Introduction to Accounting Information Systems
Question Bank
Course Introduction
Introduction to Accounting Information Systems explores the fundamental concepts, technologies, and applications that support the collection, processing, and communication of financial information within organizations. The course examines how accounting information systems are designed, implemented, and managed to ensure accurate and reliable financial reporting, facilitate decision-making, and support internal controls. Students will gain an understanding of key components such as databases, internal control frameworks, and enterprise resource planning (ERP) systems while analyzing real-world case studies on fraud prevention, cybersecurity, and the impact of emerging technologies on the accounting profession.
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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) What is the difference in an external auditor and an internal auditor?
Answer: External auditors express an opinion about the "fairness" of a client's financial statements. They are independent of the client organizations, working individually or for accounting firms. Internal auditors are employed by business firms to perform auditing work for corporate management. They ensure that accounting systems are properly designed to meet the organization's present and future needs, monitor the effectiveness of internal controls, and provide advice on operational efficiency within the organization.
Q2) With the implementation of e-commerce, many companies have dramatically reduced the number of their suppliers and/or customers.
A)True
B)False
Answer: True
Q3) The "beginning ERP market" includes companies with revenues of $500 million or more.
A)True
B)False
Answer: False
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Chapter 2: Accounting Systems Documentation
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Q1) Documentation as it relates to accounting systems is a communication device that describes in pictures, words, or both how to use the system, and what the system does, and how the system operates.
A)True
B)False
Answer: True
Q2) The initial data flow diagram is called a context diagram.
A)True
B)False
Answer: True
Q3) Which is not true about system flowchart symbols?
A) They are more numerous than are data flow diagram symbols.
B) Rigid conventions determine their use.
C) Labels attached to the symbols are self-explanatory.
D) Completely different sets of symbols are used for computerized and manual systems.
Answer: D
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Chapter 3: Essential Elements and Basic Activities of Accounting Systems
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Q1) Each control account in the general ledger has one subsidiary ledger that contains several accounts.
A)True
B)False
Answer: True
Q2) Which of the following defines a shipping transaction file in a computerized system?
A) A file that stores data about sales requiring more than one shipment
B) A file that stores data about purchases
C) A file that stores data about purchases requiring the receipt of more than one shipment
D) A file that stores data about sales
Answer: A
Q3) What file in a computerized accounting system corresponds to a paper subsidiary ledger in a paper-based system?
A) Transaction file
B) Master file
C) Open file
D) Reference file
Answer: B
Page 5
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Chapter 4: Data Flows, Activities, and Structure of Accounting Systems
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Q1) What framework has proved to be a successful attempt to unify the elements and processes that are common to all accounting systems?
A) Business processes
B) Accounting data base
C) Hierarchies
D) Road maps
Q2) 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
Q3) A new account is added to the Chart of Accounts through the sales transaction file.
A)True
B)False
Q4) Name and give a brief description of two business processes.
Q5) Name the subsystems of the inventory process in a manufacturing organization.
Page 6
Q6) Name, explain, and give examples of four different ways that data are processed.
Q7) What are the support activities of an accounting information system?
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Chapter 5: Reporting Process, Coding Methods, and Audit Trails
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Q1) Which of the following would not be suitable as a reference identifier in an audit trail?
A) Customer invoice
B) Document number of checks issued
C) Purchase order number
D) Internally generated numbers that represent completed transaction
Q2) Of the following business organizations, which one requires daily financial statement preparation?
A) An oil drilling rig manufacturer
B) A bank
C) A tool manufacturing company
D) A video store
Q3) Which of the following is a general principle of effective reporting?
A) Necessity for lengthy reports
B) Comparative reporting
C) Bidirectional reporting
D) Multidimensional reporting
Q4) Explain why reference identifiers are necessary to provide adequate audit trails.
Q5) Explain the meaning of exception reporting.
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Chapter 6: Internal Control and Risk Assessment
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Q1) What does (4) represent?
A) Total cost
B) Loss area
C) Cost of controls
D) Level of assurance
E) Optimal point of reasonable assurance E
Q2) The internal environment is the organizational infrastructure that supports internal control.
A)True
B)False
Q3) What is the optimal point of reasonable assurance for internal control?
A) When all possible controls are implemented
B) When the cost of controls equals the savings on losses from risks
C) When standard costing is used in inventory accounts
D) When no discrepancies exist between the inventory physical count and the inventory account balance
Q4) What are the documents that have contributed to our understanding of internal control and the methods to achieve effective internal control?
Q5) Define Enterprise Risk Management.
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Chapter 7: Control Activities
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Q1) Segregation of duties reduces the opportunities for a person to be in a position to do which of the following?
A) Perpetrate and conceal errors and inappropriate acts.
B) Record both cash receipts and cash disbursements.
C) Journalize entries and prepare financial statements.
D) Establish control activities and authorize transactions.
Q2) Which of the following controls most likely would assure that an organization can reconstruct its files?
A) Hardware controls that are built into the computer by the computer manufacturer.
B) Backup copies of data and program files that are stored away from originals.
C) Personnel, who are independent of data input, perform parallel simulations.
D) System flowcharts that provide accurate descriptions of input and output operations.
Q3) A trend is a movement away from programming controls into computer software and toward placing controls in human operating procedures.
A)True
B)False
Q4) What are the underlying fundamental concepts of control activities?
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Chapter 8: The Financial Process
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Q1) In accounting software packages, what are accounts that have no sub-accounts called?
A) Normal accounts
B) Master accounts
C) Sub-accounts
D) Statistical accounts
Q2) Define the following: chart of accounts, credit rating, FOB point, picking list.
Q3) An account that stores the cubic feet of gas sold is an example of a statistical account.
A)True
B)False
Q4) Generally speaking, transactions that are categorized as sales, purchases, cash payments, cash receipts, or payroll are initially recorded in the general ledger module.
A)True
B)False
Q5) The internal audit department chooses the external auditor.
A)True
B)False
Q6) Why is the time-sensitive entries feature useful?
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Chapter 9: The Revenue Process
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Q1) Which type of report lists individual past due invoices by customer?
A) Detailed A/R aging.
B) Summary aging.
C) Customer master file.
D) Vendor master file.
Q2) Define "balance forward" and "open item" billing. List an advantage of each type of billing process.
Q3) Which of the following is included in the revenue process?
A) Contra accounts
B) Sales order processing
C) Vendor invoicing
D) Inventory management
Q4) What is the purpose of sales analysis reporting?
A) It gives management a basis for judging the performance of individual sales personnel.
B) Customers providing disappointing gross profit on the sales dollar may be identified.
C) Historical sales data are used to provide planning and control information for managers.
D) All of the above are valid purposes of sales analysis reports.
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Chapter 10: The Purchasing Process
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Q1) Discuss risks associated with the payment of invoices (i.e., disbursement of cash) in the purchasing process.
Q2) Where is there rarely a deficiency in the audit trail between?
A) Purchases journal and cash disbursements
B) Purchases journal and vendor accounts
C) Vendor accounts and cash disbursements
D) Cash disbursements and vendor accounts
Q3) Which of the following describes the best physical control(s) over cash disbursements?
A) All disbursements to vendors over $50 are made with prenumbered checks.
B) Cash can be disbursed to vendors when approved by the purchasing manager.
C) Access to inventory is limited to authorized personnel only.
D) All of the above are good physical controls over cash disbursements.
Q4) List two reports generated by the purchasing process and indicate what they are used for.
Q5) In most accounting information systems, the purchasing function is represented by two modules: purchase order and receiving, sometimes referred to as the vendor module.
A)True
B)False
Page 12
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Chapter 11: The Inventory Process
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Q1) What is safety stock?
A) The quantity of inventory necessary to avoid the loss of sales due to stockout
B) The optimum order size to prevent a stockout
C) The quantity that minimizes inventory for "just in time" inventory
D) The sum of the lead time stock and stockout stock
Q2) Software systems that extend an organization's reach outside to suppliers and customers, managing the planning and flow of merchandise inventory, are known as supply chain management systems.
A)True
B)False
Q3) An important report in the inventory process is one that shows sales and gross profit by product.
A)True
B)False
Q4) Discuss some of the risks associated with the inventory process.
Q5) Discuss various activities in the inventory process.
Q6) The larger the quantity of safety stock, the larger the stockout cost.
A)True
B)False
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Chapter 12: Database Structure of Accounting Systems
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Q1) What are the three ways in which a user can interface with a database management system?
Q2) Which of the following statements is not an advantage of a database?
A) Data storage and retrieval methods are designed by application developers.
B) Data elements can be combined in virtually limitless ways.
C) Each data element needs to be stored only one time.
D) Application programs are independent of the physical structure of the data they process.
Q3) A query language is a high-level English-like language that enables users to make ad hoc, spur of the moment, requests from a computer.
A)True
B)False
Q4) A query language is a low-level, programming language.
A)True
B)False
Q5) In the relational model, data are perceived by the user to be arranged in simple tables with rows and columns.
A)True
B)False
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Chapter 13: Developing a Relational Database for an Accounting Information System
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Q1) Which of the following data elements are called repeating data elements in an invoicing application?
A) Product number, product description, invoice number, customer code
B) Product number, product description, unit sales price, quantity sold
C) Product number, unit sales price, invoice date, quantity sold
D) Product number, unit sales price, customer city, customer code
Q2) Which of the following is the first step in developing a database for an accounting system using the REA framework approach?
A) Identify and document the relationships among the events, resources, and agents that are of interest to users.
B) Identify and document the business events, or activities, that are of interest to users and the resources and agents that are related to the events.
C) Identify and document attributes that are related to the resources, events, agents, and relationships that are of interest to users.
D) Determine what tables to create and what data elements to put in which tables by referring to an E-R diagram.
Q3) What is an insertion anomaly?
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Chapter 14: Electronic Business
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Q1) The technology permitting data on an ordinary business document to be encoded in what appear to be decorative touches on the document is
A) PDF417
B) OCR
C) ASCII
D) DataGlyphs
Q2) The basic EDI standard most commonly used by businesses in the USA is
A) ANSI
B) EDIFACT
C) X12
D) No single standard is used by most businesses in the USA.
Q3) The international EDI standard is called EDIFACT representing Electronic Data Interchange for Administration, Commerce, and Transportation.
A)True
B)False
Q4) Most bar code symbologies use both the spaces (white bars) as well as the dark bars to encode data.
A)True
B)False
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Chapter 15: Ais Selection and Implementation
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Q1) What is the difference in AIS installation and AIS implementation?
Q2) Most accounting VARs handle only one to three accounting software packages.
A)True
B)False
Q3) 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.
Q4) If you buy an AIS system directly from a developer, you may have more ability to negotiate than if you buy from a VAR.
A)True
B)False
Q5) Discuss what is meant by enterprise resource planning (ERP) packages and give some examples of the leading packages.
Q6) Which of the following is not an ERP package?
A) Oracle E-Business Suite
B) Lawson Enterprise
C) Microsoft Dynamics GP
D) Peachtree by Sage
Page 17
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