WGU D217 ACCOUNTING INFORMATION
SYSTEMS OA EXAM 2026 QUESTIONS &
VERIFIED ANSWERS
SECTION 1: ACCOUNTING INFORMATION SYSTEMS FUNDAMENTALS
1. What is the primary input to the transaction processing system (TPS)?
a) Management reports
b) Financial transactions
c) Budget data
d) External audit reports
Correct Answer: b) Financial transactions
Rationale: Financial transactions are economic events that affect assets and
equities and are reflected on the financial statements. They serve as the primary
input to the transaction processing system [citation:10].
2. The major difference between the financial reporting system (FRS) and the
management reporting system (MRS) is:
a) FRS uses more advanced technology
b) FRS provides information to external users; the MRS provides information to
internal users
c) FRS is more expensive to operate
d) FRS is optional; MRS is required by law
1
, Correct Answer: b) FRS provides information to external users; the MRS
provides information to internal users
Rationale: The FRS produces financial statements for external users like tax
authorities and investors. The MRS provides internal information for management
decision-making such as budgets and variance reports [citation:1][citation:10].
3. The author distinguishes between the accounting information system and the
management information system based on:
a) The technology used
b) Whether the transactions are financial or nonfinancial that directly affect the
processing of financial transactions
c) The size of the organization
d) The type of reports generated
Correct Answer: b) Whether the transactions are financial or nonfinancial
that directly affect the processing of financial transactions
Rationale: The AIS captures financial transactions to support revenue,
expenditure, and conversion cycles. The MIS captures nonfinancial transactions to
support marketing, inventory, manufacturing, and human resources
[citation:1][citation:11].
4. An example of a financial transaction is:
a) Log of customer calls
b) Customer satisfaction survey
c) Purchase of a computer
d) Employee performance review
2
, Correct Answer: c) Purchase of a computer
Rationale: A financial transaction is an economic event that affects assets and
equities. The purchase of a computer adds an asset to the organization. A log of
customer calls is a nonfinancial transaction [citation:1][citation:11].
5. An example of a nonfinancial transaction is:
a) Sale of inventory
b) Purchase of equipment
c) Log of customer calls
d) Payment of payroll
Correct Answer: c) Log of customer calls
Rationale: Nonfinancial transactions do not directly affect financial statements
but provide valuable information for management decisions. Customer call logs are
a key source of information for customer service, marketing, and sales departments
[citation:10].
6. The transaction processing system includes which of the following cycles?
a) Financial reporting cycle
b) Management reporting cycle
c) Conversion cycle
d) Budgeting cycle
Correct Answer: c) Conversion cycle
Rationale: The conversion cycle is included within the transaction processing
system because it records cost accounting and production activities. The TPS also
includes the revenue and expenditure cycles [citation:10].
3
, 7. The goal of data processing is:
a) Data storage
b) The production of useful information
c) Minimizing costs
d) Reducing errors
Correct Answer: b) The production of useful information
Rationale: Data is not information. Data needs to be consolidated, processed,
summarized, and converted into information for management decision-making
[citation:10].
8. Which of the following is an external end user of accounting information?
a) Management
b) Tax authorities
c) Operations personnel
d) Internal auditors
Correct Answer: b) Tax authorities
Rationale: External users include those outside the organization like investors,
creditors, and tax authorities. Internal users are within the company, such as
management and operations personnel [citation:11].
9. Which factor conceptually distinguishes external auditing and internal auditing?
a) The technology used
4
SYSTEMS OA EXAM 2026 QUESTIONS &
VERIFIED ANSWERS
SECTION 1: ACCOUNTING INFORMATION SYSTEMS FUNDAMENTALS
1. What is the primary input to the transaction processing system (TPS)?
a) Management reports
b) Financial transactions
c) Budget data
d) External audit reports
Correct Answer: b) Financial transactions
Rationale: Financial transactions are economic events that affect assets and
equities and are reflected on the financial statements. They serve as the primary
input to the transaction processing system [citation:10].
2. The major difference between the financial reporting system (FRS) and the
management reporting system (MRS) is:
a) FRS uses more advanced technology
b) FRS provides information to external users; the MRS provides information to
internal users
c) FRS is more expensive to operate
d) FRS is optional; MRS is required by law
1
, Correct Answer: b) FRS provides information to external users; the MRS
provides information to internal users
Rationale: The FRS produces financial statements for external users like tax
authorities and investors. The MRS provides internal information for management
decision-making such as budgets and variance reports [citation:1][citation:10].
3. The author distinguishes between the accounting information system and the
management information system based on:
a) The technology used
b) Whether the transactions are financial or nonfinancial that directly affect the
processing of financial transactions
c) The size of the organization
d) The type of reports generated
Correct Answer: b) Whether the transactions are financial or nonfinancial
that directly affect the processing of financial transactions
Rationale: The AIS captures financial transactions to support revenue,
expenditure, and conversion cycles. The MIS captures nonfinancial transactions to
support marketing, inventory, manufacturing, and human resources
[citation:1][citation:11].
4. An example of a financial transaction is:
a) Log of customer calls
b) Customer satisfaction survey
c) Purchase of a computer
d) Employee performance review
2
, Correct Answer: c) Purchase of a computer
Rationale: A financial transaction is an economic event that affects assets and
equities. The purchase of a computer adds an asset to the organization. A log of
customer calls is a nonfinancial transaction [citation:1][citation:11].
5. An example of a nonfinancial transaction is:
a) Sale of inventory
b) Purchase of equipment
c) Log of customer calls
d) Payment of payroll
Correct Answer: c) Log of customer calls
Rationale: Nonfinancial transactions do not directly affect financial statements
but provide valuable information for management decisions. Customer call logs are
a key source of information for customer service, marketing, and sales departments
[citation:10].
6. The transaction processing system includes which of the following cycles?
a) Financial reporting cycle
b) Management reporting cycle
c) Conversion cycle
d) Budgeting cycle
Correct Answer: c) Conversion cycle
Rationale: The conversion cycle is included within the transaction processing
system because it records cost accounting and production activities. The TPS also
includes the revenue and expenditure cycles [citation:10].
3
, 7. The goal of data processing is:
a) Data storage
b) The production of useful information
c) Minimizing costs
d) Reducing errors
Correct Answer: b) The production of useful information
Rationale: Data is not information. Data needs to be consolidated, processed,
summarized, and converted into information for management decision-making
[citation:10].
8. Which of the following is an external end user of accounting information?
a) Management
b) Tax authorities
c) Operations personnel
d) Internal auditors
Correct Answer: b) Tax authorities
Rationale: External users include those outside the organization like investors,
creditors, and tax authorities. Internal users are within the company, such as
management and operations personnel [citation:11].
9. Which factor conceptually distinguishes external auditing and internal auditing?
a) The technology used
4
