,ACCOUNTING INFORMATION SYSTEMS 10TH EDITION BY
JAMES A HALL TEST BANK
Chapter 1
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
discretionary reporting.
a. True
*b. False
6. The management reporting system provides the internal financial
information needed to manage a business.
*a. True
b. False
7. Most of the inputs to the general ledger system come from the
financial reporting system.
a. True
*b. False
8. When preparing discretionary reports, organizations can choose what
information to report and how to present it.
*a. True
b. False
,9. Retrieval is the task of permanently removing obsolete or redundant
records 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
integrity of the database.
*a. True
b. False
12. Custom software is developed and maintained by enterprise resource
planners.
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
internal 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
communications devices that allows users to communicate, access data
and applications, and share information and resources.
a. True
*b. False
,17. Systems maintenance consumes the majority of a system’s total
costs.
*a. True
b. False
18. Cloud computing is a practice in which the organization sells its
IT resources 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 need 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 provide 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 organizational 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-independent computing in which shared data centers deliver hosted IT
services over the Internet is 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 part of 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
management reporting system (MRS) is the
*a. FRS provides information to internal and external users; the
MRS provides information to internal users
b. FRS provides discretionary information; the MRS provides
nondiscretionary information
c. FRS reports are prepared using information provided by the
general ledger system; the MRS provides information to the
general ledger 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
support their daily operations
*d. measuring and reporting the status of financial resources and
the changes 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
avoided?
a. data that is relevant
JAMES A HALL TEST BANK
Chapter 1
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
discretionary reporting.
a. True
*b. False
6. The management reporting system provides the internal financial
information needed to manage a business.
*a. True
b. False
7. Most of the inputs to the general ledger system come from the
financial reporting system.
a. True
*b. False
8. When preparing discretionary reports, organizations can choose what
information to report and how to present it.
*a. True
b. False
,9. Retrieval is the task of permanently removing obsolete or redundant
records 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
integrity of the database.
*a. True
b. False
12. Custom software is developed and maintained by enterprise resource
planners.
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
internal 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
communications devices that allows users to communicate, access data
and applications, and share information and resources.
a. True
*b. False
,17. Systems maintenance consumes the majority of a system’s total
costs.
*a. True
b. False
18. Cloud computing is a practice in which the organization sells its
IT resources 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 need 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 provide 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 organizational 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-independent computing in which shared data centers deliver hosted IT
services over the Internet is 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 part of 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
management reporting system (MRS) is the
*a. FRS provides information to internal and external users; the
MRS provides information to internal users
b. FRS provides discretionary information; the MRS provides
nondiscretionary information
c. FRS reports are prepared using information provided by the
general ledger system; the MRS provides information to the
general ledger 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
support their daily operations
*d. measuring and reporting the status of financial resources and
the changes 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
avoided?
a. data that is relevant
