Information is a business resource

 True

An information system is an example of a natural system

False

Transaction processing systems convert non-financial transactions into financial transactions.

False

Information lacking reliability may still have value.

False

A balance sheet prepared in conformity with GAAP is an example of discretionary reporting.

False

The Management Reporting System provides the internal financial information needed to manage a business.

True

Most of the inputs to the General Ledger System come from the Financial Reporting System.

False

When preparing discretionary reports, organizations can choose what information to report and how to present it.

True

Retrieval is the task of permanently removing obsolete or redundant records from the database

False

Systems development represents 80 to 90 percent of the total cost of a computer system.

False

The database administrator is responsible for the security and integrity of the database.

True

A backbone system is completely finished, tested, and ready for implementation.

False

The internal audito h the interests of third-party outsiders.

False

Information Technology (IT) audits can be performed by both internal and external auditors.

True

The single largest user of computer services is the personnel function.

False

Increased control is one of the key advantages of distributed data processing.

False

The flat-file approach is most often associated with so-called legacy systems.

True

In a flat-file system, files are easily shared by users.

False

Legacy systems were eliminated in the effort to make systems Y2K compliant.

False

One of the greatest disadvantages of database systems is that all data is always available to all users.

False

Under SOX legislation public accounting firms are no longer allowed to provide consulting services to audit clients.

True

Under SOX legislation public accounting firms are no longer allowed to provide consulting services to their clients.

False

Processing more transactions at a lower unit cost makes batch processing more effective than real-time systems.

True

The process of acquiring raw materials is part of the conversion cycle.

False

Directing work-in-process through its various stages of manufacturing is part of the conversion cycle.

True

The portion of the monthly bill from a credit card compnay is an example of a turn-around document.

True

The general journal is used to record recurring transactions that are similar in nature.

False

Document flowcharts are used to represent systems at different levels of detail.

False

Data flow diagrams represent the physical system.

False

System flowcharts are often used to depict processes that are handled in batches.

True

Program flowcharts depict the type of media being used (paper, magnetic tape, or discs) and terminals.

False

System flowcharts represent the input sources, programs, and output products of a computer system.

True

Program flowcharts are used to describe the logic represented in system flowcharts.

True

Batch processing systems can store data on direct access storage devices.

True

Backups are automatically produced in a direct access file environment.

False

The box symbol represents a temporary file.

False

Auditors may prepare program flowcharts to verify the correctness of program logic.

True

A control account is a general ledger account which is suported by a subsidiary ledger.

True

The most significant characteristic of direct access files is access speed.

True

Real time processing is used for routine transactions in large numbers.

False

Batch processing is best used when timely information is needed because this method processes data efficiently

False

An inverted triangle with the letter "N" represents a file in "name" order.

False

Real-time processing in systems that handle large volumes of transactions each day can create operational inefficiencies.

True

Operational inefficiencies occur because accounts unique to many concurrent transactions need to be updated in real time.

False

Operational inefficiencies occur because accounts common to many concurrent transactions need to be updated in real time.

True

Batch processing of non-critical accounts improves operational efficiency.

True

Batch processing of accounts common to many concurrent transactions reduces operational efficiency.

False

The block code is the coding scheme most appropriate for a chart of accounts.

True

Sequential codes may be used to represent complex items or events involving two or more pieces of related data.

False 

Block codes restrict each class to a pre-specified range.

True

For a given field size, a system that uses alphabetic codes can represent far more situations than a system with that uses numeric codes.

True

Mnemonic codes are appropriate for items in either an ascending or descending sequence, such as the numbering of checks or source documents.

False

The ethical principle of justice asserts that the benefits of the decision should be distributed fairly to those who share the risks.

True

The ethical principle of informed consent suggests that the decision should be implemented so as to minimize all of the risks and to avoid any unnecessary risks.

False

Employees should be made aware of the firm's commitment to ethics.

True

Business ethics is the analysis of the nature and social impact of computer technology, and the corresponding formulation and justification of policies for the ethical use of such technology.

False

Para computer ethics is the exposure to stories and reports found in the popular media regarding the good or bad ramifications of computer technology.

False

Computer programs are intellectual property.

True

Copyright laws and computer industry standards have been developed jointly and rarely conflict.

False

Business bankruptcy cases always involve faudulent behavior.

False

Defalcation is another word for financial fraud.

True

The trend toward distributed data processing increases the exposure to fraud from remote locations.

True

The external auditor is reponsible for establishing and maintaining the internal control system. 

False

Segregation of duties is an example of an internal control procedure.

True

Of the three fraud factors (situational pressure, ethics, and opportunity), situational pressure is the factor that actually facilitates the act.

False

Preventive controls are passive techniques designed to reduce fraud.

True

Ethical issues and legal issues are essentially the same.

False

Internal control systems are recommended but not required of firms subject to the Sarbanes-Oxley Act.

False

Collusion among employees in the commission of a fraud is difficult to prevent but easy to detect.

False.

The Sarbanes-Oxley Act requires only that a firm keep good records.

False

A key modifying assumption in internal control is that the internal control system is the responsibility of management. 

True

Database management fraud includes altering, updating, and deleting an organization's data.

False

While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.

True

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

True

Section 404 requires that corporate management (including the CEO) certify their organization's internal controls on a quarterly and annual basis.

False

Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization's internal controls.

False

The objective of SAS 99 is to seamlessly blend the auditor's consideration of fraud into all phases of the audit process.

True

The fraud triangle represents a geographic area in Southeast Asia where international fraud is prevalent.

False

Situational pressure includes personal or job related stresses that could coerce an individual to act dishonestly.

True

Opportunity involves direct access to assets and/or access to information that controls assets.

True

Cash larceny involves stealing cash from an organization before it is recorded on the organization's books and records.

False

Skimming involves stealing cash from an organization after it is recorded on the organization's books and records.

False