Instructions:

Choose the best answer (No. 1-13); Supply the answer (No. 14-15)

1. Which of the following is NOT a financial

transaction?
a. purchase of products
b. cash receipts
c. update valid vendor file
d. sale of inventory

2. The following are subsystems of the Accounting

Information System, EXCEPT
a. Transaction Processing System.
b. Human Resources System.
c. General Ledger/Financial Reporting System.
d. Management Reporting System.

3. Which of the following is NOT a purpose of the

Transaction Processing System?
a. managing and reporting on the status of financial investments
b. converting economic events into financial transactions
c. distributing essential information to operations personnel to support their daily operations
d. recording financial transactions in the accounting records

4. The objectives of the data collection activity of

the general model for Accounting Information Systems
are to collect data that are
a. relevant and redundant.
b. efficient and objective.
c. efficient and redundant.
d. efficient and relevant.

5. Which of the following is NOT a characteristic of

effective information?
a. relevance
b. accuracy
c. summarization
d. precision
6. Which of the following is NOT a database management
task?
a. retrieval
b. storage
c. summarization
d. deletion

C 7. When viewed from the highest to most elemental

level, the data hierarchy is
a. attribute, record, file.
b. record, attribute, key.
c. file, record, attribute.
d. file, record, key.
e. key, record, file.
8. Which is NOT an accountant’s primary role in information
systems?
a. system user
b. system auditor
c. system designer
d. system programmer

9. Which of the following is NOT an objective of all

information systems?
a. support for the stewardship function of management
b. support for management decision making
c. support for the day-to-day operations of the firm
d. all of the above are objectives

10. Which of the following best describes the activities

of the materials management function?
a. purchasing, receiving, and inventory control
b. receiving, sales, distribution, and purchasing
c. receiving, storage, purchasing, and accounts payable
d. purchasing, receiving, and storage
e. purchasing, storage, and distribution

11. Which of the following best describes the activities

of the production function?
a. maintenance, inventory control, and production planning
b. production planning, quality control, manufacturing, and cost accounting
c. quality control, production planning, manufacturing, and payroll
d. maintenance, production planning, storage, and quality control
e. manufacturing, quality control, and maintenance

12. Which of the following best describes the activities of the accounting function?
a. inventory control, accounts payable, fixed assets, and payroll
b. fixed assets, accounts payable, cash disbursements, and cost accounting
c. purchasing, cash receipts, accounts payable, cash disbursements, and payroll
d. inventory control, cash receipts, accounts payable, cash disbursements, and payroll
e. inventory control, cost accounting, accounts payable, cash disbursements, and payroll

13. Which statement best describes the issue of distributed data processing (DDP)?
a. The centralized and DDP approaches are mutually exclusive; an organization must choose one approach
or the other.
b. The philosophy and objective of the organization’s management will determine the extent of DDP in
the firm
c. In a minimum DDP arrangement, only data input and output are distributed, leaving the tasks of data
control, data conversion, database management, and data processing to be centrally managed.
d. The greatest disadvantage of a totally distributed environment is that the distributed information
processing unit locations are unable to communicate and coordinate their activities.
e. Although hardware (such as computers, database storage, and input/output terminals) can be
effectively distributed, the systems development and maintenance tasks must remain centralized for
better control and efficiency.

14. DATA ATTRIBUTES

Drawing from your basic accounting knowledge, the relevant data attributes that constitute the record
types below. Identify which attribute is the primary key for the record.
Accounts Payable record
Inventory record
Customer Sales Orders record
Purchase Orders to vendors
Cash Receipts (checks) from customers
Employee Payroll Earnings records

15. FUNCTIONAL SEGMENTATION

The current organization structure of Blue-Sky Company, a manufacturer of small sailboats, is presented below.
Required
a. What operational problems (for example, inefficiency, errors, fraud) do you think Blue Sky could
experience because of this structure?
b. Draw a new diagram reflecting an improved structure that solves the problems you identified. If
necessary, you may add up to two new positions.

Answer:
14. DATA ATTRIBUTES (NOT NORMALIZE FORM)
Accounts Payable record Economic order quantity
Primary key-vendor number Reorder level
Invoice number
Amount Customer Sales Orders record
Date due Primary key-sales order number
Date paid Customer number
Discount Item number
Unit price
Inventory record Quantity
Primary key-part number Discount
Description Date billed
Amount on hand Date due
Unit price Ship date
Total Customer number
Invoice number
Customer’s check number
Amount received
Date

Employee Payroll Earnings records

Primary Key-employee identification
Purchase Orders to vendors number
Primary key-purchase order number Hours worked-regular time
Vendor number Hours worked-overtime
Vendor’s part number Current Gross Pay
Part number Current federal income tax withheld
Quantity Current state income tax withheld
Date ordered Current FICA tax withheld
Date required Year to date hours-regular
Expected dollar amount Year to date hours-overtime
Year to date gross pay
Cash Receipts (checks) from customers Year to date federal income tax withheld
Primary Key-cash receipt number Year to date state income tax withheld
(sequentially assigned) Year to date FICA tax withheld

15. a. The production department’s vice president or manager should not supervise the inventory
management tasks. The production department uses the raw materials and therefore should not have any
custodial tasks over the storage of the inventory items. A separate materials management department
should handle the purchasing of inventory items and the warehousing of raw materials. The production
department may not take the time to investigate the best possible prices for a given quality and quantity
of goods.

Further, the production department may be able to pilfer goods from the production line if a separate
department is not controlling the release of raw materials for specific job lots. The production department
should not be in charge of cost accounting. The cost accounting department should be separate since this
department tracks the costs of the production process. The sales department should not be in charge of
credit approvals.

Further, the billing department should not report to the sales manager either because the salespeople
may be tempted to issue unwarranted and unauthorized discounts to their most valuable customer