Chapter 6 Answers Key

University of Cebu - Main Campus
ACCTG 327
Chapter 6 Quiz
Name: _________________________________________ Score: _______________
Instructor: ______________________________________ Date: ________________
Test I: Write TRUE if the statement is correct and FALSE if the statement is incorrect.
Write your answer on the space provided. ERASURES ARE NOT ALLOWED.
TRUE 1. Financial transactions are common business events that occur

regularly. To deal efficiently with such volume, business firms group
similar types of transactions into transaction cycles.
FALSE 2. Transaction processing is an economic event that affects the assets

and equities of the firm.
FALSE 3. Revenue cycle is composed of two major subsystems: the production

system and the cost accounting system.
TRUE 4. DFD uses symbols to represent the entities, processes, data flows, and
data stores that pertain to a system.
FALSE 5. Audit trails in computer-based systems are more observable than in

traditional manual systems.
FALSE 6. This data forum is the blueprint for what ultimately will become the
physical database.
TRUE 7. SOX legislation requires that management design and implement

controls over the financial reporting process.
TRUE 8. The destructive update approach leaves no backup copy of the original
master file.
FALSE 9. Legal systems tend to be client-server-based and process transactions

in real-time.
TRUE 10. Sequential coding supports the reconciliation of a batch of transactions

at the end of processing.
Test II: Write the CAPITAL LETTER of the best answer at the left side of the number.
ERASURES ARE NOT ALLOWED
1. The following are basic documentation techniques used in a CIS

environment, except:
a. Data Flow Diagram c. System Flowcharts
b. Enterprise Relationship Diagram d. Record Layout Diagram
Answer: B
ACCTG 327
Chapter 6 Quiz
2. These should always be labeled as nouns on a DFD, such as customer or
supplier.
a. Data c. Agent
b. Process d. Entity
Answer: D
3. It is the graphical representation of the physical relationships among key
elements of a system.
a. Data Flow Diagram c. Record Layout Diagram
b. Program Flowchart d. System Flowchart
Answer: D
4. It is a group of similar transactions (such as sales orders) that are
accumulated over time and then processed together.
a. Batch c. Cardinality
b. Entity d. Data Flow
Answer: A
5. These are used to reveal the internal structure of the records that
constitute a file or database table.
a. Record Layout Diagrams c. Record Systems
b. Batch Processing d. Program Flowcharts
Answer: A
6. The degree of the relationship which shows the numerical mapping
between entity instances.
a. Frequency c. Cardinality
b. Numeric Sequence d. Data Model
Answer: C
7. Entities in an ER diagram could either be of the following, except:
a. Processes c. Events
b. Physical Resources d. Agents
Answer: A
8. These are sometimes used to verify the correctness of program logic.
Accountants compare flowcharts to the actual program code to determine
whether the program is actually doing what the documentation describes.
a. System Flowcharts c. Programming Diagrams
b. Program Flowcharts d. Program Code Layout
Answer: B
9. Statement 1: Systems analysts use DFDs extensively to represent the
logical elements of the system. This technique also depicts the physical
system.
Statement 2: A DFD is a model of system processes, and the ER diagram
models the data used in or affected by the system. The two diagrams are
ACCTG 327
Chapter 6 Quiz
related through data; each data store in the DFD represents a
corresponding data entity in the ER diagram.
a. True, True c. False, True
b. True, False d. False, False
Answer: C
10. Statement 1: Organizations improve operational efficiency by grouping
together large numbers of transactions into batches and processing each
event separately rather than processing them as a unit of work.
Statement 2: Data stores represent the accounting functions used in each
process, and labeled arrows represent the data flows between processes,
data stores, and entities.
a. True, True c. False, True
b. True, False d. False, False
Answer: D
11. Statement 1: Budget master file contains the revenues, expenditures, and
other resource utilization data for each responsibility center in the
organization.
Statement 2: The primary purpose of the general ledger history file is to
provide historical financial data for comparative financial reports.
Statement 3: The historical information in the journal voucher history file
supports management’s stewardship responsibility to account for resource
utilization.
a. Only Statement 1 is incorrect.

b. Statements 1 and 3 are correct, statement 2 is incorrect.
c. All Statements are correct.
d. All Statements are incorrect.
Answer: A
12. All of the following are files included in the GLS database except:
a. General ledger history file
b. Budget master file
c. General journal master file
d. Responsibility center file
Answer: C
13. This file contains budgeted amounts for revenues, expenditures, and other
resources for responsibility centers.
ACCTG 327
Chapter 6 Quiz
a. Responsibility center file
c. General ledger master file
d. Journal voucher file
Answer: B
14. This file is the total collection of the journal vouchers processed in the current
period.
a. Responsibility center file
c. General ledger master file
Answer: D
15. It contains journal vouchers for past periods which serves as historical
information that supports management’s stewardship responsibility to account
for resource utilization.
a. Journal voucher history file
c. General ledger history file
Answer: A
16. Which of the following is the correct order of steps in the Financial Reporting
Procedures?
i. Post to general ledger
ii. Record in special journal
iii. Journalize and post the closing entries
iv. Capture the transaction
v. Make adjusting entries
a. iv - ii - i - v - iii
b. iv - ii - v - i - iii
c. iv - i - ii - iii - v
d. iv - i - ii - v - iii
Answer: A
17. What does XBRL stand for?

ACCTG 327
Chapter 6 Quiz
a. eXtensive business report language
b. eXtensible business reporting language
c. eXtensive business reporting language
d. eXtensible business and reporting language
Answer: B
18. The potential risks to the Financial Reporting System are as follows, except:
a. Unauthorized access to the general ledger.
b. Incorrect GL account balances because of unauthorized or incorrect
journal vouchers.
c. Individuals with access authority to GL accounts cannot have custody of
physical assets.
d. GL accounts that are out of balance with subsidiary accounts.
Answer: C
19. This provides relevant details about each journal voucher posted to the
general ledger.
a. journal voucher listing
b. journal voucher summary
c. general ledger change report
d. general ledger history file
Answer: A
20. Correctly generated XBRL tags may be incorrectly assigned to internal

database accounts resulting in material misrepresentation of financial data.
a. Validation of Instance Document
b. Taxonomy Creation Error
c. Taxonomy Mapping Error
d. None of the above
Answer: C

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University of Cebu - Main Campus

TRUE 1. Financial transactions are common business events that occur

FALSE 2. Transaction processing is an economic event that affects the assets

FALSE 3. Revenue cycle is composed of two major subsystems: the production

FALSE 5. Audit trails in computer-based systems are more observable than in

TRUE 7. SOX legislation requires that management design and implement

FALSE 9. Legal systems tend to be client-server-based and process transactions

TRUE 10. Sequential coding supports the reconciliation of a batch of transactions

1. The following are basic documentation techniques used in a CIS

a. Only Statement 1 is incorrect.

17. What does XBRL stand for?

20. Correctly generated XBRL tags may be incorrectly assigned to internal

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