Which of the following best explains why AIS is an important area of study for future accountants?

Chapter 01

Role and Purpose of Accounting Information Systems

Multiple Choice Questions

  1. An accounting information system is a set of interrelated:

A. Activities and documents only. B. Activities and technologies only. C. Documents and technologies only. D. Activities, documents and technologies.

  1. The components of an accounting information system are designed to collect ___ and report ___.

A. Data, information B. Data, data C. Information, information D. Information, data

  1. An accounting information system is defined by the text as a set of three interrelated elements. Which of the following choices best gives an example of each element?

A. Buying inventory, selling inventory, balance sheet B. Buying inventory, sales invoice, general ledger software C. Selling inventory, sales invoice, balance sheet D. Selling inventory, writing a check, general ledger software

  1. An accounting information system transforms inputs into outputs via processes such as:

A. Journalizing transactions and posting them to the ledger B. Identifying the elements of the FASB Conceptual Framework C. Always utilizing information technology D. Recognizing and adapting to the cost-benefit constraint

  1. Which of the following best fits the definition of an accounting information system explained in the text?

A. A checkbook register B. A publicly-traded corporation’s financial statements C. Processed source documents leading to the general purpose financial statements D. An Excel spreadsheet of financial statement ratios

  1. Eugene is a self-employed business owner. In February 2011, he gathered together his income and expense records for 2010. He used them, along with appropriate software, to prepare his tax return, which he then transmitted to the Internal Revenue Service. Has Eugene used an accounting information system based on the definition provided in the text?

A. Yes, because he used software to prepare his tax return. B. Yes, because all elements of the definition are present. C. No, because all accounting information systems must produce general purpose financial statements D. No, because no internal decision maker is mentioned.

10 vice president for customer service of First United Bank determined that Lee had overpaid his mortgage. The bank sent Lee a letter asking him if he wanted a refund of the overpayment or if he wanted to apply it to future mortgage payments. Has the vice president for customer service used an accounting information system based on the definition provided in the text?

A. No, because no mention is made of software. B. No, because the letter does not constitute an output. C. No, because no mention is made of general purpose financial statements. D. Yes, because all elements of the definition are present or implied.

11 information systems is an important area of study for future accountants because:

A. All organizations use information technology in their AIS. B. All organizations need an AIS. C. Both A and B. D. Neither A nor B.

12 information systems is an important area of study for future accountants because a well-designed AIS can respond to many elements of the FASB Conceptual Framework. All of the following are parts of the conceptual framework except:

A. Principles of debit and credit B. Objective of financial reporting C. Elements of financial statements D. Qualitative characteristics of accounting information

13 of the following best explains why AIS is an important area of study for future accountants?

A. AIS is the only area of accounting where students learn about information technology. B. AIS is the only area of accounting where students learn about the FASB Conceptual Framework. C. Both A and B D. Neither A nor B

14 is an important area of study for future accountants because a well-designed AIS can recognize and adapt to the cost-benefit constraint. Which of the following statements is most true?

A. Nonfinancial costs and benefits are less important than financial costs and benefits in designing an AIS. B. Resistance to change is a potential cost when making changes to the AIS. C. Financial statement users benefit from more information when it comes from the AIS. D. Source documents should be electronic, rather than paper-based, because electronic documents are more cost effective.

18 Corporation’s accounting information system recently reported the following information: Cost of goods sold, $1,500. Inventory, $15,000. Unearned service fees, $3,000. Service fees earned, $8,000. Which element of financial statements is not included in the preceding data?

A. Asset s B. Equit y C. Expens e D. Liabiliti es

19 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

20 of the following exemplifies “materiality” as the term is used in the FASB conceptual framework?

A. BCC Corporation purchased a $30 wastebasket with an expected useful life of 10 years. BCC charged the entire cost to expense in the period incurred. B. Reported account balances in DPT Corporation’s financial statements are rounded to the nearest whole dollar. C. Both A and B D. Neither A nor B

21 of the following statements about AIS is most true?

A. Compared to introductory accounting, AIS is more likely to have problems with nondeterministic answers. B. Compared to introductory accounting, AIS is less likely to have problems with nondeterministic answers. C. Introductory accounting and AIS are equally likely to have problems with nondeterministic answers. D. All problems in AIS have nondeterministic answers.

22 of the following statements about AIS is most true?

A. The topics studied in an AIS course are unrelated to those in other accounting courses. B. AIS is the only area of accounting that involves questions with nondeterministic answers. C. The five generic elements of an AIS can be discussed in other areas of accounting. D. All of the above statements are true.

23 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?

27 can be linked to other areas of study in accounting by focusing on the five generic elements of the AIS. Which of the following is a process that might be studied in management or cost accounting?

A. Components of the master budget B. How to prepare the master budget C. Both A and B D. Neither A nor B

28 can be linked to other areas of study in accounting by focusing on the five generic elements of the AIS. Which of the following pairs a generic element of the AIS with a specific example from financial accounting?

A. Bank reconciliation, internal control B. Adjusting entries, output C. Financial statements, storage D. FASB Conceptual Framework, input

29 an auditing course, students develop their professional judgment, learn how to conduct a financial statement audit and learn the various types of audit opinions. Which of the following therefore links AIS with auditing?

A. Communication skills B. Generic elements of the AIS C. Both A and B D. Neither A nor B

30 management accounting, students learn to prepare budgets, calculate cost variances and interpret those variances. Which of the following best links those topics with AIS study?

A. Use of professional judgment B. Required use of information technology C. Both A and B D. Neither A nor B

31 generic structure of most accounting information systems comprises ___ elements.

A. Thre e B. Fou r C. Fiv e D. More than five

32 generic element of the AIS is focused on master files, transaction files and junction files?

A. Input s B. Processe s C. Output s D. Storag e

36 used a stack of sales invoices to record journal entries in the AIS. She used those entries and others to prepare an income statement that was later reviewed by her supervisor. The supervisor’s review could best be described as which generic element of the AIS?

A. Inpu t B. Outp ut C. Proces s D. Internal control

37 generic elements of an AIS include inputs and outputs. Which of the following statements about them is most true?

A. Inputs should be paper-based; outputs should be electronic. B. Outputs should be paper-based; inputs should be electronic. C. If inputs are paper-based, outputs should also be paper-based. D. If inputs are electronic, outputs could be either paper-based or electronic.

38 generic elements of an AIS include processes and storage. Which of the following statements about them is most true?

A. Both require internal controls, but the specific controls may be different. B. Both require identical internal controls. C. Storage is not subject to internal controls, but processes are. D. Processes are not subject to internal controls, but storage is.

39 is one generic element of the AIS; the text explains that data stored electronically often are grouped into three types of files. Which of the following includes three examples of the same file type?

A. Purchases, cash receipts, sales B. Inventory, cash receipts, sales C. Purchases, cash, sales D. Inventory, cash, sales

40 is one generic element of the AIS; the text explains that data stored electronically often are grouped into three types of files. Which of the following includes one example of each file type?

A. Purchases, sales, inventory B. Purchases, inventory, purchases / inventory C. Cash receipts, cash payments, cash on hand D. Sales, cost of goods sold, inventory

41 literacy is the ability to find, evaluate, use and communicate information in all of its various formats. Information can be classified as: (i) sponsored / commercial, (ii) popular/practitioner, (iii) scholarly.

A. I and II only B. II and III only C. I and III only D. I, II and III

45 Beasley, a recent accounting graduate from a private, for-profit university, started his own accounting consulting firm. His web page discussed internal controls, inputs, processes and outputs in relation to the design and implementation of accounting information systems. Should his web page be considered a good source of information about the generic structure of AIS?

A. Yes. Because he has a college degree, he has authority. B. Yes. Because he is a recent graduate, the information is current. C. No. Since his degree is from a private, for-profit university, he cannot be objective. D. No. He is in violation of at least one of the UMUC criteria for evaluating information.

46 consulting company summarized the key provisions of the Sarbanes-Oxley Act in a half-page flyer, which was then mailed to prospective clients. The flyer contained the name of the consulting company, but did not identify any of its employees by name. In addition to objectivity, the flyer is most likely in violation of which UMUC criterion for information evaluation?

A. Authori ty B. Accurac y C. Currenc y D. Coverag e

47 Magazine is published six times a year by the Association of Certified Fraud Examiners; its articles are primarily directed to professionals employed in the fraud examination field. Fraud Magazine is likely to be considered practitioner information because:

A. It is published six times a year. B. It is published by an association of practitioners. C. Both A and B D. Neither A nor B

48 accounting professor published two articles. The first described one company’s internal controls, while the second reported the results of a study which compared perceptions of internal control effectiveness by financial statement auditors and chief financial officers. The second paper concluded that auditors were more likely than chief financial officers to question the effectiveness of a control. Which of the following statements is most true?

A. Both articles would be considered scholarly information. B. Both articles would be considered practitioner information. C. The first article would be considered scholarly information; the second, practitioner. D. The first article would be considered practitioner information; the second, scholarly.

49 recently completed a ten-week internship at a local CPA firm; as part of his internship, he did a public records search to assist in a fraud investigation. He wrote about the experience in his internship journal. Should Ahmed’s internship journal be used as a source of information for a class research paper on fraud investigation?

A. No. It was not published in a practitioner or scholarly journal. B. No. Ahmed does not have sufficient authority. C. Yes. Since the internship was recent, the journal provides current information. D. Only if Ahmed accurately and objectively describes exactly how he completed the public records search.

50 wrote a paper on the purposes of internal control for her accounting information systems class; she received a very good grade on the paper, and later uploaded excerpts from it to Wikipedia. The excerpts should not be used as a reliable information source because:

A. They were not published in a scholarly journal. B. Gloria’s credentials are insufficient. C. They are probably not accurate. D. Information found on the Internet is never reliable or objective.

52.

Which UMUC evaluation criterion is indicated by each of the following questions?

a. Can you establish the writer’s credentials?

b. Can you tell when the source was created / written?

c. Can you tell who created the information?

d. Does the information contain advertising?

e. Does the information contain any obvious errors of fact?

f. Does the source cover the subject with sufficient depth?

g. Does the source tell you where the information came from?

h. Is the information available freely?

i. Is the source still under construction?

j. When was the last time the source was updated?

53.

Which generic AIS element is exemplified by each item below?

a. Balance sheet

b. Customer’s check

c. General ledger software

d. Requiring two signatures on checks over $

e. Sales invoice

f. Sales transaction file

g. Spreadsheet software

h. Statement of cash flows

i. Storing accounting records in a locked filing cabinet

Vendor master file

Why AIS is an important area of study for future accountants?

Accounting information systems provides businesses with the ability to record all types of financial information for future use. In addition, these systems are huge time-savers and make the accounting processes and procedures easily repeatable.

Why is AIS important to accountants?

AIS ensures the highest level of accuracy with the company's financial transactions and record-keeping. It also allows specific employees to access the information they need while limiting sensitive information to others and protecting the overall security of company data.

Which of the following best demonstrates the relationship between accounting information systems and other areas of accounting?

19. Which of the following best demonstrates the relationship between accounting information systems and other areas of accounting? C. Virtually all areas of accounting involve inputs, processes, outputs, storage and internal controls.

Which of the following is not one of the components of an AIS?

Cards In This Set.