Information Systems in Accounting Practice Exam
Course Introduction
This course explores the essential role of information systems in accounting, emphasizing how technology facilitates the collection, processing, and reporting of financial data. Students will examine computerized accounting systems, the design and control of accounting information systems, and the integration of enterprise resource planning (ERP) solutions. Topics include internal controls, data management, systems documentation, security and privacy issues, and the ethical use of accounting information. The course also addresses current trends, such as cloud computing and automation, to prepare students for effective decision-making and problem-solving in modern accounting environments.
Recommended Textbook
Accounting Information Systems 13th Edition by Marshall B. Romney
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Page 2
Chapter 1: Accounting Information Systems: an Overview
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Q1) Which of the following statements below shows the contrast between data and information?
A) Data is the output of an AIS.
B) Information is the primary output of an AIS.
C) Data is more useful in decision making than information.
D) Data and information are the same.
Answer: B
Q2) The process of creating value for customers is the result of nine activities that form a A) value chain.
B) capitalist operation.
C) profitable business.
D) information system.
Answer: A
Q3) It is important that a firm's AIS collect and integrate financial and non-financial information about the organization's activities if the firm seeks use its AIS to gain a competitive advantage.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Overview of Transaction Processing and Enterprise Resource Planning Systems
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Q1) Changing an employee's hourly wage rate would be recorded where?
A) employee master file
B) employee transaction file
C) special journal
D) employee update file
Answer: A
Q2) Data about which of the following facets of a business activity is most likely to be recorded in a transaction file?
A) business activity
B) resources affected by the business activity
C) people who participate in the business activity
D) place the business activity occurs
Answer: A
Q3) The data processing method used by FedEx to track packages is an example of
A) real-time processing.
B) batch processing.
C) online batch processing.
D) real-time batch processing.
Answer: A
Page 4
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Chapter 3: Systems Documentation Techniques
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Q1) The Sarbanes-Oxley Act requires independent auditors to A) create flowcharts to document business processes.
B) understand a client's system of internal controls.
C) establish effective internal controls.
D) prepare and understand all types of system documentation.
Answer: B
Q2) Which symbol would be used in a flowchart to represent employee time cards sent by department managers to the payroll department?
A) #1
B) #4
C) #11
D) #16
Answer: A
Q3) Which symbol would be used in a flowchart to indicate the process started with the Human Resources department?
A) #1
B) #10
C) #12
D) #16
Answer: D
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Chapter 4: Relational Databases
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Q1) Kai Keoni has created custom statues made out of scrap metal for over ten years.He lives above his shop in Martha's Vinyard,Maryland.Kai is an accounting fanatic and has kept detailed records of every statue he has ever created.For every sale,he obtains the customer's name and address,a description of the statue,and a picture of the statue sold to the customer.His unique style has recently attracted the attention of several celebrities.Ready to take his business to the next level,Kai has hired you to construct an accounting information system,which he wants modeled after his paper records.You begin development of the relational database that will form the core of the AIS by envisioning the record stored in a single table with a column that represents each attribute.You then begin to break this table down into smaller tables.This process is called A) integration. B) optimization. C) minimization. D) normalization.
Q2) Seacrest Bedding is changing from a file-oriented system to a relational database system.Identify and design at least three tables that would be needed to capture data for a sales transaction.Each table should include a primary key,three non-key attributes,and foreign keys as necessary.Make up data values for two records within each table.
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Page 6
Chapter 5: Computer Fraud
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Q1) Why is computer fraud often much more difficult to detect than other types of fraud?
A) because massive fraud can be committed in only seconds, leaving little-to-no evidence
B) because most perpetrators invest their illegal income rather than spend it, concealing key evidence
C) because most computer criminals are older and more cunning than perpetrators of other types of fraud
D) because perpetrators usually only steal very small amounts of money at a time, requiring a long period of time to pass before discovery
Q2) 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.
D) theft of company property.
Q3) Why is computer fraud on the rise?
Q4) What are some of the distinguishing characteristics of fraud perpetrators?
Q5) Describe two kinds of fraud.
Q6) Explain the impact of SAS No.99 on auditors' responsibilities.
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Chapter 6: Computer Fraud and Abuse Techniques
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Q1) Describe at least four social engineering techniques.
Q2) Jerry Schneider was able to amass operating manuals and enough technical data to steal $1 million of electronic equipment by A) scavenging.
B) skimming.
C) Internet auction fraud.
D) cyber extortion.
Q3) The unauthorized use of special program that bypass regular system controls to perform illegal acts is called
A) a Trojan horse.
B) a trap door.
C) the salami technique.
D) superzapping.
Q4) Pretexting is best described as a social engineering technique that uses A) text messages to gain sensitive information.
B) an invented scenario to gain sensitive information.
C) threat of physical force to gain sensitive information.
D) impersonation of somebody you know to gain sensitive information.
Q5) Describe at least six computer attacks and abuse techniques.
Q6) How can a system be protected from viruses?
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Chapter 7: Control and Accounting Information Systems
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Q1) 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.
Q2) Which component of the COSO Enterprise Risk Management Integrated Framework is concerned with understanding how transactions are initiated,data are captured and processed,and information is reported?
A) information and communication
B) internal environment
C) event identification
D) objective setting
Q3) Explain why the Foreign Corrupt Practices Act was important to accountants.
Q4) A neural network is a software program that has
A) the ability to read text.
B) the ability to learn.
C) the capability to extract information from an individual's brain.
D) the capability to inject information into an individual's brain.
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Chapter 8: Controls for Information Security
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Q1) The ________ disseminates information about fraud,errors,breaches and other improper system uses and their consequences.
A) chief information officer
B) chief operations officer
C) chief security officer
D) computer emergency response team
Q2) Information technology managers are often in a bind when a new exploit is discovered in the wild.They can respond by updating the affected software or hardware with new code provided by the manufacturer,which runs the risk that a flaw in the update will break the system.Or they can wait until the new code has been extensively tested,but that runs the risk that they will be compromised by the exploit during the testing period.Dealing with these issues is referred to as
A) change management.
B) hardening.
C) patch management.
D) defense in depth.
Q3) Describe what a man-trap is and how it contributes to information security.
Q4) Explain social engineering.
Q5) Identify six physical access controls.
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Chapter 9: Confidentiality and Privacy Controls
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Q1) Which of the following is not true regarding virtual private networks (VPN)?
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) 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.
D) 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.
Q2) A process that takes plaintext of any length and transforms it into a short code.
A) asymmetric encryption
B) encryption
C) hashing
D) symmetric encryption
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Chapter 10: Processing Integrity and Availability Controls
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Q1) This batch processing data entry control sums a non-financial numeric field.
A) record count
B) financial total
C) hash total
D) sequence check
Q2) A customer failed to include her account number on her check,and the accounts receivable clerk credited her payment to a different customer with the same last name.Which control could have been used to most effectively to prevent this error?
A) closed-loop verification
B) duplicate values check
C) validity check
D) reconciliation of a batch control total
Q3) What control are file labels an example of?
A) data entry controls
B) output controls
C) processing controls
D) source data controls
Q4) Discuss how cloud computing could both positively and negatively affect system availability.
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Chapter 11: Auditing Computer-Based Information Systems
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Q1) How could auditors determine if unauthorized program changes have been made?
A) by interviewing and making inquiries of the programming staff
B) by examining the systems design and programming documentation
C) by using a source code comparison program
D) by interviewing and making inquiries of recently terminated programming staff
Q2) Andile Uzoma is the CEO of Chibuzo Incorporated.The board of directors has recently demanded that they receive more assurance that Chibuzo Incorporated is operating in an efficient,effective manner.Which type of audit would best suit the demands of the board of directors?
A) financial audit
B) information system audit
C) operational audit
D) sustainability audit
Q3) An auditor manually calculates accumulated depreciation on a delivery van and compares her calculation with the accounting records.The auditor is performing
A) vouching.
B) confirmation.
C) reperformance.
D) analytical review.
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Page 13
Chapter 12: The Revenue Cycle: Sales to Cash Collections
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Q1) Which of the following is not a general threat to the revenue cycle?
A) inaccurate master data
B) loss of customers
C) poor performance
D) unauthorized disclosure of sensitive information
Q2) Which of the following poses an internal control problem?
A) Physical inspection of inventory quantity and condition is outsourced to a firm that specializes in this service.
B) Products are released from inventory after a warehouse employee and a shipping clerk both sign the pick list.
C) Sales representatives have authority to increase customers' credit limits in $1,000 increments.
D) When customer payments are received in the mail, checks are sent to the cashier's office and remittance advices are sent to the accounts receivable department.
Q3) Explain how validity checks,completeness tests and reasonableness tests can be implemented to ensure accuracy of customer orders.
Q4) Describe the basic revenue cycle activities.
Q5) Discuss the revenue cycle threat of stockouts,carrying costs,and markdowns.
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Chapter 13: The Expenditure Cycle: Purchasing to Cash
Disbursements
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Q1) What is the best way to prevent the acceptance of goods that were never ordered?
A) Order only from approved vendors.
B) Enforce an appropriate conflict of interest policy in place.
C) Match the packing slip to a purchase order before accepting delivery.
D) Require specific authorization from the purchasing manager before accepting any goods.
Q2) A reverse auction would likely be best suited to the purchase of
A) central processing units (CPUs).
B) soybeans.
C) designer clothing.
D) automobiles.
Q3) ________ attempts to minimize or eliminate carrying and stockout costs.
A) Just-in-time inventory
B) Materials requirements planning
C) Economic order quantity
D) Evaluated receipt settlement
Q4) How can using RFID tags or bar codes on goods or products provide significant benefit in the expenditure cycle?
Page 15
Q5) Discuss the differences between EOQ,MRP,and JIT.
Q6) Under what conditions is MRP more suitable than JIT and vice versa?
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Page 16
Chapter 14: The Production Cycle
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Q1) What is activity-based costing (ABC)? How does it compare with the traditional costing methods? What are the benefits of activity-based costing?
Q2) Identify and discuss the two common methods of production planning.
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.
Q4) 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.
Q5) Describe five threats in the production cycle and the applicable control procedures used to mitigate each threat.
Q6) Discuss the criticisms of traditional cost accounting methods.
Page 17
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Chapter 15: The Human Resources Management and Payroll Cycle
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Q1) Identify the two types of payroll deductions and give two examples of each type.
Q2) Identify the firm below where employees' knowledge is likely to be more valuable than the value of a company's tangible assets.
A) international airline
B) law firm
C) automobile manufacturer
D) railroad
Q3) A payroll clearing account is used to
A) check the accuracy of payroll costs.
B) speed up payroll transaction processing.
C) reduce the transaction costs associated with payroll transaction processing.
D) eliminate the need to manually record payroll transactions.
Q4) The average annual management salary at Iyov Management is $80,000.If the average turnover rate for employees is ten per year,what is the approximate average annual cost of turnover?
A) $80,000
B) $400,000
C) $800,000
D) $1,200,000
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) IFRS is an acronym for what?
A) International Financial Reporting Standards
B) Internal Forensic Response System
C) Input and Financial Reporting Standards
D) Internal Fault Recovery System
Q2) 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.
Q3) What system privileges should an employee involved in the general ledger and reporting system be given?
A) general privileges to create, delete, update, or modify data
B) no privileges permitting the creation, deletion, updating, or modification of data
C) only the specific privileges necessary to perform an employee's assigned duties
D) read-only privileges
Q4) How is an audit trail used in the general ledger and reporting system?
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Chapter 17: Database Design Using the Rea Data Model
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Q1) Which of the following statements is true about the development of an REA model?
A) Events that pertain to the entry of data are included in the REA model.
B) The objective is to model basic value-chain activities.
C) REA diagrams model individual transactions and data collections.
D) Information retrieval events are modeled as events in the REA model.
Q2) Which of the following statements is false regarding REA diagrams?
A) Each organization will have its own unique REA diagram.
B) An REA diagram for a given organization will change over time.
C) Data modeling and REA diagram development involve complex and repetitive processes.
D) Redrawing an REA diagram several times during development is uncommon.
Q3) 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
Q4) Describe the three basic rules that apply to the REA model pattern.
Q5) Describe an REA data model.
Q6) Define minimum and maximum cardinalities.
Q7) Describe the steps in developing an REA diagram.
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Chapter 18: Implementing an Rea Model in a Relational Database
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Q1) An integrated REA diagram merges multiple copies of some entities in order to A) minimize the repetition of agent entities.
B) maximize the legibility of the diagram by avoiding the need to have relationship lines cross one another.
C) Both A and B are true.
D) Both A and B are false.
Q2) When integrating separate REA diagrams,
A) common resources are placed between the events that affect them.
B) each resource is connected to two agents.
C) resources are duplicated to show the give and get of economic duality relationships.
D) resources are merged if both events in the stockflow relationship are modeled.
Q3) In an integrated REA diagram,every agent must be must be linked to A) at least one resource.
B) at least two resources.
C) at least one event.
D) at least two events.
Q4) What are the advantages of the REA data model over the traditional AIS model?
Q5) Explain a completeness check.
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Chapter 19: Special Topics in Rea Modeling
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Q1) The attributes of which type of entity would provide a way for the system to compare an employee's reimbursement request with the permissible range of the amount of reimbursement permitted?
A) Resources
B) Events
C) Agents
D) Type
Q2) In which entity would an item's standard cost information most likely be maintained?
A) Inventory entity
B) Order_Inventory entity
C) Inventory-Order_Inventory entity
D) none of the above
Q3) In which entity would an item's actual cost information most likely be maintained?
A) Inventory entity
B) Order_Inventory entity
C) Inventory-Order_Inventory entity
D) none of the above
Q4) Why might an REA diagram show relationships between resources and agents?
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22
Chapter 20: Introduction to Systems Development and Systems Analysis
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Q1) One disadvantage of a Gantt chart is the fact that
A) it does not show the entire schedule for a project.
B) it does not show project progress.
C) it does not show relationships among project activities.
D) it does not permit an individual to quickly determine which activities are behind schedule.
Q2) Who is responsible for maintaining existing computer programs?
A) management
B) system programmers
C) systems analysts
D) accountants
Q3) Which of the following aspect of a feasibility study is concerned with meeting external reporting requirements?
A) technical feasibility
B) legal feasibility
C) scheduling feasibility
D) operational feasibility
Q4) Describe the four primary objectives of a systems survey conducted during systems analysis.
Q5) Describe the importance of the master plan in systems development.
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Chapter 21: Ais Development Strategies
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Q1) Which of the following about end-user computing is true?
A) System users know best what they need, so should be able to create their own applications.
B) End-users, while knowledgeable about their job, are not trained to create systems applications, and should not be allowed to do so.
C) It is inefficient and costly to ask the IS department to create basic applications that only a few users need to use.
D) In most companies, the IS department doesn't want end-users to create their own applications, for fear IS won't have enough work to do.
Q2) Identify the system below that end users should not be allowed to develop.
A) a payroll processing program
B) a program that performs "what-if" statistical modeling
C) developing an application using prewritten software such as a spreadsheet or database system
D) preparing a schedule or list such as a depreciation schedule
Q3) Describe outsourcing and identify the two types of outsourcing agreements.
Q4) Describe the purposes of a help desk.
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) Which of the following is not one of the ways data may need to be modified during data conversion?
A) resolve data inconsistencies
B) validate new files
C) identify files to be converted
D) remove unnecessary fields from data files
Q2) Which of the following is the final activity in the systems development life cycle?
A) monitoring of the system
B) ongoing maintenance activities
C) preparation of the post-implementation review report
D) user acceptance of the post-implementation review report
Q3) Which of the following is not one of the types of documentation that should be prepared for a new system?
A) management
B) operations
C) user
D) development
Q4) Describe the different types of documentation that should be prepared for a new system.
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