Information Systems in Accounting Pre-Test Questions
Course Introduction
This course explores the integration of information systems within the accounting function of organizations. Students will learn how accounting information systems (AIS) are used to collect, process, and report financial data, supporting decision-making and ensuring compliance with legal requirements. The course covers topics such as system design and implementation, internal controls, security, and the role of AIS in fraud prevention. Emphasis is placed on the impact of technology on accounting processes, including the use of databases, enterprise resource planning (ERP) systems, and current software applications. By the end of the course, students will understand the importance of information systems in improving accuracy, efficiency, and strategic value in the accounting profession.
Recommended Textbook
Accounting Information Systems 4th Edition by Robert Hurt
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Page 2
Chapter 2: Role and Purpose of Accounting Information Systems
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Q1) AIS study sometimes involves questions with deterministic answers.Which of the following questions is most likely to have a deterministic answer?
A)How should a company record the purchase of supplies on account in its AIS?
B)In a corporation with sales of $100,000 annually, what dollar amount should be considered material?
C)Which processing tools should the AIS use?
D)Has the conceptual framework achieved the FASB's original objective for developing it?
Answer: A
Q2) Which of the following elements of the conceptual framework fit within the same category?
A)Economic entity, historical cost
B)Conservatism, historical cost
C)Economic entity, conservatism
D)Conservatism, materiality
Answer: D
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Chapter 3: Transaction Processing in the Ais
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Q1) Courses intended for freshmen at a local university are numbered from 100 to 199, while courses intended for seniors at the same university are numbered from 400 to 499.Which coding system is the university using?
A)Sequential
B)Block
C)Hierarchical
D)Mnemonic
Answer: B
Q2) Plant assets, such as equipment, are reported on financial statements at their book value, thus exemplifying:
A)The measuring process in accounting only.
B)The measuring process in bookkeeping only.
C)The measuring process in both accounting and bookkeeping.
D)Informed judgments as part of the definition of bookkeeping.
Answer: C
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Chapter 4: Internal Controls
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Q1) Differences between legal & regulatory risk and directors' & officers' liability risk in Brown's taxonomy include:
A)The cause of the risk.
B)The things directly affected by the risk.
C)Both the cause of the risk and the things directly affected by the risk.
D)Neither the cause of the risk nor the things directly affected by the risk.
Q2) In Brown's taxonomy, systems risk is a form of:
A)Financial risk
B)Operational risk
C)Strategic risk
D)Hazard risk
Q3) Bumble Beasley was recently hired as a marketing manager at ATI Corporation.When approached by the accounting manager regarding the development of an internal control plan for the marketing department, Bumble said: "Internal control? I'm not even really sure I know what that is.And even if I did, I had the impression that it was all the responsibility of you accounting types." In the role of the accounting manager, explain to Bumble in your own words what internal control is.Also explain, in your own words, the basic purposes of internal control.
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Chapter 5: Management Concepts
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Q1) COSO has published integrated frameworks for both internal control and for enterprise risk management.Which of the following statements about the frameworks is most true?
A)The internal control framework is more useful than the enterprise risk management framework.
B)The enterprise risk management framework is more useful than the internal control framework.
C)Management attitudes are an element of both frameworks.
D)Both frameworks are required by the SEC.
Q2) The basic principles of business process management discussed in the text include all of the following except:
A)Always use information technology in BPM projects.
B)Hire people who can see the "big picture."
C)Communicate early; communicate often.
D)Understand how business processes support organizational strategy.
Q3) Pearl had been asked by her boss to develop a new way to process expense reimbursements in her company.In your own words, list and discuss the steps Pearl should take to accomplish her task.
Q4) List and discuss three basic principles of business process management.
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Chapter 6: Information Systems Concepts
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Q1) Liam has developed a good process for safeguarding his company's information technology assets.He has talked about his methodology with some of his co-workers and has created a schedule for applying his process to various kinds of information technology assets.Using the capability maturity model, the process is best described as:
A)Chaotic
B)Repeatable
C)Managed
D)Optimized
Q2) List the four macro- and four micro-level factors managers should consider when they select information technology resources based on the discussion in the text.
Q3) Which of the following statements would you expect to read in a company memo arguing against the use of the systems development life cycle as a form of internal control?
A)The risks associated with the SDLC are unknown.
B)The SDLC does not help achieve all four objectives of internal control.
C)The SDLC is not recognized by COSO.
D)The SDLC has no relationship to internal control.
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Chapter 7: Flowcharting
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Q1) Consider the process you use to register for courses and pay your fees each term.Referring to the previously presented set of flowcharting symbols labeled Symbol A through Symbol J., give one specific example of Symbols A, B, F, G, H, and I within the context of that process.
Q2) A properly prepared systems flowchart can be used to:
A)Evaluate internal controls in the AIS.
B)Determine which processes are completed manually in the AIS.
C)Both evaluate internal controls in the AIS and determine which processes are completed manually in the AIS.
D)Neither evaluate internal controls in the AIS nor determine which processes are completed manually in the AIS.
Q3) After drawing a rough draft of a flowchart by hand, Sue should:
A)Determine which computer program she wants to use to prepare a final copy.
B)Ask for feedback on the flowchart from her supervisor.
C)Both determine which computer program she wants to use to prepare a final copy and ask for feedback on the flowchart from her supervisor.
D)Neither determine which computer program she wants to use to prepare a final copy nor ask for feedback on the flowchart from her supervisor.
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Chapter 8: Data Flow Diagramming
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Q1) Booksellers of Bufluffia is a small, independent bookstore that both publishes and sells very specialized titles.They currently have about 50 clients; they publish and sell 30 different books at present.The company's management has asked you to create database tables to support their operations.Suppose the database includes a sales/inventory table.You would expect to find all of the following fields in that table except:
A)Sales transaction number
B)Inventory item number
C)Quantity purchased
D)Total amount billed
Q2) The Festival Theatre produces twelve plays per year.Patrons can buy tickets for a single play; alternatively, they can purchase a season pass for either three plays or six plays.Three-play passes offer a 10% discount from the prices of single tickets; six-play passes, a 25% discount.Since most patrons live within 30 miles of the theatre, all ticket sales are done at the box office only.The theatre has an "open seating" plan, so patrons do not reserve a specific seat at any performance.Create specifications (table names and field names) for three tables the theatre would need to track ticket sales; if a junction table is indicated, you must include its specifications as one of the three.
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Chapter 7: Rea Modeling
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Q1) A journal entry in a view-driven AIS debits equipment for $10,000, credits cash for $2,000 and credits notes payable for $8,000.Which of the following pieces of data would you expect to see in an event-driven AIS but not in the view-driven AIS?
A)The transaction date
B)The expected life of the equipment
C)Both the transaction date and the expected life of the equipment
D)Neither the transaction date nor the expected life of the equipment
Q2) View-driven AIS have been criticized because their data are often outdated.Which of the following journal entries for the purchase of inventory best illustrates that criticism?
A)Debit purchases, credit cash
B)Debit inventory, credit cash
C)Debit purchases, credit inventory
D)Debit inventory, credit purchases
Q3) Data in a view-driven AIS are often stored in multiple places, such as:
A)Journals.
B)Ledgers.
C)Both journals and ledgers.
D)Neither journals nor ledgers.
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Chapter 8: XBRL
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Q1) Explain, in your own words, how most organizations create XBRL instance documents.Specifically address the role of information technology in that process.
Q2) XBRL is organized in taxonomies.All of the following are XBRL taxonomies except:
A)US Country Taxonomy 2009
B)IFRS-GP
C)XML taxonomy
D)XBRL-GL
Q3) With respect to XBRL, Global Ledger and International Financial Reporting Standards are:
A)Specifications.
B)Taxonomies.
C)Namespaces.
D)Instance documents.
Q4) Which of the following would most effectively be used to select XBRL tagging software?
A)Expectancy theory
B)Weighted-rating model
C)COSO enterprise risk management framework
D)Accounting cycle
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Chapter 9: E-Business and Enterprise Resource Planning Systems
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Q1) SBL Corporation is preparing to expand into B2B e-business.It is least likely to need which of the following database tables as part of its network?
A)Customer
B)Employee
C)Business
D)Order
Q2) Enterprise resource planning systems are a sophisticated form of relational database technology; one common ERP system module is customer relationship management.Create database specifications (table names and field names) for three tables you would expect to find in an ERP system's customer relationship management module.At least one of the tables must be a junction table.Indicate primary keys by underlining and foreign keys with brackets; ensure that each table is in 3NF.
Q3) When the Internal Revenue Service encourages individual taxpayers to submit forms electronically, it is engaging in which form of e-business?
A)B2C
B)G2C
C)C2C
D)B2B
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Chapter 10: Computer Crime and Information Technology Security
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Q1) Which category of computer crime in Carter's taxonomy recognizes that the presence of computers has generated new versions of traditional crimes?
A)Target
B)Instrumentality
C)Incidental
D)Associated
Q2) WER Corporation forces its employees to change their system password every six months.Which type of security control best describes the company's policy?
A)Physical
B)Technical
C)Administrative
D)Hacking
Q3) COBIT's enablers include people, skills and competencies.According to the AICPA, broad business perspective competencies needed by accounting professionals include:
A)legal and global
B)legal and measurement
C)global and measurement
D)legal, global and measurement
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Chapter 11: Salescollection Process
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Q1) Use COSO's internal control framework to develop an internal control plan for Homemade Craft Company based on the following narrative.Focus your plan on internal controls for the sales/collection process.Homemade Crafts Company (HCC) sells collectible items such as dolls, jewelry, drink coasters and table linens.The company, which has five full-time employees, obtains its merchandise from independent contractors throughout the United States; they then mark up the products and sell them at craft stores and other outlets.Two of the five employees interact with the independent contractors, arranging inventory purchases based on demand for HCC's products and their own personal preferences.Those same employees use their personal vehicles to transport the inventory from HCC's main office to the retail locations where they will be sold.A third employee serves as the company's receptionist, while the fourth manages all aspects of the accounting information system.The company president is the fifth employee, and is in charge of administrative affairs such as hiring, performance evaluation and publicity.HCC purchases its entire inventory on account from the independent contractors, some of whom offer cash discount terms for early payment.All HCC's sales are for cash; each inventory item is marked up 25% on its cost to determine the selling price.For example, if a product costs $100 to buy, HCC sells it for $125.The two sales employees bring all cash receipts back to HCC's main office; the receptionist deposits the cash in the bank at least once a week.
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Chapter 12: Acquisitionpayment Process
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Q1) Which of the following balance sheet items is least likely to be associated with the acquisition/payment process?
A)Cash
B)Accounts payable
C)Raw materials
D)Treasury stock
Q2) BSP Corporation purchased inventory from RSR Corporation on account, $1,000.BSP also paid $100 freight to reimburse RSR for its payment to the common carrier that transported the merchandise.If RSR offered credit terms of 2/10, n/30 and BSP paid within the discount period, the total cash disbursed to RSR was:
A)$1,080.
B)$1,078.
C)$980.
D)Some other amount.
Q3) Several journal entries common to the acquisition/payment process are listed below.For each, explain what transaction the entry is recording.
Q4) List, in order, the steps in the acquisition/payment process discussed in the text.
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Chapter 13: Other Business Processes
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Q1) The purpose of the conversion process is to transform material, labor and overhead into a finished product.To accomplish that purpose, organizations can use one of three systems.Which of the following pairs would be accounted for using a job costing system?
A)Decks of playing cards, compact discs
B)Plastic bottles, aluminum cans
C)Custom-built homes, original works of art
D)Decks of playing cards, made-to-order smoothies
Q2) Transactions commonly associated with the financing process include: (a) issuance of capital stock for cash, (b) declaration of cash dividends and (c) issuance of long-term debt.In your own words, explain how each of those transactions affects each section of a corporate balance sheet.Focus your explanation at a conceptual level; do not explain the effects by indicating journal entries.
Q3) Fill in the blanks below for common transactions processed in the conversion, human resource and financing business process.
Q4) Indicate the effect (increase, decrease or no change) the indicated transaction would have on the specified ratio in each of the following independent situations.
Q5) Create a narrative description of the REA model shown below.
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Chapter 14: Decision-Making Models and Knowledge Management
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Q1) The systems development life cycle would be most useful in the ___ step to create a knowledge management system.
A)First
B)Sixth
C)Both the first and the sixth
D)Neither the first nor the sixth
Q2) Call recommended a seven-step process for creating a knowledge management system.The first step could be completed by:
A)Making knowledge management a component of performance evaluation.
B)Requiring managers to conduct focus groups with their employees about the importance of knowledge management.
C)Both making knowledge management a component of performance evaluation and requiring managers to conduct focus groups with their employees about the importance of knowledge management.
D)Neither making knowledge management a component of performance evaluation nor requiring managers to conduct focus groups with their employees about the importance of knowledge management.
Q3) List, in order, the seven steps to create a knowledge management system.
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Chapter 17: Professionalism, Ethics, and Career Planning
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Q1) According to Bell, a professional integrates knowledge from many disciplines.Knowledge about ethics requires an accountant to integrate knowledge from: A)Philosophy.
B)Communication.
C)Science.
D)Psychology.
Q2) McDonald stated that professionals have autonomy of practice.In the accounting profession, autonomy of practice has been limited by: A)FASB.
B)COSO.
C)PCAOB.
D)All of these.
Q3) In your own words, explain the fundamental principles of each of the following schools of ethical thought: ethical egoism, utilitarianism, deontology, virtue ethics.
Q4) Bell suggested seven characteristics necessary to be considered a professional.Revise each statement below to more appropriately reflect one of those characteristics; indicate the relevant characteristic in the space provided.
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Chapter 18: Auditing and Evaluating the Ais
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Q1) Verifying the frequency of bank reconciliations and reconciling the latest bank statement are examples of actions an auditor might take in which generic steps of the financial statement audit process?
A)First and second
B)Second and third
C)Third and fourth
D)Second and fourth
Q2) A government accountant suspects someone within the government is embezzling cash.Which of the following statements is most true?
A)The government would not pass a compliance audit.
B)An investigative audit will confirm the accountant's suspicion.
C)Both the government would not pass a compliance audit and an investigative audit will confirm the accountant's suspicion are true.
D)Neither the government would not pass a compliance audit nor an investigative audit will confirm the accountant's suspicion is true.
Q3) The chapter identified seven types of audits you are likely to encounter in your career.Identify and discuss two similarities and two differences between investigative audits and financial audits.
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