Business Information Systems
Midterm Exam
Course Introduction
Business Information Systems explores the critical role that information technology plays in supporting business operations, decision-making, and strategic objectives. The course covers the fundamentals of information systems, including system components, enterprise applications, and database management, as well as the ways in which businesses leverage IT to enhance efficiency, drive innovation, and gain competitive advantage. Students will examine real-world case studies, learn about emerging technologies, and develop skills for analyzing and designing systems that align with organizational needs and challenges.
Recommended Textbook
Accounting Information Systems A Practitioner Emphasis 7th Edition by Cynthia D. Heagy
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Chapter 1: Significance of Accounting Information Systems
and the Accountants Role
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Sample Questions
Q1) What are four possible categories for accounting software if based on the size of company it services?
Answer: Four possible categories are low end market, middle market, beginning ERP market, and tier 1 market.
Q2) Auditors do not need substantial technical knowledge about accounting systems to be able to carry out their responsibilities.
A)True
B)False
Answer: False
Q3) Which of the following best describes a manual accounting system?
A) Slow and prone to error
B) Limited in the volume of data it can process
C) Fast and accurate
D) A and C, but not B
E) A and B, but not C E
Answer: E
Q4) What are the key components of an accounting information system?
Answer: The key components of an accounting information system are computer hardware, accounting software, and people.
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Chapter 2: Accounting Systems Documentation
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Sample Questions
Q1) A hierarchical block diagram shows the subsystems of an accounting system and the direction of the information flows among the subsystems.
A)True
B)False
Answer: False
Q2) What does end-user documentation include?
A) Control procedures
B) Error recovery procedures
C) Names of technical support people who participated in preparing the documentation
D) A and B
Answer: D
Q3) A data flow diagram show what an accounting system is doing and how the system is doing it.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Essential Elements and Basic Activities of Accounting Systems
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Sample Questions
Q1) What file in a computerized accounting system corresponds to documents awaiting further processing in a paper-based system?
A) Transaction file
B) Master file
C) Open file
D) Reference file
Answer: C
Q2) Some examples of elements of a paper-based accounting system include accounts, chart of accounts, ledgers, and outputs.
A)True
B)False
Answer: True
Q3) Identify four typical open files in a computerized accounting systems listed in the textbook.
Answer: Answer:
1. Sales order open file
2. Customer invoice open file
3. Purchase order open file
4. Vendor invoice open file
Page 5
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Chapter 4: Data Flows, Activities, and Structure of Accounting Systems
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Sample Questions
Q1) The sales analysis subsystem refers to what activity and supports which business process?
A) Shows current sales information; supports the financial process.
B) Matches sales with accounts receivable information; supports the revenue process.
C) Analyzes historical sales data; supports the revenue process.
D) Matches sales with accounts receivable information; supports the financial process
Q2) Which of the following is not a type of processing function?
A) Retrieving
B) Sorting
C) Comparison
D) Summarization
Q3) What are the support activities of an accounting information system?
Q4) What is one of the most common errors made when inputting data?
Q5) Which of the following processes requires the direct intervention by users?
A) Updating and posting
B) File maintenance
C) Calculation
D) Summarization
6
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Chapter 5: Reporting Process, Coding Methods, and Audit Trails
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Sample Questions
Q1) Explain why reference identifiers are necessary to provide adequate audit trails.
Q2) Of the following business organizations, which one requires daily financial statement preparation?
A) An oil drilling rig manufacturer
B) A bank
C) A tool manufacturing company
D) A video store
Q3) What is an audit trail?
Q4) A purchase order number would not be suitable as a reference identifier in an audit trail.
A)True
B)False
Q5) A block code leads an accountant or auditor from a data item's specific location in the accounting information system to its preceding or successor location.
A)True
B)False
Q6) Describe in what situations the frequency of reporting should be weekly or even daily.
Page 7
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Chapter 6: Internal Control and Risk Assessment
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Sample Questions
Q1) Which of the following is true concerning the cost/benefit model for risk analysis?
A) As costs of controls increase, costs associated with risks decrease.
B) As costs of controls increase, costs associated with risks increase.
C) As total costs increase, costs associated with risks increase.
D) As total costs decrease, costs of controls decrease.
Q2) Provide some examples of risks to accounting information systems.
Q3) Two factors of the internal environment are the board of directors and control activities.
A)True
B)False
Q4) What are the components of internal control?
Q5) One factor of the internal environment is organizational structure.
A)True
B)False
Q6) Which of the following generally expresses the organizational structure?
A) Organizational chart
B) Managerial decision-making framework
C) Responsibility accounting chart
D) Functional model
8
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Chapter 7: Control Activities
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Sample Questions
Q1) General controls apply to the reliability and consistency of the overall information processing environment, and they support application controls.
A)True
B)False
Q2) Disaster recovery plans should include all of the following EXCEPT:
A) An alternative means to continue processing after disaster.
B) A strong audit trail for all transactions.
C) Required employee training and periodic testing of the plan.
D) All of the above should be included in the disaster recovery plan.
Q3) Computer hardware controls are built in by the manufacturer.
A)True
B)False
Q4) The monitoring of internal control can be conducted on an ongoing basis, as a separate project, or as a combination of both.
A)True
B)False
Q5) Define computer forensics. Include in your explanation a list of 5 of the activities that computer forensic experts can do.
Q6) Identify and briefly describe the classification scheme for control activities.
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Chapter 8: The Financial Process
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Sample Questions
Q1) An inactive account should be immediately removed from the general ledger for security reasons.
A)True
B)False
Q2) Define "soft" and "hard" closings. Be sure to indicate the DIFFERENCE between the two.
Q3) The internal audit department chooses the external auditor.
A)True
B)False
Q4) In accounting software packages, what is the equivalent term for accounts in a subsidiary ledger?
A) Master accounts
B) Modules
C) Sub-accounts
D) Normal accounts
Q5) What is the core activity of an accounting information system?
A) The revenue process
B) The purchasing process
C) The financial process
D) The transaction process
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Chapter 9: The Revenue Process
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Sample Questions
Q1) An aging accounts receivable report is commonly used for which of the following purposes?
A) As a tool for contacting customers regarding overdue amounts
B) As a basis for calculating the bad debt provision
C) As a tool for writing off small, miscellaneous, delinquent amounts
D) All of the above are purposes of an aging accounts receivable report.
Q2) Give two examples of data verification controls found in the revenue process.
Q3) Describe three of the functions typically found in the sales order function.
Q4) Define "balance forward" and "open item" billing. List an advantage of each type of billing process.
Q5) Which of the following is an action resulting from the "receipt of cash" trigger in a sales- support organization?
A) Adding to the open customer invoice file.
B) Creation a sales transaction file record.
C) Creation of a cash receipts transaction file record.
D) Collection of transaction-based query information.
Q6) What are the principal events to be recorded in the revenue process?
Q7) What is the difference in the balance forward and the open item methods of accounting for customer accounts?
Page 11
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Chapter 10: The Purchasing Process
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Sample Questions
Q1) Where is there rarely a deficiency in the audit trail between?
A) Purchases journal and cash disbursements
B) Purchases journal and vendor accounts
C) Vendor accounts and cash disbursements
D) Cash disbursements and vendor accounts
Q2) After an organization compares the vendor invoice with the purchase order data and the receiving data, the invoice data are then keyed into what file?
A) Purchase order file
B) Open invoice file
C) Accounts payable file
D) Receiving transaction file
Q3) What are alternative names for the purchasing process?
A) Expenditure, receiving, procurement
B) Receiving, expenditure, acquisition
C) Ordering, receiving, procurement
D) Expenditure, procurement, acquisition
Q4) List four of the five actions that result from the receipt of merchandise from a vendor.
Q5) Describe some factors which may complicate competitive bidding.
Q6) Define and explain the purpose of retainages.
Page 12
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Chapter 11: The Inventory Process
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Sample Questions
Q1) Which of the following are software systems that expand an organization's reach outside to suppliers and customers?
A) Enterprise resource planning systems
B) Just in time inventory systems
C) Supply chain management systems
D) None of the above
Q2) Software systems that extend an organization's reach outside to suppliers and customers, managing the planning and flow of merchandise inventory, are known as supply chain management systems.
A)True
B)False
Q3) If the sum of free stock and units on order equals the reorder point, the recommended order size is equal to the economic order quantity.
A)True
B)False
Q4) RFID codes hold more information than UPC codes, but cannot be scanned from as far away as UPCs.
A)True
B)False
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Chapter 12: Database Structure of Accounting Systems
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Sample Questions
Q1) What is one or a group of data elements that uniquely identifies a record?
A) A primary key
B) An index key
C) A foreign key
D) A locator key
Q2) Compare the data hierarchy of a conventional file to that of a database.
Q3) Which of the following are disadvantages of a database?
A) Increased hardware requirements, required technical skills, and integrated data
B) Increased hardware requirements, vulnerability to system failure, and integrated data
C) Required technical skills, difficult conversion from conventional files, and high- quality and efficient data
D) Increased hardware requirements, required technical skills, and difficult conversion from conventional files
Q4) What is meant by the "logical" structure of a database?
A) The way the data are thought about, or viewed, by users
B) The way the data are stored on storage devices
C) The internal level of a database
D) The conceptual and internal levels of a database
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Page 14
Chapter 13: Developing a Relational Database for an Accounting Information System
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Sample Questions
Q1) In a database table for sales transactions, you need to store "extended amount" and "total due."
A)True
B)False
Q2) What are resources, events, and agents called in the REA framework?
A) Properties
B) Dependencies
C) Entities
D) Attributes
Q3) In the REA framework, relationships among entities can be which of the following?
A) One-to-one
B) One-to-many (many-to-one)
C) Many-to-many
D) All of the above
Q4) A study of the business processes would uncover the relationships among events, resources, and agents.
A)True
B)False
Q5) What is an insertion anomaly?
Page 15
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Chapter 14: Electronic Business
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Sample Questions
Q1) Which of the following statements is/are true regarding a digital signature?
A) It is generated from the contents of the message and the sender's private key.
B) Extra data are appended to an electronic message to identify and authenticate the sender and message data using public-key encryption.
C) If the receiver of a message sees that a digital signature is attached, the receiver can be confident that no one has altered the message and that the sender is who the sender claims to be.
D) It is generated from the contents of the message and the sender's private key and extra data are appended to an electronic message to identify and authenticate the sender and message data using public-key encryption.
Q2) Although the rapid availability of data is a benefit of bar codes, it is very expensive to implement.
A)True
B)False
Q3) The "quiet zone" is the white spaces between bar codes.
A)True
B)False
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Page 16
Chapter 15: Ais Selection and Implementation
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Sample Questions
Q1) Two very good tools for gathering in formation to help select the best accounting system are The Accounting Library and CTS Guides.
A)True
B)False
Q2) With parallel conversion, the old system is stopped and the new system is started.
A)True
B)False
Q3) What is the difference in AIS installation and AIS implementation?
Q4) Software that groups an organization's accounting function with finance, sales, manufacturing, and human resources into a coherent, integrated system is referred to as a what?
A) Global resource planning package
B) Enterprise resource planning package
C) Worldwide enterprise resource package
D) Global accounting information package
Q5) List the tasks required in a systems acquisition project.
Q6) Discuss the various methods of conversion to an AIS system.
Q7) Describe two planning tools used in AIS selection and implementation.
Q8) Discuss issues involved in system acquisition.
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