Accounting Information Systems
Chapter Exam Questions
Course Introduction
Accounting Information Systems explores the integration of accounting principles with information technology to enhance business processes and decision-making. The course covers the design, implementation, and management of computerized accounting systems, internal controls, data security, and the role of information systems in financial reporting. Students will gain practical experience with accounting software and learn how to analyze, document, and audit information systems to ensure accuracy, reliability, and compliance. Emphasis is placed on understanding how technology transforms traditional accounting functions and supports organizational objectives.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 3rd Australian Edition by Charles Horngren
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Page 2
Chapter 1: Management Accounting in Context
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Q1) Although a budget is an important planning tool,it is arguably more powerful as a ________ tool.
A)strategic
B)tactical
C)operational
D)control
Answer: D
Q2) What competitive advantage could a company obtain from a successful cost management program?
Answer: There are three broad outcomes from a successful cost management program:1)costs are reduced with no loss in customer value.In this scenario,a company might gain a competitive advantage by lowering its price with no loss in profit,or maintain the same price and increase profit;2)customer value is increased with no change in costs.This scenario might increase customer satisfaction resulting in increased customer loyalty and perhaps increase the overall demand for the product;3)customer value might be increased while costs are reduced simultaneously.This scenario would result in the benefits described in both 1)and 2).
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3
Chapter 2: Different Costs for Different Purposes
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Q1) A product cost is the sum of the costs assigned to a product for a specific purpose.
A)True
B)False Answer: True
Q2) Absorption costing is required by GAAP (Generally Accepted Accounting Principles)for external reporting.
A)True
B)False
Answer: True
Q3) If a worker is paid for 8 hours,but is idle for 1 of those 8 hours,the 1 hour of idle time would be considered a component of direct labour.
A)True
B)False Answer: False
Q4) Unit costs are found in all areas of the value chain.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Determining How Costs Behave
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Sample Questions
Q1) A 'learning curve' is a function:
A)that increases at a greater rate as workers become more familiar with their tasks.
B)where unit costs increase as productivity increases.
C)that measures the decline in labour-hours per unit due to workers becoming better at a job.
D)that is linear.
Answer: C
Q2) The smaller the residual term,the:
A)steeper the slope of the cost function.
B)weaker the relationship between the cost driver and costs.
C)stronger the relationship between the cost driver and costs.
D)gentler the slope of the cost function.
Answer: C
Q3) What is the cost function?
A)y = $4875 + $5.25X
B)y = $43 191 + $0.19X
C)y = $41 900 + $0.23X
D)y = $2430 + $4.28X
Answer: D
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Page 5
Chapter 4: Costvolumeprofit Analysis
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Q1) To incorporate income tax into cost-volume-profit calculations,managers should use:
A)taxable income.
B)profit after deducting depreciation and taxation.
C)before tax profit.
D)after tax profit.
Q2) In CVP analysis,focusing on target net profit after tax rather than operating profit before tax:
A)will increase the break-even point.
B)will not change the break-even point.
C)will decrease the break-even point.
D)does not allow calculation of break-even point.
Q3) What is the budgeted revenue for the month assuming that Dr Hunter plans to perform this procedure 200 times?
A)$400 000
B)$200 000
C)$300 000
D)$100 000
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Chapter 5: Estimating the Cost of Producing Services
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Q1) Variation time as the measure of the time that a molecule in a production process takes 'from when the molecule is ready to have value added to it until it is a part of the finished product'.
A)True
B)False
Q2) In what type of resource-cost pool do all of the costs have the same or a similar cause-and-effect relationship with a single cost driver?
A)Heterogeneous
B)Homogeneous
C)Innovative
D)Advanced
Q3) An activity-cost driver is used to allocate costs from a resource-cost pool to activity-cost pools.
A)True
B)False
Q4) Managers use a job-costing system when the output comprises many homogenous (identical or almost identical)units.
A)True
B)False
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Chapter 6: Estimating the Costs of Products and Inventory
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Q1) The reliability of the job-cost records depends on the reliability of the inputs.
A)True
B)False
Q2) At the end of the year,costs allocated using _______ costing will not,in general,equal actual costs incurred.
A)target
B)actual
C)budgeted
D)normal
Q3) Problems with accurate costing occur when:
A)incorrect job numbers are recorded on source documents.
B)a computer screen requests an employee number before that employee is able to work on information related to a specific job.
C)bar coding is used to record materials used on the job.
D)All of these answers are correct.
Q4) When variable costing is used,an income statement will show gross margin.
A)True
B)False
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Chapter 7: Target Costing, Managing Activities and Managing Capacity
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Q1) ________ analysis is a fundamental tool in value engineering.
A)Activity
B)Value
C)Strategic
D)Hybrid
Q2) For manufacturing firms,product costs are generally locked in during the manufacturing stage.
A)True
B)False
Q3) Capacity costs:
A)don't provide a useful planning tool for non-production businesses.
B)cannot be used with activity-based costing.
C)are difficult to estimate.
D)All of these answers are correct.
Q4) What is the target operating profit?
A)$1 242 000
B)$1 200 000
C)$2 400 000
D)$2 300 000
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Chapter 8:
Activity-Based Management and Activity-Based Costing
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Sample Questions
Q1) Using pages printed as the only overhead cost driver,what is the manufacturing overhead cost estimate for Kidscare Books during 2018?
A)$2500
B)$3000
C)$2100
D)$1750
Q2) If the administrative expense of $125 000 is allocated on the basis of number of employees,the amount allocated to the Truck Rental Department would be:
A)$93 750
B)$75 000
C)$125 000
D)$31 250
Q3) Once a cost pool has been established,it should not need to be revisited or revised.
A)True
B)False
Q4) Department-costing systems are a further refinement of ABC systems.
A)True
B)False
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Chapter 9: Pricing and Customer Profitability
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Q1) Managers who want to calculate the ________ costs of serving customers must allocate all corporate,division and distribution-channel costs to customers.
A)target
B)full
C)corporate
D)distribution
Q2) Customers making large contributions to the profitability of the company should:
A)not be offered the volume-based price discounts offered to less profitable customers.
B)receive a higher level of attention from the company than less profitable customers.
C)be charged higher prices for the same products than less profitable customers.
D)be treated the same as other customers because all customers are important.
Q3) Which item is NOT a category in the customer-cost hierarchy?
A)Distribution-channel costs
B)Organisation-sustaining costs
C)Customer output unit-level costs
D)Customer batch-level costs
E)None of the above.
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11
Chapter 10: Decision Making and Relevant Information
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Q1) Full costs of a product are relevant for one-time-only special order pricing decisions.
A)True
B)False
Q2) A decision model is a formal method for making a choice,frequently involving both quantitative and qualitative analyses.
A)True
B)False
Q3) Management should focus on per unit costs when deciding whether to discontinue a product or not.
A)True
B)False
Q4) If Option 1 costs $100 and Option 2 costs $80,then the differential cost is $180.
A)True
B)False
Q5) Full costs of a product include variable costs,but not fixed costs.
A)True
B)False
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Chapter 11: Budgeting, Management Control and Responsibility Accounting
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Sample Questions
Q1) Science-based carbon-reduction targets are stretched to:
A)spur innovation.
B)arrest the development of new technologies and business models.
C)minimise exposure to foreign currency fluctuations.
D)evaluate performance more subjectively.
Q2) The manager of a hobby store that is part of a chain of stores is MOST likely responsible for a(n):
A)cost centre.
B)profit centre.
C)revenue centre.
D)investment centre.
Q3) What is budgeted cost of goods sold for 2019?
A)$345 600
B)$432 000
C)$480 000
D)$311 040
Q4) If we increase the selling price of our product,we can always expect an increase in total revenue.
A)True
B)False
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Chapter 12: Flexible Budgets, Direct Cost Variances and Management Control
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Q1) Some of the individual variances are favourable (F)and some variances are unfavourable (U).
A)True
B)False
Q2) What is the static-budget variance of revenues?
A)$40 000 favourable
B)$4000 unfavourable
C)$40 000 unfavourable
D)$4000 favourable
Q3) The __________ budget uses the expected per unit costs found in the standard cost sheet,so the only difference to the static budget is that it is based on the actual sales volume.
A)cost
B)flexible
C)direct materials
D)direct labour
Q4) A flexible budget is calculated at the start of the budget period.
A)True
B)False
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Chapter 13: Flexible Budgets, Overhead Cost Variances and Management Control
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Q1) A $5000 unfavourable flexible-budget variance indicates that:
A)the standard variable manufacturing overhead exceeded the flexible-budget amount by $5000.
B)the actual variable manufacturing overhead exceeded the flexible-budget amount by $5000.
C)the flexible-budget amount exceeded actual variable manufacturing overhead by $5000.
D)the flexible-budget amount exceeded standard variable manufacturing overhead by $5000.
Q2) Generally Accepted Accounting Principles require that unitised fixed manufacturing costs be used for:
A)pricing decisions.
B)external reporting.
C)costing decisions.
D)All of these answers are correct.
Q3) What is the amount of fixed overhead allocated to production?
A)$57 000
B)$54 300
C)$60 000
D)$100 000
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Chapter 14: Allocation of Support-Department Costs,
Common Costs and Revenues
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Q1) Complete reciprocated costs:
A)include the support department's costs plus any interdepartmental cost-allocations.
B)are used for step-down allocations.
C)are less than the support department's own costs.
D)are also referred to as budgeted costs.
Q2) A disadvantage of the _________ method is that it ignores information about reciprocal services provided between Support departments and can therefore lead to inaccurate estimates of the cost of operating departments.
A)indirect
B)step-down
C)reciprocal
D)direct
Q3) Which of the following is an example of a revenue object?
A)Division of a company
B)Customer
C)Specific product
D)All of these answers are correct.
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Chapter 15: Strategy Formation, Strategic Control and the Balanced Scorecard
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Sample Questions
Q1) Parramatta Company has been aggressively developing various types of financial and non-financial measurement schemes to help with the evaluation of its eel processing facility.It appears that the decision-making processes of some of the managers are geared for their department's benefit,leading to the detriment of the organisation as a whole.
Required: What changes in the evaluation system could the company make to help minimise the suboptimisation of the managers' decision-making processes?
Q2) Engineered costs may be variable or fixed in the short-run.
A)True
B)False
Q3) The price-recovery component measures the increase in operating profit from selling more units of a product.
A)True
B)False
Page 17
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Chapter 16: Quality, Time and the Balanced Scorecard
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Q1) How much will internal failure costs change if the internal product failures are reduced by 50% with the new procedures?
A)$38 250 decrease
B)$750 000 decrease
C)$76 500 decrease
D)$500 000 decrease
Q2) Customer-response time is a measure of how long it takes for the customer to return a call.
A)True
B)False
Q3) The average waiting time is very sensitive to the shrinking of _________ capacity.
A)used
B)bottlenecked
C)time-driven
D)unused
Q4) Without non-financial quality measures,quality problems might not be identified until it is too late.
A)True
B)False
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Chapter 17: Inventory Management, Just-In-Time and Simplified Costing Methods
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Sample Questions
Q1) The freight and transportation costs on goods acquired from suppliers are generally included in purchasing costs.
Variant question
A)True
B)False
Q2) The major relevant costs in maintaining safety stock are:
Variant question
A)ordering costs and stockout costs.
B)stockout costs and carrying costs.
C)ordering costs and purchasing costs.
D)carrying costs and purchasing costs.
Q3) To determine the Economic Order Quantity,the relevant ordering costs are minimised and the relevant carrying costs are maximised.
A)True
B)False
Q4) The costs of expediting an order from a supplier in response to a stockout include the additional ordering costs,plus any associated transportation costs.
A)True
B)False
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Chapter 18: Capital Budgeting and Cost Analysis
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Q1) Supply the missing data for each of the following proposals:
\(\begin{array}{|l|c|c|c|}
\hline &\text { Proposal A } & \text { Proposal B } & \text { Proposal C } \\
\hline \text { Initial investment } & (\mathrm{a}) & \$ 62900 & \$ 226000 \\
\hline \text { Annual net cash inflow } & \$ 60000 & \text { (c) } & (\mathrm{e}) \\
\hline \text { Life, in years } & 10 & 6 & 10 \\
\hline \text { Salvage value } & \$ 0 & \$ 10000 & \$ 0 \\
\hline \begin{array}{l}
\text { Discounted payback period in } \\
\text { years }
\end{array} & \text { (b) } & \text { (d) } & 5.69 \\
\hline \text { Internal rate of return } & 12 \% & 24 \% & (\mathrm{f} )\\
\hline
\end{array}\)
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Chapter 19: Management Control Systems, Transfer Pricing and
Multinational Considerations
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Q1) Market-based transfer prices are ideal in perfectly competitive markets when there is idle capacity in the selling division.
A)True
B)False
Q2) Which on the following is a benefit of using a market-based transfer price?
A)Profits of the division receiving the products are sacrificed for the overall good of the corporation.
B)Economic viability and profitability of each division can be evaluated individually.
C)Profits of the transferring division are sacrificed for the overall good of the corporation.
D)None of these answers are correct.
Q3) It is possible to increase the overall after-tax profit of a multinational corporation by adjusting transfer prices.
A)True
B)False
Q4) Achievement of a goal is the definition of 'effort'.
A)True
B)False
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Chapter 20: Performance Measurement, Compensation
and Multinational Considerations
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Sample Questions
Q1) What were the sales for the Tiller Division?
A)$4 800 000
B)$6 000 000
C)$7 750 000
D)$7 500 000
Q2) What is the Digger Division's return on investment?
A)0.25
B)0.30
C)0.60
D)0.45
Q3) Current cost return on investment is a better measure of the current economic returns from an investment than historical cost return on investment.
A)True
B)False
Q4) What is the Alpha Division's return on sales?
A)0.25
B)0.42
C)0.60
D)0.75
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Chapter 21: Measuring and Reporting Sustainability
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Q1) The term used to describe the ongoing learning that an organisation must undertake to achieve sustainability is:
A)life-cycle analysis.
B)environmental management.
C)corporate social responsibility.
D)learning for sustainability.
Q2) Which of the following have been identified as 'waste' in the Toyota production system?
A)Making defective products
B)Waiting time
C)Holding too large a quantity of inventory
D)All of the above are considered waste.
Q3) A 'cap and trade' approach to greenhouse gas control is a 'stick' rather than a 'carrot' approach.
A)True
B)False
Q4) The International Standards for Environmental Management Systems are ISO 14001 and ISO 14004.
A)True
B)False
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