. d. The quality of customer service influences the ability of a business to compete in a global marketplace. ANS: D 16. Which is an example of vertical reporting by the order entry/sales (OE/S) process? a. The credit manager notifies sales order processing that a customer's credit has been approved. b. Sales by geographical region are reported to the manager of customer sales and service. c. The shipping department notifies sales order processing of all shipments made for a particular period of time. d. The sales order department acknowledges a customer order. ANS: B 17. ______________ applications in organizations are usually viewed as being focused on either operational or analytical applications. a. data mining b. data warehousing c. data entry d. market segmentation ANS: B

18. ______________ is intended to allow the use of sophisticated statistical and other analytical software to help an organizationss members develop insights about customers, processes and markets.. a. data mining b. data entry c. e-commerce module d. market segmentation ANS: A 19. For a company using an ERP system, what is the most effective tool to assist marketing managers in identify smaller portions of the customer population? a. e-commerce module b. data entry c. data mart d. market segmentation ANS: C 20. ___________ systems use the Internet to automate and manage vendors and purchases with the predominate technology being electronic data interchange (EDI). a. Customer relationship management b. Buy side c. Sell side d. none of the above ANS: B 21. ___________ applications can handle both B2B and B2C transactions. a. Customer relationship management b. Buy side c. Sell side d. none of the above ANS: C 22. a. b. c. d. The grouping of customers into categories based on key characteristics is called customer relationship management segmentation XML web services

ANS: B 23. In the context diagram for an order entry/sales (OE/S) process the OE/S process has 6 outputs which include all of the following except a. the billing/accounts receivable/cash receipts process b. the carrier c. the general ledger process d. the marketing process ANS: D

24. A data flow or event that causes a process to begin is called a: a. tickler b. trigger c. document d. validity check ANS: B 25. A process for out-of-the-ordinary or erroneous events is called: a. exception routine b. summary report c. corrective routine d. normal routine ANS: A 26. An example of a "rejection procedure" is a(n): a. back order process b. inventory subroutine c. customer acknowledgment process d. sales order processing process ANS: A 27. In a logical DFD for the order entry/sales (OE/S) process, which of the following data stores would you expect to be updated by the process complete sales order? a. customer master data b. accounts receivable master data c. marketing data d. inventory master data ANS: D 28. In a logical DFD for the order entry/sales (OE/S) process, which of the following data stores is least likely to interact with the process validate sales order? a. general ledger b. accounts receivable master data c. marketing data d. inventory master data ANS: A 29. In a typical order entry/sales (OE/S) process, validating a sales order likely would involve all of the following processes except: a. checking the customer's credit b. verifying inventory availability c. completing the sales order d. completing the picking ticket ANS: D 30. Before a shipping notice is prepared by shipping personnel, they should match the details of which of the following pairs of data flows?

a. The picking ticket and a copy of the sales order earlier sent to shipping from the order entry department. b. The completed picking ticket and a copy of the sales order earlier sent to shipping from the order entry department. c. A copy of the sales order earlier sent to shipping from the order entry department and the bill of lading. d. The completed picking ticket and the bill of lading. ANS: B 31. According to the logical flow diagrams of the OE/S system, which of the following data stores provides data to the system but is not updated by it? a. shipping notice data b. sales order master data c. marketing data d. customer master data ANS: D 32. For a typical order entry/sales (OE/S) process to check a customer's credit, all of the following data stores likely would be consulted except the: a. inventory master data b. customer master data c. accounts receivable master data d. sales order master data ANS: A 33. A document that is used when filling a sales order to authorize the movement of goods from a warehouse to shipping is called a: a. shipping order b. packing slip c. picking ticket d. blind authorization ANS: C 34. In an order entry/sales (OE/S) process, you could expect that a sales order notification would be sent to a. the billing/accounts receivable/cash receipts process b. the customer c. the general ledger process d. the warehouse ANS: A 35. At the time that the shipping notice is prepared and disseminated, two data stores within the order entry/sales (OE/S) process normally are updated. Those two data stores are the: a. customer and accounts receivable master data b. accounts receivable and sales order master data c. accounts receivable master and shipping notice data d. sales order master and inventory master data ANS: D

36. Which of the following documents represents a formal "contract" between two parties? a. shipping's inventory notification b. packing slip c. customer acknowledgment d. bill of lading ANS: D 37. Which of the following data stores is designed primarily to serve the vertical information needs of the organization rather than the horizontal information flows? a. inventory master data b. marketing data c. shipping notice data d. customer master data ANS: B 38. Which of the following data is least likely to be stored in the customer master data? a. customer number b. billing address c. ship-to address d. open invoices ANS: D 39. Which document may show a number of items which are different from the number of items actually shipped to a customer? a. completed picking ticket b. bill of lading c. sales order d. packing slip ANS: C 40. In an entity-relationship (E-R) diagram for the order entry/sales (OE/S) process, you would expect that the word trigger would appear in the diamond showing the relationship between which of the following pairs of entities? a. CUSTOMER and SALES ORDER b. CUSTOMER and SHIPMENT c. STOCK PICK and SHIPMENT d. SALES INVOICE and SHIPMENT ANS: C 41. Which of the following attributes would not be contained in the related relational table? a. customer_street attribute in the Customers relation b. quantity_on_hand in the Inventory relation c. shipping_company in the Sales Order relation d. invoice_total in the Sales Order relation ANS: D

42. In a database containing (among others) four relations--CUSTOMERS, SALES ORDERS, SALES_ORDER Line item INVENTORY, and SHIPMENTS--you would expect that a combination of the SO_No and Item_No attributes would be the primary key for the __________ relation. a. CUSTOMERS b. SALES ORDERS c. SALES_ORDER Line item INVENTORY d. SHIPMENTS ANS: C 43. Which of the following goals is not an example of a process goal of the typical order entry/sales (OE/S) process? a. to provide timely responses to customer inquiries b. to provide timely acknowledgments of customer orders c. to provide timely updates to general ledger accounts d. to provide timely shipments of goods to customers ANS: C 44. In constructing a control matrix for an order entry/sales (OE/S) process, the principal data input(s) to the information system likely would be: a. customer inquiries and customer order inputs b. customer inquiries and shipping notice inputs c. customer order and shipping notice inputs d. customer order ANS: C 45. The file most important for ensuring validity of inputs is the: a. customer master data b. accounts receivable master data c. marketing data d. completed picking ticket data ANS: A 46. The primary reason that direct entry of sales order data by sales personnel enhances efficiency is because: a. it increases the likelihood of erroneous data being input b. sales personnel can enter data faster than data entry clerks c. fewer data items need to be entered by sales personnel d. the need for data entry clerks is eliminated ANS: D 47. The control plan preformatted screens is directed primarily toward achieving the information process control goal of ensuring: a. sales order input validity b. sales order input accuracy c. sales order input completeness d. sales order update completeness ANS: B

48. The control plan interactive feedback check helps to achieve the sales order input control goal of: a. sales order input validity b. sales order input accuracy c. sales order input completeness d. shipping notice input accuracy ANS: C 49. In the OE/S process, the document that represents an independent authorization to ship goods to the customer is the: a. bill of lading b. sales order c. customer acknowledgment d. none of the above ANS: B 50. In the control matrix of the OE/S process, regarding shipping notice inputs, which of the following control goals is ensured by the control plan compare input data with master data? a. input completeness and input accuracy b. input completeness and input validity c. input validity and input accuracy d. none of the above ANS: C CH11 MULTIPLE CHOICE 1. As discussed in the text, the functions of the billing/accounts receivable/cash receipts process: a. is identical to those of the order entry/sales process b. support decision making by managers in the order entry/sales process c. incomes collections of receivables d. is unrelated to the functions of the order entry/sales process ANS: C 2. According to the concept of segregation of duties, which of the following managers should report to the controller rather than to the treasurer? a. credit department manager b. accounts receivable department manager c. cashier d. investments manager ANS: B 3. In an organization in which the order entry/sales (OE/S) and billing/accounts receivable/cash receipts (B/AR/CR) processes are separate processes, the B/AR/CR process usually accomplishes all of the following activities except: a. shipping goods to customers b. billing customers c. managing customer accounts d. securing payment of customer accounts ANS: A

4. Which of the following pairs of functions would you expect might report directly to the vice president of finance? a. credit department and controller b. shipping department and controller c. accounts receivable department and treasurer d. treasurer and controller ANS: D 5. For a charge sale event, the cashier is to the cash custodial function as the __________ is to the recording function. a. shipping department b. credit department c. accounts receivable department d. none of the above ANS: C 6. For a charge sale event, the cashier is to the cash custodial function as the __________ is to the authorization function. a. shipping department b. credit department c. accounts receivable department d. warehouse ANS: B 7. In the context diagram for a billing/accounts receivable/cash receipts process, which of the following is least likely to be an external entity? a. the bank b. the customer c. the general ledger d. the cashier ANS: D 8. Which of the following process bubbles would you not expect to see in the logical DFD for a billing/accounts receivable/cash receipts process? a. perform billing b. requisition inventory c. receive customer payment d. manage customer accounts ANS: B 9. Which of the following normally would trigger the billing process in a billing/accounts receivable/cash receipts process? a. a copy of the sales order b. a shipping notice c. a picking ticket d. a customer acknowledgment ANS: B

10. Which of the following normally would trigger the billing/accounts receivable/cash receipts process to record a customer payment? a. invoice b. remittance advice c. deposit slip d. a notification to the general ledger to record a cash receipts update ANS: B 11. The principal master data that you would expect to see in a billing/accounts receivable/cash receipts process is the: a. sales order data b. shipping notifications data c. sales journal d. accounts receivable master data ANS: D 12. In a logical DFD for a billing/accounts receivable/cash receipts process, which of the following data stores is least likely to interact with a process called "perform billing"? a. inventory master data b. customer master data c. accounts receivable master data d. sales event data ANS: A 13. In a logical DFD for a billing/accounts receivable/cash receipts process, which of the following data stores would you expect to interact with a process called "manage customer accounts"? a. inventory master data b. accounts receivable master data c. sales event data d. cash receipts event data ANS: B 14. In a logical DFD for billing/accounts receivable/cash receipts process, you would expect that a credit memo would be sent by the B/AR/CR process to the customer from which of the following processes? a. perform billing b. manage customer accounts c. receive payment d. validate sales order ANS: B 15. Inputs to the billing/accounts receivable/cash receipts process normally could include all of the following except: a. a copy of the sales order sent by the sales order function to the billing function b. a shipping notice sent by the shipping function to the billing function c. deposit slip d. remittance advice ANS: C

16. In an organization in which the order entry/sales (OE/S) and billing/accounts receivable/cash receipts (B/AR/CR) processes are separate processes, outputs of the B/AR/CR process normally could include all of the following except: a. invoice b. deposit slip c. credit memo d. shipping notice ANS: D 17. In general, adjustments to customer balances in the accounts receivable master data will be necessary for all of the following except: a. sales returns and allowances b. reversals of mispostings and other errors c. bad debt write-offs d. estimates of uncollectible accounts ANS: D 18. The data dictionary definition of an invoice usually contains all of the following elements except: a. the customer's credit limit b. an invoice header c. an invoice line(s) d. all of the above ANS: D 19. In an entity-relationship (E-R) diagram for the billing/accounts receivable/cash receipts (B/AR/CR) process, you would expect that the word trigger would appear between the boxes for ? a. CUSTOMER and SHIPMENT b. CUSTOMER and SALES INVOICE c. STOCK PICK and SHIPMENTS d. SALES INVOICE and SHIPMENT ANS: C 20. A company using a database approach to data management might not maintain a relational table for ACCOUNTS RECEIVABLE. Rather, accounts receivable balances at any point in time could be computed as the difference between the relations for which of the following continuous events? a. SHIPMENTS and SALES INVOICES b. SALES INVOICES and CASH RECEIPTS c. SHIPMENTS and CASH RECEIPTS d. CUSTOMER and SALES INVOICES ANS: B 21. In a database containing (among others) five relations--CUSTOMERS, SHIPMENTS, SALES INVOICES, CASH RECEIPTS, and SALES-RELATIONS--you would expect that the Remit_No (Remittance number) would be the primary key for the __________ relation. a. CUSTOMERS

b. SHIPMENTS c. SALES INVOICES d. CASH RECEIPTS ANS: D 22. All of the following are types of accounts receivable systems except: a. debit card system b. balance-only system c. balance-forward system d. open-item system ANS: A 23. The following is a list of three types of accounts receivable systems and two organizations/systems: I. II. III. IV. V Open item Balance forward Balance only Public utilities Credit card companies (i.e., VISA)

Which of the following pairs normally are correct? a. I and IV, II and V b. I and V, II and IV c. II and IV, III and V d. II and V, III and IV ANS: D 24. In a prebilling system, invoices are prepared a. immediately upon acceptance of a customer order b. when there is to be a delay between the time that the order is accepted and the time it is shipped c. where inventory balances can be determined only through physical count d. to improve customer relations ANS: A 25. In a fraud scheme known as __________, the perpetrator attempts to cover the theft of cash received from customer A by applying cash collected from customer B to A's account, then applying a receipt from C to B's account, and so forth. a. kiting b. lapping c. schmoozing d. hacking ANS: B 26. Deposit slips are usually generated by the billing/accounts receivable/cash receipts process: a. at the time invoices are prepared b. by manual procedures c. to satisfy particular control goals

d. as part of processing cash receipts ANS: D 27. Typically, the operations process goals of the billing/accounts receivable/cash receipts process: a. vary, depending on whether we are dealing with the functions of billing, accounts receivable, or cash receipts b. remain the same when dealing with the functions of billing, accounts receivable, or cash receipts c. vary inversely with the information process goals d. are the same as the information process goals ANS: A 28. In the control matrix for a cash receipts process, the first present control is: a. receive turnaround documents b. endorse incoming checks c. edit cash receipts for accuracy d. procedure for rejecting inputs ANS: B 29. Which of the following is most likely to appear in the UC and UA columns of a control matrix for the billing process? a. immediately endorse incoming checks b. receive turnaround documents c. manual agreement of batch totals d. one for one checking of deposit slip and checks ANS: C 30. For the cash receipts process, the control plan receive turnaround documents helps to achieve which of the following pairs of information process control goals? a. input validity and input completeness b. input validity and input accuracy c. input accuracy and input completeness d. input accuracy and update accuracy ANS: B 31. For the cash receipts process, which of the following control plans addresses the information process control goal of master data update accuracy? a. immediately endorse incoming checks b. compare input data with master data c. receive turnaround documents d. enter cash receipts close to where cash is received ANS: B 32. In the cash receipts process, the control plan of immediately endorsing incoming checks is designed to achieve the control goal of: a. assuring the timely deposit of cash receipts b. ensuring security of the cash asset c. ensuring cash receipts input accuracy

d. ensuring cash receipts input completeness ANS: B 33. In the billing process, the control plan of review shipped not billed sales orders (tickler file) helps to ensure: a. effectiveness of operations b. efficient employment of resources c. security of resources d. none of the above ANS: A 34. The billing/accounts receivable/cash receipts process comprises three different but related process--namely, B, AR, and CR. Which of the following would not be an operations process goal? a. ensure effectiveness of operations b. ensure AR master data update accuracy c. ensure effectiveness of operations d. ensure security of resources ANS: B 35. The __________ normally would comprise one or more invoice records, but each record would not contain all of the detail reflected on the invoice itself. a. invoice data b. sales event data c. accounts receivable adjustments data d. cash receipts data ANS: B 36. A remittance advice generally would be recorded in which of the following pairs of data stores? a. customer master data and accounts receivable master data b. sales event data and accounts receivable master data c. accounts receivable adjustments data and accounts receivable master data d. cash receipts data and accounts receivable master data ANS: D 37. Digital images a. help reduce paper in the B/AR/CR system b. are stored in electronic folders c. may be scanned or created via software d. all of the above ANS: D 38. In addition to storing an image of the document itself, the typical electronic-based image processing system accompanies the document image with: a. a paper file of the documents b. an index used to retrieve the document image c. the MICR code contained on each document

d. a "jukebox" ANS: B 39. Which of the following statements is false? a. The typical billing/accounts receivable/cash receipts system assists in preparing internal and external reports, including GAAP-based financial statements. b. Separating the credit function from the sales function is often defended on the grounds that if they were not separated, credit might be extended to high-risk customers, simply to achieve sales targets. c. The two types of adjustments that commonly result from a periodic review of the aging details of customer account balances are a recurring entry for estimated bad debts and a bad debt write-off. d. The logical data dictionary definition of the cash receipts events data would comprise one or more invoice records. ANS: D 40. Which of the following statements is true? a. In a prebilling system, invoices are prepared after the goods have been shipped and the sales order notification has been matched to the shipping's billing notification. b. In a postbilling system, invoices are prepared upon acceptance of the customer order, and there is no separate sales order document as such. c. Of the two types of billing systems discussed in the text, the prebilling system requires the more accurate inventory records. d. Of the two types of billing systems discussed in the text, the prebilling system is appropriate in situations where there is a significant delay between acceptance of the customer's order and its shipment. ANS: C 41. Which of the following statements is false? a. The check and remittance advice trigger the receive payment process. b. A bank lockbox provides more protection for cash than a system where cash receipts are mailed to the payee company and then deposited. c. The hardware, software, maintenance, and communications costs associated with operating a credit card system are lower than for a debit card system. d. From the standpoint of reducing the collector's float, a customer check is a better payment method than a debit card. ANS: D 42. The billing/accounts receivable/cash receipts process completes the: a. billing process b. production process c. order to cash process d. inventory process ANS: C 43. An example of the vertical information flows supported by the B/AR/CR process is a(n): a. accounts receivable aging report b. customer invoice

c. remittance advice d. general ledger accounts receivable notification ANS: A 44. Which of the following is most commonly associated with the treasury function? a. recording of event data b. security of funds c. reporting of results of business events d. maintaining accounting records ANS: B 45. Segregation of duties is most clearly accomplished in most organizations by separating: a. billing and accounts receivable b. treasury and controllership c. sales and accounts receivable d. order entry and cash receipts ANS: B 46. Which of the following is not an external entity for the B/AR/CR process? a. order entry/sales process b. general ledger c. customer d. inventory process ANS: D

47. Which of the following is part of the header section of the invoice? a. seller identification b. invoice lines c. invoice total d. item description ANS: A 48. Which of the following is a ratio used to monitor the investment in accounts receivable? a. accounts receivable aging report b. days' sales outstanding c. sales turnover d. inventory turnover ANS: B 49. A customer statement serves a control purpose by: a. notifying that payment is due b. triggering the receive payment process c. confirming with the customer the amount still owed d. updating the accounts receivable master file ANS: C 50. The accounts receivable system in which all the outstanding invoices are listed is called the: a. balance-only system b. open-item system c. balance-forward system d. postbilling system ANS: B 51. The accounts receivable system typically used by credit card companies is the: a. balance-only system b. open-item system c. balance-forward system d. postbilling system ANS: C 52. Quantities of items shipped to a customer would typically be found in the relational table for: a. CUSTOMERS b. SALES_RELATIONS c. BANKS d. DEPOSITS ANS: B 53. The billing system in which the invoice is prepared immediately on acceptance of a customer order is called a: a. postbilling system b. balance-only system c. prebilling system d. balance-forward system ANS: C

54. A billing system that is used when there is little or no delay between the receipt of the customer order and the shipment of the goods is a: a. postbilling system b. balance-only system c. balance-forward system d. prebilling system ANS: D 55. The technology that allows information on documents to be converted into machine-readable data through a scanner is called a(n): a. OCR b. MICR c. Bar code reader d. digitizer ANS: A 56. An overall management objective is to: a. minimize the number of sales transactions b. minimize the total amount of accounts receivable c. minimize the time from the beginning of the selling process to the end of cash collections d. maximize the amount of float ANS: C 57. Which of the following is most effective in reducing the amount of float? a. credit cards b. debit cards c. MICRs d. charge cards ANS: B 58. Which of the following implies computer-to-computer interchange of data? a. CIP b. lockbox c. EDI d. MICR ANS: C 59. A form of fraud in which the payments made by one customer are systematically applied to the account of another is called: a. lapping b. malfeasance c. ACH d. aged trial balance ANS: A

60. In the billing function described in the text, the control goal that contributes to effective operations is: a. edit the shipping notification for accuracy b. independent billing authorization c. calculate batch totals d. review shipped not billed sales orders (tickler file) ANS: D 61. Which control is most effective in contributing to the goal of input completeness in the billing function? a. one-to-one checking of sales orders to invoices b. batch sequence checks c. key verification d. none of the above ANS: A 62. Which control plan for the cash receipts function has as its primary control goal to ensure security of resources? a. Reconcile bank account regularly. b. Enter cash receipts close to where cash is received. c. Immediately endorse incoming checks. d. One-to-one checking of deposit slips and checks. ANS: C 63. The cashier deposits checks in the bank for XYZ Corp. Who should reconcile the bank statement on a regular basis for operational purposes? a. the treasurer b. internal auditor c. the cashier d. an external auditor ANS: B 64. Which of the following is not an example of a customer self-service system? a. pay-at-the-pump gasoline station b. drive-thru lanes at a bank c. web-based courier tracking system d. telephone access to credit card balances ANS: B 65. A customer is instructed to send his remittance advice and check to a bank's postal address. This method for collecting customer cash receipts is called: a. electronic cash b. automated clearing house c. electronic lockbox d. lockbox ANS: D

66. To reduce the cost of collecting its accounts receivable, a company sells its accounts receivable to a financial organization. The service is called: a. a collection agency b. automated clearing house c. factoring d. funding ANS: C