Chapter 1 Conceptual Foundations of Accounting Information Systems
Accounting Information Systems, 14e (Romney/Steinbart)
Chapter 1 Conceptual Foundations of Accounting Information Systems
1 Distinguish data from information, discuss the characteristics of useful information, and explain how to determine the value of information.
1) Which of the following statements below shows the contrast between data and information? A) Data is the primary output of an accounting information system.
Information is the primary output of an accounting information system.
Data is more useful in decision making than information.
Data and information are the same.
Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
2) When a subsystem's goals are inconsistent with the goals of another subsystem or with the system as a whole, it creates A) system inconsistence.
system conflict.
goal inconsistence.
goal conflict.
Answer: D
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
3) When a subsystem achieves its goals while contributing to the organization's overall goal, it is called
system match.
system congruence.
goal congruence.
goal match.
Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
4) Information is best described as A) raw facts about transactions.
data that has been organized and processed so that it is meaningful to the user.
facts that are useful when processed in a timely manner.
the same thing as data.
Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
5) The value of information can best be determined by A) its usefulness to decision makers.
its relevance to decision makers.
the benefits associated with obtaining the information minus the cost of producing it.
the extent to which it optimizes the value chain.
Answer: C
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
6) An accounting information system (AIS) processes ________ to provide users with ________. A) data; information
data; transactions
information; data
data; benefits
Answer: A
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
7) ________ information reduces uncertainty, improves decision makers' ability to make predictions, or confirms expectations.
Timely
Reliable
Relevant
Complete
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
8) Information that is free from error or bias and accurately represents the events or activities of the organization is A) relevant.
reliable.
verifiable.
timely.
Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
9) Information that does not omit important aspects of the underlying events or activities that it measures is
complete.
accessible.
relevant.
timely.
Answer: A
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
10) Information is ________ when two knowledgeable people independently produce the same information. A) verifiable
relevant
reliable
complete
Answer: A
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
11) Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If information is free from error or bias and accurately represents the events or activities of the organization, it is representative of the characteristic of A) relevancy.
timeliness.
understandability.
reliability.
Answer: D
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
12) Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If information can help reduce uncertainty, improves decision making, or confirms or corrects prior expectations, it is representative of the characteristic of A) reliability.
relevance.
complete.
truthful. Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
13) Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If the same information can be reproduced by two independent and knowledgeable people, it is representative of the characteristic of A) reliability.
relevance.
verifiability.
truthful. Answer: C
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
14) Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If the information is free from error or bias, it is representative of the characteristic of A) reliability.
relevance.
verifiability.
truthful.
Answer: A
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
15) Inventory information for Sun Corp. is provided in real time by a firm's accounting information system. However, the accuracy of this information is questionable. Many store managers often report stock outs of components that the system indicates are in stock. Which of the following characteristics of useful information is absent in the situation described above? A) relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
16) Sam Jones has been the controller of Downtown Tires for 25 years. Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records. The audit has been unable to reproduce financial reports that were prepared by Sam. While there is no evidence of wrongdoing, the auditors are concerned that the discrepancies might contribute to poor decisions. Which of the following characteristics of useful information is absent in the situation described above?
relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: F
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
17) Sam Jones has been the controller of Downtown Tires for 25 years. Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records. The audit has been unable to obtain the firm's financial statements that were prepared by Sam. While there is no evidence of wrongdoing, the auditors are not able to complete the audit. Which of the following characteristics of useful information is absent in the situation described above? A) relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: G
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
18) In 2015, Singh Manufacturing implemented a Web-based information system that allows all employees to access mission-critical information. The intention was to increase production efficiency. Unfortunately, it had the opposite effect, as deliveries fell behind schedule and costs increased. Shaman Gupta, the director of information technology services, asked Ashlee Wells to come in and talk with him about the system. Ashlee is a long-time employee of Singh, and her opinion is valued by her peers and by her supervisor.
"So Ashlee, how's it going down there in the shop?"
"Not so good, Shaman. Used to be we got a weekly pick list so we knew how to plan production. Now, we got that computer system. Most of us can't figure out how to use it to do our jobs. Is there some way to print out a pick list?"
Shaman thought for a while before responding. "Well, Ashlee, to tell you the truth, I'm not so sure how to do it myself, but there must be a way. We'll bring in the consultants that helped us build the system. Maybe they can help."
Which of the following characteristics of useful information is absent in the situation described above? A) relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: E
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
19) In 2015, Singh Manufacturing implemented a Web-based information system that allows all employees to access mission-critical information. The intention was to increase production efficiency. Unfortunately, it had the opposite effect, as deliveries fell behind schedule and costs increased. Shaman Gupta, the director of information technology services, asked Ashlee Wells to come in and talk with him about the system. Ashlee is a long-time employee of Singh, and her opinion is valued by her peers and by her supervisor.
"So Ashlee, how's it going down there in the shop?"
"Not so good, Shaman. Used to be we got a weekly pick list so we knew how to plan production. Now, we got that computer system. Most of the time we can't get all of the information that we need. Is there some way to print out a list that has everything that we need?"
Shaman thought for a while before responding. "Well, Ashlee, to tell you the truth, I'm not so sure how to do it myself, but there must be a way. We'll bring in the consultants that helped us build the system. Maybe they can help."
Which of the following characteristics of useful information is absent in the situation described above? A) relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: C
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
20) Wisconsin Dells, Wisconsin, is a popular tourist destination. During the winter months, the population dwindles to a meager few, but when summer comes, the size of the town surges. Hunter Jackson is the town sanitation engineer. When the size of the town surges, so do his responsibilities. Among them is management of the sewage processing volume.
In an interview with the local paper, Hunter complained that a report on tourist population that he uses to adjust processing volume refers to data that was collected four days ago and it takes him a week to make adjustments.
Which of the following characteristics of useful information is absent in the situation described above? A) relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: D
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
21) Wisconsin Dells, Wisconsin, is a popular tourist destination. During the winter months, the population dwindles to a meager few, but when summer comes, the size of the town surges. Hunter Jackson is the town sanitation engineer. When the size of the town surges, so do his responsibilities. Among them is management of the sewage processing volume.
In an interview with the local paper, Hunter complained that a report on tourist population that he uses to adjust processing volume refers to data that was not always accurate and it is really giving him a hard time to make adjustments.
Which of the following characteristics of useful information is absent in the situation described above? A) relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: B
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
22) A frantic Barney Rubble lost a large sale because he could not access the system to verify the inventory was in stock and ready to be shipped. Which of the following characteristics of useful information is absent in the situation described above?
relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: G
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
23) Message left on voicemail: "Hi Nikki! Just landed at the airport. How about dinner this evening if you're available. Call me!" Which of the following characteristics of useful information is absent in the situation described above?
relevant
reliable
complete
timely
understandable
verifiable
accessible
Answer: C
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
24) Chopra, Limited, is an Indian company operating in New York state. It offers stylized, boutique public relations services to upscale retailers in quaint New England towns. A major source of revenue is a weekly newsletter that reports on current and projected tourist travel and spending patterns. Preparation of the newsletter requires study and analysis of weather conditions, economic activity, and travel costs. It is available at an annual subscription rate of $299.99. There are currently 190 subscribers. Preparation and distribution of the newsletter costs $12,000 annually. The value of information to subscribers is A) $236.83.
$44,998.10.
less than $63.16.
at least $300.00.
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Application of Knowledge
25) Chopra, Limited, is an Indian company operating in New York state. It offers stylized, boutique public relations services to upscale retailers in quaint New England towns. A major source of revenue is a weekly newsletter that reports on current and projected tourist travel and spending patterns. Preparation of the newsletter requires study and analysis of weather conditions, economic activity, and travel costs. It is available at an annual subscription rate of $299.99. There are currently 190 subscribers. Preparation and distribution of the newsletter costs $12,000 annually. Chopra has always been able to manage to keep its newsletter operation above their breakeven point. The value of information to Chopra is A) $236.83.
$44,998.10.
less than $63.16.
at least $12,000.
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Application of Knowledge
26) Baggins Incorporated identifies new product development and product improvement as the top corporate goals. An employee developed an innovation that will correct a shortcoming in one of the company's products. Although Baggins current Return on Investment (ROI) is 12%, the product innovation is expected to generate ROI of only 10%. As a result, awarding bonuses to employees based on ROI resulted in A) goal conflict.
information overload.
goal congruence.
decreased value of information.
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Challenging
AACSB: Application of Knowledge
27) Baggins Incorporated identifies new product development and product improvement as the top corporate goals. An employee developed an innovation that will correct a shortcoming in one of the company's products. Although Baggins current Return on Investment (ROI) is 10%, the product innovation is expected to generate ROI of 15%. As a result, awarding bonuses to employees based on ROI resulted in A) goal conflict.
information overload.
goal congruence.
decreased value of information.
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Challenging
AACSB: Application of Knowledge
28) Which of the following tradeoffs between characteristics of useful information is least objectionable?
incomplete information received on a timely basis
irrelevant information received in an understandable format
unreliable information easily accessible
verifiable information received in unreadable format
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
29) Which of the following is not one of the three basic types of data about a specific sales transaction that should be captured by an Accounting Information System?
name of the employee who completed the sale
daily sales quota
product sold
date
Answer: B
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
Define the concept of a system.
Answer: A system is a set of two or more components that are somehow interrelated and interact together to achieve a specific goal. Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
Define data, information, and how the value of information is determined.
Answer: Data: facts that are collected, entered, recorded, stored, and processed by an AIS. Information: data that has been organized and processed and is meaningful to its users. Such information is accessible, relevant, timely, reliable, verifiable, complete, and understandable. Information is of value when the benefits received from using or acting upon it outweigh the cost to produce the information.
Concept: Information needs and business processes
Objective: Learning Objective 1
Difficulty: Easy
AACSB: Analytical Thinking
Discuss the concept of a system and the issues of goal conflict and goal congruence. Answer: A system is a set of two or more components that are somehow interrelated and interact together to achieve a specific goal. A system usually consists of smaller components called subsystems. These subsystems have specific and defined functions, which interact with and support the larger system. The concept of systems is key to information technology and AIS. All systems, including the AIS, must work to achieve one or more organizational goals. Goal conflict results when a decision or action of a subsystem is inconsistent with another subsystem or the system (organization) as a whole. Goal congruence results when a subsystem achieves its goals while contributing to the organization's overall goal. Subsystems should maximize organizational goals.
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
Discuss the seven characteristics of useful information.
Answer: The seven characteristics of useful information are: relevant, reliable, complete, timely, understandable, verifiable and accessible. These characteristics are qualities that information should possess to be useful in a business environment. Briefly stated, in order for information to be useful it must be: 1) relevant, meaning that it reduces uncertainty and adds to the decisionmaking process; 2) reliable information is information that is free from error, and is accurate in its nature; 3) complete information is information that does not omit any important data, facts, or aspects about events or activities; 4) information is timely when it is fully available to enable the decision-making process to proceed; 5) understandable information must be both in an intelligible and useful format; 6) information is considered verifiable if two people, acting independently of each other, produce the same information or the same results. 7) Information is accessible if it is available to users when they need it and in a format they can use.
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
34) Discuss the concept of a system and the issues of goal conflict and goal congruence. Answer: A system is a set of two or more components that are somehow interrelated and interact together to achieve a specific goal. A system usually consists of smaller components called subsystems. These subsystems have specific and defined functions, which interact with and support the larger system. The concept of systems is key to information technology and AIS. All systems, including the AIS, must work to achieve one or more organizational goals. Goal conflict results when a decision or action of a subsystem is inconsistent with another subsystem or the system (organization) as a whole. Goal congruence results when a subsystem achieves its goals while contributing to the organization's overall goal. Subsystems should maximize organizational goals.
Concept: The concept of information
Objective: Learning Objective 1
Difficulty: Moderate
AACSB: Analytical Thinking
2 Explain the decisions an organization makes, the information needed to make them, and the major business processes present in most companies.
1) Paid time-off policies, job descriptions, and procedures manuals are examples of information needed to support key decisions in what business process?
hire and train employees
acquire inventory
sell merchandise
collect payment from customers
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
2) Before a firm can identify the information needed to effectively manage a process, the firm must
hire an outside consultant.
understand the process.
purchase computers and/or workstations.
obtain internet access.
Answer: B
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
3) Identify the piece of information below that is typically needed to acquire a building.
job descriptions
vendor performance
market coverage
capacity needs
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
4) Identify the piece of information below that is typically needed to acquire inventory.
job descriptions
vendor performance
market coverage
capacity needs
Answer: B
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
5) Identify the piece of information below that is typically needed to hire and train employees. A) job descriptions
vendor performance
market coverage
capacity needs
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
6) How can query languages be used to help make better decisions? A) They can suggest a course of action.
They can gather relevant data for decision making.
They can help the decision maker to interpret results.
They can model choose among alternative courses of action.
Answer: B
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Challenging
AACSB: Reflective Thinking
7) What is a key decision that needs to be made with regards to selling merchandise?
which banking institution to use
which employees to hire
which public accounting firm to employ
which credit cards to accept
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
8) What is a key decision that needs to be made with regards to paying vendors for goods and services?
which credit cards to accept
which employees to hire
which vendors to pay
how much capital to acquire
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
9) What is a key decision that needs to be made with regards to borrowing money from lenders?
the location
pro forma income statement
how much capital to acquire
job descriptions
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
10) One group that relies on both the adequate collection and transformation of data for decisionmaking purposes for an organization is A) management.
interested outsiders.
competitors.
the government.
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
11) Who of the following is not a stakeholder with whom an accounting information system typically communicates directly? A) The federal government.
Venture capitalist.
Company that supplies raw material.
Company that purchases finished goods for resale to consumers.
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
12) In which transaction cycle would customer sales transaction information be most likely to pass between internal and external accounting information systems?
the revenue cycle
the expenditure cycle
the human resources / payroll cycle
the financing cycle
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
13) In which transaction cycle would information for inventory purchases be most likely to pass between internal and external accounting information systems?
the revenue cycle
the expenditure cycle
the human resources / payroll cycle
the financing cycle
Answer: B
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
14) In which transaction cycle would information relating to employees benefit be most likely to pass between internal and external accounting information systems?
the revenue cycle
the expenditure cycle
the human resources / payroll cycle
the financing cycle
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
15) In which transaction cycle would information for paying dividends be most likely to pass between internal and external accounting information systems?
the revenue cycle
the expenditure cycle
the human resources / payroll cycle
the financing cycle
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
16) In which transaction cycle would information for retiring long-term debt be most likely to pass between internal and external accounting information systems?
the revenue cycle
the expenditure cycle
the human resources / payroll cycle
the financing cycle
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
17) In which transaction cycle would information for initiating back orders for out of stock goods be most likely to pass between internal and external accounting information systems?
the revenue cycle
the expenditure cycle
the human resources / payroll cycle
the financing cycle
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
18) Identify the party below that is not external to the firm.
customer
vendor
government agencies
CEO
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
19) Identify the party below that is not internal to the firm.
customer
management
employees
CEO
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytical Thinking
20) Receiving goods from vendors is part of which cycle?
the revenue cycle
the financing cycle
the expenditure cycle
the payroll cycle
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
21) The ________ is not a transaction cycle.
general ledger and reporting cycle
expenditure cycle
revenue cycle
human resources cycle
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
22) Identify the false statement below.
Retail stores do not have a production cycle.
Financial institutions have installment-loan cycles.
Every organization should implement every transaction cycle module.
A service company does not have an inventory system.
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
23) Transaction cycles can be summarized on a high level as "give-get" transactions. An example of "give-get" in the revenue cycle would be A) give cash, get goods.
give goods, get cash.
give cash, get labor.
give cash, get cash.
Answer: B
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
24) Groups of related business activities such as the acquisition of merchandise and payment of vendors are called A) transaction cycles.
economic cycles.
business events.
transactions.
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
25) The transaction cycle that includes product design is known as the A) revenue cycle.
expenditure cycle.
production cycle.
financing cycle.
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
26) The transaction cycle approach yields efficiencies when processing of a large number of transactions because
a large number of transactions within a given cycle can be categorized into a relatively small number of distinct types.
transaction cycles are easier to computerize.
the transaction cycle approach represents the natural order of business.
transaction cycles are easy to understand.
Answer: A
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
27) Updating accounts receivable is part of which transaction cycle? A) Human resources/payroll.
Expenditure.
Financing.
Revenue.
Answer: D
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Analytical Thinking
28) Who of the following would not be involved in the expenditure cycle? A) Accounts payable clerk.
Receiving clerk.
Cashier.
Requisition manager.
Answer: C
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Easy
AACSB: Analytical Thinking
29) How are "Give and Take" transactions classified in business today and what impact does this have on AIS?
Answer: The concept of "Give and Take" transactions has been used to classify business transactions into "cycles" that have starting points, processes, and end points (or closure). The majority of business transactions can be classified as revenue, expenditure, human resources (payroll), production, and financing cycles. AIS has been modeled after these transaction cycles to achieve its basic functions of collecting and processing data, providing information useful for decision making, and establishing adequate controls.
Concept: Information needs and business processes
Objective: Learning Objective 2
Difficulty: Moderate
AACSB: Reflective Thinking
3 Explain how an AIS adds value to an organization, how it affects and is affected by corporate strategy, and its role in a value chain.
1) An accounting information system must be able to perform which of the following tasks?
collect transaction data
process transaction data
provide adequate controls
all of the above
Answer: D
Concept: Accounting information systems
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytical Thinking
2) Which of the following is not an example of a common activity in an AIS?
buy and pay for goods and services
sell goods and services and collect cash
summarize and report results to interested parties
record sales calls for marketing purposes
Answer: D
Concept: Accounting information systems
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytical Thinking
3) Which of the following is not one of the components of an AIS?
internal controls and security measures
people
procedures and instructions
hardware
Answer: D
Concept: Accounting information systems
Objective: Learning Objective 3
Difficulty: Easy
AACSB: Analytical Thinking
4) The primary objective of accounting is to A) implement strong internal controls.