Accounting Information System

MULTIPLE CHOICE QUESTIONS. Identify the letter of the choice that best completes the statement or answers the
questions.

1. Which of the following is not a business resource? [A] Raw material. [B] Labor. [C] Information. [D] All are business
resources.
2. The value of information for users is determined by all of the following EXCEPT [A] Reliability. [B] Relevance. [C]
Convenience. [D] Completeness.
3. An example of a financial transaction is [A] The purchase of computer. [B] A supplier's price list. [C] A delivery
schedule. [D] An employee benefit brochure.
4. Which subsystem is not part of the Accounting Information System? [A] Transaction Processing System. [B] Expert
System. [C] General Ledger/Financial Reporting System. [D] Management Reporting System.
5. The major difference between the Financial Reporting System (FRS) and the Management Reporting System (MRS) is
the [A] FRS provides information to internal and external users; the MRS provides information to internal users. [B]
FRS provides discretionary information; the MRS provides nondiscretionary information. [C] FRS reports are
prepared using information provided by the General Ledger System; the MRS provides information to the General
Ledger System. [D] FRS reports are prepared in flexible, non-standardized formats; the MRS reports are prepared in
standardized, formal formats.
6. The purpose of the Transaction Processing System includes all of the following except [A] Converting economic
events into financial transactions. [B] Recording financial transactions in the accounting records. [C] Distributing
essential information to operations personnel to support their daily operations. [D] Measuring and reporting the
status of financial resources and the changes in those resources.
7. The Transaction Processing System includes all of the following cycles except [A] The revenue cycle. [B] The
administrative cycle. [C] The expenditure cycle. [D] The conversion cycle.
8. The primary input to the Transaction Processing System is [A] A financial transaction. [B] An accounting record. [C]
An accounting report. [D] A nonfinancial transaction.
9. When designing the data collection activity, which type of data should be avoided? [A] Data that is relevant. [B] Data
that is efficient. [C] Data that is redundant. [D] Data that is accurate.
10. The most basic element of useful data in the database is [A] The record. [B] The key. [C] The file. [D] The attribute.
11. In a database, a complete set of attributes for a single occurrence of an entity class is called [A] A key. [B] A file. [C] A
record. [D] A character.
12. Effective information has all of the following characteristics except [A] Relevance. [B] Completeness. [C]
Summarization. [D] Structure.
13. Database management tasks do not include [A] Summarization. [B] Storage. [C] Retrieval. [D] Relation.
14. What distinguishes between the Accounting Information System and the management Information System is based
on [A] Whether the transactions are financial or nonfinancial. [B] Whether discretionary or nondiscretionary reports
are prepared. [C] The end users of the reports. [D] The organizational structure of the business.
15. Which activity is not part of the finance function? [A] Cash receipts. [B] Portfolio management. [C] Credit. [D]
General ledger.
16. Which of the following is NOT part of the accounting function? [A] Managing the financial information resource of
the firm. [B] Capturing and recording transactions in the database. [C] Distributing transaction information to
operations personnel. [D] Managing the physical information system of the firm.
17. The term "accounting independence" refers to [A] Data integrity. [B] Separation of duties, such as record keeping
and custody of physical resources. [C] Generation of accurate and timely information. [D] Business segmentation by
function.
18. In the distributed data processing approach [A] Computer services are consolidated and managed as a shared
organization resource. [B] The computer service function is a cost center. [C] The end users are billed using a charge-
back system. [D] Computer services are organized into small information processing units under the control of end
users.
19. The data control group is responsible for [A] Performing the day-to-day processing of transactions. [B] Security and
integrity of the database. [C] Liaison between the end user and data processing. [D] Providing safe storage for off-
line data files.
20. Data processing does not involve [A] Data control. [B] Computer operations. [C] System maintenance. [D] Data
conversion.
21. Which individual is least involved in new systems development? [A] Systems analyst. [B] External auditor. [C] End
user. [D] Data librarian.
22. The objectives of all information systems include all of the following except [A] Support for the stewardship function
of management. [B] Evaluating transaction data. [C] Support for the day-to-day operations of the firm. [D] Support
for management decision making.
23. Which individuals may be involved in the Systems Development Life Cycle? [A] Accountants. [B] Systems
professionals. [C] End users. [D] All of the above.
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24. An appraisal function housed within the organization that performs a wide range of services for management is [A]
Internal auditing. [B] Data control group. [C] External auditing. [D] Database administration.
25. Advantages of a database system include all of the following except [A] Elimination of data redundancy. [B] Open
access to all data by all users. [C] Single update for changes in data. [D] Confidence that all data is current.
26. Disadvantages of distributed data processing include all of the following except [A] Mismanagement of organization-
wide resources. [B] Hardware and software incompatibility. [C] Cost reductions. [D] Difficulty in hiring qualified IT
professionals.
27. All of the following are external end users except [A] Cost accountants. [B] Creditors. [C] Stockholders. [D] Tax
authorities.
28. Useful information must possess all of the following characteristics except [A] Relevance. [B] Precision. [C] Accuracy.
[D] Completeness.
29. The objectives of an information system include each of the following except [A] Support for the stewardship
responsibilities of management. [B] Furthering the financial interests of shareholders. [C] Support for management
decision making. [D] Support for the firm's day-to-day operations.
30. Accountants play many roles relating to the accounting information system, including all of the following except [A]
System users. [B] System designers. [C] System auditors. [D] System converters.
31. Which system is not part of the expenditure cycle? [A] Cash disbursements. [B] Payroll. [C] Production
planning/control. [D] Purchases/accounts payable.
32. Which system produces information used for inventory valuation, budgeting, cost control, performance reporting,
and make-buy decisions? [A] Sales order processing. [B] Purchases/accounts payable. [C] Cash disbursements. [D]
Cost accounting.
33. Which of the following is a turn-around document? [A] Remittance advice. [B] Sales order. [C] Purchase order. [D]
Payroll check.
34. The order of the entries made in the ledger is by [A] Transaction number. [B] Account number. [C] Date. [D] User.
35. The order of the entries made in the general journal is by [A] Date. [B] Account number. [C] User. [D] Customer
number.
36. In general, a special journal would not be used to record [A] Sales. [B] Cash disbursements. [C] Depreciation. [D]
Purchases.
37. Which account is least likely to have a subsidiary ledger? [A] Sales. [B] Accounts receivable. [C] Fixed assets. [D]
Inventory.
38. Subsidiary ledgers are used in manual accounting environments. What file is comparable to a subsidiary ledger in a
computerized environment? [A] Archive file. [B] Reference file. [C] Transaction file. [D] Master file.
39. A journal is used in manual accounting environments. What file is comparable to a journal in a computerized
environment? [A] Archive file. [B] Reference file. [C] Transaction file. [D] Master file.
40. In a computerized environment, a list of authorized suppliers would be found in the [A] Master file. [B] Transaction
file. [C] Reference file. [D] Archive file.
41. Which of the following is an archive file? [A] An accounts payable subsidiary ledger. [B] A cash receipts file. [C] A
sales journal. [D] A file of accounts receivable that have been written off.
42. Which document is not a type of source document? [A] A sales order. [B] An employee time card. [C] A paycheck. [D]
A sales return receipt.
43. The most important purpose of a turnaround document is to [A] Serve as a source document. [B] Inform a customer
of the outstanding amount payable. [C] Provide an audit trail for the external auditor. [D] Inform the bank of
electronic funds deposits.
44. Which type of graphical documentation represents systems at different levels of detail? [A] Data flow diagram. [B]
Document flowchart. [C] System flowchart. [D] Program flowchart.
45. Data flow diagrams [A] Depict logical tasks that are being performed, but not who is performing them. [B] Illustrate
the relationship between processes, and the documents that flow between them and trigger activities. [C] Represent
relationships between key elements of the computer system. [D] Describe in detail the logic of the process.
46. System flowcharts [A] Depict logical tasks that are being performed, but not who is performing them. [B] Illustrate
the relationship between database entities in systems. [C] Represent relationships between key elements of both
manual and computer systems. [D] Describe the internal logic of computer applications in systems.
47. When determining the batch size, which consideration is the least important? [A] Achieving economies by grouping
together large numbers of transactions. [B] Complying with legal mandates. [C] Providing control over the
transaction process. [D] Balancing the trade-off between batch size and error detection.
48. In contrast to a real-time system, in a batch processing system [A] There is a lag between the time when the
economic event occurs and the financial records are updated. [B] Relatively more resources are required. [C] A
greater resource commitment per unit of output is required. [D] Processing takes place when the economic event
occurs.
49. In contrast to a batch processing system, in a real-time system [A] A lag occurs between the time of the economic
event and when the transaction is recorded. [B] Relatively fewer hardware, programming, and training resources are
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required. [C] A lesser resource commitment per unit of output is required. [D] Processing takes place when the
economic event occurs.
50. The type of transaction most suitable for batch processing is [A] Airline reservations. [B] Credit authorization. [C]
Payroll processing. [D] adjustments to perpetual inventory.
51. The type of transaction most suitable for real-time processing is [A] Recording fixed asset purchases. [B] Recording
interest earned on long-term bonds. [C] Adjusting prepaid insurance. [D] Recording a sale on account.
52. Both the revenue and the expenditure cycle can be viewed as having two key parts. These are [A] Manual and
computerized. [B] Physical and financial. [C] Input and output. [D] Batch and real-time.
53. All of the following can provide evidence of an economic event except [A] source document. [B] Turn-around
document. [C] Master document. [D] Product document.
54. A file that stores data used as a standard when processing transactions is [A] A reference file. [B] A master file. [C] A
transaction file. [D] An archive file.
55. Operational inefficiencies occur because[A] Accounts both common and unique to many concurrent transactions
need to be updated in real time. [B] Accounts common to many concurrent transactions need to be updated in real
time. [C] Accounts unique to many concurrent transactions need to be updated in real time. [D] None of the above
are true statements.
56. Operational efficiencies can be improved by [A] Updating accounts both common and unique to many concurrent
transactions in real time. [B] Updating accounts both common and unique to many concurrent transactions in batch
mode. [C] Updating accounts unique to many concurrent transactions in real time and updating common accounts in
batch mode. [D] None of the above are true statements.
57. The coding scheme most appropriate for a chart of accounts is [A] Sequential code. [B] Block code. [C] Group code.
[D] Mnemonic code.
58. The most important advantage of an alphabetic code is that [A] meaning is readily conveyed to users. [B] Sorting is
simplified. [C] The capacity to represent items is increased. [D] Missing documents can be identified.
59. Which statement is not true? [A] The journal voucher is the only source of input into the general ledger. [B] A journal
voucher can be used to represent summaries of similar transactions or a single unique transaction. [C] Journal
vouchers are not used to make adjusting entries and closing entries in the general ledger. [D] Journal vouchers offer
a degree of control against unauthorized general ledger entries.
60. Entries into the General Ledger System (GLS) can be made using information from [A] The general journal. [B] A
journal voucher which represents a summary of similar transactions. [C] A journal voucher which represents a single,
unusual transaction. [D] All of the above.
61. Which statement is not correct? The general ledger master file [A] Is based on the firm's chart of account. [B]
Contains a record for control accounts. [C] Is an output of the Financial Reporting System (FRS). [D] Supplies
information for management decision making.
62. What type of data is found in the general ledger master file? [A] A chronological record of all transactions. [B] The
balance of each account in the chart of accounts. [C] Budget records for each account in the chart of accounts. [D]
Subsidiary details supporting a control account.
63. Which steps in the Financial Accounting Process are in the correct sequence? [A] Record the transaction, post to the
ledger, prepare the adjusted trial balance, enter adjusting entries, prepare financial statements. [B] Record the
transaction, prepare the unadjusted trial balance, record adjusting journal entries, record closing entries, prepare
financial statements. [C] Record the transaction, post to the ledger, record adjusting entries, prepare the unadjusted
trial balance, prepare financial statements. [D] Record the transaction, post to the ledger, prepare the adjusted trial
balance, prepare financial statements, record closing entries.
64. Which statement is not correct? [A] The post-closing trial balance reports the ending balance of each account in the
general ledger. [B] One purpose of preparing the unadjusted trial balance is to ensure that debits equal credits. [C]
Financial statements are prepared based on the unadjusted trial balance. [D] The unadjusted trial balance reports
control account balances but omits subsidiary ledger detail.
65. Financial statements are prepared from the [A] Trial balance. [B] Adjusted trial balance. [C] General ledger. [D]
General journal.
66. Which statement is not true? [A] The journal voucher is the only source of input into the general ledger. [B] A journal
voucher can be used to represent summaries of similar transactions or a single unique transaction. [C] Journal
vouchers are not used to make adjusting entries and closing entries in the general ledger. [D] Journal vouchers offer
a degree of control against unauthorized general ledger entries.
67. Entries into the General Ledger System (GLS) can be made using information from [A] The general journal. [B] A
journal voucher which represents a summary of similar transactions. [C] A journal voucher which represents a single,
unusual transaction. [D] All of the above.
68. Which statement is not correct? The general ledger master file [A] Is based on the firm's chart of account. [B]
Contains a record for control accounts. [C] Is an output of the Financial Reporting System (FRS). [D] Supplies
information for management decision making.

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69. What type of data is found in the general ledger master file? [A] A chronological record of all transactions. [B] The
balance of each account in the chart of accounts. [C] Budget records for each account in the chart of accounts. [D]
Subsidiary details supporting a control account.
70. Which steps in the Financial Accounting Process are in the correct sequence? [A] Record the transaction, post to the
ledger, prepare the adjusted trial balance, enter adjusting entries, prepare financial statements. [B] Record the
transaction, prepare the unadjusted trial balance, record adjusting journal entries, record closing entries, prepare
financial statements. [C] Record the transaction, post to the ledger, record adjusting entries, prepare the unadjusted
trial balance, prepare financial statements. [D] Record the transaction, post to the ledger, prepare the adjusted trial
balance, prepare financial statements, record closing entries.