Question 1

A well-designed AIS can respond to many parts of the FASB Conceptual Framework.Descriptions of the assumptions, principles and constraints of the framework are listed below in alphabetic order.Group them as they are found in the conceptual framework.
a.A company will continue in business long enough to satisfy its current obligations.
b.A company's accounting records should be kept separate from those of its owner.
c.Absent other information, assets are recorded and reported at their purchase price.
d.Financial statements should include complete information for making decisions.
e.For financial reporting purposes, we divide the life of a business into quarters, years or some other measurement of time.
f.Revenue should be recorded in the AIS when goods and services are exchanged.
g.The benefits of obtaining information should outweigh the cost of obtaining it.
h.The costs of earning revenue should be put on the same income statement with the revenue they generate.
i.The value of a dollar is constant over time.
j.When a dollar amount is too small to make a significant difference in decision making, other accounting rules may be ignored.
k.When faced with a choice of methods, make the choice that puts the business in the worst possible financial light.

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Question 2

Bumble Beasley was preparing a paper for his AIS course that explained the connections between the definition of AIS and the generic elements of the AIS.He created the pairings listed in the table below:

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Question 3

AIS is an important area of study for future accountants, since a well-designed AIS can respond to many elements of the FASB Conceptual Framework.Indicate which element of financial statements from the FASB Conceptual Framework best describes each item below.
a.Accounts payable
b.Cash
c.Common stock
d.Cost of goods sold
e.Depreciation expense
f.Interest earned
g.Inventory
h.Loss on sale of land
i.Retained earnings
j.Sales

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Question 4

Which generic AIS element is exemplified by each item below?
a.Balance sheet
b.Customer's check
c.General ledger software
d.Requiring two signatures on checks over $500
e.Sales invoice
f.Sales transaction file
g.Spreadsheet software
h.Statement of cash flows
i.Storing accounting records in a locked filing cabinet
j.Vendor master file

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Question 5

List and discuss two similarities and two differences between AIS and other areas of accounting.

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Question 6

In contrast with other areas of accounting, AIS more frequently involves problems with non-deterministic answers.Which questions in the list below have non-deterministic answers?
a.How do you calculate depreciation using the straight-line method?
b.How many accountants should ITI Corporation hire?
c.Should ITI Corporation expand its operations to other countries?
d.Should ITI Corporation reconcile its bank statement at least once a month?
e.Should ITI Corporation use Quickbooks or Peachtree for transaction processing?
f.Should Thai use information from textbooks as one source in a paper for her AIS course?
g.What is the journal entry to record a cash sale?
h.Which inventory cost flow assumption (FIFO, LIFO) does ITI Corporation use?
i.Which local bank should ITI Corporation do business with?
j.With respect to financial reporting, is relevance more important than reliability?

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Question 7

For each independent case below: (1) indicate which source better fulfills the indicated UMUC criterion for information evaluation AND (2) circle the phrase that led you to your decision.
a.Objectivity:
i.A Wall Street Journal article about financial statement fraud cases, written by an investigative reporter whose contact information is provided
ii.A presentation on financial statement fraud cases, given by an experienced independent consultant to prospective clients
b.Accuracy:
i.A web site that correctly defines six elements of financial statements from the FASB Conceptual Framework
ii.An article that accurately gives examples of four constraints from the FASB Conceptual Framework
c.Authority:
i.A presentation delivered by a retired IRS agent on tax fraud
ii.An attorney's web site recommending strategies for avoiding tax audits
d.Currency:
i.A web site last modified in 2010 that gives examples of internal controls for international companies
ii.A 2009 article in a practitioner journal that gives examples of how companies are implementing international financial reporting standards
e.Coverage:
i.An article titled "Elements of the Balance Sheet" that explains (only) the difference between current assets and plant assets
ii.An article titled "Emerging Technologies in Accounting" that briefly discusses three new technologies used by a single company

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Question 8

Which generic element of the AIS is most closely associated with each of the following questions?
a.Beyond the general-purpose financial statements, what other reports will managers and system users need?
b.How many copies of each source document will be required?
c.How should the AIS be designed to facilitate the production of other reports?
d.If computer-based tools are used in the AIS, which software and hardware packages should be implemented?
e.Should AIS tools be manual, computer-based or both?
f.Under what conditions can/should data be destroyed?
g.What behavioral effects are controls likely to have?
h.What controls are necessary to promote information integrity in the AIS?
i.What kinds of source documents will system users need?
j.Where should data be stored?

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Question 9

Indicate whether each of the following statements is: (a) always true, (b) sometimes true or (c) never true.1.AIS outputs are important only in AIS and financial accounting.2.An accounting information system can determine materiality without human intervention.3.Financial accounting can involve unstructured problems.4.Internal controls cut across many areas of accounting study.5.The objective of an accounting information system is to report true financial data.

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Question 10

You have been hired as a consultant to design and implement a new accounting information system for PRI Corporation.Explain how you would structure the AIS.Give two examples of each structural element; also indicate one question you would ask PRI's management to assist in your work.(Do not use examples and questions listed in the text.)

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Question 11

The accounting staff at NSR Corporation have compiled a list of risks the company needs to address for its information technology; they plan to prepare a report recommending internal controls that address each risk.They have located the five sources of information listed below, but want to use no more than three in their report.Use the UMUC criteria to explain which sources they should use.
a.A software documentation manual for the general ledger system used at NSR Corporation.The manual contains a section on troubleshooting the software, which briefly discusses common risks and problems associated with its installation.The manual's title page lists the software company as its author.
b.A web site, first published in 2009 and last updated in 2014, for an information technology consulting firm.The web site lists and discusses twenty common internal controls for information technology based on the firm's past clients.
c.An article published in Information Security, a practitioner journal.The article, published in 2013, was co-authored by a university professor and the chief information officer of a Fortune 100 corporation.It analyzes five common internal controls for information technology, including a description of each control, the costs of implementing it and the benefits of implementing it.
d.The American Institute of CPAs list of "top ten technologies" for 2014, published on the AICPA web site.The list was developed via a survey of practicing CPAs throughout the United States; it includes several items related to information technology control, and also provides suggestions about where to find additional information.
e.The third edition of a management information systems textbook.It was published in 1999 and includes two chapters on information technology security.The textbook was written by a team of three authors: one information systems auditor with three years' experience, and two university professors with advanced degrees but little experience.
C.The particular strength of A is its authority, since it was written by the software company.C's greatest strengths are objectivity and currency.D may be an acceptable source as well.

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Question 12

Which UMUC evaluation criterion is indicated by each of the following questions?
a.Can you establish the writer's credentials?
b.Can you tell when the source was created/written?
c.Can you tell who created the information?
d.Does the information contain advertising?
e.Does the information contain any obvious errors of fact?
f.Does the source cover the subject with sufficient depth?
g.Does the source tell you where the information came from?
h.Is the information available freely?
i.Is the source still under construction?
j.When was the last time the source was updated?

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Question 13

AIS is an important area of study for future accountants because a well-designed AIS can respond to many elements of the FASB Conceptual Framework.List the parts of the FASB Conceptual Framework.(You do not need to list the items in each part.)

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Question 14

In your own words, define "accounting information system."

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Question 15

Thuy is an accountant at RPA Corporation.When RPA sells inventory, Thuy receives a sales invoice indicating the number of units sold, the sales price, sales tax assessed and the total amount paid by the customer.Thuy makes a journal entry using general ledger software.At the end of each quarter, Thuy prepares RPA's general-purpose financial statements, as well as a comparison of budgeted sales to actual sales.The general-purpose financial statements are sent to the SEC, while the budgeted-to-actual comparison is reviewed by RPA's management.From the preceding paragraph, give one example of each of the following elements from the definition of AIS presented in the text:
a.Activity
b.Data
c.Document
d.External decision maker
e.Information
f.Internal decision maker
g.Processing
h.Technology

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Quiz 2: Role and Purpose of Accounting Information Systems

Bumble Beasley was preparing a paper for his AIS course that explained the connections between the definition of AIS and the generic elements of the AIS.He created the pairings listed in the table below:

List and discuss two similarities and two differences between AIS and other areas of accounting.

AIS is an important area of study for future accountants because a well-designed AIS can respond to many elements of the FASB Conceptual Framework.List the parts of the FASB Conceptual Framework.(You do not need to list the items in each part.)

In your own words, define "accounting information system."