Individual Assignment by

LU1

esthercamry3 — 2019-02-28 03:24:17 UTC

What are the three cycles of transaction processing?

1. Expenditure Cycle

esthercamry3 — 2019-02-28 03:25:43 UTC

- Business activities begin with the acquisition of materials, property, and labor in exchange
for cash

2. Conversion Cycle

esthercamry3 — 2019-02-28 03:30:19 UTC

- consists of two main subsystems: the production system and
the cost accounting system.

3. Revenue Cycle

esthercamry3 — 2019-02-28 03:33:11 UTC

- consists of
processing cash sales, credit sales, and the receipt of cash following a credit sale.
- organization sells their goods to customer through the revenue cycle.

Accounting Information System

esthercamry3 — 2019-02-28 04:35:52 UTC

LU1 - LU4

LU2

esthercamry3 — 2019-02-28 04:37:08 UTC

Computer based systems employ four types of files. Name them.

esthercamry3 — 2019-02-28 04:40:23 UTC

1. Master Files

esthercamry3 — 2019-02-28 04:40:48 UTC

2. Transaction Files

esthercamry3 — 2019-02-28 04:41:28 UTC

3. Reference Files

esthercamry3 — 2019-02-28 04:42:04 UTC

4. Archive Files

LU3

esthercamry3 — 2019-02-28 04:53:22 UTC

What are the three rules that ensure that no single employee or department processes a
transaction in its entirety?

esthercamry3 — 2019-02-28 04:58:49 UTC

1. Transaction authorization must be isolated from transaction processing.

esthercamry3 — 2019-02-28 04:59:59 UTC

2. Asset custody must separate from asset record keeping.

esthercamry3 — 2019-02-28 05:06:00 UTC

3. The organization structure requires plot between at least two people.

LU4

esthercamry3 — 2019-02-28 05:11:30 UTC

What is the relationships between test of controls and substantive tests?

definition test of control and substantive test

esthercamry3 — 2019-02-28 05:18:02 UTC

- test of control is an audit procedure to check if a control used by a client is effective or not.

- substantive test is an audit test to test the fairness of items in the financial statements.

How does it works?

esthercamry3 — 2019-02-28 05:29:30 UTC

If the internal control is effective, then the auditor will emphasize the use of test of control compared to substantive test. In contrast, if the internal controls are less effective, the auditor will emphasize the use more on substantive tests.

In short,
- effective internal control; use test of control > substantive test
- ineffective internal control; test on control < substantive test