Accounting Information Systems
Pre-Test Questions
Course Introduction
Accounting Information Systems explores the integration of information technology with accounting processes to support effective decision-making in organizations. The course covers the design, implementation, and management of accounting systems, emphasizing the role of computerized systems in collecting, processing, and communicating financial information. Students will learn about internal controls, data security, systems development life cycles, and the impact of emerging technologies on accounting practices. Through case studies and practical exercises, students gain hands-on experience in analyzing, evaluating, and utilizing accounting information systems within business environments.
Recommended Textbook
Cost Management Measuring Monitoring and Motivating Performance 2nd Canadian Edition by
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Page 2
Chapter 1: The Role of Ethical Accounting Information in Management Decision Making
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Sample Questions
Q1) Maude is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Maude sends her clients reminders for those dates, and shops for special gifts at the client's request. She plans to do all of the work herself rather than hiring and managing additional employees. Maude's organizational strategy is most likely to include:
A)Her knowledge of local stores
B)Operating her business from her home to keep costs low
C)Leasing equipment
D)Mailing flyers to potential clients
Answer: B,C
Q2) Information gathered outside the organization includes:
A)Customer preferences
B)Product design specifications
C)Taxable income
D)Number of employees hired
Answer: A
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3
Chapter 2: Cost Concepts, Behaviour, and Estimation
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Sample Questions
Q1) Reviewing the pattern of a cost over time is a critical step in determining an engineered cost estimate.
A)True
B)False
Answer: False
Q2) Mixed costs:
A)Vary with production in direct proportion to volume
B)Vary with production but not in direct proportion to volume
C)Do not vary with production
D)Include only different types of fixed costs
Answer: B
Q3) Preparing a scatter plot is a requirement before applying the two-point method of cost estimation.
A)True
B)False
Answer: True
Q4) Textbook costs are an opportunity cost of earning a college degree.
A)True
B)False
Answer: False
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Chapter 3: Cost-Volume-Profit Analysis
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Sample Questions
Q1) CVP analysis can assist in budgeting for discretionary expenditures, such as fixed costs for advertising.
A)True
B)False
Answer: True
Q2) Ruben, Inc. is a management consulting firm specializing in pension plans. Its billing rate to clients is $120 per hour, and variable costs average $80 per hour. Fixed costs are $24,000 per month. The income tax rate is 20%. If variable costs increase by 10% and management increases its billing rate by 8%, what is the effect on the breakeven point, in billable hours?
A)It increases the breakeven point
B)The breakeven point will not change
C)It decreases the breakeven point
D)Cannot be determined
Answer: C
Q3) CVP calculations can only be used in companies that sell a single product.
A)True
B)False
Answer: False
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Chapter 4: Relevant Information for Decision Making
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Sample Questions
Q1) Growe Company manufactures sewing machines and requires 30,000 units of a component that is used in the manufacturing process. If Growe buys the part from Zigler Brothers the plant will be idle. Of the fixed, 55% overhead will continue regardless of the decision. The cost to buy the part from Zigler is $46. The unit cost to make the part is:
Direct materials $12
Direct labour 20
Variable overhead 12
Average fixed overhead 10
Total $54
Relevant costs to make the part are:
A)$1,320,000
B)$1,380,000
C)$1,620,000
D)$1,455,000
Q2) Average costs are appropriate to use when deciding whether to keep a product or product line.
A)True
B)False
Q3) Describe the costs that are usually relevant to a make or buy decision.
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Page 6
Chapter 5: Job Costing
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Sample Questions
Q1) HLY Corporation's accounting information system showed the following balances at the end of this period:
Work in process $20,000
Finished goods 30,000
Cost of goods sold 50,000
Overapplied overhead this period totalled $60,000; HLY maintains a single overhead account in its general ledger. Does HLY use an actual or a normal costing system? Explain your answer.
Q2) HLY Corporation's accounting information system showed the following balances at the end of this period:
Work in process $20,000
Finished goods 30,000
Cost of goods sold 50,000
Overapplied overhead for this period totalled $60,000; HLY maintains a single overhead account in its general ledger.
If the overapplied overhead is not considered material, prepare the journal entry to record its disposition. If no journal entry is required, explain why.
Q3) Can overhead be over- or underapplied in an actual job costing system? Explain.
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Chapter 6: Process Costing
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Sample Questions
Q1) Hendrix, Inc. employs a process costing system. Direct materials are added at the beginning of the process. Here is information about July's activities: On July 1: Beginning inventories = 750 units, 60% complete
Direct materials cost = $5,925
Conversion costs = $4,095
During July: 15,000 units started Direct materials added = $150,000
Conversion costs added = $83,520
On July 31: Ending inventories = 1,500 units, 40% complete Using the weighted average method, the cost of the goods completed and transferred out was:
A)$225,150
B)$225,060
C)$213,300
D)$213,000
Q2) Abnormal spoilage is:
A)The units that exceed the predetermined normal spoilage
B)A cost of production allocated to the units surviving inspection
C)Uncontrollable spoilage
D)Spoilage attributable to efficient operations
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Describe customer-sustaining activities and give one example.
Q2) The cost of implementing an ABC system is likely to be lower if the number of times an activity is performed:
A)Is low
B)Is high
C)Does not fluctuate seasonally
D)Can easily be tracked
Q3) In an ABC system, committed costs:
A)Vary with capacity levels
B)Vary with activity levels
C)Should not be included in ABC cost pools
D)Are related to capacity
Q4) All organizations that use activity-based costing also use activity-based management.
A)True
B)False
Q5) List two advantages and two disadvantages of implementing an ABC system compared to traditional costing.
Q6) Explain why measurement error could increase as the number of cost pools increase in an ABC system.
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Chapter 8: Measuring and Assigning Support Department
Costs
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Sample Questions
Q1) The accountant for Milton, Inc. is preparing the budgets for operating department support service costs. Maintenance costs are allocated based on square feet, and cafeteria costs are allocated based on number of employees. The following data have been collected: Support Departments Operating Departments
Maintenance Cafeteria Cutting Packaging
Direct costs $50,000 $45,000 $275,000 $300,000
Number of employees 15 10 150 250 Square metres 1,500 2,000 3,500 4,000
If the direct method is used, the total cost (including allocations)for the packaging department will be:
A)$26,667
B)$355,250
C)$54,792
D)$354,792
Q2) The reciprocal allocation method reflects:
A)All of the support department interactions
B)None of the support department interactions
C)Part of the support department interactions
D)A relatively simple allocation method
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Chapter 9: Joint Product and By-Product Costing
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Sample Questions
Q1) Jordan, Inc. produces 2 products from a joint process costing $24,000. The results from the most recent period follow: Sales Value Separable Sales Value After Product Tons at Split-Off Costs Further Processing
Alpha-1
800 $10,000 $12,000 $24,000
Alpha-2 400 8,000 4,000 20,000
Waste 200 --- --- ---
If Jordan uses the physical output method, the joint costs allocated to Alpha-1 were:
A)$8,000
B)$6,400
C)$16,000
D)$9,600
Q2) Which of the following joint cost allocation methods is used in many industries because they have units of similar size with similar net realizable values?
A)Physical output
B)Constant gross margin NRV
C)Net realizable value
D)Sales value at split-off
Q3) For what types of products is the physical output method appropriate? Explain. To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Static and Flexible Budgets
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Q1) Budgets are used to:
I. Forecast future performance
II. Compare to actual operations
III. Communicate an organization's strategy and targets
A)I only
B)II only
C)I and III only
D)I, II, and III
Q2) A formalized financial plan for organizational operations is called a long-term strategy.
A)True
B)False
Q3) Budgeting provides a means for defining managers' decision rights.
A)True
B)False
Q4) (Appendix 10A)Snow Blowers produces and sells snow blowers. Production levels are high in the summer and the beginning of fall, and then taper off through the winter. Sales are high in the fall and in early winter, and then taper off in the spring. Explain why preparing a cash budget might be particularly important for Snow Blowers.
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Chapter 11: Standard Costs and Variance Analysis
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Q1) (Appendix 11A)The contribution margin sales volume variance calculates:
A)The effects of changes in contribution margins, given the actual level of sales
B)The effects of changes in units sold, given the standard contribution margins
C)The effects of changes in actual fixed costs, given the actual level of sales
D)The effects of changes in standard variable costs, given the actual level of sales
Q2) The direct labour efficiency variance compares:
A)The standard cost for direct labour and the actual cost
B)The labour hours used to allocate fixed overhead and the actual labour hours used
C)The standard direct labour hours used for the output produced and the actual labour hours used
D)Direct labour hours and the supervisor's hours
Q3) List one similarity and one difference between price and efficiency variances for direct labour.
Q4) A standard cost variance is a difference between a standard cost and an actual cost.
A)True
B)False
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Chapter 12: Strategic Investment Decisions
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Sample Questions
Q1) (Appendix 12A)Amortization tax savings are
I. The savings on taxes because business equipment can be amortized
II. The income tax rate times the allowed amortization for that year
III. Measured in nominal dollars
A)I only
B)I and II only
C)I, II, and III
D)III only
Q2) In capital budgeting decisions, amortization shields part of operating income from the effect of income taxes.
A)True
B)False
Q3) DBR Corporation is considering the purchase and implementation of an enterprise-wide information system. Which of the following would be the least biased source of qualitative information about the project?
A)Information technology staff who would implement the system
B)The software vendor
C)Other companies that have implemented the same system
D)Experts in the industry
Q4) List one pro and one con for using the payback method.
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Chapter 13: Pricing Decisions
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Sample Questions
Q1) The internet enables managers to have greater access to market prices which results in prices being more consistent.
A)True
B)False
Q2) A penetration price is the price charged for transactions that take place within a single organization.
A)True
B)False
Q3) Division X sells organic high-gluten flour to Division Y. Division X incurs costs of $0.375 per kilogram of flour. Division Y makes loaves of bread that sell for $2.50 each. Division Y incurs costs of $1.25 per loaf, excluding the cost of flour. Each loaf of bread uses one-half kilogram of flour. What is the operating income per loaf for Division Y if the transfer price is set at $0.625 per kilogram for flour?
A)$0.6250
B)$0.9375
C)$1.2500
D)$0.8750
Q4) Explain why market-based pricing has increased in recent years.
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Page 15
Chapter 14: Strategic Management of Costs
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Sample Questions
Q1) Which of the following activities is not typically considered to be part of a manufacturing organization's value chain?
A)Making journal entries
B)Handling customer complaints
C)Designing and engineering new products
D)Manufacturing products
Q2) Which of the following is not a similarity between target costing and Kaizen costing?
A)They both rely on goal setting to achieve cost reduction
B)They both encourage organizations to work with suppliers to reduce costs
C)They both take advantage of the trade-offs between price, functionality and quality
D)They both occur at the beginning of the product life cycle
Q3) Kaizen costing concepts can be applied to:
A)Variable costs only
B)Fixed costs only
C)Both variable and fixed costs
D)Mixed costs only
Q4) Compare and contrast target costing with kaizen costing.
Q5) List one advantage and one disadvantage for using target and kaizen costing.
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Chapter 15: Measuring and Assigning Costs for Income Statements
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Sample Questions
Q1) Throughput costing income statements cannot be used to evaluate management performance.
A)True
B)False
Q2) Throughput costing was developed in the 1980s as part of:
A)The theory of constraints
B)Zero-based budgeting
C)Activity-based costing
D)Variable costing income statements
Q3) Direct material and direct labour costs are assigned to inventory when using:
I. Absorption costing
II. Throughput costing
III. Variable costing
A)I and III only
B)I and II only
C)II and III only
D)I, II, and III
Q4) Throughput costing was an outgrowth of the Theory of Constraints.
A)True
B)False
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Chapter 16: Performance Evaluation and Compensation
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Sample Questions
Q1) Investment centre managers are held responsible only for their costs.
A)True
B)False
Q2) Which of the following best describes "general knowledge" in a decision-making context?
A)Detailed information about manufacturing processes
B)Customer lists and preferences kept by individual departments in retail sales
C)Knowledge that is easily transferred between employees
D)Knowledge that can be obtained only outside the organization
Q3) A business segment that has responsibility for both revenues and expenses is called a(n)
A)Administrative centre
B)Investment centre
C)Profit centre
D)Revenue centre
Q4) In a profit centre, managers' primary goal is to maximize revenues.
A)True
B)False
Q5) Why should executive compensation in public companies be set by an independent compensation committee of the board of directors?
Page 18
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Chapter 17: Strategic Performance Measurement
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Sample Questions
Q1) The internal business process perspective in a balanced scorecard is often broken down into its value chain components. Those components include all of the following except the:
A)Innovation cycle
B)Operations cycle
C)Post-sales service cycle
D)Budget cycle
Q2) Which of the following measures would most likely be found in the internal business process perspective of the balanced scorecard?
A)Change in market share
B)Training days per employee
C)Residual income
D)Percent capacity utilization
Q3) In terms of motivation, one of the balanced scorecard's strengths is:
A)Improved financial performance
B)Aligning individual goals with organizational strategies
C)Convincing managers that the scorecard is more than a temporary fad
D)Having generally-defined objectives to increase motivation
Q4) List two strengths and two weaknesses of the balanced scorecard approach.
Q5) What are operating plans, and how are they linked to organizational strategies?
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Chapter 18: Sustainability Management
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Sample Questions
Q1) Most companies are motivated to issue sustainability reports by ethical considerations.
A)True
B)False
Q2) The triple bottom line refers to which of the following three value systems:
A)Economic, environmental, and social.
B)Economic, organic, and social
C)Economic, environmental, and ecological
D)Economic, environmental, and sustainable
Q3) To reduce the suspicion that a company is engaged in "impression management", a company's sustainability information can:
I. Follow GRI standards
II. Include lots of visuals suggesting environmental friendliness
III. Be transparent
A)I and II only
B)II and III only
C)I and III only
D)I, II, and III
Q4) Differentiate between internal impacts and external impacts.
Q5) Describe what is meant by "building a business case" for sustainable management.
Page 20
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