AIS:-Chapter 6 Questions

Give a specific example of a turn-around document.

Credit card, electricity, water, telephone bill, etc.

What is destructive update?

Destructive update involves replacing an old data value with a new value and thus destroying the original.

Why do many firms no longer use a general journal? What has taken its place?

Many firms have replaced a traditional general journal with a journal voucher system. Each entry is documented on a prenumbered journal voucher which contains additional information, such as authorization, which enhances control. A voucher may contain information on a number of related transactions.

What are the subsystems of the expenditure cycle?

Purchasing, cash disbursements, payroll, fixed asset system

Why is the audit trail important?

The audit trail is used to track transactions from the source document to the financial statements and vice versa. Accountants use the audit trail to correct errors, answer queries, and perform audits.

Which of the following statements best describes a computer-based GL/FRS? a. Most firms derive little additional benefit from a real-time FRS. b. Batch processing is typically not appropriate for transaction processing of GLS. c. The sequential file approach is an inefficient use of technology. d. A batch system with direct access files recreates the entire database each time the file is updated.

a. Most firms derive little additional benefit from a real-time FRS.

Which of the following is NOT a true statement? a. Transactions are recorded on source documents and are posted to journals. b. Transactions are recorded in journals and are posted to ledgers. c. Infrequent transactions are recorded in journals and are posted to ledgers. d. Frequent transactions are recorded in special journals.

a. Transactions are recorded on source documents and are posted to journals.

A journal is used in manual accounting environments. What files is comparable to a journal in a computerized environment? a. archive file b. reference file c. transaction file d. master file

a. archive file

The most important advantage of sequential coding is that a. missing or unrecorded documents can be identified b. the code itself lacks informational content c. items cannot be inserted d. deletions affect the sequence

a. missing or unrecorded documents can be identified

A documentation tool that depicts the physical flow of information relating to a particular transaction through an organization is a a. system flowchart. b. program flowchart. c. decision table. d. work distribution analysis. e. systems survey.

a. system flowchart.

Which of the following files is a temporary file? a. transaction file b. master file c. reference file d. none of the above

a. transaction file

Which task should the general ledger perform? a. update the general ledger b. prepare journal vouchers c. have custody of physical assets d. have record-keeping responsibility for special journals of subsidiary ledgers.

a. update the general ledger

Which of the following statements is NOT true? a. Sorting records that are coded alphabetically tends to be more difficult for users than sorting numeric sequences. b. Mnemonic coding requires the user to memorize codes. c. Sequential codes carry no information content beyond their order in the sequence. d. Mnemonic codes are limited in their ability to represent items within a class.

b. Mnemonic coding requires the user to memorize codes.

When a firm wants its coding system to convey meaning without reference to any other document, it would choose a. an alphabetic code b. a mnemonic code c. a group code d. a block code

b. a mnemonic code

Operational inefficiencies occur because a. accounts both common and unique to many concurrent transactions need to be updated in real time. b. accounts common to many concurrent transactions need to be updated in real time. c. accounts unique to many concurrent transactions need to be updated in real time. d. None of the above are true statements

b. accounts common to many concurrent transactions need to be updated in real time.

The production subsystem of the conversion cycle includes all of the following EXCEPT a. determining raw materials requirements. b. make or buy decisions on component parts. c. release of raw materials into production. d. scheduling the goods to be produced.

b. make or buy decisions on component parts.

Real-time systems might be appropriate for all of the following EXCEPT a. airline reservations. b. payroll. c. point-of-sale transactions. d. air traffic control systems. e. all of these applications typically utilize real-time processing.

b. payroll.

Which of the following statements is true? a. Journal vouchers detailing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the journal voucher history file. b. Journal vouchers summarizing transaction activity flow from the accounting department into the GLS, where they are independently reconciled and posted to the general ledger accounts. c. Journal vouchers summarizing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the general ledger accounts. d. Journal vouchers summarizing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the journal voucher history file.

c. Journal vouchers summarizing transaction activity flow from various operational departments into the GLS, where they are independently reconciled and posted to the general ledger accounts.

Which statement is NOT true? a. Business activities begin with the acquisition of materials, property, and labor in exchange for cash. b. The conversion cycle includes the task of determining raw materials requirements. c. Manufacturing firms have a conversion cycle but retail firms do not. d. A payroll check is an example of a product document of the payroll system. e. A journal voucher is actually a special source document.

c. Manufacturing firms have a conversion cycle but retail firms do not.

Which of the following is true of the relationship between subsidiary ledgers and general ledger accounts? a. The two contain different and unrelated data. b. All general ledger accounts have subsidiaries. c. The relationship between the two provides an audit trail from the financial statements to the source documents. d. The total of subsidiary ledger accounts usually exceeds the total in the related general ledger account.

c. The relationship between the two provides an audit trail from the financial statements to the source documents.

Which of the following is NOT true of turn-around documents? a. They may reduce the number of errors made by external parties. b. They are commonly used by utility companies (gas, power, water, etc.). c. They are documents used by internal parties only. d. They are both input and output documents.

c. They are documents used by internal parties only.

A chart of accounts would best be coded using a(n) _______________ coding scheme. a. alphabetic b. mnemonic c. block d. sequential

c. block

Is the system flowchart symbol for? a. on-page connector? b. off-page connector? c. home base? d. manual operation? e. document?

c. home base?

Real-time processing would be most beneficial in handling a firm's a. fixed asset records b. retained earnings information c. merchandise inventory d. depreciation records

c. merchandise inventory

Which system is not part of the expenditure cycle? a. cash disbursements b. payroll c. production planning/control d. purchases/accounts payable

c. production planning/control

Sequential access means that a. data are stored on magnetic tape. b. the address of the location of data is found through the use of either an algorithm or an index. c. to read any record on the file, all of the preceding records must first be read. d. each record can be accessed in the same amount of time.

c. to read any record on the file, all of the preceding records must first be read.

Which of the following is NOT a potential exposure of the FRS? a. a defective audit trail b. general ledger accounts that are out of balance with subsidiary accounts c. unauthorized access to the check register d. unauthorized access to the general ledger

c. unauthorized access to the check register

Which of the following is NOT an advantage of real-time processing files over batch processing? a. shorter transaction processing time b. reduction of inventory stocks c. improved customer service d. all are advantages

d. all are advantages

A documentation tool used to represent the logical elements of a system is a(n) a. programming flowchart. b. entity relationship diagram. c. system flowchart. d. data flow diagram.

d. data flow diagram

Which file has as its primary purpose to provide historical financial data for comparative financial reports? a. journal voucher history file b. budget master file c. responsibility file d. general ledger history file

d. general ledger history file

A coding scheme in the form of acronyms and other combinations that convey meaning is a(n) a. sequential code. b. block code. c. alphabetic code. d. mnemonic code.

d. mnemonic code.

Which accounting application is most suited to batch processing? a. general ledger b. vendor payments c. sales order processing d. payroll

d. payroll

In contrast to a batch processing system, in a real-time system a. a lag occurs between the time of the economic event and when the transaction is recorded b. relatively fewer hardware, programming, and training resources are required c. a lesser resource commitment per unit of output is required d. processing takes place when the economic event occurs

d. processing takes place when the economic event occurs

Which situation indicates an internal control risk in the General Ledger/Financial Reporting Systems (GL/FRS)? a. the employee who maintains the cash journal computes depreciation expense b. the cash receipts journal voucher is approved by the Treasurer c. the cash receipts journal vouchers are prenumbered and stored in a locked safe d. the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

d. the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

XBRL a. is the basic protocol that permits communication between Internet sites. b. controls Web browsers that access the Web. c. is the document format used to produce Web pages. d. was designed to provide the financial community with a standardized method for preparing.

d. was designed to provide the financial community with a standardized method for preparing.

Sequential file processing will not permit a. data to be edited on a separate computer run. b. the use of a database structure. c. data to be edited in an offline mode. d. batch processing to be initiated from a terminal. e. data to be edited on a real-time basis.

e. data to be edited on a real-time basis.