CA51019 - ACCOUNTING INFORMATION SYSTEMS

QUIZ 1

TRUE/ FALSE

1. "Cloud computing is a variant of IT outsourcing. Cloud computing services include Software

as a Service, Infrastructure as a Service and Platform as a Service. "
a. True
b. False

2. "The fundamental information objectives are to support the company's day to day
operations, to support management decision making and to support the stewardship
function of management. "
a. True
b. False

3. A professional accountant renders an attestation engagement for ABC company. The

accountant must not have any financial interest in ABC Company in order to express an
unbiased opinion on the company's financial statements. This is what is meant by
accounting independence.
a. True
b. False

4. Businesses are commonly organized and segmented by business function. These functions
will be the same for any type of organization.
a. True
b. False

5. An employee of a company approached the cashier to change his P500 bill into five P100
bills which the cashier readily did. This is considered a financial transaction.
a. True
b. False

6. MIS and AIS functions, though clearly distinguished as the major subsystems under
information systems, can be integrated within physical systems to achieve operational
efficiency.
a. True
b. False

7. Accountants are involved both in the design and audit of Accounting Information Systems.
a. True
b. False
8. Designer / auditor duality means that accountants dual roles as systems designer and
auditor draw upon a common skillset which include a thorough understanding of the
principles of systems design as well as accounting principles, audit risks, issues and
concerns.
a. True
b. False

9. The cashier forwarded the accounting copy of the Official Receipts to the bookkeeper in
charge of recording cash collections. This is an example of a vertical flow of information.
a. True
b. False

10. The Payroll System is a sub-system under the conversion cycle. This is because a large
number of company employees are in the production department.
a. True
b. False

11. Professional accountants may concurrently render attestation audits and management
advisory to the same client.
a. True
b. False

12. A Finance staff monitors the fluctuations in dollar exchange rates to determine the right
timing to change the company's US dollar denominated remittances from export sales to the
local currency. This is an example of a financial transaction.
a. True
b. False

13. The major subsystems under AIS are Revenue Cycle, Expenditure Cycle and Conversion
Cycle.
a. True
b. False
 MODIFIED TRUE or FALSE

14. Evaluate whether the following statements are true or false:

(S1)System flowcharts are often used to depict processes that are handled in batches.
(S2)Batch processing is best used when timely information is needed because this method
processes data efficiently.
(S3)Document flowcharts are used to represent systems at different levels of detail.
a. True-True-True
b. True-False-True
c. False-False-True
d. False-False-False

15. Evaluate whether the following statements are true or false:

(S1)The box symbol represents a temporary file.
(S2)Real time processing is used for routine transactions in large numbers.
(S3)Operational inefficiencies occur because accounts unique to many concurrent
transactions need to be updated in real time.
a. True-True-True
b. True-False-True
c. True-False-False
d. False-False-False

16. Evaluate whether the following statements are true or false.

(S1) Directing work-in-process through its various stages of manufacturing is part of the
conversion cycle.
(S2)The general journal is used to record recurring transactions that are similar in nature.
(S3)System flowcharts represent the input sources, programs, and output products of a
computer system.
a. True-True-True
b. True-False-True
c. True-False-False
d. False-False-False

17. Evaluate whether the following statements are true or false:

(S1)Batch processing systems can store data on direct access storage devices.
(S2)An inverted triangle with the letter ""N"" represents a file in ""name"" order.
(S3) For a given field size, a system that uses alphabetic codes can represent far more
situations than a system that uses numeric codes.
a. True-True-True
b. True-False-True
c. False-False-True
d. False-False-False
18. Evaluate whether the following statements are true or false:
(S1)Real-time processing in systems that handle large volumes of transactions each day
can create operational inefficiencies.
(S2)Operational inefficiencies occur because accounts common to many concurrent
transactions need to be updated in real time.
(S3)The block code is the coding scheme most appropriate for a chart of accounts.
a. True-True-True
b. True-False-True
c. False-False-True
d. False-False-False

19. Evaluate whether the following statements are true or false:

(S1)Auditors may prepare program flowcharts to verify the correctness of program logic.
(S2)Batch processing of accounts common to many concurrent transactions reduces
operational efficiency.
(S3)Processing more transactions at a lower unit cost makes batch processing more
efficient than real-time systems.
a. True-True-True
b. True-False-True
c. True-False-False
d. False-False-False
 MULTIPLE CHOICE

20. Which method of processing does not use the destructive update approach?
a. batch processing using direct access files
b. real-time processing
c. batch processing using sequential files
d. all of the above use the destructive update approach

21. Data flow diagrams

a. "depict logical tasks that are being performed, but not who is performing
them"
b. "illustrate the relationship between processes, and the documents that flow
between them and trigger activities"
c. represent relationships between key elements of the computer system
d. describe in detail the logic of the process

22. The Securities and Exchange Commission requires the filing of audited financial statements
among corporations every year. Which type of audit is necessary to comply with this
requirement?
a. internal audit
b. fraud audit
c. financial audit
d. operational audit

23. General ledgers are used in manual accounting environments. What file is comparable to a
subsidiary ledger in a computerized environment?
a. archive file
b. reference file
c. transaction file
d. master file
24. Which symbol represents a computer process?
a. triangle
b. rectangle
c. inverted triangle
d. diamond

25. Which symbol represents a decision?

a. diamond
b. Square
c. rectangle
d. circle
26. "In contrast to a real-time system, in a batch processing system"
a. there is a lag between the time when the economic event occurs and the
financial records are updated
b. relatively more resources are required
c. a greater resource commitment per unit of output is required
d. processing takes place when the economic event occurs

27. Which type of graphical documentation represents systems at different levels of detail?
a. data flow diagram
b. document flowchart
c. system flowchart
d. program flowchart

28. Which system produces information used for inventory valuation, budgeting, cost control,
performance reporting, and make-buy decisions?
a. sales order processing
b. purchases/accounts payable
c. cash disbursements
d. cost accounting

29. An independent appraisal function established within an organization to examine and

evaluate its activities.
a. Comptrollership
b. Internal Audit
c. Finance and Accounting
d. Human Resource

30. A subcommittee formed by the board of directors of publicly traded companies that has
special responsibilities regarding audit.
a. audit committee
b. ad hoc committee
c. special committee
d. steering committee

31. Which system is not part of the expenditure cycle?

a. cash disbursements
b. payroll
c. Cost accounting
d. purchases/accounts payable

32. Which symbol represents a manual operation?

a. inverted triangle
b. rectangle
c. circle
 d. inverted trapezoid

33. The functional unit responsible for recording financial transactions and giving feedback to
the different functional areas in an organization
a. Marketing
b. Accounting
c. Human Resource
d. Finance

34. A file that stores data used as a standard when processing transactions is
a. a reference file
b. a master file
c. a transaction file
d. an archive file

35. A type of audit initiated when corporate management suspects anomalies and irregularities
in the company.
a. internal audit
b. special audit
c. fraud audit
d. external Audit

36. The type of transaction most suitable for batch processing is

a. airline reservations
b. credit authorization
c. payroll processing
d. adjustments to perpetual inventory

37. Which symbol represents a terminal showing source or destination of documents or reports
a. square
b. ellipse
c. circle
d. rectangle

38. Which accounting application is best suited to batch processing?

a. general ledger
b. updating inventory reductions to the subsidiary ledger
c. sales order processing
d. credit checking

39. The functional unit responsible for managing employee compensation and benefits
a. Accounting
b. Production
c. Human Resource
 d. Finance

40. Which symbol represents an accounting record?

a. parallelogram
b. rectangle
c. square
d. circle

41. These are subsystems of the Expenditure Cycle, except

a. Fixed Assets System
b. Payroll System
c. Cash Receipts System
d. Accounts Payable

42. The functional area responsible for data processing, network administration & database
administration
a. Marketing
b. Accounting
c. Finance
d. Information Technology

43. All data processing is done by one or more large computers housed in a common data
center that serves users throughout the organization
a. centralized data processing model
b. distributed data processing model
c. Network Administration
d. General Model for AIS

44. The most important advantage of an alphabetic code is that

a. meaning is readily conveyed to users
b. sorting is simplified
c. the capacity to represent items is increased
d. missing documents can be identified

45. Which symbol represents a magnetic tape (sequential storage device)?

a. circle
b. diamond
c. rectangle
d. Q shape
46. Which step is not found in batch processing using sequential files?
a. control totals
b. sort runs
c. edit runs
d. immediate feedback of data entry errors
47. The general purpose financial reports that include the Statement of Financial Position, are
outputs of
a. General Ledger System/ Financial Reporting System
b. Management Reporting System
c. Internal Audit
d. External Audit

48. In contrast to a batch processing system, in a real-time system

a. a lag occurs between the time of the economic event and when the transaction is
recorded
b. "relatively fewer hardware, programming, and training resources are required"
c. a lesser resource commitment per unit of output is required
d. processing takes place when the economic event occurs

49. They are in charge of the physical system in the design of Accounting Information Systems
a. Accountants
b. IT professionals
c. fraud auditors
d. internal auditor
 CA51019 - ACCOUNTING INFORMATION SYSTEMS
QUIZ 2

TRUE/ FALSE

1. Operational inefficiencies occur because accounts common to many concurrent

transactions need to be updated in real time.
a. True
b. False

2. When preparing discretionary reports, an organization can choose what information to

report and how to present it.
a. True
b. False

3. In a real-time processing environment, the master files are updated as soon as the
transaction is submitted and accepted into the system.
a. True
b. False

4. The cash receipts journal is a special journal.

a. True
b. False

5. The system flowchart shows the relationship between two computer programs, the files
that they use, and the outputs that they produce.
a. True
b. False

6. Information is facts that are collected in a "raw" form and made meaningful through
processes such as sorting, aggregating, classifying, mathematically manipulating.
a. True
b. False

7. Cardinality reflects normal business rules as well as organizational policy.

a. True
b. False

8. Database administrator is responsible for the effective functioning of the software and
hardware that constitute the organization's network.
a. True
b. False
9. The conceptual system represents the logic and decision rules to be applied, while the
physical system represents the means of accomplishing the tasks.
a. True
b. False

10. Data flow diagrams represent the physical elements being used by illustrating the
relationship between input sources, program, and output products.
a. True
b. False

11. Custom software is completely finished, tested, and ready for implementation.
a. True
b. False

12. Warehouse stock records are the formal accounting records for inventory.
a. True
b. False

13. The purpose of the invoice is to bill the customer.

a. True
b. False

14. Most of the inputs to the General Ledger System come from the Financial Reporting
System.
a. True
b. False

15. The Database Management System is a special software system that permits users to
access all data.
a. True
b. False

16. In the revenue cycle, the internal control "limit access" applies to physical assets only.
a. True
b. False

17. Inventory control has physical custody of inventory.

a. True
b. False

18. In real-time processing systems, routine credit authorizations are automated.

a. True
b. False
19. Entities are physical resources, events, and agents about which the organization wishes
to capture data.
a. True
b. False

20. The accountant is responsible for the security and integrity of data stored in the central
database.
a. True
b. False

Multiple Choice

21. Which input control check would detect a payment made to a non-existent vendor?
a. Missing data check
b. Numeric/alphabetic check
c. Range check
d. Validity Check

22. Which of the following is not an example of independent verification?

a. comparing fixed assets on hand to the accounting records
b. permitting only authorized users to access the accounting system
c. performing a bank reconciliation
d. comparing the accounts payable subsidiary ledger to the control account

23. 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 to match the goods ordered
d. inventory records are reduced for the good shipped

24. Systems that use sequential master files employ a backup technique called
a. Batch check
b. Destructive update
c. Grandfather-father-son
d. Master file backup

25. Giving, receiving, offering or soliciting something of value because of an official act that
has been taken is
a. a bribery
b. a conflict of interest
c. an illegal gratuity
d. an economic extortion

26. The most cost-effective type of internal control

 a. Preventive control
b. Accounting control
c. Detective control
d. Corrective control

27. The bank reconciliation uncovered a transposition error in the books. This is an example
of a
a. preventive control
b. detective control
c. corrective control
d. none of the above

28. An accounting system that maintains an adequate audit trail is implementing which
internal control procedure?
a. access control
b. accounting records
c. segregation functions
d. independent verification

29. A well-designed purchase order is an example of a

a. detective control
b. corrective control
c. feedforward control
d. preventive control

30. When duties cannot be segregated, the most important internal control procedure is
a. independent verification
b. access control
c. accounting records
d. supervision

31. The office manager forgot to record in the accounting records the daily bank deposit.
Which control procedure would most likely prevent or detect this error?
a. Segregation of duties
b. accounting records
c. supervision
d. Independent verification

32. Business ethics involves

a. how managers decide on what is right in conducting business
b. how managers achieve what they decide is right for the business
c. both a and b
d. none of the above
33. One characteristic of employee fraud is that the fraud
a. is perpetrated at a level to which internal controls do not apply
b. involves misstating financial statements
c. involves the direct conversion of cash or other assets to the employee's
personal benefit
d. involves misappropriating assets in a series of complex transactions involving
third parties

34. Responsible for establishing and maintaining the internal control system
a. Management
b. Internal Auditor
c. Accountant
d. External Auditor

35. The COSO internal control framework includes

a. monitoring
b. Information and communication
c. Both a and b
d. none of the above

36. Which of the following best describes lapping?

a. Inflating bank balances by transferring money among different bank accounts
b. Applying cash receipts to a different customer's account in an attempt to
conceal previous thefts of funds.
c. Expensing an asset that has been stolen
d. Creating a false transaction

37. When certain customers made cash payments to reduce their accounts receivable, the
bookkeeper embezzled the cash and wrote off the accounts as uncollectible. Which
control procedure would most likely prevent this irregularity?
a. Segregation of duties
b. Accounting records
c. Accounting system
d. Access controls

38. Economic extortion

a. involves giving, offering, soliciting, or receiving things of value to influence an
official in the performance of his or her lawful duties.
b. occurs when an employee acts on behalf of a third party during the discharge of
his or her duties.
c. is the use or threat of force by an individual or organization to obtain
something of value.
d. involves stealing cash from an organization before it is recorded in its books and
records.
39. Which of the following is a preventive control?
a. Bank reconciliation
b. Physical inventory count.
c. A credit check before approving a sale on account
d. Comparing the accounts receivable subsidiary ledger to the control account

40. Which of the following is not an example of a processing control?

a. Check digit
b. Hash total
c. Record count
d. Batch total

41. A physical inventory is an example of a

a. preventive control
b. detective control
c. corrective control
d. feedforward control

42. The purpose of the sales invoice is to

a. record reduction of inventory
b. transfer goods from the seller to shipper
c. bill the customer
d. select items from inventory for shipment

43. Which document triggers the revenue cycle?

a. the sales order
b. the customer purchase order
c. the sales invoice
d. the journal voucher

44. The board of directors consists entirely of personal friends of the chief executive officer.
This indicates a weakness in
a. the accounting system.
b. control procedures.
c. This is not a weakness.
d. the control environment

45. The importance to the accounting profession of the Sarbanes-Oxley Act is that
a. bribery will be eliminated.
b. management is required to certify their internal control system.
c. management will not override the company's internal controls.
d. firms will not be exposed to lawsuits
46. Individuals who acquire some level of skill and knowledge in the field of computer ethics
are involved in which level of computer ethics?
a. Para computer ethics
b. Pop computer ethics
c. Theoretical computer ethics
d. Practical computer ethics

47. The revenue cycle consists of

a. one subsystem-order entry
b. two subsystems-sales order processing and cash receipts
c. two subsystems-order entry and inventory control
d. three subsystems-sales order processing, credit authorization, and cash receipts

48. According to common law, to be a fraudulent act must

a. intends to cause injury or loss regardless of whether or not such loss occurred
b. includes a false statement or non-disclosure
c. both a and b
d. neither a nor b

49. According to the ACFE study, when it comes to fraud losses

a. the median fraud loss caused by males is more than double that caused by
females
b. most frauds are committed by individuals acting alone
c. managers commit more frauds than employees
d. all of the above

50. A shell company fraud involves

a. stealing cash from an organization before it is recorded
b. stealing cash from an organization after it has been recorded
c. clerk pays a vendor twice for the same products and cashes the reimbursement
check issued by the vendor
d. manufacturing false purchase orders, receiving reports, and invoices