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The following is a list of six control plans from this chapter, followed by a list of five situations that have control implications. Match each of the five situations with a control plan that would best prevent the system failure from occurring. Because there are six control plans, you should have one letter left over.
Control Plans
- A. Service level agreements
- B. Clear desk and locked door policy
- C. User manuals
- D. Biometric identification systems
- E. Program change controls
- F. Personnel termination control plans
Control Situations
1. The customer service representatives at Everyday Supplies, a catalog sales company, have been complaining that the computer system response time is very slow. They find themselves apologizing to customers who are waiting on the phone for their orders to be completed.
2. George and Mike have been friends for many years. Henry works in the shipping department at Superior Company, an electronics wholesaler, and Mike is
3. At Bedrock Company, most transaction processing is automated. When an inventory item reaches its reorder point, the computer automatically prints a purchase order for the economic order quantity (EOQ). A programmer, who was in collusion with 3D-Arm, Inc., the vendor that supplied several parts, altered the computer program and the inventory master data for those parts. He reduced the EOQ and made certain program alterations, so that items supplied by 3D-Arm were ordered more often than Bedrock required them.
4. The data entry clerk in the accounts payable department at Martini Company did not have detailed instructions for completing the input form for approved vendor invoices. To speed up data entry, he let all of the date information default from the current day’s date. As a result, several invoices were paid late, and Martini Company lost cash discounts on several other vendor payments.
5. During a normal workday, James, who was not an employee, entered Tortora Company’s offices and was able to find and remove some computer printouts containing user IDs and other sensitive information. He later used that information to gain access to Rowley’s computer system.
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Chapter 8 Solutions
Accounting Information Systems
- Problem Three (15 marks) You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock NEWER Inc. just paid a dividend of $6.00. The dividend is expected to increase by 60%, 45%, 30% and 15% per year, respectively, in the next four years. Thereafter, the dividend will increase by 4% per year in perpetuity. Calculate NEWER’s expected dividend for t = 1, 2, 3, 4 and 5. The required rate of return for NEWER stock is 14% compounded annually. What is NEWER’s stock price? The second stock is OLDER Inc. OLDER Inc. will pay its first dividend of $10.00 three (3) years from today. The dividend will increase by 30% per year for the following four (4) years after its first dividend payment. Thereafter, the dividend will increase by 3% per year in perpetuity. Calculate OLDER’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7 and 8. The required rate of return for OLDER stock is 16% compounded annually. What is OLDER’s stock price? Now assume that…arrow_forwardProblem Three (15 marks) You are an analyst in charge of valuing common stocks. You have been asked to value two stocks. The first stock NEWER Inc. just paid a dividend of $6.00. The dividend is expected to increase by 60%, 45%, 30% and 15% per year, respectively, in the next four years. Thereafter, the dividend will increase by 4% per year in perpetuity. Calculate NEWER’s expected dividend for t = 1, 2, 3, 4 and 5. The required rate of return for NEWER stock is 14% compounded annually. What is NEWER’s stock price? The second stock is OLDER Inc. OLDER Inc. will pay its first dividend of $10.00 three (3) years from today. The dividend will increase by 30% per year for the following four (4) years after its first dividend payment. Thereafter, the dividend will increase by 3% per year in perpetuity. Calculate OLDER’s expected dividend for t = 1, 2, 3, 4, 5, 6, 7 and 8. The required rate of return for OLDER stock is 16% compounded annually. What is OLDER’s stock price? Now…arrow_forwardYou are considering a 10-year, $1,000 par value bond. Its coupon rate is 11%, and interest is paid semiannually. Bond valuation Years to maturity 10 Par value of bond $1,000.00 Coupon rate 11.00% Frequency interest paid per year 2 Effective annual rate 8.78% Calculation of periodic rate: Formulas Nominal annual rate #N/A Periodic rate #N/A Calculation of bond price: Formulas Number of periods #N/A Interest rate per period 0.00% Coupon payment per period #N/A Par value of bond $1,000.00 Price of bond #N/Aarrow_forward
- How much do investor psychology and market sentiment play into stock price movements? Do these emotional reactions having a bigger impact on short-term swings, or do they also shape long-term trends in a meaningful way?arrow_forwardExplain The business of predatory tax return preparation, including: How they deceive the working poor,The marketing tactics the preparers use, and Other than paying high fees, what negative impact can the use of these unqualified and unregulated preparers have on the taxpayer?arrow_forwardExplain the changes in tax return preparation you would like to see in Alabama, based on what has been successful in other states.arrow_forward
- Explain the understanding (or misunderstanding) of the working poor with tax return preparation within one page report.arrow_forwardExplain the regulations or requirements for tax return preparers in Alabama.arrow_forwardquestion 1. Toodles Inc. had sales of $1,840,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $1,180,000, $185,000 and $365,000 respectively. In addition, the company had an interest expense of $280,000 and a tax rate of 35 percent. (Ignore any tax loss carry-back or carry-forward provisions.)Arrange the financial information for Toodles Inc. in an income statement and compute its OCF?Question 2 Anti-Pandemic Pharma Co. Ltd. reports the following information in its income statement: Sales = $5,250,000;Costs = $2, 173,000;Other expenses = $187,400; Depreciation expense = $79,000; Interest expense= $53,555; Taxes = $76,000; Dividends = $69,000. $136,700 worth of new shares were also issued during the year and long-term debt worth $65,300 was redeemed.a) Compute the cash flow from assetsb) Compute the net change in working capitalQuestion 3Footfall Manufacturing Ltd. reports the following financial information at the end of the current year:…arrow_forward
- Accrued Interest PayableCompute the interest for December accrued on each of the following notes payable owed by Riff-Raff'n Yell Inc., on December 31: Day of Calendar: 1 Lender: New Age Principal: $10,000 Interest Rate: 5% Term (Days) 120 Day of Calendar: 8 Lender: Wyvern Tavern Principal: $8,000 Interest Rate: 6% Term (Days) 90 Day of Calendar: 17 Lender: Cedar Tree Principal: $15,000 Interest Rate: 4% Term (Days) 90 Note: Use 360 days for calculations and round to the nearest dollar. Riff-Raff'n Yell, Inc. Lender (in alphabetical order) Accrued Interest Cedar Tree Answer 1 New Age Answer 2 Wyvern Tavern Answer 3arrow_forwardQuestion Footfall afacturing pers The following fancial information at the end of the current years Inventory turnover ratio Fixed accetturnover ratio bot to assets ratia set profit ang ross profit margin the given information to fill at the templates for income statement and balance sheet geb In Statement of Footfall Manufacturing Ltd. for the year ending RELEASED BY THE CL MOME2003, FEBRUARY 9, 3005 Sales December 31, 20 Cast of other expec Earnings befo Camings afterarrow_forwardTreasury securities are issued and backed by the U.S. government and, therefore, are considered to be the lowest-risk securities on the market. As an investor looking for protection against inflation, you are considering the purchase of inflation-adjusted bonds known as U.S. Treasury Inflation-Protected Securities (TIPS). With these securities, the face value (which is paid at maturity) and the bond interest rate (which is paid semiannually) is regularly adjusted to account for inflation. However, for this problem only, assume the semi-annual interest payment (called the bond dividend) remains the same. You purchased a 10-year $10,000 TIPS bond with dividend of 4% per year payable semiannually (i.e., $200 every 6 months). Assume there is no inflation adjustment for the first 5 years, but in years 6 through 10, the bond face value increases by $850 each year. You use an expected investment return of 11% per year compounded semiannually. NOTE: This is a multi-part question. Once an…arrow_forward
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