contract between the seller and the transportation carrier; it shows legal ownership and responsibility

for assets in transit. 3. What are three input controls? Response: Authorization procedures Credit
check procedures Validation controls Batch controls 4. What are the three rules that ensure that no
single employee or department processes a transaction in its entirety? Response: The three rules that
ensure segregation of functions are as follows: a. Transaction authorization should be separate from
transaction processing. b. Asset custody should be separate from asset record keeping. c. The
organization structure should be such that the perpetration of a fraud requires collusion between 2 or
more individuals. 5. What is automation, and why is it used? Response: Automation involves using
technology to improve the efficiency and effectiveness of a task. Automation of the revenue cycle is
typically used to reduce overhead costs, make better credit granting decisions, and collect outstanding
accounts receivable better.

6. What is the objective of reengineering? Response: The objective of reengineering is to greatly reduce
costs by identifying and eliminating nonvalue-added tasks and by streamlining necessary existing
processes. 7. Distinguish among an edit run, sort run, and update run. Response: An edit run is the first
run; it detects most data entry errors. Only clear data progresses to the sort run. The sort run sequences
thetransaction records according to its primary key field and possibly a secondary key field. Once the
data are sorted, the update program posts the transactions to the appropriate corresponding records in
the master file. During a sequential update, each record is copied from the original master file to the
new master file, regardless of the effect on the balance. 8. How is the record’s primary key critical in
preserving the audit trail?