Introduction to Accounting Systems
Question Bank
Course Introduction
Introduction to Accounting Systems provides students with a foundational understanding of how accounting information systems (AIS) are used to collect, process, and report financial data within organizations. The course covers the components and design of accounting systems, emphasizing their role in supporting business operations and decision-making. Topics include the flow of accounting information, system controls and security, internal controls, documentation techniques, the use of databases, and an introduction to popular accounting software. Through case studies and practical exercises, students gain insight into how AIS integrates with other business systems to enhance organizational performance and ensure the accuracy and reliability of financial information.
Recommended Textbook
Accounting Information Systems 7th Edition by James Hall
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Page 2
Chapter 1: The Information System: An Accountants Perspective
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Q1) Advantages of distributed data processing include each of the following except A) cost reductions
B) better management of organization resources
C) improved operational efficiency
D) increased user satisfaction
Answer: B
Q2) The major difference between the Financial Reporting System (FRS)and the Management Reporting System (MRS)is the
A) FRS provides information to internal and external users; the MRS provides information to internal users
B) FRS provides discretionary information; the MRS provides nondiscretionary information
C) FRS reports are prepared using information provided by the General Ledger System; the MRS provides information to the General Ledger System
D) FRS reports are prepared in flexible, nonstandardized formats; the MRS reports are prepared in standardized, formal formats
Answer: A
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Chapter 2: Introduction to Transaction Processing
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Sample Questions
Q1) The order of the entries made in the ledger is by
A) transaction number
B) account number
C) date
D) user
Answer: B
Q2) The most important advantage of sequential coding is that
A) missing or unrecorded documents can be identified
B) the code itself lacks informational content
C) items cannot be inserted
D) deletions affect the sequence
Answer: A
Q3) Operational inefficiencies occur because accounts unique to many concurrent transactions need to be updated in real time.
A)True
B)False
Answer: False
Q4) Give one advantages of real-time data collection.
Answer: certain transaction errors can be prevented or detected and corrected at their source.
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Chapter 3: Ethics, Fraud, and Internal Control
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Q1) Opportunity involves direct access to assets and/or access to information that controls assets.
A)True
B)False
Answer: True
Q2) Forces which may permit fraud to occur do not include
A) a gambling addiction
B) lack of segregation of duties
C) centralized decision making environment
D) questionable integrity of employees
Answer: C
Q3) 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
Q4) A clerk reorders 250 items when the inventory falls below 25 items.This is an example of __________________________.
Answer: general authorization
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Chapter 4: The Revenue Cycle
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Sample Questions
Q1) What is the purpose of the credit memo?
Q2) The purpose of the invoice is to bill the customer.
A)True
B)False
Q3) The reconciliation that occurs in the shipping department is intended to ensure that
A) credit has been approved
B) the customer is billed for the exact quantity shipped
C) the goods shipped match the goods ordered
D) inventory records are reduced for the goods shipped
Q4) Periodically,the general ledger department receives all of the following except
A) total increases to accounts receivable
B) total of all sales backorders
C) total of all sales
D) total decreases in inventory
Q5) What is the purpose(s)of the stock release document?
Q6) What is the role of the shipping notice?
Q7) How is EDI more than technology? What unique control problems may it pose?
Q8) Give three examples of Access Control in a Point-of-Sale (POS)system.
Q9) What function does the receiving department serve in the revenue cycle?
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Chapter 5: The Expenditure Cycle Part I: Purchases and Cash
Disbursements Procedures
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Q1) In a merchandising firm,authorization for the purchase of inventory is the responsibility of
A) inventory control
B) purchasing
C) accounts payable
D) cash disbursements
Q2) Explain why supervision is so important in the receiving department.
Q3) The purpose of the receiving report is to
A) order goods from vendors
B) record receipt of goods from vendors
C) authorize the purchasing department to order goods
D) bill for goods delivered
Q4) Because of time delays between receiving inventory and making the journal entry
A) liabilities are usually understated
B) liabilities are usually overstated
C) liabilities are usually correctly stated
D) none of the above
Q5) What internal accounting control(s)would be the most effective in preventing a storekeeper from taking inventory home at night? When shortages become apparent,he claims the goods were never received.
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Chapter 6: The Expenditure Cycle Part II: Payroll Processing and
Fixed Asset Procedures
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Sample Questions
Q1) Accounting conventions and IRS rules sometime specify the depreciation parameters to be used.
A)True
B)False
Q2) Fixed Asset Systems must keep track of the physical location of each asset to promote accountability.
A)True
B)False
Q3) Which department is responsible for approving changes in pay rates for employees?
A) payroll
B) treasurer
C) personnel
D) cash disbursements
Q4) The Fixed Asset Systems does all of the following except
A) records acquisition of assets
B) records improvements to assets
C) estimates the fair market value of assets in service
D) records the disposal of assets
Q5) List two types of authorization required in the Fixed Asset System.
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Chapter 7: The Conversion Cycle
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Sample Questions
Q1) Move tickets authorize the storekeeper to release materials to work centers.
A)True
B)False
Q2) Which of the following statements about the EOQ inventory model assumptions is incorrect?
A) Demand for the product is constant and known with certainty.
B) The lead time is a variable.
C) All inventories in the order arrive at the same time.
D) Total ordering cost is a variable
Q3) How does automation help achieve manufacturing flexibility?
Q4) Deficiencies of the traditional cost accounting information system include all of the following except
A) an emphasis on financial performance
B) inaccurate cost allocations
C) an emphasis on standard costs
D) immediate feedback about deviations from the norm
Q5) Itemize the disadvantages of ABC that have caused some firms to abandon this technique.
Q6) Discuss the importance to the cost-accounting department of the move ticket.
Q7) What information is contained in the bill of materials (BOM)?
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Chapter 8: General Ledger, Financial Reporting, and Management Reporting Systems
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Sample Questions
Q1) How does the Management by Exception principle affect the Management Reporting System?
Q2) Which of the following statements is NOT true?
A) XML stands for eXperimental Markup Language.
B) XML is a is a meta-language for describing markup languages.
C) Unlike HTML, XML is capable of storing data in relational form.
D) Any markup language can be created using XML
Q3) Which report is not an output of the Financial Reporting System (FRS)?
A) variance analysis report
B) statement of cash flows
C) tax return
D) comparative balance sheet
Q4) An XBRL taxonomy:
A) is the document format used to produce web pages.
B) is the final product (report).
C) is a classification scheme.
D) is a tag stored in each database record.
E) none of the above is true.
Q5) Why is the audit trail necessary?
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Q6) What are the major exposures in the general ledger/financial reporting system?
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Chapter 9: Database Management Systems
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Q1) What are the key control implications of the absence of database normalization?
Q2) The __________________________ describes every data element in the database.
Q3) All of the following are elements of the DBMS which facilitate user access to the database except
A) query language
B) data access language
C) data manipulation language
D) data definition language
Q4) Improperly normalized databases are associated with three types of anomalies: the update anomaly,the insertion anomaly,and the deletion anomaly.
A)True
B)False
Q5) There is more than one conceptual view of the database.
A)True
B)False
Q6) The conceptual view of the database is often called ____________________.
Q7) Explain the purpose of an ER diagram in database design.
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Q8) Contrast the navigational databases with relational databases.What is the primary advantage of the relational model?
Chapter 10: The REA Approach to Business Process
Modeling
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Q1) ER diagrams always label entity names in the singular noun form.
A)True
B)False
Q2) Which statement is NOT true? REA resources are:
A) assets
B) affected by support events
C) scarce
D) under the control of agents
Q3) Discuss the concept of duality as it relates modeling an economic transaction.
Q4) Define duality.
Q5) Define the value chain
Q6) All of the following are examples of economic events except A) receiving raw materials from a supplier
B) checking a customer's credit prior to processing a sales order
C) disbursing cash for inventories received
D) shipping product to a customer
Q7) What are the four basic forms of cardinality?
Q8) What is the REA model? What does it mean for accountants?
Q9) Explain the rule for assigning foreign keys in a (1:M)association? Page 13
Q10) What do the letters 'R,' 'E,' and 'A' stand for in the term "REA model"?
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Chapter 11: Enterprise Resource Planning Systems
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Sample Questions
Q1) If an auditor suspected an unusual relationship between a purchasing agent and certain suppliers,how could drill-down be used to collect data?
Q2) Data warehousing processes do not include
A) modeling data
B) condensing data
C) extracting data
D) transforming data
Q3) What is a data warehouse?
Q4) The client/server model is a form of network technology in which user computers,called clients,access ERP programs and data via a host computer called a server.
A)True
B)False
Q5) What is SCM software?
Q6) 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
Q7) What is meant by the OLAP term: consolidation?
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Chapter 12: Electronic Commerce Systems
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Sample Questions
Q1) What is a ping?
Q2) Explain the function of the two parts of the TCP/IP protocol.
Q3) Discuss the changing motivation behind a Denial of Service Attack
Q4) Packet switching
A) combines the messages of multiple users into one packet for transmission. At the receiving end, the packet is disassembled into the individual messages and distributed to the intended users.
B) is a method for partitioning a database into packets for easy access where no identifiable primary user exists in the organization.
C) is used to establish temporary connections between network devices for the duration of a communication session.
D) is a denial of service technique that disassembles various incoming messages to targeted users into small packages and then reassembles them in random order to create a useless garbled message.
Q5) Which of the following statements is correct? TCP/IP
A) is the basic protocol that permits communication between Internet sites.
B) controls Web browsers that access the WWW.
C) is the file format used to produce Web pages.
D) is a low-level encryption scheme used to secure transmissions in HTTP format.
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Chapter 13: Managing the Systems Development Life Cycle
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Sample Questions
Q1) When implementing a new system,the costs associated with transferring data from one storage medium to another is an example of
A) a recurring cost
B) a data conversion cost
C) a systems design cost
D) a programming cost
Q2) The systems steering committee is responsible for all of the following except
A) assigning priorities
B) determining whether and when to terminate systems projects
C) analyzing the technical feasibility of the project
D) budgeting funds for systems development
Q3) The first step in the SDLC is to develop a systems strategy
A)True
B)False
Q4) Why is the announcement of a new systems project so critical to project success?
Q5) The systems analysis report does not
A) identify user needs
B) specify requirements for the new system
C) formally state the goals and objectives of the system
D) specify the system processing methods
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Chapter 14: Construct, Deliver, and Maintain Systems Projects
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Sample Questions
Q1) Office automation is more complex than accounting packages.
A)True
B)False
Q2) Which of the following is not an advantage of commercial software? Commercial software
A) can be installed faster than a custom system
B) can be easily modified to the user's exact specifications
C) is significantly less expensive than a system developed in-house
D) is less likely to have errors than an equivalent system developed in-house
Q3) When maintaining a system that was developed using Computer Aided Software Engineering (CASE)tools,
A) the programmer must thoroughly review the program code
B) changes should be made directly to the structure diagram
C) significantly less time is required compared to maintenance activities for a system developed without using Computer Aided Software Engineering (CASE) tools
D) the need for testing the modified application is eliminated
Q4) List the attributes of output views.
Q5) What is the purpose of the Request for Proposal (RFP)?
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Q6) What is meant by object-oriented design? What does it mean for systems design?
Chapter 15: IT Controls : Sarbanes-Oxley and IT Governance
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Sample Questions
Q1) All of the following tests of controls will provide evidence about the physical security of the computer center except
A) review of fire marshal records
B) review of the test of the backup power supply
C) verification of the second site backup location
D) observation of procedures surrounding visitor access to the computer center
Q2) For most companies,which of the following is the least critical application for disaster recovery purposes?
A) month-end adjustments
B) accounts receivable
C) accounts payable
D) order entry/billing
Q3) The same internal control objectives apply to manual and computer-based information systems.
A)True
B)False
Q4) Compare and contrast the following disaster recovery options: empty shell,recovery operations center,and internally provided backup.Rank them from most risky to least risky,as well as most costly to least costly.
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Chapter 16: IT Controls : Security and Access
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Q1) In a telecommunications environment,line errors can be detected by using an echo check.
A)True
B)False
Q2) An integrated group of programs that supports the applications and facilitates their access to specified resources is called a (an)
A) operating system.
B) database management system.
C) utility system
D) facility system.
E) object system.
Q3) Briefly define an operating system.
Q4) Audit trails in computerized systems are comprised of two types of audit logs: detailed logs of individual keystrokes and event-oriented logs.
A)True
B)False
Q5) Explain how SYN Flood attacks can be controlled.
Q6) What are the three security objectives of audit trails? Explain.
Q7) What are some typical problems with passwords?
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Chapter 17: IT Controls : Systems Development Program
Changes and Application Controls
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Q1) Describe two methods used to control the source program library.
Q2) What is the purpose of the auditor's review of SDLC documentation?
Q3) Run-to-run control totals can be used for all of the following except
A) to ensure that all data input is validated
B) to ensure that only transactions of a similar type are being processed
C) to ensure the records are in sequence and are not missing
D) to ensure that no transaction is omitted
Q4) When auditors do not rely on a detailed knowledge of the application's internal logic,they are performing
A) black box tests of program controls
B) white box tests of program controls
C) substantive testing
D) intuitive testing
Q5) Contrast the black box approach to IT auditing and the white box approach.Which is preferred?
Q6) Achieving batch control objectives requires grouping similar types of input transactions (such as sales orders)together in batches and then controlling the batches throughout data processing.
A)True
B)False Page 21
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