Introduction to Accounting Information Systems
Pre-Test Questions
Course Introduction
Introduction to Accounting Information Systems provides students with a foundational understanding of how information technology supports accounting functions and decision-making processes within organizations. This course covers the design, implementation, and control of accounting systems, highlighting topics such as transaction processing cycles, internal controls, databases, and the integration of accounting software. Students will also explore ethical considerations and emerging trends in accounting technology. By the end of the course, learners will appreciate the critical role that information systems play in ensuring the accuracy, reliability, and security of financial data.
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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Q1) Under the Sarbanes-Oxley Act of 2002, auditors are prohibited from providing any non-audit services to its clients.
A)True
B)False
Answer: True
Q2) 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.
Q3) Which of the following groups requires accounting data with the broadest perspective?
A) Entry-level managers
B) First-level managers
C) Middle-level managers
D) Upper-level managers
Answer: D
Q4) Define the difference between an event and a transaction.
Answer: An event/business activity may or may not result in a transaction, but a transaction is always an event.
3
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Chapter 2: Accounting Systems Documentation
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Q1) How should distribution of or access to documentation be handled?
A) Through multiple channels
B) Saved so that is can be a basis of comparison for future documentation development
C) On a need-to-know basis
D) None of the above
Answer: C
Q2) Which of the following issues should system narrative descriptions attempt to cover?
A) Relationship of every member in the organization as they pertain to the system
B) Cost of the system
C) The relationship between the current system documentation and any past documentation
D) System specifications
Answer: D
Q3) In a systems flowchart, a rectangle represents a process, or operation.
A)True
B)False
Answer: True
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Chapter 3: Essential Elements and Basic Activities of Accounting Systems
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Q1) The general ledger master file stores information that supports both accounting and operating activities while the subsidiary ledger master files stores information that mainly supports accounting activities.
A)True
B)False
Answer: False
Q2) The balance sheet reports the profitability of an organization for a stated period of time such as a month or a year.
A)True
B)False
Answer: False
Q3) Which of the following is (are) a typical transaction file(s) in a computerized system?
A) Cash receipts
B) General journal
C) Sales
D) All of these are typical transaction files in a computerized system.
Answer: D
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Chapter 4: Data Flows, Activities, and Structure of Accounting Systems
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Sample Questions
Q1) Name one accounting system activity other than input data.
Q2) Which of the following processes requires the direct intervention by users?
A) Updating and posting
B) File maintenance
C) Calculation
D) Summarization
Q3) Which of the following is not an example of master file maintenance?
A) Increasing and decreasing account balances in records
B) Adding new records to a file
C) Deleting unwanted records from a file
D) Changing the content of existing records
Q4) Which of the following is (are) true regarding transactions?
A) May be reported individually
B) May be reported as part of aggregate information
C) May be reported to external auditors only
D) A & B
E) B & C D
Q5) What are the two major types of reports that are produced by an accounting information system?
Q6) What are the support activities of an accounting information system? Page 6
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Chapter 5: Reporting Process, Coding Methods, and Audit Trails
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Q1) Which of the following is the appropriate format for an element in XBRL?
A) <Inventories>40000</Inventories>
B) <Inventories>40000<Inventories>
C) Inventories:40000:/Inventories
D) <Inventories:40000:/Inventories>
Q2) Record sequencing is the process of placing data in a specified order.
A)True
B)False
Q3) Which of the following computer languages is used specifically for Web applications?
A) Structured query language (SQL)
B) Extensible markup language (XML)
C) Web services description language (WSL)
D) Enterprise application language (EAL)
Q4) Which of the following statements is correct regarding extensible business reporting language (XBRL)?
A) XBRL is used to identify the content of financial data.
B) XBRL is used to format the presentation of financial data on web pages.
C) XBRL uses hypertext markup language (HTML) tags.
D) XBRL reports words and figures as standalone blocks of data.
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Chapter 6: Internal Control and Risk Assessment
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Q1) The president of a small company boasted to associates at a business club, "Fortunately, we don't need internal control. You see, we're a family business, and we're not going to steal from one another." Discuss the wisdom of the president's statement.
Q2) The internal environment is the organizational infrastructure that supports internal control.
A)True
B)False
Q3) Define the following risk responses: avoid, reduce, share, accept.
Q4) Which of the following characteristics usually does not describe a management philosophy or operating style that affects the internal environment?
A) Management's behavior toward other managers or personnel
B) Management's approach to external political factors
C) Management's attitude toward accounting functions
D) Management's approach to business risk
Q5) Type II SAS 70 reviews are required for all third party service providers.
A)True
B)False
Q6) Define Enterprise Risk Management.
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Chapter 7: Control Activities
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Q1) Data access control activities include which of the following?
A) User authentication, encryption, firewall, automatic log off
B) Encryption, batch controls, directory and file attributes
C) User authentication, user rights, callback device, check digit
D) Segregation of duties, user authentication, automatic rollback
Q2) What is automatic rollback?
A) An in-house backup that is completed through the Internet.
B) A pricing method used by retailers.
C) feature that backs out incomplete transactions.
D) A feature that aids in the recovery of data.
Q3) Omen Company is a manufacturer of men's shirts and distributes weekly sales reports to each sales manager. The quantity 2R5 appeared in the quantity sold column for one of the items on the weekly sales report for one of the sales managers. What is the most likely explanation for what occurred?
A) The output quantity was stated in hexadecimal numbers.
B) The computer malfunctioned during execution.
C) The printer malfunctioned and the "R" should have been a decimal point.
D) The system did not contain a verification control for input data.
Q4) Identify the general control activities that are desirable for information processing systems.
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Chapter 8: The Financial Process
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Q1) Define the following: chart of accounts, credit rating, FOB point, picking list.
Q2) Closings for interim periods are known as hard closings.
A)True
B)False
Q3) Recurring entry is a feature that automates the process of recording transactions and adjustments that are encountered repeatedly.
A)True
B)False
Q4) What is the term that accounting software packages use for control accounts?
A) Normal accounts
B) Chart of accounts
C) Sub-accounts
D) Master accounts
Q5) What is the listing of account names used in the financial process along with the codes assigned to the accounts called?
A) Module
B) Chart of accounts
C) Inactive account
D) Master account
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Chapter 9: The Revenue Process
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Q1) With which of the methods of payment application for open item accounts is a person required to identify the open invoices being paid, as well as any credits being taken?
A) Automatic identification
B) Post-identification
C) Pre-identification
Q2) List two exception-type reports that would be generated in the revenue process related to the collection of accounts receivable.
Q3) A detailed aging of open item accounts lists individual invoices by customer.
A)True
B)False
Q4) In the open item system, payments are applied to the outstanding balance rather than against particular invoices.
A)True
B)False
Q5) List and discuss two exception-type reports generated in the revenue process related to the collection accounts receivable and how a manager would make use of these reports.
Q6) Explain why gross profit analysis is more useful than sales analysis.
Page 12
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Chapter 10: The Purchasing Process
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Q1) In most AISs, the purchasing function is represented by two modules-purchase order and accounts receivable.
A)True
B)False
Q2) What is a major source of purchasing errors?
A) Data entry errors
B) Not setting budgets for managers
C) Not validating the purchase order
D) EDI errors
Q3) An organization is not under an obligation to pay a vendor until the organization receives the vendor's invoice.
A)True
B)False
Q4) Invoices for received items not yet paid are stored in the purchases transaction file.
A)True
B)False
Q5) List three of the four efficiency features for data entry AND give examples of each..
Q6) Define and explain the purpose of retainages.
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Chapter 11: The Inventory Process
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Q1) Define the following: lead time, safety stock, reorder point, ordering costs, economic order quantity.
Q2) Which of the following represent risks associated with outsourcing?
A) Renegotiation risk.
B) Geopolitical risk.
C) Privacy of sensitive information.
D) All of the above are risks associated with outsourcing.
Q3) All accounting system inventory control modules use a perpetual inventory system.
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
Q5) List and discuss some reports that are used to help manage the inventory process.
Q6) Name some factors that may cause management to deviate from an order size recommendation.
Q7) What are the end of period processing options in the inventory module?
Page 14
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Chapter 12: Database Structure of Accounting Systems
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Q1) A database administrator is responsible for planning, organizing, and maintaining the database to satisfy users' needs.
A)True
B)False
Q2) What is the operation that materializes the relationship between tables?
A) Union
B) Insertion
C) Projection
D) Join
Q3) If database management systems are so nifty, why does any company still operate a conventional file, or legacy, system?
Q4) Identify the types of relationships that can exist between tables in a database.
Q5) A database system consists of two major components--a database and a database management system.
A)True
B)False
Q6) An index file contains metadata, which is data about data.
A)True
B)False
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Chapter 13: Developing a Relational Database for an Accounting Information System
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Q1) In the REA framework, which of the following entities are involved in the business process described in the scenario?
A) Inventory, employee, customer, sale
B) Inventory, product number, invoice number, customer
C) Employee, product number, customer, sale
D) Invoice number, product number, customer, sale
Q2) What are the steps required to develop a relational database for an accounting system using the system output approach?
Q3) What is an insertion anomaly?
Q4) The participation of which of the following individuals is not necessary in the development of a database system?
A) Accountants
B) Marketing managers
C) Human resource managers
D) Board of directors
Q5) In the REA framework, an event is a business activity.
A)True
B)False
Q6) What is the step that will normalize data with respect to the first normal form?
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Chapter 14: Electronic Business
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Q1) Which of the following technologies would an organization use to prevent access to its private network?
A) Digital signature
B) Firewall
C) Web assurance service
D) Encryption
Q2) What is the name of a business-to-business configuration where a company provides its own Web-based EDI hosting service?
A) Internet EDI
B) Web-EDI
C) XML/EDI
D) VAN/EDI
Q3) Identify the three approaches to support EDI over the Internet and briefly describe each one.
Q4) The acronym "VAN" means value added network.
A)True
B)False
Q5) Briefly explain the difference in point-to-point versus value-added-network EDI architecture.
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Chapter 15: Ais Selection and Implementation
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Q1) Discuss what is meant by enterprise resource planning (ERP) packages and give some examples of the leading packages.
Q2) What is AIS installation?
A) The transfer of AIS programs to client computers
B) A process that is more comprehensive than implementation
C) A process that includes conversion planning and training of new personnel
D) All of the above are true about AIS installation.
Q3) The development of accounting systems for microcomputers led to the concentration of accounting functions within the accounting department.
A)True
B)False
Q4) Because the failure of an AIS may mean bankruptcy for an organization, what is the most stressful method of conversion to an AIS?
A) Direct conversion
B) Modular conversion
C) Parallel conversion
D) Pilot conversion
Q5) Discuss the various methods of conversion to an AIS system.
Q6) Discuss issues involved in system acquisition.
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