Information Technology Audit MCQ admin April 18, 2019 Quiz Information

Technology Audit MCQ Information Technology Audit MCQ contain set of 10

Information Technology Audit MCQ questions with answers which will help you
to clear beginner level quiz. 1. An audit charter should: be dynamic and change
often to coincide with the changing nature of technology and the audit
profession. clearly state audit objectives for, and the delegation of, authority to
the maintenance and review of internal controls. document the audit procedures
designed to achieve the planned audit objectives. outline the overall authority,
scope and responsibilities of the audit function. 2. The extent to which data will
be collected during an IS audit should be determined based on the: viability of
critical and required information. auditor’s familiarity with the circumstances.
auditee’s ability to find relevant evidence. purpose and scope of the audit being
done. 3. Which of the following controls would provide the GREATEST
assurance of database integrity? Audit log procedures Table link/reference
checks Query/table access time checks Rollback and rollforward database
features 4. Which of the following BEST ensures the integrity of a server’s
operating system? Protecting the server in a secure location Setting a boot
password Hardening the server configuration Implementing activity logging 5.
During a review of a business continuity plan, an IS auditor noticed that the
point at which a situation is declared to be a crisis has not been defined. The
MAJOR risk associated with this is that: assessment of the situation may be
delayed execution of the disaster recovery plan could be impacted. notification of
the teams might not occur. potential crisis recognition might be ineffective. 6.
Which of the following tests performed by an IS auditor would be the MOST
effective in determining compliance with an organization’s change control
procedures? Review software migration records and verify approvals. Identify
changes that have occurred and verify approvals. Review change control
documentation and verify approvals. Ensure that only appropriate staff can
migrate changes into production. 7. When reviewing the IT strategic planning
process, an IS auditor should ensure that the plan: incorporates state of the art
technology. addresses the required operational controls. articulates the IT
mission and vision. specifies project management practices. 8. An organization
has recently installed a security patch, which crashed the production server. To
minimize the probability of this occurring again, an IS auditor should: apply the
patch according to the patch’s release notes. ensure that a good change
management process is in place. thoroughly test the patch before sending it to
production. approve the patch after doing a risk assessment. 9. An IS auditor
selects a server for a penetration test that will be carried out by an expert. Which
of the following is MOST important? The tools used to conduct the test
Certifications held by the IS auditor Permission from the data owner of the
server An intrusion detection system (IDS) is enabled 10. In a small organization,
an employee performs computer operations and, when the situation demands,
program modifications. Which of the following should the IS auditor
recommend? Automated logging of changes to development libraries Additional
staff to provide separation of duties Procedures that verify that only approved
program changes are implemented Access controls to prevent the operator from
making program modifications 11. When auditing the proposed acquisition of a
new computer system, an IS auditor should FIRST establish that: a clear
business case has been approved by management. corporate security standards
will be met. users will be involved in the implementation plan. the new system
will meet all required user functionality.

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Information Technology Audit

1. Which is not the purpose of Risk analysis?

A. It supports risk based audit decisions
B. Assists the Auditor in determining Audit objectives
C. Ensures absolute safety during the Audit
D. Assists the Auditor in identifying risks and threats
2. Which term best describes the difference between the sample and the population in the
sampling process?
A. Precision
B. Tolerable error rate
C. Level of Risk
D. Analytical Data
3. Name one of the purposes of creating Business Continuity Plan
A. To maximise the number of decisions made during an incident
B. To minimise decisions needed during a crisis
C. To lower business insurance premiums
D. To provide guidance for federal regulations
4. Failing to prevent or detect a material error would represent which type of risk?
A. Overall Audit Risk
B. Detection Risk
C. Inherent Risk
D. Control Risk
5. Which is one of the bigger concerns regarding asset disposal?
A. Residual Asset Value
B. Employees taking disposed property home
C. Standing data
D. Environmental Regulations
6. Who should issue ogranisational policies?
A. Policies should originate from the bottom and move upto the middle management
level for approval
B. The policy should be issued in accordance with the approved standards by the
middle management level
C. Policy can be issued by any level of management based on a case to case basis
D. The policy should be signed and enforced by the highest level of management
7. A program check that ensures data entered by a data entry operator is complete is an
example of a
A. Detective Control
B. Preventive Control
C. Corrective Control
D. Redundancy Control
8. What is the primary objective in problem escalation?
A. Improve customer satisfaction
B. Optimise the number of skilled personnel
C. Ensure the correct response
D. Prove that the IT staff is competent
9. Which of the following is LEAST important when Auditors review Internal Controls?
A. The existence of an Audit Committee in the Organisation
B. The Organisational structure and the Management style used by the Organisation
C. The existence of a Budgeting System
D. The number of Personnel working for the Organisation
10. What is the best example of why plan testing is important?
A. To prove the plan worked the first time
B. To find the correct problems
C. To show the team that is not pulling their own weight
D. To verify that everyone shows up at the recovery site
11. Continuity planners can create plans without the business impact analysis (BIA) process
because
A. Business Impact Analysis is not required
B. Management already dictated all the key processes to be used
C. Not possible, critical processes continuously changes
D. Risk assessment is acceptable
12. What are the three competing demands to be addressed by the Project Management?
A. Scope, Authority and Availability of Resources
 B. Time, Cost and Scope
C. Requirements, Authority and Responsibility
D. Authority, Organisational Culture and Scope
13. How should management act to best deal with emergency changes?
A. Emergency changes can not be made without advanced testing
B. All changes should still undergo review
C. The changes control process does not apply to emergency conditions
D. Emergency changes are not allowed under any condition
14. Which is the following is not an objective of a control?
A. Reduce expected losses from irregularities
B. Reduce the probability of an error occurring
C. Reduce the amount of loss if an occurs
D. Provide for all the failures and to ensure that business is protected fully from
such failures
15. IT audit is the process of collecting and evaluating evidence to determine
A. Whether a computer system safeguards assets
B. Whether maintains data integrity
C.  Whether allows organisational goals to be achieved effectively and uses
resources efficiently
D. All of the above
16. The objectives of IT audit include
A. Ensures asset safeguarding
B. Ensures that the attributes of data or information are maintained
C. Both (a) and (b)
D. None of the above
17. Which is not an attribute of data or information
A. Compliance
B. Integrity
C. Confidentiality
D. Technology
18. Which among the following does not encompass organisational and management controls
within the information processing facility (IPF)
A. Sound human resource policies and management practices
B. Methods to assess effective and efficient operations.
C. The regulatory framework within which the business is carried out
D. Separation of duties within the information processing environment
19. The essential aspect to be understood about the organisation subject to IT audit is
A. Organisation’s business and its strategic goals and objectives
B. The number of operating units / locations and their geographic dispersion
C. Major pending projects in progress
D. All of the above
20. While understanding the type of software used in the organisation the IT auditor has to
A. See the policy decision on developing software inhouse or to buy commercial
products.
B. Collect details of operating systems, application system and database management
system
 C. Collect information relating to network architecture and technology to establish
connectivity.
D. All of the above
21. The security goals of the organisation does not cover
A. Confidentiality
B. Probability and impact of occurrence
C. Availability
D. Integrity
22. Find out the incorrect statement with reference to Risk assessment
A. The detailed audit is needed where the risk assessment is low and the risk
management is high
B. An independent assessment is necessary whether threats have been countered /
guarded against effectively and economically
C. The assessment of the soundness of IT system will necessarily have to study the
policies and process of risk management
D. None of the above
23. Consider the following statement and find out the correct one w.r.t. IT audit
A. In inherent risk there is an assumption that there are related internal controls.
B. In control risk errors will not be prevented or detected and corrected by the
internal control system.
C. The control risk associated with computerised data validation procedures is
ordinarily high.
D. None of the above
24. What is the characteristic of ‘detective control’
A. Minimise the impact of a threat
B. Use controls that detect and report the occurrence of an error, omission or
malicious act.
C. Detect problems before they occur
D. None of the above
25. Which among the following is not characteristic of ‘preventive control’
A. Monitor both operation and imports
B. Prevent error, omission or malicious act from occurring
C. Correct errors from occurring
D. None of the above
26. IT access is not controlled or regulated though password it indicates
A. Poor security control
B. High risk of the system getting hacked
C. High risk of the system getting breached
D. All of the above
27. Basic risk areas which the external Govt. auditor may come across when reviewing
internal audit’s work include
A. Availability of sufficient resources, in terms of finance, staff and skills required
B. Involvement of internal audit with IT system and under development
C. Management not required to act on internal audit’s recommendations
D. None of the above
28. Which is the common audit objectives for an IT audit
 A. Review of the security of the IT system
B. Evaluation of the performance of a system
C. Examination of the system development process and the procedures followed at
various stages involved
D. All of the above.
29. The type of audit evidence which the auditor should consider using in IT audit includes
A. Observed process and existence of physical items
B. Documentary audit evidence excluding electronic records
C. Analysis excluding IT enabled analysis using
D. None of the above
30. Match the following w.r.t interviews to be conducted with staff and purpose interviewing
Kinds of staff / personnel Purpose of interview

(A) System analysis of (A) To determine whether any application system to consume
programmers abnormal amounts of resources.
(B) Clerical / Data entry (B) To determine their perceptions of how the system has affected
staff the quality of working life
(C) Users of an application
(C) To determine how they correct input data.
systems
(D) To obtain a better understanding of the functions and controls
(D) Operation staff
embedded with the system.

A. A–B; B–A; C–D; D–C

B. A–D; B–C; C–A; D–A
C. A–C; B–D; C–A; D–B
D. None of the above
31. Which of the following type of questions need to be included in the questionnaire(s)
A. Ambiguous questions
B. Leading questions
C. Presumptuous questions
D. Specific questions
32. Analytical procedures are useful in the following way in collecting audit evidence in IT
audit
A. Use comparisons and relationships to determine whether account balances appear
reasonable
B. To decide which accounts do not need further verification
C. To decide which audit areas should be more thoroughly investigated
D. All of the above
33. What is the commonly used example of generalised audit software?
A. CAAT
B. IDEA
C. COBIT
D. None of the above
34. A higher risk of system violation happens where
A. The audit module is not operational
B. The audit module has been disabled
 C. The audit module is not periodically reviewed
D. All of the above
35. Which among the following is not a compliance test as related to IT environment
A. Determining whether passwords are changed periodically.
B. Determining whether systems logs are reviewed
C. Determining whether program changes are authorised.
D. Reconciling account balances
36. Substantive tests as they relate to the IT environment does not include
A. Conducting system availability analysis
B. Conducting system outage analysis
C. Performing system storage media analysis
D. Determining whether a disaster recovery plan was tested
37. Find out the incorrect statement w.r.t. attribute sampling used by IT auditors
A. Attribute sampling is used in substantive testing situations
B. Attribute sampling deals with the presence or absence of the attribute
C. It provides conclusions that are expressed in rates of incidence
D. None of the above
38. Variable sampling is used and deals with and provide
A. Applied in substantive testing situations
B. Deals with population characteristics that vary
C. Provides conclusions related to deviations from the norm
D. All of the above
39. Which among the following is true as to Audit Reporting
A. Normal reporting format is not adhered to in the case of IT Audit
B. In IT audit, the base of the focus is the system
C. In IT audit the audience for the report should normally be ignored
D. None of the above
40. The conclusions of the IT audit report does not include
A. Sweeping conclusions regarding absence of controls and risks
B. A mismatch between hardware procurement and software development in the
absence of IT policy
C. Haphazard development which cannot be ascribed to lack of IT policy
D. All of the above
41. Which among the following is not a limitation in IT Audit
A. Data used not from production environment
B. If these is only production environment and audit could not test dummy data
C. “Read only Access” given to audit
D. None of the above
42. With the help of what tools, IT auditor can plan for 100% substantive testing
A. CAATs tools
B. CMM (Software)
C. COBIT
D. None of the above
43. The reason for management’s failure to use information properly is
A. Failure to identify significant information
B. Failure to interpret the meaning and value of the acquired information
 C. Failure to communicate information to the decision maker
D. All of the above
44. Find out the incorrect statement
A. Distributed networks may decrease the risk of data inconsistencies
B. Application software developed inhouse may have lower inherent risk than
vendor supplied software
C. Peripheral access devices or system interfaces can increase inherent risk
D. None of the above
45. Categories of general control do not include
A. Logical access controls
B. Acquisition and program change controls
C. Control over standing data and master files
D. None of the above
46. Application controls includes
A. IT operational controls
B. Control over processing
C. Physical controls
D. None of the above
47. What legal protection is available to prevent theft illegal copying of software
A. Computer misuse legislation
B. Data protection and privacy legislation
C. Copyright laws
D. None of the above
48. Match the following w.r.t. the following critical elements and its impact

(A) Cannot satisfactorily review the computer systems and

(A) Poor reporting structures
associated controls
(B) Inappropriate or no IT planning (B) Leads to security breaches, data loss fraud and errors
(C) Security policies not in place or (C) Leads to business growth being constrained by a lack
not enforced of IT resources
(D) Ineffective internal audit (D) Leads to inadequate decision making and affect the
function future as a going concern

A. A–D; B–A; C–B; D–C

B. A–D; B–C; C–B; D–A
C. A–B; B–A; C–D; D–C
D. None of the above
49. The risk areas associated with poorly controlled computer operations include
A. Applications not run correctly
B. Loss or corruption of financial applications
C. lack of backups and contingency planning
D. All of the above
50. In case of outsourcing IT activities the IT auditor should
A. Review the policies and procedures which ensure the security of the financial data
B. Obtain a copy of the contract to determine if adequate controls have been
specified
 C. Ensure that audit needs are taken into account and included in the contracts
D. All of the above
51. While reviewing the network management and control the IT auditor is required to
A. Review the security and controls in non-financial systems
B. Review the security and controls in financial system’
C. Either (a) or (b) depending upon scope of audit and SAI’s mandate
D. None of the above
52. Which among the following is not true w.r.t. logical access controls
A. Logical access control usually depend on the in – built security facilities
B. The importance of logical access controls is increased where physical access
control is more effective
C. logical access control exits at both an installation and application level
D. None of the above
53. Weak input control may increase the risk of
A. Entry of an authorised data
B. incomplete data entry
C. Entry of duplicate / redundant data
D. All of the above
54. Weak process controls would lead to:
A. Unauthorised changes or amendments to the existing data
B. Absence of audit trial rendering, sometimes the application unauditable
C. Inaccurate processing of transactions leading to wrong outputs / results
D. All of the above
E.

Audit MCQs Basic Concepts

1.  The fundamental objective of the audit of a company is to:

(a). Protect the interests of the minority shareholders
(b). Detect and prevent errors and fraud
(c). Assess the effectiveness of the company’s performance
(d). Attest to the credibility of the company’s accounts

Ans: (d)

2. The concept of stewardship means that a company’s directors

(a). Are responsible for ensuring that the company complies with the law
(b). Are responsible for ensuring that the company pays its tax by the due date
(c). Safeguard the company’s assets and manage them on behalf of shareholders
(d). Report suspected fraud and money laundering to the authorities

Ans: (c)
3. Why do auditors concentrate their efforts on material items in accounts?
(a). Because they are easier to audit
(b). Because it reduces the audit time
(c). Because the risk to the accounts of their being incorrectly stated is greater
(d). Because the directors have asked for it

Ans: (c)

4. Which of the following is NOT the responsibility of a company’s directors?

(a). Reporting to the shareholders on the accuracy of the accounts
(b). Establishment of internal controls
(c). Keeping proper accounting records
(d). Supplying information and explanations to the auditor

Ans: (a)

5. International auditing standards are issued by the:

(a).International Accounting Standards Board
(b). Financial Accounting Standards Board
(c). International Audit and Assurance Standards Board
(d). Auditing Practices Board

Ans: (c)

Audit MCQs Obtaining Engagement 

6. When an auditor is proposed for removal from office, which one of the following is he NOT
permitted to do?
(a). Circulate representations to members
(b). Apply to the court to have the proposal removed
(c). Speak at the AGM/EGM where the removal is proposed
(d). Receive notification of the AGM/EGM where the removal is proposed

Ans: (b)

7. Which one of the following is NOT a duty of the auditor?

(a).Duty to report to the company’s bankers
(b). Duty to report to the members
(c). Duty to sign the audit report
(d). Duty to report on any violation of law

Ans: (a)

 8. Assuming that it is not the first appointment of the auditor, who is responsible for the
appointment of the auditor?
(a).The shareholders in a general meeting
(b). The managing director
(c). The board of directors in a board meeting
(d). The audit committee

Ans: (a)

9. The independent auditor’s primary responsibility is to:

(a). the directors
(b). the company’s creditors (payables)
(c). the company’s bank
(d). the shareholders

Ans: (d)

10. How long is the auditor’s term of office?

(a). Until the audit is complete
(b). Until the financial statements are complete
(c). Until the next AGM
(d). Until the directors remove them

Ans: (c)

Audit MCQs Planning Stage

11. Which one of the following is NOT considered to be part of planning?

(a).Background i.e. industry
(b). Previous year’s audit i.e. any qualifications in the report
(c). Considering the work to be done by the client staff e.g. internal audit
(d). Considering whether the financial statements show a true and fair view

Ans: (d)

12. Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?
(a). Compliance risk
(b). Detection risk
(c). Control risk
(d). Inherent risk

Ans: (a)

13. Which of the following is NOT a main element of a sales system?

(a). Receiving orders from customers
(b).  Marketing
(c).  Despatching the goods and invoicing customers
(d).  Recording sales and debtors in the accounts

Ans: (b)

14. Which should NOT be considered at the planning stage?

(a). The timing of the audit
(b). Analytical review
(c). Last year’s written representation letter
(d). Obtaining written representations

Ans: (b)

15. At the planning stage you would NOT consider:

(a). the timing of the audit
(b). whether corrections from the inventory count have been implemented
(c). last year’s audit
(d). the potential use of internal audit

Ans: (b)

Audit MCQs Sampling

16. Which of the following is NOT an accepted method of selection in sampling?

(a). Systematic selection
(b). Pervasive selection
(c). Random selection
(d). Haphazard selection

Ans: (b)

17. Which of the following are you unlikely to see in the current file of auditors’ working papers?
(a). Memorandum & articles of association
(b). Audit planning memorandum
(c). Summary of unadjusted errors
(d). Details of the work done on the inventory count

Ans: (a)

18.  According to ISA 500, the strength of audit evidence is determined by which two qualities?
(a). Appropriateness & competence
(b). Sufficiency & appropriateness
(c). Reliability & extensiveness
(d). Objectivity & independence

Ans: (b)
19. Which of the following is NOT a main element of a purchases system?
(a).  Placing orders
(b).  Receiving purchase invoices
(c).  Goods received
(d).  Decisions at board level on whether to incur capital expenditure

Ans: (d)

20 Which of the following is normally the most reliable source of audit evidence?
(a). Internal audit
(b). Suppliers’ statements
(c). Board minutes
(d). Analytical review

Ans: (b)

What is a virus attack?

A virus attack infect your Windows, Mac, Android and IOS (smartphone or tablet) software.It
can cripple your Pc/smartphone performance, data transmission of your personal information,
erase your Personal data or even destroy your hardware. These Viruses can be in the shape of;
Spyware, Ransomware, Trojan Horse or a simple programming Bug. More than 1 Million
devices infected by these viruses every day.

Now lets explore few virus Attack Questions:

Auditor Forum network is down due to a virus attack. Management has asked
the IT manager to explain why the viruses were able to penetrate the system, in
the presence of disk scanner antivirus software.

Required: As IT Manager of the company explain:

(a) two more kinds of antivirus software, besides conventional disk scanners;
(b) how the controls against viruses be strengthened further? Also discuss
the possible justification for your failure to install the appropriate software.

Besides conventional disk scanners, following types of virus

scanners are usually used:
Active Monitors / Behavior-Based Detection:
This kind of software will sit in memory and look for so-called “virus-like behavior” or
“suspicious activities”. In essence, these programs are looking for the types of actions taken on
files or boot sectors that are usually performed by a virus when it tries to spread. Active monitors
can be annoying because they cannot distinguish between a user request and a program request.
As a results users are asked to confirm actions like formatting a disk or deleting a file.

Integrity Checkers:
They compute a binary number on a known virus free program that is then stored in a database
file. The number is called a Cyclical Redundancy Check (CRC). When that program is called to
execute, the checker computes the CRC on the program that is to be executed and compares it
with the number in the database. A match means no infection; a mismatch means that a change in
the program has occurred i.e., a virus could be present.

Measures to strengthen controls against virus attack

(i) The controls against viruses be strengthened by installing a combination of different types
of antivirus software, because disk scanners carry certain limitations such as inability to
detect virus like actions and inability to perform cyclic redundancy check.
(ii) Designing and implementing sound antivirus policies.
(iii) Educating users about potential virus sources and their controls.
(iv) Restricted use of removable storage media.
(v) Installation of properly configured firewall. Periodic review and update of the firewall policy.

Reasons of failure against virus attack:

At the time of previous capital budget approval, it was pointed out to the management that
merely installing conventional disk scanner antivirus software is not enough to prevent viruses
from penetrating. Besides disk scanners, active monitors and integrity checkers were also
requested in the budget. Consequently, various other measures were suggested/required which
involved purchase of hardware as well as software. However, our request was turned down and
consequently we were unable to carry out the desired steps.

Multiple Choice Questions in Accounting

True/False

1. Accounting is an information system and is often called the "language of business." T

2. A business entity is the occurrence of an event or condition that must be recorded. F

3. The accounting equation can be expressed as Liabilities + Assets = Owner's Equity. F

4. Paying an account payable increases equity and decreases assets. F

5. The excess of expenses over revenues is called net loss. T

6. Accounts in the ledger are usually maintained in the order in which they appear on the financial
statements. T

7. The three parts of a T account are the title, a space for recording increases, and a space for recording
decreases. T

8. The order of the flow of accounting data is (1) recording in accounts, (2) recording in journal, and (3)
posting in ledger. T
9. A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a
trial balance. F

10. The erroneous moving of an entire number one or more spaces to the right or left, such as writing
$75 as $750, is called a transposition. T

11. The accrual basis of accounting requires expenses be recorded in the same period that the related
revenue is recorded. T

12. The matching concept supports accrual accounting principles. T

13. Accruals are needed when an unrecorded expense has been incurred or unrecorded revenue has
been earned. T

14. An adjusting entry to accrue an incurred expense will also affect total liabilities. T

15. A contra asset account for land will normally appear in the balance sheet. F

16. Net income is shown on the work sheet in the Income Statement debit column and the Balance
Sheet credit column. T

17. Since the adjustments are recorded on the work sheet, it is not necessary to post them in the ledger.
F

18. Capital and Drawing are reported in the owner's equity section of the balance sheet. T

19. Entries required to close the balances of the temporary accounts at the end of the period are called
adjusting entries. T
20. In the accounting cycle of a manual accounting system, a trial balance is prepared before the
financial statements are prepared. T

21. The methods or procedures used to record and report financial data is called the accounting system.
T

22. System analysis is the final phase of the creation or revision of an accounting system and is
concerned with implementing proposals. F

23. Adding a review of operations by an internal audit staff strengthens internal control. T

24. Since the concepts, methods, and procedures of a manual accounting system do not apply to a
computerized system, there is no need to learn the manual system if one plans to work only for firms
that use computerized accounting systems. F

25. The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable. F

Multiple-Choice: Each question is worth 2 points

Select only one answer (letter) per question

1. Profit is the difference between:

A. Assets and liabilities

B. Assets and equities

C. The assets purchased with cash contributed by the owner and the cash spent to operate the business

X D. The assets received for goods and services and the amounts used to provide the goods and services

2. The two most common specialized fields of accounting in practice are:

A. Environmental accounting and financial accounting

X B. Managerial accounting and financial accounting

C. Managerial accounting and tax accounting

D. Financial accounting and accounting systems

3. Resources owned by a business are referred to as:

A. Owner's equity

B. Liabilities

C. Equities

X D. Assets
4. The amount charged to customers for goods or services sold is called a(n):

A. Expense

B. Net income

X C. Revenue

D. Asset

5. The financial statement that presents a summary of the assets, liabilities, and owner's equity as of a
specific date is called a(n):

A. Income statement

B. Statement of owner's equity

C. Statement of cash flows

X D. Balance sheet

6. Accounts:

A. Do not reflect money amounts

B. Are used only by entities that manufacture products

X C. Are records of increases and decreases in individual financial statement items

D. Are only used by large entities with many transactions

7. The gross increases in owner's equity attributable to business activities are called:

A. Assets

X B. Drawings

C. Revenues

D. Expenses

8. An account is said to have a debit balance if:

X A. The amount of the debits exceeds the amount of the credits

B. There are more entries on the debit side than on the credit side

C. Its normal balance is debit without regard to the amounts or number of entries on the debit side

D. The last entry of the accounting period was posted on the debit side
9. A debit may signify a(n):

XA. Decrease in asset accounts

B. Decrease in liability accounts

C. Increase in the capital account

D. Decrease in expense accounts

10. A credit balance in which of the following accounts would indicate a likely error?

A. Fees Earned

X B. R. Brown, Drawing

C. R. Brown, Capital

D. Accounts Payable

11. Adjusting entries affect at least one:

A. Income statement account and one balance sheet account

X B. Revenue and one expense account

C. Asset and one liability account

D. Revenue and one capital account

12. The balance in the office supplies account on July 1 was $3,200, supplies purchased during July were
$2,500, and the supplies on hand at July 31 were $2,800. The amount to be used for the appropriate
adjusting entry is:

A. $3,500

B. $2,800

C. $3,200

X D. $2,900

13. A business pays weekly salaries of $15,000 on Friday for a five-day week ending on that day. The
adjusting entry necessary at the end of the fiscal period ending on Thursday is:

A. Debit Salaries Payable, $12,000; credit Cash, $12,000

B. Debit Salary Expense, $12,000; credit Drawing, $12,000

X C. Debit Salary Expense, $12,000; credit Salaries Payable, $12,000

D. Debit Drawing, $12,000; credit Cash, $12,000

14. Tangible assets used in the business that are of a relatively fixed or permanent nature are called:

X A. Fixed assets

B. Revenues

C. Expenses

D. Liabilities

15. The difference between the balance of a fixed asset account and the related accumulated
depreciation account is termed:

A. Liability

B. Contra asset

X C. Book value

D. Market value

16. Closing Entries:

A. Need not be journalized since they appear on the work sheet

B. Need not be posted if the financial statements are prepared from the work sheet

C. Are not needed if adjusting entries are prepared

X D. Must be journalized and posted

17. Which of the following is reported on the Statement of Owner's Equity for the current year?

A. Accumulated depreciation

X B. Owner's additional investment made during the current period

C. Depreciation expense

D. Salaries payable

18. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?

A. Salaries Expense

B. Fees Earned

X C. Drawing

D. Depreciation Expense
19. Which of the following accounts appears on a post-closing trial balance?

A. Insurance Expense

B. Prepaid Rent

X C. Drawing

D. Fees Earned

20. Unearned Fees appears on the :

A. Balance sheet in the current assets section

X B. Balance sheet as a current liability

C. Balance sheet in the long-term liabilities section

D. Income statement as revenue

21. To determine information needs and how the system should provide it is the goal of:

A. Systems design
B. Accounting system

X C. Systems analysis

D. Internal auditing

22. The goal of systems analysis is to determine:

A. When to implement a system

X B. Information needs

C. The size of the competitor's system

D. Changes to the present system

23. The individual accounts with customers are included in a subsidiary ledger called the:

A. Asset ledger

B. Accounts payable ledger

C. Expense ledger

X D. Accounts receivable ledger

24. Every controlling account must have its own:

A. Revenue ledger

B. General ledger

X C. Subsidiary ledger

D. Journal

25. When there are a large number of individual accounts with a common characteristic, it is common to
place them in a separate ledger called a(n):

A. Accounts receivable ledger

B. Accounts payable ledger

C. Creditors ledger

X D. Subsidiary ledger

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https://brainmass.com/business/finance/multiple-choice-questions-in-accounting-21317

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Solution Preview

True/False

1. Accounting is an information system and is often called the "language of business." T

Correct

2. A business entity is the occurrence of an event or condition that must be recorded. F

Correct

3. The accounting equation can be expressed as Liabilities + Assets = Owner's Equity. F

Correct

4. Paying an account payable increases equity and decreases assets. F

Correct

5. The excess of expenses over revenues is called net loss. T

Correct
6. Accounts in the ledger are usually maintained in the order in which they appear on the financial
statements. T

Correct

7. The three parts of a T account are the title, a space for recording increases, and a space for recording
decreases. T

Correct

8. The order of the flow of accounting data is (1) recording in accounts, (2) recording in journal, and (3)
posting in ledger. T

Correct

9. A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a
trial balance. F

Incorrect

Proof of the equality of debit and credit balances is called a trial balance.

10. The erroneous moving of an entire number one or more spaces to the right or left, such as writing
$75 as $750, is called a transposition. T

Correct
11. The accrual basis of accounting requires expenses be recorded in the same period that the related
revenue is recorded. T

Incorrect

This is the matching principle

(Definitions from http://www.juneberries.com/junko/study/actg_1.html)

Matching Principle

Revenue should be offset by all the expenses incurred in producing that revenue.

The concept of offsetting expenses against revenue on a basis of cause and effect is called matching
principle.

Accrual Basis of Accounting

The policy of recognizing revenue in the accounting records when it is earned and recognizing expenses
when the related goods or services are used is called the accrual basis of accounting.

12. The matching concept supports accrual accounting principles. T

Correct

13. Accruals are needed when an unrecorded expense has been incurred or unrecorded revenue has
been earned. T
Correct

14. An adjusting entry to accrue an incurred expense will also affect total liabilities. T

Correct

15. A contra asset account for land will normally appear in the balance sheet. F

Correct

16. Net income is shown on the work sheet in the Income Statement debit column and the Balance
Sheet credit column. T

Correct

17. Since the adjustments are recorded on the work sheet, it is not necessary to post them in the ledger.
F

Correct

18. Capital and Drawing are reported in the owner's equity section of the balance sheet. T

Correct

19. Entries required to close the balances of the temporary accounts at the end of ...
Solution Summary

Answers to T/F, Multiple Choice Questions in Accounting (25 T/F, 25 Multiple Choice) related to business
entity, accounting equation, account payable, ledger, T account, flow of accounting data, trial balance,
accrual accounting, adjusting entry, work sheet, adjusting entries, System analysis, internal audit,
subsidiary ledgers

The Basic Types of Data Transmission Media

Information Technology, Practice Questions

Simple Definition of Data transmission is that; the transfer of data in digital or analog signal over
a point-to-point communication channel. Examples of channels are copper wire, optical fiber.

There two types of data transmission modes:

1. Parallel Transmission
2. Serial Transmission
1. Synchronous
2. Asynchronous
With every passing day, a new record for the fastest data transmission rate is recorded. Large
Companies are struggling to get highest possible speed at every micro second. Today We will
elaborate different types of data transmission media with a practice question. Lets Start:

Auditor Forum is considering to connect the networks installed in its campuses which are
three kilometers apart. While reviewing the IT department’s proposal in this regard, the head
of procurement has observed that IT department has recommended the use of a particular type
of cable as data transmission medium without giving any justification for its selection.

Required: 
As IT Manager of the Auditor Forum university, write a note to the head of procurement
describing the key characteristics of four types of data transmission media that are commonly
used for connecting networks. Give justification to support your recommendation.

Types of Data Transmission Media:

Copper wire
This is a twisted pair of cables. It is widely available and inexpensive. However, it has low
transmission rate and relatively high error rate because there is only minimal anti-interference
screening. It allows straightforward addition of extra nodes. Telephone line is an example of
copper wire.

Coaxial Cable

Coaxial cable is similar to domestic television aerial cable. It gives significantly better
performance than twisted pair cable, as there is less risk of distortion of data at higher rates of
transmission. Anti interference screening is also better than twisted pair cable. Heavier grades of
cables allow broadband transmission, increasing the number of signals which can be carried
simultaneously. It allows straightforward addition of extra nodes.

Fibre optic cable

These are virtually interference free and has extremely high data transmission rates up to one
billion bits per second. It is popular in WAN, but less widely used in LANs for two reasons, first
it is relatively high cost option, secondly it does not support the addition of nodes , which makes
it unsuitable for ring type LANs, and transmission is essentially in one direction, which makes it
unsuitable for bus type LANs.

Microwave cables

These are ultra high frequencies (UHF) radio signals; they can be transmitted between radio
transmitters and receivers which are in the site of each other. Each of these relay stations are
known as repeaters. Repeaters are cited a network along which signals can be sent. The ultra
high frequency nature of microwave minimizes distortion. One particular characteristic of the
microwave system is that it cannot bend around corners; therefore microwave antennas must be
in “line of sight” of each other – that is, unobstructed.

In the given scenario it is suggested to go with fibre optic technology due to following
reasons:

(i) No interference from external factors.

(ii) No problem in terms of line of sight.
(iii) No problem with multipath distortion.
(iv) Unlimited bandwidth.
(v) High Reliability.
(vi) Low cross talk, interference between adjacent cable.
(vii) Though satellite is also a better option, it is much expensive than fibre optic and does not
suit to Auditor Forum.