Business Information Systems
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Course Introduction
Business Information Systems explores the integration of information technology with business processes to support management, operations, and decision-making. The course covers foundational concepts in information systems, including hardware, software, databases, networking, and data security, while highlighting how these components drive business efficiency and innovation. Students will examine real-world applications such as enterprise resource planning, customer relationship management, and e-commerce systems. Through case studies and hands-on exercises, learners gain insights into system design, implementation, and evaluation, emphasizing the strategic value of information systems in achieving organizational goals and maintaining competitive advantage.
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Accounting Information Systems 13th Edition by Marshall B. Romney
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Page 2
Chapter 1: Accounting Information Systems: an Overview
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Q1) How are "Give and Take" transactions classified in business today and what impact does this have on AIS?
Answer: The concept of "Give and Take" transactions has been used to classify business transactions into "cycles" that have starting points,processes,and end points (or closure).The majority of business transactions can be classified as revenue,expenditure,human resources (payroll),production,and financing cycles.AIS has been modeled after these transaction cycles to achieve its basic functions of collecting and processing data,providing information useful for decision making,and establishing adequate controls.
Q2) In which transaction cycle would information for borrowing money be most likely to pass between internal and external accounting information systems?
A) the revenue cycle
B) the expenditure cycle
C) the human resources / payroll cycle
D) the financing cycle
Answer: D
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Chapter 2: Overview of Transaction Processing and Enterprise Resource Planning Systems
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Q1) The efficiency of recording numerous business transactions can be best improved by the use of
A) prenumbered source documents.
B) specialized journals.
C) posting references.
D) subsidiary ledgers.
Answer: B
Q2) The general ledger
A) is the initial place to record general expenses.
B) is posted in total to the general journal.
C) only includes balance sheet accounts.
D) summarizes the transactions in journals.
Answer: D
Q3) Identify the statement below that is false with regards to effective coding practices.
A) Codes should allow for growth.
B) Codes should be consistent with intended use.
C) Codes should be customized for each division of an organization.
D) Codes should be as simple as possible.
Answer: C
Page 4
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Chapter 3: Systems Documentation Techniques
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Q1) Which symbol would be used in a flowchart to represent a general ledger?
A) #2
B) #1
C) #3
D) #5
Answer: A
Q2) Most processes on a DFD can be identified by
A) data in-flows only.
B) data out-flows only.
C) data flows both into or out of a process.
D) always being followed by a data store.
Answer: C
Q3) Which of the following is not a true statement?
A) Documentation tools save an organization both time and money.
B) Documentation tools are used extensively in the systems development process.
C) Data flow diagrams and flowcharts are the two most frequently used systems development documentation tools.
D) Data flow diagrams and flowcharts are difficult to prepare and revise using software packages.
Answer: D
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Chapter 4: Relational Databases
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Q1) Kekoa Konani is chairman of the Chatty Chihuahua Club,where he maintains a database of registered purebred Chihuahuas and their breeding history.One table will store the name,birth date,and other characteristics of all of the registered Chihuahuas.Each Chihuahua is uniquely identified by a registration number.A second table will contain data that link each Chihuahua to its male and female parents by means of their registration numbers.The entities described by the first table are A) marmosets.
B) parental relationships.
C) registration numbers.
D) names.
Q2) In a relational database,requiring that every record in a table have a unique identifier is called the A) entity integrity rule.
B) referential integrity rule. C) unique primary key rule.
D) foreign key rule.
Q3) Discuss the ways in which a well-designed DBMS will facilitate the three basic functions of creating,changing,and querying data.
Q4) Explain the types of attributes that tables possess in a relational database.
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Chapter 5: Computer Fraud
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Q1) Which situation below makes it easy for someone to commit a fraud?
A) placing excessive trust in key employees
B) inadequate staffing within the organization
C) unclear company policies
D) All of the above situations make it easy for someone to commit a fraud.
Q2) Which of the following will not reduce the likelihood of an occurrence of fraud?
A) encryption of data and programs
B) use of forensic accountants
C) adequate insurance coverage
D) required vacations and rotation of duties
Q3) Identify the threat below that is not one of the four types of threats faced by accounting information systems.
A) natural and political disasters
B) software errors and equipment malfunctions
C) unintentional acts
D) system inefficiency
Q4) Describe four ways companies can reduce losses from fraud.
Q5) Describe two kinds of fraud.
Q6) Why is computer fraud on the rise?
Q7) Explain the impact of SAS No.99 on auditors' responsibilities.
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Chapter 6: Computer Fraud and Abuse Techniques
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Q1) Data diddling is
A) gaining unauthorized access to and use of computer systems, usually by means of a personal computer and a telecommunications network.
B) unauthorized copying of company data such as computer files.
C) unauthorized access to a system by the perpetrator pretending to be an authorized user.
D) changing data before, during, or after it is entered into the system in order to delete, alter, or add key system data.
Q2) Tapping into a communications line and then entering the system by accompanying a legitimate user without their knowledge is called A) superzapping.
B) data leakage.
C) hacking.
D) piggybacking.
Q3) The unauthorized access to,or use of,a computer system is known as A) hacking. B) hijacking.
C) phreaking.
D) sniffing.
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Page 8
Chapter 7: Control and Accounting Information Systems
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Q1) Nolwenn Limited has been diligent in ensuring that their operations meet modern control standards.Recently,they have extended their control compliance system by incorporating policies and procedures that require the specification of company objectives,uncertainties associated with objectives,and contingency plans.Nolwenn Limited is transitioning from a ________ to a ________ control framework.
A) COSO-Integrated Framework; COBIT
B) COBIT; COSO-Integrated Framework
C) COBIT; COSO-ERM
D) COSO-Integrated Framework; COSO-ERM
E) COSO-ERM; COBIT
Q2) The first step of the risk assessment process is generally to
A) identify controls to reduce all risk to zero.
B) estimate the exposure from negative events.
C) identify the threats that the company currently faces.
D) estimate the risk probability of negative events occurring.
Q3) Which of the following measures can protect a company from AIS threats?
A) Take a proactive approach to eliminate threats.
B) Detect threats that do occur.
C) Correct and recover from threats that do occur.
D) All of the above are proper measures for the accountant to take.
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Chapter 8: Controls for Information Security
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Q1) Identify the best description of an access control matrix below.
A) does not have to be updated
B) is used to implement authentication controls
C) matches the user's authentication credentials to his authorization
D) is a table specifying which portions of the system users are permitted to access
Q2) Which of the following is not a requirement of effective passwords?
A) Passwords should be changed at regular intervals.
B) Passwords should be no more than 8 characters in length.
C) Passwords should contain a mixture of upper and lowercase letters, numbers and characters.
D) Passwords should not be words found in dictionaries.
Q3) The process that allows a firewall to be more effective by examining the data in the body of an IP packet,instead of just the header,is known as
A) deep packet inspection.
B) stateful packet filtering.
C) static packet filtering.
D) an intrusion prevention system.
Q4) Identify six physical access controls.
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Page 10
Chapter 9: Confidentiality and Privacy Controls
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Q1) Identify the type of information below that is least likely to be considered "sensitive" by an organization.
A) financial statements
B) legal documents
C) strategic plans
D) product cost information
Q2) Identify the item below that is not a step you could take to prevent yourself from becoming a victim of identity theft.
A) Shred all documents that contain your personal information.
B) Only print your initial and last name on your personal checks.
C) Do not place checks in your outgoing mail.
D) Refuse to disclose your social security number to anyone or any organization.
Q3) Which of the following descriptions is not associated with symmetric encryption?
A) a shared secret key
B) faster encryption
C) lack of authentication
D) separate keys for each communication party
Q4) Describe symmetric encryption and identify three limitations.
Q5) Describe some steps you can take to minimize your risk of identity theft.
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Chapter 10: Processing Integrity and Availability Controls
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Q1) A disaster recovery plan typically does not include
A) scheduled electronic vaulting of files.
B) backup computer and telecommunication facilities.
C) a system upgrade due to operating system software changes.
D) uninterruptible power systems installed for key system components.
Q2) This control ensures that the correct and most current files are being updated.
A) cross-footing balance test
B) data matching
C) file labels
D) write-protect mechanism
Q3) What is the most effective way to ensure information system availability?
A) high bandwidth
B) maintain a hot site
C) maintain a cold site
D) frequent backups
Q4) Error logs and review are an example of
A) data entry controls.
B) data transmission controls.
C) output controls.
D) processing controls.
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Chapter 11: Auditing Computer-Based Information Systems
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Q1) When doing an information systems audit,auditors must review and evaluate the program development process.What errors or fraud could occur during the program development process?
Q2) The ________ audit reviews the general and application controls of an AIS to assess its compliance with internal control policies and procedures and its effectiveness in safeguarding assets.
A) financial
B) information systems
C) management
D) internal control
Q3) Auditing involves the
A) collection, review, and documentation of audit evidence.
B) planning and verification of economic events.
C) collection of audit evidence and approval of economic events.
D) testing, documentation, and certification of audit evidence.
Q4) Briefly describe tests that can be used to detect unauthorized program modifications.
Q5) Audit tests and procedures traditionally have been performed on a sample basis.Do options exist for auditors to test significantly more (or all)transactions?
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Chapter 12: The Revenue Cycle: Sales to Cash Collections
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Q1) Which of the following is not a general threat to the revenue cycle?
A) inaccurate master data
B) loss of customers
C) poor performance
D) unauthorized disclosure of sensitive information
Q2) Which of the following is not one of the controls when customer payments are commingled with other mail?
A) preparing a remittance list as mail is opened
B) restrictively endorsing checks when received
C) requiring two mail room clerks to open mail together
D) requiring the controller to be personally present when mail is received and opened
Q3) Which of the following is not a threat to the revenue cycle shipping process?
A) incomplete orders
B) inventory theft
C) picking the wrong items
D) wrong shipping address
Q4) Describe the basic revenue cycle activities.
Q5) Discuss the revenue cycle threat of stockouts,carrying costs,and markdowns.
Q6) Describe typical credit approval procedures.
14
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Chapter 13: The Expenditure Cycle: Purchasing to Cash Disbursements
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Q1) How can information technology be used to improve the vendor invoice approval process?
Q2) Once a purchase request is approved,what is the next step?
A) The system creates a purchase order.
B) The accounts payable department approves the purchase request, creating a purchase order.
C) The inventory master file is accessed to find the preferred supplier(s).
D) The department that created the purchase request may buy the requested item(s).
Q3) The management at Barks-a-Million is considering a new inventory control system.The current system is inadequate because it frequently causes stockouts that interrupt production and lead to excess stock of other materials - resulting in markdowns and high carrying costs.The new system will focus on reducing or completely eliminating carrying costs,most likely employing
A) a just-in-time inventory system.
B) a reorder point.
C) materials requirements planning.
D) the economic order quantity.
Q4) Identify ten threats and applicable control procedures in the expenditure cycle.
Q5) Discuss the differences between EOQ,MRP,and JIT.
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Chapter 14: The Production Cycle
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Q1) The ________ authorizes the transfer of raw materials from the storeroom to the production floor.
A) bill of materials
B) production order
C) materials requisition
D) move ticket
Q2) What are the two major types of cost accounting systems and what are the differences between the two?
Q3) The operations list shows
A) the labor and machine requirements.
B) the steps and operations in the production cycle.
C) the time expected to complete each step or operation.
D) all of the above
Q4) ________ is an efficient way to track and process information about raw materials used in production.
A) A just-in-time inventory system
B) Identifying materials with bar codes or RFID tags
C) A materials resources planning inventory system
D) Job-order costing
Q5) Explain what CIM means and its benefits.
Page 16
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Chapter 15: The Human Resources Management and Payroll Cycle
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Q1) Discuss the threat of unauthorized changes to the payroll master file and its consequences.
Q2) Using financial incentives requires organizations to
A) pay employees less than they would have to if pay was a fixed salary.
B) better monitor employee attendance.
C) link the payroll system to other cycles to calculate incentive payments.
D) better monitor employee effort.
Q3) Which of the following will limit a firm's potential loss exposure from paycheck forgery?
A) segregation of check distribution from payroll duties
B) prompt redeposit of unclaimed paychecks
C) a separate payroll bank account
D) direct deposit of checks
Q4) Identify the following item that should contribute to the efficiency of a payroll system.
A) segregation of check distribution from payroll duties
B) prompt redeposit of unclaimed paychecks
C) a separate payroll bank account
D) direct deposit of checks
Q5) Describe benefits and threats of incentive and bonus programs.
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Chapter 16: General Ledger and Reporting System
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Q1) Which of the following is not one of the principles of proper graph design for bar charts?
A) Include data values with each element.
B) Use 3-D rather than 2-D bars to make reading easier.
C) Use colors or shades instead of patterns to represent different variables.
D) Use titles that summarize the basic message.
Q2) Which of the following user groups generally receive information produced by the general ledger and reporting system?
A) internal users
B) external users
C) inquiry processing by internal or external users
D) all of the above
Q3) When updating the general ledger,sales,purchases,and production are examples of ________ entries,and issuance or retirement of debt and the purchase or sale of investment securities are examples of ________ entries.
A) adjusting; controller originated
B) accounting subsystem; treasurer originated
C) adjusting; special journal
D) controller generated; special journal
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Chapter 17: Database Design Using the Rea Data Model
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Q1) It is industry standard to model relationships as ________ in entity-relationship diagrams.
A) rectangles
B) ovals
C) diamonds
D) there is no industry standard
Q2) It is industry standard to model attributes as ________ in entity-relationship diagrams.
A) rectangles
B) ovals
C) diamonds
D) There is no industry standard.
Q3) Each event in an REA model will in most cases have at least one ________ agent and one ________ agent involved with the event.
A) internal; resource
B) external; entity
C) internal; employee
D) internal; external
Q4) Describe the three basic rules that apply to the REA model pattern.
Q5) Describe data modeling.
19
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Chapter 18: Implementing an Rea Model in a Relational Database
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Q1) Which of the statements below is false when comparing the REA model to the traditional AIS model?
A) Traditional AISs contain only data about the financial aspects of transactions.
B) A major advantage of the REA data model is that it integrates non-financial and financial data in the AIS and makes both types of data easily accessible to management.
C) In the REA model, many financial statement items can be displayed by querying a single table.
D) Accounts in the traditional AIS are analogous to resources in the REA-based relational database.
Q2) The primary key for a Purchase-Inventory table that consists of the Purchase Order Number and the Inventory Item Number,is known as a
A) concatenated key.
B) foreign key
C) primary key.
D) dual key.
Q3) What are the advantages of the REA data model over the traditional AIS model?
Q4) Explain a completeness check.
Page 20
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Chapter 19: Special Topics in Rea Modeling
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Q1) Identify the entity that stores most of the data typically found in the employee master file.
A) Time Worked
B) Employee
C) HR
D) Payroll
Q2) Picking ticket number is most likely to be a primary key in which entity of an expanded revenue cycle REA diagram?
A) Call on Customers
B) Fill Customer Order
C) Ship Order
D) Take Customer Order
Q3) The relationship between the Disburse Cash and Issue Stock events is modeled as being M:N for all except which of the following reasons?
A) One dividend check could be paid to shareholders that purchased stock at different times.
B) Shareholders could receive several dividend checks over time.
C) Checks must be written to each shareholder for dividend payments.
D) Stock can be issued more than once over a period of time.
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Page 21
Chapter 20: Introduction to Systems Development and Systems Analysis
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Q1) A prototype
A) is expensive to create and is therefore only created once user needs are well-defined.
B) is making an internal and external review of the system to be analyzed, noting that users may not use the existing AIS as intended.
C) is typically created during the physical design phase of systems development. D) can be used to help users identify and communicate their system needs.
Q2) Describe the five phases of systems analysis.
Q3) Who is responsible for planning and monitoring a project to ensure timely and cost-effective completion?
A) information systems steering committee
B) management
C) project development team
D) accountants
Q4) PERT is an acronym that stands for
A) program evaluation and review technique.
B) process effort and resource table.
C) preliminary expenditures and revision template.
D) performance effectiveness and refinement target.
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Chapter 21: Ais Development Strategies
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Q1) Identify the ways an organization can gain full advantage of using a Request For Proposal (RFP).
Q2) Although Gillette uses canned software in its business operations,it does so with the intention of creating a competitive advantage.Identify how Gillette aims to gain a greater competitive advantage from using canned software.
A) from deciding how the software should be used
B) from deciding what software should be used
C) from the cost savings it gains by using canned software
D) from the reduced training associated with canned software
Q3) What are the three methods to obtain a new information system? What is a turnkey system?
Q4) Identify the statement below that is false with regards to the development of an AIS.
A) A newly designed AIS always meets user needs for a time period.
B) Changes to the AIS are often difficult to make after requirements have been frozen into specifications.
C) The development process can take so long that the system no longer meets company needs.
D) Users are sometimes unable to specify their needs adequately.
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Page 23
Chapter 22: Systems Design, implementation, and Operation
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Q1) What is the objective of output design? What are the output design considerations? What are the various categories of outputs?
Q2) Walk-throughs are system tests that involve
A) managers observing the operation of the system by "walking through" the IT department.
B) processing hypothetical data that are designed to identify errors in the system.
C) processing copies of real transactions in order to determine whether or not the system meets requirements.
D) a thorough review of the procedures and program logic of the system.
Q3) What factors does a steering committee consider when evaluating different system designs?
Q4) Which of the following control considerations will help ensure that all cash disbursements are made only to legitimate vendors?
A) security
B) accuracy
C) authorization
D) validity
Q5) Describe the approaches to system conversion.
Page 24
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