Information Systems in Accounting Exam Practice Tests
Course Introduction
Information Systems in Accounting explores the integration of information technology within the accounting field, focusing on how computerized systems enhance the collection, processing, and reporting of financial data. Students examine the design, implementation, and control of accounting information systems, emphasizing their role in supporting decision-making, internal controls, and business processes. The course also covers topics such as data security, ethical considerations, and the impact of emerging technologies on the accounting profession, preparing students to efficiently utilize and evaluate information systems in modern accounting environments.
Recommended Textbook
Accounting Information Systems 10th Edition by James A. Hall
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16 Chapters
1672 Verified Questions
1672 Flashcards
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Page 2
Chapter 1: The Information System: an Accountants Perspective
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Sample Questions
Q1) The __________________________ and __________________________ standards that characterize the accounting information system clearly distinguish it from the management information system.
Answer: legal,professional
Q2) Which of the following is not a cloud computing service?
A)software as a service
B)infrastructure as a service
C)network as a service
D)platform as a service
Answer: C
Q3) Two distinct ways to structure the data processing function are ____________________ and ____________________.
Answer: centralized,distributed
Q4) Sales of products to customers,purchases of inventory from vendors,and cash disbursements are all examples of __________________________.
Answer: financial transactions
Q5) A practice in which an organization sells its IT resources and leases them back is called ___________________________________.
Answer: IT outsourcing
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Chapter 2: Introduction to Transaction Processing
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Sample Questions
Q1) Program flowcharts depict the type of media being used (paper,magnetic tape,or disks)and terminals.
A)True
B)False
Answer: False
Q2) Directing work-in-process through its various stages of manufacturing is part of the conversion cycle.
A)True
B)False
Answer: True
Q3) The revenue cycle has two subsystems.What are they and what occurs within each?
Answer: The two subsystems of the revenue cycle are sales order processing and cash receipts.In the sales order processing subsystem,the sales order is processed,credit granted,goods are shipped,customer is billed,and related files updated (sales,accounts receivable,inventory,etc.).In the cash receipts subsystem,cash is collected and deposited in the bank and files updated (cash,accounts receivable,etc.).
Q4) Most organizations have replaced the general journal with a _______________________________.
Answer: journal voucher system
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Chapter 3: Ethics,fraud,and Internal Control
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161 Flashcards
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Sample Questions
Q1) Which of the following is not an example of a processing control?
A)a hash total
B)a record count
C)a batch total
D)a check digit
Answer: D
Q2) Which of the following is not part of the COSO framework?
A)monitoring
B)risk assessment
C)certification by management
D)control activities
Answer: C
Q3) Supervision is often called a(n)____________ control.
A)access
B)verification
C)compensating
D)input
Answer: C
Q4) What are the three categories of processing control?
Answer: Batch controls,run-to-run controls,and audit trail controls
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Chapter 4: The Revenue Cycle
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Sample Questions
Q1) Describe a credit check in an advanced technology system.
Q2) Distinguish between a packing slip,shipping notice,and a bill of lading.
Q3) The credit department
A)prepares credit memos when goods are returned
B)approves credits to accounts receivable when payments are received
C)authorizes the granting of credit to customers
D)none of the above
Q4) A remittance advice is a form of turnaround document.
A)True
B)False
Q5) The bill of lading is a legal contract between the buyer and the seller.
A)True
B)False
Q6) Explain the steps needed to process a credit memo in the sales return system.
Q7) The purpose of the invoice is to bill the customer.
A)True
B)False
Q8) How is independent verification carried out in a manual revenue system?
Q9) What is automation and why is it used?
Q10) What are the benefits and risks of making Internet sales? Page 6
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Page 7
Chapter 5: The Expenditure Cycle Part I: Purchases and Cash
Disbursements Procedures
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Sample Questions
Q1) When a cash disbursement in payment of an accounts payable is recorded
A)the liability account is increased
B)the income statement is changed
C)the cash account is unchanged
D)the liability account is decreased
Q2) Discuss the input data edits that are programmed into a system to minimize the risk of errors.
Q3) The receiving report is used to
A)accompany physical inventories to the storeroom or warehouse
B)advise the purchasing department of the dollar value of the goods delivered
C)advise general ledger of the accounting entry to be made
D)advise the vendor that the goods arrived safely
Q4) Explain how a voucher payable system works.How is the balance of AP determined?
Q5) Explain why supervision is so important in the receiving department.
Q6) Name the key tasks associated with purchases procedures.
Q7) The warehouse is responsible for updating the inventory subsidiary ledger.
A)True
B)False
Page 8
Q8) Which internally generated document should be compared to the supplier's invoice to verify the quantity being billed for?
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Page 9
Chapter 6: The Expenditure Cycle Part II: Payroll Processing and
Fixed Asset Procedures
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Sample Questions
Q1) The fixed asset system is similar to the expenditure cycle except
A)fixed asset transactions are non-routine and require special authorization and controls
B)fixed assets are capitalized, not expensed
C)both a and b
D)none of the above
Q2) The document that records the total amount of time spent on a production job is the
A)time card
B)job ticket
C)labor distribution summary
D)personnel action form
Q3) Which control is not a part of the fixed asset system?
A)formal analysis of the purchase request
B)review of the assumptions used in the capital budgeting model
C)development of an economic order quantity model
D)estimates of anticipated cost savings
Q4) Timekeeping is part of the personnel function.
A)True
B)False
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Chapter 7: The Conversion Cycle
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Sample Questions
Q1) Discuss the assumptions of the economic order quantity (EOQ)model and its objective.
Q2) Which situation violates the segregation of functions control procedure?
A)production planning and control is located apart from the work centers
B)inventory control maintains custody of inventory items
C)cost accounting has custody of and makes entries on cost records
D)work centers record direct labor on job tickets
Q3) Explain why traditional cost allocation methods do not work well in a CIM environment.
Q4) In a traditional manufacturing environment,cost accounting provides independent verification of what information? What are the benefits?
Q5) How does MRP II (manufacturing resource planning)expand on MRP (materials requirements planning)?
Q6) A company's value stream includes all steps in a process,both essential and non-essential,for which the customer is willing to pay.
A)True
B)False
Q7) Explain the conversion cycle.
Q8) Differentiate between essential and non-essential activities.
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Chapter 8: Financial Reporting,and Management Reporting Systems
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Sample Questions
Q1) Describe at least three characteristics of strategic planning decisions and their information requirements.
Q2) Operational control involves motivating managers at all levels to use resources,including materials,personnel,and financial assets,as productively as possible.
A)True
B)False
Q3) Strategic decisions are subordinate to tactical planning decisions.
A)True
B)False
Q4) List and explain the six basic files in the general ledger database.
Q5) The verification model uses data mining to discover previously unknown information that is hidden in the data.
A)True
B)False
Q6) Describe the three elements of problem structure.Contrast a structured problem to an unstructured problem.Describe which levels of management typically deal with structured problems and with unstructured problems.
Q7) What is information overload? How does it affect decision-making?
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Chapter 9: Database Management Systems
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Sample Questions
Q1) In the relational database model all of the following are true except A)data is presented to users as tables
B)data can be extracted from specified rows from specified tables
C)a new table can be built by joining two tables
D)only one-to-many relationships can be supported
Q2) The __________________________ authorizes access to the database.
Q3) The most serious problem with unnormalized databases is the
A)update anomaly
B)insertion anomaly
C)deletion anomaly
D)none of the above
Q4) What are the problems with the flat-file approach? How does the database approach solve them?
Q5) What is a transitive dependency?
Q6) What is a database lockout?
Q7) Data concurrency
A)is a security issue in partitioned databases
B)is implemented using timestamping
C)may result in data lockout
D)occurs when a deadlock is triggered
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Chapter 10: The Rea Approach to Business Process
Modeling
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Sample Questions
Q1) Describe the two economic events that occur for payroll procedures.
Q2) Explain how events,resources and agents are linked in a REA diagram.
Q3) The duality association in an REA diagrams signifies that each economic transaction involves two agents.
A)True
B)False
Q4) According to the REA philosophy,information systems should support only the needs of accounting professionals.
A)True
B)False
Q5) How do the entity relationship (ER)and the REA diagrams differ?
Q6) Why would a company adopt the REA approach to database design?
Q7) Which of the following is not an example of an economic event?
A)Ship goods
B)Receive goods
C)Get employee time
D)Prepare cash disbursements voucher
Q8) Define association.
Q9) How are tables in a (M:M)association physically linked? Page 14
Q10) Explain the relationship between cardinality and association.
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Page 15
Chapter 11: Enterprise Resource Planning Systems
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Sample Questions
Q1) The setup of a data warehouse includes
A)modeling the data
B)extracting data from operational databases
C)cleansing the data
D)all of the above
Q2) What is scalability?
Q3) Why must a data warehouse include both detail and summary data?
Q4) What are the three key internal control concerns for managers and auditors regarding ERP roles?
Q5) How can a firm acquire bolt-on software? What are the options?
Q6) Which statement about ERP installation is least accurate?
A)For the ERP to be successful, process reengineering must occur.
B)ERP fails because some important business process is not supported.
C)When a business is diversified, little is gained from ERP installation.
D)The phased-in approach is more suited to diversified businesses.
Q7) The big bang approach
A)is more ambitious and risky than the phased-in approach
B)is a popular alternative to the phased-in approach
C)reduces the chance of system failure
D)all of the above
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Chapter 12: Electronic Commerce Systems
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Sample Questions
Q1) Explain a distributed denial of service attack (DDoS).
Q2) IP spoofing is a form of masquerading to gain unauthorized access to a web server. A)True
B)False
Q3) Describe virtualization.
Q4) A smurf attack involves three participants: a zombie,an intermediary,and the victim.
A)True
B)False
Q5) A distributed denial of service (DDoS)attack may take the form of a SYN flood but not a smurf attack.
A)True
B)False
Q6) Network protocols fulfill all of the following objectives except
A)facilitate physical connection between network devices
B)provide a basis for error checking and measuring network performance
C)promote compatibility among network devices
D)creation of inflexible standards
Q7) Why is network control needed? What tasks are performed?
Page 17
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Chapter 13: Managing the Systems Development Life Cycle
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Sample Questions
Q1) A tangible benefit
A)can be measured and expressed in financial terms
B)might increase revenues
C)might decrease costs
D)all of the above
Q2) Name three benefits of modular programming.
Q3) In-house developed systems are less reliable than commercial software.
A)True
B)False
Q4) Aspects of project feasibility include all of the following except
A)technical feasibility
B)economic feasibility
C)logistic feasibility
D)schedule feasibility
Q5) If individual modules are thoroughly tested,it is not necessary to test the whole system.
A)True B)False
Q6) Why is cost-benefit analysis more difficult for information systems than for many other types of investments organizations make?
Page 18
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Chapter 14: Auditing It Controls Part I: Sarbanes-Oxley and It Governance
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Sample Questions
Q1) Computer fraud is easiest at the data collection stage.Why?
Q2) Explain why certain duties that are deemed incompatible in a manual system may be combined in an automated environment? Give an example.
Q3) Corporate management (including the CEO)must certify monthly and annually their organization's internal controls over financial reporting.
A)True
B)False
Q4) Explain vendor exploitation.
Q5) What is the empty shell?
Q6) The IT audit focuses on systems where technology plays a material role and thus makes the entire audit process more complex.
A)True
B)False
Q7) What approach to the design and assessment of controls is recommended by PCAOB Auditing Standard No.5?
Q8) Describe the two broad groupings of information system controls that are specified by COSO.
Q9) What is an auditor looking for when testing computer center controls? Page 19
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Page 20
Chapter 15: Auditing It Controls Part II: Security and Access
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Sample Questions
Q1) Explain how smurf attacks can be controlled.
Q2) Passwords are secret codes that users enter to gain access to systems.Security can be compromised by all of the following except
A)failure to change passwords on a regular basis
B)using obscure passwords unknown to others
C)recording passwords in obvious places
D)selecting passwords that can be easily detected by computer criminals
Q3) Transaction logs are permanent records of transactions created to preserve audit trails in a computerized environment.
A)True
B)False
Q4) One purpose of a database system is the easy sharing of data.But this ease of sharing can also jeopardize security.Discuss at least three forms of access control designed to reduce this risk.
Q5) Public key encryption
A)uses one key for encoding messages and another for decoding them
B)is an enhancement to data encryption standard (DES)
C)is electronic authentication that cannot be forged
D)requires RSA, a highly secure cryptography method
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Chapter 16: Auditing It Controls Part III: Systems
Development, program Changes, and Application Auditing
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Sample Questions
Q1) What are CAATS? Identify five of them.
Q2) All program modules must be thoroughly tested before they are implemented. A)True
B)False
Q3) When auditors do not rely on a detailed knowledge of the application's internal logic,they are performing
A)black box tests of program controls
B)white box tests of program controls
C)substantive testing
D)intuitive testing
Q4) New system development activity controls must focus on the authorization,development,and implementation of new systems and its maintenance.List five control activities that are found in an effective system development life cycle.
Q5) Use of the integrated test facility poses no threat to organizational data files. A)True
B)False
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Q6) Identify six controllable activities that distinguish an effective systems development process.