Master of Accountancy
Comprehensive Final Exam
Part I
Monday, December 7, 2009
ALB 204
4:00-8:00 PM
Exam Procedures

Students will use the laptops provided to take the exam. No notes, books, electronic
files, or electronic gadgets may be brought into the exam. Students may bring drinks,
ear plugs, and a pen or pencil. The department will provide scratch paper for those
students who wish to make notes during the test.

Students are welcome to get a drink, use the restroom, or take a short walk during the
exam period but will not receive extra time for these interruptions. Your answers
should be submitted to the department administrative assistant no later than the end of
each exam period.

Anonymity: The exam questions will be graded anonymously. In other words, the
graders will not know whose exam they are grading. To aid with this process, you will
be assigned a test number when you arrive for your exam. Only the test administrator
will know which number corresponds to which student. You should use only your test
number, instead of your name, when saving and writing all of your answers.

Please note: Your answers should be saved in separate files. The file name should be
‘TestNumber#_QUESTION’. For example: ‘Test10_Auditing’ or ‘TestNumber10_Theory’.
Each file should contain a header with your test number and the page number in the upper right
hand corner.
Exam #
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Master of Accountancy
Comprehensive Final Exam
Fall 2009
Question 1. Comparative Accounting Theory
Your comprehensive exam for Accounting Theory consists of two parts. First, you will answer any
two (2) of the short-answer questions. Please keep your answers between one (1) and two (2)
paragraphs. Your answers to the short-answer questions will be graded for content only, so
please do not spend excessive time editing your writing.
Second, you will answer any one (1) of the essay questions. Your answer should be long enough
to cover the topic, but you will be penalized for including superfluous information. While
demonstrating knowledge is a significant portion of your grade on this question, much of your
grade on this portion of the test will be based on the quality of your writing and critical thinking,
so you may wish to leave sufficient time to edit your answers.
Your score on this question will be a weighted average of your answers to the two parts. The
first part (i.e. the short answer question) will be 1/3 of your score and the second parts 2/3 of
your score. NOTE: You must pass both parts to pass the Theory question.
To aid in the grading process, please remember to include your test ID number and the page
number in the upper right hand corner of each page. Also, make sure that you start each answer
(short questions and essay) on a new page.
Short Answer questions (answer any 2 of the following questions; please keep your answers to
1-2 paragraphs)
1. There are many incentives for managers to voluntarily disclose information instead of
being forced to do so by regulation. List one of these incentives and briefly explain how
it encourages managers to release accounting information.
2. Which historical advancement had the greatest impact on the development of
bookkeeping?
3. In one paragraph, explain why the art vs. science debate is important for the accounting
profession.
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Essay questions (answer 1 of the following questions)
1. Although we typically think of accounting as reducing information asymmetry,
accounting actually provides some of the information that creates information
asymmetry in the first place.
a. Explain how accounting serves to both increase and decrease information
asymmetry.
b. Overall, do you feel that accounting is more helpful or unhelpful in reducing
information asymmetry?
You must include at least four (4) specific examples in answering the two parts of the
question (four total, not four each), at least two of which must be from the accounting
literature (i.e. readings from 561).
2. Support or reject the following statement: “Earnings management is wrong under any
circumstances.” Your argument must include at least three (3) specific examples from
our readings this semester.
Please note: Both questions require specific examples. A specific example provides enough
detail for someone who has not taken Acct 561 to easily recognize the example.
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Question 2. Accounting Information Systems
YOU MUST ANSWER ALL PARTS OF QUESTION NUMBER ONE
1. Consider the following business setting and answer the questions listed below. The Corner
Convenience Store (CCS) is a single store, independent convenience store located in a
middle-class neighborhood of a large metropolitan area. The bookkeeper for the CCS,
Marge, works four hours a day, twenty hours a week. Her duties are to perform the
accounting functions for the business. Basically, she records all transactions of the business
after the transactions are authorized by the owner of CCS.
For expenditures on merchandise (i.e., store inventory), Marge compares the receiving
report completed by the store clerk on duty when the shipment is received to the invoice
received from the supplier. She notes any discrepancies and passes all the transactions to
the owner for review and authorization of payment to the supplier. Once the owner
authorizes payment, Marge prepares and records each check in the cash disbursement
journal and gives all the checks to the owner who signs and returns them to Marge for
mailing.
At the end of each week, Marge collects the paper timesheets prepared by the clerks and
calculates for each clerk their gross pay, deductions, taxes, and net pay. The timesheets and
pay calculations are given to the owner for review and authorization of the payroll. Upon
owner authorization, Marge prepares the paychecks for the owner to sign and distribute to
the clerks. Marge completes her own timesheet, calculates her gross pay, deductions, taxes,
net pay and prepares her check for the owner to sign.
For each shift, each clerk has his or her own identifiable deposit bag. The deposit bag is used
by the clerks to open and close their cash registrar at the beginning and end of their shift. At
the beginning of the shift, the bag contains cash needed to make change during their shift.
The clerk counts this change and enters the amount on a dated, pre-numbered cash receipts
form comparing it to the amount the store owner entered on the form when she prepared
the change and bag. At the end of the shift, the clerk counts the money in the cash register
and enters this amount on the cash receipts form. The cash, cash receipts form, and the
cash register tape are placed in the bag and deposited in the night depository in the store
office. The next work day, Marge opens each bag, counts the cash, compares this amount to
the one on the cash receipts form, and then compares both of these amounts (net of the
initial change) to the total on the cash register tape. She notes any discrepancies among
these amounts and passes all of the bag contents on to the owner. Marge then makes the
appropriate entry in the cash receipts journal.
The owner prepares and makes all the bank deposits. She also prepares all the deposit bags
used by the clerks to open and close the cash register on each shift. Once a year, the owner
hires a local CPA to audit the “books” of CCS and prepare the tax returns.
a. Comment on the quality of the internal controls used by the CCS. Make these comments in a
general context across all the different types of controls (e.g., authorization). Support your
comments using specific examples of controls (i.e., strengths) and weaknesses from the
described revenue and expenditure cycles of the CCS.
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b. What additional information, if any, do you need from the owner of CCS to fully understand
these controls (i.e., strengths) and weaknesses?
c. Suppose the owner of the CCS suggests that Marge work two additional hours a day working
as a second clerk in the mornings when the store is very busy. This would be in addition to
her current duties. Comment on whether or not you would recommend Marge work these
additional hours. Comment from the perspectives of Marge and the owner of the CCS.
Justify your answer using specifics from the CCS business processes.
d. The business processes of the CCS are all manual. Pick one of these business processes (e.g.,
revenue cycle, expenditure cycle-purchases or payroll) and discuss how information
technology could be used to automate the process and the internal controls.
YOU MUST ANSWER ANY TWO OF QUESTIONS TWO, THREE, AND FOUR
2. What is the purpose of controls? Describe the types of internal controls. How do general
information technology (IT) controls differ from application controls? Briefly describe three
unique general information technology controls.
3. Describe three methods used to document business processes and/or accounting
information systems.
4. Describe the centralized information technology (IT) organizational structure. What are the
control objectives in the use of this IT organizational structure? How do the control
objectives change when business systems are fully automated with IT?
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