Deck 1: Accounting Information Systems and the Accountant

Question 1

Predictive analytics use large data warehouses to help organizations improve performance.

Answer 1

True

Question 2

It is best to view an AIS as an accounting system that must be computerized.

Answer 2

False

Question 3

The acronym ERP stands for "electronic reporting plan."

Answer 3

False

Question 4

The acronym ERP stands for "enterprise reporting system."

Question 5

Sections of the Bill C-26 mandate suspicious activity reporting.

Question 6

The term information overload refers to providing too much data to management, often resulting in managers ignoring it.

Question 7

Accounting information systems must be computerized to be effective.

Question 8

The acronym AIS stands for "Accounting Information Standards."

Question 9

The starting point for an audit trail of a production department might be the purchase of raw materials.

Question 10

The starting point for an audit trail of a payroll system might be an employee time card.

Question 11

AISs often create information that is useful to non-accountants.

Question 12

The authors consider accountants to be "knowledge workers."

Question 13

A company's audit trail is normally easier to follow under a manual data processing system compared to a computerized information processing system.

Question 14

An advantage of computerized AISs is that they do not need to be programmed to catch simple input errors such as entering "4.0" instead of "40.0" for hours worked in a payroll application.

Question 15

In order to be useful, raw accounting data must be processed by a computer.

Question 16

As used in this chapter, the acronym SAR stands for "suspicious accounting reports."

Question 17

FINTRAC stands for Financial Transactions and Report Analysis Centre of Canada.

Question 18

One of the motivations for SAR is to identify money laundering activities.

Question 19

Computers tend to make audit trails easier to follow because everything is computerized.

Question 20

The path that data follow in an AIS, for example from manual source document to completed output report, is called an audit trail.

Question 21

An example of a financial report that would be prepared by a managerial accountant instead of a financial accountant)is a budget report.

Question 22

An ABC inventory system refers to an "activity-based costing" system.

Question 23

One major difference between financial accounting and managerial accounting is that financial accountants use dashboards while managerial accountants do not.

Question 24

One major difference between financial accounting and managerial accounting is that financial accountants prepare financial statements for external investors while managerial accountants prepare financial statements for internal managers.

Question 25

Despite the CICA requirement to maintain auditor independence during consulting engagements, there are still many areas in which CA firms provide consulting services to their clients.

Question 26

The Sarbanes-Oxley Act prohibits companies from using the same auditing firms for performing both auditing and management consulting services.

Question 27

The purpose of CICA Webtrust Services is to provide assurance that a company engaged in electronic commerce can provide the goods or services it promises.

Question 28

The purpose of the assurance services of an accounting firm is to give a company's managers moral support when they are audited by the federal or state government.

Question 29

In a responsibility accounting system, every person within a company takes responsibility for the performance of every business unit.

Question 30

An example of a value-added reseller VAR)is a computer dealer that adds software to the hardware it sells.

Question 31

The series of steps leading from data recorded in transaction records to the information reported on financial statements is called the accounting cycle.

Question 32

"Cost accounting" tasks are usually performed by financial accountants.

Question 33

Accounting systems are useful for performing accounting tasks, but cannot be used for such security purposes as countering terrorism.

Question 34

As used in Chapter 1, a dashboard is an up-to-the-minute graphic depiction of one or more business activities.

Question 35

The Sarbanes-Oxley Act includes a provision that requires documenting and evaluating IT controls.

Question 36

XBRL is a business reporting language that is used to define interactive financial data.

Question 37

FINTRAC's mandate requires detailed reporting on certain financial transactions of banks, insurance companies, mutual funds, broker dealers, commodity traders, money service business, casinos, and card clubs.

Question 38

A major output of financial accounting is the preparation of financial statements such as an income statement.

Question 39

AISs are only concerned with financial information.

Question 40

As used in chapter 1, the term "dashboard" refers to a quick and easy plan to install a computerized accounting system in an organization.

Question 41

There are limited career opportunities available for students who study both accounting and information systems.

Question 42

One possible career for AIS majors is in the traditional area of financial or managerial accounting.

Question 43

Because accountants are not normally computer programmers working within the information processing subsystem, it is unnecessary for them to understand the capabilities and limitations of computers.

Question 44

Today's AIS is an enterprise-wide information system that focuses on interdepartmental business processes.

Question 45

The letter "P" in the acronym "ERP" stands for:

A)Production
B)Planning
C)Project
D)none of these

Question 46

As a result of computerized information processing systems in many organizations today, the need for accountants in these organizations has significantly declined.

Question 47

Some possible career opportunities for AIS majors or minors include consulting positions, computerized auditing, or system computer auditing positions.

Question 48

Which of the following captures the same idea as the term "GIGO" garbage in, garbage out)?

A)Computers cannot turn straw into gold
B)Too much information is the same as garbage
C)Great investments lead to great returns
D)Too many cooks spoil the broth

Question 49

Within the traditional AIS, a sales order would not be considered an accounting transaction.

Question 50

Activity-based costing systems focus on allocating overhead on the basis of direct labour hours used.

Question 51

The CISA is an acronym for a professional accounting certification.

Question 52

Which of the following is true?

A)An AIS must be computerized to be useful
B)An AIS always produces useful information
C)An AIS always produces financial information
D)none of these

Question 53

If a manager suffers "information overload":

A)He or she must press the reset button on his or her computer
B)It means that this person needs a larger hard drive
C)The "information" is really just data
D)He or she must forget some facts in order to remember others

Question 54

The "S" in the acronym "AIS" stands for:

A)Standard
B)System
C)Symbol
D)none of these

Question 55

Students majoring in AIS are unlikely to assume jobs in traditional accounting positions because they know too much.

Question 56

Managerial accounting principally provides decision?making information to a company's internal managers.

Question 57

Which of the following is true about the terms "data" and "information" within the context of Chapter 1?

A)These terms are exactly the same
B)These terms are exact opposites
C)Some "data" can also be "information"
D)none of these

Question 58

Most AISs perform all of these functions except:

A)Collect raw accounting data
B)Store accounting data for future uses
C)Process data into useful information
D)AISs perform all of these functions

Question 59

Accountants are usually classified as "line workers" within business organizations.

Question 60

Which of the following best describes a data warehouse as discussed in Chapter 1?

A)A repository of historical information from one accounting application
B)A repository of historical information from a set of accounting applications
C)A repository of information from many business applications-some not accounting
D)A repository of information from many businesses in the same industry

Question 61

All of the following are possible uses of AIS or accounting personnel that were discussed in the chapter except:

A)Countering terrorism
B)Foiling future accounting scandals
C)Providing assurance services
D)Performing monetary exchanges

Question 62

The accounting subsystem must continually interact with the:

A)Personnel subsystem
B)Information processing subsystem
C)Production subsystem
D)b and c only
E)a, b, and c

Question 63

A good performance measurement system should evaluate:

A)Profitability only
B)Customer satisfaction only
C)Those aspects of a unit's performance that are subject to its control
D)Those aspects of a unit's performance whether controllable or not

Question 64

The process by which a financial transaction is recorded so that its flow through the system can be followed is called:

A)Financial shadowing
B)Managerial trace technique
C)Concatenation
D)An audit trail

Question 65

As used in the chapter, "knowledge workers":

A)Are blue collar workers in non-managerial positions
B)Are the same as delivery clerks
C)Include most accountants
D)Does not include most accountants

Question 66

In 2006, Bill 26 expanded FINTRAC's mandate so that:

A)It requires banks to monitor their accounts in foreign institutions for fraud
B)It prohibits companies from lending money to corporate executives
C)It applies to all publicly-traded companies
D)all of these are correct

Question 67

What is the first step to be performed by most organizations in their accounting cycles?

A)Recording business transactions in a journal
B)Preparing a trial balance
C)Recording closing entries in a journal
D)Preparing transaction source documents
E)none of the above

Question 68

What has been the effect on accountants in those organizations which have computerized their data processing functions?

A)The need for accountants has disappeared
B)The accountants have become "pure" bookkeepers
C)The accountants have become involved in more decision?making activities
D)The accountants' decision?making activities have drastically declined

Question 69

Which of these would be considered suspicious activities under current SAR rules?

A)Money laundering
B)Bribing officials
C)Transferring money to suspected terrorists
D)all of these

Question 70

The P in the acronym KPI stands for:

A)Processing
B)Performance
C)Planning
D)Personnel
E)none of these

Question 71

Which of these is a business reporting language often used in recording or transmitting accounting data?

A)XBRL
B)XFile
C)ABC
D)Accounting Live

Question 72

Many accountants feel that the most important part of the Sarbanes-Oxley Act is:

A)Its anti-terrorist provisions
B)Its provisions requiring the reporting of suspicious activities
C)Section 404 on internal controls
D)Section 505 on money laundering

Question 73

Bernard Madoff is most closely associated with which of the following terms?

A)The father of activity-based costing systems
B)SAR
C)Ponzi scheme
D)CICA Rule 204
E)Key sponsor of the FINTRAC

Question 74

Which of the following accounting functions has been automated by most companies' information processing subsystems?

A)Posting to ledgers
B)Recording journal entries
C)Preparing trial balances
D)all of the above

Question 75

Which of these statements best describes the relationship between "AISs" and "countering terrorism?"

A)These are completely independent items; there is no relationship
B)AISs can help counter terrorism using data warehouses
C)AISs can help by denying financial aid to terrorist groups
D)AISs can help by identifying international embezzlers

Question 76

Which of these businesses is not required to report suspicious activities under current federal laws?

A)Banks
B)Money service organizations
C)Commodity Traders
D)Mutual fund dealers
E)Race tracks

Question 77

The managerial accounting component of the accounting subsystem contains all but which one of the following functions:

A)Cost accounting
B)Financial accounting
C)Budgeting
D)Systems study

Question 78

For performance reports to achieve their control objectives, they must:

A)Include relevant information so that necessary action may be taken to accomplish organizational goals
B)Be timely so that minimal time elapses between an activity's occurrence and the feedback reflecting the activity's efficient or inefficient performance
C)Provide subsystem managers with suggestions as to how they can operate their subsystems more efficiently
D)all of the above
E)a and b only

Question 79

Suspicious activity reporting:

A)Only applies to banking transactions
B)Is mandated by state, but not federal, regulations
C)Is mostly concerned with embezzlement issues
D)Is a requirement under the Sarbanes-Oxley Law of 2002 and CICA Rule 204
E)none of these

Question 80

Managerial accounting principally provides information to:

A)Stockholders
B)Government regulators e.g., Ontario Securities Commission, CRA)
C)Internal company management
D)Potential creditors