Accounting Information Systems midterm

| April 14, 2018

INSTRUCTIONS: For multiple choice,highlight orbold your response.
True/False (10 x 2 points each = 20 points)
1.
T
F Proper authorizations and separation of
duties are considered good examples of internal control.

2.
T F In an
AIS, source documents are always paper-based.

3.
T
F Human judgment is not essential in accounting
information system.

4.
T F Bookkeeping
and accounting are essentially the same thing.

5.
T F The
end-of-year accounting cycle includes preparing several adjusting
entries.

6. T F Closing out the accounts at year-end to ready
the AIS for next fiscal period’s entries.

7. T F AIS
focuses on business processes.

8. T F Legal behavior is the same as ethical
behavior.

9. T F Only
external parties can use information provided by the accounting information
system.

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10. T F This
is the symbol for a decision within a flowchart:

Multiple Choice (20 x 3 points each = 60 points)
11. The components of an accounting information
system are designed to collect ___ and report ___.

A.

Data, information

B.

Data, data

C.

Information, information

D.

Information, data

12. Which of the following steps in the
accounting cycle occurs first?

A. Analyze transactions
B. Close the temporary accounts to retained
earnings
C. Prepare an unadjusted trial balance
D. Record the transactions in a journal
13. All of the following are common coding
systems used in organizations except:

A.

Block

B.

Hierarchical

C.

Random

D.

Sequential

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14. An accounting information system transforms
inputs into outputs via processes such as:

A.

Journalizing
transactions and posting them to the ledger

B.

Identifying the
elements of the FASB Conceptual Framework

C.

Always utilizing
information technology

D.

Recognizing and
adapting to the cost-benefit constraint

15. Communicating information to external
decision makers is accomplished through ___________as part of the
process of ___________.

A. Financial statements,
bookkeeping

B. Financial statements,
accounting

C. Journal entries, bookkeeping

D. Journal entries, accounting

16.
A trial balance:
A. Demonstrates the lack of fraud in the AIS if
its debits equal its credits.
B. Can be
prepared only at the end of the accounting period.
C. Is
another name for the balance sheet.
D. Proves the equality of debits and credits in
the ledger, but does not guarantee an error-free AIS.

17. Courses
intended for freshmen at a local university are numbered from 100 to 199, while
courses intended for
seniors
at the same university are numbered from 400 to 499. Which coding system
is the university using?

A.

Sequential

B.

Block

C.

Hierarchical

D.

Mnemonic

18. Which of the following best describes a
Ponzi scheme?

A. A fraud whereby old investors are paid with
money from new investors.
B. Any fraud that involves a conflict of
interest.
C. A fraud committed with international
cooperation.
D. A fraud involving related-party transactions.

19. The first resource to consult when
confronting a professional ethical dilemma in accounting is

A. The company’s own code of ethics
B. A
lawyer.
C. A
professional code of ethics.
D.
Dependent upon the decision maker’s personal ethical philosophy.

20. Who bears the primary responsibility for
establishing and maintaining a sound internal control system in an
organization?

A. Accountants
B. External auditors
C. Management
D. Board of directors

21.
Which of the following organizations is not a part of COSO?

A. American Institute of CPAs
B. Securities & Exchange Commission
C. American
Accounting Association
D. Institute of Management Accountants

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22. Purposes of internal
control include:

A.

Safeguarding assets.

B.

Ensuring financial
statement reliability.

C.

Promoting operational
efficiency.

D.

All of the above.

23. Which kind of flowchart shows the logic
associated with instructions given to a computer?

A.

Systems

B.

Program

C.

Document

D.

Hardware

24. In Brown’s taxonomy,
systems risk is a form of:

A.

Financial risk

B.

Operational risk

C.

Strategic risk

D.

Hazard risk

25. Which
kind of flowchart shows relationships between computers, printers, monitors and
similar devices?

A.

Systems

B.

Program

C.

Document

D.

Hardware

26. Flowcharts should be read:

A.

From top to bottom and
from left to right

B.

From bottom to top and from
left to right

C.

From top to bottom and
from right to left

D.

From bottom to top and
right to left

27. Which of the
following flowchart symbols represents a decision?

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A. B. C. D.

28. Which of the following
flowchart symbols represents a file?

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A. B. C. D.

29. Which of the
following flowchart symbols represents a document, such as a report?

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A. B. C. D.

30. Identifying the relevant behaviors and
characteristics of the elements of a REAL model helps the designer:

A. Create cardinalities.

B. Create database tables.

C. Both of the above.

D. None of the above.

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3

31. Fill
in the blanks in each statement below based on the flowchart design
considerations discussed in the text
(see Chapter 5). 6 x 2
points each = 12 total
a.
Flowcharts should be read from __________________________ and
____________________.
b.
Flowcharts should have plenty of _______________________________.
c.
Flowcharts should have a ______________________________________.
d.
Flowcharts should be organized in columns that depict ___________________________________.
e.
Documents involved in a business process should have a clear
_______________ and a clear _____________.

f. The discussion of rough
drafts of flowcharts with people involved in the process is known as a
__________________.

32. Bloom’s Risk Taxonomy
identifies four categories of risk (see Chapter 4). For each of the following, identify
its risk as either
financial risk, hazard risk, operational risk, or strategic risk. 8 x 1
point each = 8 total

___________________________
1. Business strategy risk
___________________________
2. Credit risk
___________________________
3. Directors’ and officers’
liability
___________________________
4. Human error risk
___________________________
5. Legal and regulatory risk
___________________________
6. Liquidity risk
___________________________
7. Market risk
___________________________
8. Systems risk

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