Question 1

The compatibility principle requires that an accounting system report useful, understandable, timely, and pertinent information for effective decision making.

Accepted Answer

The compatibility principle is not directly related to the requirement of reporting useful, understandable, timely, and pertinent information for effective decision making. This description more closely aligns with the qualities of good information such as relevance and reliability, rather than the compatibility principle, which focuses on ensuring an accounting system's outputs are compatible with the needs of its users.

Question 2

Input devices are the means to make accounting information available to users.

Accepted Answer

Input devices are used to enter data into a computer system, not specifically to make accounting information available to users.

Question 3

The purchases journal is used to record cash purchases of merchandise.

Accepted Answer

The purchases journal is used to record credit purchases of merchandise, not cash purchases.

Question 4

With on-line systems, all information storage should be off-line to protect the data.

Accepted Answer

With online systems, information storage is typically done on servers that are connected to the internet. However, there are numerous measures in place to protect the data, such as firewalls, encryption, and access controls. While offline storage can provide an extra layer of security, it is not always practical or necessary for all types of data.

Question 5

Accurate source documents are crucial to accounting systems to limit the possibility of entering faulty data into the system.

Accepted Answer

Accurate source documents such as receipts, invoices, and bank statements provide the necessary information for recording transactions accurately in accounting systems. Without accurate source documents, there is a high risk of inputting incorrect data, which can lead to errors in financial statements and decision-making. Therefore, accurate source documents are crucial in ensuring the reliability and integrity of accounting systems.

Question 6

The flexibility principle prescribes that an accounting information system conform with a company's activities, personnel, and structure and adapt to a company's unique characteristics.

Accepted Answer

The answer of The flexibility principle prescribes that an accounting...

Question 7

Accounting information systems collect and process data from transactions and events, organize them in useful reports, and communicate results to decision makers.

Accepted Answer

This statement accurately describes the purpose of accounting information systems.

Question 8

With advanced technology there is no need to trace information that has been entered into an accounting information system to its source.

Accepted Answer

Even with advanced technology, tracing information back to its source is crucial for ensuring accuracy, detecting errors, and maintaining the integrity of the accounting information system.

Question 9

The five basic principles of accounting information systems are control, competency, compatibility, flexibility and cost-benefit.

Accepted Answer

The five basic principles of accounting information systems are control, relevance, compatibility, flexibility, and cost-benefit. Competency is not one of the principles.

Question 10

Accounting information systems are so accurate that decision makers in practice do not need a basic knowledge of how the systems work.

Accepted Answer

Decision makers should have at least a basic understanding of accounting information systems to make informed decisions based on the data provided. Without this knowledge, they may misinterpret the information or make incorrect assumptions.

Question 11

Internal controls include policies to direct operations toward common goals, procedures to ensure reliable financial reports, safeguards to protect company assets and methods to achieve compliance with laws and regulations.

Accepted Answer

This is a correct statement about internal controls.

Question 12

A special journal is used to record and post transactions of a similar type.

Accepted Answer

A special journal is designed to record and post transactions of a similar type such as cash receipts, cash disbursements, sales, purchases, or general journal entries. The purpose of special journals is to streamline the record-keeping process and improve efficiency in accounting.

Question 13

Auditors rely on accounting system databases when they audit financial statements and a company's controls.

Accepted Answer

Auditors use accounting system databases to extract financial data and assess a company's financial reporting, internal controls, and risk management systems. This data provides necessary evidence to support audit findings and opinions.

Question 14

A sales journal is used to record cash sales.

Accepted Answer

A sales journal is used to record credit sales, not cash sales. Cash sales are typically recorded in a cash receipts journal.

Question 15

Due to electronic files and Web communications, source documents are no longer required.

Accepted Answer

While electronic files and web communications have made information accessible, source documents are still needed to verify the accuracy and authenticity of the information presented.

Question 16

Accounting information processes are structured to eliminate the need for professional judgment.

Accepted Answer

Accounting information processes involve many complex decisions that require professional judgment. While some routine tasks such as data entry and basic calculations may be structured to reduce the need for judgment, many other aspects of accounting require skilled analysis and decision-making.

Question 17

The cost-benefit principle prescribes that the benefits from an activity in an accounting information system outweigh the costs of that activity.

Accepted Answer

The cost-benefit principle states that an activity should only be undertaken if the benefits from it exceed the costs of that activity. This principle is widely recognized and followed in the business world to ensure that resources are allocated efficiently and effectively. Therefore, the statement is true.

Question 18

The general journal is used for transactions not covered by special journals and for adjusting, closing, and correcting entries.

Accepted Answer

The general journal is a catch-all journal for transactions that don't fit into the specialized journals like cash receipts, cash disbursements, sales, and purchases. It is also used for adjusting and correcting entries at the end of an accounting period.

Question 19

Input devices include journal entries, keyboards, scanners, and modems.

Accepted Answer

This statement is true. Input devices are any hardware devices that allow data to be entered into a computer or other electronic device. Examples of input devices include keyboard, mouse, scanner, microphone, joystick, and touchscreen. Journal entries can also be considered as an input device if they are being used for data entry purposes. Modems can also be used as input devices when they are used to receive data from a remote source.

Question 20

Accounting information systems are designed to capture information about a company's transactions and events and to provide output including financial, managerial, and tax reports.

Accepted Answer

Accounting information systems are specifically designed to capture and process data related to financial transactions and events in order to produce a variety of reports for internal and external use, including financial statements, managerial reports, and tax filings.

Quiz 7: Accounting Information Systems