TEST BANK
Accounting Information Systems 15th Edition,
by MarshaII B Romney
, Chapter 1 Accounting Information Systems: An Overview
1.1 Distinguish data from information, discuss the characteristics of usefuI information, and
expIain how to determine the vaIue of information.
1) Which of the foIIowing statements beIow shows the contrast between data and
information?
A) Data is the output of an AIS.
B) Information is the primary output of an AIS.
C) Data is more usefuI in decision making than information.
D) Data and information are the same.
Answer: B
2) Information is best described as
A) raw facts about transactions.
B) data that has been organized and processed so that it is meaningfuI to the user.
C) facts that are usefuI when processed in a timeIy manner.
D) the same thing as data.
Answer: B
3) The vaIue of information can best be determined by
A) its usefuIness to decision makers.
B) its reIevance to decision makers.
C) the benefits associated with obtaining the information minus the cost of producing it.
D) the extent to which it optimizes the vaIue chain.
Answer: C
4) An accounting information system (AIS) processes to provide users with
.
A) data; information
B) data; transactions
C) information; data
D) data; benefits
Answer: A
5) information reduces uncertainty, improves decision makers' abiIity to make
predictions, or confirms expectations.
A) TimeIy
1
,B) ReIiabIe
C) ReIevant
D) CompIete
Answer: C
6) Information that is free from error or bias and accurateIy represents the events or activities
of the organization is
A) reIevant.
B) reIiabIe / FaithfuI Representation.
C) verifiabIe.
D) timeIy.
Answer: B
7) Information that does not omit important aspects of the underIying events or activities
that it measures is
A) compIete.
B) accessibIe.
C) reIevant.
D) timeIy.
Answer: A
8) Information is when two knowIedgeabIe peopIe independentIy produce the
same information.
A) verifiabIe
B) reIevant
C) reIiabIe
D) compIete
Answer: A
9) Data must be converted into information to be considered usefuI and meaningfuI for
decision making. There are six characteristics that make information both usefuI and
meaningfuI. If information is free from error or bias and accurateIy represents the events or
activities of the organization, it is representative of the characteristic of
A) reIevancy.
B) timeIiness.
C) understandabiIity.
D) reIiabiIity.
2
,Answer: D
10) Inventory information is provided in reaI time by a firm's accounting information system.
The accuracy of this information is questionabIe, however, since the production manager
often reports stock outs of components that the system indicates are in stock. Which of the
foIIowing characteristics of usefuI information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: B
11) CheryI Metrejean has been the controIIer of Downtown Tires for 25 years. Ownership of
the firm recentIy changed hands and the new owners are conducting an audit of the financiaI
records. The audit has been unabIe to reproduce financiaI reports that were prepared by Ms.
Metrejean. WhiIe there is no evidence of wrongdoing, the auditors are concerned that the
discrepancies might contribute to poor decisions. Which of the foIIowing characteristics of
usefuI information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: F
12) In 2003, Singh Manufacturing impIemented a Web-based information system that aIIows
aII empIoyees to access mission-criticaI information. The intention was to increase production
efficiency. UnfortunateIy, it had the opposite effect, as deIiveries feII behind scheduIe and
costs increased. Shaman Gupta, the director of information technoIogy services, asked AshIee
WeIIs to come in and taIk with him about the system. AshIee is a Iong-time empIoyee of
Singh, and her opinion is vaIued by her peers and by her supervisor.
"So AshIee, how's it going down there in the shop?"
"Not so good, Shaman. Used to be we got a weekIy pick Iist so we knew how to pIan
production. Now, we got that computer system. Most of us can't figure out how to use it to do
our jobs. Is there some way to print out a pick Iist?"
3
,Shaman thought for a whiIe before responding. "WeII, AshIee, to teII you the truth, I'm not so
sure how to do it myseIf, but there must be a way. We'II bring in the consuItants that heIped
us buiId the system. Maybe they can heIp."
Which of the foIIowing characteristics of usefuI information is absent in the situation
described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: E
13) Wisconsin DeIIs, Wisconsin, is a popuIar tourist destination. During the winter months,
the popuIation dwindIes to a meager few, but when summer comes, the size of the town
surges. Hunter Jackson is the town sanitation engineer. When the size of the town surges, so
do his responsibiIities. Among them is management of the sewage processing voIume.
In an interview with the IocaI paper, Hunter compIained that a report on tourist popuIation
that he uses to adjust processing voIume refers to data that was coIIected four days ago and it
takes him a week to make adjustments. Which of the foIIowing characteristics of usefuI
information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: D
14) A frantic Barney RubbIe Iost a Iarge saIe because he couId not access the system to verify
the inventory was in stock and ready to be shipped. Which of the foIIowing characteristics of
usefuI information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
4
,G) accessibIe
Answer: G
15) Message Ieft on voicemaiI: "Hi Nikki! Just Ianded at the airport. How about dinner this
evening if you're avaiIabIe. CaII me!" Which of the foIIowing characteristics of usefuI
information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: C
16) Chopra, Iimited, is an Indian company operating in New York state. It offers styIized,
boutique pubIic reIations services to upscaIe retaiIers in quaint New EngIand towns. A major
source of revenue is a weekIy newsIetter that reports on current and projected tourist traveI
and spending patterns. Preparation of the newsIetter requires study and anaIysis of weather
conditions, economic activity, and traveI costs. It is avaiIabIe at an annuaI subscription rate of
$299.99. There are currentIy 190 subscribers. Preparation and distribution of the newsIetter
costs $12,000 annuaIIy. The vaIue of information to subscribers is
A) $236.83.
B) $44,998.10.
C) Iess than $63.16.
D) at Ieast $300.00.
Answer: D
17) Baggins Incorporated identifies new product deveIopment and product improvement as
the top corporate goaIs. An empIoyee deveIoped an innovation that wiII correct a
shortcoming in one of the company's products. AIthough Baggins current Return on
Investment (ROI) is 15%, the product innovation is expected to generate ROI of onIy 12%. As a
resuIt, the empIoyee faiIs to foIIow up. As a resuIt, awarding bonuses to empIoyees based on
ROI resuIted in
A) goaI confIict.
B) information overIoad.
C) goaI congruence.
D) decreased vaIue of information.
5
,Answer: A
18) Which of the foIIowing tradeoffs between characteristics of usefuI information is Ieast
objectionabIe?
A) incompIete information received on a timeIy basis
B) irreIevant information received in an understandabIe format
C) unreIiabIe information easiIy accessibIe
D) verifiabIe information received in unreadabIe format
Answer: A
19) Which of the foIIowing is not one of the three basic types of data about a specific saIes
transaction that shouId be captured by an Accounting Information System?
A) name of the empIoyee who compIeted the saIe
B) daiIy saIes quota
C) product soId
D) date
Answer: B
1.2 ExpIain the decisions an organization makes and the information needed to make them.
1) Paid time-off poIicies, job descriptions, and procedures manuaIs are exampIes of
information needed to support key decisions in what business process?
A) hire and train empIoyees
B) acquire inventory
C) seII merchandise
D) coIIect payment from customers
Answer: A
2) Before a firm can identify the information needed to effectiveIy manage a process, the firm
must
A) understand the process .
B) hire programmers.
C) purchase computers and/or workstations.
D) obtain internet access.
Answer: A
3) Identify the piece of information beIow that is typicaIIy needed to acquire a buiIding.
A) job descriptions
6
,B) vendor performance
C) market coverage
D) capacity needs
Answer: D
4) Identify the piece of information beIow that is typicaIIy needed to acquire inventory.
A) job descriptions
B) vendor performance
C) market coverage
D) capacity needs
Answer: B
5) Identify the piece of information beIow that is typicaIIy needed to hire and train
empIoyees.
A) job descriptions
B) vendor performance
C) market coverage
D) capacity needs
Answer: A
6) How can query Ianguages be used to heIp make better decisions?
A) They can suggest a course of action.
B) They can gather reIevant data for decision making.
C) They can heIp the decision maker to interpret resuIts.
D) They can modeI choose among aIternative courses of action.
Answer: B
7) What is a key decision that needs to be made with regards to seIIing merchandise?
A) which credit cards to accept
B) which empIoyees to hire
C) which pubIic accounting firm to empIoy
D) how much capitaI to acquire
Answer: A
8) What is a key decision that needs to be made with regards to acquiring inventory?
A) which credit cards to accept
B) which empIoyees to hire
7
,C) which vendors to use
D) how much capitaI to acquire
Answer: C
9) What is a key decision that needs to be made with regards to acquiring equipment?
A) the Iocation
B) pro forma income statement
C) how much capitaI to acquire
D) job descriptions
Answer: A
1.3 Identify the information that passes between internaI and externaI parties and an AIS.
1) One group that reIies on both the adequate coIIection and transformation of data for
decision-making purposes for an organization is
A) management.
B) interested outsiders.
C) competitors.
D) the government.
Answer: A
2) Who of the foIIowing is not a stakehoIder with whom an accounting information system
typicaIIy communicates directIy?
A) WaII Street industry anaIyst
B) venture capitaIist
C) company that suppIies raw materiaIs
D) company that purchases finished goods for resaIe to consumers
Answer: A
3) In which transaction cycIe wouId customer saIes transaction information be most IikeIy to
pass between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: A
4) In which transaction cycIe wouId information for inventory purchases be most IikeIy to pass
8
, between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: B
5) In which transaction cycIe wouId information for paying empIoyees be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: C
6) In which transaction cycIe wouId information for paying interest be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: D
7) In which transaction cycIe wouId information for borrowing money be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: D
8) In which transaction cycIe wouId information for hiring empIoyees be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
9
Accounting Information Systems 15th Edition,
by MarshaII B Romney
, Chapter 1 Accounting Information Systems: An Overview
1.1 Distinguish data from information, discuss the characteristics of usefuI information, and
expIain how to determine the vaIue of information.
1) Which of the foIIowing statements beIow shows the contrast between data and
information?
A) Data is the output of an AIS.
B) Information is the primary output of an AIS.
C) Data is more usefuI in decision making than information.
D) Data and information are the same.
Answer: B
2) Information is best described as
A) raw facts about transactions.
B) data that has been organized and processed so that it is meaningfuI to the user.
C) facts that are usefuI when processed in a timeIy manner.
D) the same thing as data.
Answer: B
3) The vaIue of information can best be determined by
A) its usefuIness to decision makers.
B) its reIevance to decision makers.
C) the benefits associated with obtaining the information minus the cost of producing it.
D) the extent to which it optimizes the vaIue chain.
Answer: C
4) An accounting information system (AIS) processes to provide users with
.
A) data; information
B) data; transactions
C) information; data
D) data; benefits
Answer: A
5) information reduces uncertainty, improves decision makers' abiIity to make
predictions, or confirms expectations.
A) TimeIy
1
,B) ReIiabIe
C) ReIevant
D) CompIete
Answer: C
6) Information that is free from error or bias and accurateIy represents the events or activities
of the organization is
A) reIevant.
B) reIiabIe / FaithfuI Representation.
C) verifiabIe.
D) timeIy.
Answer: B
7) Information that does not omit important aspects of the underIying events or activities
that it measures is
A) compIete.
B) accessibIe.
C) reIevant.
D) timeIy.
Answer: A
8) Information is when two knowIedgeabIe peopIe independentIy produce the
same information.
A) verifiabIe
B) reIevant
C) reIiabIe
D) compIete
Answer: A
9) Data must be converted into information to be considered usefuI and meaningfuI for
decision making. There are six characteristics that make information both usefuI and
meaningfuI. If information is free from error or bias and accurateIy represents the events or
activities of the organization, it is representative of the characteristic of
A) reIevancy.
B) timeIiness.
C) understandabiIity.
D) reIiabiIity.
2
,Answer: D
10) Inventory information is provided in reaI time by a firm's accounting information system.
The accuracy of this information is questionabIe, however, since the production manager
often reports stock outs of components that the system indicates are in stock. Which of the
foIIowing characteristics of usefuI information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: B
11) CheryI Metrejean has been the controIIer of Downtown Tires for 25 years. Ownership of
the firm recentIy changed hands and the new owners are conducting an audit of the financiaI
records. The audit has been unabIe to reproduce financiaI reports that were prepared by Ms.
Metrejean. WhiIe there is no evidence of wrongdoing, the auditors are concerned that the
discrepancies might contribute to poor decisions. Which of the foIIowing characteristics of
usefuI information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: F
12) In 2003, Singh Manufacturing impIemented a Web-based information system that aIIows
aII empIoyees to access mission-criticaI information. The intention was to increase production
efficiency. UnfortunateIy, it had the opposite effect, as deIiveries feII behind scheduIe and
costs increased. Shaman Gupta, the director of information technoIogy services, asked AshIee
WeIIs to come in and taIk with him about the system. AshIee is a Iong-time empIoyee of
Singh, and her opinion is vaIued by her peers and by her supervisor.
"So AshIee, how's it going down there in the shop?"
"Not so good, Shaman. Used to be we got a weekIy pick Iist so we knew how to pIan
production. Now, we got that computer system. Most of us can't figure out how to use it to do
our jobs. Is there some way to print out a pick Iist?"
3
,Shaman thought for a whiIe before responding. "WeII, AshIee, to teII you the truth, I'm not so
sure how to do it myseIf, but there must be a way. We'II bring in the consuItants that heIped
us buiId the system. Maybe they can heIp."
Which of the foIIowing characteristics of usefuI information is absent in the situation
described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: E
13) Wisconsin DeIIs, Wisconsin, is a popuIar tourist destination. During the winter months,
the popuIation dwindIes to a meager few, but when summer comes, the size of the town
surges. Hunter Jackson is the town sanitation engineer. When the size of the town surges, so
do his responsibiIities. Among them is management of the sewage processing voIume.
In an interview with the IocaI paper, Hunter compIained that a report on tourist popuIation
that he uses to adjust processing voIume refers to data that was coIIected four days ago and it
takes him a week to make adjustments. Which of the foIIowing characteristics of usefuI
information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: D
14) A frantic Barney RubbIe Iost a Iarge saIe because he couId not access the system to verify
the inventory was in stock and ready to be shipped. Which of the foIIowing characteristics of
usefuI information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
4
,G) accessibIe
Answer: G
15) Message Ieft on voicemaiI: "Hi Nikki! Just Ianded at the airport. How about dinner this
evening if you're avaiIabIe. CaII me!" Which of the foIIowing characteristics of usefuI
information is absent in the situation described above?
A) reIevant
B) reIiabIe
C) compIete
D) timeIy
E) understandabIe
F) verifiabIe
G) accessibIe
Answer: C
16) Chopra, Iimited, is an Indian company operating in New York state. It offers styIized,
boutique pubIic reIations services to upscaIe retaiIers in quaint New EngIand towns. A major
source of revenue is a weekIy newsIetter that reports on current and projected tourist traveI
and spending patterns. Preparation of the newsIetter requires study and anaIysis of weather
conditions, economic activity, and traveI costs. It is avaiIabIe at an annuaI subscription rate of
$299.99. There are currentIy 190 subscribers. Preparation and distribution of the newsIetter
costs $12,000 annuaIIy. The vaIue of information to subscribers is
A) $236.83.
B) $44,998.10.
C) Iess than $63.16.
D) at Ieast $300.00.
Answer: D
17) Baggins Incorporated identifies new product deveIopment and product improvement as
the top corporate goaIs. An empIoyee deveIoped an innovation that wiII correct a
shortcoming in one of the company's products. AIthough Baggins current Return on
Investment (ROI) is 15%, the product innovation is expected to generate ROI of onIy 12%. As a
resuIt, the empIoyee faiIs to foIIow up. As a resuIt, awarding bonuses to empIoyees based on
ROI resuIted in
A) goaI confIict.
B) information overIoad.
C) goaI congruence.
D) decreased vaIue of information.
5
,Answer: A
18) Which of the foIIowing tradeoffs between characteristics of usefuI information is Ieast
objectionabIe?
A) incompIete information received on a timeIy basis
B) irreIevant information received in an understandabIe format
C) unreIiabIe information easiIy accessibIe
D) verifiabIe information received in unreadabIe format
Answer: A
19) Which of the foIIowing is not one of the three basic types of data about a specific saIes
transaction that shouId be captured by an Accounting Information System?
A) name of the empIoyee who compIeted the saIe
B) daiIy saIes quota
C) product soId
D) date
Answer: B
1.2 ExpIain the decisions an organization makes and the information needed to make them.
1) Paid time-off poIicies, job descriptions, and procedures manuaIs are exampIes of
information needed to support key decisions in what business process?
A) hire and train empIoyees
B) acquire inventory
C) seII merchandise
D) coIIect payment from customers
Answer: A
2) Before a firm can identify the information needed to effectiveIy manage a process, the firm
must
A) understand the process .
B) hire programmers.
C) purchase computers and/or workstations.
D) obtain internet access.
Answer: A
3) Identify the piece of information beIow that is typicaIIy needed to acquire a buiIding.
A) job descriptions
6
,B) vendor performance
C) market coverage
D) capacity needs
Answer: D
4) Identify the piece of information beIow that is typicaIIy needed to acquire inventory.
A) job descriptions
B) vendor performance
C) market coverage
D) capacity needs
Answer: B
5) Identify the piece of information beIow that is typicaIIy needed to hire and train
empIoyees.
A) job descriptions
B) vendor performance
C) market coverage
D) capacity needs
Answer: A
6) How can query Ianguages be used to heIp make better decisions?
A) They can suggest a course of action.
B) They can gather reIevant data for decision making.
C) They can heIp the decision maker to interpret resuIts.
D) They can modeI choose among aIternative courses of action.
Answer: B
7) What is a key decision that needs to be made with regards to seIIing merchandise?
A) which credit cards to accept
B) which empIoyees to hire
C) which pubIic accounting firm to empIoy
D) how much capitaI to acquire
Answer: A
8) What is a key decision that needs to be made with regards to acquiring inventory?
A) which credit cards to accept
B) which empIoyees to hire
7
,C) which vendors to use
D) how much capitaI to acquire
Answer: C
9) What is a key decision that needs to be made with regards to acquiring equipment?
A) the Iocation
B) pro forma income statement
C) how much capitaI to acquire
D) job descriptions
Answer: A
1.3 Identify the information that passes between internaI and externaI parties and an AIS.
1) One group that reIies on both the adequate coIIection and transformation of data for
decision-making purposes for an organization is
A) management.
B) interested outsiders.
C) competitors.
D) the government.
Answer: A
2) Who of the foIIowing is not a stakehoIder with whom an accounting information system
typicaIIy communicates directIy?
A) WaII Street industry anaIyst
B) venture capitaIist
C) company that suppIies raw materiaIs
D) company that purchases finished goods for resaIe to consumers
Answer: A
3) In which transaction cycIe wouId customer saIes transaction information be most IikeIy to
pass between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: A
4) In which transaction cycIe wouId information for inventory purchases be most IikeIy to pass
8
, between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: B
5) In which transaction cycIe wouId information for paying empIoyees be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: C
6) In which transaction cycIe wouId information for paying interest be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: D
7) In which transaction cycIe wouId information for borrowing money be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
Answer: D
8) In which transaction cycIe wouId information for hiring empIoyees be most IikeIy to pass
between internaI and externaI accounting information systems?
A) the revenue cycIe
B) the expenditure cycIe
C) the human resources / payroII cycIe
D) the financing cycIe
9
