1. 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.
 
2. Which of the following are objectives of the data collection activity within the general model
for AIS?
a. Relevant and redundant
b. Efficient and relevant
c. Efficient and redundant
d. Efficient and objective
 
3. Which of the following is NOT a database management task?
a. Retrieval
b.  Storage
c. Summarization
d. Deletion
 
4.Which of the following is NOT a financial transaction?
a. Update valid vendor file
b. Purchase of products
c. Cash receipts
d. Sale of inventory
 
5. The following are subsystems of the accounting information system, EXCEPT the
a. transaction processing system.
b. general ledger/financial reporting system.
c. human resources system.
d. management reporting system.
 
6. Providing timely information about transactions in sufficient detail to permit proper
classification and financial reporting is an example of
a. the control environment.
b. risk assessment.
c. information and communication.
d. monitoring.
 
7.  When viewed from the highest to the most elemental level, the data hierarchy is
a. file, record, attribute.
b. attribute, record, file.
c. record, attribute, key.
d. table, record, key.
e. key, record, table.
 
8. Which of the following is least likely to be used as evidence by an external auditor?
a. Substantive tests results
b. Work performed by internal auditors who organizationally report to the controller
c. Tests of controls results
d. Work performed by internal auditors who report to the audit committee of the BOD
 
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. Purchasing, receiving, and storage
c. Receiving, sales, distribution, and purchasing
d. Receiving, storage, purchasing, and accounts payable
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. Quality control, production planning, manufacturing, and payroll
c. Maintenance, production planning, storage, and quality control
 
12. Which of the following best describes the activities of the accounting function?
a. Inventory control, cash receipts, accounts payable, cash disbursements, 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, accounts payable, fixed assets, and payroll
e. Inventory control, cost accounting, accounts payable, cash disbursements, and payroll
 
13. Ensuring that all material transactions processed by the information system are valid and in
accordance with management's objectives is an example of
a. transaction authorization.
b. supervision.
c. accounting records.
d. independent verification.
 
14. Which of the following statements is most accurate?
a. ERP systems are commercial software packages that are sometimes called turnkey systems
because they can be implemented by the user with little or no modification.
b. Substantive tests provide evidence focused on the system controls.
c. Public accounting firms that provide attest services are not allowed under SOX to offer IT
advisory services.
d. Both small and large firms that have standardized information needs are potential customers
for commercial software.
e. External auditors may rely on the work of internal auditors only if they report to the con-
troller or the CEO of the client company.
 
15. Which of the following is NOT an advantage of real-time processing of files over batch
processing?
a. Shorter transaction processing time
b. Reduction of inventory stocks
c. Improved customer service
d. All are advantages
e. None of the above are advantages
 
16. Which statement is NOT true? Batch processing
a. is subject to deadlocks when processing com- mon accounts.
b. permits data to be edited in a separate com- puter run.
c. can use databases and flat files.
d. can be initiated from a terminal.
 
17. Which is the least appropriate type of transaction for a real-time system?
a. Airline reservations
b. Point-of-sale transactions
c. Weekly processing of payroll checks
d. Air traffic control systems
e. All of the above are real-time systems
 
18.Which of the following statements is not correct?
a. The database approach uses one common database to promote the concept of single user view.
b. Database systems resolve task data dependency.
c. The flat-file model encourages data redundancy.
d. A primary goal of database systems is to minimize data redundancy.
e. Database systems provide increased accessibility to data and data integration.
 
19. Which of the following is NOT true of a turn- around document?
a. It may reduce errors made by external parties.
b. It is used as internal documents only.
a. data flow diagram.
b. programming flowchart.
c. entity relationship diagram.
d. system flowchart.
e. all of the above.
 
20. Which of the following is NOT a true statement?
a. Transactions are recorded on ledgers and are posted to journals.
b. Transactions are recorded in journals and are posted to ledgers.
c. Infrequent transactions are recorded in the general journal.
d. Frequent transactions are recorded in special journal.
 
21.Which of the following is true of the relationship between subsidiary ledgers and general
ledger accounts?
a. The two contain different and unrelated data.
b. The relationship between the two constitute part of the audit trail.
c. All general ledger accounts have subsidiaries.
d. The total of subsidiary ledger accounts usually exceeds the total in the related general ledger
account.
 
22. Which statement is NOT correct?
a. Indexed random files are dispersed throughout the storage device without regard for physical
proximity with related records.
b. Indexed random files use disk storage space efficiently.
c. Indexed random files are efficient when processing a large portion of a file at one time.
d. Indexed random files are easy to maintain in terms of adding records.
 
23. Which of the following situations is NOT a segregation of duties violation?
a. The treasurer has the authority to sign checks but gives the signature block to the assistant
treasurer to run the check-signing machine.
b. The warehouse clerk, who has custodial responsibility over inventory in the warehouse, selects
the vendor and authorizes purchases when inventories are low.
c. The sales manager has the responsibility to approve credit and the authority to write off
accounts.
d. The department time clerk is given the undistributed payroll checks to mail to absent
employees.
e. The accounting clerk who shares the record- keeping responsibility for the accounts receiv-
able subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the
control account.
 

24. An invoice file would best be coded using a  coding ______________scheme.

a. alphabetic
b. mnemonic
c. block
d. sequential
 
25.Which statement is NOT correct?
a.  Legacy systems do not process financially significant transactions.
b. Mainframes are exclusive to legacy systems, while modern systems use only the client- server
model.
c. Legacy systems may use database technology.
d. All the above are true.

26. A documentation tool that depicts the physical flow of information relating to a particular

transaction through an organization is a

a. ER diagram.
b. system flowchart.
c. program flowchart.
d. decision table.
e. data flow diagram.
 
27. A coding scheme in the form of acronyms and other combinations that convey meaning is a
a. sequential code.
b. mnemonic code.
c. alphabetic code.
d. block code.
 
28. Which of the following statements is NOT true?
a. Sorting records that are coded alphabetically tends to be more difficult for users than sorting
numeric sequences.
b. Mnemonic coding requires the user to memorize codes.
c. Mnemonic codes are limited in their ability to represent items within a class.
d. Sequential codes carry no information content beyond their order in the sequence.
 
29.The production subsystem of the conversion cycle includes all of the following EXCEPT
a. make-or-buy decisions on component parts.
b. determining raw materials requirements.
c. release of raw materials into production.
d. scheduling the goods to be produced.
 
30. Which statement is NOT true?
a. Manufacturing firms have a conversion cycle but retail firms do not.
b. The conversion cycle includes the task of 'determining raw materials requirements.
c. A payroll check is an example of a product document of the payroll system.
d. A general journal may be replaced by a col- lection of journal voucher.
e. Business activities begin with the acquisition of materials, property, and labor in exchange for
cash.
 
II. Identify each of the following activities, whether it’s a:
FRS-financial reporting system
MRS-management reporting system
a. Preparation of balance sheet FRS
b. Capture customer sales order TPS
c. Preparation of variance reports MRS
d. Preparation of budgets MRS
e. Purchase order preparation TPS
f. Summary of inventory purchases by vendor MRS
g. Preparation of comparative sales report by division MRS
h. Preparation of cash disbursements to vendors TPS
i. Annual report preparation FRS
j. Customer billing process TPS
k.' Cost-volume-profit analysis MRS
 
III. Classify the following users of information as either:
I-internal user
T-external user: trading partner
S-external user-stakeholder
a. Internal Revenue Service S
b. Inventory control manager I
c. Board of directors I
d. Customers T
e. Lending institutions S
f. Securities and Exchange Commission S
g. Stockholders S
 h. Chief executive officer
i. Suppliers
j. Bondholders
IV.TRANSACTION CYCLE IDENTIFICATION
Categorize each of the following activities into the expenditure, conversion, or revenue
cycles, and identify the applicable subsystem.
a. Preparing the weekly payroll for
manufacturing personnel
b. Releasing raw materials for use in the
manufacturing cycle
c. Recording the receipt of payment for goods
sold
d. Recording the order placed by a customer
e. Ordering raw materials
f. Determining the amount
I
T
S
Expenditure cycle-payroll subsystem
Conversion cycle-production system
subsystem
Revenue cycle-cash receipts subsystem
Revenue cycle-sales order processing
subsystem
Expenditure cycle-purchases subsystem
Conversion cycle-production subsystem