WGU D105 Intermediate Accounting III 100 Original Multiple Choice
Practice Questions with Answers and Rationales
Accounting Information System Foundations
1. What is the primary purpose of an accounting information system?
A. Collect, process, store, and report information supporting decisions and
accountability
B. Replace every management decision
C. Guarantee that fraud cannot occur
D. Record only cash sales
Answer: A. Collect, process, store, and report information supporting
decisions and accountability
Rationale: An AIS transforms transaction data into useful information for
reporting, control, and decision making.
2. Which item is raw data rather than processed information?
A. A sales trend report
B. An individual invoice amount entered into the system
C. A monthly profitability analysis
D. An aging summary interpreted by management
Answer: B. An individual invoice amount entered into the system
Rationale: An individual captured fact is data; organized analysis gives facts
decision making meaning.
3. A purchasing manager receives a report too late to select a supplier. Which
information quality is most directly deficient?
A. Par value
B. Depreciation
C. Timeliness
D. Physical durability
Answer: C. Timeliness
Rationale: Information must arrive in time to influence the decision.
Page 1
,4. Two departments use different definitions of net sales. Which
improvement best supports meaningful comparison?
A. Print more copies
B. Remove transaction dates
C. Increase report font size
D. Standardize data definitions
Answer: D. Standardize data definitions
Rationale: Consistent definitions help users interpret and compare the same
measure correctly.
5. Which set best describes common AIS components?
A. People, procedures, data, software, technology infrastructure, and controls
B. Only computers and printers
C. Only debits and credits
D. Only external auditors
Answer: A. People, procedures, data, software, technology infrastructure, and
controls
Rationale: An AIS is a coordinated system of people, processes, technology, data,
and safeguards.
6. What does an audit trail allow a reviewer to do?
A. Replace accounting policies
B. Trace a transaction from source evidence to records and back
C. Eliminate the need for evidence
D. Approve all transactions automatically
Answer: B. Trace a transaction from source evidence to records and back
Rationale: A traceable sequence connects original events, processing steps, and
reported results.
7. A retailer processes accumulated sales after closing each night. What
processing approach is used?
A. Manual depreciation only
B. Database normalization
C. Batch processing
D. Continuous real time posting
Answer: C. Batch processing
Rationale: Batch processing handles a group of transactions together at a
scheduled time.
Page 2
, 8. A payment immediately updates a customer's outstanding balance. What
approach is illustrated?
A. Annual batch processing
B. Archival storage only
C. Offline reconciliation only
D. Real time processing
Answer: D. Real time processing
Rationale: Real time processing updates records as transactions occur or are
entered.
9. Which is an example of master data?
A. A vendor's approved name and payment details
B. One purchase invoice
C. One daily cash receipt
D. One employee time entry
Answer: A. A vendor's approved name and payment details
Rationale: Master data describes relatively enduring entities used repeatedly in
transactions.
10. Which is transaction data?
A. An employee's permanent identification number
B. A specific customer payment with date and amount
C. A standard chart of accounts definition
D. A supplier's approved address
Answer: B. A specific customer payment with date and amount
Rationale: Transaction data records a particular business event.
Documentation and Process Analysis
11. What does a data flow diagram primarily show?
A. Only employee reporting lines
B. Only journal entry debit totals
C. How data moves among processes, stores, and external entities
D. The physical dimensions of a server
Answer: C. How data moves among processes, stores, and external entities
Rationale: A DFD models the movement and transformation of data.
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Practice Questions with Answers and Rationales
Accounting Information System Foundations
1. What is the primary purpose of an accounting information system?
A. Collect, process, store, and report information supporting decisions and
accountability
B. Replace every management decision
C. Guarantee that fraud cannot occur
D. Record only cash sales
Answer: A. Collect, process, store, and report information supporting
decisions and accountability
Rationale: An AIS transforms transaction data into useful information for
reporting, control, and decision making.
2. Which item is raw data rather than processed information?
A. A sales trend report
B. An individual invoice amount entered into the system
C. A monthly profitability analysis
D. An aging summary interpreted by management
Answer: B. An individual invoice amount entered into the system
Rationale: An individual captured fact is data; organized analysis gives facts
decision making meaning.
3. A purchasing manager receives a report too late to select a supplier. Which
information quality is most directly deficient?
A. Par value
B. Depreciation
C. Timeliness
D. Physical durability
Answer: C. Timeliness
Rationale: Information must arrive in time to influence the decision.
Page 1
,4. Two departments use different definitions of net sales. Which
improvement best supports meaningful comparison?
A. Print more copies
B. Remove transaction dates
C. Increase report font size
D. Standardize data definitions
Answer: D. Standardize data definitions
Rationale: Consistent definitions help users interpret and compare the same
measure correctly.
5. Which set best describes common AIS components?
A. People, procedures, data, software, technology infrastructure, and controls
B. Only computers and printers
C. Only debits and credits
D. Only external auditors
Answer: A. People, procedures, data, software, technology infrastructure, and
controls
Rationale: An AIS is a coordinated system of people, processes, technology, data,
and safeguards.
6. What does an audit trail allow a reviewer to do?
A. Replace accounting policies
B. Trace a transaction from source evidence to records and back
C. Eliminate the need for evidence
D. Approve all transactions automatically
Answer: B. Trace a transaction from source evidence to records and back
Rationale: A traceable sequence connects original events, processing steps, and
reported results.
7. A retailer processes accumulated sales after closing each night. What
processing approach is used?
A. Manual depreciation only
B. Database normalization
C. Batch processing
D. Continuous real time posting
Answer: C. Batch processing
Rationale: Batch processing handles a group of transactions together at a
scheduled time.
Page 2
, 8. A payment immediately updates a customer's outstanding balance. What
approach is illustrated?
A. Annual batch processing
B. Archival storage only
C. Offline reconciliation only
D. Real time processing
Answer: D. Real time processing
Rationale: Real time processing updates records as transactions occur or are
entered.
9. Which is an example of master data?
A. A vendor's approved name and payment details
B. One purchase invoice
C. One daily cash receipt
D. One employee time entry
Answer: A. A vendor's approved name and payment details
Rationale: Master data describes relatively enduring entities used repeatedly in
transactions.
10. Which is transaction data?
A. An employee's permanent identification number
B. A specific customer payment with date and amount
C. A standard chart of accounts definition
D. A supplier's approved address
Answer: B. A specific customer payment with date and amount
Rationale: Transaction data records a particular business event.
Documentation and Process Analysis
11. What does a data flow diagram primarily show?
A. Only employee reporting lines
B. Only journal entry debit totals
C. How data moves among processes, stores, and external entities
D. The physical dimensions of a server
Answer: C. How data moves among processes, stores, and external entities
Rationale: A DFD models the movement and transformation of data.
Page 3
