FINALS (Audit Theory)

1. In determining the primary responsibility of the external auditor for an audit of a company’s
financial statements, the auditor owes primary allegiance to:
a. Stockholders, creditors and the investing public
b. The management of the audit client because the auditor is hired and paid by
management
c. The Auditing and Assurance Standards Council because it determines auditing standards
and auditor’s responsibility
d. The audit committee of the audit client because the committee is responsible for
coordinating and reviewing all audit activities within the company.

2. An audit involves ascertaining the degree of correspondence between assertions and

established criteria. In the case of an audit of financial statements, which of the following
would not be a valid criterion
a. International Accounting Standards
b. Philippine Financial Reporting Standards (PFRS)
c. Generally accepted auditing standards
d. PFRS for SMEs

3. Most of the independent auditor’s work in formulating an opinion on financial statements

consists of
a. Studying and evaluating internal control
b. Obtaining and examining evidence
c. Examining cash transactions
d. Comparing recorded accountability with assets

4. Which of the following is more difficult to evaluate objectively?

a. Efficiency and effectiveness of operations
b. Compliance with applicable government regulations
c. Presentation of financial statements in accordance with the applicable financial
reporting criteria
d. All the given criteria are equally difficult to evaluate objectively

5. An audit that involves obtaining and evaluating evidence about the efficiency and
effectiveness of an entity’s operating activities in relation to specified objectives is a (n)
a. External audit
b. Compliance audit
c. Operational audit
d. Financial statement audit

6.Which of the following statements is not distinction between independent auditors and internal
auditors
a. Independent auditors represent third party users external to the auditee entity,
whereas internal auditors report directly to management
b. Although independent auditors strive for both validity and relevance, internal auditors
are concerned almost exclusively with validity
 c. Internal auditors are employees of the auditee, whereas independent auditors are
independent contractors.
d. The internal auditor’s span of coverage goes beyond financial auditing to encompass
operational and performance auditing

7. Which of the following has the primary responsibility for the fairness of the representations
made in the financial statements?
a. Clients’ management
b. Audit committee
c. Independent auditor
d. Board of accountancy

8. An audit of the financial statements of JMV Corporation is being conducted by an external

auditor. The external auditor is expected to
a. Express an opinion as to the fairness of JMV’s financial statements
b. Express an opinion as to the attractiveness of JMV for investment purposes
c. Certify the correctness of JMV’s financial statements
d. Examine all evidence supporting JMV’s financial statements

9. Which of the following statements about independent financial statement audit is correct?
a. The audit of financial statements relieves management of its responsibilities for the
financial statements
b. An audit is designed to provide limited assurance that the financial statements taken as
a whole are free from material misstatement
c. The procedures required to conduct an audit in accordance with PSAs should be
determined by the client who engaged the services of the auditor
d. The authors’ opinion is not an assurance as to the future viability of the entity as well as
the effectiveness and efficiency with which management has conducted the affairs of
the entity

10. The primary purpose of an independent financial statement audit is to

a. Provide a basis for assessing management’s performance
b. Comply with government regulatory requirements
c. Assure management that the financial statements are unbiased and free from material
error
d. Provide users with an unbiased opinion about the fairness of information reported in
the financial statement

11. Independent auditors of financial statements perform audits that reduce and control
a. The business risks faced by investors
b. The information risk faced by investors
c. The complexity of financial statements
d. Qualify reviews performed by other CPA firms

12. In “auditing” accounting data, the concern is with

a. Determining whether recorded information properly reflects the economic events that
occurred during the accounting period.
b. Determining if fraud has occurred
 c. Determining if taxable income has been calculated correctly
d. Analyzing the financial information to be sure that it complies with government
requirements

13. The expertise that distinguishes auditors from accountants is in the

a. Ability to interpret financial reporting standards
b. Requirement to possess education beyond the Bachelor’s degree
c. Accumulation and interpretation of evidence
d. Ability to interpret PAS

14. An audit of financial statements is conducted to determine if the

a. Organization is operating efficiently and effectively
b. Auditee is following specific procedures or rules set down by some higher authority
c. Overall financial statements are stated in accordance with specified criteria
d. None of the above

15. An audit can have a significant effect on

a. Information risk
b. Business risk
c. The risk-free interest rate
d. All of these

16. When a professional accountant learns of a material error or omission in a tax return of a prior
year, he/she has the responsibility to do the following, except

a. Promptly advise the client or employer of the error or omission and recommend that
disclosure be made to the revenue authorities.
b. Promptly inform the revenue authorities even without the permission of the client.
c. Advice the employer to correct the error and recommend that disclosure be made to
the revenue authorities.
d. Consider discontinuing the association with the client if the client does not correct the
error.

17. This threat to independence occurs when a firm or a member of the assurance firm has a
direct financial interest or material indirect financial interest in an assurance client.

a. Self-review threat.
b. Advocacy threat.
c. Intimidation threat.
d. Self-interest threat.

18. In which of the following situations would a public accounting firm have violated the code
of ethics in determining its fee?

a. A fee is based on whether or not the public accounting firm’s audit report leads to the
approval of the client application for bank is financing.
b. A fee is to be established at a later date by the Bankruptcy Court.
c. A fee is based upon the nature of the engagement rather than upon the actual time
spent on the engagement.
 d. A fee is based on the fee charged by the client’s former auditors.

19. A public accounting firm would least likely be considered in violation of the independence
rules in which of the following instances?

a. A partner’s checking account, which is fully insured by the Philippine Deposit Insurance
Corporation, is held at a financial institution for which the public accounting firm
performs attest services.
b. A manager of the firm donates services as vice president of a charitable organization
that is an audit client of the firm.
c. An attest client owes the firm fees for this and last year’s annual engagement.
d. A covered member’s dependent son owns stock in an attest client.

20. Juan, CPA, has a public accounting practice. He wishes to establish a separate to offer data
processing services to the public and other public accountants.

a. Juan cannot be a partner in any separate partnership which offers data processing
services.
b. Juan may form a separate partnership
c. Juan may form a separate partnership as long as partners are CPAs.
d. Juan may form a separate partnership, but he must give up his public accounting
practices

21. The auditor's responsibility for failure to detect fraud arises

a. When such failure clearly results from failure to comply with auditing standards.
b. Whenever the amounts involved are material.
c. Only when the examination was specifically designed to detect fraud.
d. Only when such failure clearly results from negligence so gross as to sustain an
interference of fraud on the part of the auditor.

22. The risk that the audit will fail to uncover a material misstatement is eliminated

a. If client has good internal control.

b. If client follows financial reporting standards.
c. When the auditor has complied with Standards on Auditing.
d. Under no circumstances.

23. Most accounting and auditing professionals agree that when an audit has failed to uncover
material misstatements, and the wrong type of audit opinion is issued, the audit firm

a. has failed to follow Standards on Auditing.

b. deserves to lose the lawsuit.
c. should be asked to defend the quality of the audit.
d. should not be held responsible for the financial loss suffered by others.
24. In rare cases auditors have been held liable for criminal acts. A criminal conviction against an
auditor can result only when it is demonstrated that the auditor

a. Was negligent.
b. Was grossly negligent.
c. Intended to deceive or harm others.
d. Caused a financial loss to an innocent third-party.

25. When a business is unable to repay its lenders because of economic conditions, such as
recession, it suffers from

a. Business failure.
b. Audit failure.
c. Audit risk.
d. All of these.

26. The primary reason why a CPA firm establishes quality control policies and procedures for
human resources is to

a. comply with the continuing educational requirements imposed for all staff accountants in
CPA firms.

b. establish in fact as well as in appearance that staff accountants are increasing their
knowledge of accounting and auditing matters.

c. provide a forum for staff accountants to exchange their experiences and views
concerning firm policies and procedures.

d. provide reasonable assurance that staff personnel will have the capability, competence
and commitment to ethical principles required to enable them to fulfill their
responsibilities in accordance with professional standards and regulatory and legal
requirements.

27. In pursuing its quality control objectives with respect to assigning personnel to
engagements, a CPA firm may use policies and procedures such as the following

a. rotating employees from assignment to assignment on a random basis to aid in the staff
training effort.

b requiring timely identification of the staff requirements of specific engagements so that

. enough qualified personnel can be made available.

c. allowing staff to select the assignments of their choice to promote better client
relationships.

d assigning a number of employees toeach engagement in excess of the number required

. so as not to overburden the staff and interfere with the quality of the audit work
performed.
28. The accounting firm should establish policies and procedures assigned to promote an
internal culture based on the recognition that quality is essential in performing engagements.
This may be communicated through the following means except

a. Training seminars.

b Formal and informal dialogue.

.

c. Publication in PICPA newsletter.

d Mission statements.
.

29. The primary factor that should be considered in determining the extent of supervision
needed by an assistant is the assistant’s

a. Willingness to exercise due care

b. Competence

c. Professional certification

d. Independence

30. The primary purpose of establishing quality control policies and procedures for deciding
whether to accept a new client is to

a. Enable the CPA firm to attest to the integrity of the client management.

b. Satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.

c. Minimize the likelihood of association with clients whose management lacks

integrity.
d. Anticipate before performing any field work whether an unmodified opinion can be
expressed.

31. This involves developing an overall strategy for the expected conduct and scope of the
examination; the nature, extent, and timing of which vary with the size and complexity, and
experience with and knowledge of the entity
a. Audit planning
b. Audit procedure
c. Audit program
d. Audit working pen

32. Which of the following procedures would a CPA ordinarily perform during audit planning?
a. Obtain understanding of the client’s business and industry
 b. Review the client’s bank reconciliation
c. Obtain client’s representation letter
d. Review and evaluate client’s internal control

33. Early appointment of the independent auditor will enable:

a. A more thorough examination to be performed.
b. A proper study and evaluation of internal control to be performed.
c. Sufficient competent evidential matter to be obtained.
d. A more efficient examination to be planned.

34. The audit team gathers information about a new client’s business and industry in order to
obtain
a. An understanding of the clients internal control system for financial reporting
b. An understanding of how economic events and transactions affect the company’s
financial statements
c. Information about engagement risk
d. Information regarding whether the company is engaging in financial statement fraud
35. The risk that a material misstatement in an assertion will not be prevented or detected on a
timely basis by internal control is
a. Detection risk
b. Control risk
c. Inherent risk
d. Audit risk

36. Which of the following may represent the bigger challenge smaller public companies face in
implementing effective control?
a. lack of expertise
b. Reduced importance
c. Limited resources
d. Limited available guidance

37. A small entity may use less formal means to ensure that internal control objectives are
achieved. For example, extensive accounting procedures, sophisticated accounting records,
or formal controls are least likely to be needed if
a. Management is closely involved in operations
b. The entity is involved in complex transactions
c. The entity is subject to legal or regulatory requirements, also found in larger entities
d. Financial reporting objectives have been established

38. Which of the following best describes the purpose of control activities?
a. The actions, policies and procedures that reflect the overall attitude of management
b. The identification and analysis of risk relevant to the preparation of financial statements
c. The policies and procedures that help ensure that necessary actions are taken in order
to achieve the entity’s objectives
d. Activities that deal with the ongoing assessment of the quality of internal control by
management
39. Which of the following activities would be least likely to strengthen a company’s internal
control?
a. Separating accounting from other financial operations
b. Maintaining insurance for fire and theft
c. Fixing responsibility for the performance of employee duties
d. Carefully selecting and training employees

40. Proper segregation of functional responsibilities in an effective structure of internal control

calls for separation of the functions of
a. Authorization, execution and payment
b. Authorization, recording and custody
c. Custody, execution and reporting
d. Authorization, payment and recording

41. Material misstatements may emanate from all of the following except
a. fraud
b. limitations of the audit
c. error
d. non-compliance with laws and regulations

42. An intentional act by one more individuals among management, employees, or third parties
which results in misrepresentation of financial statement refers to
a. Error
b. Noncompliance
c. Fraud
d. Illegal acts

43. The responsibility for the detection and prevention of errors, fraud and noncompliance with
laws and regulations rests with
a. Auditor
b. Client’s legal counsel
c. Client Management
d. Internal auditor

44. When the auditor assesses inherent risk, he considers among others the following factors
except
a. Integrity of management
b. Nature of the entity’s business
c. Unusual pressures on management
d. Results of the interim tests

45. The revenue cycle of a company generally includes these accounts:

a. Inventory, accounts payable, and general expenses
b. Inventory, general expenses, and payroll
 c. Cash, accounts receivable, and sales
d. Cash, notes payable, and capital stock

46. All of the following are parts of corporate government except:

a. Oversight of the management by the board of directors
b. Established processes to provide accountability to stockholders.
c. Whistle-blowing processes.
d. Independent review of financial statements by the SEC.

47. Which of the following would not be correct regarding corporate governance failures that
took place in the past two decades?

a. Boards of director approve stock option plans that did not align management and
shareholder objectives.
b. Audit committees met infrequently, often for only an hour at a time.
c. Boards of directors were often dominated by management.
d. Accounting rules became more specific to address the complexities that existed in new
transaction.
48. Which of the following is an appropriate description of management’s role in preparing
financial statements and reports on internal control over financial reporting? Management
has the primary responsibility for:
a. Determining the scope of internal and external audit activities.
b. Preparing financial statements that are fairly presented in accordance with PFRS.
c. Selecting accounting principles that best portray the economic reality of the
organization’s transaction and current state.
d. Developing, implementing, and assessing the internal control processes over financial
reporting.

49. Which of the following would not be required to be communicated to the audit committee
by the outside auditor?
a. Significant audit adjustments made during the course of the audit.
b. Significant disagreement with management regarding accounting principles
c. The auditor’s knowledge of management’s consultation with other public accounting
firms regarding the proposed treatment of a controversial accounting item.
d. The extent to which the internal auditors assisted in the conduct of the audit.

50. The applications of due professional care means that the auditor’s work conforms with all of
the following except:
a. Current auditing standards as defined by Philippine standards on auditing (PSAs).
b. The work that a reasonable prudent auditor would have performed in the same
situation.
c. The work that would have been performed by a reasonable person who was not
necessarily trained in auditing.
d. The work was at least equal to that which had been performed on the audit
engagement during the preceding year.

51. Which of the following best describes the primary purpose of audit procedures?
 a. To detect errors or irregularities
b. To comply with financial reporting standards
c. To gather corroborative evidence
d. To verify the accuracy of account balances

52. As a result of analytical procedures, the independent auditor determines that the gross
profit has declined from 30% in the preceding year to 20% in the current year. The auditor
should
a. Document management’s intentions with respect to plans for reversing this trend
b. Evaluate management’s performance in causing this decline
c. Require footnote disclosure
d. Consider the possibility of an error in the financial statements

53. The auditor will most likely to perform extensive tests for possible understatement of
a. Revenues
b. Assets
c. Liabilities
d. Capital
54. Which of the following elements ultimately determines the specific auditing procedures
necessary under the circumstances to afford a reasonable basis for an opinion?
a. Auditor judgment
b. Materiality
c. Relative risk
d. Reasonable assurance

55. In testing the existence assertion for an asset, an auditor ordinarily works from the
a. Financial unrecorded items to the financial statement
b. Potentially unrecorded items to the financial statement
c. Accounting records to the supporting evidence
d. Supporting evidence to the accounting records

56. The information obtained by the auditor in arriving at the conclusions on which the audit
opinion is based is called:
a. Audit working papers
b. Audit assertions
c. Audit evidence
d. Audit standards

57. The major reason an independent auditor gathers evidence is to

a. Form an opinion on the financial statements
b. Detect fraud
c. Evaluate management
d. Evaluate internal control

58. Which of the following is the best example of a corroborating evidence

a. General journal
b. Worksheet cost allocations
 c. Vendor’s invoice
d. Cash receipts journal

59. Which of the following statements relating to the competence of evidential matter is always
true?
a. Evidence from outside an enterprise is always reliable
b. Accounting data developed under satisfactory conditions of internal control are more
relevant than data developed under unsatisfactory internal control conditions
c. Oral representations made by management are not reliable evidence
d. Evidence must be both reliable and relevant to be considered appropriate

60. Which of the following is correct about the appropriateness of evidence?

a. Audit evidence from external sources is more relevant than evidence generated
internally
b. Audit evidence is more persuasive when items of evidence from different sources or of
different nature are not consistent
c. Audit evidence generated internally is more reliable when the related accounting and
internal control systems are effective
d. Sufficiency refers to the amount of evidence needed

61. In an audit sampling application, an auditor:

a. Performs procedures on all the items in a balance and makes a conclusion about the
whole balance.
b. Performs procedures on less than 100 percent of the items in a balance and
formulates a conclusion about the whole balance.
c. Performs procedures on less than 100 percent of the items in a class of transactions for
the purpose of becoming familiar with the client’s accounting system.
d. Performs analytical procedures on the client’s unaudited financial statements when
planning the audit.

62. Auditors consider statistical sampling to be characterized by the following:

a. Representative sample selection and nonmathematical consideration of the results.
b. Carefully biased sample selection and statistical calculation of the results.
c. Representative sample selection and statistical calculation of the results.
d. Carefully biased sample selection and nonmathematical consideration of the results
.
63. In audit sampling applications, sampling risk is:
a. Characteristics of statistical sampling applications but not of non-statistical applications.
b. The probability that the auditor will fail to recognize erroneous accounting in the client’s
documentation.
c. Probability that accounting errors will arise in transactions and enter the accounting
system.
d. The probability that an auditor’s conclusion based on a sample might be different
from the conclusion based on an audit of the entire population.

64. Which of the following should be considered an audit procedure for obtaining evidence?
a. An audit sampling application in accounts receivable selection.
b. The accounts receivable exist and are valued properly.
 c. Sending a written confirmation on a customer’s account balance.
d. Non-statistical consideration of the amount of difference reported by a customer on a
confirmation response.

65. Which of the following elements in the audit risk model is/are a product of the auditors’
professional judgment?
a. Control risk,
b. Analytical procedure risk.
c. Test of details risk of incorrect acceptance.
d. All of the above.

66. An auditor is reviewing internal control for accounts receivable:

I. The billing function should not be assigned to the person who is responsible for
maintaining accounts receivable records.
II. II. Responsibility for approval of the write-off of accounts receivable that are
uncollectible should not be assigned to the cashier.

a. Only I is true c. Both I and II are true

b. Only II is true d. Neither I nor II is true

67. Statistical sampling may be applied to test controls when a client’s control procedures
a. Depend primarily on segregation of duties.
b. Are carefully reduced to writing and are included in client accounting manuals.
c. Leave an audit trail as evidence of compliance.
d. Enable the detection of fraud.

68. The deviation rate the auditor will permit in the population and still be willing to reduce the
assessed level of control risk is called the
a. Tolerable deviation rate c. Acceptable risk of over-reliance
b. Estimated population deviation rate d. Sample deviation rate

69. Which of the following statements is correct?

a. The expected population deviation rate has little or no effect on sample size.
b. As the population size doubles, the sample size also should double.
c. For a given tolerable rate, a larger sample size should be selected as the expected
population deviation rate decreases.
d. The population size has little or no effect on sample size except for very small
populations.

70. For which of the following audit tests would an auditor most likely use attribute sampling?
a. Making an independent estimate of the amount of a FIFO inventory.
b. Examining invoices in support of the valuation of fixed asset additions.
c. Selecting accounts receivable for confirmation of account balances.
d. Inspecting employee time cards for proper approval by supervisors

71. Which of the following would be the best protection for a company that wishes to prevent
the “lapping” of trade accounts receivable?
 a. Segregate duties so that the bookkeeper in charge of the general ledger has no access to
incoming mail.
b. Segregate duties so that no employee has access to both checks from customers and
currency from daily cash receipts.
c. Have customers send payments directly to the company’s depository bank.
d. Request that customers’ payment checks be made payable to the company and
addressed to the treasurer.

72. Which of the following controls would be most effective in assuring that recorded purchases
are free of material errors?
a. The receiving department compares the quantity ordered on purchase orders with the
quantity received on receiving reports.
b. Vendors’ invoices are compared with purchase orders by an employee who is
independent of the receiving department.
c. Receiving reports require the signature of the individual who authorized the purchase.
d. Purchase orders, receiving reports, and vendors’ invoices are independently matched in
preparing vouchers.
73. The purpose of segregating the duties of hiring personnel and distributing payroll checks is
to separate the
a. administrative controls from the internal accounting controls.
b. human resources function from the controllership function.
c. operational responsibility from the recordkeeping responsibility.
d. authorization of transactions from the custody of related assets.

74. When goods are received, the receiving clerk should match the goods with the
a. purchase order and the requisition form
b. vendor’s invoice and the receiving report
c. vendor’s shipping document and the purchase order
d. receiving report and the vendor’s shipping document

75. Tracing bills of lading to sales invoices provides evidence that

a. shipments to customers were invoiced
b. shipments to customers were recorded as sales
c. recorded sales were shipped
d. invoiced sales were shipped

76. Effective internal control procedures over the payroll function may include
a. Reconciliation of totals on job time tickets with job reports by employees responsible for
those specific jobs.
b. Verification of agreement of job time tickets with employee clock card hours by a payroll
department employee.
c. Preparation of payroll transaction journal entries by an employee who reports to the
supervisor of the personnel department.
d. Custody of rate authorization records by the supervisor of the payroll department.

77. A sales clerk at Schackne Company correctly prepared a sales invoice for $5,200, but the
invoice was entered as $2,500 in the sales journal and similarly posted to the general ledger
 and accounts receivable ledger. The customer remitted only $2,500, the amount on his/her
monthly statement. The most effective procedure for preventing this type of error is to
a. Use predetermined totals to control posting routines.
b. Have an independent check of sales invoice serial numbers, prices, discounts,
extensions, and footings.
c. Have the bookkeeper prepare monthly statements that are verified and mailed by a
responsible person other than the bookkeeper.
d. Have a responsible person who is independent of the accounts receivable department
promptly investigate unauthorized remittance deductions made by customers or other
matters in dispute.

78. The authority to accept incoming goods in receiving should be based on a(an)
a. vendor’s invoice
b. materials requisition
c. bill of lading
d. approved purchase order

79. Which of the following controls most likely would be effective in offsetting the tendency of
sales personnel to maximize sales volume at the expense of high bad debt write offs?
a. Employees responsible for authorizing sales and bad debt write offs are denied
access to cash.
b. Shipping documents and sales invoices are matched by an employee who does not
have authority to write off bad debts.
c. Employees involved in the credit granting function are separated from the sales
function.
d. Subsidiary accounts receivable records are reconciled to the control account by an
employee independent of the authorization of credit.

80. Which of the following controls most likely would help ensure that all credit sales
transactions of an entity are recorded?
a. The billing department supervisor sends copies of approved sales orders to the
credit department for comparison to authorized credit limits and current customer
account balances.
b. The accounting department supervisor independently reconciles the accounts
receivable subsidiary ledger to the accounts receivable control account monthly.
c. The accounting department supervisor controls the mailing of monthly statements
to customers and investigates any differences reported by customers.
d. The billing department supervisor matches pre-numbered shipping documents with
entries in the sales journal

81. A procedure that directly test accounts or classes of transactions to detect material
monetary errors or misstatements in financial statement assertions.
a. Analytical Procedures
b. Substantive Test
c. Test of Transaction
d. Test of Balances

82. For efficiency, tests of controls are frequently done at the same time as:
 a. Analytical Procedure
b. Compliance test
c. Test of transaction
d. Test of balances

83. Which of the following procedures are frequently performed in response to the auditor’s
assessment of the risk of material misstatement?
a. Ratio Analysis
b. Test of controls
c. Test of details of balances
d. Risk assessment procedure

84. The primary emphasis in most tests of details of balances is on the:

a. Balance sheet accounts
b. Revenue accounts
c. Cash flow statement accounts
d. Expense account
85. Tests of Transactions are used to determine whether _________ have been satisfied.
a. Compliance test requirements
b. Balance coverage requirements
c. Transaction-related audit objectives
d. Existence assertions

86. A listing of all the things which the auditor will do to gather sufficient, competent evidence
is the:
a. Audit strategy
b. Audit program
c. Audit procedure
d. Audit risk model

87. Means the record of audit procedures performed, relevant audit evidence obtained, and
conclusions the auditor reached. It is also called working paper.
a. Audit file
b. Risk assessment
c. Audit documentation
d. Ratio Analysis

88. Which of the following is not a type of audit program

a. Standard all-purpose
b. Tailor-made audit program
c. Modified standard form
d. Supporting Schedule

89. It include symbols in the working paper that describe the audit procedures performed
a. Heading
b. Tick Marks
c. Cross referencing
d. Indexing
90. The following are circumstances where professional accountants are or may be required to
disclose confidential information. Which of the following is not included?
a. Disclosure is required by law
b. There is a professional duty or right to disclose, when not prohibited by law
c. Disclosure is required by third party
d. Disclosure is permitted by law and is authorized by the client or the employer

91. What is the computer process called when data processing is performed concurrently with a
particular activity and the results are available soon enough to influence the particular
course of actions being taken or the decision being made?

a. Real-time processing
b. Batch processing
c. Random Access Processing
d. Integrated data Processing
92.All activity related to a particular application in a manual system is recorded in a journal. The
name of the corresponding item in a computerized system is a
a. Master file c. transaction file
b. Year-to-date file d. current balance file

93. The initial debugging of a computer program should normally be done by the
a. Programmer c. machine operator
b. Internal auditor d. control group

94. The purpose of using generalized computer programs is to test and analyze a client’s
computer
a. Systems c. records
b. Equipment d. processing logic

95. Which of the following is not a major reason for maintaining an audit trail for a computer
system
a. Deterrent to fraud c. analytical procedures
b. Monitoring purposes d. query answering

96. Which of the following employees normally would be assigned the operating responsibility
for designing a computerized accounting system, including documentation of application
systems?
a. Computer programmer
b. Data processing manager
c. Systems analyst
d. Internal auditor

97. When erroneous data are detected by computer program controls, such data may be
excluded from processing and printed on an error report. The error report should most
probably reviewed and followed up by the
a. Control group
b. Systems analyst
 c. Supervisor of computer operation
d. Computer programmer

98. A procedural control used in the management of a computer center to minimize the
possibility of data or program file destruction through operator error includes
a. Control figures.
b. Cross-footing tests.
c. Limit checks.
d. External labels.

99. Totals of amounts in computer-record data fields which are not usually added but are used
only for data processing control purposes are called
a. Record totals
b. Hash totals
c. Processing data totals
d. Field totals
100. In updating a computerized accounts receivable file, which one of the following would
be used as a batch control to verify the accuracy of the posting of cash receipts remittances?

a. The sum of the cash deposits plus the discounts less the sales returns.
b. The sum of the cash deposits.
c. The sum of the cash deposits less the discounts taken by customers.
d. The sum of the cash deposits plus the discounts taken by customers.