AIS Midterm

When I enter a correct customer number, the data entry screen displays the customer name and address. This is an example of A) prompting. B) preformatting. C) closed-loop verification. D) error checking. E) batch processing

C) closed-loop verification

Nishant Kumar has been hired by American Manufacturing as a staff accountant in the internal audit department. He has been asked to thoroughly document the existing accounting information system in preparation for making recommendations for improvements to internal controls. He decides to begin by meeting with the information technology staff in order to develop an understanding of the computer programs used by the system. The documentation tool that he should employ for this purpose is a A) data flow diagram. B) document flowchart. C) system flowchart. D) program flowchart. E) DFD

D) program flowchart

The _____________ handles the link between the way data are physically stores and each user's logical view of that data.

DBMS

The ____________ is responsible for the database.

Database Administrator

In a payroll processing DFD, the "prepare reports'" activity will be represented by ___________, the "employee payroll file" will be represented by ____________, and the "management" will be represented by ____________.

a circle; two horizontal lines; a square

A payroll clerk accidentally entered an employee's hours worked for the week as 380 instead of 38. The data entry control that would best prevent this error would be

a limit check

In a data flow diagram of the customer payment process, "Customer" will appear above or in

a square

In general, a data destination will be shown by

an arrow pointing in

A facility that is pre-wired for necessary telecommunications and computer equipment, but doesn't have equipment installed, is known as

cold site

When preparing a document flowchart, the names of organizational departments or job functions should appear in the

column headings

The BEST example of an effective payroll transaction file hash total would most likely be a. sum of net pay b. total number of employees c. sum of hours worked d. total employees' social security numbers e. sum of the gross pay

d. total of employees' social security numbers

A validity check is an example of a

data entry control

This determines the correctness of the logical relationship between two data items.

reasonableness check

Who of the following would NOT be involved in the revenue cycle? a. accounts payable clerk b. customer c. cashier d. credit manager e. salesperson

a. accounts payable clerk

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 e. incomplete

a. complete

All of the following are business processing cycles EXCEPT a. online transaction processing cycle b. the expenditure cycle c. the human resources / payroll cycle d. the production cycle e. the revenue cycle

a. online transaction processing cycle

Which is a TRUE statement regarding a document flowchart? a. A document flowchart illustrates the sequence of logical operations performed by a computer b. A document flowchart is particularly useful in analyzing the adequacy of internal control procedures c. A document flowchart is more useful than a data flow diagram d. A document flowchart is not normally used in evaluating internal control procedures e. Document flowcharts are used only for batch processing systems

b. A document flowchart is particularly useful in analyzing the adequacy of internal control procedures

All of the following situations would likely be communicated in an exception report EXCEPT a. production stoppages b. weekly credit and cash sales comparison c. low inventory level d. expense variances outside acceptable range e. direct material and direct labor efficiency variances

b. weekly credit and cash sales comparison

This determines if all required data items have been entered.

completeness check

What acts as an interface between the database and the various application programs?

database management system

This test a numerical amount to ensure that it does not exceed a predetermined value nor fall below another predetermined value.

range check

Information is _________ when two knowledgable people independently produce the same information. a. verifiable b. relevant c. reliable d. complete e. inconsistent

a. verifiable

In a program flowchart, branching to alternative paths is represented by

decision diamond

Nishant Kumar has been hired by American Manufacturing as a staff accountant in the internal audit department. He has been asked to thoroughly document the existing accounting information system in preparation for making recommendations for improvements to internal controls. He decides to begin by meeting with the information technology staff in order to develop an understanding of the computer programs used by the system. The documentation tool that he should employ for this purpose is a A) data flow diagram. B) document flowchart. C) system flowchart. D) program flowchart. E) none of the above

C) system flowchart

When the human resources manager wants to gather data about salary and start date by employees and by departments, the manager would use which language?

Data Query Language

In a relational database table for the entity "customers" some customers have the same last name. You can't use the last name field as the Primary Key because

Primary Key field values must be unique in the Primary Key field

In Enterprise Resource Planning (ERP) systems such as SAP as well as in AIS such as QuickBooks for small businesses, data is stored and maintained in

a centralized database

In a data flow diagram of the customer payment process, "update receivables' will appear above or in

a circle

In preparing a data flow diagram, when data are transformed through a process, the symbol used should be

a circle

A flowchart that depicts the relationship among the input, processing, and output of AIS is

a system flowchart

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 CP firm's network to any employee with an access code e. The AIS supports the Perpetual Inventory System and makes on-hand quatities of inventory items available to the Purchasing Department and to the Sales Department

a. All employees at a hospital can access and update patient records from any computer terminal in the hospital

A well-designed AIS can improve the decision making in and organization. Identify the statement below that describes a situation where 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 situation 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 e. An AIS has internal controls that help ensure that the data processing is authorized, accurate, and complete

a. An AIS provides to its users an abundance of information without any filtering or condensing of such information

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 the 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. e. Support isolated information systems that do not communicate with other information systems.

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

Which statement below regarding the AIS/ERP and managerial reports is FALSE? a. The AIS/ERP is best utilized for financial data while a separate management information system is best utilized for operational data b. The AIS/ERP must be able to provide managers with detailed operational information about the organization's performance c. Both financial and non financial data are required for proper and complete evaluation of organizational performance d. Most source documents capture both financial and non-financial data about business transactions e. Modern AIS/ERP integrate accounting with operations support

a. The AIS/ERP is best utilized for financial data while a separate management information system is best utilized for operational data

Which of the following statements regarding special journals is NOT true? a. Typically, adjusting journal entries for unearned revenues that have been earned are made in a Special Journal. 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. e. An example of a special journal is the sales journal.

a. Typically, adjusting journal entries for unearned revenues that have been earned are made in a Special Journal.

An accounting information system (AIS) processes ________ to provide users with ________. a. data; information b. data; transactions c. information; data d. data; benefits e. outputs; inputs

a. data; information

Carly Jackson is a staff auditor for KPMG. She has been asked to document the client's existing accounting information system so the engagement team can assess the client's adequacy of controls around financial reporting. She decides to begin by creating a flowchart to describe, analyze, and evaluate internal controls. To do this, Carly should ask the client for what type of flowchart? a. internal control flowchart b. document flowchart c. system flowchart d. dataflow diagram e. non of the above

a. internal control flowchart

A copy of a database, master file, or software that will be retained indefinitely as a historical record is known as a(n)

archive

Which statement below is TRUE with regards to an audit trail? a. An audit trail with the general journal. b. An audit trail provides the means to check the accuracy and validity of ledger postings. c. An audit trail is a summary of recorded transactions. d. Computerized audit trails are not as effective as manual audit trails. e. An automated audit trail is not an Information Technology (IT) control.

b. An audit trail provides the means to check the accuracy and validity of ledger postings.

Which of the following is an example of a turnaround document? a. a receipt a customer must use to return the goods purchased b. a telephone bill the customer must return with payment c. a paycheck stub that must be used in the employee's tax return d. a customer loyalty card used every time a customer purchases goods or services e. an employee time sheet

b. a telephone bill the customer must return with payment

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. raw data that will be processed d. computerized data e. verbally communicated data

b. data that has been organized and processed so that it is meaningful to the user

All following are benefits of the database approach EXCEPT a. data integration and sharing b. decentralized management of data c. minimal data redundancy d. cross-functional analysis and reporting e. improved data consistency

b. decentralized management of data

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 labor, get goods b. give goods, get cash c. give cash, get labor d. give cash, get cash e. turnaround document

b. give goods, get cash

Which of the following is NOT an objective of a disaster recovery plan? a. minimize the extent of the disruption, damage, or loss b. implement controls before considering risks c. resume normal operations as soon as possible d. train employees for emergency operations e. implementing controls after considering risks

b. implement controls before considering risks

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 e. customer invoice

b. receiving report

Information that is free from error or bias and accurately represents the events or activities of the organization is a. irrelevant b. reliable c. incomplete d. untimely e. inaccurate

b. reliable

Inventory information is provided in real time by a firm's accounting information system. The accuracy of this information is questionable, however, since the production manager often reports stock outs of components that the system indicates are in stock. Which of the following characteristics of useful information is absent in the situation described above? a. relevant b. reliable c. complete d. timely e. accessible

b. reliable

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 e. the batch processing cycle

b. the expenditure cycle

The use of data warehouse in strategic decision making is often referred to as

business intelligence

All of the following statements are true about relational databases EXCEPT a. Relational database design is based on the relational data model developed by Dr. E.F. Codd in 1970 b. In a relational database, a table represents one entity; examples of entities are customers, vendors, employees, purchase orders, and sales orders c. Relational database tables are related to each other by being physically adjacent to each other in a computer memory d. Each row (record) in a relational database table contains data about a specific occurrence of the entity that the table represents e. Each column in a relational database table contains information about one specific attribute of the entity that the table is storing data about

c. Relational database tables are related to each other by being physically adjacent to each other in a computer memory

Each of the following statements about DFDs and flowchart is true EXCEPT a. The purpose of a DFD is to diagram the origins, flow, transformation, storage, and destination of data b. The purpose of a flowchart is to present a graphical description of the flow of documents, relationships among input, processing, and output, or the sequence of logical operations in an information system or program c. The Sarbanes Oxley Act. of 2002 requires a public company's external auditing firm, but not the public company itself, to document and evaluate the company's internal controls d. A flowchart will generally be more complex and more focused on managerial, AIS, or IS aspects of the organization e. A DFD is limited to basic symbols and lines, and focuses on the flow and use of data

c. The Sarbanes Oxley Act. of 2002 requires a public company's external auditing firm, but not the public company itself, to document and evaluate the company's internal controls

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 e. pay as you go cycle

c. human resources cycle

All of the following are source documents EXCEPT: a. time sheet b. purchase order c. the company's financial statements d. sales order e. a credit memo

c. the company's financial statements

_________ information may increase uncertainty and inhibit decision makers' ability to make predictions. a. timely b. reliable c. too much d. complete e. relevant

c. too much

In transaction processing, generally which activity comes first?

capturing data on source documents

_________ is a data entry input control that involves summing the first four digits of a customer number to calculate the value of the fifth digit, then comparing the calculated number to the number entered during data entry.

check digit verification

This control protects records from errors that occur when two or more users attempt to update the same record simultaneously.

concurrent update controls

Choose the answer below that is generally FALSE about audit trails. a. An audit trail provides a means to check the accuracy and validity of postings to the ledger. b. Posting references and document numbers help provide an audit trail. c. An audit trail exists when company transactions can be traced through the AIS from where it originated to where they end up on the financial statements. d. Automated audit trails are rarely used in ERP systems. e. Both a company's managers and the company's auditors use audit trails.

d. Automated audit trails are rarely used in ERP systems.

Which of the following is NOT a risk associated with the data input process? a. Data is invalid b. Data is incomplete c. Data is inaccurate d. Data is authorized e Data is fraudulent

d. Data is authorized

All of the following statements about tables in a relational database are true EXCEPT a. A Primary Key field uniquely identifies a specific row in a table b. Each Primary Key has an index that enables the Relational Database Management System to dynamically (directly) access a given data value in the Primary Key field c. Some fields in a table are neither a Primary Key nor a Foreign Key d. Duplicate values are stored in a Primary Key field e. One-to-Many relationships exists between pairs of tables

d. Duplicate values are stored in a Primary Key field

All of the following are problems that may occur when redundant data are stored in a database, EXCEPT: a. The database becomes larger than it needs to be, since duplicate facts are being stored within the database b. Multiple, redundant occurrences of data are different because one version of the redundant data was updated but the other versions of the data were not c. Various departments within an organization are not using the same version of the data. For example, Inventory Management may see an on-hand quantity of five for a material item, while Accounting and Sales see an on-hand quantity of four d. Redundant data values exist in the Primary Key/Foreign Key database relationships between tables in a relational database e. One occurrence of the data is deleted as intended but other, redundant occurrences of the same data are not deleted

d. Redundant data values exist in the Primary Key/Foreign Key database relationships between tables in a relational database

Each of the following is an important guideline for drawing a system or program flowchart EXCEPT a. Use interviews, questionnaires, or narrative descriptions to understand the system before flowcharting it b. Identify the different entities to be flowcharted such as departments, job functions, or external parties c. Flowcharts should flow from top to bottom and from left to right d. Using nonstandard flowchart symbols is recommended

d. Using nonstandard flowchart symbols is recommended

The AIS must include all of the following EXCEPT a. safety of data stored in the AIS b. availability of the AIS c. accurate processing d. allowing all user's to access all of the data and information in the AIS e. complete processing

d. allowing all user's to access all of the data and information in the AIS

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. office automation, such as users' emails e. maintain the general ledger and automatically generate the financial statements

d. office automation, such as users' emails

Possible entities are Customers, Vendors, Employees, Purchase Orders, and Inventory Items. All of the following fields would normally be contained in the relational database table for the entity Customers EXCEPT a. credit limit b. last name c. address d. order quantity e. phone number

d. order quantity

Carly Jackson is a staff auditor for KPMG. She has been asked to document the client's existing accounting information system so the engagement team can assess the client's adequacy of controls around financial reporting. She decides to begin by examining the client's key software applications, examining a flowchart that illustrates the sequence of logical operations performed by the system in executing the application. To do this, Carly should ask the client for what type of flowchart? a. internal control flowchart b. document flowchart c. system flowchart d. program flowchart e. data flow diagram

d. program flowchart

An accounting information system must be able to perform all of the following tasks EXCEPT a. collect transaction data b. process transaction data c. provide adequate controls d. provide users with unrestricted access to all screens in the accounting information system e. produce the financial statements

d. provide users with unrestricted access to all screens in the accounting information system

Which is probably the MOST immediate and significant effect of database technology on accounting? a. replacement of the double entry system b. change in the nature of financial reporting c. elimination of traditional records such as journals and ledgers d. quicker access to and greater use of accounting information in decision making e. reduced effectiveness of data analytics

d. quicker access to and greater use of accounting information in decision making

An AIS provides value in all of the following ways EXCEPT a. improving products or services b. providing timely and reliable information to decision makers c. supporting the business cycles of a business d. segregating accounting from operating activities e. reducing costs

d. segregating accounting from operating activities

Which of the following statements is true with regards to system availability? a. human error does not threaten system availability b. threats to system availability can be completely eliminated c. proper controls can maximize the risk of threats causing significant system downtime d. threats to system availability include hardware and software failures as well as natural and man-made disasters e. backing up company data and storing it offsite is not a systems availability. control

d. threats to system availability include hardware and software failures as well as natural and man-made disasters

Wisconsin Dells, Wisconsin, is a popular tourist destination. During the winter months, the population dwindles 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 responsibilities. Among them is management of the sewage processing volume. In an interview with the local paper, Hunter complained that a report on tourist population that he uses to adjust processing volume refers to data that was collected four days ago and it takes him a week to make adjustments. Which of the following characteristics of useful information is absent in the situation described above? a. relevant b. reliable c. complete d. timely e. understandable

d. timely

Probably the LEAST important change management control is a. management verifying that the change management procedures are followed b. testing all changes thoroughly prior to implementation c. updating all documentation to reflect changes made to the system d. training users on the new system after the new system is already implemented e. having authorized, documented change management procedures

d. training users on the new system after the new system is already implemented

Identify the statement below that is NOT true with regards to the accounts receivable subsidiary ledger. a. Every credit is entered individually into the subsidiary ledger b. In modern ERP/AIS systems, each time there is a sale on account, the accounts receivable subsidiary ledger and the accounts receivable control account in the general ledger are debited by the amount of the sales c. The subsidiary ledgers play an important role in maintaining the accuracy of the data stored in the AIS. d. In modern ERP/AIS systems, the total of the accounts receivable subsidiary ledger always equals the accounts receivable control account in the general ledger. e. Debits from sales on account and credits from sales returns must always equal in amount in the accounts receivable subsidiary ledger.

e. Debits from sales on account and credits from sales returns must always equal in amount in the accounts receivable subsidiary ledger.

Which of the following statements is generally FALSE about how data is organized and stored in an AIS. a. A data value is physically stored in a space called a field. b. Any number of fields can be grouped together to form a record. c. Related records are grouped together to form a table in a database. d. Database tables are combined to form a database. e. Each field must be formatted as numeric.

e. Each field must be formatted as numeric.

Which of the following is NOT a true statement? a. Documentation tools save an organization both time and money b. Documentation tools are used extensively in the systems development process c. Data flow diagrams and flowcharts are the two most frequently used systems development documentation tools d. Data flow diagrams and flowcharts are easier to prepare and revise using software packages e. New auditors should disregard prior auditor's documentation of an audit clients' systems

e. New auditors should disregard prior auditor's documentation of an audit clients' systems

All of the following are advantages of an ERP system EXCEPT a. In an ERP, data input is captured or keyed once b. ERP permits management to gain greater visibility into the areas of the enterprise c. Data stored in an ERP's database is accessible by all of the ERP's application systems d. ERP's permit manufacturing plants to receive new orders in real time. e. Once purchased from a software company, an off-the-shelf (OTS) ERP system can be used almost immediately with very little setup, configuration, or customization

e. Once purchased from a software company, an off-the-shelf (OTS) ERP system can be used almost immediately with very little setup, configuration, or customization

Which of the following is NOT true about program flowcharts? a. Program flowcharts are typically prepared by personnel in an organization's information technology function b. Program flowcharts document the processing logic of computer programs c. A program flowchart will exist for every computer process symbol on a system flowchart d. Program flowcharts increase computer programmer productivity e. Program flowcharts are a high-level overview of all business processes

e. Program flowcharts are a high-level overview of all business processes

Which of the following statements is FALSE about the relationship between the general and subsidiary ledgers? a. The general ledger contains summary-level information about every asset, liability, equity, revenue, and expense account in an organization. b. The balances in general ledger accounts form the starting point for preparation of financial statements and various other financial reports. c. A subsidiary ledger account provides support for any general ledger account for which individual sub-accounts d. A subsidiary ledger records and maintains the detail-level information by having a separate record for each customer, vendor, inventory item, or fixed asset. e. The sum of the subsidiary ledger balances often do not equal the balances in the corresponding general ledger accounts.

e. The sum of the subsidiary ledger balances often do not equal the balances in the corresponding general ledger accounts.

Possible entities are Customers, Vendors, Employees, Purchase Orders, and Inventory Items. Which one of the fields listed below would most likely be contained in the Vendor table in a relational database? a. order quantity b. inventory item name c. on-hand quantity d. gender e. address

e. address

A consultant has been hired to analyze a company's legacy accounting information system and to recommend cost-effective improvements. After noting that the inventory, production, and sales departments use their own, in-house developed information systems that are entirely separated, and the company implement an off-the-shelf Enterprise Resource Planning (ERP). Implementation of the consultant's recommendation would benefit the company by contributing to all of the following EXCEPT data a. integration b. accuracy c. security d. sharing e. redundancies

e. redundancies

Anita Carmie is the largest collector and retailer of Japanese fans in the St. Louis area. Anita 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 Anita's database, all of the Japanese fans (as a whole) represent an

entity.

When printed on paper, data output is referred to as

hard copy

A facility that contains all the computing equipment the organization needs to perform its essential business activities is known as a

hot site

The logical view of a database systems refers to

how a user or programmer conceptually organizes and understands the data

The physical view of a database system refers to

how and where the data are physically arranged and stored.

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 non-financial information

A data flow diagram

is a graphical description of the source and destination of data that shows how data flow within an organization

This tests a numerical amount to ensure that it does not exceed a predetermined value.

limit check

In a data flow diagram that depicts a company's internal controls, where is each internal control typically explained in detail?

on a table that accompanies the internal control data flow diagram

In a database relationship between two tables in a Relational Database Management System (RDMS), a ________-to-many relationship exists between

one; the Primary Key of the Parent table and the Foreign Key of the Child table

Which of the following would NOT be found in a data dictionary entry for a data item?

physical location of the data

Data flow diagrams depict

processes, but not who is performing the processes

A purchase requisition is a common source document used to facilitate which business activity?

purchase request

When a computer system's files are automatically duplicated on a second data storage system as they are changed, the process is referred to as

real-time mirroring

The data processing method used by an airline to record customers' flight reservations is typically

real-time processing

A general journal would be used to

record monthly depreciation entries.

The database requirement that foreign keys must be null or have a value corresponding to the value of a primary key in another table is formally called the

referential integrity rule

A _________ ensures that input data will fit into the assigned field.

size check

When displayed on a monitor, data output is referred to as

soft copy

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