AIS Test 2 UPDATED Exam ACTUAL
QUESTIONS AND CORRECT ANSWERS
1) Perhaps the most striking fact about natural disasters in relation to AIS controls is that -
CORRECT ANSWER A) many companies in one location can be seriously affected at
one time by a disaster.
Which of the following is the greatest risk to information systems and causes the greatest
dollar losses? - CORRECT ANSWER A) Human errors and omissions
Identify the threat below that is not one of the four types of threats faced by accounting
information systems. - CORRECT ANSWER D) System design inefficiency
A power outage is an example of a(n) ________ threat. - CORRECT ANSWER B)
software errors and equipment malfunctions
Sabotage is an example of a(n) ________ threat. - CORRECT ANSWER D) intentional
acts (computer crimes)
Systems that do not meet company need is an example of a(n) ________ threat. - CORRECT
ANSWER C) unintentional acts
Terrorists are an example of a(n) ________ threat. - CORRECT ANSWER A) natural
and political disasters
Undetected data transmission errors are an example of a(n) ________ threat. - CORRECT
ANSWER B) software errors and equipment malfunctions
Excessive heat is an example of a(n) ________ threat. - CORRECT ANSWER A)
natural and political disasters
,What was the first known cyber-attack intended to harm a real-world physical target? -
CORRECT ANSWER B) Stuxnet
What agency did the United States create to use cyber weapons and to defend against cyber
attacks? - CORRECT ANSWER A) U.S. Cyber Command
Which type of threat poses the greatest risk to information systems? - CORRECT
ANSWER B) Unintentional acts
A disgruntled employee in Australia hacked into a sewage system, causing a quarter of a
million gallons of raw sewage to flood a hotel and a park. - CORRECT
ANSWER Answer: TRUE
A 16 year old hacker was able to access the systems of U.S. Missile Command and
accidently launched a small nuclear missile, which fortunately, failed to detonate. -
CORRECT ANSWER Answer: FALSE
1) Lauren wants to open a floral shop in a downtown business district. She doesn't have funds
enough to purchase inventory and pay six months' rent up front. Lauren approaches a good
friend, Jamie, to discuss the possibility of Jamie investing funds and becoming a 25% partner
in
the business. After a lengthy discussion, Jamie agrees to invest. Eight months later, Jamie
discovered that Lauren has not be honest with her regarding some aspects of the business
financial operation. In order for Jamie to sue Lauren for fraud, all the following must be true
except - CORRECT ANSWER D) Jamie found Lauren dishonest because she does not
always reconcile the business cash
account on a timely basis.
Fraud perpetrators are often referred to as - CORRECT ANSWER C) white-collar
criminals.
,"Cooking the books" is typically accomplished by all the following except - CORRECT
ANSWER C) inflating accounts payable.
SAS No. 99 requires that auditors - CORRECT ANSWER A) plan audits based on an
analysis of fraud risk.
What is the primary difference between fraud and errors in financial statement reporting? -
CORRECT ANSWER B) The intent to deceive
The two most common types of fraud impacting financial statements are - CORRECT
ANSWER D) fraudulent financial reporting and misappropriation of assets.
Intentional or reckless conduct that results in materially misleading financial statements is
called - CORRECT ANSWER C) fraudulent financial reporting.
Which of the following is not an example of one of the basic types of fraud? - CORRECT
ANSWER A) While straightening the store at the end of the day, a shoe store employee
finds and keeps an
expensive pair of sunglasses left by a customer.
Which of the following is not an example of misappropriation of assets? - CORRECT
ANSWER B) The chief financial officer of the company falsely adds $20 million to the
accounts receivable
and revenue accounts.
Describe some of the most frequent fraudulent financial reporting schemes. - CORRECT
ANSWER Answer: The most frequent fraudulent financial reporting schemes involve
fictitiously inflating
revenues,
holding the books open (recognizing revenues before they are earned), closing the books
early (delaying current expenses to a later period), overstating inventories or fixed assets, and
concealing losses and liabilities.
, Asset misappropriation is ________ likely than fraudulent financial reporting. The amounts
involved in asset misappropriation are much ________ than fraudulent financial reporting. -
CORRECT ANSWER C) more; less
Misappropriation of assets is a fraudulent act that involves - CORRECT ANSWER D)
theft of company property.
Discuss who perpetrates fraud and why it occurs, including the pressures, opportunities, and
rationalizations that are present in most frauds.
1) Fraud perpetrators do not typically - CORRECT ANSWER A) attempt to return or
pay back stolen amounts soon after the initial theft, but find they are
unable to make full restitution.
Lapping is best described as the process of - CORRECT ANSWER A) applying cash
receipts to a different customer's account in an attempt to conceal previous
thefts of cash receipts.
Which of the following is not an example of the fraud triangle characteristic concerned with
rationalization? - CORRECT ANSWER A) Revenge against the company
Insiders are frequently the ones who commit fraud because - CORRECT ANSWER D)
they know more about the system and its weaknesses than outsiders.
Which of the following is not a management characteristic that increases pressure to commit
fraudulent financial reporting? - CORRECT ANSWER A) Close relationship with the
current audit engagement partner and manager
Researchers have compared the psychological and demographic characteristics of white-
collar
QUESTIONS AND CORRECT ANSWERS
1) Perhaps the most striking fact about natural disasters in relation to AIS controls is that -
CORRECT ANSWER A) many companies in one location can be seriously affected at
one time by a disaster.
Which of the following is the greatest risk to information systems and causes the greatest
dollar losses? - CORRECT ANSWER A) Human errors and omissions
Identify the threat below that is not one of the four types of threats faced by accounting
information systems. - CORRECT ANSWER D) System design inefficiency
A power outage is an example of a(n) ________ threat. - CORRECT ANSWER B)
software errors and equipment malfunctions
Sabotage is an example of a(n) ________ threat. - CORRECT ANSWER D) intentional
acts (computer crimes)
Systems that do not meet company need is an example of a(n) ________ threat. - CORRECT
ANSWER C) unintentional acts
Terrorists are an example of a(n) ________ threat. - CORRECT ANSWER A) natural
and political disasters
Undetected data transmission errors are an example of a(n) ________ threat. - CORRECT
ANSWER B) software errors and equipment malfunctions
Excessive heat is an example of a(n) ________ threat. - CORRECT ANSWER A)
natural and political disasters
,What was the first known cyber-attack intended to harm a real-world physical target? -
CORRECT ANSWER B) Stuxnet
What agency did the United States create to use cyber weapons and to defend against cyber
attacks? - CORRECT ANSWER A) U.S. Cyber Command
Which type of threat poses the greatest risk to information systems? - CORRECT
ANSWER B) Unintentional acts
A disgruntled employee in Australia hacked into a sewage system, causing a quarter of a
million gallons of raw sewage to flood a hotel and a park. - CORRECT
ANSWER Answer: TRUE
A 16 year old hacker was able to access the systems of U.S. Missile Command and
accidently launched a small nuclear missile, which fortunately, failed to detonate. -
CORRECT ANSWER Answer: FALSE
1) Lauren wants to open a floral shop in a downtown business district. She doesn't have funds
enough to purchase inventory and pay six months' rent up front. Lauren approaches a good
friend, Jamie, to discuss the possibility of Jamie investing funds and becoming a 25% partner
in
the business. After a lengthy discussion, Jamie agrees to invest. Eight months later, Jamie
discovered that Lauren has not be honest with her regarding some aspects of the business
financial operation. In order for Jamie to sue Lauren for fraud, all the following must be true
except - CORRECT ANSWER D) Jamie found Lauren dishonest because she does not
always reconcile the business cash
account on a timely basis.
Fraud perpetrators are often referred to as - CORRECT ANSWER C) white-collar
criminals.
,"Cooking the books" is typically accomplished by all the following except - CORRECT
ANSWER C) inflating accounts payable.
SAS No. 99 requires that auditors - CORRECT ANSWER A) plan audits based on an
analysis of fraud risk.
What is the primary difference between fraud and errors in financial statement reporting? -
CORRECT ANSWER B) The intent to deceive
The two most common types of fraud impacting financial statements are - CORRECT
ANSWER D) fraudulent financial reporting and misappropriation of assets.
Intentional or reckless conduct that results in materially misleading financial statements is
called - CORRECT ANSWER C) fraudulent financial reporting.
Which of the following is not an example of one of the basic types of fraud? - CORRECT
ANSWER A) While straightening the store at the end of the day, a shoe store employee
finds and keeps an
expensive pair of sunglasses left by a customer.
Which of the following is not an example of misappropriation of assets? - CORRECT
ANSWER B) The chief financial officer of the company falsely adds $20 million to the
accounts receivable
and revenue accounts.
Describe some of the most frequent fraudulent financial reporting schemes. - CORRECT
ANSWER Answer: The most frequent fraudulent financial reporting schemes involve
fictitiously inflating
revenues,
holding the books open (recognizing revenues before they are earned), closing the books
early (delaying current expenses to a later period), overstating inventories or fixed assets, and
concealing losses and liabilities.
, Asset misappropriation is ________ likely than fraudulent financial reporting. The amounts
involved in asset misappropriation are much ________ than fraudulent financial reporting. -
CORRECT ANSWER C) more; less
Misappropriation of assets is a fraudulent act that involves - CORRECT ANSWER D)
theft of company property.
Discuss who perpetrates fraud and why it occurs, including the pressures, opportunities, and
rationalizations that are present in most frauds.
1) Fraud perpetrators do not typically - CORRECT ANSWER A) attempt to return or
pay back stolen amounts soon after the initial theft, but find they are
unable to make full restitution.
Lapping is best described as the process of - CORRECT ANSWER A) applying cash
receipts to a different customer's account in an attempt to conceal previous
thefts of cash receipts.
Which of the following is not an example of the fraud triangle characteristic concerned with
rationalization? - CORRECT ANSWER A) Revenge against the company
Insiders are frequently the ones who commit fraud because - CORRECT ANSWER D)
they know more about the system and its weaknesses than outsiders.
Which of the following is not a management characteristic that increases pressure to commit
fraudulent financial reporting? - CORRECT ANSWER A) Close relationship with the
current audit engagement partner and manager
Researchers have compared the psychological and demographic characteristics of white-
collar
