Chapter 1: Accounting Information

Systems: An Overview

STUDY GUIDE QUESTIONS

Multiple Choice
1. Which of the following is NOT one of the five major business processes or transaction
cycles?
a. Expenditure
b. Production
c. Human Resource & Payroll
d. Revenue
e. Financing
f. All of the above are major cycles.
2. Which of the following is NOT a characteristic of useful information?
a. Relevant
b. Verifiable
c. Timely
d. Accessible
e. Cost-effective
3. Accounting Information Systems (AIS) is most likely applicable to which area of
accounting?
a. Tax accounting
b. Public Accounting
c. Management consulting
d. All of the above are applicable to AIS.
e. None of the above.

Copyright © 2021 Pearson Education Ltd.

1-1
4. Which of the following is NOT a "primary activity" that directly provides value to the
customer?
a. Inbound logistics
b. Operations
c. Human resources
d. Outbound logistics
5. Which of the following best describes the sequence of the supply chain?
a. Retailer, distributor, manufacturer, raw materials supplier, and consumer
b. Manufacturer, distributor, raw materials supplier, retailer, and consumer
c. Raw materials supplier, manufacturer, distributor, retailer, and consumer
d. Raw materials supplier, manufacturer, retailer, distributor, and consumer
6. Which of the following is NOT one of the support activities in the value chain of an
organization?
a. Service
b. Purchasing
c. Firm Infrastructure
d. Technology
e. Human Resources
7. AIS adds value to an organization by:
a. Improving efficiency.
b. Sharing knowledge.
c. Improving the internal control structure.
d. Answers a and b only.
e. Answers a, b, and c.
8. Which of the following does not influence the design of an Accounting Information
System (AIS)?
a. Organizational culture
b. Information Technology
c. Business strategy
d. Legal environment

Copyright © 2021 Pearson Education Ltd.

1-2
9. What is data?
a. All of the facts that are collected, stored, and processed by an information system
b. All of the debit and credit information about each transaction
c. The output which results from the input of information
d. The same thing as information
10. Reliability refers to the characteristic of information whereby
a. Uncertainty is reduced.
b. Information is free from error or bias.
c. Timely.
d. Verifiable.
11. In order for an accounting information system to meet the needs of systems users, one
must take into account the types of decisions that are made. Decisions vary from
repetitive and routine to nonrecurring and non-routine. How would you classify a
decision where no framework or model exists for the decision?
a. Structured
b. Semi-structured
c. Unstructured
12. Information can improve decision making in what way?
a. It identifies situations requiring management action.
b. It provides a basis for choosing among alternative actions.
c. Provides valuable feedback that can be used to improve future decisions.
d. All of the above.

True or False
1. Information is data that has been organized and processed.
a. True
b. False
2. Information that is timely is free from error or bias.
a. True
b. False
3. Inbound logistics consists of receiving, storing, and distributing the materials an
organization uses to create the services and products it sells.
a. True
b. False

Copyright © 2021 Pearson Education Ltd.

1-3
4. An AIS designer, who is very competent with information technology skills, will be
successful in designing an information system regardless of his/her understanding of the
organization that he/she is designing for.
a. True
b. False
5. A component of an Accounting Information System are the people who use the system.
a. True
b. False

Essay Questions
1. Describe how AIS adds value to an organization by providing accurate and timely
information.

2. Describe the six components of an Accounting Information System (AIS).

3. Within the value chain of an organization there are five primary activities and four
support activities. Describe how an accounting information system fits into the value
chain of an organization. Where does it add value?

Copyright © 2021 Pearson Education Ltd.

1-4
 ANSWERS FOR CHAPTER 1
STUDY GUIDE
Multiple Choice
1. f. All of the above are major cycles. 8. d. Legal environment
2. e. Cost-effective 9. a. All of the facts that are collected,
stored, and processed by an
3. d. All of the above are applicable to AIS. information system
4. c. Human resources 10. b. Information is free from error or bias.
5. c. Raw materials supplier, manufacturer, 11. c. Unstructured
distributor, retailer, and consumer
12. d. All of the above.
6. a. Service
7. e. Answers a, b, and c.

True or False
1. a. True 4. b. False
2. b. False 5. a. True
3. a. True

Copyright © 2021 Pearson Education Ltd.

1-5