Accounting Information Systems Exam Review
Course Introduction
Accounting Information Systems introduces students to the design, implementation, and management of information systems that process, store, and communicate accounting data. The course explores the fundamentals of computerized accounting systems, internal controls, data security, and the integration of accounting with other business information systems. Students learn how accounting software supports decision-making, financial reporting, and compliance, as well as how to evaluate risks and ensure the integrity and accuracy of financial information within organizations. Emphasis is placed on real-world applications, case studies, and current technology trends impacting the accounting profession.
Recommended Textbook
Accounting Information Systems 7th Edition by James Hall
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17 Chapters
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Page 2
Chapter 1: The Information System: An Accountants Perspective
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96 Verified Questions
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Sample Questions
Q1) A backbone system is completely finished,tested,and ready for implementation.
A)True
B)False Answer: False
Q2) Which activity is not part of the finance function?
A) cash receipts
B) portfolio management
C) credit
D) general ledger
Answer: D
Q3) Disadvantages of the distributed data processing approach include all of the following except
A) possible mismanagement of organization resources
B) redundancy of tasks
C) software incompatibility
D) system is not responsive to the user's situation
Answer: D
Q4) Two distinct ways to structure the Data Processing Department are ____________________ and ____________________.
Answer: centralized,distributed
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Chapter 2: Introduction to Transaction Processing
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Sample Questions
Q1) Give an example of how cardinality relates to business policy?
Answer: Cardinality reflects normal business rules as well as organizational policy.For instance,the 1:1 cardinality between the entities "Salesperson" and "Company Car" suggests that each salesperson in the organization is assigned one company car.If instead the organization's policy were to assign a single automobile to one or more salespersons who share it,this policy would be reflected by a 1:M relationship.
Q2) In a computerized environment,a list of authorized suppliers would be found in the A) master file
B) transaction file
C) reference file
D) archive file
Answer: C
Q3) Program flowcharts are used to describe the logic represented in system flowcharts. A)True
B)False
Answer: True
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Chapter 3: Ethics, Fraud, and Internal Control
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Sample Questions
Q1) Explain the problems associated with lack of auditor independence.
Answer: Auditing firms who are also engaged by their clients to perform non-accounting activities such as actuarial services,internal audit outsourcing services,and consulting lack independence.They are essentially auditing their own work.This risk is that as auditors they will not bring to management's attention detected problems that may adversely affect their consulting fees.For example,Enron's auditors - Arthur Andersenwere also their internal auditor's and their management consultants.
Q2) Explain the characteristics of management fraud.
Answer: Management fraud typically occurs at levels above where the internal control system is effective.Financial statements are frequently modified to make the firm appear more healthy than it actually is.If any misappropriation of assets occurs,it is usually well hidden.
Q3) Employee fraud involves three steps.Of the following,which is not involved?
A) concealing the crime to avoid detection
B) stealing something of value
C) misstating financial statements
D) converting the asset to a usable form
Answer: C
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Chapter 4: The Revenue Cycle
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Sample Questions
Q1) Inventory control has physical custody of inventory.
A)True
B)False
Q2) The packing slip is also known as the shipping notice.
A)True
B)False
Q3) A remittance advice is a form of turn-around document.
A)True
B)False
Q4) Which situation indicates a weak internal control structure?
A) the mailroom clerk authorizes credit memos
B) the record keeping clerk maintains both accounts receivable and accounts payable subsidiary ledgers
C) the warehouse clerk obtains a signature before releasing goods for shipment
D) the accounts receivable clerk prepares customer statements every month
Q5) A written customer purchase order is required to trigger the sales order system.
A)True
B)False
Q6) What makes point-of-sale systems different from revenue cycles of manufacturing firms?
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Chapter 5: The Expenditure Cycle Part I: Purchases and Cash
Disbursements Procedures
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Usually the open voucher payable file is organized by A) vendor
B) payment due date
C) purchase order number
D) transaction date
Q2) The receiving department is not responsible to
A) inspect shipments received
B) count items received from vendors
C) order goods from vendors
D) safeguard goods until they are transferred to the warehouse
Q3) Because of time delays between receiving inventory and making the journal entry
A) liabilities are usually understated
B) liabilities are usually overstated
C) liabilities are usually correctly stated
D) none of the above
Q4) Goods received are inspected and counted to
A) determine that the goods are in good condition
B) determine the quantity of goods received
C) preclude payment for goods not received or received in poor condition
D) all of the above
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Chapter 6: The Expenditure Cycle Part II: Payroll Processing and
Fixed Asset Procedures
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Sample Questions
Q1) List two types of authorization required in the Fixed Asset System.
Q2) Describe an internal control that would prevent the payment of insurance premiums on an automobile that is no longer owned by the company.
Q3) An important reconciliation in the payroll system is
A) general ledger compares the labor distribution summary from cost accounting to the disbursement voucher from accounts payable
B) personnel compares the number of employees authorized to receive a paycheck to the number of paychecks prepared
C) production compares the number of hours reported on job tickets to the number of hours reported on time cards
D) payroll compares the labor distribution summary to the hours reported on time cards
Q4) Fixed asset accounting systems include cost allocation and matching procedures that are not part of routine expenditure systems. A)True B)False
Q5) Why does the payroll process lend itself to batch processing?
Q6) Why should employee paychecks be drawn against a special checking account?
Page 8
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Chapter 7: The Conversion Cycle
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Sample Questions
Q1) Discuss three common problems associated with inventories.
Q2) What is meant by the term "product family" and what is its relationship to value stream accounting.
Q3) Discuss inventory control objectives.
Q4) What is the economic order quantity if the annual demand is 10,000 units,set up cost of placing each order is $3 and the holding cost per unit per year is $2?
A) 174
B) 123
C) 245
D) none of the above
Q5) Which type of manufacturing creates a homogeneous product through a continuous series of standard procedures?
Q6) The bill of materials specifies the types and quantities of the raw materials and subassemblies used in producing a single unit of finished product.
A)True
B)False
Q7) What is meant by the term "islands of technology"?
Q8) Name five documents associated with batch production systems.
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Chapter 8: General Ledger, Financial Reporting, and Management Reporting Systems
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Sample Questions
Q1) Which best describes a batch process General Ledger System (GLS)
A) paper documents are eliminated
B) the general ledger master file is updated each night
C) there is a time lag between transaction processing and posting to the general ledger
D) no direct access or querying of the General Ledger is possible
Q2) Which report is not an output of the Financial Reporting System (FRS)?
A) variance analysis report
B) statement of cash flows
C) tax return
D) comparative balance sheet
Q3) Which statement is not true?
A) authority refers to an individual's obligation to achieve desired results
B) if an employee is given the responsibility for a task, that employee should be given authority to make decisions within the limits of that task
C) the level of detail provided to an employee is a function of the employee's position with the firm
D) all of the above are true
Q4) What is information overload? How does it affect decision-making?
Page 10
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Chapter 9: Database Management Systems
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Sample Questions
Q1) In a distributed data processing system,a database can be centralized or distributed.What are the options? Explain.
Q2) Timestamping is a control that is used to ensure database partitioning.
A)True
B)False
Q3) A deadlock is a phenomenon that prevents the processing of transactions.
A)True
B)False
Q4) Entities are
A) nouns that are depicted by rectangles on an entity relationship diagram
B) data that describe the characteristics of properties of resources
C) associations among elements
D) sets of data needed to make a decision
Q5) The update anomaly in unnormalized databases
A) occurs because of data redundancy
B) complicates adding records to the database
C) may result in the loss of important data
D) often results in excessive record insertions
Q6) Explain the three types of anomalies associated with database tables that have not been normalized.
Page 11
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Chapter 10: The REA Approach to Business Process
Modeling
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Sample Questions
Q1) Modeling economic transactions under the REA approach always includes depicting both internal and external agents.
A)True B)False
Q2) How do the entity relationship (ER)and the REA diagrams differ?
Q3) What are the four basic forms of cardinality?
Q4) Why would a company adopt the REA approach to database design?
Q5) All of the following are examples of economic events except A) receiving raw materials from a supplier
B) checking a customer's credit prior to processing a sales order
C) disbursing cash for inventories received
D) shipping product to a customer
Q6) Since REA databases do not employ journals and ledgers,how can they support financial statement reporting?
Q7) How are tables in a (M:M)association physically linked?
Q8) Define the value chain
Q9) In REA,resources are assets that include accounts receivable.
A)True
B)False Page 12
Q10) What is the REA model? What does it mean for accountants?
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Chapter 11: Enterprise Resource Planning Systems
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Sample Questions
Q1) The big-bang approach involves converting from old legacy systems to the new ERP in one implementation step.
A)True
B)False
Q2) This chapter stressed the importance of data normalization when constructing a relational database.Why then is it important to de-normalize data in a data warehouse?
Q3) Which of the following statements is not true?
A) In a typical two-tier client server system, the server handles both application and database duties.
B) Client computers are responsible for presenting data to the user and passing user input back to the server.
C) In three-tier client server architecture, one tier is for user presentations, one is for database and applications, and the third is for Internet access.
D) The database and application functions are separate in the three-tier model.
Q4) Why are data in a data warehouse stored in unnormalized tables?
Q5) How does a data warehouse help the external auditor perform the audit?
Q6) Why does the data warehouse need to be separate from the operational databases?
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Chapter 12: Electronic Commerce Systems
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102 Flashcards
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Sample Questions
Q1) The intermediary in a smurf attack is also a victim.
A)True
B)False
Q2) Which topology has a large central computer with direct connections to a periphery of smaller computers? Also in this topology,the central computer manages and controls data communications among the network nodes.
A) star topology
B) bus topology
C) ring topology
D) client/server topology
Q3) Polling is one technique used to control data collisions.
A)True
B)False
Q4) What is an IP address?
Q5) Discuss the three levels of Internet business models.
Q6) HTML tags are customized to delimit attributes,the content of which can be read and processed by computer applications.
A)True
B)False
Page 15
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Chapter 13: Managing the Systems Development Life Cycle
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Sample Questions
Q1) Which technique is least likely to be used to quantify intangible benefits?
A) opinion surveys
B) simulation models
C) professional judgment
D) review of accounting transaction data
Q2) A cost-benefit analysis is a part of the detailed
A) operational feasibility study
B) schedule feasibility study
C) legal feasibility study
D) economic feasibility study
Q3) What is the internal business process perspective?
Q4) All of the steps in the Systems Development Life Cycle apply to software that is developed in-house and to commercial software.
A)True
B)False
Q5) Intangible benefits
A) are easily measured
B) are of relatively little importance in making information system decisions
C) are sometimes estimated using customer satisfaction surveys
D) when measured, do not lend themselves to manipulation
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Chapter 14: Construct, Deliver, and Maintain Systems Projects
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Sample Questions
Q1) What is the role of test data? What is a base case?
Q2) A commercial software system that is completely finished,tested,and ready for implementation is called a
A) backbone system
B) vendor-supported system
C) benchmark system
D) turnkey system
Q3) The detailed design report is the blueprint which guides programmers and database administrators in constructing the physical system.
A)True
B)False
Q4) What are embedded instructions? Why do they matter?
Q5) An advantage of the Computer Aided Software Engineering (CASE)model tool,which transforms the structure diagram into machine language,is
A) it facilitates the auditors review of the system
B) it ensures that firm will use a specific CASE tool and vendor
C) it forces all system changes to be made through the data flow diagrams
D) it reduces the analysis required in designing the system
Q6) What is the importance of the base case?
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Chapter 15: IT Controls : Sarbanes-Oxley and IT Governance
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Sample Questions
Q1) All of the following are steps in an IT audit except
A) substantive testing
B) tests of controls
C) post-audit testing
D) audit planning
Q2) All of the following tests of controls will provide evidence about the physical security of the computer center except
A) review of fire marshal records
B) review of the test of the backup power supply
C) verification of the second site backup location
D) observation of procedures surrounding visitor access to the computer center
Q3) Which statement is not true?
A) Auditors must maintain independence.
B) IT auditors attest to the integrity of the computer system.
C) IT auditing is independent of the general financial audit.
D) IT auditing can be performed by both external and internal auditors.
Q4) Why should new systems development activities be segregated from the program change (maintenance)function.
Q5) Explain how IT outsourcing can lead to loss of strategic advantage.
Q6) How do the tests of controls affect substantive tests?
Page 18
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Chapter 16: IT Controls : Security and Access
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Sample Questions
Q1) Describe two ways that passwords are used to authorize and validate messages in the electronic data interchange environment.
Q2) All of the following are designed to control exposures from subversive threats except A) firewalls
B) one-time passwords
C) field interrogation
D) data encryption
Q3) Advance encryption standard (AES)is
A) a 64 -bit private key encryption technique
B) a 128-bit private key encryption technique
C) a 128-bit public key encryption technique
D) a 256-bit public encryption technique that has become a U.S. government standard
Q4) Which of the following is considered an unintentional threat to the integrity of the operating system?
A) a hacker gaining access to the system because of a security flaw
B) a hardware flaw that causes the system to crash
C) a virus that formats the hard drive
D) the systems programmer accessing individual user files
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Chapter 17: IT Controls : Systems Development Program
Changes and Application Controls
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Sample Questions
Q1) Which of the following is an example of an input error correction technique?
A) immediate correction
B) rejection of batch
C) creation of error file
D) all are examples of input error correction techniques
Q2) Which statement is not correct? The goal of batch controls is to ensure that during processing
A) transactions are not omitted
B) transactions are not added
C) transactions are free from clerical errors
D) an audit trail is created
Q3) Source program library controls should prevent and detect unauthorized access to application programs.
A)True
B)False
Q4) Which of the following is not an example of a processing control?
A) hash total.
B) record count.
C) batch total.
D) check digit
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