Accounting Information Systems
Test Bank
Course Introduction
Accounting Information Systems (AIS) explores the design, implementation, and management of information technology solutions that support the accounting functions within organizations. The course covers the fundamentals of systems analysis and design, internal controls, database management, and the integration of AIS with other business processes. Students examine how accounting information is collected, processed, and reported, and how these systems facilitate decision-making, compliance, and risk management. Emphasis is placed on the use of real-world accounting software, cybersecurity issues, and the regulatory environment affecting the integrity and reliability of financial data.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis16th Global Edition by Srikant M. Datar
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4103 Verified Questions
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Chapter 1: The Manager and Management Accounting
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Sample Questions
Q1) A cost concept used for the purposes of external reporting will always be appropriate for internal reporting.
A)True
B)False
Answer: False
Q2) Which of the tools shown below would be the most effective planning tool?
A)performance evaluation report
B)fishbone diagram
C)control chart
D)budget
Answer: D
Q3) Financial accounting is concerned primarily with ________.
A)external reporting to investors,creditors,and government authorities
B)cost planning and cost controls
C)product design and marketing strategies
D)providing information for strategic and tactical decisions
Answer: A
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Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) The collection of cost data in an organized way,such as in various categories such as materials,labor,and manufacturing overhead,is called:
A)cost application
B)cost accumulation
C)cost assignment
D)cost reporting
Answer: B
Q2) Period costs are included in the cost of goods sold.
A)True
B)False Answer: False
Q3) Costs are accounted for in two basic stages: assignment followed by accumulation.
A)True
B)False
Answer: False
Q4) A cost object is anything for which a cost measurement is desired.
A)True
B)False Answer: True
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Chapter 3: Cost-Volume-Profit Analysis
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Sample Questions
Q1) If variable costs per unit increase,then the breakeven point will decrease.
A)True
B)False
Answer: False
Q2) Which option provides the greatest degree of operating leverage if 600 people attend?
A)Option one
B)Option two
C)Both options provide equal degrees of operating leverage.
D)Operating leverage is indeterminable.
Answer: B
Q3) When fixed costs are $70,000 and variable costs are 60% of the selling price,then breakeven sales are ________.(Round the final answer to the nearest dollar. )
A)$116,667
B)$175,000
C)$112,000
D)$98,000
Answer: B
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Chapter 4: Job Costing
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Sample Questions
Q1) The advantage of using normal costing instead of actual costing is ________.
A)indirect costs are assigned at the end of the year when they are known
B)the job cost is more accurate under normal costing
C)indirect costs are assigned to a job on a timely basis
D)normal costing provides a higher gross profit margin
Q2) What are the direct costs of a job and in which source documents are they recorded?
Q3) Direct costs are traced the same way for actual costing and normal costing.
A)True
B)False
Q4) A cost is considered direct if it can be traced to a particular cost object in a cost effective way which means it can be
A)traced easily with the aid of technology
B)traced in a manner that is accurate
C)traced in an economically feasible way
D)possibly traced accurately with an investment in hardware and software
Q5) Explain how the following statement be true: Often the manufacturing overhead control account (debit)does not equal the manufacturing overhead allocated account (credit).
Page 6
Q6) Differentiate between a cost pool and a cost-allocation base.
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Chapter 5: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) Which of the following statements is true of ABC systems?
A)ABC systems provide less insight than traditional systems into the management of the indirect costs.
B)ABC systems are used by managers for strategic decisions rather than for inventory valuation in merchandising companies.
C)Service companies find great value from ABC because a vast majority of their cost structure is composed of direct costs.
D)ABC systems is valuable for pricing decisions but not for understanding,managing,and reducing costs in government institutions.
Q2) Service-sustaining costs are the costs of activities that managers cannot trace to individual services but that support the organization as a whole.
A)True
B)False
Q3) Demand for refinements to the costing system has accelerated due to ________.
A)increase in direct costs
B)decrease in product diversity
C)decrease in indirect costs
D)competition in product markets
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Chapter 6: Master Budget and Responsibility Accounting
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Sample Questions
Q1) The ________ is a component of financial budgets.
A)cost of goods sold budget
B)budgeted income statement
C)direct materials budget
D)budgeted statement of cash flows
Q2) Computer-based systems,such as ERP systems,cannot perform calculations for financial planning models.
A)True
B)False
Q3) Sensitivity analysis helps managers evaluate risks ________.
A)by showing the effects of changes to the original data or an underlying assumption
B)by identifying inconsistencies in underlying assumptions and actual conditions
C)by removing the effects of foreign currency exposure and other uncontrollable factors
D)by identifying gaps in the production process using information on setups needed to manufacture products
Q4) A rolling budget is the same as a continuous budget.
A)True
B)False
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Chapter 7: Flexible Budgets,direct-Cost Variances,and Management Control
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Sample Questions
Q1) A master budget is called a static budget because it is developed around a single planned output level.
A)True
B)False
Q2) When benchmarking it is best when management accountants simply analyze the costs and allow management to provide the insight as to why the revenues and costs differ between companies.
A)True
B)False
Q3) Expected performance is also called budgeted performance.
A)True
B)False
Q4) Efficiency is the relative amount of inputs used to achieve a given output level. A)True
B)False
Q5) The flexible-budget variance is the total of price variance and efficiency variance. A)True
B)False
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Chapter 8: Flexible Budgets, overhead Cost Variances, and Management Control
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Sample Questions
Q1) Wainwright has budgeted construction overhead for August of $435,000 for fixed costs.Actual costs for the month totaled for $450,000 for fixed.Allocated fixed overhead totaled $430,000.The company tracks each item in an overhead control account before allocations are made to individual jobs.The fixed overhead spending variance for August was $15,000 unfavorable for fixed.
Required:
a.Make journal entries for the actual costs incurred.
b.Make journal entries to record the variances for August.
Q2) The following overhead variances would result in a total-overhead variance of $15,000 favorable: spending variance $5,000 U,efficiency variance $20,000 F,and production-volume variance $30,000 U.
A)True
B)False
Q3) The amount reported for fixed overhead on the static budget is also reported
A)as actual fixed costs
B)as allocated fixed overhead costs
C)as flexible budget costs
D)as committed variable costs
Page 10
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Chapter 9: Inventory Costing and Capacity Analysis
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Sample Questions
Q1) In ________,fixed manufacturing costs are included as inventoriable costs.
A)variable costing
B)absorption costing
C)throughput costing
D)activity-based costing
Q2) There is no output-level variance for variable costing,when ________.
A)the inventory level decreases during the period
B)the inventory level increases during the period
C)fixed manufacturing overhead is allocated to work in process
D)fixed manufacturing overhead is not allocated to work in process
Q3) Which of the following statements is true of absorption costing?
A)Absorption costing allocates fixed manufacturing overhead to actual units produced during the period.
B)Absorption costing carries over nonmanufacturing costs to the future periods.
C)Absorption costing shows the same level of profit as variable costing irrespective of the level of inventories.
D)Absorption costing allocates total manufacturing cost using the budgeted level of production for a particular year.
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Chapter 10: Determining How Costs Behave
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Sample Questions
Q1) The account analysis method of cost estimation classifies account costs as fixed,mixed,or variable using qualitative judgments.
A)True
B)False
Q2) Fixed costs are sometimes allocated to individual products as part of the standard costing system.When this is the case,they should be treated as variable costs for purposes of future cost estimation.
A)True
B)False
Q3) The high-low method relies on only two observations,the highest and lowest,to estimate a linear cost function.
A)True
B)False
Q4) Simple regression analysis estimates the relationship between the dependent variable and one independent variable.
A)True
B)False
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Page 12
Chapter 11: Decision Making and Relevant Information
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Sample Questions
Q1) A study by a consultant shows that a company that had $2,000,000 of inventory was holding excess inventory of $320,000 that could be eliminated with a few process improvements.It also has $620,000 in marketable securities that yield 5% per year.What is the estimated annual opportunity cost of holding the excess inventory?
A)$16,000
B)$100,000
C)$31,000
D)$47,000
Q2) Incremental revenue is the sum of differential revenues of two alternatives.
A)True
B)False
Q3) Differential revenue is the difference in total revenue between two alternatives.
A)True
B)False
Q4) Equal weight must be given to qualitative factors and quantitative nonfinancial factors while making decisions.
A)True
B)False
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Chapter 12: Strategy,balanced Scorecard,and Strategic
Profitability Analysis
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Sample Questions
Q1) Manufacturing overhead cost is an example of indirect engineered costs.
A)True
B)False
Q2) Which of the following is not correct about the balanced scorecard?
A)profits and value created for shareholders are perspectives revealed on a balance scorecard
B)nonfinancial and operational indicators are reported on a balance scorecard
C)the balanced scorecard reveals information about the success of the company in its target market
D)the balance scorecard increases managements emphasis on short-term results
Q3) Can a company identify unused capacity and,if so,how can unused capacity be managed?
Q4) Which of the following statements best relates to the balanced scorecard's learning and growth perspective?
A)How will we empower our employees?
B)How do we lower costs?
C)What processes will increase value to customers?
D)How can we obtain greater profits?
Q5) What are the four key perspectives in the balanced scorecard?
Q6) Define engineered and discretionary costs and give two examples of each. Page 14
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Page 15
Chapter 13: Pricing Decisions and Cost Management
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Sample Questions
Q1) When is a company said to be engaged in predatory pricing? What are the primary conditions to be satisfied to prove predatory pricing?
Q2) What are the five steps that are followed while implementing target pricing and target costing?
Q3) For a company operating in a perfectly competitive market,cost information affects the pricing decisions of the company.
A)True
B)False
Q4) Which of the following scenarios is an example of predatory pricing?
A)Ceramic Corp sells its products below average total costs during off-peak seasons.
B)Almeida flowers has arrived at an informal agreement with other sellers in the area to charge a very high selling price.
C)Anton Inc. ,sells its products for $25 in the U.S,however it can sell the same product for double the price in its home country.
D)Duyen Inc. ,is launching a new product and has decided to sell its product below its average variable costs until it drives competitors out of market.
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Chapter 14: Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis
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Sample Questions
Q1) An unfavorable sales-mix variance would most likely be caused by which of the following?
A)a new competitor providing better service in the high-margin product sector
B)a competitor having distribution problems with high-margin products
C)the company offering low-margin products at a higher price
D)the company experiencing quality-control problems that get negative media coverage of low-margin products
Q2) Market-share variance = $380,000 (U);Market-size variance = $250,000 (F);Sales-mix variance = $640,000 (F);calculate the sales-quantity variance.
A)$380,000 (F)
B)$630,000 (F)
C)$10,000 (F)
D)$130,000 (U)
Q3) The static-budget variance is the difference between ________.
A)an actual result and the corresponding budgeted amount in the static budget
B)the budget amount in the static budget and the amount in the flexible budget
C)an actual result and the flexible budget amount
D)the static budget amount and the sales-volume variance
Q4) Why would a manager perform customer-profitability analysis?
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Chapter 15: Allocation of Support-Department Costs, common
Costs, and Revenues
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Sample Questions
Q1) Two or more support departments whose costs are being allocated can also provide support to each other and as well as to operating departments.
A)True
B)False
Q2) If management wants to choose a method of revenue allocation that best captures the "benefits received" by customers then they would use ________ to allocate revenue to products in a bundle.
A)stand-alone revenue -allocation based on unit costs
B)stand-alone revenue-allocation based on selling prices
C)stand-alone revenue-allocation based on physical units
D)stand-alone revenue-allocation based on unit costs
Q3) The cost-allocation method that allocates each support-department's costs to operating departments only is the direct method.
A)True
B)False
Q4) Why do organizations use budgeted rates instead of actual rates to allocate the costs of support departments to each other and to user departments and divisions? Explain.
Page 18
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Chapter 16: Cost Allocation: Joint Products and Byproducts
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Sample Questions
Q1) Under the benefits-received criterion,the physical-measure method is much less desirable than the sales value at split-off method.Why?
Q2) Separable costs include manufacturing costs only.
A)True
B)False
Q3) Which of the following is a is a market-based approach to allocating joint costs?
A)sales units
B)units of production
C)physical measures
D)net realizable value
Q4) In joint costing,the constant gross-margin percentage NRV method is an example of allocating costs using physical measures.
A)True
B)False
Q5) Joint costing allocates the joint costs to the individual products that are eventually sold.
A)True B)False
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Chapter 17: Process Costing
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Sample Questions
Q1) The president of the Gulf Coast Refining Corporation wants to know why his golfing partner,who is the chief financial officer of a large construction company,calculates his costs by the job,but his own corporation calculates costs by large units rather than by individual barrel of oil.
Q2) The weighted-average method merges unit costs from different accounting periods,obscuring period-to-period comparisons.
A)True
B)False
Q3) The Swivel Chair Company manufacturers a standard recliner.During February,the firm's Assembly Department started production of 145,000 chairs.During the month,the firm completed 184,000 chairs and transferred them to the Finishing Department.The firm ended the month with 19,000 chairs in ending inventory.All direct materials costs are added at the beginning of the production cycle.Weighted-average costing is used by Swivel.What were the equivalent units for materials for February?
A)203,000 chairs
B)184,000 chairs
C)164,000 chairs
D)191,250 chairs
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Chapter 18: Spoilage, rework, and Scrap
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Sample Questions
Q1) Scrap is usually divided between normal and abnormal scrap.
A)True
B)False
Q2) If a company set a standard of zero rework ________.
A)all rework is treated as abnormal and is written off as a cost of the current period
B)all rework is treated as normal and is written off as a cost of the current period
C)all rework is treated as abnormal and is shown as a liability of the current period
D)all rework is treated as normal and is shown as a liability of the current period
Q3) The loss from abnormal spoilage account would appear ________.
A)on a balance sheet
B)as a detailed item in the retained earnings schedule of a balance sheet
C)a separate line item on an income statement
D)a deduction from the cost of goods sold
Q4) What are the objectives in accounting for spoilage?
Q5) Why do firms often conduct multiple inspections?
Q6) What are the advantages of costing rework?
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Chapter 19: Balanced Scorecard: Quality and Time
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Sample Questions
Q1) Any factor where a change in the factor causes a change in the speed with which an activity is undertaken is referred to as ________.
A)a time driver
B)a cost driver
C)manufacturing lead time
D)customer-response time
Q2) Distribution of questionnaires to customers regarding product quality and improving the product on certain key areas based on the inferences drawn from the questionnaires is an example of a nonfinancial measure of quality.
A)True
B)False
Q3) Total costs of quality help managers aggregate costs to evaluate the tradeoffs of incurring prevention costs and appraisal costs to eliminate internal and external failure costs.
A)True
B)False
Q4) Discuss the means by which a company goes about evaluating and installing a new quality improvement program.
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Chapter 20: Inventory Management, just-In-Time, and Simplified Costing Methods
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Sample Questions
Q1) Lean accounting is much simpler than traditional product costing because
A)it compares value stream costs against costs that include costs of all purchased materials
B)it computes the cost of individual products
C)calculating actual product costs by value streams requires less overhead allocation
D)adding a larger markup on value stream costs to compensate for some of the excluded costs is easier than tracing all non value added costs
Q2) Beryl Company sells 900 flash drives per week.Purchase-order lead time is 2 weeks and the economic-order quantity is 1625 units.What is the reorder point?
A)3250 units
B)1450 units
C)1800 units
D)1625 units
Q3) Lean accounting takes in to consideration all costs associated with inventories.
A)True
B)False
Q4) Lean accounting is much simpler than traditional product costing.Why?
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Chapter 21: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) Soda Manufacturing Company provides vending machines for soft-drink manufacturers.The company has been investigating a new piece of machinery for its production department.The old equipment has a remaining life of five years and the new equipment will cost $99,825 with a five-year life.The expected additional cash inflows are $25,000 per year.What is the internal rate of return?
A)8%
B)12%
C)6%
D)4%
Q2) The Comil Corporation recently purchased a new machine for its factory operations at a cost of $328,325.The investment is expected to generate $115,000 in annual cash flows for a period of four years.The required rate of return is 13%.The old machine has a remaining life of four years.The new machine is expected to have zero value at the end of the four-year period.The disposal value of the old machine at the time of replacement is zero.What is the internal rate of return?
A)12%
B)13%
C)14%
D)15%
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Chapter 22: Management Control Systems, transfer Pricing, and Multinational Considerations
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Sample Questions
Q1) Effort in terms of management control systems is defined in terms of physical exertion such as a worker producing at a faster rate.
A)True
B)False
Q2) A product may be passed from one subunit to another subunit in the same organization.The product is known as a(n)________.
A)interdepartmental product
B)intermediate product
C)subunit product
D)transfer product
Q3) Minimum transfer price can be arrived at by adding incremental cost per unit incurred up to the point of transfer with the markup required.
A)True
B)False
Q4) Decisions regarding sources of long-term financing are best made at subunit level as the subunit has local knowledge and can leverage it in negotiations.
A)True
B)False
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Chapter 23: Performance Measurement, compensation, and
Multinational Considerations
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Sample Questions
Q1) Customer-satisfaction measures are an example of the ________.
A)goal-congruence approach
B)balanced scorecard approach
C)financial report scorecard approach
D)investment success approach
Q2) Historical-cost-based accounting measures are usually inadequate for evaluating economic returns on new investments and,in some cases,create disincentives for expansion.
A)True
B)False
Q3) Which of the following is the required rate of return used in the economic value added (EVA)calculation?
A)The ROI of the division or company being evaluated
B)After-tax weighted-average cost of capital
C)The residual income/total assets
D)The after-tax operating income/(Total assets - current liabilities)
Q4) Some companies,make environmental performance a line item on every employee's salary appraisal report.
A)True B)False
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