96 test bank for core concepts of accounting information systems 12th edition

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96 Test Bank for Core Concepts of Accounting

Information Systems 12th Edition

Mutiple Choice Questions

Bernard Madoff is most closely associated with which of the following terms?

1 a) The father of activity-based costing systems

2 b) SAR

3 c) Ponzi scheme

4 d) Sarbanes-Oxley Act of 2002

5 e) Key sponsor of the Patriot Act

Which of the following is true?

1 a) An AIS must be computerized to be useful

2 b) An AIS always produces useful information

3 c) An AIS always produces financial information

4 d)An audit trail

Which of the following is true about the terms “data” and “information” within the context of Chapter 1?

1 a)These terms are exactly the same

2 b)These terms are exact opposites

3 c)Some “data” can also be “information”

4 d)none of these

Which of the following describes “cloud computing”?

1 a) It is a is a way of using business applications over the Internet

2 b) It is an internal business process over the organizations intranet

3 c) It is an internal business process over the organizations extranet

4 d) none of these

Information systems auditors are:

1 a)Auditors who are concerned with analyzing risks associated with computerized information systems

2 b)Individuals who often work closely with financial auditors

3 c)Auditors who have a lot of technical expertise related to information technology

4 d)all of the above

Which of the following best describes a data warehouse as discussed in Chapter 1?

1 a)A repository of historical information from one accounting application

2 b)A repository of historical information from a set of accounting applications

3 c)A repository of information from many business applications—some not accounting

4 d)A repository of information from many businesses in the same industry

An advantage of cloud computing is that:

1 a)No one understands it, including hackers and would-be fraudsters

2 b)All data inputs, processing, and outputs are hidden

3 c)Users pay only for the services they require

4 d)Smaller businesses or government agencies cannot use it

The designation for a licensed information systems audit professional is:

3 c)CIA

4 d)CISA

As used in the chapter, “knowledge workers”:

1 a)Are blue collar workers in non-managerial positions

2 b)Are the same as delivery clerks

3 c)Include most accountants

4 d)Does not include most accountants

All of the following are possible uses of AIS or accounting personnel that were discussed in the chapter except:

1 a)Countering terrorism

2 b)Foiling future accounting scandals

3 c)Providing assurance services

4 d)Performing monetary exchanges

An example of an assurance service for a company engaged in electronic commerce is:

2 b)Trust US

3 c)CITP

4 d)CPA Trust Services

If a manager suffers “information overload”:

1 a)He or she must press the reset button on his or her computer

2 b)It means that this person needs a larger hard drive

3 c)The “information” is really just data

4 d)He or she must forget some facts in order to remember others

Most AISs perform all of these functions except:

1 a)Collect raw accounting data

2 b)Store accounting data for future uses

3 c)Process data into useful information

4 d)AISs perform all of these functions

Which of the following best describes assurance services?

1 a)Auditors are desperate to offer assurance services so that they will still

2 have business in the future

3 b)Assurance and auditing are closely related

4 c)Assurance is a guarantee that there is no fraud in a company

5 d)Assurance services usually require expertise in information technology

Which of the following best describes “predictive analytics”?

1 a)It is a method auditors use to predict when managers might have a weak internal control system

2 b)It is a technique that uses data stored in data warehouses to create systems that allow managers to use their data to improve performance

3 c)It is a method used to prevent managers from overriding internal controls

4 d) none of the above

Which of these is a drawback of cloud computing?

1 a)Inability to handle periods of peak processing loads

2 b) Users must still invest heavily in computer resources of their own

3 c) Requires users to pay for services, whether they use them or not

4 d) May requires users to trust service provider with sensitive data

5 e) none of these are drawbacks of cloud computing

Which of the following captures the same idea as the term “GIGO?”

1 a)Computers cannot turn straw into gold

2 b)Too much information is the same as garbage

3 c)Great investments lead to great returns

4 d)Too many cooks spoil the broth

What has been the effect on accountants in those organizations which have computerized their data processing functions?

1 a)The need for accountants has disappeared

2 b)The accountants have become "pure" bookkeepers

3 c)The accountants have become involved in more decision making activities

4 d)The accountants' decision making activities have drastically declined

For performance reports to achieve their control objectives, they must:

1 a)Include relevant information so that necessary action may be taken to accomplish organizational goals

2 b)Be timely so that minimal time elapses between an activity's occurrence and the feedback reflecting the activity's efficient or inefficient performance

3 c)Provide subsystem managers with suggestions as to how they can operate their subsystems more efficiently

4 d)all of the above

5 e)a and b only

Managerial accounting principally provides information to:

1 a)Stockholders

2 b)Government regulators (e.g., SEC, Federal bank examiners)

3 c)Internal company management

Suspicious activity reporting:

1 a) Only applies to banking transactions

2 b)Is mandated by state, but not federal, regulations

3 c) Is mostly concerned with embezzlement issues

4 d) Is a requirement under the Sarbanes-Oxley Law of 2002

Which of the following is intended to solve the problem that financial data used in one application is not easily transferable to other applications?

3 c)XBRL

Which of the following is not true regarding professional service firms?

1 a)The SEC is in favor of professional service firms expanding their businesses to include consulting services

2 b)As a result of the corporate bankruptcies and accounting scandals in 2002,

professional service firms no longer perform any consulting services

3 c)Professional service firms generally offer a variety of assurance services, including providing assurance over AISs

4 d)In the early 2000's, many large professional service firms sold off the majority of their consulting practices

Which of these statements best describes the relationship between “AISs” and “countering terrorism?”

1 a) These are completely independent items; there is no relationship

2 b) AISs can help counter terrorism using data warehouses

3 c) AISs can help by denying financial aid to terrorist groups

4 d) AISs can help by identifying international embezzlers

The U.S Patriot act:

1 a) Requires banks to monitor their accounts in foreign institutions for fraud

2 b) Prohibits companies from lending money to corporate executives

3 c) Only applies to publicly-traded companies

4 d) all of these are correct

The accounting subsystem must continually interact with the:

2 b)Recording journal entries

3 c)Preparing trial balances

4 d)all of the above

The managerial accounting component of the accounting subsystem contains all but which one of the following functions:

1 a)Cost accounting

2 b)Financial accounting

3 c)Budgeting

4 d)Systems study

Which of these is least likely to be an example of a cloud computing service?

1 a)The development of a web site for a retail store

2 b)The remote processing of payroll records for a manufacturer

3 c) The use of computer time on a remote supercomputer by a research firm

4 d) Interviewing candidates for an executive accountant

5 e) all of these are reasonable examples of cloud computing services

A good performance measurement system should evaluate:

1 a)Profitability only

2 b)Customer satisfaction only

3 c)Those aspects of a unit’s performance that are subject to its control

4 d)Those aspects of a unit’s performance whether controllable or not

What is the first step to be performed by most organizations in their

accounting cycles?

1 a)Recording business transactions in a journal

2 b)Preparing a trial balance

3 c)Recording closing entries in a journal

4 d)Preparing transaction source documents

5 e)none of the above

Which of the following is not a component of the balanced scorecard?

"Excessive data reporting" can result in:

1 a)Massive quantities of data printed out by a company's computer

2 b)The generation of unnecessary reports

3 c)Subsystem managers' belief that it is a status symbol to receive large numbers of internally generated reports

4 d)Inefficient decision making by subsystem managers due to a lack of relevant information

5 e)all of the above

Which of these businesses is not required to report suspicious activities under current federal laws?

Many accountants feel that the most important part of the Sarbanes-Oxley Act is:

1 a) Its anti-terrorist provisions

2 b) Its provisions requiring the reporting of suspicious activities

3 c) Section 404 on internal controls

4 d) Section 505 on money laundering

The principal cause for more timely performance reports in the typical modern organization is due to:

1 a)Better educated management

2 b)Adoption of progressive management philosophies which stress participative

management (e.g., MBO)

3 c)Information processing systems

4 d)Need for less information

True- False Questions

In a responsibility accounting system, every person within a company takes responsibility for the performance of every business unit

The term information overload refers to providing too much data to

management, often resulting in managers ignoring it

XBRL is a business reporting language that is used to define interactive

Managerial accounting principally provides decision making information to a company's internal managers

Accounting systems are useful for performing accounting tasks, but cannot

be used for such security purposes as countering terrorism

1 True

2 False

The purpose of CPA Trust Services is to provide assurance that a company engaged in electronic commerce can provide the goods or services it

The path that data follow in an AIS, for example from manual source

document to completed output report, is called an audit trail

Today's AIS is an enterprise-wide information system that focuses on

interdepartmental business processes

One major difference between financial accounting and managerial

accounting is that financial accountants prepare financial statements for external investors while managerial accountants prepare financial statements for internal managers

Because accountants are not normally computer programmers working within the information processing subsystem, it is unnecessary for them to

understand the capabilities and limitations of computers

1 True

2 False

Some possible career opportunities for AIS majors or minors include

consulting positions, computerized auditing, or system computer auditing positions

1 True

2 False

One major difference between financial accounting and managerial

accounting is that financial accountants use dashboards while managerial accountants do not

1 True

2 False

A company's audit trail is normally easier to follow under a manual data

processing system compared to a computerized information processing system

1 True

2 False

As a result of computerized information processing systems in many

organizations today, the need for accountants in these organizations has significantly declined

1 True

Section 352 of the Patriot Act requires auditors to verify that their

organizations have adequate risk assessment systems

A major output of financial accounting is the preparation of financial

statements such as an income statement

An advantage of computerized AISs is that they do not need to be

programmed to catch simple input errors such as entering “4.0” instead of

“40.0” for hours worked in a payroll application

As a result of corporate bankruptcies in 2002, some of the largest public accounting firms are no longer engaged in any consulting work

1 True

2 False

The purpose of the assurance services of an accounting firm is to give a company’s managers moral support when they are audited by the federal or state government.

As used in this chapter, the acronym SAR stands for “suspicious accounting reports.”