ACTG 313 UPDATED EVALUATIONS EXAM QUESTIONS AND
SOLUTIONS GUARANTEE A+
✔✔COBIT - ✔✔Control Objectives for Information and Related Technology
✔✔COBIT Principles - ✔✔1. meeting stakeholder needs
2. covering the enterprise end-to-end
3. applying a single, integrated framework
4. enabling a holistic approach
5. separating governance from mgmt.
✔✔General threats to Revenue cycle - ✔✔1. Inaccurate or invalid master data
2. Unauthorized disclosure of sensitive information
3. Loss or destruction of data
4. Poor performance
✔✔General controls to revenue cycle - ✔✔1. a. Data processing integrity controls
b. Restrict access to master data
c. Review of all changes to master data
2. a. Access controls
b. Encryption
c. Tokenization of customer personal information
3. a. Backup and disaster recovery procedures
4. a. Managerial reports
✔✔Sales Order Entry Processing Steps - ✔✔1. take the customer order
2. approve customer credit
3. check inventory availability
4. respond to customer inquiries
✔✔CAR - ✔✔Custody
Authorization
Recording
✔✔What 3 things do you need before you record a sale? - ✔✔Custody: Shipping,
product
Authorization: Sales order
Recording: invoice + record (JE)
✔✔sales order entry processing threats - ✔✔1. Incomplete/inaccurate orders
2. Invalid orders
3. Uncollectible accounts
,4. Stockouts and excess inventory
5. Loss of customers
✔✔sales order entry processing controls - ✔✔1. a. Data entry edit controls
b. Restrict access to master data to maintain accuracy
2. a. Signature to authorize sale
3. a. Credit limits checked, and if the sale exceeds the limit, specific authorization
needed
4. a. Perpetual inventory system
b. RFID or barcode technology
c. Physical inventory counts
5. customer relationship management systems
✔✔Shipping Process - ✔✔1. pick and pack the order
2. ship the order
a. packing slip
b. bill of lading
✔✔Shipping Process Threats - ✔✔1. Picking the wrong item or quantity to ship
2. Theft
3. Fail to ship the goods
4. Ship to the wrong address
✔✔Shipping Process Controls - ✔✔1. a. Bar code technology
b. Reconcile picking list to sales order
2. a. Restrict physical access to inventory
b. Document inventory transfers
c. Physical counts of inventory and reconcile to quantities recorded
3. a. Reconcile shipping documents to sales orders, picking lists, and packing slips
4. a. Data entry edit controls
✔✔Billing Process - ✔✔1. Invoicing the customer
Source document: sales invoice
2. Updating accounts receivable
Source document: credit memo and monthly statements
✔✔Billing Process Threats - ✔✔1. Failure to bill the customer
2. Billing errors
3. Posting errors in accounts receivable
, 4. Inaccurate or invalid credit memos
5. Fraudulent or premature recording of sales
✔✔Billing Process Controls - ✔✔1. a. Reconcile invoices with sales orders and shipping
documents
b. Separate shipping and billing functions
2. a. Data entry edit controls
b. Configure the system to automatically enter price data
3. a. Reconcile subsidiary accounts receivable balance to the amount for accounts
receivable in the general ledger
b. mail monthly statements to customers
4. a. Segregation of authorization and recording function for credit memos
5. a. 3-way match (sales order, bill of lading, and sales invoice) before recording the
sale
✔✔Cash Collection Process - ✔✔1. Process customer payments and update their
account balance (remittance)
2. Deposit payments to the bank
✔✔Cash collection process Threats - ✔✔1. Theft of cash
2. Cashflow problems
✔✔Cash collection process controls - ✔✔1. a. Proper segregation of cash handling and
posting to customer accounts, authorize credit memos or reconcile bank account
b. Use lockbox
c. immediately open mail, prompt endorsement, and deposit all cash receipts daily
d. use cash registers
e. use EFT (electronic funds transfer) or FEDI (financial electronic data interchange)
2. a. Lockbox
b. Discounts for early payment
c. Cash flow budgeting
✔✔Electronic Funds Transfer (EFT) - ✔✔electronic payments from customers directly to
bank
✔✔Credit manager should never report to accounting department. T or F? - ✔✔True
✔✔Sales representative should never be allowed to approve a sale on credit. T or F? -
✔✔True
SOLUTIONS GUARANTEE A+
✔✔COBIT - ✔✔Control Objectives for Information and Related Technology
✔✔COBIT Principles - ✔✔1. meeting stakeholder needs
2. covering the enterprise end-to-end
3. applying a single, integrated framework
4. enabling a holistic approach
5. separating governance from mgmt.
✔✔General threats to Revenue cycle - ✔✔1. Inaccurate or invalid master data
2. Unauthorized disclosure of sensitive information
3. Loss or destruction of data
4. Poor performance
✔✔General controls to revenue cycle - ✔✔1. a. Data processing integrity controls
b. Restrict access to master data
c. Review of all changes to master data
2. a. Access controls
b. Encryption
c. Tokenization of customer personal information
3. a. Backup and disaster recovery procedures
4. a. Managerial reports
✔✔Sales Order Entry Processing Steps - ✔✔1. take the customer order
2. approve customer credit
3. check inventory availability
4. respond to customer inquiries
✔✔CAR - ✔✔Custody
Authorization
Recording
✔✔What 3 things do you need before you record a sale? - ✔✔Custody: Shipping,
product
Authorization: Sales order
Recording: invoice + record (JE)
✔✔sales order entry processing threats - ✔✔1. Incomplete/inaccurate orders
2. Invalid orders
3. Uncollectible accounts
,4. Stockouts and excess inventory
5. Loss of customers
✔✔sales order entry processing controls - ✔✔1. a. Data entry edit controls
b. Restrict access to master data to maintain accuracy
2. a. Signature to authorize sale
3. a. Credit limits checked, and if the sale exceeds the limit, specific authorization
needed
4. a. Perpetual inventory system
b. RFID or barcode technology
c. Physical inventory counts
5. customer relationship management systems
✔✔Shipping Process - ✔✔1. pick and pack the order
2. ship the order
a. packing slip
b. bill of lading
✔✔Shipping Process Threats - ✔✔1. Picking the wrong item or quantity to ship
2. Theft
3. Fail to ship the goods
4. Ship to the wrong address
✔✔Shipping Process Controls - ✔✔1. a. Bar code technology
b. Reconcile picking list to sales order
2. a. Restrict physical access to inventory
b. Document inventory transfers
c. Physical counts of inventory and reconcile to quantities recorded
3. a. Reconcile shipping documents to sales orders, picking lists, and packing slips
4. a. Data entry edit controls
✔✔Billing Process - ✔✔1. Invoicing the customer
Source document: sales invoice
2. Updating accounts receivable
Source document: credit memo and monthly statements
✔✔Billing Process Threats - ✔✔1. Failure to bill the customer
2. Billing errors
3. Posting errors in accounts receivable
, 4. Inaccurate or invalid credit memos
5. Fraudulent or premature recording of sales
✔✔Billing Process Controls - ✔✔1. a. Reconcile invoices with sales orders and shipping
documents
b. Separate shipping and billing functions
2. a. Data entry edit controls
b. Configure the system to automatically enter price data
3. a. Reconcile subsidiary accounts receivable balance to the amount for accounts
receivable in the general ledger
b. mail monthly statements to customers
4. a. Segregation of authorization and recording function for credit memos
5. a. 3-way match (sales order, bill of lading, and sales invoice) before recording the
sale
✔✔Cash Collection Process - ✔✔1. Process customer payments and update their
account balance (remittance)
2. Deposit payments to the bank
✔✔Cash collection process Threats - ✔✔1. Theft of cash
2. Cashflow problems
✔✔Cash collection process controls - ✔✔1. a. Proper segregation of cash handling and
posting to customer accounts, authorize credit memos or reconcile bank account
b. Use lockbox
c. immediately open mail, prompt endorsement, and deposit all cash receipts daily
d. use cash registers
e. use EFT (electronic funds transfer) or FEDI (financial electronic data interchange)
2. a. Lockbox
b. Discounts for early payment
c. Cash flow budgeting
✔✔Electronic Funds Transfer (EFT) - ✔✔electronic payments from customers directly to
bank
✔✔Credit manager should never report to accounting department. T or F? - ✔✔True
✔✔Sales representative should never be allowed to approve a sale on credit. T or F? -
✔✔True
