Advanced Accounting Information Systems
Exam Answer Key
Course Introduction
Advanced Accounting Information Systems explores the design, implementation, and management of complex accounting information systems within organizations. The course delves into topics such as systems control, security, auditing, enterprise resource planning (ERP) integration, and data analytics. Students will analyze case studies, apply advanced technological solutions, and gain hands-on experience with accounting software to understand how information systems support strategic decision-making, regulatory compliance, and the evolving needs of modern businesses. Emphasis is placed on evaluating risks, optimizing internal controls, and leveraging digital tools to enhance organizational performance and integrity in financial reporting.
Recommended Textbook
Accounting Information Systems 12th Edition by Marshall B. Romney
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Chapter 1: Accounting Information Systems: an Overview
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Q1) Which of the following is a true statement?
A) Business strategy directly influences AIS, but not information technology.
B) Information technology directly influences organizational culture, but not business strategy.
C) Organizational culture directly influences business strategy, but not AIS.
D) AIS directly influences information technology, but not business strategy.
Answer: A
Q2) An accounting information system must be able to perform which of the following tasks?
A) collect transaction data
B) process transaction data
C) provide adequate controls
D) all of the above
Answer: D
Q3) Which of the following is not an example of a common activity in an AIS?
A) buy and pay for goods and services
B) sell goods and services and collect cash
C) summarize and report results to interested parties
D) recording of sales calls for marketing purposes
Answer: D
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Chapter 2: Overview of Transaction Processing and Erp Systems
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Q1) The general ledger account that corresponds to a subsidiary ledger account is known as a
A) dependent account.
B) attribute account.
C) entity account.
D) control account.
Answer: D
Q2) The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky.Since 1996,the owner,Glamdring Elfthrall,has leveraged computer technology to provide a superior level of customer service.In particular,the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible.Price information and condition are also provided for each inventory item.In this database,the price of figures is a(an)
A) entity.
B) attribute.
C) field.
D) record.
Answer: B
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Chapter 3: Systems Documentation Techniques
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Q1) Which symbol would be used in a flowchart to represent a file of paper documents?
A) #7
B) #8
C) #9
D) #15
Answer: C
Q2) In a payroll processing DFD,the "prepare reports" activity will be represented by ________,the "employee payroll file" will be represented by ________,and the "management" will be represented by ________.
A) a circle; two horizontal lines; a square
B) a circle; two horizontal lines; two horizontal lines
C) a rectangle; a square; a circle
D) a square; two horizontal lines; a circle
Answer: A
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Chapter 4: Relational Databases
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Q1) Dana Halsey is chair of the Purebred Marmoset Society,which maintains a database of registered purebred marmosets and their breeding history.One table will store the name,birth date,and other characteristics of all of the marmosets that have been registered.Each marmoset is uniquely identified by a registration number.A second table will contain data that link each marmoset to its male and female parents by means of their registration numbers.The primary key in the first table is:
A) name
B) registration number
C) date of birth
D) relationship number
Q2) Describe what you think will be the main impact of database technology in your career.
Q3) In the database design approach known as normalization,the first assumption made about data is
A) there is no redundancy in the data.
B) the delete anomaly will not apply since all customer records will be maintained indefinitely.
C) everything is initially stored in one large table.
D) the data will not be maintained in 3NF tables.
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Chapter 5: Computer Fraud
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Q1) The most efficient way to conceal asset misappropriation is to
A) write-off a customer receivable as bad debt.
B) alter monthly bank statements before reconciliation.
C) alter monthly physical inventory counts to reconcile to perpetual inventory records.
D) record phony payments to vendors.
Q2) Which of the following is the best way to hide theft of assets?
A) Creating "cash" through the transfer of money between banks
B) Conversion of stolen assets into cash
C) Stealing cash from customer A and then using customer B's balance to pay customer A's accounts receivable
D) Charging the stolen asset to an expense account
Q3) Why do many fraud cases go unreported and unprosecuted?
A) Major fraud is a public relations nightmare.
B) Fraud is difficult, costly, and time-consuming to investigate and prosecute.
C) Law enforcement and the courts are often so busy with violent crimes that little time is left for fraud cases.
D) all of the above
Q4) Why do fraudulent acts often go unreported and are therefore not prosecuted?
Q5) Describe at least four ways a company can make fraud less likely to occur.
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Chapter 6: Computer Fraud and Abuse Techniques
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Q1) During a routine audit,a review of cash receipts and related accounting entries revealed discrepancies.Upon further analysis,it was found that figures had been entered correctly and then subsequently changed,with the difference diverted to a fictitious customer account.This is an example of
A) kiting.
B) data diddling.
C) data leakage.
D) phreaking.
Q2) A ________ is similar to a ________,except that it is a program rather than a code segment hidden in a host program.
A) worm; virus
B) Trojan horse; worm
C) worm; Trojan horse
D) virus; worm
Q3) The unauthorized copying of company data is known as
A) data leakage.
B) eavesdropping.
C) masquerading.
D) phishing.
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Chapter 7: Control and Accounting Information Systems
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Q1) A ________ is created to guide and oversee systems development and acquisition.
A) performance evaluation
B) project development plan
C) steering committee
D) strategic master plan
Q2) At a movie theater box office,all tickets are sequentially prenumbered.At the end of each day,the beginning ticket number is subtracted from the ending number to calculate the number of tickets sold.Then,ticket stubs collected at the theater entrance are counted and compared with the number of tickets sold.Which of the following situations does this control detect?
A) Some customers presented tickets purchased on a previous day when there wasn't a ticket taker at the theater entrance (so the tickets didn't get torn.)
B) A group of kids snuck into the theater through a back door when customers left after a show.
C) The box office cashier accidentally gives too much change to a customer.
D) The ticket taker admits his friends without tickets.
Q3) Explain how a company could be the victim of fraud,even if ideal segregation of duties is enforced.
Q4) Explain why the Foreign Corrupt Practices Act was important to accountants.
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Chapter 8: Information Systems Controls for System
Reliability Part 1: Information Security
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Q1) Verifying the identity of the person or device attempting to access the system is
A) authentication.
B) authorization.
C) identification.
D) threat monitoring.
Q2) Which of the following is not a useful control procedure to control access to system outputs?
A) Allowing visitors to move through the building without supervision
B) Coding reports to reflect their importance
C) Requiring employees to log out of applications when leaving their desk
D) Restricting access to rooms with printers
Q3) Which of the following is an example of a corrective control?
A) Physical access controls
B) Encryption
C) Intrusion detection
D) Incident response teams
Q4) Identify three ways users can be authenticated and give an example of each.
Q5) Describe the function of a computer incident response team (CIRT)and the steps that a CIRT should perform following a security incident.
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Chapter 9: Information Systems Controls for Systems
Reliability Part 2: Confidentiality and Privacy
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Q1) Concerning virtual private networks (VPN),which of the following is not true?
A) VPNs provide the functionality of a privately owned network using the Internet.
B) Using VPN software to encrypt information while it is in transit over the Internet in effect creates private communication channels, often referred to as tunnels, which are accessible only to those parties possessing the appropriate encryption and decryption keys.
C) The cost of the VPN software is much less than the cost of leasing or buying the infrastructure (telephone lines, satellite links, communications equipment, etc.) needed to create a privately owned secure communications network.
D) It is more expensive to reconfigure VPNs to include new sites than it is to add or remove the corresponding physical connections in a privately owned network.
Q2) The system and processes used to issue and manage asymmetric keys and digital certificates are known as A) asymmetric encryption.
B) certificate authority.
C) digital signature.
D) public key infrastructure.
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Chapter 10: Information Systems Controls for Systems
Reliability Part 3: Processing Integrity and Availability
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Q1) The accounting department at Synergy Hydroelectric records an average of 12,500 transactions per hour.By cost-benefit analysis,managers have concluded that the maximum acceptable loss of data in the event of a system failure is 25,000 transactions.If the firm's recovery time objective is 120 minutes,then the worst case recovery time objective is
A) 1 hour
B) 2 hours
C) 3 hours
D) 4 hours
Q2) When a computer system's files are automatically duplicated on a second data storage system as they are changed,the process is referred to as
A) real-time mirroring.
B) batch updating.
C) consistency control.
D) double-secure storage.
Q3) Discuss how cloud computing could both positively and negatively affect system availability.
Q4) Define and contrast a recovery point objective and a recovery time objective.
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Chapter 11: Auditing Computer-Based Information Systems
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Q1) An auditor sets an embedded audit module to flag questionable online transactions,display information about the transaction on the auditor's computer,and send a text message to the auditor's cell phone.The auditor is using A) the snapshot technique.
B) a system control audit review file.
C) audit hooks.
D) continuous and intermittent simulation.
Q2) Verifying the accuracy of certain information,often through communication with third parties,is known as A) reperformance.
B) confirmation.
C) substantiation.
D) documentation.
Q3) Describe the risk-based audit approach.
Q4) Describe the disadvantages of test data processing.
Q5) a)What is test data processing? b)How is it done? c)What are the sources that an auditor can use to generate test data?
Q6) Explain the differences between each type of audit risk.
Q7) Name and describe the different types of audits.
Page 13
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Chapter 12: The Revenue Cycle: Sales to Cash Collections
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Q1) Describe the basic revenue cycle activities.
Q2) During the sales order entry process,a ________ is performed to compare the quantity ordered with the standard amounts normally ordered.
A) completeness test
B) redundant data check
C) field check
D) reasonableness test
Q3) Two documents usually accompany goods shipped to a customer.What are the two documents?
A) a bill of lading and an invoice
B) a packing slip and a bill of lading
C) an invoice and a packing slip
D) an invoice and a sales order
Q4) Describe four threats in the revenue cycle and identify appropriate controls for each threat.
Q5) Discuss the revenue cycle threat of stockouts,carrying costs,and markdowns.
Q6) Explain how validity checks,completeness tests and reasonableness tests can be implemented to ensure accuracy of customer orders.
Q7) Explain how to effectively segregate duties in the sales order activity.
Page 14
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Chapter 13: The Expenditure Cycle: Purchasing to Cash Disbursements
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Q1) What is the key difference between the MRP and JIT inventory management approaches?
A) Only JIT reduces costs and improves efficiency.
B) MRP is especially useful for products such as fashion apparel.
C) JIT is more effectively used with products that have predictable patterns of demand.
D) MRP schedules production to meet estimated sales needs; JIT schedules production to meet customer demands.
Q2) The Squishy Things Toy Company was established in 1948.It recently signed a large contract with a chain of retail toy stores.As a condition of the contract,the Squishy will be required to track and forecast product sales by linking in to the chain's sales database.Squishy will then be responsible for shipping products to the chain's regional warehouses as needed.The relationship between Squishy and the chain is an example of
A) vendor-managed inventory.
B) sales force automation.
C) electronic data interchange.
D) optical character recognition.
Q3) Discuss the differences between EOQ,MRP,and JIT.
Q4) Define and describe the EOQ approach to inventory management.
Page 15
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Chapter 14: The Production Cycle
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Q1) At the end of each production run,preventive maintenance is done on the assembly line.The expenses associated with this maintenance are ________ overhead.
A) batch-related
B) product-related
C) companywide
D) department-based
Q2) Which type of information below should not be maintained by the AIS in accounting for fixed assets?
A) identification/serial number
B) cost
C) improvements
D) market value
Q3) The use of various forms of information technology in the production process is referred to as
A) computerized investments and machines.
B) computerized integration of machines.
C) computer-integrated manufacturing.
D) computer intense manufacturing.
Q4) Identify and discuss the two common methods of production planning.
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Chapter 15: The Human Resources Management and Payroll Cycle
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Q1) All of the following are controls that should be implemented in a payroll process,except
A) supervisors distribute paychecks since they should know all employees in their department.
B) someone independent of the payroll process should reconcile the payroll bank account.
C) sequential numbering of paychecks and accounting for the numbers.
D) restrict access to blank payroll checks and documents.
Q2) What is not a desired result of an employee bonus/incentive system?
A) Employees may recommend unnecessary services to customers in order to exceed set sales quotas and earn a bonus.
B) Employees may look for ways to improve service.
C) Employees may analyze their work environment and find ways to cut costs.
D) Employees may work harder and may be more motivated to exceed target goals to earn a bonus.
Q3) Explain benefits to companies and to employees of using electronic direct deposit for payroll.
Q4) Identify the two types of payroll deductions and give two examples of each type.
Q5) Describe benefits and threats of incentive and bonus programs.
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Chapter 16: General Ledger and Reporting System
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Q1) Adjusting entries that reflect events that have already occurred,but for which no cash flow has taken place are classified as
A) accruals.
B) deferrals.
C) revaluations.
D) corrections.
Q2) Budgets and performance reports should be developed on the basis of
A) responsibility accounting.
B) generally accepted accounting principles.
C) financial accounting standards.
D) managerial accounting standards.
Q3) Explain the benefits of XBRL.
Q4) Which of the following balanced scorecard dimensions provides measures on how efficiently and effectively the organization is performing key business processes?
A) financial
B) internal operations
C) innovation and learning
D) customer
Q5) What is responsibility accounting?
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Chapter 17: The Rea Data Model
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Q1) Which of the following statements about REA modeling and REA diagrams is false?
A) REA is an acronym for Resources, Entities, and Agents.
B) REA data modeling does not include traditional accounting elements such as ledgers, chart of accounts, debits and credits.
C) REA data modeling could be referred to as an events-based model.
D) REA diagrams must include at least two activities, which together represent a give-get economic exchange.
Q2) Each event in an REA model will in most cases have at least one ________ agent and one ________ agent involved with the event.
A) internal; resource
B) external; entity
C) internal; employee
D) internal; external
Q3) Which of the following is not one of the rules in creating an REA data model?
A) Each event is linked to at least one resource that it affects.
B) Each event is linked to at least one other event.
C) Each event is linked to at least two participating agents.
D) All of the above are important rules.
Q4) Define cardinality.
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Chapter 18: Implementing an Rea Model in a Relational Database
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Q1) In a relational database,which of the following attributes would typically be included in the table that stores data about the Customer entity?
A) Invoice number
B) Credit limit
C) Product code
D) Backorder
Q2) Nonfinancial information should be collected because
A) it may indicate events that may affect resources.
B) it can be used to plan other activities.
C) it can be used in transaction processing.
D) both A and B
Q3) Which of the following is a redundant entity that would be merged when two cycles are combined?
A) Customer
B) Employee
C) Vendor
D) Inventory
Q4) Explain the five rules for drawing integrated REA diagrams.
Page 20
Q5) What are the advantages of the REA data model over the traditional AIS model?
Q6) Explain a completeness check.
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Chapter 19: Special Topics in Rea Modeling
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Q1) M:N agent-event relationships occur whenever an activity is performed by ________ employee and management wants to retain the ability to monitor ________ performance.
A) more than one; group
B) more than one; individual
C) one; group
D) one; individual
Q2) The temporal difference between Request Inventory and Order Inventory is reflected by the
A) Request Inventory minimum cardinality of 1.
B) Request Inventory maximum of N.
C) Order Inventory maximum of N.
D) Order Inventory minimum of 0.
Q3) Why is the event Issue Debt often modeled as a separate event entity?
Q4) In an expanded revenue cycle REA diagram,sales order number is most likely to be a primary key in
A) Call on Customers.
B) Fill Customer Order.
C) Ship Order.
D) Take Customer Order.
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Chapter 20: Introduction to Systems Development Systems Analysis
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Q1) Who is responsible for preparing the specifications that are used to create the programs?
A) management
B) programmers
C) systems analysts
D) the information systems steering committee
Q2) A good rule to follow to prevent behavioral problems associated with implementing a new system is "Avoid complex systems that cause radical changes." What expression is used to describe this system design rule?
A) allay fears and stress new opportunities
B) keep the system simple and humanize it
C) control users' expectations
D) test the system
Q3) Describe the physical design stage of the systems development life cycle.
Q4) In which plan within planning systems development is the prioritized list of projects contained?
A) project development plan
B) scheduled project plan
C) the master plan
D) all of the above
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Chapter 21: Ais Development Strategies
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Q1) Describe outsourcing and identify the two types of outsourcing agreements.
Q2) The risk of outsourcing concerned with unauthorized disclosure of sensitive information is the risk of
A) a locked-in system.
B) a loss of control.
C) a reduced competitive advantage.
D) inflexibility.
Q3) A request for proposal sent to software vendors is an important tool since it can reduce errors.Which statement below supports this reason?
A) All responses are in the same format and based on the same information.
B) Both parties possess the same expectations and pertinent information is captured in writing.
C) The chances of overlooking important factors are reduced.
D) The same information is provided to all vendors.
Q4) Describe each of the four important principles underlying Business Process Management (BPM).
Q5) Discuss how an organization can develop custom software.
Q6) Describe end-user computing and the advantages and risks involved.
Q7) Describe the purposes of a help desk.
Page 24
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Chapter 22: Systems Design, implementation, and Operation
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Q1) The accountant wants to make sure that all cash disbursements are made only to legitimate vendors.Which of the following control considerations will deal with this concern?
A) security
B) accuracy
C) authorization
D) validity
Q2) Performing revisions to existing program code is an example of A) debugging.
B) structured programming.
C) program maintenance.
D) walk through.
Q3) Write one question that should be asked about each of the controls design considerations.
Q4) Describe the post-implementation review activity.
Q5) Flowcharts,record layouts,decision tables,and related items are part of A) determining user needs.
B) documenting the program.
C) testing the program.
D) training program users.
Page 25
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