AIS Test 1 Practice Questions

Data about all of the following facets of a business activity are most likely to be recorded in a master file except the business activity. resources affected by the business activity. people who participate in the business activity. place the business activity occurs.

A

A specialized journal A) is used to record infrequent or non-routine transactions. B) simplifies the process of recording large numbers of repetitive transactions. C) records all detailed data for any general ledger account that has individual sub-accounts. D) contains summary-level data for every account of the organization.

B

A chart of accounts is an example of (select all that apply) sequence codes. block codes. group codes. mnemonic codes.

B C

T/F By definition, accounting is an information system

True

An ERP system might facilitate the purchase of direct materials by all of the following except selecting the best supplier by comparing bids. preparing a purchase order when inventory falls to reorder point. routing a purchase order to a purchasing agent for approval. communicating a purchase order to a supplier.

a

The general ledger summarizes the transactions in journals. only includes balance sheet accounts. is posted in total to the general journal. is the initial place to record depreciation expense.

a

Hector Sanchez works in the accounting department of a multinational manufacturing company. His job includes updating accounts payable based on purchase orders and checks. His responsibilities are part of the company's a. revenue cycle. b. expenditure cycle. c. financing cycle. d. production cycle.

b. expenditure cycle

What kind of processing involves entering transaction data and editing them as they occur? a. batch processing b. online batch processing c. online real time processing

b. online batch processing

All of the information (name, GPA, major, etc) about a particular student is store in the same _______. a. file b. record c. attribute d. field

b. record

In the value chain concept, upgrading IT is considered what kind of activity? a. primary activity b. support activity c. service activity d. structured activity

b. support activity

Which of the following statements regarding the value chain is false? a. shipping is part of the outbound logistics b. the AIS is a primary activity in the value chain c. storing materials and inventory is part of outbound logistics d. outbound logistics distribute finished products and services to customers

b. the AIS is a primary activity in the value chain

Transforming data into information so that management can plan, execute, control, and evaluate activities, resources, and personnel is part of which component of an AIS? a. the people who use the system b. the procedures and instructions used to collect, process, and store data c. the data about the organization and its business activities d. the software used to process the data

b. the procedures and instructions used to collect, process and store data

The business processes that include goods storage, receiving vendor invoices, and updating payable accounts is called a. the expenditure cycle b. the revenue cycle c. the production or conversion cycle d. the financing cycle

b. the revenue cycle

Which of the following is a function of an AIS? a. reducing the need to identify a strategy and strategic position b. transforming data into useful information c. allocation organizational resources d. automating all decision making

b. transforming data into useful information

The data on a report was checked by two clerks working independently is illustrative of ________ information. a. relevant b. verifiable c. reliable d. complete

b. verifiable

Which of the following statements is true? a. Batch processing ensures that stored information is always current. b. Batch input is more accurate than on-line data entry. c. On-line batch processing is a combination of real-time and batch processing. d. Batch processing is not frequently used.

c. On-line batch processing is a combination of real-time and batch processing.

In Petaluma, California, electric power is provided to consumers by the Power To The People Electrical Company (PTTP), a local co-op. Each month PTTP mails bills to 70,000 households and then processes payments as they are received. What is the best way for this business to ensure that payment data entry is efficient and accurate? a. Well-designed paper forms b. Source data automation c. Turnaround documents d. Sequentially numbered bills

c. Turnaround documents

The portion of a data record where the data value for a particular attribute is stored is called a. an entity b. an attribute c. a field d. a record

c. a field

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the data about an individual figure's price is stored in a(an) a. entity. b. attribute. c. field. d. record.

c. field

Time cards are associated with the ______________ cycle. a. revenue b. expenditure c. human resources/payroll d. financing

c. human resources/payroll

Which of the following is a primary activity in the value chain? a. purchasing b. accounting c. post sales service d. human resources management

c. post sales service

Which of the following documents is most likely to be used in the expenditure cycle? a. sales orders b. credit memo c. receiving report d. job time ticket

c. receiving report

Which of the following documents would be found in the expenditure cycle? a. delivery ticket b. time card c. credit memo d. purchase order

d

Implementation of an ERP system requires increased focus on all except which of the following controls ? a. Segregation of duties between custody, authorization, and recording b. Data entry controls on validity and accuracy c. Controls over access to data d. Appropriate disposal of hard copy reports

d. appropriate disposal of hard copy reports

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 safety and availability of data and information produced from data is accurate

d. both safety and availability of data and information produced from data is accurate

Information is a. basically the same as data b. raw facts about transactions c. potentially useful facts when processed in a timely manner d. data that has been organized and processed so that it's meaningful

d. data that has been organized and processed so that it's meaningful

A(n) _______ is something about which information is stored while a(n) _______ is a characteristic of interest. a. field / entity b. field / record c. attribute / entity d. entity / attribute

d. entity / attribute

Which of the following is not normally associated with the data processing cycle? a. input b. processing c. output d. monitoring

d. monitoring

The Cape Fear Rocket Club heads out to the dunes of Cape Fear, Oregon every August to pierce the sky with their fiery projectiles. An enterprising seller of t-shirts has devised a series of designs that capture the spirit of the event in silk-screened splendor. His employees can be found on many of the major intersections selling his products out of the backs of pickup trucks. What is the best way for this business to ensure that sales data entry is efficient and accurate? a. well-designed paper forms b. source data automation c. turnaround documents d. sequentially numbered forms

d. sequentially numbered forms

Which of the following is NOT an advantage of an ERP system? a. better access control b. standardization of procedures and reports c. improved monitoring capabilities d. simplicity and reduced costs

d. simplicity and reduced costs

How does the chart of accounts list general ledger accounts? a. alphabetical order b. chronological order c. size order d. the order in which they appear in financial statements

d. the order in which they appear in financial

A general journal would be used to record monthly depreciation entries. simplifies the process of recording large numbers of repetitive transactions. records all detailed data for any general ledger account that has individual sub-accounts. contains summary-level data for every account of the organization.

A

A specialized journal would be most likely to be used to enter sales transactions. monthly depreciation adjustments. annual closing entries. stock issuance transactions.

A

Changing an employee's hourly wage rate would be recorded in which file? Employee master file Employee transaction file Payroll master file Payroll transaction file

A

Data must be collected about three facets of each business activity. What are they? the business activity, the resources it affects, the people who participate the business activity, the transactions it creates, the impact on the financial statements the inputs, outputs and processes used who is involved, what was sold, how much was paid

A

Data processing includes all of the following except verifying subsidiary ledger balances. changing customer addresses. removing inventory items no longer offered. adding the name of a new vendor.

A

Documents that are sent to customers or suppliers and then sent back to the company in the course of a business transaction are known as turnaround documents. source documents. source data automation. transaction documents.

A

For a retail business, a delivery of inventory, from a vendor (with whom there is an established credit relationship) would be initially recorded in which type of accounting record as part of which transaction cycle? purchases journal; expenditure cycle general journal; expenditure cycle general ledger; expenditure cycle cash disbursements journal; production cycle

A

Hector Sanchez works in the accounting department of a multinational manufacturing company. His job includes updating accounts receivable based on sales orders and remittance advices. His responsibilities are part of the company's revenue cycle. expenditure cycle. financing cycle. production cycle.

A

Many small businesses choose to outsource their payroll activities to firms that specialize in providing payroll services. Dolores Yu operates a payroll processing business in Calabasas, California. When she sends bills out to her clients, her work is part of her firm's revenue cycle. expenditure cycle. financing cycle. production cycle.

A

Pre-numbered checks, invoices, and purchase orders are examples of sequence codes. block codes. group codes. mnemonic codes.

A

Pre-numbering of source documents helps to verify that all transactions have been recorded since the numerical sequence serves as a control. source data automation was used to capture data. documents have been used in order. company policies were followed.

A

The data processing method used by FedEx to track packages is an example of real-time processing. batch processing. online batch processing. real-time batch processing.

A

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, action figures (collectively) are a(an) Entity. attribute. field. record.

A

When the sum of all entries in the subsidiary ledger equals the balance in the corresponding general ledger account, it is assumed that The recording processes were accurate. all source documents were recorded. adjusting entries are not required. no errors exist in the subsidiary ledger.

A

Which of the following statements is false? Codes should be consistent with intended use. Codes should allow for growth. Codes should be as simple as possible. Codes should be customized for each division of an organization.

A

Callow Youth Clothing (CYC) is a boutique retailer located in Estes Park, Colorado. During the peak tourist season, it has average daily cash and credit card sales in excess of $5,000. What is the best way for CYC to ensure that sales data entry is efficient and accurate? Well-designed paper forms Source data automation Turnaround documents Sequentially numbered sales invoices

B

Callow Youth Clothing is a boutique retailer located in Estes Park, Colorado. It is a sole proprietorship that stocks an inventory of between 80 and 160 different products. Inventory is updated in real time by the AIS. When designing a chart of accounts for this business, what is the minimum number of digits necessary to represent the general ledger account code, including subsidiary ledgers? 4 6 7 9

B

Hector Sanchez works in the accounting department of a multinational manufacturing company. His job includes updating accounts payable based on purchase orders and checks. His responsibilities are part of the company's revenue cycle. expenditure cycle. financing cycle. production cycle.

B

The efficiency of recording numerous business transactions can be best improved by the use of prenumbered source documents. specialized journals. posting references. subsidiary ledgers.

B

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the price of figures is a(an) entity. attribute. field. record.

B

The quality assurance department at a large manufacturing business enters data into the AIS that is used to produce a weekly report that summarizes the proportion of defective units in each product line. This is an example of internal financial information. internal nonfinancial information. external financial information. external nonfinancial information.

B

Which of the following is an example of source data automation? a utility bill POS (point-of-sale) scanners in retail stores a bill of lading a subsidiary ledger

B

Which step below is not considered to be part of the data processing cycle? data input feedback from external sources data storage data processing

B

A subsidiary ledger is used to record infrequent or non-routine transactions. simplifies the process of recording large numbers of repetitive transactions. records all detailed data for any general ledger account that has individual sub-accounts. contains summary-level data for every account of the organization.

C

In Petaluma, California, electric power is provided to consumers by the Power To The People Electrical Company (PTTP), a local co-op. Each month PTTP mails bills to 70,000 households and then processes payments as they are received. What is the best way for this business to ensure that payment data entry is efficient and accurate? Well-designed paper forms Source data automation Turnaround documents Sequentially numbered bills

C

In transaction processing, generally which activity comes first? recording data in a journal posting items to special journals capturing data on source documents recording data in a general ledger

C

The chart of accounts of a corporate retail bookstore would probably include work-in-process inventory. a drawing account. retained earnings. both A and C

C

The collection of job time tickets or time sheets is part of which transaction cycle? Revenue cycle production cycle human resources cycle expenditure cycle

C

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the data about an individual figure's price is stored in a(an) Entity. attribute. field. record.

C

Which of the following is an example of an ERP system? A) Alexis uses a computerized information system to keep track of all the financial data generated by her bakery. She is considering opening a new bakery on the east side of town. B) Betty has a system that keeps track of the accounts payable and receivable for her plumbing business. At the end of the year, the system helps her to prepare her taxes in just two hours. C) Charlie keeps records of all his business records in a shoe box. Each week he enters all of the data into spreadsheets that automatically generate purchase orders, based on predetermined inventory reorder points. Production quotas for the coming week are also automatically generated based on customer orders. D) Doug is a freelance photographer. He keeps records of all expenses and revenues on his cell phone and then e-mails them to himself every month. The files are stored on his personal computer and backed up to CD quarterly.

C

Which of the following statements is true? Batch processing ensures that stored information is always current. Batch input is more accurate than on-line data entry. On-line batch processing is a combination of real-time and batch processing. Batch processing not frequently used.

C

Product items are often coded with (select all that apply) sequence codes. block codes. group codes. mnemonic codes.

C D

Concerning a master file, which of the following statements is false? A master file is conceptually similar to a ledger in a manual AIS. A master file stores cumulative information. A master file exists across fiscal periods. A master file's individual records are rarely, if ever, changed.

D

Source documents generally help to improve accuracy in transaction processing because... they specify which information to collect. logically related data can be grouped in the same area of the document. they provide directions and steps for completing the form. All of the above are correct.

D

The Cape Fear Rocket Club heads out to the dunes of Kittyhawk, North Carolina every August to pierce the sky with their fiery projectiles. An enterprising seller of t-shirts has devised a series of designs that capture the spirit of the event in silk-screened splendor. His employees can be found on many of the major intersections hawking his wares out of the backs of station wagons and pickup trucks. What is the best way for this business to ensure that sales data entry is efficient and accurate? Well-designed paper forms Source data automation Turnaround documents Sequentially numbered forms

D

The coding technique most likely used for sales orders is called a group code. block code. data code. sequence code.

D

The general ledger is used to record infrequent or non-routine transactions. simplifies the process of recording large numbers of repetitive transactions. records all detailed data for any general ledger account that has individual sub-accounts. contains summary-level data for every account of the organization.

D

The general ledger account that corresponds to a subsidiary ledger account is known as a dependent account. attribute account. entity account. control account.

D

The issuing of a purchase order is part of which transaction cycle? the revenue cycle the production cycle the human resources cycle the expenditure cycle

D

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky. Since 1996, the owner, Glamdring Elfthrall, has leveraged computer technology to provide a superior level of customer service. In particular, the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible. Price information and condition are also provided for each inventory item. In this database, the data about an individual figure is a(an) Entity. attribute. field. record.

D

To be effective, the chart of accounts must be as concise as possible. begin with account 001. utilize only one coding technique. contain sufficient detail to meet the information needs of the organization.

D

Which of the following is conceptually similar to a journal in a manual AIS? database master file record transaction file

D

Which statement below regarding the AIS is false? The AIS must be able to provide managers with detailed and operational information about the organization's performance. Both traditional financial measures and operational data are required for proper and complete evaluation of performance. The AIS was often just one of the information systems used by an organization to collect and process financial and nonfinancial data. Traditionally, most AIS have been designed so that both financial and operational data are stored in a manner that facilitates their integration in reports.

D

in some paper form. a computer data entry screen. a notepad entry. both A and B

D

Which of the following is not true about the accounts receivable subsidiary ledger? a. Debits and credits in the subsidiary ledger must always equal. b. Every credit sale is entered individually into the subsidiary ledger. c. The total of the subsidiary ledgers must equal the control account. d. The subsidiary ledgers play an important role in maintaining the accuracy of the data stored in the AIS.

a

Which of the following is not usually a consideration when designing a coding system? Government regulations on coding systems Standardization Future expansion needs Facilitating report preparation

a

Which of the following statements regarding special journals is not true? a. The balances in a special journal must always reconcile to the general ledger. b. Special journals are used to record large numbers of repetitive transactions. c. Special journals are periodically summarized and posted to the general ledger. d. Special journals provide a specialized format for recording similar transactions

a

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

a. Every organization does not need to implement all of the available transaction cycle modules

Which of the following does not represent one of the four different data processing activities? a. Merging b. Creating c. Reading d. Deleting

a. Merging

Which statement below regarding the AIS and managerial reports is false? a. The AIS is best utilized for financial data while the management information system is best utilized for operational data b. The AIS must be able to provide managers with detailed operational information about the organization's performance c. Both financial and nonfinancial data are required for proper and complete evaluation of organizational performance d. Most source documents capture both financial and nonfinancial data about business transactions

a. The AIS is best utilized for financial data while the management information system is best utilized for operational data

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

a. a large number of transactions within a given cycle can be categorized into a relatively small number of distinct types

Which of the following is most likely to be a general ledger control account? a. accounts receivable b. petty cash c. prepaid rent d. retained earnings

a. accounts receivable

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

a. complete

Which of the following is NOT a step in the data processing cycle? a. data collection b. data input c. data storage d. data processing

a. data collection

Which of the following would be least representative of ERP systems? a. easy to install and implement b. centralized database c. costly d. modular

a. easy to install and implement

Antia Carmie is the largest collector and retailer of Japanese fans in the St. Louis area. Antia uses computer technology to provide superior customer service. The store's database system was designed to make detailed information about each Japanese fan easily accessible to her customers. Accordingly, the fan price and condition are provided for each fan, along with many pictures of each fan. In Antia's database, the Japanese fans (as a whole) represent a(n) a. entity. b. attribute. c. field. d. record.

a. entity

When a subsystem's goals are inconsistent with the goals of another subsystem, or which the system as a whole, it is called a. goal conflict b. goal congruence c. both definitions are wrong

a. goal conflict

Which of the following is NOT a means by which information improves decision making? a. increases information overload b. reduces uncertainty c. provides feedback about the effectiveness of prior decisions d. identifies situations requiring management action

a. increases information overload

When items are numbered consecutively to account for all of them, and missing ones cause a gap in the sequence, it is a a. sequence code b. block code c. group code d. mnemonic code

a. sequence code

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 event b. the use of laptop computers 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

a. the use of a corporate database to help staff identify the relevant experts who can help with a particular event

Records of company data sent to an external party and then returned to the system as input are called a. turnaround documents b. source data automation documents c. source documents d. external input documents

a. turnaround documents

Cheryl Metrejean has been the controller of Downtown Tires for 25 years. Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records. The audit has been unable to reproduce financial reports that were prepared by Ms. Metrejean. While there is no evidence of wrongdoing, the auditors are concerned that the discrepancies might contribute to poor decisions. Which of the following characteristics of useful information is absent in the situation described above? a. verifiable b. reliable c. complete d. timely

a. verifiable

Common source documents for the revenue cycle include all of the following except a. sales order. b. receiving report. c. delivery ticket. d. credit memo.

b

What usually initiates data input into a system? a. The transaction system automatically checks each hour to see if any new data is available for input and processing b. The performance of some business activity generally serves as the trigger for data input c. A general ledger program is queried to produce a trial balance at the end of an accounting period d. Data is only input when a source document is submitted to the accounting department

b.

Which of the following statements about a master file is false? a. A master file is conceptually similar to a ledger in a manual AIS. b. A master file's individual records are rarely, if ever, changed. c. A master file exists across fiscal periods. d. A master file stores cumulative information.

b. A master file's individual records are rarely, if ever, changed.

Data differ from information in which way? a. Data are output, and information is input b. Information is output, and data are input c. Data are meaningful bits of information d. There is no difference

b. Information is output, and data are input

A report telling how well all approved vendors have performed in the prior 12 months is information that is MOST needed in which business process? a. paying vendors b. acquiring inventory c. selling merchandise d. paying employees

b. acquiring inventory

Which transaction cycle includes interactions between an organization and its suppliers? a. revenue cycle b. expenditure cycle c. human resources/payroll cycle d. general ledger and reporting system

b. expenditure