Smith Corporation Has Numerous Customers

question 1

Multiple Choice

Smith Corporation has numerous customers. Customer files are kept on disk storage. Each account in the customer file contains name, address, credit limit, and account balance. The auditor wishes to test these files to determine whether credit limits are being exceeded. The best procedure for the auditor to follow would be to:

• A) Develop test data that would cause some account balance to exceed the credit limit and determine if the system properly detects such situations.
• B) Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.
• C) Require a printout of all account balances so they can be manually checked against the credit limits.
• D) Request a printout of a sample of account balances so they can be individually checked against the credit limits.

---

Definitions:

Retirement Fund

A Retirement Fund is a pool of funds contributed by employees, employers, or both for the future financial security of retirees.

Withdrawals

The act of taking money out of an account which can affect the account balance and interest calculations.

Monthly Payments

Regular payments made every month, commonly associated with loans, mortgages, or subscription services.

Loan

A sum of money that is borrowed, typically from a financial institution, which is expected to be paid back with interest.