- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2014
B.B.M. – V Semester
ACCOUNTING AND INFORMATION SYSTEMS (ELECTIVE P1: ACCOUNTS)
Duration: 3 Hours Max. Marks: 100
SECTION – A
- Answer ALL the questions. Each carries 2 marks. (10 x 2=20)
- What are the components of IS? Why it is important?
- What do you mean by Online Batch TPS? Give an example?
- ‘Data is usually not useful until subjected to a value added processes. Why?
- What is Information System Audit? What are the major areas of its activity?
- Write any four problems of auditing in an EDP environment?
- What is C 2 B Ecommerce?
- What do you mean by internet security?
- State any two objectives of trial balance.
- In Tally, how do you treat carriage outwards?
- Write the steps for creating a multiple ledger in Tally.
SECTION – B
- Answer any FOUR Each carries 5 marks. (4×5=20)
- What are the elements of a system? Can you have a visible system without feed back? Explain.
- Explain the different audit approaches?
- Ecommerce has given birth to interactive marketing. What are your comments on this?
- Explain cryptography? What is the working of public-key encryption?
- Distinguish between Manual Accounting System and Computerized Accounting System.
- Explain the steps involved in creating a Company in Tally Accounting Package.
SECTION – C
III) Answer any THREE questions. Each carries 15 marks. (3×15=45)
- Explain Accounting Information System and its role in modern business?
- Explain in detail the objectives of Information System Audit?
- What is EFT? Explain the credit and debit transfer through ACH? Explain the
clearing information through value exchange system?
- Explain the following:
Firewall
Digital Certificates
SET
- Create necessary journal, ledgers (specify under which group you have to create the ledger) and pass the entries into the respective vouchers (specify voucher button) in the books of “Star Software” with date and amount.
1/4/2014 Mr. Manohar started STAR SOFTWARE business with cash Rs.500000
2/4/2014 He opened a bank account with ICICI for Rs.100000
3/4/2014 Purchased Plant and Machinery for Rs.5000
5/4/2014 Purchased goods from Mr. Ram Mohan Rs.4000
8/4/2014 Goods returned to Mr.Ram Mohan Rs.1000
9 /4/2014 Paid Mr.Ram Mohan in full settlement Rs.2800.
12/4/2014 Withdrew cash for personal expenses Rs.1200
14/4/2014 Paid carriage on goods purchased Rs.800
15/4/2014 Paid commission Rs.700
18/4/2014 Paid rent Rs.400
22/4/2014 Sold goods to Mr.Antony for cash Rs.2000
26/4/2014 The following payment has been made by cheque
Audit fees Rs.2000, Factory lighting Rs.500, Directors fees Rs.1000, Salaries Rs.5000
SECTION – D
- IV) Case study- Compulsory questions. (15 marks)
- You are the owner of Rob’s Concierge Service, a small business that provides personal services , such as house sitting, dog walking, and deliveries ,for busy professionals. You are considering in creating a Web site and conducting business online. Describe how a web site could help you in exploit the inherent advantages of an online business – that is, how it might help you expand your market , create greater visibility for your business , and maximize your relationship with your customers.
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- JOSEPHS COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2014
B.Com /B.B.M. – V Semester
ACCOUNTING AND INFORMATION SYSTEMS(Elective A/c)
Answer Key
- Machine Side->H/w, Programs
Human side->People,Procdeures
Interface->Data
These transforms data resources into information products.
- The system that groups a number of transactions for later processing.
Ex: A number of hourly work slips may be collected during the day and gathered into a batch. This batch will be input into the computer system at the end of the day and processed ,obtain reports.
3.Data is raw, unsummarised , unanalyzed facts.Data has to be processed and becomes information.Information is a resource.So, data should not be useful until subjected to a value added process.
- Systematic independent examination of the information systems and to check whether the objectives are achieved or not.
Gathering Information
Comparison of Information
Asking why
5.Absence of supporting vouchers
Vulnerability to manipulation
Lack of visible auditing sequence
Garbage in Garbage out
Storage problem
Coding problem
Computer virus in frauds
- Consumer-to-business (C2B) is a business model in which consumers (individuals) create value and businesses consume that valueC2B model, also called a reverse auction or demand because this enables buyers to name or demand their own price, which is often binding, for a specific good or service. The website collects the demand bids then offers the bids to participating sellers.
- Security is the protection of any computer device, communication device or network from unauthorized access to data, viruses etc.
- To check the arithmetical accuracy of books of account.
To have all ledgers balances at one place.
To facilitate the preparation of financial statements.
9.carriage outwards :ledger creation under ->Indirect expenses
Carriage outward a/c dr
To cash a/c Payment voucher(f5)
- Gateway of Tally ->Accounts Information->Ledgers->Multiple Ledgers->create
Section B
- “System is an orderly grouping of interdependent components linked together according to a plan to achieve a specific objective.”
- Outputs (goods/services/information) and inputs (material/men)
- Processor(s)- total/partial transformation.
- Control- Guides the system.
- Feedback- Measures output against standard.
- Environment- In which organization operates.
- Boundaries and Interface.
No. We cannot have a visible system without feedback Because feedback leads to control.
12.
1.Auditing around the computer
Checking the correctness of the o/p data without going into the details.
Approach can be useful in the following circumstances:
*system is simple, logic is straight forward and clear.
*Risk is due to material errors/ irregulations/ ineffectiveness in operations.
*used when the application system uses a generalized package (SAP),that is well tested and used by many users.
*Auditors should ensure that the organization has not modified the package and adequate control exists over the source code and documentation to prevent unauthorized modification of the package.
*Not suitable for complex system.
2.Auditing through the computer
*knowledge of OS,H/W, technical expertise.
*Here,computer programs and the data constitute the target of IS audit.
*Continuous testing on the computer system,OS,S/w and data.
*Auditor can use computer to test logic, controls the system and records produced by the system.
*Understanding the internal working of the system.
3.Auditing with the computer
*The data from the auditee’s computer system are retrieved to an independent environment.
*Such data is checking
*Checking computer system and its programs.
13.
Planning, Promotion and sale of existing products in the existing or new markets (New products).
Interactive Marketing: This is a customer focused marketing. Two way communications is possible. That is, customer can be a member of while planning, developing and after sales service of the product.
Ex: Internet chat, Discussion groups, Questionnaires, E-mail correspondence.
- Cryptography
Greek word-Kryptos(Hidden)
Art and methodology involved in creating cryptograms
Cryptogram->Writing a message which appears to be meaningless to those who have no means or we need a key to extract the original text from the cipher text.
2Types of Cypher systems.
1.Transposition->Rearrangement
2.Substitution->Replacement
2Methods
1.Private key
2.Public key
Public key(Asymmetric Encryption)
User have 2 keys
1.Private
2.Public
A person uses a program to generate two keys.
Key is a mathematically created value which is difficult to reverse.
1.Private 2.Public(Telephone Index)
>To send msg,Check the public key and send the msg.Owner decrypts the msg with his private key.
- Tracing of any entry in the journal or ledger is easy in manual accounting because data recorded are visible. In Computerized accounting it is difficult.
Risk of manipulation is less in Manual accounting. In computerized accounting system data recorded is subject to the risk of manipulation.
In the manual accounting system , accounting data cannot be adjusted to produce various special statements and reports. But under computerized accounting data can be easily adjusted to generate or prepare special statements and reports.
The cost of preparing statements and reports is high in manual accounting but it is low in computerized accounting in the long run.
The reports prepared under manual accounting system are mostly general purpose reports. But under computerized accounting, a number of special reports can be prepared to meet the requirements of different mangers
16. Directory
The data path where you want the company to be created is specified in the Directory field.
Name
Enter the name of the company whose books are being opened. If you are a professional accountant and are maintaining the books of your clients, give the Client Company’s name.
Mailing Name and Address
In addition to the Company Name, Tally.ERP 9 provides the facility to enter the Mailing Name field. It displays the Company Name by default. You may change it as required, if the mailing name is different from the Company Name.
Statutory compliance for
Select the Country from the List of Countries. The Statutory Features and Base Currency Symbol are enabled in accordance with the country selected..
State
You can select the appropriate state from the predefined list.
PIN Code
Specify the PIN Code (Postal Index Number) of the specified address.
Telephone
Enter the Telephone number.
Mobile No
Enter the mobile number of the company.
E-mail Address
Enter the E-mail address that will be used to e-mail documents, reports and data from Tally.ERP 9.
Currency
Currency symbol is the symbol of the base currency, that is, the currency that will be used to maintain the books of account.
The symbol ` appears by default in case India for India/SAARC Companies and the field is left blank for International Companies.
Maintain
Tally.ERP 9 displays a drop down for the Type of Company with two options Accounts only and Accounts with Inventory
Select Accounts only if you do not have any inventory transactions (suitable for professionals and corporate offices).
However, at a later date (if required) you can choose to alter the information as Accounts-with-Inventory. Select Accounts-with-Inventory, to maintain both financial accounts and inventory.
Financial Year From
In most countries, the books of accounts of a company are maintained for a stipulated period like, 12 months, 15 months, and so on. This stipulated period is referred to as the Financial Year.
Books Beginning From
Tally.ERP 9 presumes that you wish to maintain books from the beginning of the financial year. Hence, Tally.ERP 9 displays the date given in Financial Year From field automatically.
TallyVault Password
TallyVault is an enhanced security system, which allows for encryption of the company data. Encryption involves converting normally accessible Tally information into unrecognisable information, which can only be reconverted by authorised persons.
It can be observed that only the second condition is applicable to our example. Since length is 9, that is, greater than 8 but lesser than 12, the score is rounded off from 4 to 3.
Therefore, as per this example, the net score is 3 and hence the strength attributed to the password is Good.
Use Security Control?
Set this to Yes, if you want to initiate a password-protected system to control access to Tally.ERP 9 data. Else, set this to No.
Use TallyAudit Features
Tally Audit allows the administrator or an auditor profile user to track changes in accounting information. If you wish to use this facility, select Yes
Base Currency Information
The Base Currency Information is found in the bottom frame of the Company creation Screen. Base Currency is the currency in which your accounts would be maintained.
Company ACCEPT/REJECT screen YES –Company is created.
- A CBIS which collects, store and process the financial and accounting data and provides statistical report for decision making.
Used by internal and external parties.
Functions of an AIS
- Collect and Store Data
- Record Transactions
- Safeguard Organizational assets
- Documentation of business activities
- Effective segregation of duties
- Accounting Information System
->Double entry bookkeeping concept
->records flow of fund/P&L/BS
1.Online Accounting System
*Internet technologies
*Order processing/inventory control/receivables & payments
*direct transaction
2.Order processing/Sales order processing
*process data for sales analysis.
*Recording and screening customer order
*Status of customer order.
- Inventory Control
*Changes in the inventory
*Inventory status report
*Inventory level
4.Accounts Receivables
*Prompt customer payments
*helps to control the credit extended and collection of money owned.
- Accounts Payable
*Purchases from &payments to suppliers
*Good relationships/good credit standing/secure discounts offered.
6.Payroll
*Data from employee time cards
*Prompt payment to employees, reports to mgt., & Govt.agencies.
7.General Ledger
*Better financial control and management reports
*Less labor/lower costs.
- Objectives of Information System Audit
1.Safeguarding of information system(assets and resources)
Good system for internal control
Protection to the hardware ,software etc.
Information system auditor has to review the physical securities, adequacy and internal control.
Information system must be protected against :
Accidental Hazardous: Natural destruction, earth quake etc..
Intentional Hazardous: Virus
2.Maintenance of data integrity
It includes safeguarding of information(a/c record,backups) against unauthorized addition,deletion,modification and alteration.
Data entry is important.
Features
Accuracy
Confidentiality
Completeness
Reliabilty
Availability
Timeliness
Effectiveness
Up to date
3.Maintenance of system effectiveness
It provides input to decide (when/what/how) the system should improve.System effectiveness is a ratio of the actual o/p to the std. output.
If it is >100% effectiveness is achieved
Else ineffective.
Improved task accomplishments
Improved quality
Operational effeciveness
Technical effectivess
Economic effectiveness
Ensuring system efficiency
Resources must be utilized
Use minimum resource to achieve goal.
Ratio of output to the input is known as efficiency.
Efficient/inefficient
The assessment of the capabilities of the h/w and s/w against the work load is important.
Automation should deliver the planned result with less consumption of computer h/w , s/w ,computer operations and computer personnel.
5.Other objectives
*Identify the risks that the organization is facing and priortize the risks.
* Implementation of IT in the organization as per the security policy, approved by the BOD.
- Verify whether proper security policies /procedures have been formulated and implemented regarding duties of the system administrator, and system maintainers.
*contribute effectively towards minimization of computer abuses and crimes.
*suggest improvements in the security controls for the IS.
*Act as an advisor to the management for improving security and IT implementations.
*Verify whether the IS procedures and policies have been formulated and implemented for the entire organization.
*Check professional standards and ethics to ensure quality and consistency of audit work.
- Electronic funds transfer (EFT) is the electronic exchange, transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems.
The term covers a number of different concepts;
- Cardholder-initiated transactions, using a payment card such as a credit or debit card
- Direct deposit payment initiated by the payer
- Direct debit payments, sometimes called electronic checks, for which a business debits the consumer’s bank accounts for payment for goods or services
- Wire transfer via an international banking network
- Electronic bill payment in online banking, which may be delivered by EFT or paper check
- Transactions involving stored value of electronic money, possibly in a private currency.
Explain each.
20
Firewall
->It enforces an access control policy b/w two n/w.
->Pair of mechanism
Block Traffic
Permit Traffic
Structure
1.Request from client
2.Validate the request
3.Cache/Internet
4.Cache-Sent to the client
5.Internet:Connect to server
6.Request to server
7.Response from server.
8.Send to client.(Diagram)
Digital Certificate
*An attachment to an electronic message used for security purpose
*It is a method of verifying the identity of the person/corporation.
*If an individual is wishing to send an encrypted message,applies for a digital certificate from the CA.
*CA issues an encrypted digital certificate containing the applicants public key and other identification information.
*It should include the digital signature of the certificate issuing authority.
Ex:X.509
SET
Open standard for protecting and ensuring the authenticity of electronic transactions.
SET is not itself a payment system.It is a set of security protocols and formats enabling users to employ the existing credit card payment infrastructure on an open n/w such as internet.
3 services
1Providing a secure communication channel.
2.Providing a trust by the use of digital certificate.(Attachment to an electronic message)
3.Ensuring privacy because the information is available to parties when and where necessary.
Establishing SET
Assume the customer is having SET enabled browser and transaction provider (bank,Store)is having SET enabled server.
A customer opens bank a/c
Receives a digital certificate.(public key with expiry date)
The third party merchant also receives a certificate from bank.(merchant ppl key ,bank public key)
Customer places an order over a webpage.
The customer browser receives and confirms the merchant is valid.
Browser sends the order info.This msg encrypts with the merchants public key.The payment info which is encrypted with the bank public key.(which can not be read by the merchant).Info that ensures that the payment can be for the particular order.
Merchant verification by the customer by checking the digital signature on the customer certificate.This may be done by referring the certificate to the bank/to a third party.
The merchant sends the order message along to the bank.This includes the bank’s public key and customer payment information& the merchant certificate.
The bank verifies the merchant and the message.The bank uses the digital signature on the certificate with the message and verifies the payment part.
The bank digitally signs &send authorization to the merchant who can fill the order.
21.
List of ledgers and group head
Cash – Default
Capital – capital
Bank – bank
Plant & machinery Fixed asset
Purchases Purchases
Mr.Ram Mohan Sundry Creditor
Return Outward Purchase a/c
Discount Received Indirect Income
Drawings Capital
Carriage inwards Direct Expenses
Commission Paid Indirect Expenses
Rent Paid Indirect Expenses
Sales Sales
Audit fees Indirect Expenses
Factory lighting Direct Expenses
Directors fee Indirect Expenses
Salary Indirect Expenses
Following is the journal Vouchername, voucher button
- Receipt-F6
Cash a/c dr 500000
To capital
- Contra – F4
Bank a/c Dr 100000
To cash
3.Payment- F5
Plant&Machinery a/c Dr 5000
To Cash
- Purchases a/c dr 4000
To Mr.Ram Mohan(Purchase voucher f9)
- Mr.Ram Mohan a/c dr. 1000.
To Return Outward (Journal F7)
- Mr.Ram Mohan a/c dr 3000 (payment a/c f5)
To cash 2800
To discount 200
7Drawings a/c dr 1200(payment f5)
To Cash
8.Carriage inwards a/c dr 800(payment f5)
To cash
9.Commission a/c dr 700
To cash (f5)
- Rent a/c dr 400(f5)
To cash
11.Cash a/c Dr 2000
To sales 2000 Receipt F6)
12.Audit fees a/c dr 2000
Factory lighting a/c dr 500
Directors fees a/c dr 1000
Salaries a/c dr 5000
To bank 7500 (F5)
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