Introduction to Accounting Exam Questions
Course Introduction
Introduction to Accounting provides students with a foundational understanding of the principles and practices underlying the accounting profession. The course covers essential topics such as the accounting cycle, recording and summarizing financial transactions, preparing financial statements, and interpreting basic accounting information. Students will explore key concepts including assets, liabilities, equity, revenues, and expenses, as well as the role of accounting in business decision-making. Through practical exercises and real-world examples, this course equips students with the skills necessary to analyze financial data and appreciate the significance of accurate financial reporting in various organizational settings.
Recommended Textbook Accounting Information Systems 10th Edition by
James A. Hall
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Chapter 1: The Information System: an Accountants Perspective
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Q1) IT outsourcing is location-independent computing.
A)True
B)False
Answer: False
Q2) Accountants play many roles relating to the accounting information system,including all of the following except A)system users
B)system designers
C)system auditors
D)system converters
Answer: D
Q3) Three activities that are part of the finance function are __________________________,__________________________,and
Answer: portfolio management,treasury,credit evaluation,cash disbursements,cash receipts,banking
Q4) A practice in which an organization sells its IT resources and leases them back is called ___________________________________.
Answer: IT outsourcing
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Chapter 2: Introduction to Transaction Processing
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Q1) Selecting a specific record from a master file containing millions of records requires a direct access file environment.
A)True
B)False
Answer: True
Q2) For what purpose are ER diagrams used?
Answer: An entity relationship (ER)diagram is a documentation technique used to represent the relationship between entities.One common use for ER diagrams is to model an organization's database.
Q3) Batch processing of non-critical accounts improves operational efficiency.
A)True
B)False
Answer: True
Q4) Batch processing is best used when timely information is needed because this method processes data efficiently.
A)True
B)False
Answer: False
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Chapter 3: Ethics,fraud,and Internal Control
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Q1) Para computer ethics is the exposure to stories and reports found in the popular media regarding the good or bad ramifications of computer technology.
A)True
B)False
Answer: False
Q2) Define and describe the importance of physical controls.
Answer: Virtually all systems,regardless of their sophistication,employ human activities that need to be controlled.This class of controls relates primarily to the human activities employed in accounting systems.These activities may be purely manual,such as the physical custody of assets,or they may involve the use of computers to record transactions or update accounts.Physical controls do not relate to the computer logic that actually performs these accounting tasks.Rather,they relate to the human activities that initiate such computer logic.In other words,physical controls do not suggest an environment in which clerks update paper accounts with pen and ink.
Q3) A check digit is a method of detecting data coding errors.
A)True
B)False
Answer: True
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Chapter 4: The Revenue Cycle
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Sample Questions
Q1) For the revenue cycle,state two specific independent verifications that should be performed.
Q2) The revenue cycle consists of
A)one subsystem-order entry
B)two subsystems-sales order processing and cash receipts
C)two subsystems-order entry and inventory control
D)three subsystems-sales order processing, credit authorization, and cash receipts
Q3) What specific internal control procedure would detect the misplacement of a prepared sales invoice that was not mailed to the customer? The invoice was never found.
Q4) Describe two common methods for achieving multilevel security.
Q5) Sales orders should be prenumbered documents.
A)True
B)False
Q6) Physical controls are embedded in computer systems to control access to data. A)True
B)False
Q7) List two points in the sales processing system when authorization is required.
Q8) What is a bill of lading?
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Chapter 5: The Expenditure Cycle Part I: Purchases and Cash
Disbursements Procedures
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Q1) An automated cash disbursements system can yield better cash management since payments are made on time.
A)True
B)False
Q2) Differentiate between a purchase requisition and a purchase order.
Q3) What is the purpose of a receiving report? How are copies of the report distributed?
Q4) In the expenditure cycle,general ledger does not
A)post the journal voucher from the accounts payable department
B)post the account summary from inventory control
C)post the journal voucher from the purchasing department
D)reconcile the inventory control account with the inventory subsidiary summary
Q5) What is the principle objective of the cash disbursement system?
Q6) To maintain a good credit rating and to optimize cash management,cash disbursements should arrive at the vendor's place of business
A)as soon as possible
B)on the due date
C)before the discount date
D)by the end of the month
Q7) What is the objective of automated purchase approval?
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Chapter 6: The Expenditure Cycle Part II: Payroll Processing and
Fixed Asset Procedures
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Q1) Describe several technologies developed for producing the time and attendance file in a modern business with telecommuting employees working from multiple locations.
Q2) The fixed asset system is similar to the expenditure cycle except
A)fixed asset transactions are non-routine and require special authorization and controls
B)fixed assets are capitalized, not expensed
C)both a and b
D)none of the above
Q3) Personnel action forms are used to do all of the following except
A)activate new employees
B)terminate employees
C)record hours worked
D)change pay rates
Q4) Depreciation records include all of the following information about fixed assets except
A)the economic benefit of purchasing the asset
B)the cost of the asset
C)the depreciation method being used
D)the location of the asset
Chapter 7: The Conversion Cycle
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Q1) Discuss the assumptions of the economic order quantity (EOQ)model and its objective.
Q2) Explain the conversion cycle.
Q3) Discuss inventory control objectives.
Q4) A manufacturing process that is organized into group technology cells utilizing no human labor is called
A)islands of technology
B)process simplification
C)computer-integrated manufacturing
D)traditional manufacturing
Q5) What is one benefit of the flexible production system?
Q6) A flexible manufacturing system
A)creates bottlenecks in the process
B)leads to an "us" versus "them" attitude among workers
C)shortens the physical distance between activities
D)is organized along functional lines
Q7) Automation is at the heart of the lean manufacturing philosophy.Discuss its stages and its distinguishing features.
Q8) What is a company's value stream?
Q9) How do lean manufacturing companies use electronic data interchange (EDI)? Page 9
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Chapter 8: Financial Reporting,and Management Reporting Systems
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Q1) What is XML?
Q2) Explain the purpose and contents of the general ledger master file.
Q3) List two duties that individuals with access authority of GL accounts should not have.
Q4) Why is the audit trail necessary?
Q5) Strategic decisions are subordinate to tactical planning decisions.
A)True
B)False
Q6) A report is said to have information content if it eliminates uncertainty associated with a problem facing the decision maker.
A)True
B)False
Q7) XBRL reporting:
A)must be used by banks to file required quarterly "call reports"
B)is used substantially both in the US and internationally
C)facilitates the fulfillment of legal requirements stipulated in SOX
D)all of the above
Q9) What are the major exposures in the general ledger/financial reporting system? Page 11
Q8) The difference between the actual performance and the standard is called the
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Chapter 9: Database Management Systems
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Q1) What is a partial dependency?
Q2) What typical features are provided by a database management system (DBMS)?
Q3) Improperly normalized databases are associated with three types of anomalies: the update anomaly,the insertion anomaly,and the deletion anomaly.
A)True
B)False
Q4) A replicated database is appropriate when
A)there is minimal data sharing among information processing units
B)there exists a high degree of data sharing and no primary user
C)there is no risk of the deadlock phenomenon
D)most data sharing consists of read-write transactions
Q5) Explain the three types of anomalies associated with database tables that have not been normalized.
Q6) _________________________ occurs when a specific file is reproduced for each user who needs access to the file.
Q7) What is view integration?
Q8) What is the partitioned database approach and what are its advantages?
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Q9) Discuss the accountant's role in data modeling and potential problems caused by anomalies.
Chapter 10: The Rea Approach to Business Process
Modeling
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Q1) When assigning foreign keys in a 1:M association,
A)the primary key of each table should be embedded as a foreign key in the related table
B)the primary key on the (0,M) side of the relation should be embedded as the foreign key on the (1,1) side
C)the primary key on the (1,1) side of the relation should be embedded as the foreign key on the (0,M) side
D)none of the above is true
Q2) The duality association in an REA diagrams signifies that each economic transaction involves two agents.
A)True
B)False
Q3) How does the REA approach improve efficiency?
Q4) Modern managers need both financial and nonfinancial information that traditional GAAP-based accounting systems are incapable of providing.
A)True
B)False
Q5) What are the four basic forms of cardinality?
Q6) How are tables in a (M:M)association physically linked?
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Chapter 11: Enterprise Resource Planning Systems
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Q1) Drill-down capability is an OLAP feature of data mining tools.
A)True
B)False
Q2) What is a role?
Q3) Which of the following is usually not part of an ERP's core applications?
A)OLTP applications
B)sales and distribution applications
C)business planning applications
D)OLAP applications
Q4) Online transaction processing programs
A)are bolt-on programs used with commercially available ERPs
B)are available in two models-two-tier and three-tier
C)handle large numbers of relatively simple transactions
D)allow users to analyze complex data relationships
Q5) How is the access control list approach different from RBAC?
Q6) Which of the following is not a risk associated with ERP implementation?
A)opposition to changes in the business culture
B)choosing the wrong ERP
C)choosing the wrong consultant
D)All of these are risks associated with ERP implementations.
Page 15
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Chapter 12: Electronic Commerce Systems
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Q1) A ping is used to test the state of network congestion and determine whether a particular host computer is connected and available on the network.
A)True
B)False
Q2) The primary difference between a LAN and a WAN is
A)the geographical area covered by the network
B)the transmission technology used
C)the type of workstation used
D)the size of the company
Q3) HTTP
A)is the document format used to produce web pages
B)controls web browsers that access the web
C)is used to connect to Usenet groups on the Internet
D)is used to transfer text files, programs, spreadsheets, and databases across the Internet
Q4) What is packet switching?
Q5) Business-to-consumer is the largest segment of Internet commerce.
A)True
B)False
Q6) What is an IP address?
Page 16
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Chapter 13: Managing the Systems Development Life Cycle
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Q1) Discuss the documentation requirements of systems designers and programmers,computer operators,and end users.
Q2) Reasons that a new systems implementation may be unsuccessful include all of the following except
A)organizational restructuring required by the new system results in displaced workers
B)end users do not understand the strategic merits of the new system
C)employees are not trained to use the system
D)system development team members include representatives from end-user departments
Q3) When the nature of the project and the needs of the user permit,most organizations will create the system in-house rather than rely on a commercial package.
A)True
B)False
Q4) What is meant by object-oriented design? What does it mean for systems design?
Q5) Name three items included in the detailed design report.
Q6) List at least three one-time costs and three recurring costs in system development.
Q7) List four types of facts that should be gathered during an analysis of a system.
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Chapter 14: Auditing It Controls Part I: Sarbanes-Oxley and It Governance
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Q1) Define fault tolerance.
Q2) Statements on Auditing Standards recommendations must be followed by every member of the profession unless it can be shown why a standard does not apply in a given situation.
A)True
B)False
Q3) The following are examples of commodity assets except
A)network management
B)systems operations
C)systems development
D)server maintenance
Q4) What primary IT functions must be separated in a centralized firm?
Q5) What is a recovery operations center? What is its purpose?
Q6) What are the components of audit risk?
Q7) Explain why certain duties that are deemed incompatible in a manual system may be combined in an automated environment? Give an example.
Q9) How do the tests of controls affect substantive tests? Page 18
Q8) Why should new systems development activities be segregated from the program change (maintenance)function?
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Chapter 15: Auditing It Controls Part II: Security and Access
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Q1) Network communication poses some special types of risk for a business.What are the two broad areas of concern? Explain.
Q2) Explain how the one-time password approach works.
Q3) In an electronic data interchange environment,the audit trail
A)is a printout of all incoming and outgoing transactions
B)is an electronic log of all transactions received, translated, and processed by the system
C)is a computer resource authority table
D)consists of pointers and indexes within the database
Q4) Describe one benefit of using a call-back device.
Q5) Malicious and destructive programs cause millions of dollars of loss to corporations annually.
A)True
B)False
Q6) Audit objectives for communications controls include all of the following except
A)detection and correction of message loss due to equipment failure
B)prevention and detection of illegal access to communication channels
C)procedures that render intercepted messages useless
D)all of the above
Q7) Discuss three sources of exposure (threats)to the operating system.
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Chapter 16: Auditing It Controls Part III: Systems
Development, program Changes, and Application Auditing
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Q1) All of the following statements are true about the integrated test facility (ITF)except A)production reports are affected by ITF transactions
B)ITF databases contain "dummy" records integrated with legitimate records
C)ITF permits ongoing application auditing
D)ITF does not disrupt operations or require the intervention of computer services personnel
Q2) Use of the integrated test facility poses no threat to organizational data files.
A)True
B)False
Q3) One of the auditor's objectives relating to systems development is to authorize development projects.
A)True
B)False
Q4) Auditors do not rely on detailed knowledge of the application's internal logic when they use the __________________________ approach to auditing computer applications.
Q5) Describe a test of controls that would provide evidence that only authorized program maintenance is occurring.
21
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