Accounting Information Systems Review
Questions
Course Introduction
Accounting Information Systems explores the design, implementation, and management of information systems in the context of accounting functions and business operations. The course covers key topics such as systems development life cycles, internal controls, database management, risk assessment, and the role of AIS in facilitating financial reporting and decision-making. Students will gain practical knowledge of how technology integrates with accounting processes, emphasizing the analysis, design, and evaluation of systems that collect, process, and report accounting data. Real-world case studies and software applications are used to demonstrate how accounting information systems contribute to organizational efficiency, accuracy, and compliance.
Recommended Textbook
Managerial Accounting 2nd Edition by Charles E. Davis
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Page 2
Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) The supply chain's goal is to
A)Avoid carrying too much inventory.
B)To reduce or eliminate defective goods.
C)To measure performance based on financial and non-financial components.
D)To get the right product to the right location,in the right quantities at the right time,and at the right cost.
Answer: D
Q2) Preparers of managerial accounting information are generally not active participants in the decision making process.
A)True
B)False
Answer: False
Q3) Which of the following is not a test of an ethical business decision as suggested by the Institute of Business Ethics?
A)Would I want others to do to me what I am doing to them?
B)Do I mind others knowing what I have done?
C)Who does my decision affect or hurt?
D)Would my decision be considered fair by those affected?
Answer: A
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Page 3
Chapter 2: Cost Behavior and Cost Estimation Summary of
Questions by Objectives and Blooms Taxonomy
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Questions
Q1) Three methods used for estimating the fixed and variable portions of a cost include: cost-cover graphs,the high-False - Three methods used for estimating the fixed and variable portions of a cost include scattergraphs,the high-low method and regression analysis.
A)True
B)False
Answer: False
Q2) Four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis are
A)Variable cost,fixed cost,selling cost,and administrative cost.
B)Variable cost,fixed cost,mixed cost,and step cost.
C)Variable cost,fixed cost,period cost,and other cost.
D)Selling cost,administrative cost,cost of goods sold,and depreciation.
Answer: B
Q3) If activity level decreases,what happens to the total variable cost?
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.
Answer: A
Page 4
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Cost-plus pricing adds an amount to the cost of the product or service to cover the company's operating costs and contribute to its profit.
A)True
B)False
Answer: True
Q2) Donnie's Donut Shop sells cream-filled muffins for $1 each.Donnie's variable cost per donut is $0.30 and total fixed costs are $2,000 per month.If Donnie wants to earn a monthly operating income of $5,000,how many muffins must he sell during the month?
A) 2,857
B) 7,000
C) 10,000
D) 23,333
Answer: C
Q3) The formula for operating income is
A)Sales revenue - variable costs - fixed costs
B)Sales revenue - variable costs - fixed costs - profit
C)Sales revenue - contribution margin - variable costs
D)Sales revenue - gross margin - fixed costs
Answer: A
Page 5
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Wood used in the manufacturing of furniture is an example of: \(\begin{array}{} \underline{\text{Indirect Material}} & \underline{\text{Overhead}} \end{array}\)
A) \(\begin{array}{}\text{Yes} & \text{No}\end{array}\)
B) \(\begin{array}{}\text{Yes} & \text{Yes}\end{array}\)
C) \(\begin{array}{}\text{No} & \text{Yes}\end{array}\)
D) \(\begin{array}{}\text{No} & \text{No}\end{array}\)
Q2) Classify the following costs incurred by a Ranger Boat Company manufacturing plant as product or period costs by placing an "X" in the appropriate column. \[\begin{array} { | l | c | c | }
\hline & \textbf{Product Cost} & \textbf{Period Cost} \\
\hline \text{Cost of boat seats} & & \\
\hline \text{Cost of bolts to secure electric motor} & & \\
\hline \text{Cost of commission paid to salespeople} & & \\
\hline \text{Salary of CEO} & & \\
\hline \text{Salary of worker who installs seats into boats} & & \\
\hline \end{array}\]
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6
Chapter 5: Planning and Forecasting
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Sample Questions
Q1) In setting the direct labor quantity standard,allowances are made for A)Rest time.
B)Machine down time.
C)Both rest time and machine down time.
D)Neither rest time nor machine down time.
Q2) Jody Jewelry manufactures jewelry.In October Jody is planning to make 500 rings,400 bracelets,and 210 pendants.Each ring requires 3 ounces of gold and 2 semi-precious stones.Each bracelet requires 4 ounces of gold and 4 semi-precious stones.Each pendant requires 3.5 ounces of gold and 1 semi-precious stone.The company can purchase the 10k gold it uses in its manufacturing for $215 an ounce,and can purchase a lot of 100 semi-precious stones for $3,080.What is the standard cost for direct materials per bracelet?
A) $338.20
B) $983.20
C) $890.80
D) $245.80
Q3) Zero-based budgeting is not as time consuming as incremental budgeting.
A)True
B)False
Q4) What is budgetary slack and why is it an issue in budget preparation?
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) When a variable overhead efficiency variance is identified,managers will want to talk with the production manager to evaluate the use of the activity base.
A)True
B)False
Q2) Which of the following would be a feasible explanation for an unfavorable direct materials quantity variance?
A)Purchased more materials than specified because the larger quantity resulted in a price discount
B)Purchased a higher-quality material than specified in the standard
C)A machine that was out of alignment caused several
D)Only higher-paid experienced factory workers were assigned to the product
Q3) Which of the following is not a factor in the amount of material used in production,resulting in a direct materials quantity variance?
A)The quality of the material.
B)The skill level of the production workers.
C)The supervision provided by the production manager.
D)All of these ans choices are correct.
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8
Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) An activity that is performed for each individual unit of product is classified as a
A)Variable cost-level activity.
B)Unit-level activity.
C)Batch-level activity.
D)Operations-level activity.
Q2) Mounce Catering Service uses an activity-based costing system.What would be the most appropriate cost driver for the activity of preparing meals?
A)Number of meals prepared
B)Number of orders taken
C)Number of rolls used
D)Rent on building
Q3) In implementing an activity-based costing system,once the activity pools have been determined,manufacturing overhead costs can be assigned to them.This is referred to as
A)Predetermined overhead allocation
B)Overhead application
C)First-stage allocation
D)None of these ans choices are correct.
Q4) What is an activity cost pool and how are activity cost pool rates calculated?
9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) What is an What is an opportunity cost and what is the impact of opportunity cost on a decision to outsource the production of an item?
Q2) Murphy's,Inc.has the following production and cost data for two of its products,Standard and Deluxe: \(\begin{array}{lccc} & \underline{\text { Standard }} & & \underline{\text { Deluxe }} \\ \text { Contribution margin per unit } & \$ 60 & & \$ 40 \\ \text { Machine hours needed per unit } & 2 & & 1 \end{array}\) A total of 80,000 hours is available each period for the production of the two products.The demand for both products is strong and Murphy will be able to sell as many of either product as it can produce.Ignoring qualitative issues,which of the two products should Murphy produce?
Q3) Throughput contribution equals
A)Sales revenue less direct materials cost.
B)Sales revenue less product costs.
C)Direct material plus direct labor.
D)Direct material plus traceable manufacturing overhead.
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Page 10
Chapter 9: Capital Budgeting
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Sample Questions
Q1) Felder's manufacturing is considering the purchase of new equipment that costs $750,000 to replace equipment that is old and inefficient.Felder has found a buyer for the old equipment who will pay $8,000 for it.The new equipment is expected to produce $12,000 of additional revenue each year,but will result in additional maintenance cost of $2,000.The new equipment will have a salvage of $10,000 and will be depreciated over 10 years.
Required:
Identify the amount and timing of the cash flows relevant to Felders decision to purchase the new equipment.
Q2) Morrow Company has invested in equipment that cost $70,000.The equipment has a 7-year life and no salvage value.Morrow uses straight-line depreciation.The equipment has a payback period of 4 years.The accounting rate of return is closest to
Q3) What are the three factors needed to determine the present value of any future amount?
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Page 11
Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) ROI will \(\textbf{ not }\) be improved by
A)Increasing revenue.
B)Converting variable costs to traceable fixed costs.
C)Decreasing assets.
D)All of these ans choices will improve ROI.
Q2) To calculate the weighted-average cost of capital we do \(\textbf{ not }\) need to know
A)The relative percentage of capital provided by each source.
B)The required rate of return.
C)The date of each capital source.
D)All of these ans choices are necessary to calculate the weighted-average cost of capital.
Q3) Which of the following would \(\textbf{ not }\) be a focus of top managers in a decentralized organizational structure?
A)Long-range projections
B)Corporate goals
C)Day-to-day operational issues
D)All of these ans choices would be focuses of top management.
Q4) What is EVA and how is it calculated?
Q5) What is a transfer price? List the four ways of determining a transfer price.
Page 12
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Traditionally,organizations have evaluated their performance using only financial measures.However,many other performance indicators should be considered.The balanced scorecard was developed to assist managers in measuring performance across several perspectives.
Required
a.Identify and discuss each of the perspectives used in the balanced scorecard.
b.Provide three measures of performance used in each perspective.
Q2) Which of the following statements is correct regarding benchmarking?
A)Benchmarking is the practice of using a company's own data to identify the processes and practices in which it outperforms its competitors.
B)Benchmarking involves selecting measures,setting targets for measures and adjusting the benchmark as strategies change.
C)Benchmarking participants should adhere to the Benchmarking Code of Conduct which provides general principles to follow during the benchmarking process.
D)All of these ans choices are correct regarding benchmarking.
Q3) Lagging indicators can be used to predict future results.
A)True
B)False
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) In preparing a common-size income statement,you express all revenue and expense accounts as a percentage of net income.
A)True
B)False
Q2) Common-size statements are especially helpful in comparing companies of different size.
A)True
B)False
Q3) The average collection period is calculated as a. \(\frac{365 \text { days }}{\text { Ending Accounts Receivable Balance }}\)
b. \(\frac{365 \text { days }}{\text { Net Credit Sales }}\)
c. \(\frac{365 \text { days }}{\text { Average Accounts Receivable Balance }}\)
d. \(\frac{365 \text { days }}{\text { Accounts Receivable Turnover }}\)
Q4) Probably the most common measure of short-term liquidity is the quick ratio.
A)True
B)False
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following items would \(\textbf{ not }\) be included in the calculation of cash flows provided by operating activities using the indirect method?
A)Purchasing supplies on account
B)Net income
C)Depreciation expense
D)Gain on the sale of equipment
Q2) Answer the following questions relating to the statement of cash flows.
a.List the three sections used to classify activities in the statement of cash flows.
b.Give one example of a use of cash for each of the three activities.
c.Give one example of a source of cash for each of the three activities.
Q3) For the past two years,Monroe Corporation's statement of cash flows has shown net cash provided by investing activities.Which of the following choices could explain this result?
A)Collection of accounts receivable balances
B)Sales of factory equipment
C)Receipt of cash dividends from investments in other company's stock
D)Issuance of long-term debt
Q4) What is the basic form of the statement of cash flows?
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Page 15
Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) In a process costing system, all product costs for the period are accumulated and divided evenly over all units produced during the period.
A)True
B)False
Q2) When using a process costing system,the formula for reconciling the costs of production is
A)Beginning WIP balance + Costs transferred out during the period + Ending WIP = Total costs accounted for
B)Beginning WIP balance + Cost added during the period = Cost transferred out during the period + Ending WIP balance
C)Cost added during the period - Beginning WIP balance = Cost transferred out during the period + Ending WIP balance
D)Beginning WIP balance + Cost transferred out - Ending inventory = Total costs to accounted for
Q3) The accounting firm PriceWaterhouseCoopers is an example of a company that would use a process costing system.
A)True
B)False
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16
Chapter 15: Topic Focus Variable and Absorption Costing
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Q1) For each item below,identify whether the item applies to an absorption costing or variable costing income statement by marking an "X" in the appropriate column.
\[\begin{array} { | l | l | l | }
\hline & \text { Absorption } & \text { Variable } \\
\hline \text { Gross profit } & & \\
\hline \text { Expenses separated by variable and fixed } & & \\
\hline \text { Expenses separated by product and period } & & \\
\hline \text { Contribution margin } & & \\
\hline \text { All fixed costs expensed in period incurred } & & \\
\hline
\end{array}\]
Q2) Mixed costs are divided into their direct and indirect components.
A)True
B)False
Q3) The only difference between variable and absorption costing is the treatment of variable overhead costs.
A)True
B)False
Q4) What managerial behavior does variable costing render ineffective?
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Chapter 16: Topic Focus Standard Costing Systems
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Q1) When using a standard costing system,the direct materials price variance is recorded at the time direct materials are transferred to the production floor.
A)True
B)False
Q2) When using a standard costing system,which of the following should be recorded to transfer
A)Debit finished goods for actual cost and credit work in process for actual cost
B)Debit finished goods for standard cost and credit work in process for standard cost
C)Debit finished goods for standard cost and credit work in process for actual cost
D)Debit finished goods for actual cost and credit work in process for standard cost
Q3) The standard cost of labor consists of two components: standard quantity of direct labor hours allowed for actual production and standard direct labor rate per hour.
A)True B)False
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18
Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) Which of the following is \(\textbf{ not }\) an example of how a company can help a customer become a profitable customer?
A)Encourage them to order in larger quantities to reduce shipping charges
B)Encourage them to order through the cheaper internet sales channel rather than the more costly catalog sales channel
C)Encourage them to delay payment on their account so as to forgo any sales discount
D)Ask them to pay all shipping charges
Q2) Selling expenses are expenses that are associated with only the delivery of products to the customer.
A)True
B)False
Q3) The formula for the customer profit margin is
A)Customer net profit divided by customer revenue
B)Customer revenue divided by customer cost of goods sold
C)Customer revenue less cost of goods sold less allocated selling expenses
D)Customer profit margin less allocated selling and administrative expenses
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