TEST BANK
ACCOUNTING INFORMATION SYSTEMS
, Table Of Contents
Part 1. Overview Of Accounting Information Systems
Chapter 1. The Information System: An Accountant’s Perspective
Chapter 2. Introduction To Transaction Processing
Chapter 3. Ethics, Fraud, And Internal Control
Part 2. Transaction Cycles And Business Processes
Chapter 4. The Revenue Cycle
Chapter 5. The Expenditure Cycle Part I: Purchases And Cash Disbursements Procedures
Chapter 6. The Expenditure Cycle Part II: Payroll Processing And Fixed Asset Procedures
Chapter 7. The Conversion Cycle
Chapter 8. Financial Reporting And Management Reporting Systems
Part 3. Advanced Technologies In Accounting Information
Chapter 9. Database Management Systems
Chapter 10. The REA Approach To Database Modeling
Chapter 11. Enterprise Resource Planning Systems
Chapter 12. Electronic Commerce Systems
Part 4. Systems Development Activities
Chapter 13. Systems Development And Program Change Activities
Part 5. Computer Controls And IT Auditing
Chapter 14. Auditing IT Controls Part I: Sarbanes-Oxley And IT Governance
Chapter 15. Auditing IT Controls Part II: Security And Access
Chapter 16. Auditing IT Controls Part III: Systems Development, Program Changes, And
Application Auditing
,Chapter 1. The Information System: An Accountant’s Perspective
1. Information Is A Business Resource.
*A. True
B. False
2. IT Outsourcing Is Location-Independent Computing.
a. True
*B. False
3. Transaction Processing Systems Convert Non-
Financial Transactions Into Financial Transactions.
a. True
*B. False
4. Information Lacking Reliability May Still Have Value.
a. True
*B. False
5. A Balance Sheet Prepared In Conformity With GAAP Is An Example Of Discr
Etionary Reporting.
a. True
*B. False
6. The Management Reporting System Provides The Internal Financial Inf
Ormation Needed To Manage A Business.
*A. True
B. False
7. Most Of The Inputs To The General Ledger System Come From The Finan
Cial Reporting System.
a. True
*B. False
8. When Preparing Discretionary Reports, Organizations Can Choose What Inf
Ormation To Report And How To Present It.
*A. True
B. False
,9. Retrieval Is The Task Of Permanently Removing Obsolete Or Redundant Reco
Rds From The Database.
a. True
*B. False
10. Systems Development Represents 80 To 90 Percent Of The Total Cost Of A
Computer System.
a. True
*B. False
11. The Database Administrator Is Responsible For The Security And Int
Egrity Of The Database.
*A. True
B. False
12. Custom Software Is Developed And Maintained By Enterprise Resource Pla
Nners.
a. True
*B. False
13. The Internal Auditor Represents The Interests Of Third-
Party Outsiders.
a. True
*B. False
14. Information Technology (IT) Audits Can Be Performed By Both Int
Ernal And External Auditors.
*A. True
B. False
15. Custom Software Is The Most Affordable Systems Development Option.
a. True
*B. False
16. A Database Is A Collection Of Interconnected Computers And Communica
Tions Devices That Allows Users To Communicate, Access Data And Applicati
Ons, And Share Information And Resources.
a. True
*B. False
,17. Systems Maintenance Consumes The Majority Of A System’s Total Cos
Ts.
*A. True
B. False
18. Cloud Computing Is A Practice In Which The Organization Sells Its IT Re
Sources To A Third-
Party Outsourcing Vendor Then Leases Back IT Services From The Vendor For
A Contract Period.
a. True
*B. False
19. A Potential Benefit Of Cloud Computing Is That The Client Firm Does Not N
Eed To Know Where Its Data Are Being Processed.
a. True
*B. False
20. One Of The Greatest Disadvantages Of Database Systems Is That All Data
Is Always Available To All Users.
a. True
*B. False
21. Under SOX Legislation Public Accounting Firms Are No Longer Allowed To P
Rovide Consulting Services To Audit Clients.
*A. True
B. False
22. One Member Of A Company’s Audit Committee Must Be An Independent CPA.
a. True
*B. False
23. Which Of The Following Is Not A Business Resource?
a. Raw Material
b. Labor
c. Information
*D. All Are Business Resources
,24. Which Level Of Management Is Responsible For Short-
Term Planning And Coordination Of Activities Necessary To Accomplish
Organiza Tional Objectives?
a. Operations Management
*B. Middle Management
c. Top Management
d. Line Management
25. Which Level Of Management Is Responsible For Controlling
Day-To-Day Operations?
a. Top Management
b. Middle Management
*C. Operations Management
D. Executive Management
26. Location-
Independentscomputing In Which Shared Data Centers Deliver Hosted IT Services
Over T He Internetsis Called
a. IT Outsourcing
b. Network Administration
*C. Cloud Computing
D. Custom Software
27. The Value Of Information For Users Is Determined By All Of The Following Except
a. Reliability
b. Relevance
*C. Convenience
D. Completeness
28. An Example Of A Nonfinancial Transaction Is
a. Sale Of Products
b. Cash Disbursement
*C. Log Of Customer Calls
D. Purchase Of Inventory
29. An Example Of A Financial Transaction Is
*A. The Purchase Of Computer
b. A Supplier’s Price List
c. A Delivery Schedule
d. An Employee Benefit Brochure
30. Which Subsystem Is Not Partsof The Accounting Information System?
, a. Transaction Processing System
*B. Expert System
c. General Ledger/Financial Reporting System
d. Management Reporting System
31. The Major Difference Between The Financial Reporting System (FRS) And
The Managementsreporting System (MRS) Is The
*A. FRS Provides Information To Internal And External Users; The MRS Pr
Ovides Information To Internal Users
b. FRS Provides Discretionary Information; The MRS Provides No
Ndiscretionary Information
c. FRS Reports Are Prepared Using Information Provided By The Gen
Eral Ledger System; The MRS Provides Information To The General L
Edger System
d. FRS Reports Are Prepared In Flexible, Nonstandard Formats; The MRS
Reports Are Prepared In Standardized, Formal Formats
32. The Purpose Of The Transaction Processing System Includes All Of The Following
Except
a. Converting Economic Events Into Financial Transactions
b. Recording Financial Transactions In The Accounting Records
c. Distributing Essential Information To Operations Personnel To Su
Pport Their Daily Operations
*D. Measuring And Reporting The Status Of Financial Resources And The C
Hanges In Those Resources
33. The Transaction Processing System Includes All Of The Following Cycles Except
a. The Revenue Cycle
*B. The Administrative Cycle
c. The Expenditure Cycle
d. The Conversion Cycle
34. The Primary Input To The Transaction Processing System Is
*A. A Financial Transaction
b. An Accounting Record
c. An Accounting Report
d. A Nonfinancial Transaction
35. When Designing The Data Collection Activity, Which Type Of Data Should
Be A Voided?
a. Data That Is Relevant
, b. Data That Is Efficient
*C. Data That Is Redundant
D. Data That Is Accurate
36. The Mostsbasic Element Of Useful Data In The Database Is The
a. Record
b. Key
c. File
*D. Attribute
37. In A Database, A Complete Setsof Attributes For A Single Occurrence Of An
Entity Cl Ass Is Called A
a. Key
b. File
*C. Record
D. Character
38. Effective Information Has All Of The Following Characteristics Except
a. Relevance
b. Completeness
c. Summarization
*D. Structure
39. Database Managementstasks Do Not Include
*A. Summarization
b. Storage
c. Retrieval
d. Deletion
40. The Author Distinguishes Between The Accounting Information System And
The Managementsinformation System Based On
*A. Whether The Transactions Are Financial Or Nonfinancial
b. Whether Discretionary Or Nondiscretionary Reports Are Prepared
c. The End Users Of The Reports
d. The Organizational Structure Of The Business
41. Which Activity Is Not Partsof The Finance Function?
a. Cash Receipts
b. Portfolio Management
c. Credit
, *D. General Ledger
42. Market Research And Advertising Are Partsof Which Business Function?
a. Materials Management
b. Finance
*C. Marketing
D. Production
43. Which Function Manages The Financial Resources Of The Firm Through
Portfolio Management, Banking, Creditsevaluation, And Cash Receipts And
Disbursements?
a. Accounting
*B. Finance
c. Materials Management
d. Distribution
44. Which Of The Followingsis Not Part Of The Accounting Function?
a. Managingthe Financial Informationsresource Of The Firm
b. Capturingsand Recordingstransactionssin Thesdatabase
c. Distributingtransactioninformationstooperationspersonnel
*D. Managingthesphysical Information System Of Thesfirm
45. The Term “Accounting Independence” Refers To
a. Data Integrity
*B. Separation Of Duties, Such As Record Keeping And Custody Of Physic
Al Resources
c. Generation Of Accurate And Timely Information
d. Business Segmentation By Function
46. In The Distributed Data Processing Approach
a. Computer Services Are Consolidated And Managed As A Shared Org
Anization Resource
b. The Computer Service Function Is A Cost Center
c. The End Users Are Billed Using A Charge-Back System
*D. Computer Services Are Organized Into Small Information Processing
Units Under The Control Of End Users
47. Which Of The Followingsis Not A Cloud Computingservice?
a. Software As Asservice
b. Infrastructure As A Service
, *C. Network As A Service
D. Platformsas A Service
48. The Goal Of Data Processing Is
a. The Verification Of The Algorithms Used
b. To Collect Only Relevant Data
*C. The Production Of Useful Information
D. To Develop A Hierarchy Of Outputs
49. Attestation Services Are Performed By
*A. External Auditors
b. Internal Accountants
c. Internal Auditors
d. Third-Party Accountants
50. IT Professionals Create Custom Software Using
a. Distributed Data Processing
b. Turnkey Systems
c. Enterprise Resource Planning
*D. The System Development Life Cycle
51. The Objectives Of All Information Systems Include All Of The Following Except
a. Support For The Stewardship Function Of Management
*B. Evaluating Transaction Data
c. Support For The Day-To-Day Operations Of The Firm
d. Support For Management Decision Making
52. Which Individuals May Be Involved In The Systems Developmentslife Cycle?
a. Accountants
b. Systems Professionals
c. End Users
*D. All Of The Above
53. An Appraisal Function Housed Within The Organization Thatsperforms A Wide
Range O F Services For Managementsis
*A. Internal Auditing
b. Data Control Group
c. External Auditing
d. Database Administration
ACCOUNTING INFORMATION SYSTEMS
, Table Of Contents
Part 1. Overview Of Accounting Information Systems
Chapter 1. The Information System: An Accountant’s Perspective
Chapter 2. Introduction To Transaction Processing
Chapter 3. Ethics, Fraud, And Internal Control
Part 2. Transaction Cycles And Business Processes
Chapter 4. The Revenue Cycle
Chapter 5. The Expenditure Cycle Part I: Purchases And Cash Disbursements Procedures
Chapter 6. The Expenditure Cycle Part II: Payroll Processing And Fixed Asset Procedures
Chapter 7. The Conversion Cycle
Chapter 8. Financial Reporting And Management Reporting Systems
Part 3. Advanced Technologies In Accounting Information
Chapter 9. Database Management Systems
Chapter 10. The REA Approach To Database Modeling
Chapter 11. Enterprise Resource Planning Systems
Chapter 12. Electronic Commerce Systems
Part 4. Systems Development Activities
Chapter 13. Systems Development And Program Change Activities
Part 5. Computer Controls And IT Auditing
Chapter 14. Auditing IT Controls Part I: Sarbanes-Oxley And IT Governance
Chapter 15. Auditing IT Controls Part II: Security And Access
Chapter 16. Auditing IT Controls Part III: Systems Development, Program Changes, And
Application Auditing
,Chapter 1. The Information System: An Accountant’s Perspective
1. Information Is A Business Resource.
*A. True
B. False
2. IT Outsourcing Is Location-Independent Computing.
a. True
*B. False
3. Transaction Processing Systems Convert Non-
Financial Transactions Into Financial Transactions.
a. True
*B. False
4. Information Lacking Reliability May Still Have Value.
a. True
*B. False
5. A Balance Sheet Prepared In Conformity With GAAP Is An Example Of Discr
Etionary Reporting.
a. True
*B. False
6. The Management Reporting System Provides The Internal Financial Inf
Ormation Needed To Manage A Business.
*A. True
B. False
7. Most Of The Inputs To The General Ledger System Come From The Finan
Cial Reporting System.
a. True
*B. False
8. When Preparing Discretionary Reports, Organizations Can Choose What Inf
Ormation To Report And How To Present It.
*A. True
B. False
,9. Retrieval Is The Task Of Permanently Removing Obsolete Or Redundant Reco
Rds From The Database.
a. True
*B. False
10. Systems Development Represents 80 To 90 Percent Of The Total Cost Of A
Computer System.
a. True
*B. False
11. The Database Administrator Is Responsible For The Security And Int
Egrity Of The Database.
*A. True
B. False
12. Custom Software Is Developed And Maintained By Enterprise Resource Pla
Nners.
a. True
*B. False
13. The Internal Auditor Represents The Interests Of Third-
Party Outsiders.
a. True
*B. False
14. Information Technology (IT) Audits Can Be Performed By Both Int
Ernal And External Auditors.
*A. True
B. False
15. Custom Software Is The Most Affordable Systems Development Option.
a. True
*B. False
16. A Database Is A Collection Of Interconnected Computers And Communica
Tions Devices That Allows Users To Communicate, Access Data And Applicati
Ons, And Share Information And Resources.
a. True
*B. False
,17. Systems Maintenance Consumes The Majority Of A System’s Total Cos
Ts.
*A. True
B. False
18. Cloud Computing Is A Practice In Which The Organization Sells Its IT Re
Sources To A Third-
Party Outsourcing Vendor Then Leases Back IT Services From The Vendor For
A Contract Period.
a. True
*B. False
19. A Potential Benefit Of Cloud Computing Is That The Client Firm Does Not N
Eed To Know Where Its Data Are Being Processed.
a. True
*B. False
20. One Of The Greatest Disadvantages Of Database Systems Is That All Data
Is Always Available To All Users.
a. True
*B. False
21. Under SOX Legislation Public Accounting Firms Are No Longer Allowed To P
Rovide Consulting Services To Audit Clients.
*A. True
B. False
22. One Member Of A Company’s Audit Committee Must Be An Independent CPA.
a. True
*B. False
23. Which Of The Following Is Not A Business Resource?
a. Raw Material
b. Labor
c. Information
*D. All Are Business Resources
,24. Which Level Of Management Is Responsible For Short-
Term Planning And Coordination Of Activities Necessary To Accomplish
Organiza Tional Objectives?
a. Operations Management
*B. Middle Management
c. Top Management
d. Line Management
25. Which Level Of Management Is Responsible For Controlling
Day-To-Day Operations?
a. Top Management
b. Middle Management
*C. Operations Management
D. Executive Management
26. Location-
Independentscomputing In Which Shared Data Centers Deliver Hosted IT Services
Over T He Internetsis Called
a. IT Outsourcing
b. Network Administration
*C. Cloud Computing
D. Custom Software
27. The Value Of Information For Users Is Determined By All Of The Following Except
a. Reliability
b. Relevance
*C. Convenience
D. Completeness
28. An Example Of A Nonfinancial Transaction Is
a. Sale Of Products
b. Cash Disbursement
*C. Log Of Customer Calls
D. Purchase Of Inventory
29. An Example Of A Financial Transaction Is
*A. The Purchase Of Computer
b. A Supplier’s Price List
c. A Delivery Schedule
d. An Employee Benefit Brochure
30. Which Subsystem Is Not Partsof The Accounting Information System?
, a. Transaction Processing System
*B. Expert System
c. General Ledger/Financial Reporting System
d. Management Reporting System
31. The Major Difference Between The Financial Reporting System (FRS) And
The Managementsreporting System (MRS) Is The
*A. FRS Provides Information To Internal And External Users; The MRS Pr
Ovides Information To Internal Users
b. FRS Provides Discretionary Information; The MRS Provides No
Ndiscretionary Information
c. FRS Reports Are Prepared Using Information Provided By The Gen
Eral Ledger System; The MRS Provides Information To The General L
Edger System
d. FRS Reports Are Prepared In Flexible, Nonstandard Formats; The MRS
Reports Are Prepared In Standardized, Formal Formats
32. The Purpose Of The Transaction Processing System Includes All Of The Following
Except
a. Converting Economic Events Into Financial Transactions
b. Recording Financial Transactions In The Accounting Records
c. Distributing Essential Information To Operations Personnel To Su
Pport Their Daily Operations
*D. Measuring And Reporting The Status Of Financial Resources And The C
Hanges In Those Resources
33. The Transaction Processing System Includes All Of The Following Cycles Except
a. The Revenue Cycle
*B. The Administrative Cycle
c. The Expenditure Cycle
d. The Conversion Cycle
34. The Primary Input To The Transaction Processing System Is
*A. A Financial Transaction
b. An Accounting Record
c. An Accounting Report
d. A Nonfinancial Transaction
35. When Designing The Data Collection Activity, Which Type Of Data Should
Be A Voided?
a. Data That Is Relevant
, b. Data That Is Efficient
*C. Data That Is Redundant
D. Data That Is Accurate
36. The Mostsbasic Element Of Useful Data In The Database Is The
a. Record
b. Key
c. File
*D. Attribute
37. In A Database, A Complete Setsof Attributes For A Single Occurrence Of An
Entity Cl Ass Is Called A
a. Key
b. File
*C. Record
D. Character
38. Effective Information Has All Of The Following Characteristics Except
a. Relevance
b. Completeness
c. Summarization
*D. Structure
39. Database Managementstasks Do Not Include
*A. Summarization
b. Storage
c. Retrieval
d. Deletion
40. The Author Distinguishes Between The Accounting Information System And
The Managementsinformation System Based On
*A. Whether The Transactions Are Financial Or Nonfinancial
b. Whether Discretionary Or Nondiscretionary Reports Are Prepared
c. The End Users Of The Reports
d. The Organizational Structure Of The Business
41. Which Activity Is Not Partsof The Finance Function?
a. Cash Receipts
b. Portfolio Management
c. Credit
, *D. General Ledger
42. Market Research And Advertising Are Partsof Which Business Function?
a. Materials Management
b. Finance
*C. Marketing
D. Production
43. Which Function Manages The Financial Resources Of The Firm Through
Portfolio Management, Banking, Creditsevaluation, And Cash Receipts And
Disbursements?
a. Accounting
*B. Finance
c. Materials Management
d. Distribution
44. Which Of The Followingsis Not Part Of The Accounting Function?
a. Managingthe Financial Informationsresource Of The Firm
b. Capturingsand Recordingstransactionssin Thesdatabase
c. Distributingtransactioninformationstooperationspersonnel
*D. Managingthesphysical Information System Of Thesfirm
45. The Term “Accounting Independence” Refers To
a. Data Integrity
*B. Separation Of Duties, Such As Record Keeping And Custody Of Physic
Al Resources
c. Generation Of Accurate And Timely Information
d. Business Segmentation By Function
46. In The Distributed Data Processing Approach
a. Computer Services Are Consolidated And Managed As A Shared Org
Anization Resource
b. The Computer Service Function Is A Cost Center
c. The End Users Are Billed Using A Charge-Back System
*D. Computer Services Are Organized Into Small Information Processing
Units Under The Control Of End Users
47. Which Of The Followingsis Not A Cloud Computingservice?
a. Software As Asservice
b. Infrastructure As A Service
, *C. Network As A Service
D. Platformsas A Service
48. The Goal Of Data Processing Is
a. The Verification Of The Algorithms Used
b. To Collect Only Relevant Data
*C. The Production Of Useful Information
D. To Develop A Hierarchy Of Outputs
49. Attestation Services Are Performed By
*A. External Auditors
b. Internal Accountants
c. Internal Auditors
d. Third-Party Accountants
50. IT Professionals Create Custom Software Using
a. Distributed Data Processing
b. Turnkey Systems
c. Enterprise Resource Planning
*D. The System Development Life Cycle
51. The Objectives Of All Information Systems Include All Of The Following Except
a. Support For The Stewardship Function Of Management
*B. Evaluating Transaction Data
c. Support For The Day-To-Day Operations Of The Firm
d. Support For Management Decision Making
52. Which Individuals May Be Involved In The Systems Developmentslife Cycle?
a. Accountants
b. Systems Professionals
c. End Users
*D. All Of The Above
53. An Appraisal Function Housed Within The Organization Thatsperforms A Wide
Range O F Services For Managementsis
*A. Internal Auditing
b. Data Control Group
c. External Auditing
d. Database Administration
