Deck 2: Overview of Business Processes

Question 1

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.

Answer 1

B

Question 2

The transaction cycles approach leads to efficient processing of 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.

Answer 2

B

Question 3

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.

Answer 3

D

Question 4

A typical source document could be

A)in some paper form.
B)a computer data entry screen.
C)a notepad entry.
D)both A and B

Question 5

Which step below is not considered to be part of the data processing cycle?

A)data input
B)feedback from external sources
C)data storage
D)data processing

Question 6

What is the major difference between the revenue and the expenditure cycle?

A)The revenue cycle includes marketing activities; the expenditure cycle does not.
B)In the revenue cycle,cash is received; in the expenditure cycle cash is paid out.
C)The expenditure cycle includes paying employees.
D)The revenue cycle includes the activity of obtaining funds from investors.

Question 7

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 8

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 9

All transaction cycles feed information directly into the

A)financial statements.
B)governmental reports.
C)general ledger and reporting system.
D)financing operations.

Question 10

Data must be collected about three facets of each business activity.What are they?

A)the business activity,the resources it affects,the people who participate
B)the business activity,the transactions it creates,the impact on the financial statements
C)the inputs,outputs and processes used
D)who is involved,what was sold,how much was paid

Question 11

Certain documents or forms are generated and/or processed with each transaction cycle.The issuing of a purchase order is part of which transaction cycle?

A)the revenue cycle
B)the production cycle
C)the human resources cycle
D)the expenditure cycle

Question 12

The basic "give and take" functions of a business have been grouped into transaction cycles.The 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 13

Which of the following is not a transaction cycle?

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

Question 14

The transaction cycles relate to one another and interface with this to generate information for both management and external parties.

A)general ledger and reporting system
B)accounting information systems
C)computer processor
D)human resources cycle

Question 15

The operations performed on data to generate meaningful and relevant information are referred to as

A)general ledger and reporting system
B)accounting information system
C)financial reporting
D)data processing cycle

Question 16

Certain documents or forms are generated and/or processed with each transaction cycle.The collection of job time tickets or time sheets is part of which transaction cycle?

A)the revenue cycle
B)the production cycle
C)the human resources cycle
D)the expenditure cycle

Question 17

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 18

An agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization is

A)give-get exchange
B)transaction
C)revenue
D)processing cycle

Question 19

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 20

One of the steps in the data processing cycle is data input.What is the catalyst for data input into a system?

A)The production transaction system automatically checks each hour to see if any new data is available for input and processing.
B)The performance of some business activity generally serves as the trigger for data input.
C)A general ledger program is queried to produce a trial balance at the end of an accounting period.
D)Data is only input when an authorized party permits the input to occur.

Question 21

To be effective,the chart of accounts must

A)be as concise as possible.
B)contain only five account categories.
C)limit account codes to 10 digits or less.
D)contain sufficient detail to meet the information needs of the specific organization's AIS.

Question 22

The general ledger account that corresponds to a subsidiary ledger account is known as a

A)dependent account.
B)attribute account.
C)entity account.
D)control account.

Question 23

In a chart of accounts using three digits for each account,each numeric digit has meaning to users of the AIS.For example,a numeric digit may represent either a major category of accounts,a primary financial subaccount within each category,or a specific account into which transaction data will be posted.Using this example,which digit position would best represent a primary financial subaccount within an account category?

A)first
B)second
C)third
D)fourth

Question 24

Which of the following documents would be found in the expenditure cycle?

A)delivery ticket
B)time card
C)journal voucher
D)purchase order

Question 25

The chart of accounts for a manufacturing corporation would include

A)retained earnings.
B)common stock.
C)raw materials inventory.
D)all of the above

Question 26

The systematic assignment of numbers or letters to items to classify and organize them is known as

A)coding
B)chart of accounts
C)data input
D)pre-numbered documents

Question 27

When the sum of all entries in the subsidiary ledger equals the amount in the corresponding general ledger account,it is assumed that (select all that apply)

A)the recording and posting processes are accurate.
B)all of the transaction cycles have been completed.
C)since the ledgers are in balance,adjusting entries are not required.
D)no errors exist in the subsidiary ledger and corresponding general ledger account.

Question 28

Source documents generally help to improve accuracy in transaction processing because

A)they specify which information to collect due to their structure.
B)standard information is preprinted on the document.
C)they provide directions and steps for completing the form.
D)All of the above are correct.

Question 29

A chart of accounts is an example of (select all that apply)

A)sequence codes
B)block codes
C)group codes
D)hierarchical codes

Question 30

The chart of accounts of a corporate retail bookstore would probably include

A)work-in-process inventory.
B)a drawing account.
C)retained earnings.
D)both A and C

Question 31

Common source documents for the revenue cycle include all of the following except

A)sales order.
B)receiving report.
C)delivery ticket.
D)credit memo.

Question 32

Pre-numbering of source documents helps to verify that

A)all transactions have been recorded since the numerical sequence serves as a control.
B)no inventory has been misplaced.
C)documents have been used in order.
D)all cash has been collected.

Question 33

The efficiency of recording numerous business transactions can be best improved by the use of

A)prenumbered source documents.
B)specialized journals.
C)posting references.
D)segregation of duties.

Question 34

What is a primary example of source data automation?

A)a utility bill
B)POS (point-of-sale)scanners in retail stores
C)a bill of lading
D)a subsidiary ledger

Question 35

In transaction processing,generally which activity comes first?

A)recording data in a journal
B)posting items to special journals
C)capturing data on source documents
D)posting data to a ledger

Question 36

Regarding codes,which of the following is false?

A)The code should be consistent with its intended use.
B)Codes should allow for growth in the number of items to be coded.
C)Coding systems should be as simple as possible.
D)Coding systems need not be consistent across divisions of an organization.

Question 37

A listing of general ledger accounts by account number is called the

A)chart of accounts.
B)listing of accounts.
C)trial balance.
D)subsidiary accounts.

Question 38

Pre-numbered checks,invoices and purchase orders are examples of

A)sequence codes
B)block codes
C)group codes
D)hierarchical codes

Question 39

Inventory items are often coded with these

A)sequence codes
B)block codes
C)group codes
D)hierarchical codes

Question 40

Businesses usually use some type of documents in the data input step of the data processing cycle.Documents that are sent to customers or suppliers and then sent back to the organization in the course of a business transaction are known as

A)turnaround documents.
B)source documents.
C)source data automation.
D)rubber or bounce-back documents.

Question 41

Which of the following is conceptually similar to a journal in a manual AIS?

A)database
B)master file
C)record
D)transaction file

Question 42

A specialized journal

A)is used to record infrequent or non-routine transactions.
B)simplifies the process of recording large numbers of repetitive transactions.
C)records all detailed data for any general ledger account that has individual sub-accounts.
D)contains summary-level data for every account of the organization.

Question 43

Documents generated at the end of transaction processing activities are called

A)financial statements
B)operational documents
C)reports
D)source documents

Question 44

Concerning processing,which of the following statements is true?

A)Batch processing ensures that stored information is always current.
B)Batch input is more accurate than on-line data entry.
C)On-line batch processing is a combination of real-time and batch processing.
D)Batch processing is almost never used.

Question 45

Something about which information is stored is

A)attribute
B)database
C)entity
D)record

Question 46

Computers store data by organizing smaller units of data into larger units,which have meaning to users.Data values that are stored in a physical space are called a

A)field.
B)record.
C)file.
D)database.

Question 47

A general journal

A)is used to record infrequent or non-routine transactions.
B)simplifies the process of recording large numbers of repetitive transactions.
C)records all detailed data for any general ledger account that has individual sub-accounts.
D)contains summary-level data for every account of the organization.

Question 48

Concerning a master file,which of the following statements is false?

A)It is conceptually similar to a ledger in a manual AIS.
B)It stores cumulative information about an organization's resources.
C)It exists across fiscal periods.
D)Its individual records are not changed.

Question 49

A subsidiary ledger

A)is used to record infrequent or non-routine transactions.
B)simplifies the process of recoding large numbers of repetitive transactions.
C)records all detailed data for any general ledger account that has individual sub-accounts.
D)contains summary-level data for every account of the organization.

Question 50

Periodic updating of the data stored about resources and agents is

A)On-line processing
B)real-time processing
C)batch processing
D)data processing

Question 51

Federal Express stated in one of its mission statements that "positive control of each package will be maintained by utilizing ...electronic tracking and tracing systems." This is an example of which type of data processing?

A)real-time processing which features immediate updating as to the location of packages
B)batch processing which features updating at fixed time periods
C)real-time processing which features updating at fixed time periods such as at the end of an accounting period
D)batch processing which features immediate updating as to the location of packages

Question 52

Characteristics of interest that need to be stored are

A)attribute
B)database
C)entity
D)record

Question 53

The set of fields that contain data about various attributes of the same entity forms a

A)entity
B)record.
C)file.
D)database.

Question 54

Which of the following is not a type of report provided to decision makers by the typical AIS?

A)financial statements
B)customer satisfaction surveys conducted by third parties
C)managerial reports
D)All of the above reports are important to decision makers.

Question 55

The general ledger

A)is used to record infrequent or non-routine transactions.
B)simplifies the process of recoding large numbers of repetitive transactions.
C)records all detailed data for any general ledger account that has individual sub-accounts.
D)contains summary-level data for every account of the organization.

Question 56

Which statement below regarding the AIS and managerial reports is false

A)The AIS must be able to provide managers with detailed and operational information about the organization's performance.
B)Both traditional financial measures and operational data are required for proper and complete evaluation of performance.
C)Most source documents capture both financial and operational data about business transactions.
D)Traditionally,most AIS systems have been designed so that both financial and operational data are stored in a manner that facilitates their integration in reports.

Question 57

Which of the following is not one of the four types of file processing?

A)changing
B)updating
C)deleting
D)altering

Question 58

An audit trail

A)provides the means to check the accuracy and validity of ledger postings.
B)is provided by the ledger and the general journal.
C)is automatically created in every computer-based information system.
D)is a characteristic of interest.

Question 59

Basic data storage concepts define both entities and attributes.An entity is something about which information is stored.Which item below would not be considered an entity?

A)a customer address
B)a customer
C)an employee
D)an inventory item

Question 60

Related records grouped together form a(n)

A)field.
B)entity.
C)file.
D)database.

Question 61

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky.Since 1996,the owner,Glamdring Elfthrall,has leveraged computer technology to provide a superior level of customer service.In particular,the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible.Price information and condition are also provided for each inventory item.In this database,an individual figure is a(an)

A)entity.
B)attribute.
C)field.
D)record.

Question 62

In an effort to measure and evaluate the productivity of word processing specialists,the office manager at Four-Q Consulting acquired a software package that counts the number of keystrokes per day by each employee.Some weeks later,the manager observed several of the employees sitting at their workstations during lunch and randomly punching keys.This is an example of:

A)employee innovation.
B)on-line,real-time processing.
C)a lack of management controls.
D)the reporting system leading to dysfunctional behavior.

Question 63

One of the most important assumptions about how managers will act in a budget-controlled environment is that:

A)managers will largely ignore budgets.
B)budgets must be too tight to encourage high aspirations.
C)budget slack will exist in almost every budget and is negotiated by all managers.
D)measurement affects behavior.

Question 64

A report which shows actual results,budgets,and variances is called a

A)financial plan.
B)cash budget.
C)performance report.
D)managerial report.

Question 65

Some information will have to be collected from __________ sources to determine,for example,customer satisfaction.

A)external
B)internal
C)regulatory
D)competitive

Question 66

A formal expression of goals and objectives in financial terms is called a(n)

A)mission statement.
B)strategic plan.
C)budget.
D)operational plan.

Question 67

Performance reports are primarily used for

A)financial control.
B)cash planning.
C)forecasting.
D)financial planning.

Question 68

Phlogiston Pharmaceuticals,Ltd.,is a manufacturer of generic drugs with a worldwide market for its products.In order to determine the amount of each drug to produce,it is essential that the following be available on a timely basis:

A)Cash flow projections
B)Pro-forma income statements
C)Demand forecasts
D)Accounts receivable records

Question 69

Identify an example of external source data that is important to an organization.

A)customer satisfaction as gauged by surveys
B)staff salaries as a percentage of sales
C)satisfaction of employees with their work environment
D)sales revenue divided by the number of hours worked by the sales staff

Question 70

The quality assurance department at a large manufacturing business enters data into the AIS that is used to produce a weekly report that summarizes the proportion of defective units in each product line.This is an example of:

A)internal financial information.
B)internal nonfinancial information.
C)external financial information.
D)external nonfinancial information.

Question 71

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky.Since 1996,the owner,Glamdring Elfthrall,has leveraged computer technology to provide a superior level of customer service.In particular,the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible.Price information and condition are also provided for each inventory item.In this database,the data about an individual figure's price is stored in a(an)

A)entity.
B)attribute.
C)field.
D)record.

Question 72

A projection of an organization's cash inflows and outflows is known as a(n)

A)performance budget.
B)operating budget.
C)management budget.
D)cash budget.

Question 73

Hector Sanchez works in the accounting department of a multinational manufacturing firm.A large part of his job involves updating accounts receivable based on sales reports and payments received.His responsibilities are part of the firm's

A)revenue cycle.
B)expenditure cycle.
C)financing cycle.
D)production cycle.

Question 74

In Petaluma,California,electric power is provided to consumers by the Power To The People Electrical Company,a local co-op.Each month PTTP mails bills to 70,000 households and then processes payments as they are received.What is the best way for this business to ensure that payment data entry is efficient and accurate?

A)Well-designed paper forms
B)Source data automation
C)Turnaround documents
D)Sequentially numbered forms

Question 75

Which managerial tool below is used to provide the organization with financial control?

A)a cash budget
B)a performance report
C)a sales budget
D)a customer satisfaction survey

Question 76

Callow Youth Clothing is a boutique retailer located in Estes Park,Colorado.During the peak tourist season,it has average daily cash and credit card sales in excess of $5,000.What is the best way for this business to ensure that sales data entry is efficient and accurate?

A)Well-designed paper forms
B)Source data automation
C)Turnaround documents
D)Sequentially numbered forms

Question 77

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky.Since 1996,the owner,Glamdring Elfthrall,has leveraged computer technology to provide a superior level of customer service.In particular,the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible.Price information and condition are also provided for each inventory item.In this database,the price of a figure is a(an)

A)entity.
B)attribute.
C)field.
D)record.

Question 78

The premier buyer and seller of vintage action figures in the San Francisco Bay area is Vini Vidi Geeky.Since 1996,the owner,Glamdring Elfthrall,has leveraged computer technology to provide a superior level of customer service.In particular,the store's database system was designed to make detailed information about each individual action figure's characteristics easily accessible.Price information and condition are also provided for each inventory item.In this database,the data about an individual figure is a(an)

A)entity.
B)attribute.
C)field.
D)record.

Question 79

Variances to the budget should be interpreted by using the principle of

A)management by exception.
B)management by objectives.
C)management by exemption.
D)exceptions to variances.

Question 80

Callow Youth Clothing is a boutique retailer located in Estes Park,Colorado.It is a sole proprietorship that stocks an inventory of between 80 and 160 different items,each of which is tracked in real time by the AIS.In designing a chart of accounts for this business,what is the minimum number of digits necessary to represent the account codes,including subsidiary ledgers?

A)4
B)6
C)7
D)9