Core accounting information systems concepts including internal controls, ERP systems, and transaction data flow.
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- What is the COSO internal control framework?
- A widely accepted framework that defines five components: control environment, risk assessment, control activities, information and communication, and monitoring
- What is the primary purpose of internal controls in an accounting system?
- To safeguard assets, ensure accurate financial reporting, and promote operational efficiency and compliance with regulations
- Define preventive controls.
- Controls designed to stop errors or irregularities from occurring in the first place
- Define detective controls.
- Controls designed to identify and correct errors or irregularities after they have occurred
- Define corrective controls.
- Controls implemented to fix problems identified by detective controls and prevent recurrence
- What is an ERP system?
- An integrated software system that consolidates business processes and data across an organization into a single database
- What are the main modules typically found in an ERP system?
- Financial, human resources, inventory management, supply chain, sales and distribution, and production/manufacturing
- What is a key advantage of implementing an ERP system?
- Integration of data across departments eliminates silos, reduces redundancy, and provides real-time information
- What does real-time posting mean in an ERP system?
- Transactions are recorded and immediately updated in the system without delay, ensuring current financial data
- What is a master file in an ERP system?
- A database table containing relatively permanent information such as customer, vendor, or employee records
- What are the four main phases of the transaction processing cycle?
- Initiation, authorization, recording, and reconciliation
- Define segregation of duties.
- The practice of dividing tasks among different people to reduce the risk of error or fraud
- What are the three key incompatible duties that should be segregated in accounting?
- Authorization, recording, and custody of assets, plus reconciliation
- What is an audit trail in an accounting information system?
- A record of all transactions and system activities that allows tracking of how data was entered, modified, and processed
- What is FIFO in inventory management?
- First In, First Out, an inventory valuation method where oldest items are assumed to be sold first