CPA Review for Free COPY COPY Flashcards by Mary R

Systems control activities can generally be divided into what two categories?

General and application

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The purchase and sale of commodities for current delivery is known as which market?

Spot Market

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A reliable system is one that operates without

material, error, fault or failure during a specified period in a specified environment -

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The Availability principle of the AICPA’s Trust Services framework is concerned with

the availability of the system for operations and uses as committed or agreed to in conformity with the entity’s availability policies.

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System failures that result in an interruption of business operations or loss of data is:

An example of risk related to the Availability principle

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A company produces a product in a long-series of automated steps that requires little direct material and direct labor but a lot of overhead. What costing system is the company most likely to use?

Activity Based Costing

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Computer hardware is extremely reliable, primarily due to

chip technology.``

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The country of Flattistan’s central bank is seeking to stabilize its nation’s economy in what has become a period of excessive inflation. To this end, the central bank would utilize which of the following tools of monetary policy?

Selling government securities

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Which of the following best describes a cold site?

An alternate site where the organization provides and installs hardware

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It is less expensive than a hot site but takes longer to recover after a disaster

Cold Site

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process a large volume of transactions where management reporting systems provide information used to support business decisions.

Transaction processing systems

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Posie Petunia is planning to start up an independent business producing organic hand lotions. Several independent producers already produce such lotions and each produces a differentiated product. The equipment and supplies Posie needs are relatively inexpensive to obtain. Which of the following best describes the market structure into which Posie is planning to enter?

monopolistic competition: several independent producers, low barriers to entry, and differentiated products.

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refers to the pricing strategy for products and services bought and sold across international borders between related parties. Transfer pricing is closely tied to a firm’s international tax strategy

Transfer pricing

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Caused by decrease in SRAS

Cost-push Inflation

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What causes a cost-push inflation

Increase in oil price

2. Increase in nominal wages

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What causes inflation and /or deflation?

Shift in AD and SRAS curves

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Shift Right in AD curve will cause

Price Level to rise, leading to inflation

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Shift Left in SRAS curve will cause

Price Level to rise, leading to inflation

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Demand pull inflation is caused by

an increase in AD

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Demand pull inflation could be caused by factors such as

Increase in gov’t spending
Decrease in taxes
Increase in wealth
Increase in the money supply

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Inflation has a inverse relationship with

Purchasing power (As the price level rises the value of money declines)

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What are the two most common measures of money supply?

2. M2

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A disaster recovery and business continuity plan should strive for the following goals:

minimize the extent of disruption, damage and loss, establish an alternate method of processing data, facilitate the return to normal operations as soon as possible and train employees to perform under emergency conditions. -

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The level of a material misstatements is one of the most important professional judgments that an_______must make.

independent auditor(It is one that the auditor must make without any influence by the audit client.)

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Stephanie Felix has been tasked with measuring how often certain manufacturing defects occur at his company's Salt Lake City plant. Which of the following tools would be the most effective in this case?

A Pareto chart is essentially a bar chart or histogram that ranks the causes of variations in a process from most to least frequent, which is intended to indicate their effects on quality

Which of the following is the best explanation of a futures contract?

A contract to buy or sell a specified commodity at a certain date in the future, at a market-determined price

An agreement to buy 10,000 barrels of light, sweet crude oil (a particular grade of crude oil) on August 12 of the current year at the price being quoted today in the futures market,is an example of

A futures contract

Is a cost that is not described by a straight line over the relevant range

A nonlinear cost function

Can be fixed or variable and are costs that are common to multiple products.

Joint Cost

You see a simultaneous decrease in supply and demand for tobacco products. Which of the following represents the effect of these shifts on output quantity and market price?

Output quantity decreases and output price is indeterminate.

costs have both a fixed and variable component

Mixed costs or semi variable

vary proportionally in total with the level of activity

variable cost

When a bond pays a coupon rate below the prevailing market rate, it will sell

At a discount

If the coupon rate is greater than the current market rate, the bond will sell.

At a premium.

When the coupon rate is equal to the market rate, the bond will sell

At exactly par value

The systems programmer is responsible for

implementing, modifying and debugging the software required to interface with the hardware

A patch is

a change or modification to an existing program and/or may also be added for fraudulent purposes.

An example of patch would be

changes in tax laws may require the implementation of a patch.

An example of internal business process: | ****should be measured based on how well the company manages to do a particular process****

1. measures how quickly inventory is acquired and sold. 2. measures how cheaply goods can be turned into finished products. 3. measures how often goods get to a customer within the time allotted

Useful and used by all levels of the organization not just for the exclusive use of upper management.

Data Mining

The definition of a data warehouse is:

An integrated collection of data used for reporting and analysis to support management decisions

Which of the following is a requirement established by the New York Stock Exchange for the companies that are officially listed on that exchange?

A code of conduct must be adopted by the governing board and made public.

What is meant by the term “economic profit?”

any profit earned in excess of a normal amount of profit.

Internal control systems should be designed to achieve operations and information process goals. What are three examples of operations goals?

1. Effectiveness of operations 2. Efficient resources 3. Security of resources

a small number of powerful firms that dominate the marketplace and significant barriers to entry

An oligopoly

Which of the following definitions best describes an internal site for disaster recovery?

The organization's site or intranet -

The steps to process improvement are:

1) design 2) modeling (which involves simulation of the process) 3) execution (including training of personnel and testing of the process) 4) monitoring 5) optimization

A disaster recovery and business continuity plan should include

Specific assignments for personnel who are familiar with the plan and their responsibilities

is a second generation language that requires an assembler to translate assembly language into machine language.

Assembly language

the risk to the firm's earnings associated with translating its financial statements into functional currencies

Translation risk

Responsible for creating the visual content of the website?

The Web Designer

Examples of confidential data are:

1. Engineering details of products 2. legal documents 3. customer lists

Internal control systems should be designed to achieve operations and information process goals. Which of the following are five examples of information goals?

Input validity, input completeness, input accuracy, update completeness, and update accuracy -

The COBIT framework describes four categories of IT resources:

applications, which include systems and manual procedures to process information; the information itself; infrastructure, which includes hardware, equipment, and operating systems needed to process information; and people.

The seven criteria set forth in the COBIT framework are:

1) effectiveness, 2) efficiency, 3) confidentiality, 4) integrity, 5) availability, 6) compliance, and 7) reliability

Two methods to control access to appropriate users include

Passwords and user IDs and Independent review of transactions -

A character is a

letter, number or symbol

System failures that result in an interruption of business operations or loss of data is an example of risk related to:

the Availability principle

Computer software designed to help humans make decisions?

Artificial intelligence

An example of a tool used by a Systems Analyst?

A systems flowchart

An example of a Master File is:

Vendor names and addresses

responsible of overseeing the development, planning and the implementation of a website. -

The Web Administrator or also called a Web Developer

Batch processing accumulates and processes similar

transactions in batches

On-line processing processes transactions as

they occur

Unemployment that occurs when unemployed laborers have manufacturing skills but job openings are for laborers with service skills is known as

Structural Employment

Frictional unemployment occurs

when there is job turnover

Cyclical unemployment occurs when

aggregate labor supply exceeds aggregate labor demand in a low point of the business cycle.

Full employment occurs when

all workers willing to work at market wages are employed using their skills

A period cost cannot be directly associated with

the production of a good and is expensed as incurred rather than being capitalized.

Product costs or "inventoriable" costs (such as direct material and direct labor) are directly associated with the

production of a good and are, thus, capitalized, or added to the cost of those items

if the cost of capital is 8 percent per year, then the IRR must be

above 8 percent for an investment to be a worthwhile venture

The potential that the present value of an organization's cash flows could increase or decrease as a result of changes in the exchanges rate

Economic Exposure

Measurement of transaction exposure is generally done in two steps

1. Project foreign currency inflows and foreign currency outflows 2. Estimate the variability(risk) associated with the foreign currency.

Exchange rate risk is defined , in part, by

Transaction Exposure

Globalization is often measured using

World trade growth as a percentage of GDP

An increase in the discount rate would cause

MS ↓ INTEREST RATES ↑

When do differentiation strategies fail

The value of the firm's premium does not exceed its cost

Occurs when an investor's certainty equivalent is equal to the expected return on the investment

Risk indifferent

Occurs when an investor's certainty equivalent is less than the expected rate of return

Risk-Averse(investor seeks higher returns for more risk)

Inelastic supply curve occurs when

the percentage change in Qty supplied is LESS than the percentage change in price

Subsidy is:

effectively reduces the costs of producing a product

Ideally, functions in a control environment should be segregated. This is not always possible. At a minimum, an attempt should be made to segregate what three functions?

Programming, operations and the data library

Which function is generally responsible for the custody of removable media?

The Librarian

An economist is hoping to see a future increase in gross domestic product. The economist is looking for evidence that might indicate this future change will happen. Which of the following is most likely to indicate this possibility? -

Increase in the hours worked each week by production workers

GDP is a measure of

Productivity

definition for GDP using the expenditure (input) approach?

Consumption + investment + government expenditure + net exports.

When a firm uses standard unit costs for elements of production, budget variances are calculated by

comparing actual costs with those based on standard unit costs at the actual level of production -

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