TEST BANK OF ACCOUNTING INFORMATION SYSTEMS, 12E
BY MARSHALL B. ROMNEY
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Accounting Information System
Exam and Quizzes – Strayer
Chapter 1
Accounting Information Systems: An Overview
1)
Which of the following statements below shows the contrast between data and
information?
A)
Data is the output of an AIS.
B)
Information is the primary output of an AIS.
C)
Data is more useful in decision-making than information.
D)
Data and information are the same.
2)
Information is
A)
basically the same as data.
B)
raw facts about transactions.
C)
potentially useful facts when processed in a timely manner.
D)
data that has been organized and processed so that it's meaningful.
3)
The value of information can best be defined as
A)
how useful it is to decision makers.
B)
the benefits produced by possessing and using the information minus the cost of
producing it.
C)
how relevant it is.
D)
the extent to which it maximizes the value chain.
4)
An accounting information system (AIS) processes ________ to provide users with
________.
A)
data; information
B)
data; transactions
C)
information; data
D)
data; benefits
5)
Information that reduces uncertainty, improves decision makers' ability to make
predictions, or confirms or corrects their prior expectations, is said to be
A)
complete.
B)
relevant.
C)
reliable.
D)
timely.
6)
Information that is free from error or bias and accurately represents the
events or activities of the organization is
A)
relevant.
B)
reliable.
C)
verifiable.
D)
timely.
7)
Information that does not omit important aspects of the underlying events or
activities that it measures is
A)
complete.
B)
accessible.
C)
relevant.
D)
timely.
8)
When two knowledgeable people acting independently each produce the same
information, this information is said to be
A)
complete.
B)
relevant.
C)
reliable.
D)
verifiable.
9)
Data must be converted into information to be considered useful and meaningful
for decision-making. There are six characteristics that make information both
useful and meaningful. If information is free from error or bias and accurately
represents the events or activities of the organization, it is representative
of the characteristic of
A)
relevancy.
B)
timeliness.
C)
understandability.
D)
reliability.
10)
An accounting information system must be able to perform which of the following
tasks?
A)
collect transaction data
B)
process transaction data
C)
provide adequate controls
D)
all of the above
11)
Which of the following is not an example of a common activity in an AIS?
A)
buy and pay for goods and services
B)
sell goods and services and collect cash
C)
summarize and report results to interested parties
D)
recording of sales calls for marketing purposes
12)
Which of the following is not one of the components of an AIS?
A)
Internal controls and security measures
B)
People
C)
Procedures and instructions
D)
Hardware
13)
One group that relies on both the adequate collection and transformation of
data for decision-making purposes for an organization is
A)
management.
B)
interested outsiders.
C)
competitors.
D)
the government.
14)
The primary objective of accounting is to
A)
implement strong internal controls.
B)
provide useful information to decision makers.
C)
prepare financial statements.
D)
ensure the profitability of an organization.
15)
The American Institute of Certified Public Accountants (AICPA) has recognized
the importance of AIS and the major impact information technology has on the
area of accounting. To recognize individual CPAs who have met educational and
experiential requirements in this area, the group formally created the
designation known as
A)
the Certified Management Accountant.
B)
the Certified Information Technology Professional.
C)
the Certified Internal Auditor.
D)
the Certified Data Processing Professional.
16)
The AIS must include controls to ensure
A)
safety and availability of data.
B)
marketing initiatives match corporate goals.
C)
information produced from data is accurate.
D)
both A and C
17)
A change in the AIS that makes information more easily accessible and widely
available within an organization is most likely to first influence the
A)
organizational culture.
B)
customer base.
C)
external financial statement users.
D)
production activity.
18)
The process of creating value for customers is the result of nine activities
that form a
A)
value chain.
B)
profitable operation.
C)
successful business.
D)
support system.
19)
The value chain concept is composed of two types of activities known as
A)
primary and support.
B)
primary and secondary.
C)
support and value.
D)
technology and support.
-14
20)
Which of the following is a primary activity in the value chain?
A)
infrastructure
B)
technology
C)
purchasing
D)
marketing and sales
21)
In value chain analysis, what is the activity of arranging the delivery of
products to customers called?
A)
outbound logistics
B)
inbound logistics
C)
shipping
D)
delivery
22)
An AIS provides value by
A)
improving products or services through information that increases quality and
reduces costs.
B)
providing timely and reliable information to decision makers.
C)
creating new products.
D)
both A and B
23)
In Chapter 1, Figure 1-4 shows the factors that influence the design of AIS.
The diagram shows a bi-directional arrow between the organizational culture and
the AIS. The reason for this two-way interchange between organizational culture
and AIS is
A)
that the AIS should not influence the values of the organizational culture.
B)
because the organization's culture influences the AIS, and likewise the AIS
influences the organization's culture by controlling the flow of information
within the organization.
C)
due to the transfer of managers between the two corporate elements.
D)
the AIS impacts the organization's key strategies.
24)
An example of inbound logistics would consist of
A)
the activities that transform inputs into final products or services.
B)
the activities that help customers to buy the organization's products or
services.
C)
the activities that provide post-sale support to customers.
D)
the activities that consist of receiving, storing, and distributing the
materials used as inputs by the organization to create goods and/or services it
sells.
25)
A good example of how an AIS is used to share knowledge within an organization
is
A)
the use of a corporate database to help staff identify the relevant experts who
can help with a particular client.
B)
the use of laptop computers to access a network for messaging worldwide.
C)
the monitoring of production equipment to watch for defects.
D)
the use of point-of-sale data to determine hot-selling items.
26)
One activity within the value chain is research and development. This activity
can be identified as a
A)
firm infrastructure activity.
B)
human resources activity.
C)
technology activity.
D)
purchasing activity.
27)
When the AIS provides information in a timely and accurate manner, it stands as
an example of
A)
improved decision making.
B)
improving the quality and reducing the costs of products or services.
C)
improving efficiency.
D)
all of the above
28)
Accounting information plays major roles in managerial decision making by
A)
identifying situations requiring management action.
B)
reducing uncertainty.
C)
providing a basis for choosing among alternative actions.
D)
all of the above
29)
A well-designed AIS can improve the decision-making function within the
organization. Which statement below would describe a limitation, rather than a
benefit, of an efficient AIS?
A)
An AIS reduces uncertainty, and therefore accounting information can provide a
basis for choosing among alternative courses of action.
B)
An AIS identifies situations requiring management action.
C)
An AIS provides to its users an abundance of information without any filtering
or condensing of such information.
D)
An AIS provides information about the results of previous decisions which
provides decision makers with feedback that can be used in future decision
making.
30) Jill Fredson
is in charge of the mail room at Gammon University. Every Friday morning she
receives a report via email that summarizes the number of outgoing and incoming
pieces of mail by source and destination department. Every Friday afternoon,
Jill deletes the report without reading it because it has no bearing on mail
room operations. Which of the following characteristics of useful information
is absent in the situation described above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
31) Inventory
information is provided in real time by a firm's accounting information system.
The accuracy of this information is questionable, however, since the production
manager often reports stock outs of components that the system indicates are in
stock. Which of the following characteristics of useful information is absent
in the situation described above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
32) Joe Marzetti
has been the controller of Fairview Tires for 25 years. Ownership of the firm
recently changed hands and the new owners are conducting an audit of the
financial records. The audit has been unable to reproduce financial reports
that were prepared by Marzetti. While there is no evidence of wrongdoing, the
auditors are concerned that the discrepancies might contribute to poor
decisions. Which of the following characteristics of useful information is
absent in the situation described above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
33) In 2003,
Custer Manufacturing implemented a Web-based information system that allows all
employees to access mission-critical information. The intention was to increase
production efficiency. Unfortunately, it had the opposite effect, as deliveries
fell behind schedule and costs increased. Jeff Akspen, the director of
information technology services, asked Joyce Jenkins to come in and talk with
him about the system. Joyce is a long-time employee of Custer, and her opinion
is valued by her peers and by her supervisor. "So Joyce, how's it going
down there in the shop?""Not so good, Jeff. Used to be we got a
weekly pick list so we knew how to plan production. Now, we got that computer
system. Most of us can't figure out how to use it to do our jobs. Is there some
way to print out a pick list?"Jeff thought for a while before responding.
"Well, Joyce, to tell you the truth, I'm not so sure how to do it myself,
but there must be a way. We'll bring in the consultants that helped us build
the system. Maybe they can help." Which of the following characteristics
of useful information is absent in the situation described above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
34) Razzmataz,
Wisconsin, is a popular tourist destination. During the winter months, the
population dwindles to a meager few, but when summer comes, the size of the
town surges. Chuck Hewitt is the town sanitation engineer. When the size of the
town surges, so do his responsibilities. Among them is management of the sewage
processing volume.In an interview with the local paper, Chuck complained that a
report on tourist population that he uses to adjust processing volume refers to
data that was collected five days ago and it takes him a week to make
adjustments.Which of the following characteristics of useful information is
absent in the situation described above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
35) A frantic
Stro Frinzel called the home office from Des Moines."You have got to help
me. I am about to close a great sale, but I have to be able to guarantee
delivery by the fourteenth. I can't get through to the company Web site to
verify delivery!""Thank you for calling. Your call is very important
to us. However, all of our lines are currently in use. Please try again
later."Which of the following characteristics of useful information is
absent in the situation described above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
36) Message left
on an answering machine: "Hi Bob! Just got into town. How about dinner
this evening if you're available. Call me!"Which of the following
characteristics of useful information is absent in the situation described
above?
A) Relevant
B) Reliable
C) Complete
D) Timely
E)
Understandable
F) Verifiable
G) Accessible
37) Robinson
Crusoe has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process.
Monday is the newest employee. She collects the coconuts. Tuesday, as you might
expect, takes calls from curstomers, oops, I mean customers, who are unhappy
with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon
they drift to the wholesaler. Thursday sends smoke signals to the wholesaler
extolling the virtues of the latest production run of nuts that are drifting
across the bay.Which of the following functions in the value chain is Monday
performing?
A) Inbound
logistics
B) Operations
C) Outbound
logistics
D) Marketing and
sales
E) Service
38) Robinson
Crusoe has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process.
Monday is the newest employee. She collects the coconuts. Tuesday, as you might
expect, takes calls from curstomers, oops, I mean customers, who are unhappy
with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon
they drift to the wholesaler. Thursday sends smoke signals to the wholesaler
extolling the virtues of the latest production run of nuts that are drifting
across the bay.Which of the following functions in the value chain is Friday
performing?
A) Inbound
logistics
B) Operations
C) Outbound
logistics
D) Marketing and
sales
E) Service
39) Robinson
Crusoe has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process.
Monday is the newest employee. She collects the coconuts. Tuesday, as you might
expect, takes calls from curstomers, oops, I mean customers, who are unhappy
with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon
they drift to the wholesaler. Thursday sends smoke signals to the wholesaler
extolling the virtues of the latest production run of nuts that are drifting
across the bay.Which of the following functions in the value chain is Wednesday
performing?
A) Inbound
logistics
B) Operations
C) Outbound
logistics
D) Marketing and
sales
E) Service
40) Robinson
Crusoe has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process.
Monday is the newest employee. She collects the coconuts. Tuesday, as you might
expect, takes calls from curstomers, oops, I mean customers, who are unhappy
with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon
they drift to the wholesaler. Thursday sends smoke signals to the wholesaler
extolling the virtues of the latest production run of nuts that are drifting
across the bay.Which of the following functions in the value chain is Thursday
performing?
A) Inbound
logistics
B) Operations
C) Outbound
logistics
D) Marketing and
sales
E) Service
41) Robinson
Crusoe has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process.
Monday is the newest employee. She collects the coconuts. Tuesday, as you might
expect, takes calls from curstomers, oops, I mean customers, who are unhappy
with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon
they drift to the wholesaler. Thursday sends smoke signals to the wholesaler
extolling the virtues of the latest production run of nuts that are drifting
across the bay.Which of the following functions in the value chain is Tuesday
performing?
A) Inbound
logistics
B) Operations
C) Outbound
logistics
D) Marketing and
sales
E) Service
42)
Refer to the chart
above. At what point, measured in terms of the net cost of information, does
information overload begin?
A) 0
B) 5
C) 10
D)
12
43)
Tri-Anything, Limited, is a British company operating in New York state. It
offers stylized, boutique public relations services to upscale retailers in
quaint New England towns. A major source of revenue is a weekly newsletter that
reports on current and projected tourist travel and spending patterns.
Preparation of the newsletter requires study and analysis of weather
conditions, economic activity, and travel costs. It is available at an annual
subscription rate of $299.99. There are currently 190 subscribers. Preparation
and distribution of the newsletter costs $12,000 annually. The value of
information to subscribers is:
A) $236.83
B) $44,998.10
C) Less than
$63.16
D)
At least $300.00
44)
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.
45)
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
46)
Which of the following is not a transaction cycle?
A)
revenue
B)
expenditure
C)
human resources
D)
general ledger and reporting
47)
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.
48)
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.
49)
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.
50)
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.
51)
Which of the following is a true statement?
A)
Business strategy directly influences AIS, but not information technology.
B)
Information technology directly influences organizational culture, but not
business strategy.
C)
Organizational culture directly influences business strategy, but not AIS.
D)
AIS directly influences information technology, but not business strategy.
52)
The transaction 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.
53)
The transaction cycle approach leads to efficient processing of a 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.
54)
Which of the following is not an example of how an AIS adds value to an
organization?
A)
All employees at a hospital can access and update patient records from any
computer terminal in the hospital.
B)
A customer service representative can find a customer's account data, purchase
history, payment history, and salesperson's name while on the phone with the
customer, to resolve issues quickly.
C)
Suppliers are able to access sales data directly from the point-of-sale system
of a retailer and deliver inventory automatically when needed.
D)
Client tax files are encrypted and made available on the CPA firm's network to
any employee with an access code.
55)
Rolleigh Corp. identifies growth by new product development and product
improvement as the number one corporate goal. An employee at Wrigley's, one of
Rolleigh's wholly-owned subsidiaries, developed an innovation to an existing
product that would directly address a shortcoming in the similar product
offered by Rolleigh's closest competitor. Wrigley's current Return on
Investment (ROI) is 15%, but the product innovation is expected to generate ROI
of only 12%. Awarding bonuses to subsidiary managers based on ROI could result
in:
A)
goal conflict
B)
information overload
C)
goal congruence
D)
decreased value of information
56)
Which of the following tradeoffs between characteristics of useful information
is least objectionable?
A)
Incomplete information received on a timely basis
B)
Irrelevant information received in an understandable format
C)
Unreliable information easily accessible
D)
Verifiable information received in unreadable format
57)
Paid time-off policies, job descriptions, and procedures manuals are examples
of information needed to support key decisions in what business process?
A)
Hire and train employees
B)
Acquire inventory
C)
Sell merchandise
D)
Collect payment from customers
58)
Which of the following is not a key decision to be made when starting a
business?
A)
How to estimate the allowance for uncollectible accounts
B)
Whether to advertise on TV, radio, or newspaper
C)
How to raise capital
D)
Whether to accept American Express
59)
Paying federal payroll taxes is part of which transaction cycle?
A)
Human resources/payroll
B)
Expenditure
C)
Financing
D)
Revenue
60)
Who of the following would not be involved in the revenue cycle?
A)
Accounts payable clerk
B)
Customer
C)
Cashier
D)
Credit manager
61)
Which of the following is not one of the three basic types of data about
a specific sales transaction that should be captured by an Accounting
Information System?
A)
Name of the employee who completed the sale
B)
Daily sales quota
C)
Product sold
D)
Date
62)
Who of the following is not a stakeholder with whom an accounting
information system typically communicates directly?
A)
Wall Street industry analyst
B)
Venture capitalist
C)
Company that supplies raw materials
D)
Company that purchases finished goods for resale to consumers
63)
Define the concept of a system.
64)
Define data, information, and how the value of information is determined.
65)
Define an accounting information system.
66)
Identify the components of an accounting information system.
67)
What is the CITP designation and why is it important to AIS?
68)
Differentiate between an AIS course and other accounting courses.
69)
What is the purpose behind the five primary activities in the value chain?
70)
How can an AIS add value to the organization?
71)
How can a well-designed AIS improve the efficiency and effectiveness of a
company's value chain?
72)
Discuss the concept of a system and the issues of goal conflict and goal
congruence.
73)
Discuss the seven characteristics of useful information.
74)
Explain what an AIS is, describe the basic tasks it performs in an
organization, and give some examples of the types of accounting transactions it
processes.
75)
Discuss the components of a supply chain.
76)
How can an AIS become part of the firm's value chain and add value to the
business?
77)
How can the value of the information produced by an accounting information
system be determined? What would a measurement and verification expert think
about quantification and verification of such information?
78)
Why have accounting software packages been designed with separate transaction
modules?
79)
How are "Give and Take" transactions classified in business today and
what impact does this have on AIS?
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