Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE

PHILIPPINES
San Pedro Campus
ACCO 2083 - ACCOUNTING INFORMATION SYSTEM
M I D T E R M E X A M I N A T I O N
February 7, 2018 (Wednesday) / 6:00 PM – 9:00 PM

Name (SN, GN, MN) Year and Section Score

SCOPE OF EXAMINATION
The Information System, Introduction to Transaction Processing and Ethics, Fraud & Internal Control

SPECIFIC INSTRUCTIONS
Select the correct answer for each of the following questions. Mark only one answer for each item by encircling the
letter of your choice. WORK INDEPENDENTLY. Friction pen, any form of communication, and any form of cheating will
never be tolerated.

M U L T I P L E C H O I C E Q U E S T I O N S

1. Which of the following best explains why AIS is an important area of study for future accountants? 
a) Both AIS connects other areas of accounting, such as intermediate and cost accounting and AIS connects accounting with
other subjects, such as finance and management.
b) AIS connects other areas of accounting, such as intermediate and cost accounting.
c) AIS connects accounting with other subjects, such as finance and management.
d) Neither AIS connects other areas of accounting, such as intermediate and cost accounting nor AIS connects accounting
with other subjects, such as finance and management.
2. A general ledger:

a) is a listing of an organization’s transactions, organized by account.

b) is a chronological listing of an organization’s transactions.
c) does not include every account in an organization’s chart of accounts.
d) is the same thing as a transaction listing.

3. The “S” in the acronym “AIS” stands for:

a) standard b) site c) symbol d) system

4. Preparing bank reconciliation is an example of what?

a) Detective control b) Internal Control c) Corrective Control d) Preventive Control

5. Which kind of flowchart shows the logic associated with instructions given to a computer? 

a) System b) Document c) Program d) Dataflow

6. Documentation includes:

a) All flowcharts, narratives, and other written communications associated with the information system.
b) All written communications associated with an accounting information system except flowcharts and data flow
diagrams.
c) All flowcharts, narratives, and other written communications associated with an accounting information system, except
for program flowcharts, decision tables, and pseudocode.
d) Flowcharts and data flow diagrams only.
7. _____________ is a process, effected by an entity’s board of directors, management and other personnel, designed to provide
reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance.
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 a) Corporate social responsibility c) Internal control
b) Mission and vision d) Corporate standard
8. All of these are basic purposes of internal control except:

a) Safeguarding the resources of the entity.

b) Ensuring reliability of the financial reports.
c) Promoting the operations’ efficiency and effectiveness.
d) Elimination of all irregularities and fraud.
9. In AIS structure, general-purpose financial statements and internal reports such as variance analysis are examples of ___________.

a) inputs b) outputs c) process d) storage

10. Relationships between elements of an Entity Relationship Diagram is called ____________.

a) Cardinalities c) Normalization
b) Business Process d) Database relationships
11. A _______________ is a graphical representation of some part of an information system.
b) data flow b) flowchart c) symbol d) diagram

Consider the following REA diagram as you respond to the number 12, 13 and 14

(1,1)
(1,*)
Purchase Vendor
Equipment (1,*) (1,*) equipment
(0,*) Purchasing
(1,1) Agent
12. From the above diagram which is a resource? 
a) Purchase equipment b) Equipment c) Vendor d) Purchasing Agent
13. Which of the following from the above diagram is a(an) event: 

a) Purchase equipment c) Vendor

b) Equipment d) Purchasing Agent
14. The box in the third column represents a(n): 

a) Event c) Internal Agent and/or External Agent

b) Resource d) Either A or B
15. There are three (3) types of controls 1. Preventive Controls; 2. Detective Controls; and 3. Corrective Controls. Which of the
following is in proper order when adopting certain internal control?
a) Preventive, Detective and Corrective c) Corrective, Preventive, and Detective

b) Preventive, Corrective and Detective d) Corrective Detective and Preventive

16. All of the following are reasons why information technology is important to accountants except:

a) IT supports AIS functions such as communications and record keeping.

b) Accountants must often evaluate AISs for themselves or for clients.
c) It is important to keep up; if your competitors buy new computers, you should buy too.
d) IT is likely to affect the way accountants work in the future.
17. Counting inventory is an example of what specific control?

a) Detective control b) Internal Control c) Corrective Control d) Preventive Control

18. A system flowchart is a block diagram that:
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 a) is used only by auditors.
b) is used primarily when document flowcharts cannot be used.
c) depicts the flow of computer systems in an organization.

d) depicts the flow of data through a computerized accounting information system.

19. Which of the following is a program flowchart symbol for a decision.

a) b) c) d)

20. Which of the following professionals would use a document flowchart?

a) Accountants b) Auditors c) System designers d) All of these.

21. In the sales/collection process that comprises activities from taking a _________ to collecting payment from the customer.

a) customer’s payment b) customer’s order c) vendor’s order d) vendor’s payment

22. Which of the following statements best describes a business process?

a) It is an activity that increases and/or decreases peso amounts in the complete set of financial statements.
b) The nature and type of processes might vary from industry to industry.
c) It is a collection of activities in an organization that creates value.

d) It is an economic event in the life of an organization.

23. An accounting information system is a set of interrelated:

a) activities and documents only. c) documents and technologies only.

b) activities and technologies only. d) activities, documents and technologies.

24. The components of an accounting information system are designed to collect ___________ and report ____________. 

a) data; information b. information; data c) information; information d) data; data

25. An important input to the sales process is:

a) A customer order c) The cash forecast

b) A receiving report d) Aged accounts receivable information

26. Statement 1: The external auditor is responsible for establishing and maintaining the internal control system.
Statement 2: Segregation of duties is an example of an internal control procedure.
a) Statement 1 is true; Statement 2 is false c) Both statements are true

b) Statement 1 is false; Statement 2 is true d) Both statements are false

27. Which of the following best describes lapping?

a) applying cash receipts to a different customer’s account in an attempt to conceal previous thefts of funds
b) inflating bank balances by transferring money among different bank accounts
c) expensing an asset that has been stolen

d) creating a false transaction

28. Who is responsible for establishing and maintaining the internal control system?
a) the internal auditor c) management

b) the accountant d) the external auditor

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29. Which of the following is not a limitation of the internal control system?
a) errors are made due to employee fatigue
b) fraud occurs because of collusion between two employees
c) the industry is inherently risky

d) management instructs the bookkeeper to make fraudulent journal entries

30. The most cost-effective type of internal control is

a) preventive control c) detective control

b) accounting control d) corrective control

31. Which of the following is a preventive control?

a) credit check before approving a sale on account
b) bank reconciliation
c) physical inventory count
d) comparing the accounts receivable subsidiary ledger to the control account
32. In balancing the risks and benefits that are part of every ethical decision, managers receive guidance from each of the following
except
a) justice c) risk minimization

b) self-interest d) proportionality

33. Which of the following suggests a weakness in the internal control environment?
a) the firm has an up-to-date organizational chart
b) monthly reports comparing actual performance to budget are distributed to managers
c) performance evaluations are prepared every three years

d) the audit committee meets quarterly with the external auditors

34. Which of the following indicates a strong internal control environment?

a) the internal audit group reports to the audit committee of the board of directors
b) there is no segregation of duties between organization functions
c) there are questions about the integrity of management

d) adverse business conditions exist in the industry

35. The four principal types of corruption include all of the following except
a) bribery c) conflict of interest

b) gratuities d) economic extortion

36. Management can expect various benefits to follow from implementing a system of strong internal control. Which of the
following benefits is least likely to occur?
a) reduced cost of an external audit.
b) prevents employee collusion to commit fraud.
c) availability of reliable data for decision-making purposes.

d) some assurance that important documents and records are protected.

37. Statement 1: The internal auditor represents the interests of third-party outsiders.
Statement 2: Information Technology (IT) audits can be performed by both internal and external auditors.
a) Statement 1 is true; Statement 2 is false c) Both statements are true

b) Statement 1 is false; Statement 2 is true d) Both statements are false

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38. Which level of management is responsible for short-term planning and coordination of activities necessary to accomplish
organizational objectives?
a) operations management c) top management

b) middle management d) line management

39. Which level of management is responsible for controlling day-to-day operations?

a) operations management c) top management

b) middle management d) executive management

40. An example of a nonfinancial transaction is

a) sale of products c) log of customer calls

b) cash disbursement d) purchase of inventory

41. The purpose of the Transaction Processing System includes all of the following except
a) converting economic events into financial transactions
b) recording financial transactions in the accounting records
c) distributing essential information to operations personnel to support their daily operations
d) measuring and reporting the status of financial resources and the changes in those resources

42. The most basic element of useful data in the database is

a) the record c) the file

b) the key d) the attribute

43. In a database, a complete set of attributes for a single occurrence of an entity class is called
a) a key c) a record

b) a file d) a character

44. Which of the following is not part of the accounting function?

a) managing the financial information resource of the firm
b) capturing and recording transactions in the database
c) distributing transaction information to operations personnel

d) managing the physical information system of the firm

45. Advantages of a database system include all of the following except

a) elimination of data redundancy
b) open access to all data by all users
c) single update for changes in data

d) confidence that all data is current

46. Accountants play many roles relating to the accounting information system, including all of the following except
a) system users c) system auditors

b) system designers d) system converters

47. Statement 1: The top portion of the monthly bill from a credit card company is an example of a turn-around document.
Statement 2: The general journal is used to record recurring transactions that are similar in nature.
a) Statement 1 is true; Statement 2 is false c) Both statements are true

b) Statement 1 is false; Statement 2 is true d) Both statements are false

48. The order of the entries made in the ledger is by

a) transaction number c) date

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 b) account number d) user

49. In a computerized environment, a list of authorized suppliers would be found in the

a) master file c) reference file

b) transaction file d) archive file

50. Which document is not a type of source document?

a) a sales order c) a paycheck
b) an employee time card d) a sales return receipt

***END OF THE EXAMINATION***

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