Accounting Data Analytics
Chapter Exam Questions
Course Introduction
Accounting Data Analytics explores the integration of data analysis techniques within the field of accounting, equipping students with the skills to interpret large volumes of financial data and extract actionable insights. The course covers topics such as data visualization, predictive analytics, and the use of specialized accounting software to analyze transactional data. Emphasis is placed on real-world applications, including fraud detection, auditing, and decision-making support, enabling students to make informed recommendations and enhance organizational performance through data-driven strategies.
Recommended Textbook
Accounting Information Systems A Practitioner Emphasis 7th Edition by Cynthia D. Heagy
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Chapter 1: Significance of Accounting Information Systems
and the Accountants Role
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Q1) Which of the following certifications is specifically designed for internal auditors?
A) Certified information systems auditor
B) Certified internal auditor
C) Certified public accountant
D) Certified fraud examiner
Answer: B
Q2) The content and format of accounting information for external reporting are regulated by internal policies and procedures, while the content and format of accounting information for internal reporting are determined by accounting rule-making bodies.
A)True
B)False
Answer: False
Q3) What are the major components of a computerized accounting system?
Answer: Hardware, software, and people
Q4) What are the key components of an accounting information system?
Answer: The key components of an accounting information system are computer hardware, accounting software, and people.
Page 3
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Chapter 2: Accounting Systems Documentation
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Q1) Because of the limited amount of detail, block diagrams are generally used in conjunction with other documentation that shows complementary aspects of an accounting system.
A)True
B)False Answer: True
Q2) Information about a system's goals and objectives should be included in a narrative description.
A)True
B)False Answer: True
Q3) Define the following terms: file maintenance, level 0 DFD, data flow diagrams, exception report, system flowchart.
Answer: file maintenance (unique, non-routine, should be done by someone other than person doing day-to-day recording, includes adding/deleting accounts/customers/vendors), level 0 (entire system on one sheet, basic processes, major tasks), dfd (what system does and how it does it), exception report (shows deviations from a norm ONLY), system flowchart (most detailed, what system does and how it does it).
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Chapter 3: Essential Elements and Basic Activities of Accounting Systems
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Q1) What type of account in the general ledger has a related subsidiary ledger?
A) Detail
B) Chart
C) Control
D) General
Answer: C
Q2) Which of the following is a characteristic of real-time posting/updating?
A) Real-time posting provides for the immediate update of the master file upon entering of transaction data.
B) Real-time posting preceded batch posting because of its simplicity.
C) Real-time posting results in systems that are sensitive to error contamination.
D) Both A and C are characteristics of real-time posting/updating.
Answer: D
Q3) An example of a source document is a receiving report.
A)True
B)False
Answer: True
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Chapter 4: Data Flows, Activities, and Structure of Accounting Systems
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Q1) The cash receipts transaction file is used to update the open customer invoice file and the
A)True
B)False
Q2) What are the support activities of an accounting information system?
Q3) Periodically, data in the sales transaction file and the cash receipts transaction file are summarized and transferred to the general journal transaction file.
A)True
B)False
Q4) Name three business processes.
Q5) What are the support activities of an accounting information system?
A) People, input, process
B) People, technology, input
C) People, technology, control
D) People, process, control
Q6) Any organization that provides goods or services on demand requires a sales subsystem.
A)True
B)False
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Chapter 5: Reporting Process, Coding Methods, and Audit Trails
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Q1) Which of the following is a general principle of effective reporting?
A) Necessity for lengthy reports
B) Comparative reporting
C) Bidirectional reporting
D) Multidimensional reporting
Q2) Which of the following would not be suitable as a reference identifier in an audit trail?
A) Customer invoice
B) Document number of checks issued
C) Purchase order number
D) Internally generated numbers that represent completed transaction
Q3) What is the advantage of extensible business reporting language (XBRL) over extensible markup language (XML)?
A) XBRL employs standardized tags.
B) XBRL is objective.
C) XBRL is independent.
D) XBRL allows the user to define the tags.
Q4) Define what an audit trail is and what it does. Give two examples of numbers that should NOT be used as identifiers.
Q5) Explain the meaning of exception reporting.
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Chapter 6: Internal Control and Risk Assessment
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Q1) The Sarbanes-Oxley Act (SOX) requires that the external audit firm for a company be rotated every five years.
A)True
B)False
Q2) The president of a small company boasted to associates at a business club, "Fortunately, we don't need internal control. You see, we're a family business, and we're not going to steal from one another." Discuss the wisdom of the president's statement.
Q3) One factor of the internal environment is the audit committee.
A)True
B)False
Q4) One factor of the internal environment is the board of directors.
A)True
B)False
Q5) The organizational structure defines limits of managerial authority, areas of responsibility, and lines of reporting.
A)True
B)False
Q6) What are four indications of management's philosophy and operating style?
Q7) Define Enterprise Risk Management.
Page 8
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Chapter 7: Control Activities
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Q1) For what purpose would the system administrator be likely to use a user rights table?
A) To create an audit trail for detecting access violations
B) To plan for access security
C) To encrypt data for high-level protection
D) To store user authentication codes
Q2) A disaster recovery plan is which of the following?
A) An application control.
B) An automated preventive control.
C) A general control.
D) An automated application control.
Q3) Which of the following represent physical controls?
A) Separation of the authorization and modification functions of purchasing.
B) Alarms and surveillance cameras for the warehouse.
C) Back-ups of all master files.
D) All of the above.
Q4) A network that uses fiber optic cable provides better access security than cables that transmit electrical impulses.
A)True
B)False
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Chapter 8: The Financial Process
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Q1) Define "soft" and "hard" closings. Be sure to indicate the DIFFERENCE between the two.
Q2) Which of the following is not a type of entry in the financial process?
A) Data captured in and transferred from other processes to the financial process
B) Transactions originally recorded in the financial process
C) End-of-period adjustments required in the financial process
D) Planning and control for the purchase of inventory and other resources
Q3) The balance sheet and statement of cash flow constitute the basic reporting requirements in the financial process.
A)True
B)False
Q4) Mainframe and minicomputer based accounting packages, being designed for large transaction volumes, almost universally support the dollar-entry method for entering monetary values.
A)True
B)False
Q5) The internal audit department chooses the external auditor.
A)True
B)False
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Chapter 9: The Revenue Process
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Q1) An aging accounts receivable report is commonly used for which of the following purposes?
A) As a tool for contacting customers regarding overdue amounts
B) As a basis for calculating the bad debt provision
C) As a tool for writing off small, miscellaneous, delinquent amounts
D) All of the above are purposes of an aging accounts receivable report.
Q2) Which of the following is not true regarding the balance forward method of accounting for accounts receivable?
A) Payments are applied to the outstanding balance rather than to particular invoices.
B) No attempt is made to match individual payments and invoices.
C) Invoice records remain in the open invoice file until payment is received.
D) The open invoice file is archived at the end of the period.
Q3) A remittance advice is used as a source document for entering receipts in the cash receipts transaction file.
A)True
B)False
Q4) Describe three of the functions typically found in the sales order function.
Q5) Explain why gross profit analysis is more useful than sales analysis.
Q6) What is the difference between credit limit, credit rating, and credit hold?
Page 11
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Chapter 10: The Purchasing Process
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Q1) Petty cash limits often tend to be higher in small organizations than they are in large, well-run organizations.
A)True
B)False
Q2) An organization must have a regular schedule for making payments of invoices. Which are criteria for selection of invoices for payment?
A) Select all invoices coming due on or before a specified date
B) Select all invoices with a specified vendor
C) All of the above
D) None of the above
Q3) Cash disbursements to vendors are recorded in the cash disbursements transaction file which is then used to update the open vendor invoice file and the vendor master file.
A)True
B)False
Q4) The addition of a new vendor is handled in the vendor account maintenance function of the purchase order module.
A)True
B)False
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Chapter 11: The Inventory Process
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Q1) What is economic order quantity?
A) Maximum order quantity
B) A result of balancing holding costs against order costs
C) A quantity that is determined by the minimum holding cost
D) The sum of the safety stock and lead time stock
Q2) List three of the four tasks that supply chain management systems can perform.
Q3) Define the following: lead time, safety stock, reorder point, ordering costs, economic order quantity.
Q4) What are the main activities in the inventory process for a mercantile organization?
Q5) Which of the following control activities would protect inventory from theft?
A) Limited access to the warehouse containing inventory.
B) Allowing only the inventory manager to authorize removal of items from the warehouse.
C) Only the shipping clerks can verify the shipments and deliver the items to the warehouse.
D) All of the above are control activities that would protect inventory from theft.
Q6) Discuss control activities related to the physical safeguarding of inventory.
Q7) Discuss various activities in the inventory process.
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Chapter 12: Database Structure of Accounting Systems
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Q1) Most companies develop their database management systems in house.
A)True
B)False
Q2) Which of the following statements about the internal level of a database is true?
A) It is the physical implementation of the conceptual level.
B) It includes the file organizations to store data on the physical storage devices.
C) It is the way all the data in the entire database are viewed logically.
D) A and B, but not C
E) B and C, but not A D
Q3) Which of the following statements about an object-oriented database is true?
A) It can handle maps, graphs, images, audio, and video as well as the familiar text and numbers.
B) It is more user friendly than a relational database.
C) It contains a collection of records stored in tables.
D) It performs faster than a relational database.
Q4) A query language is a low-level, programming language.
A)True
B)False
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Chapter 13: Developing a Relational Database for an Accounting Information System
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Q1) A transitive dependency exists when a nonkey data element depends on, or is determined by, another nonkey data element.
A)True
B)False
Q2) Which of the following would be the primary keys of the first three tables above?
A) CustCode, InvNo, ProdNo
B) InvNo, InvNo/ProdNo, ProdNo
C) InvNo/CustCode, ProdNo/Qty, ProdNo
D) InvDate/InvNo, ProdNo, Desc
Q3) The end product of developing a database for an accounting system is a set of "normalized" tables that will store the data.
A)True
B)False
Q4) Tables in a relational database are documented by a data flow diagram.
A)True
B)False
Q5) Briefly summarize the steps required to develop a database for an accounting system using the REA framework approach.
Page 15
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Chapter 14: Electronic Business
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Q1) A security feature for Extranets is to create tunnels of secured data flows using cryptography and authorization algorithms.
A)True
B)False
Q2) Which of the following web assurance services assures the consumer that the site is genuine and not a "spoof" site?
A) TRUSTe
B) VeriSign
C) BBB OnLine
D) WebTrust
E) SysTrust B
Q3) The UPC bar code has a center divider with the field on the left and the field on the right representing
A) The industry and the company ID, respectively
B) The product ID and the company ID, respectively
C) The company ID and the product ID, respectively
D) The company ID and the industry, respectively
Q4) List the three types of e-business and give one example of each.
Q5) Identify at least two benefits of EDI.
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Chapter 15: Ais Selection and Implementation
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Q1) Many CPAs advise against any modifications of a commercial off-the-shelf AIS.
A)True
B)False
Q2) Pilot conversion is the installation of one AIS module at a time and loading of data only for that module.
A)True
B)False
Q3) What is modular conversion to a new accounting information system?
A) A conversion method that is used when a company has a number of locations, and the AIS is to be installed at each location
B) The opposite of a parallel conversion
C) The installation of one AIS component at a time and the loading of data only for that component
D) A conversion method in which the old system is stopped and existing data are imported to the new system.
Q4) What is the difference in AIS installation and AIS implementation?
Q5) Discuss issues involved in system acquisition.
Q6) List the tasks required in a systems acquisition project.
Q7) Discuss the various methods of conversion to an AIS system.
Page 17
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