Multiple-Choice Questions

1. Which of the following is NOT a financial transaction?

a. purchase of products
b. cash receipts
c. update valid vendor file
d. sale of inventory

2. The following are subsystems of the Accounting Information System,

EXCEPT
a. Transaction Processing System.
b. Human Resources System.
c. General Ledger/Financial Reporting System.
d. Management Reporting System.

3. Which of the following is NOT a purpose of the Transaction

Processing System?
a. managing and reporting on the status of financial investments
b. converting economic events into financial transactions
c. distributing essential information to operations personnel to support
their daily operations
d. recording financial transactions in the accounting records

4. The objectives of the data collection activity of the general model for
Accounting Information Systems are to collect data that are
a. relevant and redundant.
b. efficient and objective.
c. efficient and redundant.
d. efficient and relevant.

5. Which of the following is NOT a characteristic of effective

information?
a. relevance
b. accuracy
c. summarization
d. precision

6. Which of the following is NOT a database management task?

a. retrieval
b. storage
c. summarization
d. deletion
7. When viewed from the highest to most elemental level, the data
hierarchy is
a. attribute, record, file.
b. record, attribute, key.
c. file, record, attribute.
d. file, record, key.
e. key, record, file.

8. Which is NOT an accountant’s primary role in information systems?

a. system user
b. system auditor
c. system designer
d. system programmer

9. Which of the following is NOT an objective of all information

systems?
a. support for the stewardship function of management
b. support for management decision making
c. support for the day-to-day operations of the firm
d. all of the above are objectives

10. Which of the following best describes the activities of the materials
management function?
a. purchasing, receiving, and inventory control
b. receiving, sales, distribution, and purchasing
c. receiving, storage, purchasing, and accounts payable
d. purchasing, receiving, and storage
e. purchasing, storage, and distribution

11. Which of the following best describes the activities of the production
function?
a. maintenance, inventory control, and production planning
b. production planning, quality control, manufacturing, and cost
accounting
c. quality control, production planning, manufacturing, and payroll
d. maintenance, production planning, storage, and quality control
e. manufacturing, quality control, and maintenance

12. Which of the following best describes the activities of the accounting
function?
a. inventory control, accounts payable, fixed assets, and payroll
b. fixed assets, accounts payable, cash disbursements, and cost
accounting
c. purchasing, cash receipts, accounts payable, cash disbursements, and
payroll
d. inventory control, cash receipts, accounts payable, cash disbursements,
and payroll
e. inventory control, cost accounting, accounts payable, cash
disbursements, and payroll

13. Which statement best describes the issue of distributed data

processing (DDP)?
a. The centralized and DDP approaches are mutually exclusive; an
organization must choose one approach or the other.
b. The philosophy and objective of the organization’s management will
determine the extent of DDP in the firm.
c. In a minimum DDP arrangement, only data
input and output are distributed, leaving the tasks of data control, data
conversion, database management, and data processing to be centrally
managed.
d. The greatest disadvantage of a totally distributed environment is that
the distributed information processing unit locations are unable to
communicate and coordinate their activities.
e. Although hardware (such as computers, database storage, and
input/output terminals) can be effectively distributed, the systems
development and maintenance tasks must remain centralized for better
control and efficiency.

14. Which of the following is a disadvantage of distributed data

processing?
a. End-user involvement in systems operation is decreased.
b. Disruptions due to mainframe failures are increased.
c. The potential for hardware and software
incompatibility across the organization is increased.
d. The time between project request and completion is increased.
e. All of the above are disadvantages.
1. USERS OF INFORMATION
Classify the following users of information as either:
I—internal user
T—external user: trading partner
S—external user:stakeholder
a. Internal Revenue Service
b. Inventory control manager
c. Board of directors
d. Customers
e. Lending institutions
f. Securities and Exchange Commission
g. Stockholders
h. Chief executive officer
i. Suppliers
j. Bondholders

2. SUBSYSTEMS
Use the human body system to illustrate the concepts of system
decomposition and subsystem interdependency.
Draw a hierarchical chart similar to the one in Figure 1-2 and discuss the
interdependencies.

4. ACCOUNTING INFORMATION SYSTEM & MANAGEMENT

INFORMATION SYSTEM FEATURES
List some AIS and MIS information from which salespeople may benefit.
Clearly indicate whether the information item would be an output of a
traditional AIS or MIS system. Finally, discuss the benefits of integrating
this information.

5. INFORMATION SYSTEM CATEGORIZATION

Classify the following items as either:
TPS—transaction processing system
FRS—financial reporting system
MRS—management reporting system
a. Variance reports
b. Sales order capture
c. Balance sheet
d. Budgets
e. Purchase order preparation
f. Tax returns
g. Sales summary by product line
h. Cash disbursements preparation
i. Annual report preparation
j. Invoice preparation
k. Cost-volume-profit analysis

Multiple-Choice Questions
1. Which statement is NOT true?
a. Business activities begin with the acquisition of materials, property,
and labor in exchange for cash.
b. The conversion cycle includes the task of determining raw materials
requirements.
c. Manufacturing firms have a conversion cycle but retail firms do not.
d. A payroll check is an example of a product document of the payroll
system.
e. A journal voucher is actually a special source document.

2. A documentation tool that depicts the physical flow of information

relating to a particular transaction through an organization is a
a. system flowchart.
b. program flowchart.
c. decision table.
d. work distribution analysis.
e. systems survey.

3. Sequential file processing will not permit a. data to be edited on a

separate computer run.
b. the use of a database structure.
c. data to be edited in an offline mode.
d. batch processing to be initiated from a terminal.
e. data to be edited on a real-time basis.

4. The production subsystem of the conversion cycle includes all of the

following EXCEPT
a. determining raw materials requirements.
b. make or buy decisions on component parts.
c. release of raw materials into production.
d. scheduling the goods to be produced.
5. Which of the following files is a temporary file?
a. transaction file
b. master file
c. reference file
d. none of the above

6. A documentation tool used to represent the logical elements of a

system is a(n)
a. programming flowchart.
b. entity relationship diagram.
c. system flowchart.
d. data flow diagram.

7. Which of the following is NOT an advantage of real-time processing

files over batch processing?
a. shorter transaction processing time
b. reduction of inventory stocks
c. improved customer service
d. all are advantages

8. Which statement is NOT correct?

a. Legacy systems may process financially significant transactions.
b. Some legacy systems use database technology.
c. Mainframes are exclusive to legacy systems, while modern systems use
only the clientserver model.
d. All the above are true.

9. Which statement is NOT correct?

a. Indexed random files are dispersed throughout the storage device
without regard for physical proximity with related records.
b. Indexed random files use disk storage space efficiently.
c. Indexed random files are efficient when processing a large portion of a
file at one time.
d. Indexed random files are easy to maintain in terms of adding records.

10. Which statement is NOT correct? The indexed sequential access

method
a. is used for very large files that need both direct access and batch
processing.
b. may use an overflow area for records.
c. provides an exact physical address for each record.
d. is appropriate for files that require few insertions or deletions.
11. Which statement is true about a hashing structure?
a. The same address could be calculated for two records.
b. Storage space is used efficiently.
c. Records cannot be accessed rapidly.
d. A separate index is required.

12. In a hashing structure

a. two records can be stored at the same address.
b. pointers are used to indicate the location of all records.
c. pointers are used to indicate location of a record with the same address
as another record.
d. all locations on the disk are used for record storage.

13. An advantage of a physical address pointer is that

a. it points directly to the actual disk storage location.
b. it is easily recovered if it is inadvertently lost.
c. it remains unchanged when disks are reorganized.
d. all of the above are advantages of the physical address pointer.

14. Which of the following is NOT true of a turnaround document?

a. They may reduce the number of errors made by external parties.
b. They are commonly used by utility companies (gas, power, water).
c. They are documents used by internal parties only.
d. They are both input and output documents.

15. Which of the following is NOT a true statement?

a. Transactions are recorded on source documents and are posted to
journals.
b. Transactions are recorded in journals and are posted to ledgers.
c. Infrequent transactions are recorded in the general journal.
d. Frequent transactions are recorded in special journals.

16. Which of the following is true of the relationship between subsidiary

ledgers and general ledger accounts?
a. The two contain different and unrelated data.
b. All general ledger accounts have subsidiaries.
c. The relationship between the two provides an audit trail from the
financial statements to the source documents.
d. The total of subsidiary ledger accounts usually exceeds the total in the
related general ledger account.
17. Real-time systems might be appropriate for all of the following
EXCEPT
a. airline reservations.
b. payroll.
c. point-of-sale transactions.
d. air traffic control systems.
e. all of these applications typically utilize realtime processing.

18. is the system flowchart symbol for:

a. on-page connector.
b. off-page connector.
c. home base.
d. manual operation.
e. document.

*19. A chart of accounts would best be coded using a(n)

______________ coding scheme.
a. alphabetic
b. mnemonic
c. block
d. Sequential

20. Which of the following statements is NOT true?

a. Sorting records that are coded alphabetically tends to be more difficult
for users than sorting numeric sequences.
b. Mnemonic coding requires the user to memorize codes.
c. Sequential codes carry no information content beyond their order in the
sequence.
d. Mnemonic codes are limited in their ability to represent items within a
class.

21. A coding scheme in the form of acronyms and other combinations

that convey meaning is a(n)
a. sequential code.
b. block code.
c. alphabetic code.
d. mnemonic code.