Accounting Information Systems
Midterm Exam
Course Introduction
Accounting Information Systems is a course that explores the integration of accounting principles with information technology to effectively collect, process, and communicate financial data. Students will examine the design, implementation, and control of computerized accounting systems, as well as the role these systems play in supporting managerial decision-making, internal controls, and compliance with regulatory requirements. Topics include system documentation, data modeling, transaction processing, cybersecurity, and the impacts of emerging technologies on accounting practices. The course prepares students to analyze and evaluate accounting information systems to ensure accuracy, security, and efficiency in organizational operations.
Recommended Textbook
Accounting Information Systems 11th Edition by Marshall B. Romney Paul J. Steinbart
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Page 2
Chapter 1: Accounting Information Systems
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Q1) What is the purpose behind the five primary activities in the value chain?
Answer: The goal of the five primary activities in the value chain is to facilitate the business in providing value to its customers.The five primary activities allow the business to create,market,and deliver its products and services to its customers,as well as providing postsale support.
Q2) The benefit produced by the information minus the cost of producing it.
A)Goal congruence
B)Information
C)Information overload
D)Value of information
Answer: D
Q3) Which activity below would not be considered to be a "top" accountant work activity?
A)process improvement
B)input into future product marketing initiatives
C)long-term strategic planning
D)computer systems and operations
Answer: B
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Chapter 2: Overview of Business Processes
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Q1) A company you have been asked to examine as part of an AIS consulting engagement employs a cashier who handles all cash receipts from customers.The cashier counts the cash daily,prepares the bank deposit,and carries the deposit to the bank every day after work.In addition,the cashier authorizes all discounts and allowances and decides when uncollectible accounts will be written off.Finally,because the accounting department is overworked at times,the cashier is allowed to post cash payments to customer accounts and reconcile the bank account.Outline how a dishonest cashier could misuse all these responsibilities to steal cash from the company. Answer: This procedure represents a gross violation of the "segregation of duties" principle.The cashier could steal cash in any number of ways.For example,the cashier could misapply payments from other customers to cover the theft (this is better known as lapping).The cashier could steal cash by writing off the balances as bad debts or cover over the balances with illegitimate discounts.Also,the cashier could steal cash and then cover it up with entries to expense accounts or by preparing a "bogus" bank reconciliation.This is why it is critically important that there is a clear,unequivocal separation of duties when dealing with any aspect of cash in a business.
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Chapter 3: Systems Development and Documentation Techniques
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Sample Questions
Q1) Which symbol would be used in a flowchart to represent the display of a report on a computer screen?
A)#1
B)#2
C)#3
D)#11
Answer: C
Q2) In a document flowchart of a manual payroll processing system,"update employee file" will be shown by a(n)__________ symbol,and "prepare payroll check" will be shown by a(n)__________ symbol.
A)input; output
B)input; manual operation
C)manual operation; output
D)manual operation; manual operation
Answer: D
Q3) P71 56)What are the four categories of flowcharting symbols?
Answer: The four categories of flowcharting symbols are: input/output,processing,storage,flow and miscellaneous.
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Chapter 4: Relational Databases
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Sample Questions
Q1) Which of the following would not be found in a data dictionary entry for a data item?
A)records containing a data item
B)the physical location of the data
C)the source of the data item
D)the field (data)type
Q2) What is the most popular type of database?
A)hierarchical
B)relational
C)object-oriented
D)network
Q3) The database constraint that says that foreign keys must be null or have a value corresponding to the value of a primary key in another table is formally called the A)entity integrity rule.
B)referential integrity rule.
C)rule of keys.
D)referential entity rule.
Q4) Discuss the ways in which a well-designed DBMS will facilitate the three basic functions of creating,changing,and querying data.
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Chapter 5: Computer Fraud and Security
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Q1) Developers of computer systems often include a user name and password that is hidden in the system,just in case they need to get into the system and correct problems in the future.This is referred to as a
A)Trojan horse.
B)key logger..
C)spoof.
D)back door.
Q2) One computer fraud technique is known as data diddling.What is it?
A)gaining unauthorized access to and use of computer systems,usually by means of a personal computer and a telecommunications network
B)unauthorized copying of company data such as computer files
C)unauthorized access to a system by the perpetrator pretending to be an authorized user
D)changing data before,during,or after it is entered into the system in order to delete,alter,or add key system data
Q3) What is a computer fraud?
Q4) Define fraud.
Q5) How can a system be protected from viruses?
Q6) How does a company make fraud less likely to occur?
Page 7
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Chapter 6: Control and Accounting Information Systems
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Q1) The internal control model developed by COSO is comprised of five interrelated components.Among these components is the internal environment.Which attribute below is not part of the internal environment?
A)the competence of an organization's people
B)the integrity of an organization's people
C)monitoring activities within the organization itself
D)the ethical values of an organization's people
Q2) Management can authorize employees to handle routine transactions without special approval.This is known as
A)Authorization
B)General authorization
C)Special authorization
D)Specific authorization
Q3) Why is management's philosophy and operating style considered to be the most important component of the control environment?
Q4) Discuss the internal (control)environment.
Q5) What was the primary objective of the Foreign Corrupt Practices Act?
Q6) Why was the Foreign Corrupt Practices Act of interest to accountants?
Q7) What is the difference between general and specific authorization?
Page 8
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Chapter 7: Infromation System Controls for Systems
Reliability
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Sample Questions
Q1) Which of the following is not associated with asymmetric encryption?
A)No need for key exchange
B)Public keys
C)Private keys
D)Speed
Q2) The process of turning off unnecessary features in the system is known as
A)Deep packet inspection
B)Hardening
C)Intrusion detection
D)War dialing
Q3) An electronic document that certifies the identity of the owner of a particular public key.
A)Asymmetric encryption
B)Digital certificate
C)Digital signature
D)Public key
Q4) What are the three fundamental information security concepts?
Q5) What is a penetration test?
Q6) How does an intrusion detection system work?
Q7) What are the problems with symmetric encryption? Page 9
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Chapter 8: Auditing Computer-Based Information Systems
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Sample Questions
Q1) This ensures that the input data will fit into the assigned field.
A)Limit check
B)Range check
C)Size check
D)Validity check
Q2) Identify four processing controls.
Q3) Batch totals are an example of
A)Data entry controls
B)Data transmission controls
C)Output controls
D)Processing controls
Q4) Which of the following is not one of the 10 internationally recognized best practices for protecting the privacy of customers' personal information?
A)Access.
B)Monitoring and enforcement.
C)Registration.
D)Security.
Q5) Identify a fundamental control procedure for protecting that confidentiality of sensitive information.
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Chapter 9: Auditing Computer-Based Informtion Systems
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Q1) A sample of sales records is selected and each record is traced from the initial order record to product delivery and payment.Errors are noted.This is an application of which of the following five internal audit scope standards?
A)Operating and financial information integrity
B)Policy compliance verification
C)Asset security verification
D)Resource use efficiency
E)Operational effectiveness
Q2) An auditor examining a firm's accounting information system creates a fictitious customer in the system and then creates several fictitious sales to the customer.The records are then tracked as they are processed by the system.This is an example collecting audit evidence using
A)an integrated test facility.
B)the snapshot technique.
C)a system control audit review file.
D)audit hooks.
E)continuous and intermittent simulation.
Q3) What are embedded audit modules?
Q4) Why are audit tests and procedures performed on a sample basis?
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Chapter 10: The Revenue Cycle: Sales an Cash Collections
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Q1) Another essential part of the revenue cycle is filling customer orders and shipping merchandise to customers.Automating warehouse systems cut costs,improve efficiency,and enable more customer-responsive shipments.The essential element(s)required for an automated perpetual inventory system consist(s)of
A)conveyor belts and forklifts
B)conveyor belts and forklifts equipped with RFDC
C)conveyor belts
D)bar-code scanners
Q2) Sad Clown Pajamas is an Internet-based wholesaler.Customers enter their orders online.The manager of Callow Youth Clothing was entering an order when the following error message popped up: Did you mean to enter a quantity of 1000 for your order? This message is the result of a
A)validity check.
B)reasonableness test.
C)limit check.
D)completeness test.
Q3) Poor performance in the area of cash collections is a threat to the business.What controls can be used to help neutralize this threat?
Q4) Explain how to effectively segregate duties in the sales order cycle.
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Chapter 11: The Expenditure Cycle: Purchasing and Cash
Disbursements
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Q1) In the expenditure cycle,evaluated receipt settlement increases efficiency by
A)eliminating the need for receiving reports.
B)eliminating the need for vendor invoices.
C)eliminating the need for purchase orders.
D)eliminating the need to prepare and mail checks.
Q2) How is the expenditure cycle a "mirror image" of the revenue cycle?
Q3) The management at Sad Clown Pajamas,an Internet-based wholesaler,is considering a new inventory control system.The current system is inadequate because it results in stockouts that interrupt production and excess stocks of some materials that result in markdowns and high carrying costs.The new system,which will focus on forecasting demand for Sad Clown's products,will employ
A)a just-in-time inventory system.
B)the economic order quantity.
C)a reorder point.
D)materials requirements planning.
Q4) In the expenditure cycle,the majority of payments made are by check.What are some control issues related to payment of vendors by check?
Q5) What are the possible problems associated with receiving goods ordered from a vendor?
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Chapter 12: The Production Cycle
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Q1) The second step in the production cycle is planning and scheduling.One of the methods of production planning is referred to as pull manufacturing.This method is also known as
A)manufacturing resource planning (MRP).
B)just-in-time manufacturing system (JIT).
C)the economic order quantity (EOQ)system.
D)ahead-of-time production implementation (ATPI).
Q2) Dolly Salem owns and operates a bakery in Charleston,South Carolina.Each afternoon she prepares a shopping list that describes the number and variety of ingredients that she will purchase in the evening from a local food wholesaler.This list is an example of a(an)
A)bill of materials.
B)operations list.
C)production order.
D)materials requisition.
E)move ticket.
Q3) What is a master production schedule (MPS)?
Q4) What is activity-based costing (ABC)? How does it compare with the traditional costing methods? What are the benefits of activity-based costing?
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Chapter 13: The Human Resources Managementpayroll Cycle
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Q1) One good way to eliminate paper paychecks is to
A)pay in cash only.
B)pay with money orders.
C)use the direct deposit method to transfer funds into employee bank accounts.
D)use EFT.
Q2) Define an HRM/payroll cycle.What are the basic activities in an HRM/payroll cycle?
Q3) Many companies offer their employees a "cafeteria" approach to voluntary benefits in which employees can pick and choose the benefits they want.This approach is normally called a(n)
A)elective plan.
B)menu options benefit plan.
C)flexible benefit plan.
D)pay-as-you-go plan.
Q4) Which of the following forms is used to report an independent contractor's compensation?
A)941
B)W-2
C)W-3
D)1099-Misc.
16
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Chapter 14: General Ledger and Reporting System
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Q1) Business intelligence refers to the
A)use of industrial espionage to capture data about competitors.
B)use of data contained in a data warehouse for strategic planning.
C)publications provided by industry consultants and news letters.
D)systematic application of online search engines like Google to identify industry-specific trends and benchmarks.
Q2) The final activity in the general ledger and reporting system is the production of various managerial reports.The report that shows planned cash inflows and outflows for each project is the
A)journal voucher list.
B)statement of cash flows.
C)operating budget.
D)capital expenditures budget.
Q3) Extensible Business Reporting Language is based on A)HTML.
B)TCP/IP.
C)XML.
D)XL.
Q4) What is responsibility accounting?
Q5) Explain the benefits of XBRL.
17
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Chapter 15: Data Modeling and Database Design
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Q1) Concerning REA diagrams,which of the following is false?
A)Each organization will have its own unique REA diagram.
B)An REA diagram for a given organization will change over time.
C)Data modeling and REA diagram development involve complex and repetitive processes.
D)Redrawing an REA diagram several times during development is uncommon.
Q2) Developing an REA model involves three steps.In which step are the agents identified?
A)First
B)Second
C)Third
D)None of the above
Q3) An entity-relationship diagram (E-R)is useful because it shows the various entities being modeled and the important relationships among them.Anything about which the organization wants to collect and store information is called
A)a data model.
B)an entity.
C)a schema.
D)a tuple.
Q4) List the five stages in the database design process.
Page 18
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Chapter 16: Implementing an Rea Model in a Relational Database
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Q1) What are the advantages of the REA data model over the traditional AIS model?
Q2) Technological changes
A)Do not change the mechanics of accounting procedures.
B)Have little effect on accounting process.
C)Do not change the need for management reports and financial statements.
D)Are more easily adapted using traditional AIS models.
Q3) What is the first step to implementing an REA diagram in a relational database?
A)Assign attributes to appropriate tables.
B)Create a table for each distinct entity in the diagram and for each many-to-many relationship.
C)Identify cardinalities.
D)Use foreign keys to implement one-to-one and one-to-many relationships.
Q4) When merging redundant resource entities into a new REA diagram,
A)Common resources are placed between the events that affect them.
B)Each resource is connected to two agents that either increase or decrease it.
C)Resources are duplicated to show the give and get of economic duality relationships.
D)None of the above.
Q5) In order to integrate separate REA diagrams into an integrated organizational REA model,what must the designer understand?
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Chapter 17: Special Topics in Rea Modeling
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Q1) Picking ticket number is most likely to be a primary key in:
A)Call on Customers
B)Fill Customer Order
C)Ship Order
D)Take Customer Order
Q2) Why might an REA diagram show relationships between agents?
Q3) Sales order number is most likely to be a primary key in:
A)Call on Customers
B)Fill Customer Order
C)Ship Order
D)Take Customer Order
Q4) Financial institution number is most likely to be a foreign key in:
A)Cash
B)Pay for Goods
C)Receive Goods
D)Warehouse
Q5) What are the benefits of an integrated enterprise-wide data model?
Q6) Describe the relationships between Recruiting event and Skills,and between Recruiting event and Job Applicants.
Q7) Give an example of an M:N Agent-Event relationship
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Chapter 18: Introduction to Systems Development and Systems Analysis
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Q1) Name the five phases of the systems development life cycle.
Q2) Three months after a new telephone system with voice mail was installed at Modest Expectations College in Pennsylvania,several senior faculty members were contacted by a telecommunications secretary and were told that their voice mail boxes were full.It turns out that they had never learned how to check their voice mail.This is an example of dealing with change by A)deterrence.
B)projection.
C)avoidance.
D)aggression.
Q3) It is important for the systems analyst to determine AIS system objectives so that everyone involved can focus on the elements most vital to the system's success.The __________ objective states that crucial information should be produced first and then less important items as time permits.
A)flexibility
B)reliability
C)timeliness
D)usefulness
Q4) Identify the main reasons why companies change existing systems?
Page 21
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Chapter 19: Ais Development Strategies
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Q1) Firms should consider preparing a software prototype if the software
A)will be used for a critical function like inventory management.
B)automates a structured task.
C)can be produced using outside developers.
D)inputs and outputs are not clearly defined..
Q2) Discuss how information system outsourcing can provide the organization with both a business solution and asset management.
Q3) As part of the development process for a new job bidding software system for Halide Construction,LLC,Jon Chelide prepared and distributed functional programs that simulate the system's input and output interface.These programs are an example of a(an)
A)application of CASE technology.
B)operational prototype.
C)RFP.
D)nonoperational prototype.
Q4) A vendor that offers Web-based software services is called a(an)
A)SDLC.
B)RFP.
C)ASP.
D)CASE.
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Chapter 20: Systems Design, Implementation and Operation
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Q1) What is the name for the type of testing where copies of real transaction and file records are used rather than hypothetical ones?
A)acceptance testing
B)debugging
C)desk checking
D)program walk-through
Q2) The project team wants to find the most efficient way to collect data in order to prepare a report on sales per store.Which element in design specifications will deal with the decision?
A)data collection
B)input
C)output
D)processing procedures
Q3) Which consideration is not of concern in controls design?
A)security
B)alphabetical control
C)audit trail
D)validity
Q4) Briefly discuss structured programming.
Q5) How can accountants help in the SDLC process?
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