AIS and Internal Controls Exam Review
Course Introduction
This course provides an in-depth exploration of Accounting Information Systems (AIS) and the crucial role they play in the design and implementation of effective internal controls within organizations. Students will examine how AIS supports business processes, transaction cycles, and decision-making, alongside learning frameworks and tools used to identify, assess, and mitigate risks. Topics include documentation techniques, control environment components, fraud risk management, security of data and systems, and regulatory compliance such as SOX. By integrating theory with real-world applications, the course prepares students to evaluate, develop, and monitor robust internal control structures that safeguard organizational assets and ensure information reliability.
Recommended Textbook
Accounting Information Systems 13th Global Edition by Marshall B. Romney
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Chapter 1: Accounting Information Systems: an Overview
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Sample Questions
Q1) Information that does not omit important aspects of the underlying events or activities that it measures is
A)complete.
B)accessible.
C)relevant.
D)timely.
Answer: A
Q2) The AIS must include controls to ensure
A)safety and availability of data.
B)marketing initiatives match corporate goals.
C)information produced from data is accurate.
D)both A and C
Answer: D
Q3) What is a key decision that needs to be made with regards to acquiring equipment?
A)the location
B)pro forma income statement
C)how much capital to acquire
D)job descriptions
Answer: A
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Page 3
Chapter 2: Overview of Transaction Processing and Enterprise Resource Planning Systems
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Sample Questions
Q1) A chart of accounts is an example of (select all that apply)
A)sequence codes.
B)block codes.
C)group codes.
D)mnemonic codes.
Answer: B,C
Q2) Identify the statement below that is not true with regards to the accounts receivable subsidiary ledger.
A)Every credit sale is entered individually into the subsidiary ledger.
B)Debits and credits in the subsidiary ledger must always equal.
C)The subsidiary ledgers play an important role in maintaining the accuracy of the data stored in the AIS.
D)The total of the subsidiary ledgers must equal the control account.
Answer: B
Q3) The general ledger
A)is the initial place to record general expenses.
B)is posted in total to the general journal.
C)only includes balance sheet accounts.
D)summarizes the transactions in journals.
Answer: D
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Chapter 3: Systems Documentation Techniques
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Sample Questions
Q1) Describe a situation in which data flow should be shown with two data flow lines instead of one.
Answer: A data flow may consist of one or more pieces of datum.The determining factor is whether the data elements always flow together at the same time.For example,"customer payment" have both payment and remittance data.Since these elements always flow together,only one data flow line is required.However,data flows between the customer and the payment processes have customer inquiries and cash receipts; these data items do not always flow together at the same time.In such a case,two data flow lines will be shown.
Q2) Describe the different levels of DFDs.
Answer: The highest-level or summary view DFD,which shows major inputs/outputs and a single process is called a context diagram.The DFD itself shows inputs,major processes,and outputs; each process in the DFD can be "exploded" or shown in greater level of detail with the sub-processes and related data flows.
Q3) True or False: The Sarbanes-Oxley Act requires auditors to create flowcharts to document business processes.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Relational Databases
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Sample Questions
Q1) The database requirement that foreign keys must be null or have a value corresponding to the value of a primary key in another table is formally called the
A)entity integrity rule.
B)referential integrity rule.
C)unique primary key rule.
D)foreign key rule.
Q2) The problem of losing desired information from a database when an unwanted record is purged from the database is referred to as the ________ anomaly.
A)purge
B)erase
C)delete
D)integrity
Q3) The ________ occurs when more than one occurrence of a specific data item in a database exists.
A)inconsistency anomaly
B)insert anomaly
C)delete anomaly
D)update anomaly
Q4) List the four DBMS "languages" and describe who uses each and for what purpose.
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Chapter 5: Computer Fraud
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Q1) Why is computer fraud often more difficult to detect than other types of fraud?
A)Rarely is cash stolen in computer fraud.
B)The fraud may leave little or no evidence it ever happened.
C)Computers provide more opportunities for fraud.
D)Computer fraud perpetrators are just more clever than other types of criminals.
Q2) A teller at a savings and loan drive-through accepted a cash payment from customer #1 for an auto loan.The teller appeared to process the payment,but told the customer the printer was jammed and she can't print a receipt.The customer accepted the excuse and drove away.The teller pocketed the cash and wrote down customer #1's loan number and payment amount for future reconciling.A couple of days before customer #1's monthly statement was printed,the teller recorded a cash payment from customer #2 as if it were made by customer #1.The teller pocketed the difference between the two payments.The teller continued to steal and misapply customer payments for the next two years without detection. Identify the type of fraud scheme described.Describe five controls you would implement to address the fraud risk,and label each control as preventive or detective.
Q3) Describe at least four ways a company can make fraud less likely to occur.
Q4) What are some of the distinguishing characteristics of fraud perpetrators?
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Chapter 6: Computer Fraud and Abuse Techniques
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Q1) True or False: Identify theft has always been a federal crime.
A)True
B)False
Q2) Wassim Masood works in the information technology department of TMV.On Monday morning,he arrived at work,scanned his identity card,and entered his code.At that moment,a lady in a delivery uniform came up behind Wassim with a bunch of boxes.Although Wassim held the door for the delivery lade,he later wondered if the delivery lady was engaged in A)pretexting.
B)piggybacking.
C)posing.
D)spoofing.
Q3) Gaining control of somebody's computer without their knowledge and using it to carry out illicit activities is known as A)hacking.
B)sniffing.
C)phreaking.
D)hijacking.
Q4) What is social engineering?
Q5) Describe at least four social engineering techniques.
Page 8
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Chapter 7: Control and Accounting Information Systems
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Q1) ________ objectives help ensure the accuracy,completeness and reliability of internal and external company reports,Applying the ERM framework.
A)Compliance objectives
B)Operations objectives
C)Reporting objectives
D)Strategic objectives
Q2) Which of the following is not one of the five principles of COBIT5?
A)meeting stakeholder needs
B)covering the enterprise end-to-end
C)enabling a holistic approach
D)improving organization efficiency
Q3) The definition of the lines of authority and responsibility and the overall framework for planning,directing,and controlling is laid out by the A)control activities.
B)organizational structure.
C)budget framework.
D)internal environment.
Q4) Explain why the Foreign Corrupt Practices Act was important to accountants.
Q5) Describe the differences between general and specific authorization.
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Chapter 8: Controls for Information Security
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Q1) Which of the following is commonly true of the default settings for most commercially available wireless access points?
A)The security level is set at the factory and cannot be changed.
B)Wireless access points present little danger of vulnerability so security is not a concern.
C)Security is set to the lowest level that the device is capable of.
D)Security is set to the highest level that the device is capable of.
Q2) True or False: Cloud computing can potentially generate significant cost savings for an organization.
A)True
B)False
Q3) Describe what information security process the term hardening refers to.
Q4) The most common input-related vulnerability is
A)buffer overflow attack.
B)hardening.
C)war dialing.
D)encryption.
Q5) Explain social engineering.
Q6) Explain the value of penetration testing.
Q7) Identify six physical access controls.
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Chapter 9: Confidentiality and Privacy Controls
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Sample Questions
Q1) Data masking is also referred to as A)encryption.
B)tokenization.
C)captcha.
D)cookies.
Q2) Cindy Vindoolo logged on to her e-mail account to find that she had received 50 e-mails from a company called LifeCo that promised her extreme weight loss if she bought their diet pills.Cindy angrily deleted all 50 e-mails,realizing she was a victim of A)telemarketing.
B)spam.
C)direct mail.
D)MLM.
Q3) Information encrypted with the creator's private key that is used to authenticate the sender is
A)asymmetric encryption.
B)digital certificate.
C)digital signature.
D)public key.
Q4) Describe some steps you can take to minimize your risk of identity theft.
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Chapter 10: Processing Integrity and Availability Controls
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Q1) Probably the most important change management control is
A)monitoring user rights and privileges during the change process.
B)testing all changes thoroughly prior to implementation on a stand-alone computer.
C)updating all documentation to reflect changes made to the system.
D)management's careful monitoring and review.
Q2) A payroll clerk accidently entered an employee's hours worked for the week as 380 instead of 38.The data entry control that would best prevent this error would be
A)a limit check.
B)a check digit.
C)batch total reconciliation.
D)a field check.
Q3) Prompting is a control that helps ensure
A)transaction data are not lost.
B)transactions data are accurate.
C)transactions data are complete.
D)transaction data are valid.
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) Which of the choices below best describes a risk-based audit approach?
A)a four-step approach to internal control evaluation.
B)a three-step approach to internal control evaluation.
C)a four-step approach to financial statement review and recommendations.
D)a three-step approach to financial statement review and recommendations.
Q2) The evidence collection method that examines all supporting documents to determine the validity of a transaction is called
A)review of documentation.
B)vouching.
C)physical examination.
D)analytical review.
Q3) The purpose of ________ is to determine why,how,when,and who will perform the audit.
A)audit planning
B)the collection of audit evidence
C)the communication of audit results
D)the evaluation of audit evidence
Q4) Why do all audits follow a sequence of events that can be divided into four stages,and what are the four stages?
Q5) How is a financial audit different from an information systems audit?
Page 13
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Chapter 12: The Revenue Cycle: Sales to Cash Collections
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Q1) The ________ is a legal contract that defines responsibility for goods that are in transit.
A)bill of lading
B)packing slip
C)back order
D)picking list
Q2) ________ is not a basic activity of the revenue cycle.
A)Sales order entry
B)Shipping
C)Receiving
D)Billing
Q3) The ________ normally triggers the billing process in the revenue cycle.
A)sales order received from the sales department
B)picking ticket received from the sales department
C)packing slip received from the shipping department
D)journal voucher received from the shipping department
Q4) Describe cycle billing and identify how an organization might benefit by using cycle billing.
Q5) Failure to collect cash on credit sales is a threat in the revenue cycle.What controls can be used to help neutralize this threat?
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Chapter 13: The Expenditure Cycle: Purchasing to Cash
Disbursements
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Q1) Evaluated receipt settlement approves payment of vendor invoices after reconciling the purchase order and the A)receiving report.
B)vendor invoice.
C)sales invoice.
D)disbursement voucher.
Q2) The Gwallter Reece Chihuahua Sweater Co.(GRCCo)was established in 2013.It recently signed a large contract with PetCo pet stores.GRCCo will be required to track and forecast sweater sales.The technology that is used for communication between GRCCo and PetCo is
A)electronic data interchange.
B)vendor-managed inventory.
C)sales force automation.
D)optical character recognition.
Q3) a)What is the major cost driver in the purchasing function? b)Describe how information technology can be used to control this cost driver.
Q4) How can information technology be used to improve the vendor invoice approval process?
Q5) Under what conditions is MRP more suitable than JIT and vice versa?
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Chapter 14: The Production Cycle
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Q1) The ________ is the production cycle document that specifies the quantity of each product to be produced and when production should begin.
A)receiving report
B)bill of lading
C)master production schedule
D)operations list
Q2) Which of the following organization controls should be implemented and maintained to counteract the general threat that the loss of production data will greatly slow or halt production activity?
A)Store key master inventory and production order files on-site only to prevent their theft.
B)Back up data files only after a production run has been physically completed.
C)Access controls should apply to all terminals within the organization.
D)Allow access to inventory records from any terminal within the organization to provide efficient data entry.
Q3) Explain what CIM means and its benefits.
Q4) What types of data are accumulated by cost accounting? What is the accountant's role in cost accounting?
Q5) Discuss the criticisms of traditional cost accounting methods.
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Chapter 15: The Human Resources Management and Payroll Cycle
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Q1) The document that lists each employee's gross pay,payroll deductions,and net pay in a multicolumn format is called
A)an employee earnings statement.
B)the payroll register.
C)a deduction register.
D)an employee time sheet summary.
Q2) Accountants can help executive compensation plan boards
A)comply with legal and regulatory requirements.
B)by identifying the best ways to keep the details of compensation plans out of the hands of external parties.
C)avoid paying excessive amounts of "perks" to executives.
D)distribute information regarding how well each executive is performing their job.
Q3) ________ are used to transmit time and attendance data directly to the payroll processing system.
A)Badge readers
B)Electronic time clocks
C)Magnetic cards
D)none of the above
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Chapter 16: General Ledger and Reporting System
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Q1) Describe three threats in the general ledger and reporting system and identify corresponding controls for each threat.
Q2) Performance reports for cost centers should compare actual versus budget ________ costs.
A)controllable
B)uncontrollable
C)fixed
D)variable
Q3) XBRL stands for
A)extensible business reporting language.
B)extreme business reporting ledgers.
C)external business reporting language.
D)extensive business report logic.
Q4) Budgets used for internal planning purposes and performance evaluation should be developed on the basis of
A)responsibility accounting.
B)generally accepted accounting principles.
C)financial accounting standards.
D)managerial accounting standards.
Q5) How is a balanced scorecard used to assess organizational performance?
Page 18
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Chapter 17: Database Design Using the Rea Data Model
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Q1) Identify the minimum cardinality of any REA diagram relationship.
A)0 or 1
B)0 or N
C)1 or N
D)none of the above
Q2) Describe data modeling.
Q3) True or False: Besides modeling entities as rectangles,there are no industry standards for entity-relationship diagrams.
A)True
B)False
Q4) In which stage(s)of the database design process does data modeling occur?
A)only in the systems analysis stage
B)only in the design stage
C)in both the systems analysis and design stages
D)neither the systems analysis nor the design stages
Q5) In which stage(s)of the database design process should accountants participate?
A)the systems analysis stage
B)the conceptual design stage
C)the implementation and conversion stage
D)in all of the stages above
19
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Chapter 18: Implementing an Rea Model in a Relational Database
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Q1) Which of the statements below is false when comparing the REA model to the traditional AIS model?
A)Traditional AISs contain only data about the financial aspects of transactions.
B)A major advantage of the REA data model is that it integrates non-financial and financial data in the AIS and makes both types of data easily accessible to management.
C)In the REA model,many financial statement items can be displayed by querying a single table.
D)Accounts in the traditional AIS are analogous to resources in the REA-based relational database.
Q2) Integrating separate REA diagrams developed for individual transaction cycles into a single,comprehensive enterprise-wide data model
A)is possible.
B)requires understanding what the cardinalities in each separate diagram reveal about the organization's business policies and activities.
C)provides a single comprehensive enterprise-wide model of the organization.
D)All of the above are true.
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Chapter 19: Special Topics in Rea Modeling
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Q1) In an expenditure cycle diagram,which of the following is an example of an event that larger organizations might want to include in their extended REA model?
A)Request
B)Order
C)Ship Order
D)Fill Order
Q2) Identify the event below where information associated with the event most likely will need to be retained for years.
A)the actual cost associated with repairing a customer's car
B)the employee who answered a customer service phone call
C)the amount of cash received from issuing stock
D)a list of services offered by the company as of the start of a fiscal year
Q3) Picking ticket number is most likely to be a foreign key in which entity of an expanded revenue cycle REA diagram?
A)Customers
B)Fill Customer Order
C)Ship Order
D)Take Customer Order
Q4) Why might an REA diagram show relationships between resources and agents?
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Chapter 20: Introduction to Systems Development and Systems Analysis
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Q1) A feasibility study should first be performed in the ________ stage of the systems development life cycle.
A)conceptual design
B)implementation and conversion
C)physical design
D)system analysis
Q2) In which systems analysis step do analysts conduct an extensive study of the present system to gain a thorough understanding of how it works?
A)feasibility study
B)information needs and requirements
C)systems analysis report
D)systems survey
Q3) Who is responsible for maintaining existing computer programs?
A)management
B)system programmers
C)systems analysts
D)accountants
Q4) Describe the physical design stage of the systems development life cycle.
Q5) Describe the five phases of systems analysis.
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Chapter 21: Ais Development Strategies
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Q1) Who should maintain control of access to date in a user-created system with proper controls?
A)end-users
B)management
C)the IT department
D)a help desk
Q2) Identify the system below where development would not likely benefit from treating a prototype.
A)decision support systems
B)executive information systems
C)expert systems
D)systems that cross a number of organizational boundaries
Q3) Discuss how information system outsourcing can provide the organization with both a business solution and asset management.
Q4) Identify the ways an organization can gain full advantage of using a Request For Proposal (RFP).
Q5) Describe outsourcing and identify the two types of outsourcing agreements.
Q6) Discuss how an organization can develop custom software.
Q7) Describe the purposes of a help desk.
Page 23
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Chapter 22: Systems Design,implementation,and Operation
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Q1) Walk-throughs are system tests that involve
A)managers observing the operation of the system by "walking through" the IT department.
B)processing hypothetical data that are designed to identify errors in the system.
C)processing copies of real transactions in order to determine whether or not the system meets requirements.
D)a thorough review of the procedures and program logic of the system.
Q2) Which of the following describes a phase-in conversion?
A)Both the old and new AIS are operated simultaneously.
B)Elements of the old AIS are replaced gradually with elements of the new AIS.
C)The new AIS is introduced into a segment,rather than the whole organization.
D)The old AIS is terminated as the new AIS is introduced.
Q3) Which of the below standards should not be used to evaluate design alternatives in the conceptual systems design stage of the SDLC?
A)how well a system meets organizational objectives
B)how well a system meets user needs
C)the economic feasibility of each alternative
D)the amount of time it required to formulate each alternative
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