Deck 1: The Information System: an Accountants Perspective

Question 1

Information is a business resource.

Answer 1

True

Question 2

Retrieval is the task of permanently removing obsolete or redundant records from the database.

Answer 2

False

Question 3

Information lacking reliability may still have value.

Answer 3

False

Question 4

The database administrator is responsible for the security and integrity of the database.

Question 5

A potential benefit of cloud computing is that the client firm does not need to know where its data are bring processed.

Question 6

A balance sheet prepared in conformity with GAAP is an example of discretionary reporting.

Question 7

Most of the inputs to the General Ledger System come from the Financial Reporting System.

Question 8

Transaction processing systems convert non-financial transactions into financial transactions.

Question 9

Custom software is the most affordable systems development option.

Question 10

Cloud computing is a practice in which the organization sells its IT resources to a third-party outsourcing vendor then leases back IT services from the vendor for a contract period.

Question 11

Custom software is completely finished, tested, and ready for implementation.

Question 12

When preparing discretionary reports, organizations can choose what information to report and how to present it.

Question 13

A database is a collection of interconnected computers and communications devices that allows users to communicate, access data and applications, and share information and resources.

Question 14

The internal auditor represents the interests of third-party outsiders.

Question 15

IT outsourcing is location-independent computing.

Question 16

The Management Reporting System provides the internal financial information needed to manage a business.

Question 17

Information Technology (IT) audits can be performed by both internal and external auditors.

Question 18

One of the greatest disadvantages of database systems is that all data is always available to all users.

Question 19

Systems development represents 80 to 90 percent of the total cost of a computer system.

Question 20

Systems maintenance consumes the majority of a system's total costs.

Question 21

The major difference between the Financial Reporting System (FRS) and the Management Reporting System (MRS) is the

A) FRS provides information to internal and external users; the MRS provides information to internal users
B) FRS provides discretionary information; the MRS provides nondiscretionary information
C) FRS reports are prepared using information provided by the General Ledger System; the MRS provides information to the General Ledger System
D) FRS reports are prepared in flexible, nonstandardized formats; the MRS reports are prepared in standardized, formal formats

Question 22

An example of a nonfinancial transaction is

A) sale of products
B) cash disbursement
C) log of customer calls
D) purchase of inventory

Question 23

Which of the following is not a business resource?

A) raw material
B) labor
C) information
D) all are business resources

Question 24

Database management tasks do not include

A) summarization
B) storage
C) retrieval
D) deletion

Question 25

Which subsystem is not part of the Accounting Information System?

A) Transaction Processing System
B) Expert System
C) General Ledger/Financial Reporting System
D) Management Reporting System

Question 26

The value of information for users is determined by all of the following but

A) reliability
B) relevance
C) convenience
D) completeness

Question 27

Effective information has all of the following characteristics except

A) relevance
B) completeness
C) summarization
D) structure

Question 28

One member of a company's audit committee must be an independent CPA.

Question 29

When designing the data collection activity, which type of data should be avoided?

A) data that is relevant
B) data that is efficient
C) data that is redundant
D) data that is accurate

Question 30

The Transaction Processing System includes all of the following cycles except

A) the revenue cycle
B) the administrative cycle
C) the expenditure cycle
D) the conversion cycle

Question 31

The purpose of the Transaction Processing System includes all of the following except

A) converting economic events into financial transactions
B) recording financial transactions in the accounting records
C) distributing essential information to operations personnel to support their daily operations
D) measuring and reporting the status of financial resources and the changes in those resources

Question 32

In a database, a complete set of attributes for a single occurrence of an entity class is called

A) a key
B) a file
C) a record
D) a character

Question 33

Which level of management is responsible for short-term planning and coordination of activities necessary to accomplish organizational objectives?

A) operations management
B) middle management
C) top management
D) line management

Question 34

An example of a financial transaction is

A) the purchase of computer
B) a supplier's price list
C) a delivery schedule
D) an employee benefit brochure

Question 35

Which level of management is responsible for controlling day-to-day operations?

A) top management
B) middle management
C) operations management
D) executive management

Question 36

The most basic element of useful data in the database is

A) the record
B) the key
C) the file
D) the attribute

Question 37

Under SOX legislation public accounting firms are no longer allowed to provide consulting services to audit clients.

Question 38

The primary input to the Transaction Processing System is

A) a financial transaction
B) an accounting record
C) an accounting report
D) a nonfinancial transaction

Question 39

The author distinguishes between the Accounting Information System and the management Information System based on

A) whether the transactions are financial or nonfinancial
B) whether discretionary or nondiscretionary reports are prepared
C) the end users of the reports
D) the organizational structure of the business

Question 40

Location-independent computing in which shared data centers deliver hosted IT services over the Internet.

A) IT outsourcing
B) Network administration
C) Cloud computing
D) Custom software

Question 41

Which individual is least involved in new systems development?

A) systems analyst
B) external auditor
C) end user
D) data librarian

Question 42

Market research and advertising are part of which business function?

A) materials management
B) finance
C) marketing
D) production

Question 43

An appraisal function housed within the organization that performs a wide range of services for management is

A) internal auditing
B) data control group
C) external auditing
D) database administration

Question 44

The objectives of an information system include each of the following except

A) support for the stewardship responsibilities of management
B) furthering the financial interests of shareholders
C) support for management decision making
D) support for the firm's day-to-day operations

Question 45

Which individuals may be involved in the Systems Development Life Cycle?

A) accountants
B) systems professionals
C) end users
D) all of the above

Question 46

Advantages of cloud computing include all of the following except

A) Access to whatever computing power is needed
B) Paying only for what is used
C) Unknown data processing location
D) Flexible, short term contracts

Question 47

Which of the following is not part of the accounting function?

A) managing the financial information resource of the firm
B) capturing and recording transactions in the database
C) distributing transaction information to operations personnel
D) managing the physical information system of the firm

Question 48

Attestation services are performed by

A) external auditors
B) internal accountants
C) internal auditors
D) third-party accountants

Question 49

Which of the following is not a cloud computing service?

A) Software as a service
B) Infrastructure as a service
C) Network as a service
D) Platform as a service

Question 50

The objectives of all information systems include all of the following except

A) support for the stewardship function of management
B) evaluating transaction data
C) support for the day-to-day operations of the firm
D) support for management decision making

Question 51

In the distributed data processing approach

A) computer services are consolidated and managed as a shared organization resource
B) the computer service function is a cost center
C) the end users are billed using a charge-back system
D) computer services are organized into small information processing units under the control of end users

Question 52

Useful information must possess all of the following characteristics except

A) relevance
B) precision
C) accuracy
D) completeness

Question 53

All of the following are external end users except

A) Cost accountants
B) Creditors
C) Stockholders
D) Tax authorities

Question 54

The term "accounting independence" refers to

A) data integrity
B) separation of duties, such as record keeping and custody of physical resources
C) generation of accurate and timely information
D) business segmentation by function

Question 55

Data processing does not involve

A) data control
B) computer operations
C) system maintenance
D) data conversion

Question 56

Motivations for IT outsourcing include each of the following except

A) IT's highly technical nature
B) Long term contracts in IT outsourcing
C) Expense of IT
D) Dynamically changing nature of IT

Question 57

What factor conceptually distinguishes external auditing and internal auditing?

A) Tests of controls
B) Substantive tests
C) Education
D) Constituencies

Question 58

Which function manages the financial resources of the firm through portfolio management, banking, credit evaluation, and cash receipts and disbursements?

A) accounting
B) finance
C) materials management
D) distribution

Question 59

Which activity is not part of the finance function?

A) cash receipts
B) portfolio management
C) credit
D) general ledger

Question 60

Which of the following is not a production support activity?

A) Maintenance
B) Marketing
C) Production planning
D) Quality control

Question 61

How has SOX legislation impacted the consulting practices of public accounting firms?

Question 62

Accountants play many roles relating to the accounting information system, including all of the following except

A) system users
B) system designers
C) system auditors
D) system converters

Question 63

Two methods to acquire information systems are to __________________________ and to __________________________.

Question 64

Entities outside the organization with a direct or indirect interest in the firm, such as stockholders, financial institutions, and government agencies, are called ____________________.

Question 65

The __________________________ and __________________________ standards that characterize the AIS clearly distinguish it from the MIS.

Question 66

The tests that focus on the system itself and how it is designed to reduce risk is called ____________________.

Question 67

Two distinct ways to structure the Data Processing Department are ____________________ and ____________________.

Question 68

Location-independent sharing of data centers hosting IT servers over the internet is called ______________________________.

Question 69

The three major subsystems of the AIS are _______________________________, ___________________________, and _______________________________.

Question 70

Why is it necessary to distinguish between AIS and MIS?

Question 71

The transaction processing system is comprised of three cycles: __________________________, __________________________, and __________________________.

Question 72

Sales of products to customers, purchases of inventory from vendors, and cash disbursements are all example of __________________________.

Question 73

The task of locating and transferring an existing record from the database for processing is called data ____________________.

Question 74

What is discretionary reporting?

Question 75

Sarbanes-Oxley legislation requires that management designs and implements controls over the entire financial reporting process. What systems does this include?

Question 76

Three activities that are part of the finance function are __________________________, __________________________, and __________________________.

Question 77

Transactions with trading partners include ____________________ and ____________________.

Question 78

A practice in which an organization sells its IT resources and leases them back is called ___________________________________.

Question 79

These tests focus on data rather than process: __________________________,

Question 80

The most common audit types are ____________________, ____________________, and ____________________ auditors.