, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
Chapter 1 Accounting Information Systems and Firm Value
1) Accounting and Finance is a primary activity in the value
chain. Answer: FALSE
Diff: 1
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
2) Accounting Information Systems at this date are all
computerized. Answer: FALSE
Diff: 1
Topic: Data versus Information
Learning Objective: 01-02 Distinguish among data, information, and an information
system. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
3) Business value includes all those items, events and interactions that determine the financial
health and well-being of the firm.
Answer: TRUE
Diff: 1
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
4) The Certified Information Technology Professional (CITP) is a professional designation for
those with a broad range of technology knowledge and does not require a CPA.
Answer: FALSE
Diff: 1
Topic: Role of Accountants in Accounting Information Systems
Learning Objective: 01-03 Distinguish the roles of accountants in providing information, and explain
certifications related to accounting information systems.
Bloom's: Remember
AACSB: Reflective
Thinking
AICPA: BB Industry; FN Decision Making
5) The Certified Information Systems Auditor (CISA) is a professional designation generally
sought by those performing IT audits.
Answer: TRUE
Diff: 1
Topic: Role of Accountants in Accounting Information Systems
Learning Objective: 01-03 Distinguish the roles of accountants in providing information, and explain
certifications related to accounting information systems.
Bloom's: Remember
AACSB: Reflective
Thinking
AICPA: BB Industry; FN Decision Making
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, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
6) Information is defined as being data organized in a meaningful way that is useful to the
user. Answer: TRUE
Diff: 1
Topic: Data versus Information
Learning Objective: 01-02 Distinguish among data, information, and an information
system. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
7) Data is defined as being information organized in a meaningful way that is useful to the
user. Answer: FALSE
Diff: 1
Topic: Data versus Information
Learning Objective: 01-02 Distinguish among data, information, and an information
system. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
8) A systems analyst analyzes a business problem that might be addressed by an information
system and recommends software or systems to address that problem.
Answer: TRUE
Diff: 1
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
9) A value chain is defined as the flow of materials, information, payments, and services
from customer to supplier.
Answer: FALSE
Diff: 1
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
10) Relevant information is that information that is free from bias and
error. Answer: FALSE
Diff: 1
Topic: Definition of Accounting Information Systems; Attributes of Useful Information
Learning Objective: 01-01 Define an accounting information system, and explain characteristics of useful
information. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
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, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
11) The characteristics of relevant information include predictive value, feedback value and
timeliness. Answer: TRUE
Diff: 1
Topic: Definition of Accounting Information Systems; Attributes of Useful Information
Learning Objective: 01-01 Define an accounting information system, and explain characteristics of useful
information. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
12) The characteristics of reliable information are that the information is verifiable, without bias
and timely.
Answer: FALSE
Diff: 1
Topic: Definition of Accounting Information Systems; Attributes of Useful Information
Learning Objective: 01-01 Define an accounting information system, and explain characteristics of useful
information. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
13) Information overload is defined as the difficulty a person faces in understanding a problem
and making a decision as a consequence of too much information.
Answer: TRUE
Diff: 1
Topic: Definition of Accounting Information Systems; Attributes of Useful Information
Learning Objective: 01-02 Distinguish among data, information, and an information
system. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
14) The main financial benefit of Customer Relationship Management practices reduces the
cost of goods sold.
Answer: FALSE
Diff: 1
Topic: AIS, Firm Profitability, and Stock Prices
Learning Objective: 01-08 Assess the impact of AIS on firm profitability and stock prices.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
15) An efficient Enterprise System can significantly lower the cost of support processes
included in sales, general, and administrative expenses.
Answer: TRUE
Diff: 1
Topic: AIS, Firm Profitability, and Stock Prices
Learning Objective: 01-08 Assess the impact of AIS on firm profitability and stock prices.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
Page 3
, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
16) An accounting information system (AIS) is defined as being an information system that
records, processes and reports on transactions to provide financial and nonfinancial
information for decision making and control.
Answer: TRUE
Diff: 1
Topic: Definition of Accounting Information Systems
Learning Objective: 01-01 Define an accounting information system, and explain characteristics of useful
information. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
17) An enterprise system is a centralized database that collects data from throughout the firm.
This includes data from orders, customers, sales, inventory and employees.
Answer: TRUE
Diff: 1
Topic: AIS and Internal Business Processes
Learning Objective: 01-06 Describe how AIS assists the firm's internal business processes.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
18) Outbound logistics are the activities associated with receiving and storing raw materials and
other partially completed materials, and distributing those materials to manufacturing when
and where they are needed.
Answer: FALSE
Diff: 1
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
19) Service Activities as defined in the value chain are those activities that provide the support of
customers after the products and services are sold to them (e.g. warranty repairs, parts,
instruction manuals, etc.).
Answer: TRUE
Diff: 1
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
20) A well-designed and well-functioning AIS can be expected to create value by providing
relevant information helpful to management to increase revenues and reduce expenses.
Answer: TRUE
Diff: 1
Topic: AIS, Firm Profitability, and Stock Prices
Learning Objective: 01-08 Assess the impact of AIS on firm profitability and stock prices.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
Page 4
, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
21) Production of a 1040 tax form from the AIS to be delivered to the Internal Revenue Service
is an example of discretionary information.
Answer: FALSE
Diff: 1
Topic: Data versus Information
Learning Objective: 01-02 Distinguish among data, information, and an information
system. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
22) An enterprise system is primarily used to manage and nurture a firm's interactions with its
current and potential clients.
Answer: FALSE
Diff: 1
Topic: AIS and Internal Business Processes
Learning Objective: 01-06 Describe how AIS assists the firm's internal business
processes. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
23) The Sarbanes-Oxley Act of 2002 is a federal law in the United States that set new and
enhanced standards for all U.S. public companies, their management and public
accounting firms.
Answer: TRUE
Diff: 1
Topic: Role of Accountants in Accounting Information Systems
Learning Objective: 01-03 Distinguish the roles of accountants in providing information, and explain
certifications related to accounting information systems.
Bloom's: Remember
AACSB: Reflective
Thinking
AICPA: BB Industry; FN Decision Making
24) CRM software often includes the use of database marketing tools to learn more about
the customers and to develop strong firm-to-customer relationships.
Answer: TRUE
Diff: 1
Topic: AIS and External Business Processes
Learning Objective: 01-07 Assess how AIS facilitates the firm's external business
processes. Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
25) The Certified Information Technology Professional is the position created by the AICPA
to recognize CPAs who have the ability to provide skilled professional services on
Information Technology.
Answer: TRUE
Diff: 1
Topic: Data versus Information
Learning Objective: 01-03 Distinguish the roles of accountants in providing information, and explain
certifications related to accounting information systems.
Bloom's: Remember
AACSB: Reflective
Thinking
Page 5
, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
AICPA: BB Industry; FN Decision Making
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, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
26) Accounting information systems:
A) Are always computerized.
B) Report only accounting information.
C) Include records, processes and reports.
D) Are for computer
games. Answer: C
Diff: 2
Topic: Definition of Accounting Information Systems
Learning Objective: 01-01 Define an accounting information system, and explain characteristics of useful
information. Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
27) Which of the following is not a characteristic of useful information?
A) Easy to understand.
B) Feedback value.
C) Timeliness.
D) Representational
Faithfulness. Answer: A
Diff: 2
Topic: Attributes of Useful Information
Learning Objective: 01-01 Define an accounting information system, and explain characteristics of useful
information. Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
28) Which of the following are considered to be mandatory information required by a regulatory
body?
A) Financial reports for the Securities and Exchange Commission.
B) The amount of taxes saved by a merger.
C) The total dollar value of fireworks that are sold on July 4.
D) The cost to build an all-new Starbucks restaurant in Abu
Dhabi. Answer: A
Diff: 2
Topic: Data versus Information
Learning Objective: 01-02 Distinguish among data, information, and an information
system. Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
29) The correct order of effects in the value chain are:
A) Inbound Logistics → Operations → Service.
B) Inbound Logistics → Outbound Logistics → Marketing & Sales.
C) Inbound Logistics → Operations → Outbound Logistics.
D) Inbound Logistics → Operations → Shipping.
Answer: C
Diff: 2
Topic: The Value Chain and Accounting Information Systems
Learning Objective: 01-04 Describe how business processes affect the firm's value chain.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
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, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
30) Which designation would be most appropriate for those professionals possessing IT audit,
control and security skills?
A) Certified Internal Auditor (CIA).
B) Certified Public Accountant (CPA).
C) Certified Information Technology Professional (CITP).
D) Certified Information Systems Auditors
(CISA). Answer: D
Diff: 2
Topic: Role of Accountants in Accounting Information Systems
Learning Objective: 01-03 Distinguish the roles of accountants in providing information, and explain
certifications related to accounting information systems.
Bloom's: Understand
AACSB: Reflective
Thinking
AICPA: BB Industry; FN Decision Making
31) Which designation is for CPAs with a broad range of technology knowledge and experience?
A) Certified Internal Auditor (CIA).
B) Certified Public Accountant (CPA).
C) Certified Information Technology Professional (CITP).
D) Certified Information Systems Auditors
(CISA). Answer: C
Diff: 2
Topic: Role of Accountants in Accounting Information Systems
Learning Objective: 01-03 Distinguish the roles of accountants in providing information, and explain
certifications related to accounting information systems.
Bloom's: Understand
AACSB: Reflective
Thinking
AICPA: BB Industry; FN Decision Making
32) A supply chain:
A) Refers to the supplies needed to build products.
B) Refers to the flow of materials, information, payments and services.
C) Is similar in function and purpose to the value chain.
D) Does not apply to a service firm like an accounting
firm. Answer: B
Diff: 2
Topic: AIS and External Business Processes
Learning Objective: 01-07 Assess how AIS facilitates the firm's external business processes.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
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, ACCOUNTING INFORMATION SYSTEMS (RICHARDSON 2ND EDITION)
33) A supply chain system does not include information about:
A) Current customers.
B) Prospective customers.
C) Availability of inventory.
D) Current
suppliers. Answer: B
Diff: 2
Topic: AIS and External Business Processes
Learning Objective: 01-07 Assess how AIS facilitates the firm's external business
processes. Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
34) The income statement line item most likely affected by an AIS investment in enterprise
systems would be:
A) Revenues.
B) Cost of Goods Sold.
C) Selling, General and Administrative Expenses.
D) Unearned
Revenue. Answer: C
Diff: 2
Topic: AIS, Firm Profitability, and Stock Prices
Learning Objective: 01-08 Assess the impact of AIS on firm profitability and stock prices.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
35) The income statement line item most likely affected by an AIS investment in supply chain
that would interface with suppliers would be:
A) Revenues.
B) Cost of Goods Sold.
C) Selling, General and Administrative Expenses.
D) Research and Development
Expenses. Answer: B
Diff: 2
Topic: AIS, Firm Profitability, and Stock Prices
Learning Objective: 01-08 Assess the impact of AIS on firm profitability and stock prices.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Industry; FN Decision Making
Page 9
