Information Systems for Accountants
Review Questions
Course Introduction
This course explores the essential role of information systems within the accounting profession, emphasizing how technology enables the collection, processing, and analysis of financial data. Students will examine various types of accounting information systems, such as transaction processing systems, enterprise resource planning (ERP) systems, and computerized accounting software. The course covers topics including internal controls, data security, auditing in a digital environment, and compliance with regulatory requirements. Through case studies and practical applications, students will gain hands-on experience with accounting software and learn to evaluate and implement technological solutions that improve organizational efficiency and decision-making.
Recommended Textbook
Accounting Information Systems 14th GLOBAL Edition by Marshall B. Romney
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Page 2
Chapter 1: Conceptual Foundations of Accounting Information Systems
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Q1) How can an AIS add value to the organization?
Answer: An AIS can increase the efficiency and effectiveness of the value chain by improving the quality and lowering costs of products or services,improving efficiency of operations,improving decision making,enhancing the sharing of knowledge,improving the efficiency and effectiveness of its supply chain and improving the internal control structure.
Q2) When the AIS provides information in a timely and accurate manner,it stands as an example of
A)improved decision making.
B)improving the quality and reducing the costs of products or services.
C)improving efficiency.
D)all of the above
Answer: D
Q3) The value chain concept is composed of two types of activities known as A)primary and support.
B)primary and secondary.
C)support and value.
D)technology and support.
Answer: A
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Chapter 2: Overview of Transaction Processing and Enterprise Resource Planning Systems
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Q1) In an ERP system,the module used to record data about transactions in the production cycle is called
A)order to cash.
B)purchase to pay.
C)manufacturing.
D)logistics.
Answer: C
Q2) The collection of employee time sheets is part of which transaction cycle?
A)the revenue cycle
B)the production cycle
C)the human resources cycle
D)the expenditure cycle
Answer: C
Q3) The collection of customer payment is part of which transaction cycle?
A)the revenue cycle
B)the production cycle
C)the human resources cycle
D)the expenditure cycle
Answer: A
Page 4
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Chapter 3: Systems Documentation Techniques
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Q1) A data flow diagram
A)is a graphical description of the source and destination of data that shows how data flow within an organization.
B)is a graphical description of the flow of documents and information between departments or areas of responsibility.
C)is a graphical description of the relationship among the input, processing, and output in an information system.
D)is a graphical description of the sequence of logical operations that a computer performs as it executes a program.
Answer: A
Q2) In a customer payment processing DFD,the "update receivables" activity will be represented by ________,the "accounts receivable file" will be represented by ________,and the "credit manager" will be represented by ________.
A)a square; two horizontal lines; a circle.
B)a rectangle; a square; a circle.
C)a circle; two horizontal lines; two horizontal lines.
D)a circle; two horizontal lines; a square.
Answer: D
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Chapter 4: Relational Databases
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Q1) Which of the following would not be found in a data dictionary entry for a data item?
A)records containing a specific data item
B)physical location of the data
C)source of the data item
D)field type
Q2) A set of individual user views of the database is called the
A)conceptual-level schema.
B)internal-level schema.
C)external-level schema.
D)meta-schema.
Q3) Using the database depicted above,in the Sales table,"Customer #" is best described as
A)an attribute.
B)a primary key.
C)a foreign key.
D)A, B, and C
Q4) What is the difference in logical view and physical view?
Q5) Describe the difference between update anomaly,insert anomaly,and delete anomaly.Provide an example for each of the anomaly.
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Chapter 5: Computer Fraud
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Q1) Misappropriation of assets is a fraudulent act that involves
A)dishonest conduct by those in power.
B)misrepresenting facts to promote an investment.
C)using computer technology to perpetrate a crime.
D)theft of company property.
Q2) Fraud perpetrators are often referred to as
A)bad actors.
B)blue-collar criminals.
C)white-collar criminals.
D)outlaws.
Q3) Which of the following is a financial pressure that could cause an employee to commit fraud?
A)A feeling of not being valued.
B)Having a grumbling and drug addiction.
C)Having a close association with suppliers and customers.
D)Having an anger management issue.
Q4) Discuss the reasons for the rapid increase of computer fraud.
Q5) Describe ways that the Treadway Commission has recommended to reduce fraudulent financial reporting.
Page 7
Q6) Describe four ways companies can reduce losses from fraud.
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Chapter 6: Computer Fraud and Abuse Techniques
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Q1) A fraud technique that allows a perpetrator to bypass normal system controls and enter a secured system is called
A)superzapping.
B)data diddling.
C)using a trap door.
D)piggybacking.
Q2) Computer fraud perpetrators that modify programs during systems development,allowing access into the system that bypasses normal system controls are using
A)a Trojan horse.
B)a trap door.
C)the salami technique.
D)superzapping.
Q3) Describe the differences between a worm and a virus.
Q4) Individuals who control an army of malware-infected zombie computers are referred to as
A)malware owners.
B)malware writers.
C)botnet owners.
D)bad actors.
Page 8
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Chapter 7: Control and Accounting Information Systems
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Q1) Hiring qualified personnel is an example of a ________ control,and procedures to resubmit rejected transactions are an example of a ________ control.
A)corrective; detective
B)detective; corrective
C)preventive; corrective
D)detective; preventive
Q2) Applying the COBIT5 framework,monitoring is the responsibility of
A)the CEO.
B)the CFO.
C)the board of directors.
D)all of the above
Q3) As a result of an internal risk assessment,Berryhill Insurance decided it was no longer profitable to provide flood insurance in the southern states.Berryhill apparently chose to ________ the risk of paying flood claims in the southern states.
A)reduce
B)share
C)avoid
D)accept
Q4) Why are most fraud not being reported or prosecuted?
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Chapter 8: Controls for Information Security
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Q1) According to the Trust Services Framework,the confidentiality principle of integrity is achieved when the system produces data that
A)is available for operation and use at times set forth by agreement.
B)is protected against unauthorized physical and logical access.
C)can be maintained as required without affecting system availability, security, and integrity.
D)is complete, accurate, and valid.
Q2) Who bears the responsibility for information security in an organization?
A)CIO.
B)CISO.
C)CFO.
D)COO.
Q3) Why does COBIT5 DSS-05.06 stress the importance of restricting physical access to network printers?
A)because hackers can use them to print out sensitive information
B)because hackers often hide inside large network printers until night
C)because document images are often stored on network printers
D)because network printers are easier to hack into than computers
Q4) Explain social engineering.
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Chapter 9: Confidentiality and Privacy Controls
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Q1) Identify the type of information below that is least likely to be considered confidential by an organization.
A)Audited financial statements.
B)Legal documents.
C)Top executives' salaries.
D)New product development plans.
Q2) Compare the advantages and disadvantage of symmetric and asymmetric encryption.
Q3) One way to circumvent the counterfeiting of public keys is by using A)a digital certificate.
B)digital authority.
C)encryption.
D)cryptography.
Q4) Describe some steps you can take to minimize your risk of identity theft.
Q5) Describe symmetric encryption and identify three limitations.
Q6) CAN-SPAM provides both criminal and civil penalties for violations of the law. A)True B)False
Q7) Encryption is not a panacea to protecting confidential information. A)True
B)False
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Chapter 10: Processing Integrity and Availability Controls
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Q1) All of the following controls for online entry of a sales order would be useful except
A)check digit verification on the dollar amount of the order.
B)validity check on the inventory item numbers.
C)field check on the customer ID and dollar amount of the order.
D)concurrent update control.
Q2) Cancellation and storage of documents means
A)documents are defaced and stored.
B)documents are defaced before being shredded.
C)cancellation data are copied from documents before they are stored.
D)data are copied from a document and stored before it is being shredded.
Q3) The best example of an effective payroll transaction file record count would most likely be
A)sum of net pay.
B)total number of employees.
C)sum of FICA.
D)total of employees' social security numbers.
Q4) According to COBIT 5,what should be the common features for locating and designing data centers housing mission-critical servers and databases?
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Page 12
Chapter 11: Auditing Computer-Based Information Systems
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Q1) When a control deficiency is identified,the auditor should inquire about A)tests of controls.
B)compensating controls.
C)the feasibility of a systems review.
D)materiality and inherent risk factors.
Q2) Evaluating effectiveness,efficiency,and goal achievement are objectives of ________ audits.
A)financial
B)operational
C)information systems
D)all of the above
Q3) When programmers are working with program code,they often employ utilities that are also used in auditing.For example,as program code evolves,it is often the case that variables defined during the early part of development become irrelevant.The occurrences of variables that are not used by the program can be found using
A)program tracing.
B)scanning routines.
C)mapping programs.
D)embedded audit modules.
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Chapter 12: The Revenue Cycle: Sales to Cash Collections
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Q1) You have been hired by a catalog company to computerize its sales order entry process.Approximately 70% of all orders are received over the telephone by a sales person.The other 30% of orders are received by a sales person through mail or fax.The catalog company wants the phone orders processed real-time.The mail and fax orders will be processed in batches of 50 orders.The following attributes are collected for every sales order:
Customer number (if the order is from a new customer,a new number needs to be assigned)
Customer name
Address
Payment method (credit card for phone and fax orders and check for mailed orders)
Credit card number and expiration date
Items ordered and quantity of each
Unit price of each item ordered
Identify and describe at least ten specific control policies and procedures you will implement for the sales order process.Be very specific describing the controls and number each new control you suggest.
Q2) Explain how to effectively segregate duties in the sales order activity.
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Chapter 13: The Expenditure Cycle: Purchasing to Cash
Disbursements
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Q1) Which of the following is not a common control for ensuring inventory is secure and inventory counts are accurate?
A)control of physical access to the inventory storage areas
B)transfers of inventory with proper documentation
C)sending "blind" copies of purchase orders to inventory control for data entry
D)making physical counts of inventory at least once per year
Q2) The management at Barks-a-Million is considering a new inventory control system.The current system is inadequate because it frequently causes stockouts that interrupt production and lead to excess stock of other materials - resulting in markdowns and high carrying costs.The new system will focus on reducing or completely eliminating carrying costs,most likely employing
A)a just-in-time inventory system.
B)a reorder point.
C)materials requirements planning.
D)the economic order quantity.
Q3) How can information technology be used to improve the vendor invoice approval process?
Q4) Explain what is meant by the expenditure cycle as a "mirror image" of the revenue cycle.
Page 15
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Chapter 14: The Production Cycle
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Q1) What does the first term in the throughput formula,productive capacity,represent?
A)The maximum number of units that can be produced given current technology.
B)The percentage of total production time used to manufacture a product.
C)The percentage of "good" units produced given current technology.
D)The minimum number of units that can be produced given current technology.
Q2) In activity-based costing,expenses associated with the purchase of health care insurance for employees are ________ overhead.
A)batch-related
B)product-related
C)company wide
D)expenditure-based
Q3) Labor productivity is measured by the quantity produced divided by the labor time required to produce it.All other things held constant,an increase in labor productivity will increase throughput by
A)increasing productive capacity.
B)increasing productive processing time.
C)increasing yield.
D)increasing all components of throughput.
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Chapter 15: The Human Resources Management and Payroll Cycle
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Q1) As each payroll transaction is processed,the system should also
A)allocate labor costs to appropriate general ledger accounts
B)use cumulative totals generated from a payroll to create a summary journal entry to be posted to the general ledger
C)both A and B above
D)The HRM system should not perform either activity A or B.
Q2) Executive immersion experiences are important because
A)CEOs often have no idea what rank-and-file employees do on a daily basis.
B)employees who have positive attitudes contribute to increasing company profits.
C)many employees feel upper management is out of touch.
D)it is important for organizations to take social responsibility seriously.
Q3) Discuss the reasons small and midsized businesses are attracted to payroll service bureaus and PEOs.
Q4) A "zero balance check" refers to which of the following control procedures?
A)The ACH clearing account shows a zero balance once all entries are posted.
B)cross-footing the payroll register
C)The payroll clearing account shows a zero balance once all entries are posted.
D)trial balance showing that debits equal credits
Q5) Describe the basic activities in an HRM/payroll cycle.
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Chapter 16: General Ledger and Reporting System
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Q1) Identify the year the SEC will require American companies to switch from U.S.-based GAAP to IFRS as the basis for preparing financial statements.
A)2016
B)2018
C)2020
D)At this point it is unclear when the SEC will require American companies to implement IFRS, though the SEC remains committed to requiring U.S. companies use IFRS at some point.
Q2) What is responsibility accounting?
Q3) When updating the general ledger,sales,purchases,and production are examples of ________ entries,and issuance or retirement of debt and the purchase or sale of investment securities are examples of ________ entries.
A)adjusting; controller originated
B)accounting subsystem; treasurer originated
C)adjusting; special journal
D)controller generated; special journal
Q4) Explain the purpose of a journal voucher file.
Q5) Discuss the value and role of budgets as managerial reports.
Q6) Explain the benefits of XBRL.
Page 18
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Chapter 17: Database Design Using the Rea Data Model
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Q1) Describe the possible relationships between entities,in terms of cardinalities.
Q2) An REA diagram must link every event to at least one ________ and two ________.
A)resource; agents
B)agent; resources
C)transaction; entities
D)resource; relationships
Q3) Identify the item below that would be classified as an event by the REA data model.
A)An IOU from a customer.
B)The customer.
C)A customer sale.
D)A loan from a vendor.
Q4) A(n)________ diagram graphically depicts a database's contents by showing entities and relationships.
A)data flow
B)flowchart
C)entity-relationship
D)REA
Q5) Describe the three basic rules that apply to the REA model pattern.
Q6) Explain how an AIS system can be viewed as a set of "give-to-get" exchanges.
Page 19
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Chapter 18: Implementing an Rea Model in a Relational Database
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Q1) From the choices below,identify the attribute below that would make the best primary key.
A)Last name.
B)Date of entry.
C)Airport code.
D)Passport control number.
Q2) Information traditionally found in journals is stored where in an REA database?
A)Event entity.
B)Agent entity.
C)Relationship.
D)Resource entity.
Q3) From the choices below,identify the attribute below that would make the best primary key.
A)Product number.
B)Date of first purchase.
C)Postal code.
D)Customer telephone number.
Q4) Explain where in the REA model you can find the information normally found in a ledger.
20
Q5) What are the advantages of the REA data model over the traditional AIS model?
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Chapter 19: Special Topics in Rea Modeling
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Q1) Type and group entities are similar in that both are abstractions that represent sets of A)objects.
B)semantics.
C)attributes.
D)tables.
Q2) The ________ entity is used to collect and summarize data about the raw materials,labor,and machine operations used during production of inventory.
A)Finished Goods Inventory
B)Raw Materials
C)Issue Raw Materials
D)Work-in-Process
Q3) Sales order number is most likely to be a foreign key in which entity of an expanded revenue cycle REA diagram?
A)Call on Customers.
B)Fill Customer Order.
C)Ship Order.
D)Take Customer Order.
Q4) Why is the event Issue Debt often modeled as a separate event entity?
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Chapter 20: Introduction to Systems Development and Systems Analysis
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Q1) ________ is a form of resistance when users blame anything and everything on the new system,such that it becomes the scapegoat for all real and imagined problems and errors.
A)Acceptance
B)Aggression
C)Avoidance
D)Projection
Q2) During ________ of systems analysis,an examination is made of each development activity to define the problem to be solved.
A)information needs and systems requirements
B)the feasibility study
C)the initial investigation
D)the systems survey
Q3) A Logical model used to gather information about an existing system
A)comes only after a physical model of the existing system is created.
B)describes how a system actually works, rather than how it should work.
C)illustrates how a system functions by describing the flow of documents and computer processes.
D)illustrates what is being done, regardless of how that flow is actually accomplished.
Page 22
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Chapter 21: Ais Development Strategies
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Q1) Carmie Iria,the director of a systems project committee,has received management approval for the implementation of a new accounting information system.After sending out an RFP to multiple vendors,the committee settled on purchasing a system from Sysys,a vendor who will provide a standard software package and post-sale technical support.Carmie's committee has decided to go with
A)canned software.
B)a turnkey system.
C)an outsourced system.
D)an end-user developed system.
Q2) Describe the important characteristics of extreme programming (XP).
Q3) Although Gillette uses canned software in its business operations,it does so with the intention of creating a competitive advantage.Identify how Gillette aims to gain a greater competitive advantage from using canned software.
A)From deciding how the software should be used.
B)From deciding what software should be used.
C)From the cost savings it gains by using canned software.
D)From deciding when software should be used.
Q4) Describe the advantages and disadvantages of outsourcing.
Q5) Explain the concept of an application service provider.
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Chapter 22: Systems Design, implementation, and Operation
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Q1) What of the below is the most time-consuming activity in the physical design stage of the systems development life cycle (SDLC)?
A)Controls design.
B)Input design.
C)Output design.
D)Program design.
Q2) What type of conversion changes the old system to a new one by operating both systems simultaneously until the organization is confident the new system is functioning correctly?
A)Direct conversion.
B)Parallel conversion.
C)Phase-in conversion.
D)Pilot conversion.
Q3) Which of the following is a consideration during file and database design?
A)Form size.
B)Format.
C)Medium.
D)Organization.
Q4) Describe the standards that should be used to evaluate design alternatives.
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Q5) How can accountants help in the systems development life cycle (SDLC)process?