D217 Accounting Information Systems
MOD Study Guide Exam And Actual
Answers.
MOD 1 - The primary input to the transaction processing system is - Answer "a financial transaction."
The financial transaction is the primary input to the transaction processing system. Financial transactions
are economic events that affect assets and equities and are reflected on the financial statements.
The major difference between the financial reporting system (FRS) and the management reporting
system (MRS) is the - Answer "FRS provides information to external users; the MRS provides
information to internal users." The FRS produces the financial statements as required by law. The MRS
provides information to management for decision making such as budgets, forecasts, customer orders.
The author distinguishes between the accounting information system and the management information
system based on - Answer "whether the transactions are financial or nonfinancial that directly affect
the processing of financial transactions." The AIS captures financial transactions to support systems
around the revenue, expenditure and conversion cycles. The MIS captures nonfinancial transactions to
support systems for marketing, inventory, manufacturing and human resources.
An example of a financial transaction is - Answer "the purchase of computer." The purchase of a
computer adds an asset to the organization.
An example of a nonfinancial transaction is - Answer "log of customer calls." The log of customer calls
is a key source of information for customer service, marketing and the sales departments.
The transaction processing system includes which of the following? - Answer "the conversion cycle."
The conversion cycle is included within the transaction processing system because it records cost
accounting and production activities.
The goal of data processing is - Answer "the production of useful information." Data is not information.
Data is data. Data needs to be consolidated, processed, summarized and converted into information for
management decision-making.
,Which of the following is an external end user? - Answer "tax authorities." Tax authorities are external
users who expect an accurate accounting of tax due. In addition, the non-discretionary reports from the
accounting information system provide what is needed for tax authorities to evaluate tax liability.
An appraisal function housed within the organization that performs a wide range of services for
management is - Answer "internal auditing." An appraisal function housed within the organization that
performs a wide range of services for management is internal auditing. Internal auditors verify the
accuracy and security of the information systems and also work with various business segments to
secure and optimize processes.
What factor conceptually distinguishes external auditing and internal auditing? - Answer
"constituencies." External auditing and internal auditing are distinguished by constituencies. Internal
auditors focus on company management. External auditors perform services to assure external investors,
tax and regulatory authorities that the financial statements are complete and accurate.
MOD 2- Which system is part of the expenditure cycle? - Answer "cash disbursements." Cash
disbursements is part of the expenditure cycle. Cash disbursement is the way a firm pays vendors,
creditors, and employees.
Both the revenue and the expenditure cycle can be viewed as having two key parts. These key parts are -
Answer "physical and financial." The two key parts of the revenue and expenditure cycle are physical
and financial. The physical portion refers to the documents that support the necessary transactions; the
financial portion refers to the effect that the appropriate transactions have on assets and equity.
System flowcharts do which one of the following? - Answer The correct answer is "represent
relationships between key elements of manual and computer systems." System flowcharts represent
relationships between key elements of manual and computer systems. The system flowchart is a graphic
representation of the process that is used by the programmer/analyst and systems auditors to
understand the flow of data through the program or system and the files/functions that are involved
from input to storage to output.
Which symbol is used to represent a data source or destination of documents and reports in a system
flowchart? - Answer "oval." This symbol is used to represent a data source or destination of documents
and reports.
Which accounting application is least suited to batch processing? - Answer "sales order processing."
Sales order processing is least suited to batch processing. The production process needs to know as soon
,as possible if customer orders are required. At the same time, it is important to know what the potential
revenue is at any given time.
In contrast to a real-time system, in a batch processing system - Answer "there is a lag between the
time when the economic event occurs, and the financial records are updated." Batch systems group
transactions and they process when it is most efficient, often on an hourly, daily, or weekly basis. Batch
systems process transactions in bulk when required or when convenient. These systems are appropriate
when there is no urgency to the information.
In contrast to a batch processing system, in a real-time system - Answer "processing takes place when
the economic event occurs." In a real-time system processing takes place when the economic event
occurs. For example, when an item is scanned at your local grocery store during checkout, the store
inventory, daily sales, and cashier productivity systems are updated immediately.
The coding scheme most appropriate for a chart of accounts is - Answer "block code." The most
appropriate coding scheme for a chart of accounts is block code. As described in the text, the use of
block codes allows accounts to be logically grouped in blocks. For example, 100 - 199 Current Assets, 200
- 299 Fixed Assets, and so on.
When a firm wants its coding system to convey meaning without reference to any other document, it
would choose - Answer "a mnemonic code." When a firm wants its coding system to convey meaning
without reference to any other document, it would choose a mnemonic code. For example, colleges and
universities use mnemonic codes- such as "Acct 101" for Intro to Accounting- to define courses by
department and level. These mnemonic codes provide helpful information for decision making.
The most important advantage of sequential coding is that - Answer "missing or unrecorded
documents can be identified." The most important advantage of sequential coding is that missing or
unrecorded documents can be identified. For example, checks, invoices and orders are commonly coded
in sequence to easily identify missing or unprocessed items.
UNIT 2 FORM A - Li has implemented a new accounting information system (AIS) to help him manage his
construction company. Li uses the information captured by the system to plan each project, forecasting
the requirements for raw materials and the cash flow expected.
Which AIS subsystem helps Li in planning? - Answer "Management reporting system (MRS)." The MRS
subsystem of the AIS provides management with special reports that aid in budgeting and forecasting.
, Which information does the management reporting system (MRS) provide? - Answer "Variance
reports." The MRS provides the internal information needed to run a business (e.g., variance reports).
Useful information has the following characteristics: relevance, timeliness, accuracy, completeness, and
summarization.
What happens if the information is untimely? - Answer "The decision maker wastes resources analyzing
outdated information." The decision maker spends time and resources on the outdated information,
which delays the optimal decision.
Useful information has the following characteristics: relevance, timeliness, accuracy, completeness, and
summarization.
What happens if the information is inaccurate? - Answer "The decision maker receives materially
wrong information." The decision maker needs information that has no material errors.
Which important information does external feedback about the level of uncollected customer accounts
indicate to the management information system? - Answer "The organization needs to review its
credit-granting policies." The uncollected customer accounts are an indication that some customers have
received too much credit, and management should review those policies.
What is a type of data source for the accounting information system (AIS)? - Answer "Raw material is
moved into work-in-process." Transferring raw material into work-in-process is an internal transaction
that involves the movement of resources within the organization. This is a data source for the AIS.
Why would an organization decide to develop its own custom information system? - Answer "It has
unique information needs." An organization would develop its own custom information system when
there is no readily available solution for its information needs.
An objective of internal control is to mitigate the risk from errors and fraud.
What is the primary risk associated with revenue cycle transactions? - Answer "Inaccurately recording
sales and cash receipt transactions in journals and accounts." Recording sales and cash receipt
transactions in journals and accounts must be accurate.
What does the letter N in an inverted triangle mean in a system flowchart? - Answer "It is a temporary
file using a numeric filing system." The inverted triangle means that it is a temporary file and the N
means that it uses a numeric filing system.
