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Accounting Information Systems: The Processes and Controls 2nd Edition Test Bank

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    1 - 1 ACCOUNTING INFORMATION SYSTEMS/2e TURNER / WEICKGENANNT Test Bank: CHAPTER 1: Introduction to AIS NOTE: All new or adjusted questions are in red. New questions are identified by the letter A as part of the question number; adjusted questions are identified by the letter X as part of the question number. End of Chapter Questions: 1. When a company receives returned goods from a customer, the business process to accept the return would most likely be a(n): A. Administrative process B. Conversion process C. Expenditure process D. Revenue process 2. Which of the following is least likely to be an output of the accounting information system? A. A check B. A report C. An invoice D. A bar code 3. Which of the following is not true of the supply chain? A. The supply chain includes vendors. B. The supply chain excludes customers. C. The supply chain includes information flows. D. The supply chain include secondary suppliers. 4. Which of the following is not an objective of IT enablement? A. Increased accuracy of data B. Reduced cost C. Reduced security problems D. Increased efficiency 5. The correct order of the computer data hierarchy is: A. Byte, bit, record, field, file, database B. Bit, byte, record, field, file, database C. Bit, byte, field, record, file, database D. Bit, byte, field, record, database, file 6. The process of searching for identifiable patterns in data is called: A. Sequential processing B. Data warehousing C. Data mining D. Real - time processing 7. An IT enabled system for purchasing that is an “invoice - less” system is called a(n): A. Automated matching system B. Evaluated receipt settlement

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    1 - 2 C. E - payables D. Point of sale system 8. The COSO report written for the purpose of assisting managers in the challenge of managing risk in their organization is entitled: A. Internal Control – Integrated Framework B. Enterprise Risk Management – Integrated Framework C. Corporate Governance Guidance D. IT Governance Guidance 9. Accountants have some form of use of the AIS in all but which role? A. User B. Programmer C. Auditor D. Designer 10. Which of the following is not true of unethical behavior? A. The only category of unethical behavior for accountants is inflating revenue. B. Accountants are often pressured to help commit or coverup unethical behavior. C. Hacking is an unethical behavior that accountants should be concerned about. D. An accounting information system can be used to cover up unethical behavior. ANSWERS TO QUESTIONS 1 - 10 (FROM THE TEXTBOOK) 1. D 6. C 2. D 7. B 3. B 8. A 4. C 9. B 5. C 10. A TEST BANK – CHAPTER 1 – MULTIPLE CHOICE 11. A prescribed sequence of work steps preformed in order to produce a desired result for the organization is called a(n): A. Accounting Information System B. Business Process C. Financial Transaction D. Capital Transaction Process 12. The process that must identify the transactions to be recorded, capture all the important details of the transactions, properly process the transaction details, and provide reports is termed the: A. Revenue Process B. Expenditure Process C. Accounting Information System D. Business Process 13. An accounting information system serves many functions - which of the following is NOT one of those functions? A. Capture the details of a transaction B. Implement the start of a transaction C. Provide reports of transactions D. Process the transactions details into appropriate accounts

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    1 - 3 14. The proper order of activity in an accounting information system would be as follows: A. Capture, Record, Process, Report B. Process, Record, Capture, Report C. Capture, Process, Report, Record D. Record, Capture, Process, Report 15. Which of the following is not one of the general types of business processes identified by the textbook? A. Revenue Processes B. Expenditure Processes C. Conversion Processes D. Human Resource Processes 16. Which of the following statements, related to business processes, is false? A. Each business process has a direct effect on the financial status of the organization. B. A business process is initiated by a particular kind of event. C. A business process has a well - defined beginning and end. D. Each business process is usually completed in a relatively short period. 17. Which of the following is least likely to be part of an accounting information system function? A. Record the accounting data in the appropriate records B. Generation of data to be part of the information system. C. Process the detailed accounting data. D. Report the summarized accounting data. 18. Work steps that are internal controls within the business process would include: A. Using an electronic register to record all sales transactions. B. Combining both manual and computer based records. C. Reconciling a cash register at the end of each day. D. Preparation of internal reports to monitor the performance of a specific department. 19. Five different components of the accounting information system were presented in the textbook. Which of the following is not one of those components? A. Work steps within a business process intended to capture accounting data as the business process occurs. B. Work steps that are internal controls within the business process to safeguard assets and to ensure the accuracy and completeness of the data. C. Work steps that generate both internal and external reports. D. Work steps to assure that all business processes are recorded using computer - based procedures. 20. Output from an accounting information system would include: A. Checks to vendors B. Invoices from vendors C. Customer statements D. Purchase orders 21. The entities, processes, and information flows that involve the movement of materials, funds, and related information through the full logistics process, from the acquisition of raw materials to the delivery of the finished produces to the end use is a set of linked activities referred to as: A. Management Information System B. Supply Chain C. Accounting Information System

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    1 - 4 D. Logistics Management 22. The organization and control of all materials, funds, and related information in the logistics process, from the acquisition of raw materials to the delivery of finished products to the end user is referred to as: A. Supply Chain Management B. Management Information System C. Logistics Management D. IT Enablement 23. When discussing the supply chain: A. Any concern about vendors would relate only to those vendors with which a company has direct contact. B. Service providers would not be part of the supply chain. C. Concern would not extend beyond the point where the product is shipped to a customer. D. An entity may not be able to directly control all of the interrelated activities within the supply chain. 24. Using IT systems to enhance efficiency and effectiveness of internal or supply chain processes is called: A. Information Technology Enablement B. Information Systems Control C. Information Technology Process Engineering D. Information Technology Business Processes 25. The purposeful and organized changing of business processes to make them more efficient is referred to as: A. Information Technology Engineering B. Information Systems Management C. Business Process Reengineering D. Business Process Supply Chain 26. The use of BPR (Business Process Reengineerin) is a two - fold: (1) Aligns business processes with the IT systems used to recorded processes and, (2): A. Improves the efficiency and effectiveness of these processes. B. Reduces the cost of these processes. C. Enhances the usefulness of these processes. D. Increases the accuracy of the process. 27. The smallest unit of information in a computer system can have only one of two values, zero or one, and is referred to as a(n): A. Field B. Record C. Byte D. Bit 28. A unit of storage that represents one character is referred to as a: A. Byte B. Bit C. Bat D. Field 29. A set of related fields is referred to as a: A. File B. Record C. Byte D. Binary Digit

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    1 - 5 30. Each record is made up of related: A. Files B. Bytes C. Name D. Fields 31. A collection of data stored on a computer in a form that allows the data to be easily accessed, retrieved, manipulated, and stored is referred to as a(n): A. Accounting Information System B. Information Technology C. Database D. Master File 32. A collection of data stored in several small two - dimensional tables that can be joined together in many varying ways to represent many different kinds of relationships among the data is referred to as a(n): A. Database B. Master File C. Relational Database D. Relation Based Accounting Software 33. Accounting software traditionally uses two different types of files. The file type that is relatively permanent and used to maintain the detailed data for each major process is a(n): A. General Ledger B. Master File C. Transaction File D. Subsidiary File 34. Accounting software traditionally uses two different types of files. The file type that is the set of relatively temporary records that will be process to update the permanent file is referred to as a(n): A. Master File B. General File C. Transaction File D. Subsidiary File 35. The chart of accounts would be a good example of a: A. Transaction File B. Master File C. Field D. Record 36. The organization of files in a computer system normally uses one of two different access methods. The access method where the files store records in sequence, with one record stored immediately after another, is referred to as: A. Chronological Access B. Sequential Access C. Random Access D. Numerical Access 37. The organization of files in a computer system normally uses one of two different access methods. The access method where the files are not stored in sequence, one record not stored immediately after another, is referred

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    1 - 6 to as: A. Indexed Access B. Batch Access C. Sequential Access D. Random Access 38. There are two modes of processing transactions in accounting systems. The mode that requires all similar transactions be grouped together and be processed at the same time, is referred to as: A. Batch Processing B. Online Processing C. Real - time Processing D. Sequential Processing 39. There are two modes of processing transactions in accounting systems. The mode that will record transactions, one at a time, is referred to as: A. Batch Processing B. Online Processing C. Real - Time Processing D. Sequential Processing 40. A type of online processing where a transaction is processed immediately so that the output is available immediately is termed: A. Virtual Processing B. Sequential Processing C. Real - Time Processing D. Batch Processing 41. An integrated collection of enterprise - wide data that includes five to ten fiscal years of non - volatile data, used to support management in decision making and planning is referred to as: A. Operational Database B. Relational Database C. Data Storage D. Data Warehouse 42. This type of database contains the data that are continually updated as transactions are processed and includes data for the current fiscal year and supports day - to - day operations is referred to as a(n): A. Data Warehouse B. Data Storage C. Relational Database D. Operational Database 43. The data in the data warehouse are said to be enterprise - wide because: A. The data relate to all areas of the business. B. The data are pulled from each of the operational databases and maintained in the data warehouse for many fiscal periods. C. All areas of the business are able to access the data warehouse. D. All transactions across the all areas of the business are recorded in the data warehouse. 44. The process of searching data within the data warehouse for identifiable patterns that can be used to predict future behavior is referred to as: A. Data mining B. Data digging

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    1 - 7 C. Data housing D. Data querying 45. Two or more computers linked together to share information and / or resources is referred to as a(n): A. Computer Intranet B. Computer Internet C. Computer System D. Computer Network 46. This type of computer network is one that spans a relatively small area - often confined to a single building or group of buildings, and are intended to connect computers within an organization. A. Local Area Network B. Land Arena Network C. Extranet D. Internet 47. The global computer network, or “information super highway”, is the: A. WAN B. Intranet C. Internet D. LAN 48. A company’s private network, accessible only to the employees of that company is the: A. WAN B. Intranet C. Internet D. LAN 49. This computer network is similar to a company’s intranet except that it does allow access to selected outsiders, such as buyers, suppliers, distributors, and wholesalers. A. Ultranet B. Internet C. Extranet D. LAN 49A. A contemporary type of computer infrastructure that is used by an increasing number of companies involves the use of shared services, software, and / or data stored on servers at a remote location, which are accessible over a network, is referred to as: A. Database B. Cloud Computing C. Internet D. Relational Internet 50. The use of electronic means to enhance business processes is termed: A. E - business B. Electronic data interchange C. Point of sale system D. E - commerce 51. The intercompany, computer - to - computer transfer of business documents in a standard business format is called: A. E - business B. E - commerce

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    1 - 8 C. Local area network D. Electronic data interchange 52. Which of the following is NOT one of the three components of electronic data interchange? A. Commerce - encompasses all forms of electronic trading. B. Intercompany - two or more companies conducting business electronically. C. Standard business format - necessary so that the various companies can interact and trade electronically. D. Computer to computer - indicates that each company’s computers are connected via a network. 53. This term refers to a system of hardware and software that captures retail sales transactions by standard bar coding. A. E - business B. Electronic data interchange C. Point of sale system D. E - commerce 54. When a point of sale system is used and a customer checks out through a cash register, which of the following processes occur? A. Net income is computed B. Inventory values are updated C. Accounts payable balances are updated D. Replacement inventory is purchased 55. A system of computer hardware and software in which the software matches an invoice to its related purchase order and receiving report is called: A. Point of sale system B. Electronic data interchange C. Automated matching D. Evaluated receipt settlement 56. An invoice - less system in which computer hardware and software complete an invoice - less match that is a comparison of the purchase order with the goods received is termed: A. Evaluated receipt settlement B. Automated matching C. Electronic invoice presentation and payment D. Enterprise resource planning 57. This system enables a vendor to present an invoice to its trading partner via the internet, eliminating the paper, printing, and postage costs of traditional paper invoicing. A. Evaluated receipt settlement B. Electronic invoice presentation and payment C. Automated matching D. Electronic data interchange 58. A multi - module software system designed to manage all aspects of an enterprise usually broken down into modules such as financials, sales, human resources, and manufacturing, is referred to as a(n): A. Electronic data system B. Electronic data interchange C. Enterprise resource planning D. Electronic resource program

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    1 - 9 59X. Management has the responsibility, and the ability, to take action to reduce risks or to lessen the impact al nearly all risks an organization faces. The steps taken by management to lessen the risk or reduce the impact of the risk, are referred to as: A. Programs B. Risk assessment C. Information evaluation D. Controls 60. Which of the following groups of professionals within an organization have a history of designing and implementing the controls to lessen risks? A. Management B. Accountants C. Human Resources D. Lawyers 61. Which of the following is not one of broad categories of controls? A. The risk that assets will be stolen or misused. B. The risk of errors in accounting data or information. C. The risk of loss due to a natural disaster. D. The risk of fraudulent activity by employees. 62. Which of the following is not a risk inherent in an IT system? A. Computer security breaches. B. Computers being stolen. C. Erroneous input of data. D. Hardware or software failure. 63X. A comprehensive report on enterprise risk management was issued by this organization. A. American Accounting Association B. New York Stock Exchange C. Institute of Internal Auditors D. Committee on Sponsoring Organizations 64. A process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may effect the entity, and manage risk to be withing its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives is referred to as: A. Enterprise resource planning B. Enterprise risk management C. IT system control structure D. Corporate governance structure 65. In order to achieve the objective of managing risk, management should establish control structures that include, at a minimum: A. Accounting internal controls. B. Accounting internal controls, IT controls, corporate governance, enterprise risk management, and IT governance. C. IT controls, IT governance, corporate governance, and accounting internal controls. D. IT controls and accounting internal controls.

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    1 - 10 66. The company’s development and adherence to this should reduce the opportunities for managements or employees to conduct fraud. A. Code of ethics B. Internal control structure C. Application controls D. Corporate governance 67X. The COSO report, Internal Controls – Integrated Framework, identified interrelated components of internal control. Which of the following is not one of those components? A. Monitoring B. Risk assessment C. Control activities D. Enterprise risk management 68. IT controls can be divided into two categories. Which of the following is a correct statement of one of those categories? A. Application controls apply overall to the IT accounting system. B. Application controls apply to the prevention of erroneous or incomplete input or processing of data. C. Application controls are used specifically in accounting applications to control inputs, processing, and output. D. Application controls are used to prohibit fraudulent financial reporting. 69. An elaborate system of checks and balances, whereby a company’s leadership is held accountable for building shareholder value and creating confidence in the financial reporting processes, is referred to as: A. Enterprise risk management B. Corporate governance C. Application controls D. Internal control structure 70. The purpose of this 2002 act was to improve financial reporting and reinforce the importance of corporate ethics. A. Foreign Corrupt Practices Act B. Sarbanes - Oxley Act C. Securities and Exchange Act D. Treadway Act 71. Which of the following is not one of the corporate functions interrelated within the corporate governance system? A. Management Oversight B. Ethical Conduct C. Risk Assessment D. Financial Stewardship 72. The proper management, control, and use of IT systems are known as: A. IT Governance B. IT Controls C. IT Risk Management D. IT Code of Ethics 73. Accountants have several possible roles related to accounting information systems. Which of the following is not normally one of those roles? A. Auditor of an AIS B. User of the AIS

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    1 - 11 C. Programmer of the AIS D. Design of the AIS 74. There are many reasons for accountants to become aware of potential unethical behaviors. Which of the following is not one of the reasons identified by the authors? A. Accountants are responsible for identifying unethical and illegal activities. B. Accounts assist in developing and implementing internal control structures that should decrease the chance of unethical actions. C. Accountants are often pressured to assist in, or cover up, unethical actions. D. Accountants deal with assets or records that could easily tempt accountants to engage in unethical behavior. ANSWERS TO TEST BANK – CHAPTER 1 – MULTIPLE CHOICE: 11. B 24. A 37. D 50. A 63X. D 12. C 25. C 38. A 51. D 64. B 13. B 26. A 39. B 52. A 65. C 14. A 27. D 40. C 53. C 66. A 15. D 28. A 41. D 54. B 67X. D 16. A 29. B 42. D 55. C 68. C 17. B 30. D 43. B 56. A 69. B 18. C 31. C 44. A 57. B 70. B 19. D 32. C 45. D 58. C 71. C 20. B 33. B 46. A 59X. D 72. A 21. B 34. C 47. C 60. B 73. C 22. A 35. B 48. B 61. C 74. A 23. D 36. B 49. C 62. B 49A. B TEST BANK – CHAPTER 1 – TRUE/FALSE: 75. A business process has a well - defined beginning and end. TRUE 76. Each business process has a direct effect on the financial status of an organization. FALSE: The process could have an indirect effect. 77. Few accounting information systems rely on computer hardware and software to track business processes. FALSE: Most accounting information systems rely on computer hardware and software. 78. The rethinking and redesigning that occur during business process reengineering are aided by the use of information technology. TRUE 79. There are very few business processes that have the potential to be improved by IT enablement. FALSE 80. Business process reengineering should leverage the capabilities of information technology to improve the efficiency of business processes. TRUE 81. It is important for accountants to have some understanding of basic computer terminology.

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    1 - 12 TRUE 82. When files are organized as sequential access, and the user needs to access record number 250, the previous 249 records will be read by the computer before reading record number 250. TRUE 83. When files are organized as sequential access, the sequence is normally based on one key record in each file. FALSE: the key is a field – not a record 84. Batch processing is best suited to applications that have large volumes of similar transactions that can be processed as regular intervals. TRUE 85. Online processing is the opposite of real - time processing. FALSE: Online processing is the opposite of batch processing. 86. Batch processing is best suited to sequential access files. TRUE 87. Online processing is best suited to sequential access files. FALSE: random access files, not sequential access files. 88. Online processing is best suited to situations were there is a large volume of records but only a few records are needed to process any individual transaction. TRUE 89. Each time a new transaction is completed, parts of the data warehouse must be updated. FALSE: parts of the operational database must be updated. 90. Data in the data warehouse are called nonvolatile because they do not change rapidly in the same way that operational data change. TRUE 91. A system of local area networks connected over any distance via other net work connections is called a WAN, or wide area network. TRUE 92. E - business is a type of e - commerce. FALSE: e - commerce is a type of e - business 93. The “intercompany” component of electronic data interchange means that two or more companies are conducting business electronically. TRUE 94. In order to have an automated matching system it is necessary to have access to paper copies of purchase orders and invoices. FALSE: All of the related files need to be online. 95. When automated matching is used, the system will not approve an invoice for payment unless the items and quantities match with the packing slip and the prices match the purchase order prices. TRUE

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    1 - 13 96. The evaluated receipt settlement system is an IT enabled system that reduces the time and cost of processing customer payments. FALSE: processing vendor payments. 97. ERP systems are based on a relational database system. TRUE 98. Traditional accounting software is much more comprehensive and encompassing that ERP software. FALSE 99. Before ERP software systems, modules such as human resources were in separate software but well integrated with the accounting software. FALSE: were NOT well integrated. 100. Although accountants are heavily involved in the creation, implementation, and monitoring of the control structure, management has the ultimate responsibility to establish a control environment. TRUE 101. Once a company has decided on the control processes needed, it is not necessary to have an ongoing assessment of risks. FALSE: it is necessary to have an ongoing assessment of risks. 102. A code of ethics should reduce opportunities for employees to conduct fraud if management emphasizes the cost and disciplines or discharges those who violate it. TRUE 103. IT systems are to be chosen and implemented to support the attainment of strategies and objectives. TRUE 104. It is likely that an accountant will select a career path, within accounting, that will not in some way, involve the use of an accounting information system. FALSE 105. An auditor cannot make informed decisions necessary to complete the audit without an understanding of the accounting information system. TRUE 106. The accounting information system is often the tool used to commit or cover up unethical behavior. TRUE ANSWERS TO TEST BANK – CHAPTER 1 – TRUE/FALSE: 75. True 82. True 89. False 96. False 103. True 76. False 83. False 90. True 97. True 104. False 77. False 84. True 91. True 98. False 105. True 78. True 85. False 92. False 99. False 106. True 79. False 86. True 93. True 100. True 80. True 87. False 94. False 101. False 81. True 88. True 95. True 102. True

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    ACCOUNTING INFORMATION SYSTEMS/2e TURNER / WEICKGENANNT Test Bank: CHAPTER 3 : Fraud, Ethics, and Internal Control NOTE: All new or adjusted questions are in red. New questions are identified by the letter A as part of the question number; adjusted questions are identified by the letter X as part of the question number. End of Chapter Questions: 1. The careful and responsible oversight and use of the assets entrusted to management is called: A. Control environment B. Stewardship C. Preventive control D. Security 2. Which of the following is not a condition in the fraud triangle? A. Rationalization B. Incentive C. Conversion D. Opportunity 3. There are many possible indirect benefits to management when management fraud occurs. Which of the following in not an indirect benefit of management fraud? A. Delayed exercise of stock options. B. Delayed cash flow problems. C. Enhanced promotion opportunities. D. Increased incentive - based compensation. 4. Which of the following is not an example of employee fraud? A. Skimming B. Larceny C. Kickbacks D. Earnings management 5. Which of the following is not a common form of employee fraud? A. Inventory theft B. Expense account fraud C. Payroll fraud D. Refund fraud 6. Segregation of duties is a fundamental concept in an effective system of internal controls. Nevertheless, the effectiveness of this control can be compromised through which situation? A. A lack of employee training B. Collusion among employees C. Irregular employee reviews D. The absence of an internal audit function

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    7. The most difficult type of misstatement to discover is fraud that is concealed by: A. Over - recording the transactions B. Nonrecorded transactions C. Recording the transactions in subsidiary records D. Related parties 8. The review of amounts charged to the company from a seller that it purchased from is called a: A. Vendor audit B. Seller review C. Collusion D. Customer review 9. Which of the following is generally an external computer fraud, rather than an internal computer fraud? A. Spoofing B. Input manipulation C. Program manipulation D. Output manipulation 10. Which control activity is intended to serve as a method to confirm the accuracy or completeness of data in the accounting system? A. Authorization B. Segregation of duties C. Security of assets D. Independent checks and reconciliations 11. COSO describes five components of internal control. Which of the following terms is best described as “policies and procedures that help ensure management directives are carried out and management objectives are achieved”? A. Risk assessment B. Information and communication C. Control activities D. Control environment 12. Proper segregation of functional responsibilities calls for separation of the functions of: A. Authorization, execution, and payment B. Authorization, recording, and custody C. Custody, execution, and reporting D. Authorization, payment, and recording 13. AICPA Trust Principles identify five categories of risks and controls. Which category is best described by the statement, “Information process could be inaccurate, incomplete, or not properly authorized”? A. Security B. Availability C. Processing integrity D. Confidentiality

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