Accounting Information Systems
Exam Solutions
Course Introduction
Accounting Information Systems is a course that explores the intersection of accounting practices and information technology. Students learn about the design, implementation, and management of computerized systems that collect, process, and report financial data. The course covers topics such as internal controls, system security, data analytics, and the integration of accounting software in business processes. Emphasis is placed on how accounting information systems support decision-making, regulatory compliance, and organizational efficiency, preparing students to navigate the technological landscape of modern accounting environments.
Recommended Textbook
Accounting Business Reporting for Decision Making 6th Edition by Jacqueline Birt
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14 Chapters
869 Verified Questions
869 Flashcards
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Page 2
Chapter 1: Introduction to Accounting and Business Decision Making
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Sample Questions
Q1) Which statement about the AASB Conceptual Framework is not true?
A) It establishes the objectives of the financial statements.
B) It sets out the fundamental and enhancing qualitative characteristics of financial reports.
C) It applies to all entities producing special purpose financial statements.
D) It defines the elements of the financial statements.
Answer: C
Q2) Which of the following is not a role of the Australian Securities and Investments Commission?
A) To ensure financial institutions honour their commitments.
B) To uphold the law uniformly, effectively and quickly.
C) To promote confident and informed participation in the financial system by investors and consumers.
D) To make information about companies and other bodies available to the public. Answer: A
Q3) The accounting process within an organisation which includes costing,budgeting and planning is known as ____________________ accounting.
Answer: management
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Chapter 2: Accounting in Society
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Sample Questions
Q1) Kantian philosophy is grounded in the notion of duty or obligation and believes that a business that is motivated by maximising their profits,whilst doing so respectfully,is acting:
A) with dignity.
B) prudently, but not morally.
C) morally, but not prudently.
D) loyally.
Answer: B
Q2) Ethically,businesses are obliged to act in the way expected of them by
Answer: society
Q3) A company that discloses information about its products and services in a timely manner is following the ____________________ principle of business sustainability performance.
Answer: transparency
Q4) An entity's societal and environmental obligations to all its stakeholders are known as __________________
Answer: corporate social responsibility
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Chapter 3: Business Structures
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Sample Questions
Q1) Which of the following does not apply to a partnership business?
A) Minimal costs to establish.
B) Pays taxation separately to that of the owners.
C) An annual tax return must be prepared.
D) An ABN must be applied for.
Answer: B
Q2) The main (advantage/disadvantage)_________________ of a company is that its shareholders have limited liability for the business' debts.
Answer: advantage
Q3) An expense that would not appear in a partnership income statement is:
A) interest expense.
B) depreciation expense.
C) income tax expense.
D) advertising expense.
Answer: C
Q4) In Australia a discretionary trust is also known as a _____________ trust.
Answer: family
Q5) Gym classes and excavation of building sites are examples of _________________ services.
Answer: equipment-based
5
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Chapter 4: Business Transactions
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Sample Questions
Q1) A business borrows $10 000 from the bank.What effect does this transaction have on the accounting equation?
A) An increase in the asset cash of $10 000 and an increase in the liability bank loan of $10 000.
B) An increase in the asset cash of $10 000 and a decrease in the liability bank loan of $10 000.
C) A decrease in the asset cash of $10 000 and a decrease in the liability bank loan of $10 000.
D) A decrease in the asset cash of $10 000 and an increase in the liability bank loan of $10 000.
Q2) If total claims equal $950 000 and equity is $460 000,assets must be:
A) $590 000
B) $490 000
C) $950 000
D) $460 000
Q3) Profit (or loss)= ___________________ less expenses
Q4) If the value of Assets is $165 000 and the value of Equity is $100 000,then Liabilities must be equal to ________________.
Q5) _________ is added to opening equity to calculate ending equity.
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Chapter 5: Balance Sheet
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Sample Questions
Q1) A characteristic essential to all assets is:
A) a result of a past event.
B) a resource controlled by the entity.
C) a present economic resource.
D) all of the above.
Q2) Motor Cross Ltd's inventory purchases for the month of January are summarised below.Using the weighted-average method of valuing inventory,the weighted unit cost is:
\( \begin{array}{lcc}\text{Purchase date}&\text{ Number of units}&\text{ Cost per unit}\\\\\text { 2. January } & 8 & \$ 5000 \\ \text { 13 January } & 12 & \$ 8500 \\ \text { 17 January } & 35 & \$ 7000 \\ \text { 27 January } & 20 & \$ 10500\end{array} \)
A) $10 500
B) $ 7 960
C) $ 7 750
D) $ 8 500
Q3) An essential characteristic of an asset is that the resource must be _________________ by the entity.
Q4) Goodwill is regarded as an ______________ intangible asset.
Q5) Liabilities are known as ______________ claims on the assets of an entity.
Page 7
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Chapter 6: Statement of Profit or Loss and Statement of Changes in Equity
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Sample Questions
Q1) Which of the following must exist before income can be recognised?
A) The increase in future economic benefits related to an increase in an asset or a decrease in a liability must have arisen.
B) The increase in future economic benefits must be able to be measured reliably.
C) All options must exist.
D) Income recognition must occur at the same time as the recognition of increases in assets or reductions in liabilities.
Q2) Which of the following transactions will be recorded as income?
A) Borrow $50 000 from the bank.
B) A. J. Smith pays $2 500 for goods sold to him on credit last month.
C) Sold inventory on credit for $5 000.
D) Owner contributes $8 000 of personal funds to the business.
Q3) Which of the following will be classified as income?
A) Interest received.
B) Fees charged for services provided.
C) Gain on sale of equipment.
D) All of the above.
Q4) The statement of profit or loss measures an entity's financial _________.
Page 8
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Chapter 7: Statement of Cash Flows
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Sample Questions
Q1) The section of the statement of cash flows that is generally considered to be the best measure of a company's ability to generate cash is:
A) each section gives an equal estimation.
B) cash flows from operating activities.
C) cash flows from financing activities.
D) cash flows from investing activities.
Q2) Cash flows from investing activities arise from changes in non- ___________ ____________ on the balance sheet.
Q3) Using the indirect method to prepare the statement of cash flows,which of the following statements is true?
A) Decrease in current assets means a decrease in cash.
B) Increase in current assets means an increase in cash.
C) Increase in current liabilities means an increase in cash.
D) Decrease in current liabilities means an increase in cash.
Q4) If dividends declared at the end of the period are $10 000,and the balance of dividends payable increased by $2000 over the period,the amount of dividends paid during the year is equal to _________.
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9
Chapter 8: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) Which of the following statements concerning price earnings ratio (PER)is true?
A) PER is calculated as current market price divided by dividends per share.
B) PER is calculated as total shareholders' equity divided by earnings per share.
C) PERs are commonly between 10 and 15 times for industrial companies.
D) PER is not affected by a change in the share price.
Q2) With ratio analysis,when an item on the statement of cash flows is compared to a balance sheet item:
A) the balance sheet item should first be calculated as an average amount for the year.
B) the ending balance of the balance sheet item should be used.
C) the beginning balance of the balance sheet item should be used.
D) a meaningful comparison of items between these statements cannot be made.
Q3) ________ before interest and tax divided by net finance costs equals times interest earned.
Q4) Ratios can be impacted by the accounting policy choices and ___________ made by an entity.
Q5) The information provided by financial statements alone is not enough to form predictions about an entity's financial ___________.
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Chapter 9: Budgeting
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Q1) The schedule of cash receipts from accounts receivable (debtors)provides information to include in the:
A) sales budget.
B) cash budget.
C) budgeted statement of profit or loss.
D) budgeted balance sheet.
Q2) The first step in the budgeting process is commonly:
A) preparation of the master budget and sub-budgets.
B) assessment of expected trading and operating conditions.
C) preparation of initial budget estimates.
D) consideration of past performance.
Q3) The budget that sets the expected level of activity for the budget period is the ______________ or ______________ budget.
Q4) The master budget is a set of __________ budgets for a future period.
Q5) The budget process usually focuses on the time frame of one: A) day.
B) week.
C) month.
D) year.
Q6) A program budget is commonly used in the __________ and not-for-profit sector.
Page 11
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Chapter 10: Costvolumeprofit Analysis
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Q1) When production is affected by limited resources,the contribution margin per ________________ factor should be calculated to determine the most profitable mix of products/services.
Q2) The break-even point is where:
A) total sales = fixed costs plus profit.
B) total sales = total variable costs.
C) total sales = total variable costs plus profit.
D) total sales = total costs.
Q3) If fixed costs are $200 000 and variable costs are 60% of the selling price,the break-even point in sales dollars is:
A) $800 000
B) $333 333
C) $200 000
D) $500 000
Q4) Which of the following statements is correct? If the activity level goes outside the relevant range:
A) fixed costs can no longer be assumed to be fixed.
B) fixed costs will remain constant.
C) fixed costs will always increase.
D) fixed costs will always decrease.
Page 12
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Chapter 11: Costing and Pricing in an Entity
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Sample Questions
Q1) Under the activity hierarchy of costs,costs incurred for the benefit of the entire entity (e.g.cost of operating the head office)are classified as:
A) unit level costs.
B) batch level costs.
C) product level costs.
D) facility level costs.
Q2) Cost drivers can be based on either volume or activity.Which of the following is a volume-based cost driver?
A) Number of inspections undertaken.
B) Number of invoices processed.
C) Units of output.
D) Time taken to set up machines.
Q3) Peter is the manager of the window manufacturing department in a construction business.Which cost would not be classed as a direct cost of the window manufacturing process?
A) Timber for the window frames.
B) Glass for the window panes.
C) Wages of tradesmen.
D) Depreciation of tools and equipment.
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Chapter 12: Capital Investment
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Sample Questions
Q1) The cost of forgoing benefits from an alternative investment is known as the ___________ cost.
Q2) Jimmy's Tacos is considering investing $35 000 in a new 'pop-up' shop beside a popular Melbourne park.Jimmy estimates the net cash inflow will increase by $14,000 each year for the next 5 years.The payback period for the new taco shop is:
A) 2 years.
B) 2.5 years.
C) 3 years.
D) 3.5 years.
Q3) The opportunity cost of making an investment is:
A) not relevant when applying the NPV method.
B) equal to the required discount rate.
C) the cost of forgoing a benefit from an alternative investment.
D) the initial cash outlay of the investment.
Q4) The accounting rate of return is calculated as average _____________ divided by average_____________.
Q5) The effect of dividend imputation on the PV analysis of investments will depend on the ______________ structure of the entity involved.
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Chapter 13: Financing the Business
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Sample Questions
Q1) Foreign investment where the investor has significant influence over the key policies of the investee is known as ___________ investment.
Q2) Costs involved in managing cash include:
A) no interest earned on cheque accounts.
B) merchant fees for debit cards.
C) keeping cash secure from thieves.
D) all of the above.
Q3) If average inventory is $225 000,total credit sales is $1 200 000 and cost of sales is $980 000,the days inventory turnover is (round your answer up to the next full number of days):
A) 69 days.
B) 84 days.
C) 23 days.
D) 19 days.
Q4) Which of the following statements about equity finance is true?
A) Ordinary shares are the main type of shares issued.
B) Preference shares normally dont have voting rights attached.
C) Ordinary shares have no fixed maturity date.
D) All of these statements are true.
Page 15
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Chapter 14: Performance Measurement
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Sample Questions
Q1) A ______________ statement is a short statement that sets out the overall philosophy and objectives of an entity.
Q2) Which of the following statements regarding the balanced scorecard approach is true?
A) The balanced scorecard uses only short-term performance measures.
B) The balanced scorecard uses only long-term performance measures.
C) The balanced scorecard is used because there is a causal relationship between all of the measures and their economic impact.
D) The balanced scorecard is designed to encourage the use of a wide range of measures to gauge performance.
Q3) Appointing managers to be responsible for the performance of specific divisions of an entity assists in which of the following?
A) Freeing up central management time for strategic long-term planning.
B) Improving the commitment and motivation of managers.
C) Improving the timeliness of and access to information as a result of localised decision making.
D) All of the options are ways in which appointing division managers assists an entity.
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Page 16