ACC 307 Midterm Gliem

Which one of the following statements about a management information system (MIS) is false? A. A MIS is best suited to solve problems when uncertainty is great and reporting requirements are ill-defined. B. A MIS is often fed with input by a transaction processing system. C. A MIS supports day-to-day operations by aggregating and formatting data about an organization's transactions. D. The information produced by a MIS is made available to middle management for use in controlling an organization's activities.

A MIS is best suited to solve problems when uncertainty is great and reporting requirements are ill-defined. Answer A is correct. A MIS is a system that collects, sorts, and processes operational financial and transactional data relevant to managerial and financial accounting. A MIS is concerned not only with reporting to external parties, but also with the internal activities needed for management decision making. A MIS is best suited to solve problems when reporting requirements are well defined. A decision support system is a better choice for problems in which decision making is less structured.

A database is A. A real-time system. B. A network of computer terminals. C. Essential for the storage of large data sets. D. A collection of related files.

A collection of related files. Answer D is correct. The use of a database system significantly reduces redundancy of stored data in a system. Data in a standardized form are ideally entered once into integrated files and then used for any and all related applications. The database is usually built to serve multiple applications. Consequently, the data are independent of particular applications and greater flexibility in meeting unanticipated demands is possible. The database approach also allows for better access by users and for more rapid updating of information.

The relationship between online, real-time database systems and batch processing systems is that A. A firm will not use batch processing if it has a large computer. B. A firm will always prefer an online, real-time processing system because batch processing is slow. C. A firm may use both processing modes concurrently. D. A firm will have only one processing mode because a single computer cannot do both.

A firm may use both processing modes concurrently. Answer C is correct. Firms may find it beneficial to incorporate both processing modes into one system. A database may be established for information that must be obtained quickly, for instance, a sales processing system in which credit information must be available to sales personnel on an ongoing basis. However, other processing requirements may take advantage of the speed and control provided in a batch processing system. For example, payroll transactions may be processed quickly and efficiently in a batch mode.

Which of the following is the best example of the use of a decision support system (DSS)? A. A manager uses the query language feature of a database management system (DBMS) to compile a report showing customers whose average purchase exceeds $2,500. B. A manager uses a personal-computer-based simulation model to determine whether one of the company's ships would be able to satisfy a particular delivery schedule. C. An auditor uses a generalized audit software package to retrieve several purchase orders for detailed vouching. D. An auditor uses a personal-computer-based word processing software package to modify an internal control questionnaire for a specific audit engagement.

A manager uses a personal-computer-based simulation model to determine whether one of the company's ships would be able to satisfy a particular delivery schedule. Answer B is correct. A decision support system (DSS) assists middle- and upper-level managers in long-term, nonroutine, and often unstructured decision making. The system contains at least one decision model, is usually interactive, dedicated, and time-shared, but need not be real-time. It is an aid to decision making, not the automation of a decision process. The personal-computer-based simulation model is used to provide interactive problem solving (i.e., scheduling) assistance, the distinguishing feature of a DSS.

Which of the following is a false statement about a database management system application environment? A. Data are shared by passing files between programs or systems. B. Data are used concurrently by multiple users. C. Data definition is independent of any one program. D. The physical structure of the data is independent of user needs.

A.)Data are shared by passing files between programs or systems. Answer A is correct. In this kind of system, applications use the same database. There is no need to pass files between applications.

Which one of the following statements about an accounting information system (AIS) is false? A. AIS is best suited to solve problems where there is great uncertainty and ill-defined reporting requirements. B. AIS is often referred to as a transaction processing system. C. AIS supports day-to-day operations by collecting and sorting data about an organization's transactions. D. The information produced by AIS is made available to all levels of management for use in planning and controlling an organization's activities.

AIS is best suited to solve problems where there is great uncertainty and ill-defined reporting requirements. Answer A is correct. An AIS is a subsystem of a management information system that processes financial and transactional data relevant to managerial and financial accounting. The AIS supports operations by collecting and sorting data about an organization's transactions. An AIS is concerned not only with external parties, but also with the internal activities needed for management decision making at all levels. An AIS is best suited to solve problems when reporting requirements are well defined. A decision support system is a better choice for problems in which decision making is less structured.

Batch processing A. Allows users to inquire about groups of information contained in the system. B. Is not used by most businesses because it reduces the audit trail. C. Accumulates transaction records into groups for processing against the master file on a delayed basis. D. Can only be performed on a centralized basis.

Accumulates transaction records into groups for processing against the master file on a delayed basis. Answer C is correct. Batch processing is the accumulation and grouping of transactions for processing on a delayed basis. The batch approach is suitable for applications that can be processed against the master file at intervals and involve large volumes of similar items, such as payroll, sales, inventory, and billing.

A decision support system A. Improves management productivity by automating the decision-making process. B. Searches for unexpected relationships among data. C. Provides immediate information about an organization's critical success factors. D. Allows for certain aspects of a problem to be preprogrammed.

Allows for certain aspects of a problem to be preprogrammed. Answer D is correct. A decision support system (DSS) does not automate a decision or provide structured information flows but rather allows for certain aspects of the problem to be preprogrammed and provides tools for an end user to employ in applying insight and judgment

How is an accounting information system (AIS) distinguished from a management information system (MIS)? A. An AIS may be either manual or computer based; a MIS is computer based. B. An AIS deals with financial information; a MIS handles all other information. C. An AIS is a subsystem within a MIS. D. An AIS is control oriented; a MIS is used exclusively for planning.

An AIS is a subsystem within a MIS. Answer C is correct. An information system transforms raw data into knowledge useful for decision making. A MIS provides information for management decisions. An AIS is a subsystem of a MIS and processes financial and transactional data relevant to managerial decisions as well as financial accounting.

A client would like to implement a management information system that integrates all functional areas within an organization to allow information exchange and collaboration among all parties involved in business operations. Which of the following systems is most effective for this application? A. A decision support system. B. An enterprise resource planning system. C. An office automation system. D. An executive support system.

An enterprise resource planning system. Answer B is correct. Enterprise Resource Planning (ERP) is the latest phase in the development of computerized systems for managing organizational resources. ERP is intended to integrate enterprise-wide information systems by creating one database linked to all of an organization's applications.

Which group of characteristics best describes decision support systems? A. Expert systems, model-based information, electronic data interchange, and the decision maker's own insights and judgments. B. Analytical models, specialized databases, interactive computer-based modeling processes, and the decision maker's own insights and judgments. C. Analytical models, applications models, and interactive computer-based modeling processes. D. Programming models and interactive computer-based modeling processes.

Analytical models, specialized databases, interactive computer-based modeling processes, and the decision maker's own insights and judgments. Answer B is correct. A decision support system (DSS) assists middle- and upper-level managers in long-term, nonroutine, and often unstructured decision making. The system combines data, decision models, and user-friendly software to provide end users with capabilities for analysis rather than specified information flows. It is an aid to decision making, not the automation of a decision process.

In business information systems, the term "stakeholder" is best described by which of the following? A. Information technology personnel responsible for creating the documents and data stored on the computers or networks. B. The management team responsible for the security of the documents and data stored on the computers or networks. C. Anyone in the organization who has a role in creating or using the documents and data stored on the computers or networks. D. Authorized users who are granted access rights to the documents and data stored on the computers or networks.

Anyone in the organization who has a role in creating or using the documents and data stored on the computers or networks. Answer C is correct. Stakeholders are those who affect, or are affected by, the output of the information system. They have an interest in the system's effective and efficient functioning. Hence, they include users such as managers, employees, IT personnel, suppliers, and customers.

During the annual audit, it was learned from an interview with the controller that the accounting system was programmed to use a batch processing method and a detailed posting type. This would mean that individual transactions were A.)Assigned to groups before posting, and each transaction had its own line entry in the appropriate ledger. B. Posted upon entry, and each transaction group had a cumulative entry total in the appropriate ledger. C. Assigned to groups before posting, and each transaction group had a cumulative entry total in the appropriate ledger. D. Posted upon entry, and each transaction had its own line entry in the appropriate ledger.

Assigned to groups before posting, and each transaction had its own line entry in the appropriate ledger. Answer A is correct. In batch processing, transactions are accumulated and submitted to the computer as a single batch. A detailed posting type provides each transaction with its own line entry in the appropriate ledger.

At a remote computer center, management installed an automated scheduling system to load data files and execute programs at specific times during the day. The best approach for verifying that the scheduling system performs as intended is to A. Simulate the resource usage and compare the results with actual results of operations. B. Audit job accounting data for file accesses and job initiation/termination messages. C. Use library management software to track changes to successive versions of applications programs. D. Analyze job activity with a queuing model to determine workload characteristics.

Audit job accounting data for file accesses and job initiation/termination messages. Answer B is correct. Job accounting data analysis permits programmatic examination of job initiation and termination, record counts, and processing times. Auditing job accounting data for file accesses and job initiation/termination messages will reveal whether the right data files were loaded/dismounted at the right times and the right programs were initiated/terminated at the right times.

Which of the following features is classified as part of an expert system? A. Use of electronic mail to route and approve purchase requisitions. B. Automatic obligation of budget funds as soon as an order is issued. C. Automatic placement of orders with suppliers who currently offer the best combination of price, freight cost, and delivery time. D. Issuance of purchase requisition notices as soon as the on-hand balance reaches the reorder point.

Automatic placement of orders with suppliers who currently offer the best combination of price, freight cost, and delivery time. Answer C is correct. The automatic placement of orders with the best combination of price, freight, and delivery time requires the maintenance of a database for all suppliers that is constantly changing as terms and conditions change. It simulates the decision process used by purchase managers.

A payroll system's master file is processed at night once every 2 weeks. There is relatively little file maintenance required. Which of the following is most likely to be the appropriate processing method under the circumstances? A. Batch. B. Network. C. Parallel. D. Online, real-time.

Batch. Answer A is correct. Batch processing is the accumulation and grouping of transactions for processing on a delayed basis. The batch approach is suitable for applications that can be processed at intervals and involve large volumes of similar items, e.g., payroll, sales, inventory, and billing.

A company updates the payroll master file at the end of the week. The payroll time cards are transported to the computer center for processing. The sequence of events followed by the computer center in updating its master file should be A. Converting to machine-readable form, batching records of transactions, validating input, updating the master. B. Batching records of transactions, converting to machine-readable form, validating input, updating the master. C. Validating input, batching records of transactions, converting to machine-readable form, updating the master. D. Batching records of transactions, validating input, converting to machine-readable form, updating the master.

Batching records of transactions, converting to machine-readable form, validating input, updating the master. Answer B is correct. Batching is the collection and grouping of similar input records for processing. Information must be converted to machine language so the computer can read it. Validating input is checking the validity of account numbers, customer numbers, etc., included in the batched input records. The master file contains current or almost current records. The transaction (i.e., batch) file must be processed against the master file to bring the almost current records to a current state.

Batch and online processing modes A. Are forms of real-time processing. B. Can be used in combination in a single application. C. Are mutually exclusive. D. Are outmoded means of processing data.

Can be used in combination in a single application. Answer B is correct. Batch and online modes can be combined in a single application.

Which of the following is a primary function of a database management system? A. Report customization. B. Capability to create and modify the database. C. Database access authorizations. D. Financial transactions input.

Capability to create and modify the database. Answer B is correct. A database management system (DBMS) is an integrated set of software tools superimposed on the data files that helps maintain the integrity of the underlying database. It allows programmers and designers to work independently of the physical and logical structure of the database. With a DBMS, the physical structure of the database can be completely altered without having to change any of the programs using the data items.

Which one of the following distinguishes a management information system from a transaction processing system? A. Production of reports to support operations. B. Maintenance of a structured database. C. Automation of routine transaction processing. D. Capability to provide data for decision-making support.

Capability to provide data for decision-making support. Answer D is correct. A management information system (MIS) provides managers with the information they need for analysis, planning, control, and decision making. A transaction processing system (TPS) supports the ongoing routine operations of an organization.

A principal advantage of an ERP system is A. Data redundancy. B. Program-data dependence. C. Centralization of data. D. Separate data updating for different functions.

Centralization of data. Answer C is correct. An advantage of an ERP system is the elimination of data redundancy through the use of a central database. In principle, information about an item of data is stored once, and all functions have access to it. Thus, when the item (such as a price) is updated, the change is effectively made for all functions. The result is reliability (data integrity).

What is the correct ascending hierarchy of data in a system? A. Field, record, file, character. B. Character, field, record, file. C. Character, record, file, field. D. Field, character, file, record.

Character, field, record, file. Answer B is correct. A character (byte) is composed of a group of bits, a field is a group of bytes, a record is a group of fields, and a file is a group of records.

Which of the following characteristics distinguishes computer processing from manual processing? A. Most computer systems are designed so that transaction trails useful for audit purposes do not exist. B. Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing. C. The potential for systematic error is ordinarily greater in manual processing than in computerized processing. D. Errors or fraud in computer processing will be detected soon after their occurrence.

Computer processing virtually eliminates the occurrence of computational error normally associated with manual processing. Answer B is correct. Computer processing uniformly subjects like transactions to the same processing instructions. A computer program defines the processing steps to accomplish a task. Once the program is written and tested appropriately, it will perform the task repetitively and without error. However, if the program contains an error, all transactions will be processed incorrectly.

Which of the following is a false statement about XBRL? A. XBRL is freely licensed. B. XBRL facilitates the automatic exchange of information. C. XBRL is designed to work with a variety of software applications. D. XBRL is used primarily in the U.S.

Correct XBRL is used primarily in the U.S. Answer D is correct. XBRL (eXtensible Business Reporting Language) was developed for business and accounting applications. It is an XML-based application used to create, exchange, and analyze financial reporting information that was developed for worldwide use.

A computer network has the ability to produce output on laser printers in departments. Users specify where their output is to be printed, but some users give the wrong destination code and tie up others' printers needlessly. The best approach for ensuring that printing occurs on the right device is to A. Train current users in how to specify the right designation codes for their printing. B. Put all the printers in one location so that it is irrelevant which device does the printing. C. Create destination defaults for printing based on each employee's departmental affiliation. D. Permit departments to cancel printing that does not belong to one of its employees.

Create destination defaults for printing based on each employee's departmental affiliation. Answer C is correct. A default setting is an automatic setting in a program. The user is not required to enter the information unless (s)he wants to change it. Thus, if defaults are created based on employees' departmental affiliations, users will not have the opportunity to enter incorrect codes.

An overall description of a database, including the names of data elements, their characteristics, and their relationship to each other, is defined by using a A. Data control language. B. Data manipulation language. C. Data definition language. D. Data command interpreter language.

Data definition language. Answer C is correct. The data definition language defines the database structure and content, especially the schema (the description of the entire database) and subschema (logical views of the database). The schema specifies characteristics such as the names of the data elements contained in the database and their relationship to each other. The subschema defines the logical data views required for applications, which limits the data elements and functions available to each application.

Which one of the following features is least likely to apply to the transaction processing cycle of an accounting information system? A. Data records are chiefly historical in nature. B. Data records are the basis of predictive systems. C. Most of the sources of data are an organization's recurring transactions. D. Data are usually financial in nature.

Data records are the basis of predictive systems. Answer B is correct. An AIS is a subsystem of a management information system that processes financial and transactional data relevant to managerial and financial accounting. The AIS supports operations by collecting and sorting historical data about an organization's transactions. An AIS is concerned not only with external parties but also with the internal activities needed for management decision making at all levels. An AIS is best suited to solve problems when reporting requirements are well defined. An AIS does not typically use records based on predictive systems, which would be a feature of a decision support system.

Of the following, the greatest advantage of a database (server) architecture is that A. Conversion to a database system is inexpensive and can be accomplished quickly. B. Data redundancy can be reduced. C. Multiple occurrences of data items are useful for consistency checking. D. Backup and recovery procedures are minimized.

Data redundancy can be reduced. Answer B is correct. Data organized in files and used by the organization's various application programs are collectively known as a database. In a database system, storage structures are created that render the applications programs independent of the physical or logical arrangement of the data. Each data item has a standard definition, name, and format, and related items are linked by a system of pointers. The programs therefore need only specify data items by name, not by location. A database management system handles retrieval and storage. Because separate files for different application programs are unnecessary, data redundancy can be substantially reduced.

Devices that are used only to perform sequential file processing will not permit A. Batch processing to be initiated from a terminal. B. Data to be edited on a real-time basis. C. The use of a database structure. D. Data to be edited in an offline mode.

Data to be edited on a real-time basis. Answer B is correct. In an online, real-time system, direct (random), not sequential, access to files is required. As each transaction is entered, it is edited (validated). Files can then be immediately updated to reflect that transaction. Sequential file access is typical of (but not required in) batch processing.

DB2, Oracle, SQL Server, and Access are A. Access control systems. B. Programming languages. C. Library systems. D. Database management systems.

Database management systems. Answer D is correct. A database management system (DBMS) is an integrated set of computer programs that create the database, maintain the elements, safeguard the data from loss or destruction, and make the data available to application programs and inquiries. The items listed are relational DBMS packages. DB2 (IBM) and Oracle (Oracle Corp.) are used in mainframes and mid-range systems (e.g., servers). SQL Server (Microsoft) is also used in mid-range systems. Access (Microsoft) is a DBMS system for personal computers.

Which of the following statements regarding decision support systems is generally true? A. A decision support system should be designed to provide specific answers and a predefined sequence of analysis. B. A decision support system best supports very structured applications. C. Decision support systems facilitate solving relatively unstructured problems. D. Decision support systems are usually developed most successfully by using a system development life cycle approach.

Decision support systems facilitate solving relatively unstructured problems. Answer C is correct. The decision support system (DSS) assists a decision maker by allowing him or her to access data and to test different solutions to the problem. This system only supplies support and should not take the place of the decision maker's insights and judgment.

Early decision models used with structured decisions, such as inventory reordering and production scheduling, emphasized finding the structure of the decision and programming as much of it as possible. More recent models have been developed to support unstructured decision processes. Models of the latter type are called A. Decision support systems. B. Management information systems. C. Rational decision models. D. Systems analysis techniques.

Decision support systems. Answer A is correct. A decision support system (DSS) assists middle- and upper-level managers in long-term, nonroutine, and often unstructured decision making. It is an aid to decision making, not the automation of a decision process.

The function of a data dictionary is to A. Describe and share information about objects and resources. B. Mark the boundary between two consecutive transactions. C. Specify privileges and security rules for objects and resources. D. Specify systems users.

Describe and share information about objects and resources. Answer A is correct. A data dictionary is an organized and shared collection of information about the objects and resources used by the information system (IS) organization to deliver or exchange information internally and externally.

Most client-server applications operate on a three-tiered architecture consisting of which of the following layers? A. Desktop client, application, and database. B. Desktop server, application, and database. C. Desktop server, software, and hardware. D. Desktop client, software, and hardware.

Desktop client, application, and database. Answer A is correct. A client-server system divides processing of an application between a client machine on a network and a server. This division depends on which tasks each is best suited to perform. User interaction is ordinarily restricted to the client part of the application. This portion normally consists of the user interface, data entry, queries, and receipt of reports. Moreover, many applications, e.g., word processing and spreadsheet software, reside on the client computer (a desktop, workstation, or laptop). The server customarily manages peripheral hardware and controls access to shared databases. Thus, a client-server application must be designed as separate software components that run on different machines but appear to be one application.

Transaction processing systems frequently support the inquiry of online database users. Inquiry processing includes all of the following characteristics except that A. End users may write their own queries. B. Responses are in a prespecified format displayed on the end user's terminal. C. It is dependent on the use of telecommunication networks and database management query languages. D. End users are allowed to make changes to the records retrieved.

End users are allowed to make changes to the records retrieved. Answer D is correct. Inquiry processing in a database system can be the result of either batch or real-time processing. An inquiry system requires the use of sophisticated hardware and software, including a database query language. Responses are in a prespecified format. End users receive responses concerning the results of transaction activities but are not allowed to make changes to the records retrieved.

Which of the following systems assists with nonroutine decisions, serves strategic levels of the organization, and helps answer questions regarding what a company's competitors are doing, as well as identifies new acquisitions that would protect the company from cyclical business swings? A. Management information system. B. Executive support system. C. Transaction processing system. D. Decision support system.

Executive support system. Answer B is correct. An executive support system (ESS) assists senior management in making nonroutine decisions, such as identifying problems and opportunities. An ESS also provides information about the activities of competitors.

The purchasing department buys cleaning compound from four different companies. The computerized purchasing system uses a decision table to select a vendor based on continually changing costs, delivery dates, and past experience. This is an example of a(n) A. Chargeback system. B. Parallel simulation. C. Expert system. D. Base case system evaluation.

Expert system. Answer C is correct. Expert systems are systems that emulate management decision rules and can learn as the environment changes. In this case, as suppliers change their terms and prices, the system will learn new combinations that minimize total order cost.

Which one of the following incorporates making the best decisions possible, using a logical approach by asking a series of questions, by using reasoning, and by allowing subjective inputs and outputs? A. Decision support systems. B. Teleprocessing. C. Multi-networking. D. Expert systems.

Expert systems. Answer D is correct. An expert system is software designed to perceive, reason, and understand. An expert system is an interactive system that asks a series of questions and uses knowledge gained from a human expert to analyze answers and come to a decision. The system is developed by using a continuous process of revision. As new knowledge or decision-making strategies become available, the information can be incorporated into the system.

Which of the following technologies is specifically designed to exchange financial information over the World Wide Web? A. Extensible business reporting language (XBRL). B. Transmission control program/internet protocol (TCP/IP). C. Hypertext markup language (HTML). D. Hypertext transfer protocol (HTTP).

Extensible business reporting language (XBRL). Answer A is correct. XBRL is the specification developed for commercial and industrial entities. It is expected to decrease the costs of generating financial reports, reformulating information for different uses, and sharing business information using electronic media. The SEC allows firms to report using XBRL.

In an inventory system on a database, one stored record contains part number, part name, part color, and part weight. These individual items are called A. Occurrences. B. Bytes. C. Stored files. D. Fields.

Fields. Answer D is correct. A record is a collection of related data items (fields). A field (data item) is a group of characters representing one unit of information.

Remote batch processing avoids the need for having A. Terminals at each user location. B. File updating at each user location. C. Input controls at each user location. D. Printers at each user location.

File updating at each user location. Answer B is correct. Batch processing is the accumulation and grouping of transactions for processing on a delayed basis. The batch approach is suitable for applications involving large volumes of similar items, e.g., payroll, sales, and inventory transactions. Remote batch processing (remote job entry) entails collection and entry of data from places other than the location of the file updating.

Which of the following structures refers to the collection of data for all vendors in a relational data base? A. File. B. Field. C. Record. D. Byte.

File. Answer A is correct. A file is a group of records. Each record refers to the collection of data for a specific vendor in the data base.

Advanced electronic point-of-sale (POS) systems allow instant capture and transmission of information for which purposes? I. Instant updating of accounting records II. Accumulation of marketing information III. Tracking of information about specific customers IV. Facilitation of warehousing A. I, II, and III only. B. III and IV only. C. I, II, III, and IV. D. I and II only.

I, II, III, and IV. Answer C is correct. An electronic POS system may update and analyze the perpetual inventory records for each outlet. It may also perform other accounting tasks, such as crediting revenue accounts and debiting cash, accounts receivable, and cost of goods sold. Moreover, a POS system may (1) provide marketing information to identify and respond to trends; (2) make sales forecasts; (3) determine which products are in demand; (4) improve customer service; (5) target products and promotions to customers with different demographic traits; and (6) evaluate the effects of promotions, including coupons. Another function of a POS system is to record personal and transactional information about specific customers, including tracking of warranties, deposits, rentals, progressive discounts, and special pricing. Still another function is use of bar coding in association with the stocking and warehousing functions to reduce the costs of data entry, including the effects of human error.

One of the principal objectives of a database system is to A. Reduce the overall complexity of data processing and data storage. B. Employ physical rather than logical data organization concepts. C. Improve data consistency by reducing data redundancy. D. Provide application programs with their own separate data files.

Improve data consistency by reducing data redundancy. Answer C is correct. In a database, storage structures are created that render the applications programs independent of the physical or logical arrangement of the data. Each data item has a standard definition, name, and format, and related items are linked by a system of pointers. The programs therefore only need to specify data items by name, not by location. A database management system handles retrieval and storage. Because separate files for different applications programs are unnecessary, data redundancy and inconsistency can be substantially reduced.

An enterprise resource planning (ERP) system has which of the following advantages over multiple independent functional systems? A. Reduction in costs for implementation and training. B. Increased amount of data redundancy since more than one module contains the same information. C. Modifications can be made to each module without affecting other modules. D. Increased responsiveness and flexibility while aiding in the decision-making process.

Increased responsiveness and flexibility while aiding in the decision-making process. Answer D is correct. ERP is the latest phase in the development of computerized systems for managing organizational resources. ERP is intended to integrate enterprise-wide information systems by creating one database linked to all of an organization's applications. The current generation of ERP software connects the organization with customers, suppliers, owners, creditors, and strategic allies. This increased integration allows for quicker response time and more flexibility.

The four major tasks that any system must perform are A. Input, backup, output, and storage. B. Input, transformation, storage, and feedback. C. Input, transformation, output, and maintenance. D. Input, transformation, output, and storage.

Input, transformation, output, and storage. Answer D is correct. The four major tasks that any system must perform are input, transformation, output, and storage.

An enterprise resource planning system is designed to A. Present executives with the information needed to make strategic plans. B. Help with the decision-making process. C. Allow nonexperts to make decisions about a particular problem. D. Integrate data from all aspects of an organization's activities.

Integrate data from all aspects of an organization's activities. Answer D is correct. An enterprise resource planning system is intended to integrate enterprise-wide information systems by creating one database linked to all of an organization's applications.

Which one of the following terms best describes a decision support system (DSS)? A. Formalized system. B. Management reporting system. C. Interactive system. D. Accounting information system.

Interactive system. Answer C is correct. A decision support system is an interactive system that is useful in solving semistructured and unstructured problems, that is, those requiring a top-management or middle-management decision maker to exercise judgment and to control the process. A DSS does not automate a decision or provide structured information flows but rather provides tools for an end user to employ in applying insight and judgment. The system must be interactive to permit the user to explore the problem by using the computational capacities, models, assumptions, data resources, and display graphics of the DSS.

An organization has made available the company newsletter and job openings on the network such that only employees of the organization may view them. The organization is using a(n) A. Extranet. B. Firewall. C. Intranet. D. Client-server architecture.

Intranet. Answer C is correct. An intranet permits sharing of information throughout an organization by applying Internet connectivity standards and Web software (e.g., browsers) to the organization's internal network. An intranet addresses the connectivity problems faced by organizations that have many types of computers.

In a business information system, which of the following types of computer files most likely would be a master file? A. Inventory subsidiary. B. Payroll transactions. C. Cash disbursements. D. Cash receipts.

Inventory subsidiary. Answer A is correct. A master file is permanent information that is updated for the effects of transactions. In online processing, it is immediately updated. In batch processing, transactions are accumulated in a sorted transaction file, with periodic updating to create a new master file. Thus, an inventory subsidiary account is recorded in a master file.

XML A. Is focused on the content of the data. B. Is useful to display highly unstructured data. C. Has become less important as new languages on the Internet are developed. D. Uses standardized tags.

Is focused on the content of the data. Answer A is correct. XML (eXtensible Markup Language) is useful for putting structured data into a text file. It can be used to extract and tag structured information from a database for transmission and subsequent use in other applications, e.g., display on the Internet or importation into a spreadsheet.

Which of the following statements most likely represents a disadvantage for an entity that keeps digital computer files rather than manually prepared files? A. Random error associated with processing similar transactions in different ways is usually greater. B. Attention is focused on the accuracy of the programming process rather than errors in individual transactions. C. It is usually more difficult to compare recorded accountability with physical count of assets. D. It is usually easier for unauthorized persons to access and alter the files.

It is usually easier for unauthorized persons to access and alter the files. Answer D is correct. In a manual system, one individual is assigned responsibility for maintaining and safeguarding the records. However, in a computer environment, the data files may be subject to change by others without documentation or indication of who made the changes.

The primary purpose of a database system is to have a single storage location for each A. Database. B. Item of data. C. File. D. Record.

Item of data. Answer B is correct. Databases allow companies to save data (information) in one place instead of having hundreds of specific files with similar data.

A file containing relatively long-term information used as a source of reference and periodically updated with detail is termed a A. Master file. B. Transaction file. C. Dump. D. Record layout.

Master file. Answer A is correct. A master file containing relatively long-term information, such as an inventory file listing the part number, description, quantities on hand, quantities on order, etc., is used in a file processing run. Transactions are processed against the master file, thus periodically updating it.

Management information systems represent a significant investment by most businesses. A primary concern of management is that the system A. Employ the latest technology. B. Might consume too much time and money during testing. C. Was designed using CASE (Computer-Aided Software Engineering) tools rather than traditional methods. D. Meet the business needs of the organization.

Meet the business needs of the organization. Answer D is correct. A management information system (MIS) provides information for management decisions. The MIS must meet the needs of the organization or the cost will exceed any benefit to a business.

The finance department is evaluating two accounts receivable transaction processing systems. System A provides for batch processing twice weekly. System B provides online real-time processing. Which of the following requirements is most important in determining whether to adopt system A or system B? A. Accuracy of weekly accounts receivable aging report. B. Need for controls that validate transactions. C. Need to immediately answer customers' questions regarding account balances. D. Accuracy of monthly general ledger balance.

Need to immediately answer customers' questions regarding account balances. Answer C is correct. Batch processing is the accumulation and grouping of transactions for processing on a delayed basis. In a real-time system, having the latest information available at all times is crucial for making immediate decisions. Therefore, if the department needs to immediately answer customers' questions regarding account balances, it should adopt online real-time processing.

A new purchasing system for just-in-time production requirements has been proposed. Users want access to current master file information at all times. To satisfy user needs, master file changes should be implemented with A. Periodic entry with subsequent batch processing. B. Online entry with immediate processing. C. Online entry with subsequent batch processing. D. Periodic entry with immediate batch processing.

Online entry with immediate processing. Answer B is correct. JIT production attempts to minimize inventory by more closely coordinating deliveries of needed materials and production. Thus, inventory data must be current. Online entry with immediate (real-time) processing gives users current master file information because changes are entered and applied to the master file as they occur. However, check printing can still occur in batch mode.

The concept of timeliness of data availability is most relevant to A. Computerized systems. B. Payroll systems. C. Manual systems. D. Online systems.

Online systems. Answer D is correct. An online processing system is in direct communication with the computer, giving it the capability to handle transactions as they are entered. An online system permits both immediate posting (updating) and inquiry of master files as transactions occur. In an online system, data are immediately available to users upon entry.

What type of computer processing system is characterized by data that are assembled from more than one location and records that are updated immediately? A. Personal computer systems. B. Data compression systems. C. Online, real-time systems. D. Batch processing systems.

Online, real-time systems. Answer C is correct. Real-time processing involves processing an input record and receiving the output soon enough to affect a current decision-making process. In a real-time system, the user interacts with the system to control an ongoing activity. Online indicates that the decision maker is in direct communication with the computer. Online, real-time systems usually permit access to the server computer system from multiple remote terminals.

Which of the following is a critical success factor in data mining a large data store? A. Effective search engines. B. Pattern recognition. C. Image processing systems. D. Accurate universal resource locator (URL).

Pattern recognition. Answer B is correct. Data mining allows a user to discover hidden relationships, such as associations, sequences of events, classifications (descriptions of the groups to which the item belongs), or clusters (new groupings previously not known). Typical applications of data mining are identification of potential customers and purchasing power.

An advantage of using systems flowcharts to document information about internal control instead of using internal control questionnaires is that systems flowcharts A. Identify internal control deficiencies more prominently. B. Provide a visual depiction of clients' activities. C. Reduce the need to observe clients' employees performing routine tasks. D. Indicate whether controls are operating effectively.

Provide a visual depiction of clients' activities. Answer B is correct. Systems flowcharts provide a visual representation of a series of sequential processes, that is, of a flow of documents, data, and operations. In many instances, a flowchart is preferable to a questionnaire because a picture is usually more easily comprehended.

Business intelligence (BI) has all of the following characteristics except A. Providing advice and answers to top management from a knowledge-based system. B. Focusing on strategic objectives. C. Giving immediate information about an organization's critical success factors. D. Displaying information in graphical format.

Providing advice and answers to top management from a knowledge-based system. Answer A is correct. BI serves the needs of top management for managerial control and strategic planning. BI focuses on strategic (long-range) objectives and gives immediate information about a firm's critical success factors. BI is not a program for providing top management with advice and answers from a knowledge-based (expert) system.

An accounting information system (AIS) must include certain source documents in order to control purchasing and accounts payable. For a manufacturing organization, the best set of documents should include A. Purchase orders, receiving reports, and vendor invoices. B. Purchase requisitions, purchase orders, receiving reports, and vendor invoices. C. Purchase requisitions, purchase orders, inventory reports of goods needed, and vendor invoices. D. Purchase orders, receiving reports, and inventory reports of goods needed.

Purchase requisitions, purchase orders, receiving reports, and vendor invoices. Answer B is correct. An AIS is a subsystem of a management information system that processes financial and transactional data relevant to managerial and financial accounting. The AIS supports operations by collecting and sorting data about an organization's transactions. An AIS is concerned not only with external parties but also with the internal activities needed for management decision making at all levels. An AIS is best suited to solve problems when reporting requirements are well defined. A manufacturer has well-defined reporting needs for routine information about purchasing and payables. Purchase requisitions document user department needs, and purchase orders provide evidence that purchase transactions were appropriately authorized. A formal receiving procedure segregates the purchasing and receiving functions and establishes the quantity, quality, and timeliness of goods received. Vendor invoices establish the liability for payment and should be compared with the foregoing documents.

What type of computerized data processing system would be most appropriate for a company that is opening a new retail location? A. Direct-access processing. B. Real-time processing. C. Sequential-file processing. D. Batch processing.

Real-time processing. Answer B is correct. Real-time processing is most useful in systems that require having the latest information available at all times. In a retail environment, such a system would potentially allow the company to track inventory, cash, labor, etc., as they change.

Mill Co. uses a batch processing method to process its sales transactions. Data on Mill's sales transaction file are electronically sorted by customer number and are subjected to programmed edit checks in preparing its invoices, sales journals, and updated customer account balances. One of the direct outputs of the creation of this file most likely would be am A. Printout of the sales price master file. B. Printout of the updated inventory records. C. Report showing exceptions and control totals. D. Report showing overdue accounts receivable.

Report showing exceptions and control totals. Answer C is correct. Batch processing is useful for processing large volumes of data, especially when sorted in sequential order, for example, by customer number. Editing (validation) of data should produce a cumulative automated error listing that includes not only errors found in the current processing run but also uncorrected errors from earlier runs. Each error should be identified and described, and the date and time of detection should be given. The creation of the file also generates various totals that serve as controls over the accuracy of the processing.

A logical view of an entire database is a A. Hierarchy. B. Network. C. Schema. D. Subschema.

Schema. Answer C is correct. The schema is the description of the structure or organization of the database using data description language. Either the physical or the logical structure of the database can be completely altered without having to change any of the programs using the data items; only the schema requires alteration. Data-description (or definition) language is used in database management systems to define not only the schema but also the structure of the portion of the database that each application program is authorized to access (subschema) and individual data items.

Compared to online real-time processing, batch processing has which of the following disadvantages A. Stored data are current only after the update process. B. Additional personnel are required. C. A greater level of control is necessary. D. Additional computing resources are required.

Stored data are current only after the update process. Answer A is correct. In batch processing, transactions are gathered throughout the workday and stored offline until a period, often overnight, when computer resources are freed up. These collections of transactions, called "batches," are then processed as a group. During the limbo period between entry and storage of the transactions and processing of the batch, the database is not current.

When documenting internal control, the independent auditor sometimes uses a systems flowchart, which can best be described as a A. Diagram that clearly indicates an organization's internal reporting structure. B. Graphic illustration of the flow of operations that is used to replace the auditor's internal control questionnaire. C. Pictorial presentation of the flow of instructions in a client's internal computer system. D. Symbolic representation of a system or series of sequential processes.

Symbolic representation of a system or series of sequential processes. Answer D is correct. A systems flowchart is a symbolic representation of the flow of documents and procedures through a series of steps in the accounting process of the client's organization.

Enabling users to have different views of the same data is a function of A. The database management system. B. A program library management system. C. A utility program. D. The operating system.

The database management system. Answer A is correct. A database is characterized by the independence of applications from the physical arrangement of the data. Application programmers define a user view (external schema) of the data and write program instructions using a programming language interface with the DBMS. Consequently, programs need not specify the location of a data item. Only the name of the item is necessary. The DBMS mediates between user view and the actual physical arrangement of the data. Hence, different users (applications) may create different views of the data.

One advantage of a database management system (DBMS) is A. A decreased vulnerability as the database management system has numerous security controls to prevent disasters. B. Each organizational unit takes responsibility and control for its own data. C. The cost of the data processing department decreases as users are now responsible for establishing their own data handing techniques. D. The independence of the data from the application programs, which allows the programs to be developed for the user's specific needs without concern for data capture problems.

The independence of the data from the application programs, which allows the programs to be developed for the user's specific needs without concern for data capture problems. Answer D is correct. A fundamental characteristic of databases is that applications are independent of the database structure; when writing programs or designing applications to use the database, only the name of the desired item is necessary. Programs can be developed for the user's specific needs without concern for data capture problems. Reference can be made to the items using the data manipulation language, after which the DBMS takes care of locating and retrieving the desired items. The physical or logical structure of the database can be completely altered without having to change any of the programs using the data items. Only the schema requires alteration.

An enterprise resource planning (ERP) system integrates the organization's computerized subsystems and may also provide links to external parties. An advantage of ERP is that A. It can be installed by organizations of all sizes. B. The comprehensiveness of the system reduces resistance to change. C. The reengineering needed for its implementation should improve business processes. D. Customizing the software to suit the unique needs of the organization will facilitate upgrades.

The reengineering needed for its implementation should improve business processes. Answer C is correct. The benefits of ERP may significantly derive from the business process reengineering that is needed for its implementation. Using ERP software that reflects industry best practices forces the linked subunits in the organization not only to redesign and improve their processes but also to conform to one standard.

A small client recently put its cash disbursements system on a server. About which of the following internal control features would an auditor most likely be concerned? A. Only one employee has the password to gain access to the cash disbursement system. B. There are restrictions on the amount of data that can be stored and on the length of time that data can be stored. C. Programming of the applications are in BASIC, although COBOL is the dominant, standard language for business processing. D. The server is operated by employees who have cash custody responsibilities.

The server is operated by employees who have cash custody responsibilities. Answer D is correct. Separation of duties is a basic category of control activities (AU-C 315). Functions are incompatible if a person is in a position both to perpetrate and conceal fraud or errors. Hence, the duties of authorizing transactions, recording transactions, and custody of assets should be assigned to different people. Those employees that operate the server may be able to override the controls to change records to conceal a theft of cash.

Compared to batch processing, real-time processing has which of the following advantages? A. Timeliness of information. B. Ease of implementation. C. Efficiency of processing. D. Ease of auditing.

Timeliness of information. Answer A is correct. Real-time processing involves processing an input record and receiving the output soon enough to affect a current decision-making process. Thus, the emphasis is on receiving the output in a timely fashion. In comparison, the batch approach is suitable for applications that can be processed at intervals.

The normal sequence of documents and operations on a well-prepared systems flowchart is A. Top to bottom and right to left. B. Top to bottom and left to right. C. Bottom to top and right to left. D. Bottom to top and left to right.

Top to bottom and left to right. Answer B is correct. The direction of flow in the normal sequence of documents and operations on a well-prepared systems flowchart is from top to bottom and from left to right.

In a manual system, records of current activity are posted from a journal to a ledger. In a computer system, current records from a(n) A. Index file are updated to a master file. B. Transaction file are updated to a master file. C. Table file are updated to a transaction file. D. Master file are updated to a year-to-date file.

Transaction file are updated to a master file. Answer B is correct. The initial collection of the transactions (e.g., credit sales transactions) in a computer-maintained accounting system is termed the transaction file. The master file (e.g., accounts receivable file) is periodically updated with the transaction file.

Which of the following terms best describes a payroll system? A. Transaction processing system (TPS). B. Decision support system (DSS). C. Data base management system (DBMS). D. Enterprise resource planning (ERP) system.

Transaction processing system (TPS). Answer A is correct. Information systems that support routine processes in an organization include, among others, the transaction processing system (TPS). A transaction is a single, discrete event that can be captured by an information system. A TPS therefore captures the fundamental data that reflect the economic life of an organization. A payroll system is one of the most routine processes necessary to conduct the organization's business.

Enterprise resource planning (ERP) software packages, such as SAP R/3 and Oracle, are all-inclusive systems that attempt to provide entity-wide information. ERP systems provide advantages to an organization's auditors because they A. Typically have built-in transaction logs and ability to produce a variety of diagnostic reports. B. Have been installed by smaller firms so, to date, few auditors have encountered them. C. Typically require firms to reduce the division of duties and responsibilities found in traditional systems. D. Have proven difficult for some firms to install.

Typically have built-in transaction logs and ability to produce a variety of diagnostic reports. Answer A is correct. ERP systems have a variety of controls and report generation functions that allow auditors to abstract and monitor data collected and processed. Some ERP systems have built-in audit functions.

An auditor's flowchart of a client's accounting system is a diagrammatic representation that depicts the auditor's A. Assessment of the risks of material misstatement. B. Understanding of the system. C. Identification of weaknesses in the system. D. Assessment of the control environment's effectiveness.

Understanding of the system. Answer B is correct. The auditor should document (1) the understanding of the entity and its environment and the components of internal control, (2) the sources of information regarding the understanding, and (3) the risk assessment procedures performed. The form and extent of this documentation are influenced by the nature and complexity of the entity's controls (AU-C 315). For example, documentation of the understanding of internal control of a complex information system in which many transactions are electronically initiated, authorized, recorded, processed, or reported may include questionnaires, flowcharts, or decision tables.