Accounting Information Systems Practice Exam

Course Introduction

Accounting Information Systems (AIS) explores the structure, components, and functions of systems that collect, process, and communicate financial and accounting data within organizations. The course covers topics such as internal controls, database management, systems design and implementation, and the integration of emerging technologies like cloud computing and data analytics. Students will gain practical experience with accounting software and learn how information systems support decision-making, enhance accuracy, ensure compliance, and promote organizational efficiency. Focus is placed on both the technical and managerial aspects of AIS, preparing students to assess risks, safeguard data, and optimize the flow of financial information.

Recommended Textbook

Accounting Information Systems A Practitioner Emphasis 7th Edition by Cynthia D. Heagy

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Chapter 1: Significance of Accounting Information Systems

and the Accountants Role

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Q1) Which of the following certifications is specifically designed for internal auditors?

A) Certified information systems auditor

B) Certified internal auditor

C) Certified public accountant

D) Certified fraud examiner

Answer: B

Q2) What essential functions are performed by computer hardware?

A) Input, processing, output, and instruction of data

B) Input, storage, and instruction of data, and decision making

C) Input, processing, storage, and output of data

D) Input, storage, and output of data and decision making

Answer: C

Q3) Which of the following is not accounting information?

A) Total direct/indirect labor hours

B) Delivery equipment cost

C) Computer training schedule

D) Next year's sales budget

Answer: C

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Chapter 2: Accounting Systems Documentation

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Q1) What type of documentation describes an accounting system from the outside looking in?

A) System design documentation

B) Top-down design documentation

C) User documentation

D) Technical documentation

Answer: C

Q2) Systems flowcharts suffer from a lack of standard flowcharting symbols.

A)True

B)False

Answer: False

Q3) A hierarchical block diagram shows the subsystems of an accounting system and the direction of the information flows among the subsystems.

A)True

B)False

Answer: False

Q4) The initial data flow diagram is called a context diagram.

A)True

B)False

Answer: True

Page 4

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Chapter 3: Essential Elements and Basic Activities of Accounting Systems

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Q1) What file in a computerized accounting system corresponds to a sub-ledger (such as accounts receivable) in a paper-based system?

A) Transaction file.

B) Master file.

C) Open file.

D) Reference file.

Answer: B

Q2) An open file contains the data about transactions that have been started but cannot be fully processed until a subsequent event occurs.

A)True

B)False Answer: True

Q3) One of the essential elements of a paper-based accounting system is a chart of accounts.

A)True

B)False

Answer: True

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Chapter 4: Data Flows, Activities, and Structure of Accounting Systems

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Q1) Which of the following activities involve an interface between users and the accounting system?

A) Input and process

B) Process and store

C) Input and output

D) Output and process

Q2) More than one status or activity report may be produced from a single file, each formatted to meet a different need.

A)True

B)False

Q3) Which is not true about the financial process?

A) Revenue, purchasing, and production events are initially recorded in the financial process.

B) Transaction data that are captured in other processes are transferred to the financial process.

C) Some transactions are originally recorded in the financial process.

D) Some end-of-period adjustments are required in the financial process.

Q4) What are the major activities of an accounting information system?

Q5) What are the support activities of an accounting information system?

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Chapter 5: Reporting Process, Coding Methods, and Audit Trails

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Q1) Exception reporting is the arrangement together of actual data for a current period with either budget data for the current period or actual data for a prior period, thereby facilitating comparison of the data.

A)True

B)False

Q2) Which of the following statements is correct regarding extensible business reporting language (XBRL)?

A) XBRL avoids errors by eliminating the need to reenter data.

B) XBRL is equivalent to hypertext markup language (HTML).

C) XBRL does NOT require the use of tags.

D) XBRL was developed by a single company.

Q3) Providing reports of production hours worked to production personnel, dollar denominated data to sales personnel, and financial reports to the chief financial officer are examples of what kind of reporting?

A) Reporting by exception

B) Reporting by function

C) Reporting by responsibility

D) Reporting by comparison

Q4) Explain the meaning of exception reporting.

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Chapter 6: Internal Control and Risk Assessment

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Q1) Which of the following includes risks that are all related to accounting information system activities?

A) Computer system failure, information security breaches, errors and irregularities in transaction authorization

B) Computer fraud, errors and irregularities in transaction authorization, and internal audit fraud

C) Fraudulent financial reporting, external audit fraud, and concealment of illegal acts

D) Inadequate training, system failure, risk disclosure, and irregularities in transaction authorization

Q2) One of the basic factors of the internal environment is the board of directors or audit committee.

A)True

B)False

Q3) Define what a SAS 70 review is used for AND describe what the two different types of reports that can result from one of these reviews will contain.

Q4) What are four indications of management's philosophy and operating style?

Q5) Define Enterprise Risk Management.

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Chapter 7: Control Activities

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Q1) What is automatic rollback?

A) An in-house backup that is completed through the Internet.

B) A pricing method used by retailers.

C) feature that backs out incomplete transactions.

D) A feature that aids in the recovery of data.

Q2) What is the most likely source of errors in a computerized accounting system?

A) Operator action

B) Output

C) Processing

D) Input

Q3) Which of the following are methods of auditing in computerized environments?

A) Auditing around the computer.

B) Auditing with the computer.

C) Auditing through the computer.

D) B and C only.

E) All of the above. E

Q4) Hiring trustworthy employees is the best way to minimize the opportunity for fraudulent activity,

A)True

B)False

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Chapter 8: The Financial Process

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Q1) A processing feature unique to the general ledger module is one that allows the altering of recorded transactions if they have not been permanently posted. What is the feature called?

A) Provisional posting

B) Pencil posting

C) Ink posting

D) Both A and B

Q2) The chart of accounts that is a listing of all account names, along with their numbers and codes assigned to the accounts (general ledger).

A)True

B)False

Q3) Which of the following is not an example of horizontal analysis?

A) Common dollar analysis

B) Data comparisons

C) Absolute changes

D) Percentage changes

Q4) List and explain three examples of information processing control activities in the financial process.

Q5) What are the three types of transactions recorded in the financial process?

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Chapter 9: The Revenue Process

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Q1) The revenue process includes not only reporting but also facilitating and controlling certain business processes of the firm.

A)True

B)False

Q2) Which of the following is an application of the recurring entry concept?

A) Automatic identification

B) Standing orders

C) New orders

D) Remittance advice

Q3) Standing orders represent an application of the recurring entry concept.

A)True

B)False

Q4) Which of the following is included in the revenue process?

A) Contra accounts

B) Sales order processing

C) Vendor invoicing

D) Inventory management

Q5) A detailed aging of open item accounts lists individual invoices by customer.

A)True

B)False

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Chapter 10: The Purchasing Process

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Q1) What are two major data entry processes (think of the processes that require the most entry items per transaction)?

A) Creation and issuance of purchase orders; recording of cash disbursements.

B) Creation and issuance of purchase orders; recording of merchandise received and services rendered.

C) Recording of merchandise received and services rendered; recording of cash disbursements.

D) Creation and issuance of purchase orders; recording of accounts payable.

Q2) What are alternative names for the purchasing process?

A) Expenditure, receiving, procurement

B) Receiving, expenditure, acquisition

C) Ordering, receiving, procurement

D) Expenditure, procurement, acquisition

Q3) Which is an example of an acquired good?

A) Patents and janitorial services

B) Computer programs and consultants

C) Fixed assets and raw materials

D) Catering company and accounting firms

Q4) List and explain the activities in the purchasing process.

Q5) Describe some factors which may complicate competitive bidding.

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Chapter 11: The Inventory Process

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Q1) Which of the following represent risks associated with outsourcing?

A) Renegotiation risk.

B) Geopolitical risk.

C) Privacy of sensitive information.

D) All of the above are risks associated with outsourcing.

Q2) What is the system called that uses technology to manage the purchase and receipt of merchandise in a manner that minimizes inventory on hand?

A) Enterprise resource planning systems (ERP).

B) Just-in-time inventory (JIT).

C) Inventory control modules (ICM).

D) Electronic data interchange (EDI).

Q3) If the sum of free stock and units on order equals the reorder point, the recommended order size is equal to the economic order quantity.

A)True

B)False

Q4) Discuss some of the risks associated with the inventory process.

Q5) The larger the quantity of safety stock, the larger the stockout cost.

A)True

B)False

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Chapter 12: Database Structure of Accounting Systems

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Q1) A primary key is one or a group of data elements that uniquely identifies a record.

A)True

B)False

Q2) Which of the following statements about a relationship in a database is correct?

A) It is a connection or interaction between tables.

B) It may exist because of the nature of the data elements themselves.

C) It may exist because of the need to relate information in the database in some prescribed manner.

D) A and B, but not C

E) A, B, and C E

Q3) Which of the following statements about the internal level of a database is true?

A) It is the physical implementation of the conceptual level.

B) It includes the file organizations to store data on the physical storage devices.

C) It is the way all the data in the entire database are viewed logically.

D) A and B, but not C

E) B and C, but not A D

Q4) List the advantages and disadvantages of a database system.

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Chapter 13: Developing a Relational Database for an Accounting Information System

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Q1) A table in a relational database can have multiple values for one cell.

A)True

B)False

Q2) A study of the business processes would uncover the relationships among events, resources, and agents.

A)True

B)False

Q3) Which of the following data elements serves as both a primary and a foreign key in the five tables above?

A) InvNo

B) CustCode

C) EmpCode

D) A and B, but not C

E) A, B, and C E

Q4) Which of the following statements is true about symbols used in the entity-relationship diagram?

A) A line links an attribute to an attribute.

B) An ellipse represents an attribute.

C) A diamond represents an attribute.

D) A square represents an entity.

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Chapter 14: Electronic Business

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Q1) If Jones Manufacturing (see preceding question) were requested by MasMart to affix barcodes to products sold to MasMart, which of the symbologies discussed in this chapter would most likely be selected and why?

Q2) What would Interleaved 2 of 5 most likely be used for?

A) Drug items

B) Multiple unit packages

C) Small items

D) Items sold by weight

E) Items sold by volume C

Q3) What is/are benefits of using automatic ID? (Bar code is the most common example.)

A) Low cost of implementation

B) Reduced cost of data entry

C) Significantly increased accuracy of data entry

D) Both A and B

E) A, B, and C E

Q4) The "quiet zone" is the white spaces between bar codes.

A)True

B)False

Q5) List the three types of e-business and give one example of each.

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Chapter 15: Ais Selection and Implementation

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Q1) Which of the following is not an ERP package?

A) Oracle E-Business Suite

B) Lawson Enterprise

C) Microsoft Dynamics GP

D) Peachtree by Sage

Q2) Because the failure of an AIS may mean bankruptcy for an organization, what is the most stressful method of conversion to an AIS?

A) Direct conversion

B) Modular conversion

C) Parallel conversion

D) Pilot conversion

Q3) Describe two planning tools used in AIS selection and implementation.

Q4) If you buy an AIS system directly from a developer, you may have more ability to negotiate than if you buy from a VAR.

A)True

B)False

Q5) Merchantability refers to the ability of a product to perform some function. A)True

B)False

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