Accounting Information Systems midterm

What is the main advantage of special journals in a paper-based accounting system?

Reduction in time requried

Which of the following data elements are essential in a journal?

Transaction date, dollar amount of each debit and credit, and account name and number

What type of account in the general ledger has a related subsidiary ledger?

Control Account

Which file can update a subsidiary ledger master file?

Transaction file

What type of transaction would not initially be recorded in the general ledger?

Payroll

What best describes internal control

A process by which management gains reasonable assurance that is objectives will be achieved

Which of the following documents has become widely accepted authority on internal control and is the basis for others?

COSO’s internal control - Integrated framework

An audit committee is a subcommittee under the direction of whom?

The board of directors

The five components of internal control include the following:

Control environment, risk assessment, control activities, information and communication, and monitoring

Which of the following is necessary for printing of the sales journal

Customer master file and sales transaction file

What are the primary activities of an accounting information system?

Input/capture data, store data, process data, and output/communicate the data

What are the support activities of an accounting information system?

People, technology, control

Which of the following is not used for event coding in accounting information systems?

• Sale

• Receipt of a sale order

• A vendor

• Acceptance of a sales order

A vendor

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

comparative reporting

What file in a computerized accounting system corresponds to a paper subsidiary ledger in a paper-based system?

Master file

Which of the following is not accounting information?
a. Total direct/indirect labor hours
b. Delivery equipment cost
c. Computer training schedule
d. Next year’s sales budget

Computer training schedule

In what terms can accounting information be expressed?

Units, percentages, and money

What does entity coding identity?

Master file records

Numbers that are used as unique reference identifiers should have which of the following characteristics?

Represent the completion of a transaction, derived from internally generated documents

Why study paper-based accounting systems?

They provide a more simplified context of what issues surround a computerized accounting system

Legal document that defines who is responsible for goods while they are in transit. It identifies that carrier, source, destination, any special shipping instructions, and indicates which party (customer or vendor) must pay the carrier

Bill of Lading

Form that is used to summarize a group of transactions, can be a valid entry in the general ledger

Journal voucher

Four business processes that comprise an accounting information system

Revenue, purchasing, inventory, financial

Which of the following is true concerning the cost/benefit model for risk analysis?

As costs of controls increase, costs associated with risks decrease

What is a set of processing references that enables the tracing of an event from its sources to its destination or from its destination back to its sources know as?

Audit trail

Foreign Corrupt Practice Act of 1977 (amended 1978)

It established provisions for record keeping and internal control for companies registered with the SEC

Sarbanes-Oxley Act of 2002

It recommended that every publicly traded company include a report in its annual report assessing the effectiveness of the company's internal control structure and procedures

Describe the importance of risk assessment

Helps management set priorities so it can determine what controls to implement.

Which of the following statements is true about a database management system?

It is a collection of software specifically designed to manage the data in a database in response to instructions issued by application programs or requests made by users

Which of the following statements is not an advantage of a database?

Data storage and revival methods are designed by application designers

Which of the following is the most important query language used in database management systems?

SQL

Which of the following are disadvantages of a database?

Increased hardware requirements, required technical skills, and difficult conversion from conventional files

Which is meant by the "logical" structure of a database?

The way the data are thought about or viewed by users

Which level of the database architecture relates to the way all the data in the entire database are logically viewed?

Conceptual level

The participation of which of the following individuals is not necessary in the development of a database system?

Board of directors

Which of the following data elements are not included in a sales invoice?

Sales representative name, sales representative commission, sales representative discount

What type of transaction would not initially be recorded in the general ledger?

Issuance or retirement of bonds and stock

Which of the following would not be suitable as a reference identifier in an audit trail?
a. Numbered invoice to customer
b. Document number of checks issued
c. Purchase order number
d. Internally generated numbers that represent completed transaction

Purchase order number

What input control can prevent/detect a warehouse clerk inadvertently typed the letter "L"(lower case is "l") instead of the number 1 in an inventory code.

Valid data type

What input control can prevent/detect a payroll clerk inadvertently typed one more 0 in the hour-worked/week field, consequently paying the employee for 400 hours worked in that week.

Reasonableness of amount

An Internal document with the amount you're ordering & how much it cost. And initiates the B2B purchase

Purchase Requisition

Transaction finales are also:

Journals

Examples of master files

General ledger and subsidiary ledger

With regards to inventory, what type of posting is used? real time posting or batch posting

Must always be real time posting

What are supporting activities?

Managing people, technology, and manage control

What files are needed to print a sales journal?

Sales transaction and customer master file

what is "open customer invoice file"?

Unpaid invoices

what is needed to print a customer invoice?

Customer master file and sales input

What files are needed to print a cash receipts journal

Customer master file and cash receipts master file

What is file maintenance?

Adding or deleting an account

Is adjusting an account balance considered maintenance?

No, it is an adjusting entry

what are activity reports?

Journal entries

Status reports for balances come from?

Financial Statements: I/S, B/S, C/F

What does event coding identiy?

Transaction events

Who is responsible for all internal controls?

CEO

Represent completion from an internal document

Reference identifiers

1993 FDIC made banks do what?

Requires banks worth over 180 million to assess and report effectiveness of internal controls

What is firewall

Software and hardware

The most common reporting of physical units is for which of the following?

Inventory

What are dictionaries of items that represent financial report concepts?

Taxonomies

What is a document that has been tagged according to the rules of XBRL?

Instance document

What is a feature or benefit of comparative reporting?

Arranges actual data of the current period with current period budgeted data or prior years actual data

What is a solution to the problem that exception reporting may have the most severe problems appearing on the report's back pages?

Record sequencing

What is one problem with exception reporting?

May have the most severe problems appearing at the end of the report

What is record sequencing?

Arranging records in order of severity of the problem

The Sarbanes-Oxley Act prohibits which of the following?

Public accounting firms from providing consulting services to its auditing clients

What are the roles of people in computerized accounting systems

To monitor the processing of data and to interpret data

to manufacture hardware

write software

and maintain the accounting system

and to supervise

control the accounting function

Which of the following groups requires accounting data with the broadest perspective?

Upper level managers

Which of the following organizations can audit a company to determine whether the company has the correct number of licenses for the number of users?

Sotware Aliance (BSA)

Which of the following statements about a manual accounting system is not correct?

Data are stored in only one location.

Who are the users of accounting systems?

Financial accountants, managerial accountants, governmental accountants, and tax accountants

Who is most responsible for operation of the accounting system in an organization?

The controller and chief financial officer

What symbol would be used in a data flow diagram to represent the processing of employees' time cards?

Circle

What symbol would be used in a data flow diagram to represent employees' payroll data stored on magnetic disk?

Open ended rectangle

Flowcharting as a prelude to internal control evaluation provides what advantage over the use of narrative descriptions?

Ease in following information flow

What does the diamond-shaped symbol commonly used in flowcharting show or represent?

decision point

What are the labels, in order, or a trapezoid, scroll, sideways can, and rectangle?

Manual process, document, magnetic disk storage, computerized process

Under which business process would cost accounting subsystems fall?

Inventory process

Under which of the following business processes would the shipping subsystem fall?

Revenue process

Under which of the following business processes would the accounts payable subsystem fall?

Inventory process

The primary objective of an external auditor in obtaining an understanding of a client's internal control is to provide the auditor with:

An opinion on the clients financial statements

What is an Accounting Information System?

Event based systems, accounting events, and accounting transactions

What are accounting data?

Monetary and non-monetary

Examples of block codes

Chart of accounts

Document listing the quantity and description of each item included in a shipment

Packing slip

Document that formally requests supplier to sell/deliver products at desired prices and promises to contractually engage with supplier if accepted

Purchase order

Document that identifies the deliver location and date needed, item numbers, descriptions, quantity, and price of each item requested, and suggests a vendor.

Purchase requisition

Document that records the details of each delivery

Receiving report

Enclosure included with a customers payment that indicates invoices, statements, or other items paid

Remittance Advice

Document notifying customers of the amount to be paid, where to be paid, and where to send payment

Sales Invoice

Document created during sales order entry, listing the item numbers, quantities, prices, and terms of the sale

Sales Order

Used during a processing operation and purged when the operation is complete

Scratch File

Copy of file intended as replacement if original file is lost

Backup file

Permanent record of transactions that occurred during a set time period

Archive File

Instructions that tell the computer how to process certain data

program file

Best times to use real-time posting

Only when information is critical. Batch post everything else

Open customer invoice file

Customer file that has not been paid yet

What are needed to print a customer invoice

Customer master file and sales input

Example of sequence code

Checks, purchase orders

Code that uses letters over numbers to signify a value.

Ex: USA, NY = New York, United States of America

Mnemonic Codes