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ACCOUNTING INFORMATION SYSTEMS


CONTROLS AND PROCESSES
TURNER / WEICKGENANNT

CHAPTER 14: E-Commerce and E-Business

TEST BANK – CHAPTER 14 – TRUE / FALSE

1. E-business is the use of electronic means to enhance business processes.

2. E-commerce is electronically enabled transactions between a business and its


customers.

3. E-commerce is the use of electronic means to enhance business processes.

4. E-commerce only involves transactions between the business and its customers.

5. Packet switching is the method used to send data over a computer network.

6. A router is an electronic hardware device that is connected to each computer to


connect it to a network.

7. A protocol is a standard data communication format that allows computers to


exchange data.

8. TCP/IP is an abbreviation for terminal communications protocol/Internet protocol

9. The Internet (interconnected networks) serves as the backbone for the World
Wide Web (WWW).

10. A backbone provider is an organization such as the National Science Foundation


(NSF) which funded the Internet and/or the WWW.

11. Regional ISPs connect to the backbone through lines that have less speed and
capacity than the backbone.

12. Local ISPs connect to the backbone through lines that have less speed and
capacity than the backbone.

13. A web server is a computer and hard drive space that connects to the backbone
through lines that have less speed and capacity than the backbone.

14. A web server is a computer and hard drive space that stores web pages and
data.
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15. The standard form of encryption embedded in e-commerce sites and in web
browser software is “Safe Sending Language” (SSL).

16. Due to interstate trade events and taxation issues the U.S. Government has
standardized the definition of e-commerce.

17. The common term for business-to-consumer e-commerce is B2C. The common
term for business-to-business electronic sales is B2B.

18. E-commerce provides the potential for much richer marketing concepts that
include video, audio, product comparisons, and product testimonials or product
tests.

19. Because of computer interaction and the capability of almost instant verification
business across the World Wide Web has a lower probably of fraud, hackers, and
compromised customer privacy.

20. The AICPA Trust Services Principles do not protect the history of purchases since
these are classified as “public knowledge events.”

21. The AICPA Trust Services Principles state that the customer should be given the
choice regarding the collection and retention of data.

22. The AICPA Trust Services Principles state that the customer need not be
contacted if a business is going to release non-sensitive information about the
customer to a third party.

23. The supply chain is the linked processes from the raw material vendor through
the manufacturer ending at the stage of finished goods.

24. The supply chain may be larger at either or both ends as more than one vendor
may supply the same materials and more than one customer may purchase the
finished products.

25. A strength of the supply chain concept is that inconsistencies or poor quality
within the supply chain will be compensated by other strengths resulting in an
overall satisfactory product.

26. An example of vertical integration is a manufacturer who mines the raw


materials, produces the product, and then sells it in company owned stores.

27. The differentiating factor between B2C and B2B is where B2C might purchase
two books; a B2B purchase might involve ten thousand books.

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28. One advantage in the B2B e-business environment is that operations costs can
be reduced through inventory reductions and efficiencies can be increased by
location of nearby assets when needed.

29. An intranet is a private network accessible only to the employees of a company.

30. Because intranets do not transmit information through the Internet or WWW
they do not use protocols such as TCP/IP.

31. An extranet is similar to an internet except that it offers access to a greater


number of sites than a standard Internet or WWW connection.

32. One characteristic that the Internet, intranets, and extranets have in common is
that they are all networks that are intended for the sharing of information and
the conducting of transactions.

33. The general public has general access to the intranet and extranet networks.

34. XML is a rich language that facilitates the exchange of data between
organizations via web pages.

35. In XBRL complex financial statements are presented only in a static mode.

36. Traditional EDI is a real-time processing system due to the 24 hour, 7 day a
week operation of computers and servers.

37. Management has an ethical obligation to create and enforce policies and
practices which ensure that private customer data are not misused.

38. Because of their sensitive nature, companies seldom sell or share customer lists
or customer data.

39. While there is no requirement to disclose a privacy policy on a website, it is an


ethical obligation to disclose and follow the policy.

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ANSWERS TO TEST BANK - CHAPTER 14 - TRUE/FALSE:


1. T 9. T 17. T 25. F 33. F
2. T 10. F 18. T 26. T 34. T
3. F 11. T 19. F 27. T 35. F
4. F 12. F 20. F 28. T 36. F
5. T 13. F 21. T 29. T 37. T
6. F 14. T 22. F 30. F 38. F
7. T 15. F 23. F 31. F 39. T
8. F 16. F 24. T 32. T

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TEST BANK – CHAPTER 14 – MULTIPLE CHOICE

40. E-commerce:
A. is business-to-business electronic trading and process integration.
B. is electronically enabled transactions between a business and its vendors.
C. is electronic recording and control of internal processes.
D. is electronically enabled transactions between a business and its customers.

41. E-business:
1. is a narrower concept than e-commerce.
2. services the customers and the vendors.
3. is electronic recording and control of internal processes.
4. uses electronic means to enhance business processes.
A. 1 only.
B. 2 and 3 only.
C. 2, 3, and 4 only.
D. 1, 2, 3, and 4.

42. The internal processes of e-business do not include:


A. access to personnel records.
B. access to fringe benefit information.
C. on-line sales to customers.
D. travel and expense reporting.

43. E-commerce:
A. sales will usually be large dollar amounts with only a few items are sold.
B. is the sale of goods or services from a business to retailers.
C. is the sale of goods or services to an end-user consumer.
D. Both A and B are correct answers.

44. E-business
1. includes the sale of raw materials between companies.
2. includes using the Internet as an electronic network.
3. sales will usually be smaller dollar amounts with many sales.
4. is a broader concept than e-commerce.
A. 1, 2, 3, and 4.
B. 2, 3, and 4 only.
C. 1, 3, 4 only.
D. 1, 2, and 4 only.

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45. Packet switching is a method of:


A. turning routers off and on to send messages between computers.
B. dividing large messages into bundles for transmission over a network.
C. isolating computers connected to the network by disconnecting them.
D. keeping all associated bundles of the message on one network path.

46. The transmission of packets:


A. must be determined by the sender manually.
B. must be accomplished via the same network path.
C. allows great versatility in the transmission of data.
D. has diminished because of advances in connectivity.

47. The transmission of packets:


A. are usually sent in sequential order.
B. must be received in sequential order.
C. must follow the same network path.
D. will bundle small messages into larger bundles for transmission.

48. A router is:


A. a software application that creates path instructions for packets.
B. is hardware that connects two or more networks.
C. must receive its instructions from the user manually.
D. Both B and C are correct.

49. The proper actions and capabilities is:


A. packet switching bundles small messages into large messages for
transmission while routers determine the best path through the network.
B. packet switching replaces the need for routers to determine the best path
for the message through the network.
C. packet switching and routers both bundle small messages into large
messages for transmission.
D. packet switching divides large messages into small bundles for transmission
while routers determine the best path through the network.

50. A protocol is required so that:


A. computers from the same manufacturer can communication with each
other.
B. computers from different manufacturers can communicate with each other.
C. so that communications within the network can be routed properly.
D. Answers A, B, and C are all correct.

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51. Protocols can be considered:


A. a proprietary language to a specific computer manufacturer.
B. a language native to the network so all computers can translate it.
C. unnecessary if the computer is communicating on a LAN.
D. unnecessary if the computer is using packet switching and routers.

52. TCP/IP is:


A. trunk controlling protocol/intranet protocol.
B. transmission control protocol/intranet protocol.
C. trunk controlling protocol/Internet protocol.
D. transmission control protocol/Internet protocol.

53. The ARPANET was:


A. restricted to universities, libraries, research organizations, and commercial
carrier access.
B. was designed in the 1990s to augment the growing Internet and intranet
systems.
C. does not require the use of protocols such as TCP/IP because of the limited
access.
D. restricted to universities, libraries, and research organizations.

54. The Internet:


A. is a series of LANs connected together to increase their local capability.
B. is a series of networks connected to provide a global connectivity.
C. is generally restricted to universities, libraries, and research organizations.
D. utilizes the World Wide Web as a backbone to increase its capabilities.

55. The Internet:


A. utilizes LANs as a backbone to increase connectivity.
B. is a system of unconnected networks.
C. utilizes the World Wide Web as a backbone.
D. is compatible to graphic user interface tools.

56. The expansive growth of web servers occurred:


A. in the early 1990s – 1990~1994.
B. in the mid 1990s – 1993~1996.
C. in the late 1990s – 1995~2000.
D. in the early 2000s – 2000~2004.

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57. The proper sequence of Internet connectivity between users is:


A. regional ISP to national backbone provider to regional ISP.
B. local ISP to national backbone provider to network access point to national
backbone provider to local ISP.
C. regional ISP to national network access points to regional ISP.
D. local ISP to regional ISP to national backbone provider to network access
points to national backbone provider to regional ISP to local ISP.

58. A backbone provider is an organization:


A. that provides direct Internet access to the end users.
B. that provides regional ISPs direct access to the Internet.
C. that provides high-speed access to local ISP users.
D. that provides high-speed access to regional ISP users.

59. The Internet backbone is:


A. the network between the local ISP and the regional ISP.
B. the network between the regional ISP and the local ISP.
C. the network between the local ISP and the national backbone provider.
D. the network between national backbone providers.

60. Regional ISPs:


A. connect directly to the Internet backbone through network access points.
B. connect to the Internet backbone through local ISPs utilizing network
access points.
C. provide the connection between local ISPs and national backbone providers.
D. provide end users direct connects to the Internet backbone through
network access points.

61. Regional ISPs do not include:


A. EarthLink.
B. BellSouth.
C. MCI.
D. America Online.

62. Backbone providers would not include:


A. MCI.
B. Sprint.
C. America Online.
D. BBN.

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63. Local ISPs would include:


A. MCI and Sprint.
B. America Online and EarthLink.
C. BBN and a local cable company.
D. television and cable companies.

64. A web server is:


A. always located at national backbone provider levels.
B. always located at regional ISP provider levels.
C. is a computer and hard drive space that stores web pages and data.
D. always the access between the national backbone provider and the
backbone.

65. HTML is:


A. a language which allows computers to connect to the Internet and WWW.
B. a protocol language allowing user level computers to connect to local ISPs.
C. is a language utilized to present website words, data, and pictures.
D. used for information sharing between the Internet and WWW.

66. HTML allows:


A. user level computers to connect to the Internet through an ISP.
B. user level computers a way to display information the way it was intended
to be displayed.
C. local and regional ISPs to interact with national backbone providers.
D. national backbone providers to exchange information about trunk traffic.

67. An example of a URL is:


A. cjb@jhs-email.com.
B. http://www.cjb.org.
C. jhs-email.com.
D. All of the above, A, B, and C, are examples of URLs.

68. Select the true statement from the following.


A. URL stands for uniform real-time locator while http stands for hypertext
transmission protocol.
B. URL stands for uniform resource location while http stands for hypertext
translation protocol.
C. URL stands for uniform resource locator while http stands for hypertext
transmission protocol.
D. URL stands for uniform real-time location while http stands for hypertext
transmission protocol.

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69. When a valid URL is entered into your web browser:


A. your computer will send a network access protocol (NAP) command to your
network server.
B. your computer will send an http command to your internet access point
requesting information.
C. your command will be translated into TCP/IP and sent directly to a national
backbone provider.
D. your computer will directly access the Internet and WWW in its search for
the information.

70. HTTP stands for:


A. hypertext transmission protocol.
B. hypertransmission terminal protocol.
C. hypertext terminal protocol.
D. hypertext translation protocol.

71. An example of a domain name is:


A. jhs-email.com.
B. cjb@jhs-email.com.
C. http://www.cjb.org.
D. All of the above, A, B, and C, are examples of domain names.

72. A URL is converted to an IP:


A. by TCP/IP capabilities of the user level computer.
B. by a DNS accessed when the browser sends the command.
C. by the local ISP provider.
D. by the national backbone provider.

73. SSL – secure sockets layering:


A. reduces the frequency of Internet connection disconnects.
B. ensures that TCP/IP is correctly configured for Internet browsing.
C. is an effective way to prevent web pages from denial of service attacks.
D. is an encryption system which reduces the probably of improper use of
transmitted data.

74. The ways to determine a secure sockets layering connection is:


A. the “s” at the end of “www”.
B. the “s” at the end of “http.”
C. the padlock on the lower bar of most web browsers.
D. Both answers, B and C, are correct.

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75. Select the correct statement from the following.


A. B2C and B2B are both considered e-commerce.
B. B2C is considered e-commerce while B2B is considered e-business.
C. B2B is considered e-commerce while B2C is considered e-business.
D. B2C and B2B are both considered e-business.

76. The common element in B2B and B2C is:


A. both require a physical selling point.
B. a downloadable product.
C. both require access to the business’s website.
D. both require SSL (secure sockets layering) to complete the transaction.

77. Advantages of e-commerce include all except:


A. a narrower market for goods and services.
B. increased access to information.
C. the lack of geographic constraints.
D. All of the answers, A, B, and C, are advantages of e-commerce.

78. All of the following are true statements about e-commerce except:
A. e-commerce sites normally conduct sales 24 hours a day, 7 days a week, 12
months a year.
B. e-commerce sales are except from sales taxes due to the lack of a physical
site.
C. e-commerce consumers can search for better prices and more information
easily.
D. e-commerce consumers may incur shipping and handling charges not
incurred by retail customers.

79. E-commerce sites may:


1. provide access to manufacturer information on the product.
2. may provide tax free sales of retail goods.
3. require shipping and handling fees to be paid.
4. provide links to live or video presentations of product information.
5. not provide as quick order processing as the company’s retail locations.
A. 1, 2, 3, 4, and 5 are correct.
B. 1, 3, 4, and 5 are correct.
C. 1, 2, 4, and 5 are correct.
D. 1, 2, 3, and 4 are correct.

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80. Select the true statements from the following.


1. Fraud, theft, or theft of data on the Internet and WWW are reduced by its
regulated and controlled state.
2. A customer may feel isolated from the product because of the inability to
touch or handle the product.
3. E-commerce customers may be targeted for solicitations based on their
purchasing history.
4. E-commerce customers will often incur a shipping and handling charge with
purchases.
5. E-commerce customers will always find the best product at the best price.
A. 1, 2, 3, 4, and 5 are all true statements.
B. 2, 3, and 4 are all true statements.
C. 1, 3, 4, and 5 are all true statements.
D. 1, 4, and 5 are all true statements.

81. E-commerce business benefits include all except:


A. a lower cost of advertising per customer reached.
B. more interaction with video and audio product comparisons.
C. more rigid advertising and product presentation requirements.
D. All of the above, A, B, and C, are benefits of e-commerce.

82. E-commerce businesses are:


A. normally confined to more restrictive marketing due to the larger market.
B. more likely to incur greater order processing costs because of technology
costs.
C. less confined in inventory stocking than a retail facility.
D. less flexible in pricing structures due to WWW and Internet distribution of
information.

83. All of the following are disadvantages of e-commerce except:


A. faster order processing prevents good assurance of order correctness.
B. greater probability of fraud or compromised customer privacy.
C. more complex sales, inventory, and payment applications.
D. All of the above, A, B, and C, are disadvantages of e-commerce.

84. With the advent of technology, the Internet, and the WWW:
A. commerce is moving only from physical to electronic positioning.
B. commerce has maintained its stance of physical and electronic.
C. commerce is moving both from electronic to physical and from physical to
electronic.
D. No notable trends have been identified.

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85. Select the correct statement from those below.


A. Bricks and mortar refer to traditional stores while e-tailers are both brick
and mortar and e-commerce businesses.
B. Bricks and mortar refer to stores with both physical and electronic
presences while e-tailers are e-commerce businesses only.
C. Bricks and mortar refer to traditional stores while brick and click businesses
are both brick and mortar and e-commerce businesses.
D. Bricks and mortar refer to traditional stores while brick and click refers to e-
commerce businesses.

86. The AICPA’s Trust Services Principles state that online privacy focuses on:
1. Name
2. Address
3. Social Security number
4. government ID numbers
5. employment history
6. personal health conditions
7. personal financial information
8. history of purchases
9. credit records
A. 1, 2, 3, 4, 5, 6, 7, 8, and 9.
B. 1, 2, 3, 4, 6, 7, 8, and 9 only.
C. 1, 2, 3, 4, 5, 6, 7, and 9 only.
D. 1, 2, 3, 4, 5, 6, 7, and 8 only.

87. The AICPA’s Trust Services Principles practice that states a specific person or
persons should be assigned the responsibility to insure that privacy
practices are followed by employees is under the title of:
A. monitoring and enforcement.
B. security for privacy.
C. management.
D. choice and consent.

88. The AICPA’s Trust Services Principles practice that states a company should have
policies and practices to maintain the privacy of customer data is under the
title of:
A. choice and consent.
B. collection.
C. use and retention.
D. notice.

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89. The AICPA’s Trust Services Principles practice that states the organization should
provide the choice to its customers regarding the collection of data is under
the title of:
A. choice and consent.
B. collection.
C. use and retention.
D. notice.

90. The AICPA’s Trust Services Principles practice that states the organization should
ask about the collection, retention, and of the use is under the title of:
A. use and retention.
B. access.
C. choice and consent.
D. disclosure to third parties.

91. The AICPA’s Trust Services Principles practice that states that only the data that
is necessary for the purpose of conducting the transaction should be
collected is under the title of:
A. use and retention.
B. collection.
C. choice and consent.
D. security for privacy.

92. The AICPA’s Trust Services Principles practice that states the organization should
use customers’ personal data only in the manner described in “notice” is
under the title of:
A. security for privacy.
B. monitoring and enforcement.
C. use and retention.
D. choice and consent.

93. The AICPA’s Trust Services Principles practice that states that customers should
have access to the data provided so that the customer can view, change,
delete, or block further use of the data provided is under the title of:.
A. access.
B. choice and consent.
C. security for privacy.
D. use and retention.

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94. The AICPA’s Trust Services Principles practice that states that organizations
should receive explicit or implicit consent of the customer before providing
information to third parties is under the title of:
A. choice and consent.
B. security for privacy.
C. monitoring and enforcement.
D. disclosure to third parties.

95. The AICPA’s Trust Services Principles practice that states that the organization
has the necessary protections to try to insure that customer data is not lost,
destroyed, altered, or subject to unauthorized access is under the title of:
A. choice and consent.
B. security for privacy.
C. monitoring and enforcement.
D. disclosure to third parties.

96. The AICPA’s Trust Services Principles practice that states that all customer data
collected remains “accurate, complete, current, relevant, and reliable” is
under the title of:
A. choice and consent.
B. quality.
C. monitoring and enforcement.
D. use and retention.

97. The AICPA’s Trust Services Principles practice that states that the organization
should have procedures to address privacy related inquiries or disputes is
under the title of:
A. choice and consent.
B. quality.
C. monitoring and enforcement.
D. use and retention.

98. Internal processes of the organization include all of the following except:
A. transactions involving suppliers.
B. movement of raw materials.
C. timekeeping and labor management.
D. sharing of data files among workers.

99. The supply chain:


A. is usually smaller at the customer end.
B. is usually more complex for service firms.
C. includes manufacturing facilities.
D. does not include any internal resources.

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100. The supply chain:


A. ends once the raw materials arrive at the manufacturing facility.
B. is an external process only.
C. is both an internal and external process.
D. ends once the product is manufactured and ready for sale.

101. The correct sequence of the supply chain is:


A. secondary suppliers, suppliers, manufacturer, warehouses, distributors,
retailers, and customers.
B. suppliers, secondary suppliers, manufacturer, warehouses, distributors,
retailers, and customers.
C. suppliers, secondary suppliers, manufacturer, distributors, warehouses,
retailers, and customers.
D. suppliers, secondary suppliers, manufacturer, distributors, warehouses,
retailers, and customers.

102. The correct statement regarding the supply chain and B2C is the supply chain
extends from the:
A. secondary supplier and ends with the retailer while B2C is from the
manufacturer to the final consumer.
B. secondary supplier and ends with the retailer while B2C is from the
manufacturer to the final consumer.
C. secondary supplier and ends with the manufacturer while B2C is from the
retailer to the final consumer.
D. secondary supplier and ends with the final customer while B2C is from the
retailer to the final consumer.

103. The correct statement regarding the supply chain and B2B is the supply chain
extends from the:
A. secondary supplier and ends with the retailer while B2B is from the
manufacturer to the final consumer.
B. secondary supplier and ends with the final customer while B2B is from the
secondary supplier to the distributor.
C. secondary supplier and ends with the manufacturer while B2B is from the
supplier to the retailer.
D. secondary supplier and ends with the final customer while B2B is from the
retailer to the final consumer.

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104. Vertical integration of the supply chain occurs when:


A. one organization owns all of the companies capable of accomplishing a
specific task.
B. all of the organizations that can accomplish a specific task are located in
one geographic region.
C. several organizations agree to produce a single product under a common
label.
D. one organization owns the supply chain from raw materials through
distribution and sales.

105. Select the correct statement from the following:


A. B2C is typically many line items per order while B2B is typically few line
items per order.
B. B2C is typically few line items per order while B2B is typically many line
items per order.
C. B2C uses purchase order forms while B2B utilizes credit card purchasing.
D. B2C buyers usually have a relationship with the seller while B2B do not have
a prior relationship.

106. An intranet is:


A. a private network accessible only to the employees of a company.
B. a public network accessible by the customers and vendors of a company.
C. a public network accessible by the entire supply chain of a company.
D. a private network accessible by the entire supply chain of a company.

107. B2C e-commerce requires:


A. access to the intranet.
B. access to the extranet.
C. access to the Internet.
D. all of the above, A, B, and C.

108. An extranet is:


A. a private network accessible only to the employees of a company.
B. a public network accessible by the customers and vendors of a company.
C. a public network accessible by the entire supply chain of a company.
D. a private network accessible by select members of the supply chain.

109. Select the correct statement from those provided below.


A. Intranet access is generally open to select members of the supply chain.
B. Internet access is generally open to select members of the supply chain.
C. Extranet access is generally restricted to company employees.
D. Extranet access is generally open to select members of the supply chain.

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110. When a company uses the:


A. intranet for exchanges such as B2C transactions, it must give access to
potential customers.
B. Internet for exchanges such as B2C transactions, it must give access to
potential customers.
C. Internet for exchanges such as B2C transactions, it must preclude potential
customers default access.
D. extranet for exchanges such as B2C transactions, it must preclude potential
customers default access.

111. Firewalls:
A. prevent internal users from accessing unacceptable web sites through the
intranet.
B. permit internal users direct access to the Internet to accomplish B2B
transactions.
C. prevent vendors from viewing inventory levels via the intranet.
D. prevent external users from accessing the extranet or intranet.

112. Select the correct statement from the following.


A. XML is extensible markup language while XBRL is extensible business
reporting language.
B. XML is extensive markup language while XBRL is extensive business
reporting language.
C. XML is example markup language while XBRL is example business reporting
language.
D. XML is extensible manipulation language while XBRL is extensible business
reporting language.

113. XML:
A. allows dynamic financial statements to be published on websites.
B. provides standards for the automatic exchange of financial data.
C. facilitates the exchange of data between organizations via web pages.
D. is based on XBRL language for the construction of business web pages.

114. EDI via ANSI X.12 implementation is hampered by:


A. high costs.
B. usable only on small projects.
C. limited transfer of files and data formats.
D. Both A and C above are correct answers.

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115. Internet EDI, or EDIINT, features all of the following except:


A. low cost.
B. heavy infrastructure.
C. industry standard.
D. entire supply chain integration.

116. Value added networks or VANs, features all of the following except:
A. transaction fees.
B. complicated.
C. industry standard.
D. limited access.

117. As a metalanguage, XML:


A. places a data tag that the beginning and end of each page identifying the
contained data.
B. places a data tag that the beginning and end of each data item identifying
the contained data.
C. places a data tag only at the beginning of the data identifying the following
data item.
D. is usable on both EDI and EDIINT networks.

118. XBRL:
A. is a language that allows data extraction from financial statements.
B. is the base or core language for XML, also a metalanguage.
C. requires that financial statements be submitted in printed format.
D. Both answers B and C are correct.

119. Companies that engage in e-commerce, B2C sales with consumers:


A. have the legal obligation of complying with the AICPA Trust Services
Principles.
B. have the same kind of obligations to conduct their business ethically as
companies transacting business any other way.
C. have legal obligations that suggest that customers should be so informed
regarding customer privacy.
D. are required by law to have a local presence for the resolution of customer
complaints.

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ANSWERS TO TEST BANK - CHAPTER 14 – MULTIPLE CHOICE:

40. D 56. C 72. B 88. D 104. D


41. C 57. D 73. C 89. A 105. B
42. C 58. D 74. C 90. C 106. A
43. C 59. D 75. B 91. B 107. C
44. D 60. C 76. C 92. C 108. D
45. B 61. C 77. A 93. A 109. D
46. C 62. C 78. B 94. D 110. B
47. A 63. D 79. D 95. B 111. D
48. B 64. C 80. B 96. B 112. A
49. D 65. C 81. C 97. C 113. C
50. D 66. B 82. B 98. A 114. D
51. B 67. B 83. A 99. C 115. B
52. D 68. C 84. C 100. C 116. D
53. D 69. B 85. C 101. A 117. B
54. B 70. A 86. A 102. D 118. A
55. C 71. A 87. C 103. B 119. B

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TEXTBOOK – CHAPTER 14 – END OF CHAPTER QUESTIONS

120. Which of the following statements is true?


A. E-business is a subset of e-commerce.
B. E-commerce is a subset of e-business.
C. E-business and e-commerce are exactly the same thing.
D. E-business and e-commerce are not related.

121. An electronic hardware device that is located at the gateway between two or
more networks is a
A. packet switch.
B. URL.
C. router.
D. protocol.

122. The type of organization that serves as the main trunk line of the Internet is
called a
A. local ISP.
B. regional ISP.
C. global ISP.
D. backbone provider.

123. Which of the following is not a direct advantage for the consumer from -
commerce?
A. Access to a broader market
B. More shopping convenience
C. Reduced order-processing cost
D. Information sharing from the company

124. Each of the following represents a characteristic of B2B commerce except


A. electronic data interchange.
B. electronic retailing.
C. data exchanges.
D. preexisting business relationships.

125. Each of the following represents an application of B2C commerce except


A. software sales.
B. electronic retailing.
C. data exchanges.
D. stock trading.

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126. Before forwarding customer data, an organization should receive explicit or


implicit consent of the customer. This describes which of the AICPA Trust
Services Principles online privacy practices?
A. Consent
B. Use and retention
C. Access
D. Onward transfer and disclosure

127. Which of the following process within a supply chain can benefit from IT
enablement?
A. All process throughout the supply chain
B. Only internal process within the supply chain
C. Only external process within the supply chain
D. exchange process between a company and its suppliers

128. When a company has an e-business transaction with a supplier, it could be using
A. the Internet.
B. an intranet.
C. an extranet.
D. Either the Internet or an extranet.

129. Intranets are used for each of the following except


A. communication and collaboration.
B. business operations and managerial monitoring.
C. web publishing.
D. customer self-service.

130. When there is no necessity for a preexisting relationship between buyer and
seller, that transaction is more likely to b classified as
A. B2B.
B. B2C.
C. B2E.
D. Either B2B or B2C.

131. Which of the following IT controls would not be important in an extranet?


A. encryption
B. Password
C. Antivirus software
D. Penetration testing
E. All of the above are important IT controls.

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132. A company’s computer network uses web servers, HTML, and XML to serve
various user groups. Which type of network best serves each of the following
users?
Employees Suppliers
A. Intranet Extranet
B. Intranet Internet
C. Internet Extranet
D. Internet Internet

133. An extensible markup language designed specifically for financial reporting is


A. Internet DI
B. XML
C. XBRL
D. XFRL

ANSWERS TO TEXTBOOK – CHAPTER 14 – END OF CHAPTER QUESTIONS

120. B 123. C 126. D 129. A 132. A


121. C 124. B 127. A 130. B 133. C
122. D 125. C 128. D 131. E

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TEST BANK – CHAPTER 14 – SHORT ANSWER QUESTIONS

134. How do e-commerce and e-business differ?


Answer: E-business is a very broad concept that includes any electronically enabled
business process. E-business can include electronic enhancements of processes with
trading partners, as well as internal processes. E-commerce is a subset of e-business
and it includes electronic sales between a retail business and an end consumer. E-
commerce is conducted via the Internet, while e-business could use the Internet as
well as other electronic means.

135. What was the original purpose of the network of computers that eventually
became the Internet?
Answer: The original purpose was to facilitate communication and sharing of work
between universities engaged in research for the Department of defense.

136. Why was ARPANET designed with many different alternative routes for network
traffic?
Answer: ARPANET was designed during the height of the Cold War with the USSR
and there were many fears of nuclear attack. A design with many alternative routes
could still operate if a nuclear attack destroyed one or more of those routes.

137. Why is a standard protocol necessary in computer networks?


Answer: There may be many different brands or types of computers on a network,
and these computers could use different operating systems. In order for these
various computer systems to communicate, there must be a standard protocol. The
protocol establishes the common communication method.

138. How quickly did Internet usage by the public grow after the Internet was opened
to business transactions in 1994?
Answer: The public use of the Internet exploded in growth after it was opened to
business transactions. This was especially true in the 1998 to 2001 period.

139. Describe the relationship between national backbone providers, regional ISPs,
and local ISPs?
Answer: Backbone providers make up the main trunk-lines of the Internet. They are
made up of high capacity , high speed lines. Regional Internet Service Providers
(ISP) connect to the backbone providers with lines with less speed and capacity than
backbone providers. The local ISPS then connect to the regional ISPs and these
local ISPs provide Internet connect to local customers.

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140. What is the importance of a standard formatting language for Web pages and a
standard addressing system?
Answer: The standard formatting language for web pages is HTML. A standard
formatting language is necessary to show a web page in the same form on the
many different kind of computers connected to the World Wide Web. There is a
similar reason to have a standard addressing system. Various types of computers
need a way to locate the desired web site If a standard method of accessing web
sites exists, the computer browsers can be built to use the standard addressing
system on the various kinds of computers.

141. Which types of costs can be reduced when a company decides to engage in B2B
e-commerce on the Internet?
Answer: Marketing costs, order processing costs, and distribution costs can be
reduced by engaging in B2C sales.

142. What are the differences between brick and mortar retailers and clicks and
mortar retailers?
Answer: Brick and mortar refers to retailers that sell in traditional forms in a building
that customers visit to make a purchase. Clicks and mortar refers to retailers who
have traditional sales in a building, but also sell to customers via the Internet.

143. According to the Online Privacy section of the AICPA Trust Services Principles,
what types of personal information should be protected?
Answer: All information collected from customers should remain private unless the
customer has given implicit or explicit permission to share such information with
third parties. In addition, companies should collect only data necessary to
conducting the transaction.

144. If you could condense the ten areas of Online Privacy in the AICPA Trust
Principles, into a shorter list (three, four, or five point list), how would you word
that list?
Answer: Collect only necessary data, keep that data private unless the customer
gives permission to share it, make sure you have enforced policies to store and use
the data as the customer intends you to use it, notify the customer of how you
intend to use the data.

145. What is meant by “monitoring and enforcement” regarding online privacy


practices?
Answer: It means that a company should continuously monitor how well it follows
its privacy practices and that they must put processes in place to ensure privacy
practices are followed.

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146. How is E-business a more broad concept than e-commerce?


Answer: E-commerce refers to web-based sales between a business and an end
consumer. E-business is a much broader concept that includes electronic forms of
process improvement throughout the supply chain. Thus it can include processes
between a business and its suppliers, a business and its customers, or internal
processes. It also includes many forms of electronic enhancement beyond web-
based.

147. Describe the concept of a supply chain.


Answer: It is the set of linked activities from the acquisition and delivery of raw
materials, through the manufacture, distribution, and delivery to a customer.
Why is it important to insure an efficient flow of goods throughout the supply chain?
Any slow-down or bottle neck in the supply chain can slow or stop the entire supply
chain.

148. Which functions within the supply chain can be enhanced through the use of e-
business?
Answer: Virtually any process within the supply chain can be enhanced through e-
business.

149. How are activities in the supply chain interdependent?


Answer: They are interdependent in that one step in the supply chain drives the
following step. For example, a secondary supplier must provide products to a
supplier, who then converts it to a product to be sold to the manufacturer.

150. In what ways are the characteristics of e-business different from e-commerce?
Answer: E-business is often business to business, while e-commerce is business to
consumer. In an e-business order, it is likely to be a large dollar order, with many
line items, and with a business that we have a pre-existing relationship. An e-
commerce order may be from an unknown customer and each order may be a small
dollar amount, but a large volume of orders. E-commerce transactions are likely to
be credit card transactions while e-business transactions are likely to involve
purchase orders and invoices.

151. What are the three levels of network platforms that are utilized in e-business and
which groups use each level?
Answer: The Internet is used by internal and external users, potentially including
anyone in the world. Extranets are used by trading partners and are not available to
the entire world. Intranets are used by employees within the company.

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152. Which type of users should have access to an intranet?


Answer: Only those inside the company.

153. Which type of users should have access to an extranet?


Answer: Trading partners such as suppliers, secondary suppliers, and distributors.

154. What types of controls should be used to properly limit access in intranets and
extranets?
Answer: Authentication controls should be used, including controls such as user Ids,
passwords, access levels, computer logs, and authority tables. Also, hacking and
break-in controls should be used. These include controls such as firewalls,
encryption, security policies, VPN, vulnerability assessment, penetration testing, and
intrusion detection.

155. Why is the use of XML advantageous in Internet EDI?


Answer: XML allows a more rich exchange of data than traditional EDI. For example,
it could allow the exchange of product descriptions, pictures, or even databases of
information regarding products.

156. In what ways are XBRL financial statements advantageous when compared to
traditional paper financial statements?
Answer: XBRL statements can be viewed by a browser, or printed. In addition, the
viewing of an XBRL statement on a web browser could be much more interactive.
For example a reader of the statements could click on an item such as sales to see
more underlying detail of the sales total.

157. What are some of the ethical obligations of companies related to e-commerce?
Answer: Companies have an obligation to collect, store, and use customer data in a
ethical manner. These obligations are described in the ten privacy practices of the
AICPA Trust Services Principles.

158. Is there a difference between ethical obligations and legal obligations in regards
to online privacy?
Answer: Yes, for example, there is no legal obligation to have a privacy policy
displayed on the company web site. However, companies that wish to be very
ethical should display privacy practices.

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TEST BANK – CHAPTER 14 –SHORT ESSAY

159. Much of the e-business and e-commerce conducted by companies uses the
Internet as the form of electronic communication. Describe other electronic
means to conduct e-business or e-commerce.
Answer: Electronic Data interchange (EDI) and Electronic Funds Transfer (EFT) are
other communication means.

160. How does the use of HTML, URLs, domain names, and SSL contribute to an
Internet that can be used world-wide?
Answer: There are many different types or brands of computers throughout the
world and these computers use different operating systems. There must be some
common standards within the Internet to allow these various types of computers to
read and interact with the Internet. HTML, URLs, domain names, and SSL are all
standards in use world-wide that facilitate a user-friendly Internet. Without such
common standards, it would not be as easy to connect to and use the Internet.

161. Describe the benefits to the consumer of B2C sales.


Answer: Customers benefit in through increased access, speed, convenience, and
information sharing inherent in B2C sales. They have access to a broader market, 24
hours a day, every day, and therefore more product choices. B2C also often results
in lower prices, quicker deliver, and marketing targeted specifically to the customers’
needs. Customers also sometimes have the opportunity to conduct live chats with
company representatives, or can view FAQs about the products.

162. Describe the benefits to the company of B2C sales.


Answer: Benefits to the company are: a broader market of customers beyond the
geographic area of any stores they maintain; reduced marketing, order processing,
and distribution costs; higher profits; the ability to conduct richer marketing; and the
ability to react quickly to market changes.

163. Describe the benefits to a company that engages in B2B transactions via the
Internet.
Answer: They are a wider potential market, reduced transaction cost, higher profits,
faster cycle times for product purchase or sale and cash flow, reduction in keying of
information and reduced data errors.

164. What are the ten areas of privacy practices described in the Online Privacy
section of the AICPA Trust Services Principles?
Answer: The ten areas are: management, notice, choice and consent, collection, use
and retention, access, disclosure to third parties, security for privacy, quality,
monitoring and enforcement.

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165. Describe the activities that take place in the supply chain of a manufacturing
firm.
Answer: Before a manufacturer can produce goods, it must buy raw materials from
suppliers. Often those suppliers also need to purchase raw materials, so there are
secondary suppliers in the supply chain. The internal processes of manufacturing are
also part of the supply chain. Upon completion, products must be distributed
through warehouses or distributors to retailers, who then sell these goods to
customers.

166. Describe the differences between B2C and B2B.


Answer: B2C is a sale between a company and an end consumer. B2B is a sale or
purchase between two companies. The differences in these types of transactions
causes many differences in the characteristics of the transactions. A B2B sale is
likely to be ordered via a purchase order, with many line items on the purchase
order, with a relatively high total dollar amount. These B2B sales are between
companies with preexisting relationships in which they have negotiated specific
shipping instructions or prices. B2C sales are relatively smaller dollar amounts, but
with a larger volume of sales transactions. It may be a sale to a customer with no
preexisting relationship to the company and it is likely to be a credit card sale.

167. Explain the importance of user authentication and network break-in controls in
extranets.
Answer: Only trading partners such as suppliers, secondary suppliers, distributors, or
retailers should have access to an extranet. That is, it should not allow any user on
the web to log in. Thus, there must be extensive authentication controls. These
controls in include user Id, password, log in procedures, biometric devises or
security tokens, computer logs, and authorization tables. Since the extranet often
uses internet network facilities, it can be susceptible to hackers or other network
break-ins. Controls such as firewalls, encryption, SSL, vulnerability assessments,
penetration testing, and intrusion detection must be used.

168. What are the advantages of Internet EDI over traditional EDI?
Answer: The Internet allows cost-free exchanges of data. In traditional EDI, the
companies usually pay a VAN for network capabilities and communication. The
software and systems for Internet EDI are also simpler and cheaper than those for
traditional EDI. Even very small companies can afford hardware and software to
conduct Internet EDI.

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TEST BANK – CHAPTER 14 – PROBLEMS

169. Explain the hardware or standards that were developed during the ARPANET that
were an important foundation for the Internet of today.
There were hardware items or standards developed during the ARPANET time
frame. These include packet switching, routers, and the TCP/IP protocol. Packet
switching is the method to send data over a computer network. Data is divided into
small packets and sent individually. Packets may travel different routes and as they
arrive, they are reassembled into the original data. A router is hardware that serves
as a gateway between two or more networks. TCP/IP is an acronym for transmission
control protocol/Internet protocol. It is the protocol used today.

170. The Pizza Pie Pit is a local chain of pizza restaurants in Dallas. The chain has 30
locations throughout the city and its suburbs. The management is considering
opening a Web site to conduct e-commerce with customers. Describe any
benefits that might be derived from this move.
A move to sales on the web site may not increase the geographic area from which
the Pizza Pie Pit draws customers. This is because the delivery area is not likely to
change. However, it may experience increased sales due to the convenience of
placing pizza orders online. It will also be likely to increase the accuracy of orders
and reduce the costs of filling pizza orders. Pizza Pie Pit may also see a benefit to
the marketing available on the web site, for examples, they could put pictures of
pizzas on “special” and perhaps increase the sales of promotional items. If these
benefits do occur, the company will experience increased profits.

171. Using your favorite search website, enter the term “privacy seal” and search.
Answer the following questions:
What is the purpose of a Web privacy seal?
The purpose of a privacy seal is to inform customers that the company web site
adheres to high standards of privacy of data. When a company displays a privacy
seal, they are alerting customers that the company can be trusted to maintain the
privacy of customer data.
Which organizations provide Web privacy seals to web-based companies?
Providers include the Better Business Bureau, TRUST-e, CPA WebTrust (AICPA),
PrivacyBot.com, ValidatedSite.com, and International Bureau of Certified Internet
Merchants.
What are the advantages to a company that maintains a Web privacy seal?
Those parties that provide privacy seals indicated that having a privacy seal leads to
increased customer confidence and higher revenue.
What are the benefits to a consumer of shopping a website that has a privacy seal?
The consumer should feel a greater sense of confidence that their data is private.
There should also be fewer concerns about negative consequences such as a
customer’s contact information being sold, or identity theft.

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172. Visit the website www.cpawebtrust.org and answer the following questions:
What is a WebTrust seal?
A WebTrust Seal is placed on a web site of a company that has been examined by a
CPA firm to determine that it has appropriate privacy practices and that it adheres to
those practices.
Which organization sanctions the WebTrust seal?
The American Institute of Certified Public Accountants (AICPA)
What kind of professional can provide a WebTrust seal to a company?
Licensed CPAs who have been trained in WebTrust service examinations.
What must this professional do before providing a WebTrust seal?
For a firm to become a licensed WebTrust Services provider, the firm must: be in
good standing with the AICPA; be a CPA majority owned firm; be part of a
recognized quality control system; and, sign a licensing agreement and remit an
annual licensing fee to the AICPA.

173. Enter the Web site of a popular retail company that sells a large volume of goods
or services on the Internet. Search for company “Privacy Policies” on that Web
site. If you do not find any privacy policies, continue visiting other company Web
sites until you do find privacy policies. Once you have found a company with
privacy policies, describe how the company policies do or do not meet the
privacy practices in the AICPA Trust Principles.
The solution will depend on which company the student uses in their answer. For
any company, the student answer should compare the privacy practices against
those in the AICPA Trust services Principles privacy practices. The following sample
answer is based on Target ®, the retail department store, www.target.com,
accessed on February 15, 2008.

The Target web site has privacy practices at


http://sites.target.com/site/en/spot/page.jsp?title=privacy%5Fpolicy and it is
divided into three main areas:
What information we collect
How we may share information
How you can limit our sharing or information

Target identifies the information it collects such as name, address, e-mail address,
phone number, credit card number, and it discloses there may be other information
collected. This other information might include personal preferences or information
about other people such as gift recipients.

The site indicates there are several parties they may share information with. Those
uses include: use by Target to offer products or services, Amazon.com when goods
are purchased from Amazon on target’s site, carefully selected companies and
organizations, and service providers such as printing companies or web host
companies.

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The site also discloses how a customer can limit use of data provided. It appears
that when information is collected by Target, customers are giving implicit consent
to use information as outlined in the privacy practices. Within the privacy policy,
there are clickable links to allow a customer to limit use or sharing of information.
For example, one link allows customers to prevent sharing of information to
companies or organizations outside the Target family of companies.

Thus, the Target site does include some of the privacy practices in the AICPA Trust
Services Principles, but not all. It does seem to include adequate notice, consent,
and disclosure to third parties as described above. However, the site describes little,
if any, information about management, collection, access, security for privacy,
quality, or monitoring and enforcement. The site does briefly describe use of the
information, such as for offering special promotions. There is no information about
the retention of data. Therefore, the Target site partially describes use and
retention.

174. Using an Internet search engine, search for the terms “Internet EDI” and “Kate
and Ashley.” Explain how Coty applies Internet EDI.
This solution is based on an article at
http://www.computerworld.com.au/index.php/id;1618362747 accessed of February
15, 2008. the article indicates that Coty, the cosmetics manufacturer of Kate and
Ashley, is using a blend of old and new technology as it sells the fragrance to Wal-
Mart. The old part of the technology is EDI. It is using standard and traditional data
formats for EDI exchange with Wal-Mart. The article describes the new technology
as the “transport mechanism”. Coty is transmitting EDI information to Wal-Mart
using the Internet, rather than a Value Added Network (VAN). The technology costs
less and is simple to implement. It also eliminates the fees paid to VANs. The article
also describes that the increase in the use of internet EDI is driven by companies
such as Wal-Mart. Wal-Mart is requiring its vendors to use Internet EDI. Meijer is
another company that encouraged Coty to use Internet EDI for its information
exchanges.

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175. Visit the www.xbrl.org Web site. Click on the “Latest News” link, and then the
“articles” link. After reading three or four of the most recent articles about XBRL,
briefly describe what those articles say about XBRL.
The student solution to this problem will vary greatly and depend on when they view
the XBRL site and which articles they choose. As of the end of 2007, some items
about XBRL are:
The Shanghai stock exchange in China is asking companies to use XBRL to file
reports.
In Belgium, over 290,000 companies will be using XBRL to file accounts with the
National Bank of Belgium.
The majority of European Banking Supervisors are using XBRL as either a required
or optional format.
In the United States, the SEC is considering mandatory XBRL filing for the Fall of
2008.

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