Republic of the Philippines

Batangas State University

Name: Date:

Section: Score:

Midterm Examination on Accounting Information System

I. Direction: Encircle the letter of the best answer.

1. Which of the following is not a purpose of the transaction processing system?

a) Managing and reporting on the status of the financial statements

b) Converting economic events into financial transactions

c) Distributing essential information to operations personnel to support their daily operations

d) Recording financial transactions in the accounting records

2. Which of the following are objectives of the data collection activity within the general model for AIS?

a) Relevant and redundant

b) Efficient and relevant

c) Efficient and redundant

d) Efficient and objective

3. Which of the following is NOT a database management risk?

a) Retrieval

b) Storage

c) Summarization

d) Deletion

4. Which of the following is NOT a financial transaction?

a) Update valid vendor file

b) Purchase of product

c) Cash receipts

d) Sale of inventory

5. The following are subsystems of the accounting information systems, EXCEPT the

a) Transaction processing system

b) General ledger/financial reporting system

c) Human resource system

d) Management reporting system

6. Which of the following is NOT a characteristic of effective information?

a) Relevance

b) Precision

c) Accuracy

d) Summarization

7. When viewed from the highest to most elemental level, the data hierarchy is
 a) File, record, attribute

b) Attribute, record, file

c) Record, attribute, key

d) Table, record, key

e) Key, record, table

8. Which of the following is least likely to be used as evidence by an external auditor?

a) Substantive tests results

b) Work performed by internal auditors who organizationally report to the controller

c) Test of controls results

d) Work performed by internal auditors who report to the audit committee of the BOD

9. Which of the following is NOT an objective of all information system?

a) Support for the stewardship function of management

b) Support management decision making

c) Support for the day-to-day operations of the firm

d) All of the above are objectives

10. Which of the following best describes the activities of the materials management function?

a) Purchasing, receiving and inventory control

b) Purchasing, receiving and storage

c) Receiving, sales, distribution, and purchasing

d) Receiving, storage, purchasing and accounts payable

e) Purchasing, storage and distribution

11. Which of the following best describes the activities of the production function?

a) Maintenance, inventory control and production planning

b) Quality control, production planning, manufacturing and payroll

c) Maintenance, production planning, storage and quality control

d) Manufacturing, quality control and maintenance

e) Production planning, quality control, manufacturing and maintenance

12. Which of the best describes the activities of the accounting function?

a) Inventory control, cash receipts, accounts payable, cash disbursements and payroll

b) Fixed assets, accounts payable, cash disbursement and cost accounting

c) Purchasing, cash receipts, accounts payable, cash disbursements and payroll

d) Inventory control, accounts payable, fixed assets and payroll

e) Inventory control, cost accounting, accounts payable, cash disbursements and payroll

13. Which of the following is NOT an advantage of real-time processing of files over batch processing?

a) Shorter transaction processing time

b) Reduction of inventory stocks

c) Improved customer service

d) All are advantages

e) None of the above are advantages

14. Which statement is NOT true? Batch processing

a) Is subject to deadlocks when processing common accounts

c) Can use databases and flat files

d) Can be initiated from a terminal

15. Which is the least appropriate type of transaction for a real-time system?

a) Airline reservation

b) Point-of-sale transaction

c) Weekly processing of payroll checks

d) Air traffic control systems

e) All of the above are real-time systems

16. Which of the following is NOT true of a turn-around document?

a) It may reduce errors made by external parties

b) It is used as internal documents only

c) It is commonly used by utility companies (gas, power, water)

d) It is both input and output document

17. A documentation tool used to represent the logical elements of a system is a(n)

a) Data flow diagram

b) Programming flowchart

c) Entity relationship diagram

d) System flowchart

e) All of the above

18. Which of the following is NOT a true statement?

a) Transactions are recorded on ledgers and are posted to journals

b) Transactions are recorded in journals and are posted to ledgers

c) Infrequent transactions are recorded in the general journal

d) Frequent transactions are recorded in special journal

19. Which of the following is true of the relationship between subsidiary ledgers and general ledger accounts?

a) The two contain different and unrelated data

b) The relationship between the two constitute part of the audit trail

c) All ledger accounts have subsidiaries

d) The total of subsidiary ledger accounts usually exceeds the total in the related general ledger account

20. Which statement is NOT correct?

a) Legacy systems do not process financially significant transactions

b) Mainframes are exclusive to legacy systems, while modern systems use only the client-server model

c) Legacy systems may use database technology

d) All of the above are true

21. An example of a control designed to validate a transaction at the point of data entry is

a) Recalculation of a batch total

b) A record count

c) A check digit

d) Checkpoints

22. Application controls are classified as

b) Input, processing, output and storage

c) Input, processing, output and control

d) Input, processing, output, storage and control

23. Which of the following is NOT an element of the fraud triangle?

a) Ethics

b) Justifiable reliance

c) Situational pressure

d) Opportunity

24. How are transactions in real-time processing system edited?

a) In a separate computer run

b) In online mode as transactions are entered

c) During backup procedure

d) Not edited due to time constraints

25. Which of the following journal entries would a bookkeeper make to conceal the theft of cash receipts from customers in
payment of their accounts?

DR CR

a. Miscellaneous Expense Cash

b. Petty Cash Cash

c. Cash Accounts Receivable

d. Sales Returns Accounts Receivable

a) Transaction authorization

b) Supervision

c) Accounting Records

d) Segregation of duties

27. An employee in the receiving department keyed in shipment from a remote terminal and inadvertently omitted the purchase
order number. The best application control to detect this error would be a

a) Batch total

b) Missing data check

c) Completeness check

d) Reasonableness test

28. Ensuring that all material transactions processed by the information system are valid and in accordance with the management’s
objectives is an example o

a) Transaction authorization

b) Supervision

c) Accounting records

d) Independent verification

29. Providing timely information about transactions in sufficient detail to permit proper classification an financial reporting is an
example of

a) Control environment

b) Risk assessment
 c) Information an communication

d) Monitoring

30. The fraud scheme that is similar to the concept of “borrowing from Peter to pay Paul” is

a) Expense account fraud

b) Bribery

c) Lapping

d) Transaction fraud

II. Direction: Enumerate the following.

31-34. Four main areas of Business Ethics

35-42. Main computer ethics issues

43-45. Fraud Triangle

46-48. Fraud Schemes

49-50. Types of IT controls

III. Direction: Label the elements in the diagram and briefly describe its function and key features. (20 pts.)
Prepared by:

Philip Dan Jayson M. Laroza, CPA

Instructor

Checked and Verified by:

ASST. PROF. JENNIFER M. PEREZ, CPA

Department Chair, Accountancy and Management Accounting

Approved by:

DR. IRENE H. MARALIT

Associate Dean, CABEIHM