Accounting Information Systems
Mock Exam
Course Introduction
Accounting Information Systems is a course that explores the design, implementation, and management of information systems used in accounting. Students learn about the role of computerized systems in processing, recording, and reporting financial data, as well as the ways these systems support internal control and decision-making processes within organizations. Emphasizing both technological and accounting perspectives, the course covers topics such as database management, system documentation, audit trails, security measures, and the integration of accounting software with other business applications. Through case studies and practical projects, students gain a comprehensive understanding of how accounting information systems enhance business efficiency, accuracy, and compliance.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 8th Canadian Edition by
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Page 2
Srikant M. Datar
Chapter 1: The Accountants Vital Role in Decision Making
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Sample Questions
Q1) cost of computer time used by a salesperson
Answer: Answers: B
Q2) The budgetary control function may include evaluating the difference
A)between current operating costs and last year's operating costs.
B)between budgeted amounts and actual results.
C)between the original budget and the final adjusted budget.
D)allowed in the current production costs.
E)between the historical cost and the current cost.
Answer: B
Q3) How does a controller help "control" a company?
Answer: By reporting and interpreting relevant data, the controller exerts a force or influence that impels management toward making better-informed decisions.The controller of Caterpillar described the job as "a business advisor to ...help the team develop strategy and focus the team all the way through recommendations and implementation."
Q4) Explaining the variances in Department 23's labour report.
Answer: Answers: A
Q5) cost of materials used in the layout of a customer's magazine ad
Answer: Answers: C
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Chapter 2: An Introduction to Cost Terms and Purposes
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Q1) Manufacturing firms have three types of inventory: direct materials, work in process, and merchandise.
A)True
B)False
Answer: False
Q2) Classifying a cost as either direct or indirect depends upon
A)the behaviour of the cost in response to volume changes.
B)whether the cost is expensed in the period in which it is incurred.
C)whether the cost can be traced to the cost object.
D)whether an expenditure is avoidable or not in the future.
E)the inventory classification system.
Answer: C
Q3) Merchandising companies purchase products and sell them to customers without changing their basic form.
A)True
B)False
Answer: True
Q4) factory supervisor's salaries
Answer: Answers: C
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Chapter 3: Cost-Volume-Profit Analysis
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Q1) If unit sales exceed the break-even point when using the graph method
A)there is a loss because the total cost line exceeds the total revenue line.
B)total sales exceed total costs.
C)there is a profit because the total cost line exceeds the total revenue line.
D)expenses are extremely high relative to revenues.
E)operating income is negative (an operating loss).
Answer: B
Q2) How many people must purchase tickets assuming option two is chosen, and Big Sports expects to raise $4,820 for the athletic fund? Assume no one pays more than the cost of his/her ticket.
A)258 people
B)173 people
C)243 people
D)276 people
E)310 people
Answer: A
Q3) Changes in product quality could be considered an example of a revenue driver.
A)True
B)False
Answer: True
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Chapter 4: Job Costing
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Q1) Transferring costs from indirect cost pools to cost objects is called
A)cost allocation.
B)cost control.
C)cost pool.
D)cost factoring.
E)cost processing.
Q2) General Hospital uses a job-costing system for all patients.In March the Critical Care and Special Care facilities had cost allocation bases of 4,000 nursing days and 3,000 nursing days, respectively.The nursing care charges for each department for the month were $2,106,000 and $1,500,000, respectively.The General Care area had costs of $2,700,000 and 7,500 nursing days for the month.Patient Jim Hansen spent 5 days in Critical Care, 4 days in Special Care and 21 days in General Care during March.Required:
a.Determine the cost allocation rate for each department.
b.What are the total charges to Mr.Hansen if he was in the facility the entire month of March?
Q3) Cost assignment includes cost allocation for indirect costs and direct costs.
A)True
B)False
Q4) cost of goods sold
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Chapter 5: Activity-Based Costing and Management
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Q1) Customer Service
Q2) When selling price is cost plus 25% and costs are assigned using the single cost driver, number of pages printed, then
A)Ernsting Printers will want to drop Wealth Managers as a customer.
B)Wealth Managers will likely seek to do business with competitors.
C)Wealth Managers is unfairly over billed for its use of printing resources.
D)Wealth Managers is under billed for the job, while other jobs will be unfairly over billed.
E)All customers will be under billed for their jobs.
Q3) Compared to an activity-based cost system, CP8 is ________ under the traditional system.
A)undercosted
B)overcosted
C)fairly costed
D)accurately costed
E)costed the same
Q4) Understanding the hierarchy of costs is critical when allocating costs to products.
A)True
B)False
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Chapter 6: Master Budget and Responsibility Accounting
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Questions
Q1) What will be Berry's Boxes production costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2018?
A)$20,500; $10,250; $4,100
B)$19,500; $9,750; $3,900
C)$10,000; $5,000; $4,000
D)$22,500; 11,250; $4,500
E)$12,000; $6,000; $4,800
Q2) Long-run planning (strategic plans)involves the preparation of the A)operating budget.
B)cash budget.
C)budget standards.
D)profit plan.
E)capital budget.
Q3) Performance reports for responsibility centres may include uncontrollable costs if they are segregated from controllable costs.
A)True
B)False
Q4) Describe the concept of kaizen budgeting.
Q5) List and describe the four approaches to budgeting.
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Chapter 7: Flexible Budgets, Variances, and Management
Control: I
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Q1) What is the All Good Things Ltd.static-budget variance?
A)$400 F
B)$400 U
C)$600 F
D)$200 F
E)$200 U
Q2) To prepare budgets based on actual data from past periods is preferred since past inefficiencies are excluded.
A)True
B)False
Q3) For any actual level of output, the difference between the input that was actually used and the input should have been used is
A)an effectiveness variance.
B)a purchase cost variance.
C)the variance rate.
D)a rate variance.
E)an efficiency variance.
Q4) A favourable variance can be automatically interpreted as "good news."
A)True
B)False
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Chapter 8: Flexible Budgets, Variances, and Management
Control: II
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Q1) Cady Machine Shop used 15,000 machine hours during January.It takes 0.90 machine-hours to produce one unit; 15,000 units were produced during the month.Budgeted production included 12,000 units, using 10,800 machine hours.Budgeted variable manufacturing overhead costs per machine-hour is $22.50.What is the variable overhead efficiency variance for Cady?
A)$67,500 unfavourable
B)$67,500 favourable
C)$37,000 favourable
D)$33,750 favourable
E)$33,750 unfavourable
Q2) What is the Cakewalk Ltd.rate variance for fixed shipping overhead costs?
A)$900 U
B)$600 F
C)$800 U
D)$800 F
E)$600 U
Q3) Human capital refers to the intangible skills provided by people and is an inventoriable cost under ASPE/IFRS.
A)True
B)False
Page 10
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Chapter 9: Income Effects of Denominator Level on Inventory Valuation
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Q1) What are break-even sales in units using absorption costing if the production units are actually 25,000?
A)5,625 units
B)6,667 units
C)7,667 units
D)8,847 units
E)1,154 units
Q2) Stamp Bottling Works manufactures glass bottles.January began with 15,000 units carried at $108,750.An additional 35,000 units were produced that month.February had production of 40,000 units.Fixed manufacturing costs totalled $119,000 in January and $132,000 in February.Sales for both months totalled 45,000 units with variable manufacturing costs of $4 per unit.Selling and administrative costs were $0.40 per unit variable and $60,000 fixed.The selling price was $10 per unit.Inventory moves on a first-in, first-out basis.Required: Compute the operating income for both months using absorption costing.
Q3) Briefly discuss two methods of reducing the undesirable incentives associated with the use of absorption costing to evaluate the performance of a plant manager.
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Chapter 10: Analysis of Cost Behaviour
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Q1) Bank of Bowmanville has variable demand for its counter services.The daily demand ranges from 200 to 250 customers a day and the average banking transaction takes 6 minutes.The average daily demand is 228 customers.The bank currently has 5 staff members serving the counter and operates 7 hours a day.Required: a.What is the average customer waiting time in minutes?
b.In an effort to reduce costs, the bank is considering eliminating one of its counter services staff and having a manager fill in during two hours of the day.What would be the effect of this change on wait time? What might the customers' reaction be?
Q2) The average waiting time is the average amount of time an order will wait at the company's shipping office before it is sent to the customer.
A)True
B)False
Q3) What is the cost function derived from using the high-low method?
A)y = $43,191 + $0.19x
B)y = $4,875 + $4.28x
C)y = $41,900 + $0.23x
D)y = $2,430 + $4.28x
E)y = -$4,875 + $5.25x
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Chapter 11: Decision Making and Relevant Information
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Q1) What is the change in the daily contribution margin if the change is made?
A)$1,200
B)$(128)
C)$(560)
D)$240
E)$(568)
Q2) All fixed costs are irrelevant in relevant-cost analysis.
A)True
B)False
Q3) Why is the book value of old equipment irrelevant to the equipment replacement decision?
Q4) In linear programming a mathematical inequality or equality that must be appeased is known as
A)an objective function.
B)a constraint.
C)an operating policy.
D)a business function.
E)the optimal solution.
Q5) The firm's variable overhead is $50 per client hour
Q6) Current year's amortization of the firm's computer system is $15,000
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Chapter 12: Pricing Decisions, Product Profitability Decisions, and Cost Management
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Q1) Under cost-plus pricing, what is the required selling price to achieve a 15% markup?
A)$285
B)$6300
C)$310
D)$315
E)$322
Q2) For Rogers' Heaters, what is the minimum acceptable price of this one-time-only special order?
A)$290
B)$390
C)$260
D)$507
E)$377
Q3) Decisions on the price to bid on a one-time-only special order should include A)only cost data.
B)only the potential bids of competitors.
C)existing fixed manufacturing overhead.
D)cost data, and the use of variable costing income statements.
E)cost data and potential bids of competitors.
Page 14
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Chapter 13: Strategy, Balanced Scorecard, and Profitability Analysis
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Q1) Which of the following is NOT a force that shapes an organization's competitive environment?
A)competitors
B)equivalent products
C)bargaining power of customers
D)government regulation
E)potential entrants into the market
Q2) Strategies have been classified in many different ways, but what is common is to set the business within its external environment.
A)True
B)False
Q3) Successful reengineering efforts generally involve changing the roles and responsibilities of employees.
A)True
B)False
Q4) Identify and explain Porter's Five Forces model.
Q5) One way to eliminate unused capacity is to downsize.
A)True
B)False
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Chapter 14: Period Cost Allocation
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Q1) A budgeted rate helps to motivate the manager of a support department.
A)True
B)False
Q2) Using the step-down method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A)$64,000
B)$85,333
C)$114,667
D)$128,000
Q3) Which of the following departments is least likely to be a support department for a boat manufacturing company?
A)personnel
B)moulding and assembly
C)data processing
D)accounting
E)purchasing
Q4) What is a "common cost"? What are two methods that a manager can use to allocate common costs to two or more users?
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Chapter 15: Cost Allocation: Joint Products and Byproducts
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Q1) One problem with the physical measure method of allocation is that the physical weights used for allocating joint costs may have no relation to the product's ability to produce revenue.
A)True
B)False
Q2) Separable costs are assignable after the splitoff point.
A)True
B)False
Q3) What will be the total incremental benefit or (loss)from all potential sales of processing the cardboard beyond the splitoff point?
A)$257,800
B)$237,800
C)$217,800
D)$311,000
E)$277,000
Q4) Sawdust from a furniture manufacturer
Q5) The cause-and-effect criterion is not present when joint costing is used. A)True B)False
Q6) Cost of refining gasoline for use in automobiles.
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Chapter 16: Revenue and Customer Profitability Analysis
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Q1) Which of the following statements is TRUE?
A)Managers often find the bar chart presentation to be the most accurate way to analyze customer profitability.
B)Managers find customer-profitability analysis useful because it frequently highlights how vital a small set of customers is to total profitability.
C)Managers find customer-profitability analysis useful because when a customer is ranked in the loss category, they can focus their resources on this type of customer.
D)The 80/20 rule means that 80% of the customers provide 80% of the profit and 20% of the customers provide the remainder.
E)Managers can ensure that low profitability customers receive high priority.
Q2) What is the Teddy Bear Company total sales-mix variance?
A)$21,600 favourable
B)$13,750 favourable
C)$13,750 unfavourable
D)$4,500 unfavourable
E)$4,500 favourable
Q3) What actions might be taken with an unprofitable customer?
Q4) Why would a manager perform customer-profitability analysis?
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Chapter 17: Process Costing
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Q1) The first-in, first-out (FIFO)process costing method assigns the cost of the previous accounting period's equivalent units in beginning work-in-process inventory to the first units completed and transferred out of the process.
A)True
B)False
Q2) What is the difference between a weighted-average method of process costing and a first-in, first-out method of process costing?
Q3) What were the equivalent units of direct materials and conversion costs, respectively, for February? Assume Dustin Plastics, Inc., uses the weighted-average process costing method.
A)800; 730
B)800; 800
C)800; 700
D)600; 500
E)700; 630
Q4) List and describe the five steps in process costing.
Q5) Unit costs do not fluctuate between periods.
A)True
B)False
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Chapter 18: Spoilage, Rework, and Scrap
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Q1) Which of the following is NOT a consideration when accounting for scrap?
A)the timing of the recognition of proceeds from disposal
B)inventory costing, including when and how to affect operating income
C)planning and control includes physical tracking
D)decisions as to whether to group scrap with reworked units
E)the reduction from theft
Q2) The goal of separately identifying abnormal spoilage is to
A)properly cost units in the system.
B)assist in performance measurement.
C)ensure that such units do not reach finished goods inventory.
D)reduce abnormal spoilage to an acceptable level.
E)reduce abnormal spoilage to nil.
Q3) At Waldorf Computer Systems Inc.what amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized in the equivalent unit calculation, and that they are ignored, respectively?
A)$27,500; $30,000
B)$30,000; $34,250
C)$30,000; $37,500
D)$37,500; $40,000
E)$30,000; $40,000
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Chapter 19: Inventory Cost Management Strategies
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Q1) Criticism of backflush accounting included all of the following EXCEPT
A)WIP exists but is not recorded.
B)ASPE/IFRS is not followed for external reporting purposes.
C)there is an absence of audit trails.
D)the accounting system cannot pinpoint the uses of resources.
E)managers can keep track of operations by personal observation.
Q2) Pure Sound Ltd.makes musical instruments.One of their products is an acoustic guitar that has an annual demand of 4,000 units.The setup cost for each production batch is $1,500; it costs $12 to carry a guitar in inventory for one year.Required:
1.What is the total annual relevant batch set up and carrying cost if the company uses the economic order quantity? Assume that setup costs are the same as ordering costs.2.The company is switching to a just-in-time system.The average order size is 200 guitars.What is the total annual relevant batch set up and carrying cost?
3.Compare the Enterprise Resource Planning EOQ model with the JIT model.What are the advantages and disadvantages of each?
Q3) What are the principles of lean accounting? Are there any limitations? Discuss.
Q4) What are five features of a just-in-time manufacturing system?
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Chapter 20: Capital Budgeting: Methods of Investment Analysis
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Q1) The net present value method is better than the internal rate of return because
A)managers generally find the NPV method easier to understand.
B)it always yields the same result as IRR.
C)IRR focuses more on accounting income.
D)it considers the source of cash flows.
E)the NPV's of different projects can be added together, and investments may have multiple required rates of return.
Q2) The net present value method is a discounted cash flow method that concentrates on cash accruals.
A)True
B)False
Q3) A comparison of year-to-year changes in customer net present value estimates
A)is one way to be certain of the customer evaluation process.
B)highlights whether managers have been successful in maintaining long-run profitable relationships with their customers.
C)can be used to motivate customers.
D)is difficult to calculate because of the need to know the customers' cost of capital.
E)can be used in place of the payback method.
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Chapter 21: Transfer Pricing and Multinational Management
Control
Systems
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Q1) What is the total cost to Crush Company if the carbonated water is purchased from the local supplier?
A)$900,000
B)$1,200,000
C)$975,000
D)$1,080,000
E)$1,620,000
Q2) What is the transfer price per pair of sandals from the Sole Division to the Assembly Division if the transfer price per pair of soles is 125% of full costs?
A)$15.00
B)$13.00
C)$26.25
D)$16.25
E)$8.75
Q3) Full-cost transfer pricing may be used because it yields relevant costs for short-run decisions even though full-cost allocations may lead to poor long-run decisions.
A)True
B)False
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Chapter 22: Multinational Performance Measurement and Compensation
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Q1) How should environmental and ethical issues affect managers' performance evaluations?
A)Socially responsible companies set aggressive targets for income and ROI, which must be met before environmental and ethical issues become relevant.
B)Environmental responsibilities are met by adhering to the law of the land (e. g., pollution laws).
C)Issues that may be ethical concerns in Canada (e. g., bribery)may not be illegal in other countries, and multi-national companies must adhere to local custom.
D)Socially responsible companies include environmental and ethical targets in managers' performance evaluations.
E)Illegal behaviour is not part of management's concern, unless it affects the bottom line.
Q2) In establishing performance measures and compensation policy, the issues are interdependent and the decision maker may proceed through a series of decisions several times before selecting the performance measure(s).
A)True
B)False
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