Deck 1: Accounting Information Systems: an Overview

Question 1

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

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

Answer 1

D

Question 2

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

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

Answer 2

A

Question 3

When two knowledgeable people acting independently each produce the same information,this information is said to be

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

Answer 3

D

Question 4

The AIS must include controls to ensure

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

Question 5

The value chain concept is composed of two types of activities known as

A) primary and support.
B) primary and secondary.
C) support and value.
D) technology and support.

Question 6

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

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

Question 7

The process of creating value for customers is the result of nine activities that form a

A) value chain.
B) profitable operation.
C) successful business.
D) support system.

Question 8

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

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

Question 9

The primary objective of accounting is to

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

Question 10

The value of information can best be defined as

A) how useful it is to decision makers.
B) the benefits produced by possessing and using the information minus the cost of producing it.
C) how relevant it is.
D) the extent to which it maximizes the value chain.

Question 11

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

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

Question 12

Which of the following statements below shows the contrast between data and information?

A) Data is the output of an AIS.
B) Information is the primary output of an AIS.
C) Data is more useful in decision-making than information.
D) Data and information are the same.

Question 13

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

A) Internal controls and security measures
B) People
C) Procedures and instructions
D) Hardware

Question 14

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) recording of sales calls for marketing purposes

Question 15

Information that reduces uncertainty,improves decision makers' ability to make predictions,or confirms or corrects their prior expectations,is said to be

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

Question 16

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

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

Question 17

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

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

Question 18

Information is

A) basically the same as data.
B) raw facts about transactions.
C) potentially useful facts when processed in a timely manner.
D) data that has been organized and processed so that it's meaningful.

Question 19

Which of the following is a primary activity in the value chain?

A) infrastructure
B) technology
C) purchasing
D) marketing and sales

Question 20

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

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

Question 21

Message left on an answering machine: "Hi Bob! Just got into town.How about dinner this evening if you're available.Call me!"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
F) Verifiable
G) Accessible

Question 22

A well-designed AIS can improve the decision-making function within the organization.Which statement below would describe a limitation,rather than a benefit,of an efficient AIS?

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

Question 23

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

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

Question 24

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

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

Question 25

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) Understandable
F) Verifiable
G) Accessible

Question 26

Jill Fredson is in charge of the mail room at Gammon University.Every Friday morning she receives a report via email that summarizes the number of outgoing and incoming pieces of mail by source and destination department.Every Friday afternoon,Jill deletes the report without reading it because it has no bearing on mail room operations.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
F) Verifiable
G) Accessible

Question 27

One activity within the value chain is research and development.This activity can be identified as a

A) firm infrastructure activity.
B) human resources activity.
C) technology activity.
D) purchasing activity.

Question 28

A frantic Stro Frinzel called the home office from Des Moines."You have got to help me.I am about to close a great sale,but I have to be able to guarantee delivery by the fourteenth.I can't get through to the company Web site to verify delivery!""Thank you for calling.Your call is very important to us.However,all of our lines are currently in use.Please try again later."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
F) Verifiable
G) Accessible

Question 29

Robinson Crusoe has formed a business that sells carved gourmet coconuts.He has hired five employees.The most senior is Friday,who manages the carving process.Monday is the newest employee.She collects the coconuts.Tuesday,as you might expect,takes calls from curstomers,oops,I mean customers,who are unhappy with their coconuts.Wednesday tosses finished coconuts into the sea,whereupon they drift to the wholesaler.Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.Which of the following functions in the value chain is Monday performing?

A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service

Question 30

Joe Marzetti has been the controller of Fairview Tires for 25 years.Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records.The audit has been unable to reproduce financial reports that were prepared by Marzetti.While there is no evidence of wrongdoing,the auditors are concerned that the discrepancies might contribute to poor decisions.Which of the following characteristics of useful information is absent in the situation described above?

A) Relevant
B) Reliable
C) Complete
D) Timely
E) Understandable
F) Verifiable
G) Accessible

Question 31

In value chain analysis,what is the activity of arranging the delivery of products to customers called?

A) outbound logistics
B) inbound logistics
C) shipping
D) delivery

Question 32

Robinson Crusoe has formed a business that sells carved gourmet coconuts.He has hired five employees.The most senior is Friday,who manages the carving process.Monday is the newest employee.She collects the coconuts.Tuesday,as you might expect,takes calls from curstomers,oops,I mean customers,who are unhappy with their coconuts.Wednesday tosses finished coconuts into the sea,whereupon they drift to the wholesaler.Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.Which of the following functions in the value chain is Wednesday performing?

A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service

Question 33

An example of inbound logistics would consist of

A) the activities that transform inputs into final products or services.
B) the activities that help customers to buy the organization's products or services.
C) the activities that provide post-sale support to customers.
D) the activities that consist of receiving, storing, and distributing the materials used as inputs by the organization to create goods and/or services it sells.

Question 34

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

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

Question 35

In 2003,Custer Manufacturing implemented a Web-based information system that allows all employees to access mission-critical information.The intention was to increase production efficiency.Unfortunately,it had the opposite effect,as deliveries fell behind schedule and costs increased.Jeff Akspen,the director of information technology services,asked Joyce Jenkins to come in and talk with him about the system.Joyce is a long-time employee of Custer,and her opinion is valued by her peers and by her supervisor."So Joyce,how's it going down there in the shop?""Not so good,Jeff.Used to be we got a weekly pick list so we knew how to plan production.Now,we got that computer system.Most of us can't figure out how to use it to do our jobs.Is there some way to print out a pick list?"Jeff thought for a while before responding."Well,Joyce,to tell you the truth,I'm not so sure how to do it myself,but there must be a way.We'll bring in the consultants that helped us build the system.Maybe they can help." 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
F) Verifiable
G) Accessible

Question 36

Accounting information plays major roles in managerial decision making by

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

Question 37

Robinson Crusoe has formed a business that sells carved gourmet coconuts.He has hired five employees.The most senior is Friday,who manages the carving process.Monday is the newest employee.She collects the coconuts.Tuesday,as you might expect,takes calls from curstomers,oops,I mean customers,who are unhappy with their coconuts.Wednesday tosses finished coconuts into the sea,whereupon they drift to the wholesaler.Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.Which of the following functions in the value chain is Friday performing?

A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service

Question 38

An AIS provides value by

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

Question 39

Robinson Crusoe has formed a business that sells carved gourmet coconuts.He has hired five employees.The most senior is Friday,who manages the carving process.Monday is the newest employee.She collects the coconuts.Tuesday,as you might expect,takes calls from curstomers,oops,I mean customers,who are unhappy with their coconuts.Wednesday tosses finished coconuts into the sea,whereupon they drift to the wholesaler.Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.Which of the following functions in the value chain is Thursday performing?

A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service

Question 40

Razzmataz,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.Chuck Hewitt 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,Chuck complained that a report on tourist population that he uses to adjust processing volume refers to data that was collected five 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
F) Verifiable
G) Accessible

Question 41

Robinson Crusoe has formed a business that sells carved gourmet coconuts.He has hired five employees.The most senior is Friday,who manages the carving process.Monday is the newest employee.She collects the coconuts.Tuesday,as you might expect,takes calls from curstomers,oops,I mean customers,who are unhappy with their coconuts.Wednesday tosses finished coconuts into the sea,whereupon they drift to the wholesaler.Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.Which of the following functions in the value chain is Tuesday performing?

A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service

Question 42

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

A) $236.83
B) $44,998.10
C) Less than $63.16
D) At least $300.00

Question 43

Rolleigh Corp.identifies growth by new product development and product improvement as the number one corporate goal.An employee at Wrigley's,one of Rolleigh's wholly-owned subsidiaries,developed an innovation to an existing product that would directly address a shortcoming in the similar product offered by Rolleigh's closest competitor.Wrigley's current Return on Investment (ROI)is 15%,but the product innovation is expected to generate ROI of only 12%.Awarding bonuses to subsidiary managers based on ROI could result in:

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

Question 44

Which of the following is a true statement?

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

Question 45

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

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

Question 46

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

A) Incomplete information received on a timely basis
B) Irrelevant information received in an understandable format
C) Unreliable information easily accessible
D) Verifiable information received in unreadable format

Question 47

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

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

Question 48

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

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

Question 49

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

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

Question 50

The transaction cycle approach leads to efficient processing of a large number of transactions because

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

Question 51

Which of the following is not a transaction cycle?

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

Question 52

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

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

Question 53

Refer to the chart above.At what point,measured in terms of the net cost of information,does information overload begin?

A) 0
B) 5
C) 10
D) 12

Question 54

Which of the following statements is false?

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

Question 55

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

A) Accounts payable clerk
B) Customer
C) Cashier
D) Credit manager

Question 56

Paying federal payroll taxes is part of which transaction cycle?

A) Human resources/payroll
B) Expenditure
C) Financing
D) Revenue

Question 57

The business owners obtain financing from outside investors,which results in an inflow of cash into the company.This transaction is considered to be part of which cycle?

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

Question 58

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

A) Hire and train employees
B) Acquire inventory
C) Sell merchandise
D) Collect payment from customers

Question 59

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

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

Question 60

Which of the following is not a key decision to be made when starting a business?

A) How to estimate the allowance for uncollectible accounts
B) Whether to advertise on TV, radio, or newspaper
C) How to raise capital
D) Whether to accept American Express

Question 61

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

Question 62

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

Question 63

What is the purpose behind the five primary activities in the value chain?

Question 64

How can an AIS add value to the organization?

Question 65

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

Question 66

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

A) Name of the employee who completed the sale
B) Daily sales quota
C) Product sold
D) Date

Question 67

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

Question 68

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

Question 69

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

Question 70

Differentiate between an AIS course and other accounting courses.

Question 71

Define an accounting information system.

Question 72

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

Question 73

Define the concept of a system.

Question 74

Discuss the components of a supply chain.

Question 75

How can a well-designed AIS improve the efficiency and effectiveness of a company's value chain?

Question 76

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

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

Question 77

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

Question 78

Identify the components of an accounting information system.

Question 79

Discuss the seven characteristics of useful information.