Acct 460 Test 3

Front 1

Key Verification

Back 1

An input device that requires two keyings of the same data with the keystrokes matching for the data to be accepted into the system

Front 2

Focus for processing

Back 2

Processing of transaction files, reports, and records is accurate and complete

Front 3

run-to-run totals

Back 3

from one process to another. computer process. add totals from one process to another

Front 4

Beneford's law

Back 4

look for errors or fraud based on mathematical pattern frequencies

Front 5

processing test data

Back 5

a series of test transactions that have both valid and invalid transactions to test the way the processing behaves

Front 6

integrated test facility

Back 6

the test transactions separate from the regular transactions. they come out before the financial statements.

employees are unaware

Front 7

parallel simulation

Back 7

auditor compares results from regular program to results from a similar, separate program

Front 8

timed reorder

Back 8

goods are always ordered on a specific schedule. quantities can be the same or can vary

Front 9

reorder point

Back 9

a minimum stock level is set up and the order is done when the minimum is reached

Front 10

transaction processing systems (TPS)

Back 10

the way information flows through systems when a sale occurs. records, summarizes, and reports

Front 11

3 categories of sales transactions

Back 11

1) sales processes, including ordering, delivery, and billing

2) sales returns

3) cash collection (depositing money, updating A/R)

Front 12

price list

Back 12

entire list of pre-established and approved prices for each product

Front 13

pick list

Back 13

shows quantities and descriptions of items ordered. these items are what should be picked from the warehouse

Front 14

packing slip

Back 14

lists all items that should be included in a shipment

Front 15

bill of lading

Back 15

terms of the agreement between the company and the carrier

Front 16

shipping log

Back 16

chronological listing of shipments that allows management to track the status of sales and to answer customer inquiries regarding order status

Front 17

sales journal

Back 17

special journal that contains sales transactions. periodically, this amount is posted to the general ledger.

Front 18

5 internal control activities

Back 18

1) authorization of transactions

2) segregation of duties

3) adequate records and documents

4) security of assets and documents

5) independent checks and reconciliations

Front 19

authorization of transactions

Back 19

specific people should have specific duties, and they should only perform those duties. specific ways of authorizing transactions, such as customer signature, should be in place

Front 20

common independent checks and reconciliations for sales

Back 20

-verification of information in the sales journal and on the invoices

-reconciliation of A/R detail with invoices and general ledger

-reconciliation of inventory records with actual quantities of product on hand

Front 21

Risky sales processes that flag a need for controls

Back 21

-frequent price changes

-estimated pricing

-large volume of transactions

-consignments

-shipping from another location

Front 22

receiving log

Back 22

chronological sequence of all returned items

Front 23

receiving report

Back 23

source document that shows the quantity and condition of all items received from returns

Front 24

credit memorandum

Back 24

a document from the seller to the buyer stating the amount to be credited (A/R) to the buyer's account from a return

Front 25

journal of credit memos

Back 25

to keep track of all credit memos issued

Front 26

sales allowances

Back 26

a credit to the customer's account due to a defective or late product. this requires a lot of controls because no goods are usually returned.

Front 27

remittance advice

Back 27

documentation accompanying payment that identifies the customer account number and invoice to which the payment applies

Front 28

cash receipts journal

Back 28

special journal that records all cash collections. this is sent to a cashier along with the checks so the bank deposit can be prepared

Front 29

3 separations for internal control

Back 29

authorization, recording, and custody

Front 30

separation of duties for cash receipts

Back 30

-those who handle cash should not have access to accounting records or bank reconciliations.

-those with IT authority should not have access to accounting or cash

-those with access to the subsidiary ledger should not have access to the general ledger

Front 31

checks and reconciliation for cash collections

Back 31

-surprise checks by someone who does not ordinarily deal with cash

-bank deposits compared with cash receipts journal

-reconcile cash accounts with bank statements

-deposit dates should be checked against bank statements

Front 32

e-commerce systems

Back 32

incorporate electronic processing of sales-related activities over the Internet

Front 33

electronic data interchange (EDI)

Back 33

communicate sales documents electronically with a standard business format

Front 34

point of sale (pos)

Back 34

process sales at a cash register in retail stores

Front 35

business process reengineering (bpr)

Back 35

-purposeful and organized changing of business processes to make the processes more efficient

-aligns business processes with IT systems

-improves efficiency and effectiveness

Front 36

advantages to e-commerce

Back 36

-reduced cost from paperwork and tasks

-shorter sales cycle

-increased accuracy and reliability

-increased market (online)

Front 37

risks of e-commerce

Back 37

-unauthorized access

-invalid data entered by customers

-incomplete audit trail

-hardware errors

-viruses

-hackers

-risks to customers: private information

Front 38

repudiate

Back 38

customer claims a transaction was not made by them.

-controls to authorize users and make sure users are real

Front 39

redundant server system

Back 39

-ensures that the system is available to not lose sales

-requires maintaining one or more computers as a backup in case the main server goes down

Front 40

American national standards institute (ansi)

Back 40

developed standard formats for the usual documents needed in a sales process that help make EDI more streamlined

Front 41

header data

Back 41

part of ANSI standards that contain information about the file or transmission being sent. header identifies the beginning and end of a particular transaction data set

Front 42

trailer data

Back 42

part of ANSI standards that contains data about the file or transmission and identifies the end of a particular transaction data set

Front 43

labeling interchanges

Back 43

part of ANSI standards that identify the type of transactions in the set, such as sales invoices

Front 44

data segments

Back 44

part of ANSI standards that include the actual data within the invoices, such as quantities and prices

Front 45

value added networks (VANs)

Back 45

companies that use EDI usually do not communicate directly and may use a third party to reduce costs. VANs are the third party communication that also translates and encrypts EDI data and authenticates users

-many companies use the internet to reduce cost savings even more by not having to pay the third party fees

Front 46

advantages of an EDI system

Back 46

-reduction of data keying and elimination of entry errors

-cost savings from less data keying and postage

-time savings

-shorter order cycle= less inventory hold time

-better customer service

Front 47

encryption

Back 47

coding of data that makes data unreadable to those without the encryption key

Front 48

transaction logging

Back 48

IT system automatically produces a log of users and the actions they undertake within the IT system.

Front 49

control totals

Back 49

subtotals of selected fields for an entire batch of transactions. ex: quantity ordered

Front 50

acknowledgement

Back 50

a reply that echoes the data control totals. this can reduce the risk of erroneous or invalid EDI data in transactions

Front 51

channel stuffing

Back 51

intentionally persuading a customer to buy more than needed, which stuffs more product into the channel

Front 52

leaving sales open

Back 52

moving a sales cut off period to include sales that should be included in a subsequent period

Front 53

common carrier

Back 53

how companies receive their goods. trucking, rail, or plane

Front 54

3 parts of purchasing system

Back 54

1) purchasing

2)returns

3) cash disbursement

Front 55

purchase requisition form

Back 55

documents the need and request that specific items and quantities be purchased. This must be authorized by a designated person

Front 56

purchase order (PO)

Back 56

document issued to a seller by a buyer that indicates products, quantities, and prices for products/services the seller will provide

Front 57

purchases journal

Back 57

chronological listing of all POs issued to vendors

Front 58

blind purchase order

Back 58

includes information from the PO, but omits price and quantity. forces independent check of item quantity and quality

Front 59

bill of lading

Back 59

details of all items included in a delivery. receiving clerk should sign to verify reciept

Front 60

packing slip

Back 60

shows quantities and descriptions of items included in the shipment. does not usually include prices

Front 61

receiving report

Back 61

a detail of the contents and condition of the receipt

Front 62

receiving log

Back 62

sequential listing of all receipts

Front 63

cutoff

Back 63

the date for the end of the accounting period. liabilities and receipts must be recorded in the same period

Front 64

accounts payable subsidiary ledger

Back 64

detail of amounts owed to each vendor. a file of outstanding invoices is also usually kept

Front 65

debit memo

Back 65

document that identifies the items beings returned. Shows that the company will debit (reduce) their A/P that is owed to the seller

Front 66

cash management

Back 66

careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adequate cash balances exist to meet obligations

Front 67

documents required for cash disbursements

Back 67

1) purchase order: valid order placed

2) receiving report: quality goods received

3) invoice: billed items are correct

Front 68

remittance advice

Back 68

tear-off part of a check that has an explanation of the reasons for payment, such as invoice number

Front 69

cash disbursements journal

Back 69

chronological listing of all payments. like a check register

Front 70

dual signature

Back 70

two people must sign a check to reduce fraud and/or error

Front 71

three-way match

Back 71

matching of a purchase order to the related receiving report and invoice

Front 72

business process reengineering

Back 72

organized change in business processes for the purpose of improving efficiency and effectiveness

Front 73

automated matching

Back 73

computer software technique in which the computer software matches an invoice to its related purchase order and receiving report

-all files must be online or in a database

-items/quantities/prices must match

-checks for math errors and previous payments

-select most advantageous payment date

Front 74

evaluated receipt settlement (ers)

Back 74

invoiceless system

-receipt of goods is carefully evaluated and then if it matches the purchase order, the obligation will be settled

-less safety due to lack of manual procedures

Front 75

vulnerability testing

Back 75

examining the system to determine the adequacy of security measures and to identify security deficiencies

Front 76

penetration testing

Back 76

intentionally attempting to circumvent IT system access controls to determine whether there are weaknesses in any controls

Front 77

intrusion detection software

Back 77

alerts an organization to hacking or unauthorized use of the system or network

Front 78

RAID

Back 78

redundant array of inexpensive disks. maintains one or more disk drives that mirror each other

Front 79

e-payables

Back 79

electronic invoicing and payables

Front 80

electronic invoice presentment and payment (EIPP)

Back 80

electronic invoicing and payables systems

-Internet, using web browsers

Front 81

procurement cards (p-cards)

Back 81

credit cards the organization gives to certain employees to make designated purchases

-makes purchasing easier

-small dollar purchases, such as supplies or maintenance, travel

Front 82

four primary functions of corporate governance

Back 82

management oversight

internal controls

financial stewardship

ethical conduct

Front 83

Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness of purchase transactions?

Back 83

Are prenumbered purchase orders, receiving reports, and vouchers used, and are the entire sequences accounted for?

Front 84

which of the following controls is not normally performed in the accounts payable department?

Back 84

unused purchase orders and receiving reports are accounted for

-this would allow them to purchase and record the purchase

Front 85

payroll processes

Back 85

policies and procedures that employees follow in acquiring and maintaining human resources, capturing and maintaining employee data, paying employees, and recording the cash and payroll liabilities and expenses

Front 86

fixed asset processes

Back 86

policies and procedures involved in purchasing property, capturing and maintaining relevant data about the assets, paying for and recording the assets, recording depreciation, and accounting for losses and gains

Front 87

what is the human resources department responsible for?

Back 87

-maintaining records of jobs and employees

-tracking vacancies

-recruitment

-personnel department: keeps records of: hiring/contract/interview reports/wage/personal info

Front 88

organization chart

Back 88

a map of the jobs and reporting relationships of the company.

-only top branches of the company

Front 89

time sheet

Back 89

record of hours worked by an employee for a specific payroll period

-updated daily

Front 90

payroll register

Back 90

accumulation of all payroll data

-complete listing of salary or wage detail for all employees

Front 91

payroll voucher

Back 91

authorizes the transfer of cash from the company's main cash account to the payroll account

-transfer carried out by cash disbursements dept

Front 92

payroll disbursements journal

Back 92

-listing of all paychecks written

-all checks are in order

-total amount of paychecks should support the total cash transferred to the payroll account

Front 93

paymaster

Back 93

person who distributes checks. should not have access to payroll or custody of cash and should be independent of supervisors to make sure the checks are issued to current employees

Front 94

authorization of transactions: payroll

Back 94

-dept sup verify hours and make sure no fake/retired employees

-pay rate adjustments

-only authorized signatures on checks

Front 95

segregation of duties: payroll

Back 95

-human resources department separate from payroll and record-keeping

-no access to signed checks or cash account for employees

-independence paymaster

Front 96

adequate records and documents: payroll

Back 96

-personnel files and payroll register

-tax forms

-prenumbered checks and separate bank account

Front 97

security of assets and documents

Back 97

-access to personnel files only designated persons

-access to payroll cash only to paycheck signers

-blank payroll checks locked with physical controls

Front 98

independent checks and reconciliation

Back 98

-# hours on timesheets match payroll register

-time sheets match production

-payroll register reconcile to general ledger

-bank statement for payroll account

Front 99

3 phases of fixed asset process:

Back 99

acquisition, continuance, and disposal

Front 100

capital budget

Back 100

financial plan detailing all of the company's investments in fixed assets and other investments

-some companies require large outlays of money be included here

Front 101

fixed asset subsidiary ledger

Back 101

detailed listing of the company's fixed assets, divided into categories

-should have: acquisition date, costs, tag numbers, useful life estimates, salvage values

Front 102

fixed asset continuance phase

Back 102

the processes required to maintain accurate and up-to-date records regarding fixed assets throughout their useful lives.

-update cost data for improvements

-update estimates

-adjust for depreciation

-keep track of physical location of assets

Front 103

depreciation schedule

Back 103

record detailing the amounts and timing of depreciation for all fixed asset categories except land and CIP

Front 104

four steps for disposal of fixed asset

Back 104

1) depreciation updated to the recorded date of disposal

2) remove assets from the fixed asset subsidiary ledger

3) depreciation removed from the schedule and the fixed asset subsidiary ledger

4) gains/losses computed

Front 105

3 steps for purchasing a fixed asset

Back 105

1) investment analysis

2) comparison with capital budget

3) review and approval by appropriate management

Front 106

segregation of duties: fixed assets

Back 106

custody and record keeping, purchasing

Front 107

adequate records and documents: fixed assets

Back 107

all normal purchasing documents

-fixed asset tag

-capital budget

Front 108

security of assets and documents: fixed assets

Back 108

insurance and preventative maintenance

-physical controls: expensive items

Front 109

independent checks and reconciliation: fixed assets

Back 109

purchases match capital budget

-fixed asset audit

-impairment loss check

Front 110

time sheet falsifications

Back 110

-exaggeration of work hours

-falsification of O/Tor vacation

-falsification of sales to get a bigger bonus

-overstatement of travel expenses

-lying about sick days

-lying about an injury to get disability

Front 111

ghost employee

Back 111

entity who receives a paycheck, but who does not work for the company

-maybe previous employee

-friend or relative info

-can only happen without proper S.O.D.

Front 112

signs of ghost employee

Back 112

-paychecks without adequate withholdings

-duplicate address, ss, bank account

-payroll expenses over budget

-unclaimed paychecks when distributed by independence paymaster

Front 113

earnings management

Back 113

-management's flubbing of fixed asset numbers to seem more favorable

-extend life of fixed asset: less depreciation each year

-salvage value increased

-misclassify r&m expense as a capitalization

Front 114

logistics

Back 114

logical, systematic flow of resources throughout the organization

-well planned and coordinated efforts of many departments

-make the most efficient use of resources to support the organization

Front 115

planning

Back 115

-part of the logistics function

-directs the focus of operations and determines what and how much should be produced

Front 116

research and development

Back 116

focuses on product improvement

-investigating and developing new products and methods of producing those products

-research and test new products or processes before they are used

Front 117

capital budgeting

Back 117

plans the capital resources needed to support production

-mainly for fixed assets

-large amounts of money, so must be carefully planned in advance

Front 118

engineering

Back 118

planning the specifications for products that will be manufactured.

-prepares the design and determines the parts needed

-writes the recipe

Front 119

bill of materials

Back 119

form that specifies the components of a product, including what parts and materials are needed

-ingredients needed for the recipe

Front 120

operations list

Back 120

the entire chain of events that a product goes through, including locations and timing

-how to make the recipe

Front 121

scheduling

Back 121

plans the timing for production activities, taking into account what is needed and what is available

-reduce idle time

Front 122

production orders

Back 122

authorize production activities for a particular sales order

Front 123

production schedule

Back 123

outlines the specific timing required for a sales order with dates and times

-goal is no idle time between production activities

-combines info from sales order, bill of materials, and operations list

Front 124

3 resource categories

Back 124

1) maintenance and control

2) human resources

3) inventory control

Front 125

maintenance and control

Back 125

maintaining capital resources

-keeping up with maintenance

-working with capital budgeting for replacement

-timely repair in case of breakdown

Front 126

human resources

Back 126

-responsible for keeping adequate line staff and supervisors

-time sheets must be correct so that appropriate costs are assigned to jobs

Front 127

inventory control

Back 127

managing and recording the movement of inventory throughout the conversion process.

Front 128

economic order quantities (eoq)

Back 128

the most efficient quantity of products to purchase

-based on the costs of ordering and maintaining inventory

Front 129

inventory stores function

Back 129

the control of raw materials inventory held in storage or in holding areas waiting for processing

Front 130

routing

Back 130

the issuance and movement of materials into various production phases

Front 131

routing slip

Back 131

when items are removed from the storeroom and taken into production, this is prepared to indicate movement.

-documents the descriptions and quantities of materials taken into production for a specified sale or other authorized production activity

-"move ticket"

Front 132

inventory status reports

Back 132

document the extent of work completed and the resulting level of inventory.

-should be monitored so scheduling is aware

Front 133

warehousing

Back 133

managing the holding area for finished goods awaiting sale.

-well organized so items are easy to find

-controlled to prevent theft

Front 134

operations

Back 134

major business activity in which a company engages.

-day to day performance

Front 135

quality control

Back 135

follow-up to production

-products are inspected for quality before being moved to the warehouse/shipping

Front 136

rework

Back 136

-additional procedures necessary to bring a product up to its required specifications

Front 137

standard costs

Back 137

what is expected based on projections of a product's required resources. DM, DL, MOH

Front 138

variances

Back 138

the different between the actual and standard cost applied

Front 139

activities in the conversion process that require authorization

Back 139

1) initiation of production

2) issuance of materials into production

3) transfer of finished goods to the warehouse

Front 140

computer-aided-design

Back 140

may be used to enhance the engineering function

Front 141

materials resource planning (MRP)

Back 141

automated scheduling and planning of production and moving of materials

Front 142

mrp-II

Back 142

expansion of mrp. considers all manufacturing resources

Front 143

enterprise-resource planning (erp)

Back 143

expansion of mrpII. integrate all conversion processes into one single software program, as well as purchasing, A/P, H/R, and payroll

Front 144

computer integrated manufacturing

Back 144

-the most advanced form of computer conversion processes

-integrates all functional conversion processes, but also integrates financial and cost accounting functions.

Front 145

absorption costing

Back 145

inclusion of both variable and fixed costs into the determination of unit costs

-fraud: overproducing

Front 146

administrative processes

Back 146

transactions and activities that either are specifically authorized by top managers or are used by managers to perform administrative functions

-investment of excess funds

-issuance of capital stock

Front 147

capital

Back 147

funds used to acquire the long-term capital assets of an organization

-long term debt or equity

Front 148

source of capital processes

Back 148

those processes to authorize the raising of capital, execute the raising of capital, and properly account for that capital

Front 149

underwriter

Back 149

third party that contracts to bring new securities issues to the market

Front 150

investment processes

Back 150

authorize, execute, manage, and account for investments of excess funds

Front 151

special journal

Back 151

established to record specific types of transactions

-regular and recurring transactions

-sales journal

Front 152

subsidiary ledgers

Back 152

maintain the detail information regarding routine transactions

-accounts receivable

Front 153

general journal/general ledger

Back 153

nonroutine transaction, such as sales of stock

-at the end of the period, you must ensure that all transactions have been posted to the general journal

Front 154

journal voucher

Back 154

for manual accounting systems

-something sent to the general ledger department from a subsidiary department to authorize the posting of transactions to the general ledger. must be signed