Deck 1: Accounting Information Systems: an Overview

Question 1

Which of the following statements below 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 useful in decision making than information.
D)Data and information are the same.

Answer 1

B

Question 2

________ information reduces uncertainty,improves decision makers' ability to make predictions,or confirms expectations.

A)Timely
B)Reliable
C)Relevant
D)Complete

Answer 2

C

Question 3

Discuss the concept of a system and the issues of goal conflict and goal congruence.

Answer 3

A system is a set of two or more components that are somehow interrelated and interact together to achieve a specific goal.A system usually consists of smaller components called subsystems.These subsystems have specific and defined functions,which interact with and support the larger system.The concept of systems is key to information technology and AIS.All systems,including the AIS,must work to achieve one or more organizational goals.Goal conflict results when a decision or action of a subsystem is inconsistent with another subsystem or the system (organization)as a whole.Goal congruence results when a subsystem achieves its goals while contributing to the organization's overall goal.Subsystems should maximize organizational goals.

Question 4

Discuss the concept of a system and the issues of goal conflict and goal congruence.

Question 5

Which of the following tradeoffs between characteristics of useful information is least objectionable?

A)incomplete information received on a timely basis
B)irrelevant information received in an understandable format
C)unreliable information easily accessible
D)verifiable information received in unreadable format

Question 6

Before a firm can identify the information needed to effectively manage a process,the firm must

A)understand the process .
B)hire programmers.
C)purchase computers and/or workstations.
D)obtain internet access.

Question 7

Baggins Incorporated identifies new product development and product improvement as the top corporate goals.An employee developed an innovation that will correct a shortcoming in one of the company's products.Although Baggins current Return on Investment (ROI)is 15%,the product innovation is expected to generate ROI of only 12%.As a result,the employee fails to follow up.As a result,awarding bonuses to employees based on ROI resulted in

A)goal conflict.
B)information overload.
C)goal congruence.
D)decreased value of information.

Question 8

Information is best described as

A)raw facts about transactions.
B)data that has been organized and processed so that it is meaningful to the user.
C)facts that are useful when processed in a timely manner.
D)the same thing as data.

Question 9

Chopra,Limited,is an Indian company operating in New York state.It offers stylized,boutique public relations services to upscale retailers in quaint New England towns.A major source of revenue is a weekly newsletter that reports on current and projected tourist travel and spending patterns.Preparation of the newsletter requires study and analysis of weather conditions,economic activity,and travel costs.It is available at an annual subscription rate of $299.99.There are currently 190 subscribers.Preparation and distribution of the newsletter costs $12,000 annually.The value of information to subscribers is

A)$236.83.
B)$44,998.10.
C)less than $63.16.
D)at least $300.00.

Question 10

Information that does not omit important aspects of the underlying events or activities that it measures is

A)complete.
B)accessible.
C)relevant.
D)timely.

Question 11

Data must be converted into information to be considered useful and meaningful for decision making.There are six characteristics that make information both useful and meaningful.If information is free from error or bias and accurately represents the events or activities of the organization,it is representative of the characteristic of

A)relevancy.
B)timeliness.
C)understandability.
D)reliability.

Question 12

Discuss the seven characteristics of useful information.

Question 13

Information that is free from error or bias and accurately represents the events or activities of the organization is

A)relevant.
B)reliable.
C)verifiable.
D)timely.

Question 14

Information is ________ when two knowledgeable people independently produce the same information.

A)verifiable
B)relevant
C)reliable
D)complete

Question 15

Paid time-off policies,job descriptions,and procedures manuals are examples of information needed to support key decisions in what business process?

A)hire and train employees
B)acquire inventory
C)sell merchandise
D)collect payment from customers

Question 16

An accounting information system (AIS)processes ________ to provide users with ________.

A)data; information
B)data; transactions
C)information; data
D)data; benefits

Question 17

Define data,information,and how the value of information is determined.

Question 18

Which of the following is not one of the three basic types of data about a specific sales transaction that should be captured by an Accounting Information System?

A)name of the employee who completed the sale
B)daily sales quota
C)product sold
D)date

Question 19

The value of information can best be determined by

A)its usefulness to decision makers.
B)its relevance 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 value chain.

Question 20

Define the concept of a system.

Question 21

What is a key decision that needs to be made with regards to acquiring inventory?

A)which credit cards to accept
B)which employees to hire
C)which vendors to use
D)how much capital to acquire

Question 22

In which transaction cycle would information for borrowing money be most likely to pass between internal and external accounting information systems?

A)the revenue cycle
B)the expenditure cycle
C)the human resources / payroll cycle
D)the financing cycle

Question 23

Who of the following is not a stakeholder with whom an accounting information system typically communicates directly?

A)Wall Street industry analyst
B)venture capitalist
C)company that supplies raw materials
D)company that purchases finished goods for resale to consumers

Question 24

Identify the piece of information below that is typically needed to hire and train employees.

A)job descriptions
B)vendor performance
C)market coverage
D)capacity needs

Question 25

In which transaction cycle would information for paying interest be most likely to pass between internal and external accounting information systems?

A)the revenue cycle
B)the expenditure cycle
C)the human resources / payroll cycle
D)the financing cycle

Question 26

What is a key decision that needs to be made with regards to selling merchandise?

A)which credit cards to accept
B)which employees to hire
C)which public accounting firm to employ
D)how much capital to acquire

Question 27

Obtaining financing from outside investors is part of which cycle?

A)the revenue cycle
B)the financing cycle
C)the production cycle
D)the payroll cycle

Question 28

In which transaction cycle would information for inventory purchases be most likely to pass between internal and external accounting information systems?

A)the revenue cycle
B)the expenditure cycle
C)the human resources / payroll cycle
D)the financing cycle

Question 29

What is a key decision that needs to be made with regards to acquiring equipment?

A)the location
B)pro forma income statement
C)how much capital to acquire
D)job descriptions

Question 30

Identify the piece of information below that is typically needed to acquire a building.

A)job descriptions
B)vendor performance
C)market coverage
D)capacity needs

Question 31

Identify the party below that is not internal to the firm.

A)customer
B)management
C)employees
D)CEO

Question 32

One group that relies on both the adequate collection and transformation of data for decision-making purposes for an organization is

A)management.
B)interested outsiders.
C)competitors.
D)the government.

Question 33

Identify the piece of information below that is typically needed to acquire inventory.

A)job descriptions
B)vendor performance
C)market coverage
D)capacity needs

Question 34

Identify the party below that is not external to the firm.

A)customer
B)vendor
C)government agencies
D)CEO

Question 35

In which transaction cycle would information for paying employees be most likely to pass between internal and external accounting information systems?

A)the revenue cycle
B)the expenditure cycle
C)the human resources / payroll cycle
D)the financing cycle

Question 36

The ________ is not a transaction cycle.

A)general ledger and reporting cycle
B)expenditure cycle
C)revenue cycle
D)human resources cycle

Question 37

In which transaction cycle would customer sales transaction information be most likely to pass between internal and external accounting information systems?

A)the revenue cycle
B)the expenditure cycle
C)the human resources / payroll cycle
D)the financing cycle

Question 38

In which transaction cycle would information for hiring employees be most likely to pass between internal and external accounting information systems?

A)the revenue cycle
B)the expenditure cycle
C)the human resources / payroll cycle
D)the financing cycle

Question 39

Identify the false statement below.

A)Retail stores do not have a production cycle.
B)Financial institutions have installment-loan cycles.
C)Every organization should implement every transaction cycle module.
D)A service company does not have an inventory system.

Question 40

How can query languages be used to help make better decisions?

A)They can suggest a course of action.
B)They can gather relevant data for decision making.
C)They can help the decision maker to interpret results.
D)They can model choose among alternative courses of action.

Question 41

An AIS provides value by

A)improving products or services through information that increases quality and reduces costs.
B)providing timely and reliable information to decision makers.
C)creating new products.
D)both A and B

Question 42

Who of the following would not be involved in the revenue cycle?

A)accounts payable clerk
B)customer
C)cashier
D)credit manager

Question 43

The AIS must include controls to ensure

A)safety and availability of data.
B)marketing initiatives match corporate goals.
C)information produced from data is accurate.
D)both A and C

Question 44

The transaction cycle approach yields efficiencies when processing of a large number of transactions because

A)a large number of transactions within a given cycle can be categorized into a relatively small number of distinct types.
B)transaction cycles are easier to computerize.
C)the transaction cycle approach represents the natural order of business.
D)transaction cycles are easy to understand.

Question 45

Define an accounting information system.

Question 46

Which of the following is not one of the components of an AIS?

A)internal controls and security measures
B)people
C)procedures and instructions
D)hardware

Question 47

Explain what an AIS is,describe the basic tasks it performs in an organization,and give some examples of the types of accounting transactions it processes.

Question 48

Identify the components of an accounting information system.

Question 49

True or False: An accounting information system requires at least one computer.

Question 50

How are "Give and Take" transactions classified in business today and what impact does this have on AIS?

Question 51

The transaction cycle that includes the events of hiring employees and paying them is known as the

A)revenue cycle.
B)expenditure cycle.
C)human resources cycle.
D)financing cycle.

Question 52

Why have accounting software packages been designed with separate transaction modules?

Question 53

Which of the following is not an example of a common activity in an AIS?

A)buy and pay for goods and services
B)sell goods and services and collect cash
C)summarize and report results to interested parties
D)record sales calls for marketing purposes

Question 54

Paying state payroll taxes is part of which transaction cycle?

A)human resources/payroll
B)expenditure
C)financing
D)revenue

Question 55

The primary objective of accounting is to

A)implement strong internal controls.
B)provide useful information to decision makers.
C)prepare financial statements.
D)ensure the profitability of an organization.

Question 56

The American Institute of Certified Public Accountants (AICPA)has recognized the importance of AIS and the major impact information technology has on the area of accounting.To recognize individual CPAs who have met educational and experiential requirements in this area,the group formally created the designation known as

A)the Certified Information Auditor.
B)the Certified Internal Auditor.
C)the Certified Information Technology Professional.
D)the Certified Data Processing Professional.

Question 57

Transaction cycles can be summarized on a high level as "give-get" transactions.An example of "give-get" in the revenue cycle would be

A)give cash,get goods.
B)give goods,get cash.
C)give cash,get labor.
D)give cash,get cash.

Question 58

An accounting information system must be able to perform which of the following tasks?

A)collect transaction data
B)process transaction data
C)provide adequate controls
D)all of the above

Question 59

Groups of related business activities such as the acquisition of merchandise and payment of vendors are called

A)transaction cycles.
B)economic cycles.
C)business events.
D)transactions.

Question 60

Many modern accounting software packages offer separate transaction cycle modules.What is the reason for this?

A)Every organization does not need to implement all of the available transaction cycle modules.
B)Most businesses do not need the revenue cycle module as part of their AIS.
C)The nature of a given transaction cycle is the same irrespective of the type of organization.
D)A properly designed AIS does not use the concept of separate business transaction cycles to process transactions.

Question 61

How can the value of the information produced by an accounting information system be determined? What would a measurement and verification expert think about quantification and verification of such information?

Question 62

A change in the AIS that makes information more easily accessible and widely available within an organization is most likely to first influence the

A)organizational culture.
B)customer base.
C)external financial statement users.
D)production activity.

Question 63

True or False: Corporate strategy should affect the way a firm deploys an accounting information system.

Question 64

True or False: It is important that a firm's AIS collect and integrate financial and non-financial information about the organization's activities if the firm seeks use its AIS to gain a competitive advantage.

Question 65

An AIS that makes information more easily accessible and more widely available is likely to increase pressure for

A)centralization and defined procedures.
B)centralization and autonomy.
C)decentralization and defined procedures.
D)decentralization and autonomy.

Question 66

How can an AIS become part of the firm's value chain and add value to the business?

Question 67

True or False: When properly deployed,accounting information systems can provide firms with a competitive advantage.

Question 68

A well-designed AIS can improve the decision making in an organization.Identify the statement below that describes a situation where an AIS may actually inhibit effective decision making.

A)An AIS provides to its users an abundance of information without any filtering or condensing of such information.
B)An AIS identifies situations requiring management action.
C)An AIS reduces uncertainty,and therefore accounting information can provide a basis for choosing among alternative courses of action.
D)An AIS provides information about the results of previous decisions which provides decision makers with feedback that can be used in future decision making.

Question 69

Which of the following is not an example of how an AIS adds value to an organization?

A)All employees at a hospital can access and update patient records from any computer terminal in the hospital.
B)A customer service representative can find a customer's account data,purchase history,payment history,and salesperson's name while on the phone with the customer,to resolve issues quickly.
C)Suppliers are able to access sales data directly from the point-of-sale system of a retailer and deliver inventory automatically when needed.
D)Client tax files are encrypted and made available on the CPA firm's network to any employee with an access code.

Question 70

Identify the primary reason that it is important for a firm to identify the AIS improvements likely to yield the greatest return.

A)because business strategy directly influences AIS,but not information technology
B)because most organizations have limited resources
C)because a firm never wants to waste time addressing issues that are not urgent
D)because it is expensive to improve accounting information systems

Question 71

Which of the following is a true statement?

A)Business strategy directly influences AIS,but not information technology.
B)Information technology directly influences organizational culture,but not business strategy.
C)Organizational culture directly influences business strategy,but not AIS.
D)AIS directly influences information technology,but not business strategy.

Question 72

When the AIS provides information in a timely and accurate manner,it stands as an example of

A)improved decision making.
B)improving the quality and reducing the costs of products or services.
C)improving efficiency.
D)all of the above

Question 73

What is the CITP designation and why is it important to AIS?

Question 74

Identify a recent technological advance that provides an opportunity to gain a competitive advantage.

A)CVVP analysis
B)discounted cash flows
C)predictive analysis
D)economic order quantity (EOQ)

Question 75

How can an AIS add value to the organization?

Question 76

Identify how firms use predictive analysis.

A)to provide an educated guess regarding what is expected to occur in the near future
B)to engage in data warehousing
C)to engage in a low-cost strategy
D)to design the most effective accounting information system

Question 77

A good example of how an AIS is used to share knowledge within an organization is

A)the use of a corporate database to help staff identify the relevant experts who can help with a particular client.
B)the use of tablets to access a network for messaging worldwide.
C)the monitoring of production equipment to watch for defects.
D)the use of point-of-sale data to determine hot-selling items.

Question 78

Accounting information plays major roles in managerial decision making by

A)identifying situations requiring management action.
B)reducing uncertainty.
C)providing a basis for choosing among alternative actions.
D)all of the above

Question 79

In Chapter 1,Figure 1-4 shows the factors that influence the design of AIS.The diagram shows a bi-directional arrow between the organizational culture and the AIS.The reason for this two-way interchange between organizational culture and AIS is

A)that the AIS should not influence the values of the organizational culture.
B)because the organization's culture influences the AIS,and likewise the AIS influences the organization's culture by controlling the flow of information within the organization.
C)due to the transfer of managers between the two corporate elements.
D)the AIS impacts the organization's key strategies.

Question 80

Differentiate between an AIS course and other accounting courses.