Accounting Information Systems
Test Bank
Course Introduction
Accounting Information Systems explores the design, implementation, and management of information systems used in accounting and business environments. This course examines the integration of technology with accounting processes, focusing on topics such as internal controls, data security, transaction processing cycles, and the role of accounting systems in decision-making. Students will analyze system documentation, assess risks, and study ethical considerations while gaining practical knowledge in using accounting software and interpreting system outputs to support organizational goals.
Recommended Textbook
Cost Management A Strategic Emphasis 8th Edition by Edward Blocher
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Chapter 1: Cost Management and Strategy
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Sample Questions
Q1) Which of the following is not considered part of the Institute of Management Accountants' definition of management accounting?
A)partnering in management decision making.
B)devising planning and performance management systems.
C)analyzing data and providing information.
D)providing expertise in financial reporting and control.
E)assisting management in the formulation and implementation of an organization's strategy.
Answer: C
Q2) Under the Sarbanes-Oxley Act of 2002, the Public Company Accounting Oversight Board (PCAOB) established rules relating to which of the following areas?
A)Financial reporting.
B)Production quality control.
C)Executive compensation.
D)Hiring and firing practices.
E)Audit quality, ethics, and independence.
Answer: E
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Page 3
Chapter 2: Implementing Strategy: The Value Chain, the
Scorecard, and the Strategy Map
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Sample Questions
Q1) A strategy map is:
A)A detailed flowchart outlining which firm managers are responsible for each implementation of a firm's strategy and when these implementations are to take place.
B)A cause and effect diagram of the relationships among the balanced scorecard perspectives to show how the achievement of critical success factors in each perspective affects the achievement of goals in other perspectives and the overall financial performance of the firm.
C)A framework for the firm to achieve a desired organizational change in strategy while mapping the successes of other firms within the industry.
D)None of the above.
Answer: B
Q2) The main objective of value chain analysis is to identify stages of the value chain where the firm can:
A)Justify increases in the price of the product or service.
B)Increase value to the customer or reduce cost in some way.
C)Outsource production to other producers.
D)Improve efficiency
Answer: B
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Chapter 3: Basic Cost Management Concepts
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Sample Questions
Q1) Assume the following information pertaining to Cub Company:\(\begin{array}{lr}
\text { Prime costs } & \$ 195,000 \\
\text { Conversion costs } & 221,000 \\
\text { Direct materials used } & 85,000 \\
\text { Beginning work in process } & 98,000 \\
\text { Ending work in process } & 81,000
\end{array}\)Direct labor used is calculated to be:
A) $306,000.
B) $26,000.
C) $110,000.
D) $84,000.
E) $111,000.
Answer: C
Q2) The income statement for a manufacturing company includes:
A)Indirect Labor, Factory Overhead, and Total Manufacturing Cost
B)Total Manufacturing Cost and Cost of Goods Sold.
C)Indirect Materials, Factory Overhead, and Cost of Goods Manufactured.
D)Indirect Labor, Indirect Materials and Cost of Goods Sold.
E)None of the above.
Answer: B
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Chapter 4: Job Costing
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Sample Questions
Q1) Sutherland Company listed the following data for 2019:\(\begin{array}{lr}
\text { Budgeted factory overhead } & \$ 2,100,000 \\
\text { Budgeted direct labor hours } & 89,000 \\
\text { Budgeted machine hours } & 51,000 \\
\text { Actual factory overhead } & 2,201,000 \\
\text { Actual direct labor hours } & 83,700 \\
\text { Actual machine hours } & 48,900
\end{array}\)If overhead is applied based on machine hours, the overapplied/underapplied overhead is:
A)$187,298 underapplied.
B)$187,298 overapplied.
C)$176,358 underapplied.
D)$176,358 overapplied.
E)$-0-.
Q2) Which of the following industries is often suitable for applying operation costing?
A)Electronic equipment.
B)Healthcare.
C)Legal services.
D)Universities.
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Page 6
Chapter 5: Activity-Based Costing and Customer
Profitability Analysis
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Sample Questions
Q1) In regard to selling activities, which one of the following would be a cost driver for selling expense?
A)Number of invoices.
B)Number of sales calls.
C)Number of production runs.
D)Number of shipments.
E)All of the above.
Q2) Which one of the following is a high value-added activity?
A)Set-up.
B)Rework.
C)Repair.
D)Storage.
E)Processing.
Q3) In the context of ABC, cross-subsidization refers to:
A)Production departments subsidizing each other.
B)Costing inaccuracies which affect the relative profitability of products.
C)Cross-selling products lines, which affect customer profitability.
D)Efforts to increased coordination among department heads.
E)None of the above.
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Chapter 6: Process Costing
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Sample Questions
Q1) The journal entry to record finished product units would include a debit to:
A)Work-in-Process Inventory.
B)Accrued Payroll.
C)Factory Overhead.
D)Materials Inventory.
E)Finished Goods Inventory.
Q2) Firms should use a process costing system when they produce products that:
A)Are semi-homogeneous.
B)Pass through a series of inspection points.
C)Pass through a series of manufacturing departments.
D)Have a small batch size.
Q3) Process costing can be found in which of the following companies (industries)?
A)Coca-Cola.
B)Royal Dutch Shell Group.
C)Kimberly-Clark (paper products).
D)Reichhold Chemical (chemicals).
E)All of the above.
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Chapter 7: Cost Allocation: Departments, Joint Products, and
By-Products
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Sample Questions
Q1) The reciprocal method can be solved using the Excel function:
A)Goal Seek
B)Regression
C)Solver
D)Scenarios
E)Pivot Tables
Q2) An alternative concept of fairness in cost allocation, absent the cause-and-effect basis, includes:
A)Ability-to-bear.
B)Efficiency.
C)Different costs for different purposes.
D)Consistency.
Q3) Which of the following statements best describes a by-product?
A) A product that is produced from material that would otherwise be scrap.
B) A product that has a selling price similar to that of the main product.
C) A product created along with the main product whose sales value does not cover its cost of production.
D) A product that usually produces a small amount of revenue when compared to the main product's revenue.
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E) A product that has a lower unit selling price than the main unit.
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Chapter 8: Cost Estimation
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Sample Questions
Q1) A data point that is outside the normal distribution of data is called an "outlier," which is often removed from the data before analysis because it:
A) Leads to unbiased calculations.
B) Can distort the results of the data analysis.
C) Has an upward bias on the statistical measures in regression.
D) Will always add bias to the results of a high-low analysis.
Q2) Maintenance expenses of a company are to be analyzed for purposes of constructing a flexible budget. Examination of past records disclosed the following costs and volume measures:\(\begin{array}{lrr}
& \text { Highest } & \text { Lowest } \\
\text { Cost per month } & \$ 42,000 & \$ 34,000 \\
\text { Machine hours } & 46,000 & 30,000
\end{array}\)Using the high-low technique, estimate the annual fixed cost for maintenance expenditures:
A) $447,000.
B) $240,000.
C) $230,000.
D) $384,000.
E) $228,000.
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Page 10
Chapter
CVP Analysis
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Sample Questions
Q1) Which one of the following is the most useful measure for comparing the risk of two alternative products?
A) Contribution margin ratio.
B) Margin of safety ratio (MOS%).
C) Financial leverage.
D) Breakeven point.
E) Gross profit ratio.
Q2) Which of the following items is not useful for addressing risk and uncertainty in CVP analysis?
A) Regression analysis
B) Sensitivity analysis
C) What-if analysis
D) Monte Carlo Simulation (MCS) analysis
E) Decision trees and decision tables
Q3) At the breakeven point, total fixed cost (F) is:
A) Less than the total contribution margin (CM).
B) Equal to the total contribution margin (CM).
C) More than the total contribution margin (CM).
D) Equal to the contribution margin per unit (CM).
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E) Equal to the total contribution margin (CM) divided by operating income ( B).
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Chapter 10: Strategy and the Master Budget
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Sample Questions
Q1) The budget committee for Amacom Company, with the help of the district sales manager, projects sales of 80,000 units of its primary product next year.The budget committee and key executives have decided that finished goods inventory should be decreased from the 10,000 units expected at the end of the current year, to 7,000 units at the end of next year.Each unit of finished product requires three units of material MPS15 and six units of material NAV23.At the end of the current year, the inventory of material MPS15 is expected to be 10,000 units and material NAV23 is expected to be 20,000 units.The budget committee believes that these material inventories can be reduced by 80% during the coming year because of the newly installed supply chain system. Required
1.Calculate the number of units Amacom expects to produce during the next year. 2.Compute the number of units that should be purchased of each of the raw materials in order to produce the budgeted units and comply with inventory policy.
Q2) Explain benefits of implementing a master budgeting system.
Q3) List factors that should be considered in developing a sales forecast for an upcoming budget period.
Q4) What is the focus of activity-based budgeting (ABB)? What is the principal advantage of ABB?
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Page 12
Chapter 11: Decision Making With a Strategic Emphasis
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Sample Questions
Q1) Joint (common) costs in a joint production process are relevant for determining:
A) Whether to produce at all.
B) Which products should be produced up to the split-off point in the production process.
C) Which products should be produced internally and which products should be outsourced.
D) The set of products that should be subjected to additional processing.
E) The selling price of individual products produced as part of the joint production process.
Q2) Variable costs will generally be relevant for decision making because they:
A) Differ between decision options.
B) Are volume-based.
C) Have not been committed and are likely to differ between decision alternatives.
D) Differ between decision options and have been committed.
E) Measure opportunity cost.
Q3) What strategic factors/considerations are generally relevant to the special order decision problem (i.e., whether a company should accept a one-time order from a customer with whom the company does not generally do business)?
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Chapter 12: Strategy and the Analysis of Capital Investments
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Sample Questions
Q1) A capital budgeting model that accounts for an assumed rate of return on interim-period cash inflows from an investment is the:
A) Internal rate of return (IRR) model.
B) Present-value payback period model.
C) Net present value (NPV) model.
D) Accounting rate of return (ARR) model.
E) Modified internal rate of return (MIRR) model.
Q2) Within the context of capital budgeting, a primary goal-congruency problem exists when discounted cash flow (DCF) models are used for decision-making purposes, but accrual-based earnings figures are used for subsequent performance-evaluation purposes. Which of the following items is not likely to be useful for addressing this goal-congruency problem?
A) Monte Carlo simulation.
B) Use of EVA® as the financial-performance metric.
C) Separating incentive compensation (i.e., "reward") from budgeted performance.
D) Conducting post-audits of capital investment decisions.
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Page 14
Chapter 13: Cost Planning for the Product Life Cycle: Target
Costing, Theory of Constraints, and Strategic Pricing
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Sample Questions
Q1) The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model:\(\begin{array}{lr}
\text { Variable manufacturing costs } & \mathrm{S} \\ \text { Applied fixed manufacturing overhead } & 135 \\ \text { Variable selling and administrative costs } & 90 \\ \text { Applied fixed selling and administrative costs } & 105 \end{array}\)What price will the company charge if the firm uses cost-plus pricing based on variable manufacturing cost and a markup percentage of 200%?
A) $810.
B) $450.
C) $540.
D) $675.
E) None of these answer choices is correct.
Q2) The theory of constraints (TOC) emphasizes which of the following?
A) Developing competitive constraints.
B) Finding and eliminating design constraints.
C) Removing bottlenecks from the production process.
D) Improving overall production efficiency.
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Chapter 14: Operational Performance Measurement:
Direct-Cost Variances, and the Role of Nonfinancial
Performance Measures
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Sample Questions
Q1) Minmax Co.'s direct labor information for February is as follows:\(\begin{array}{lr}
\text { Direct labor hours worked (AQ) } & 33,600 \\
\text { Standard direct labor hours for units manufactured (SQ) } & 35,000 \\
\text { Unfavorable direct labor rate variance } & \$ 11,760 \\
\text { Total payroll for direct labor } & \$ 470,400 \end{array}\)The standard direct labor rate per hour (SP) (to two decimal places) for February was:
A) $13.44.
B) $13.65.
C) $13.78.
D) $14.00.
E) $14.35.
Q2) By convention, short-term financial control is accomplished by all the following except:
A) Comparing actual to budgeted financial results.
B) Calculating a series of cost and revenue variances at the end of the period.
C) The use of flexible budgets and standard costs.
D) Explaining the total operating-income variance for a given period.
E) The use of productivity analysis.
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Chapter 15: Operational Performance Measurement:
Indirect-Cost Variances and Resource-Capacity Management
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Sample Questions
Q1) The following information is available from the Terry Company:\(\begin{array}{lrr}
\text { Actual total factory overhead cost incurred } & \$ 25,000 \\
\text { Actual fixed overhead cost incurred } & \$ 10,400 \\
\text { Budgeted fixed overhead expenses } & \$ 11,000 \\
\text { Actual direct labor hours (DLH) worked } & 4,400 \\
\text { Standard DLHs for this period's production (output) } & 4,000 \\
\text { Standard variable overhead rate per DLH } & \$ 3.00 \\
\text { Standard fixed overhead rate per DLH } & \$ 2.50 \end{array}\)The total under or overapplied overhead for Terry Company for the period, to the nearest dollar, is:
A) $800 overapplied.
B) $800 underapplied.
C) $2,600 underapplied.
D) $3,000 overapplied.
E) $3,000 underapplied.
Q2) What are the four (4) steps in determining the standard fixed factory overhead application rate? Does the procedure differ for product-costing versus cost-control purposes? Explain.
17
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Chapter 16: Operational Performance Measurement:
Further Analysis of Productivity and Sales
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Sample Questions
Q1) A selling price variance is:
A) Further divided into separate sales quantity and sales mix variances.
B) Further divided into separate revenue and quantity variances.
C) Not further divided.
D) Further divided into separate flexible budget and sales volume variances.
E) Further divided into separate variable and fixed variances.
Q2) Creepers, Inc., manufactures stuffed spiders and mummies. During September the following information was gathered:\(\begin{array}{lrrr}&\text { Spiders } & \text { Mummies } \\
\text { Units sold } & 6,900 & 3,100 \\
\text { Budgeted sales (units) } & 7,500 & 2,500 \\
\text { Contribution margin per unit: } & & \\
\text { Actual } & \$ 3.75 & \$ 5.75 \\
\text { Budgeted } & \$ 2.75 & \$ 5.25
\end{array}\)What is the sales volume variance for Spiders?
A) $0.
B) $1,125 favorable.
C) $1,500 favorable.
D) $1,650 unfavorable.
E) $12,375 unfavorable.
Page 18
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Chapter 17: The Management and Control of Quality
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Sample Questions
Q1) The following data of causes of absenteeism for a fellow student for the year just completed were available.
\(\begin{array}{lll}\text { Reason\# }&\text { Cause of Absenteeism }&\text { Number of Occurrences }\\
1 & \text { Personal Illness } & 14 \\
2 & \text { A child's illness } & 31 \\
3 & \text { Car broke down } & 10 \\
4 & \text { Personal emergency } & 38 \\
5 & \text { Overslept } & 11 \\
6 & \text { Unexplained visitor } & 13
\end{array}\) Required:
1. Use the above information to construct a histogram.
2.Use the information from requirement (1) to prepare a Pareto diagram.
(Note: In constructing the above two items, you can use the information in column 1 to describe each of the identified causes. That is, you can use the reference numbers rather than the actual verbal descriptions presented in column 2.)
3. Within the context of managing and control quality, what is the primary purpose played by tools such as histograms and Pareto diagrams?
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Chapter 18: Strategic Performance Measurement: Cost
Centers, Profit Centers, and the Balanced Scorecard
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Sample Questions
Q1) Zhender Inc. manufactures hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in both 2018 and 2019 was 3,000 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations:\(\begin{array}{lcc} & 2018 & 2019 \\
\text { Units sold } & 2,500 & 3,200 \\
\text { Units produced } & 3,000 & 3,000\\\text { Costs: }\\
\text { Variable factory overhead per unit } & \$ 0.65 & \$ 0.65 \\
\text { Fixed factory overhead } & \$ 1,290 & \$ 1,290 \\
\text { Variable marketing per unit } & \$ 0.80 & \$ 0.80 \\
\text { Fixed Selling and Administrative } & \$ 650 & \$ 650 \end{array}\)Full costing operating income for 2018 is calculated to be:
A) $935.
B) $1,150.
C) $1,200.
D) $1,352.
E) $1,395.
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Chapter 19: Strategic Performance Measurement:
Investment Centers and Transfer Pricing
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Sample Questions
Q1) Selected data from Division A of Green Company are as follows: \(\begin{array}{lcc}
\text { Sales } & \$ & 500,000 \\
\text { Average investment } & \$ & 300,000 \\
\text { Operating income } & \$ & 60,000 \\
\text { Minimum rate of return } & & 15 \% \end{array}\)Division A's residual income (RI) is:
A)$15,000.
B)$24,000.
C)$30,000.
D)$36,000.
E)$54,000.
Q2) A measure of the manager's ability to control expenses and increase revenues to improve profitability is:
A) Residual income (RI) divided by level of invested capital.
B) Return on equity (ROE).
C) Return on investment (ROI).
D) Return on sales (ROS).
E) Asset turnover (AT).
Q3) 0
Page 21
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Chapter 20: Management Compensation, Business
Analysis,
and Business Valuation
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Q1) All of the following are listed as common payment options for bonus compensation plans except:
A)Performance shares.
B)Current bonus.
C)Deferred bonus.
D)Preferred bonus.
E)Stock options.
Q2) Any system of compensation:
A) May encourage unethical behavior.
B) Must be approved by the appropriate regulatory authority.
C) Should be designed by top management.
D) Must be approved by the auditor.
Q3) In service firms, improvement in long term profitability is best measured by all the following except:
A)Staff utilization.
B)Net revenues.
C)Collections of customer accounts.
D)Materials usage.
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