Test Bank for Accounting Information Systems 9e James A. Hall,
All Chapters
Chapter 1—The Information System: An Accountant’s Perspective
TRUE/FALSE
1. Information is a business resource.
ANS: T PTS: 1
2. IT outsourcing is location-independent computing.
ANS: F PTS: 1
3. Transaction processing systems convert non-financial transactions into financial transactions.
ANS: F PTS: 1
4. Information lacking reliability may still have value.
ANS: F PTS: 1
5. A balance sheet prepared in conformity with GAAP is an example of discretionary reporting.
ANS: F PTS: 1
6. The Management Reporting System provides the internal financial information needed to manage a
business.
ANS: T PTS: 1
7. Most of the inputs to the General Ledger System come from the Financial Reporting System.
ANS: F PTS: 1
8. When preparing discretionary reports, organizations can choose what information to report and how to
present it.
ANS: T PTS: 1
9. Retrieval is the task of permanently removing obsolete or redundant records from the database.
ANS: F PTS: 1
10. Systems development represents 80 to 90 percent of the total cost of a computer system.
ANS: F PTS: 1
11. The database administrator is responsible for the security and integrity of the database.
ANS: T PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
12. Custom software is completely finished, tested, and ready for implementation.
ANS: F PTS: 1
13. The internal auditor represents the interests of third-party outsiders.
ANS: F PTS: 1
14. Information Technology (IT) audits can be performed by both internal and external auditors.
ANS: T PTS: 1
15. Custom software is the most affordable systems development option.
ANS: F PTS: 1
16. A database is a collection of interconnected computers and communications devices that allows users to
communicate, access data and applications, and share information and resources.
ANS: F PTS: 1
17. Systems maintenance consumes the majority of a system’s total costs.
ANS: T PTS: 1
18. Cloud computing is a practice in which the organization sells its IT resources to a third-party outsourcing
vendor then leases back IT services from the vendor for a contract period.
ANS: F PTS: 1
19. A potential benefit of cloud computing is that the client firm does not need to know where its data are
bring processed.
ANS: F PTS: 1
20. One of the greatest disadvantages of database systems is that all data is always available to all users.
ANS: F PTS: 1
21. Under SOX legislation public accounting firms are no longer allowed to provide consulting services to
audit clients.
ANS: T PTS: 1
22. One member of a company’s audit committee must be an independent CPA.
ANS: F PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
MULTIPLE CHOICE
1. Which of the following is not a business resource?
a. raw material
b. labor
c. information
d. all are business resources
ANS: D PTS: 1
2. Which level of management is responsible for short-term planning and coordination of activities
necessary to accomplish organizational objectives?
a. operations management
b. middle management
c. top management
d. line management
ANS: B PTS: 1
3. Which level of management is responsible for controlling day-to-day operations?
a. top management
b. middle management
c. operations management
d. executive management
ANS: C PTS: 1
4. Location-independent computing in which shared data centers deliver hosted IT services over the Internet.
a. IT outsourcing
b. Network administration
c. Cloud computing
d. Custom software
ANS: C PTS: 1
5. The value of information for users is determined by all of the following but
a. reliability
b. relevance
c. convenience
d. completeness
ANS: C PTS: 1
6. An example of a nonfinancial transaction is
a. sale of products
b. cash disbursement
c. log of customer calls
d. purchase of inventory
ANS: C PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
7. An example of a financial transaction is
a. the purchase of computer
b. a supplier’s price list
c. a delivery schedule
d. an employee benefit brochure
ANS: A PTS: 1
8. Which subsystem is not part of the Accounting Information System?
a. Transaction Processing System
b. Expert System
c. General Ledger/Financial Reporting System
d. Management Reporting System
ANS: B PTS: 1
9. The major difference between the Financial Reporting System (FRS) and the Management Reporting
System (MRS) is the
a. FRS provides information to internal and external users; the MRS provides information to
internal users
b. FRS provides discretionary information; the MRS provides nondiscretionary information
c. FRS reports are prepared using information provided by the General Ledger System; the
MRS provides information to the General Ledger System
d. FRS reports are prepared in flexible, nonstandardized formats; the MRS reports are
prepared in standardized, formal formats
ANS: A PTS: 1
10. The purpose of the Transaction Processing System includes all of the following except
a. converting economic events into financial transactions
b. recording financial transactions in the accounting records
c. distributing essential information to operations personnel to support their daily operations
d. measuring and reporting the status of financial resources and the changes in those
resources
ANS: D PTS: 1
11. The Transaction Processing System includes all of the following cycles except
a. the revenue cycle
b. the administrative cycle
c. the expenditure cycle
d. the conversion cycle
ANS: B PTS: 1
12. The primary input to the Transaction Processing System is
a. a financial transaction
b. an accounting record
c. an accounting report
d. a nonfinancial transaction
ANS: A PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
13. When designing the data collection activity, which type of data should be avoided?
a. data that is relevant
b. data that is efficient
c. data that is redundant
d. data that is accurate
ANS: C PTS: 1
14. The most basic element of useful data in the database is
a. the record
b. the key
c. the file
d. the attribute
ANS: D PTS: 1
15. In a database, a complete set of attributes for a single occurrence of an entity class is called
a. a key
b. a file
c. a record
d. a character
ANS: C PTS: 1
16. Effective information has all of the following characteristics except
a. relevance
b. completeness
c. summarization
d. structure
ANS: D PTS: 1
17. Database management tasks do not include
a. summarization
b. storage
c. retrieval
d. deletion
ANS: A PTS: 1
18. The author distinguishes between the Accounting Information System and the management Information
System based on
a. whether the transactions are financial or nonfinancial
b. whether discretionary or nondiscretionary reports are prepared
c. the end users of the reports
d. the organizational structure of the business
ANS: A PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
19. Which activity is not part of the finance function?
a. cash receipts
b. portfolio management
c. credit
d. general ledger
ANS: D PTS: 1
20. Market research and advertising are part of which business function?
a. materials management
b. finance
c. marketing
d. production
ANS: C PTS: 1
21. Which function manages the financial resources of the firm through portfolio management, banking,
credit evaluation, and cash receipts and disbursements?
a. accounting
b. finance
c. materials management
d. distribution
ANS: B PTS: 1
22. Which of the following is not part of the accounting function?
a. managing the financial information resource of the firm
b. capturing and recording transactions in the database
c. distributing transaction information to operations personnel
d. managing the physical information system of the firm
ANS: D PTS: 1
23. The term “accounting independence” refers to
a. data integrity
b. separation of duties, such as record keeping and custody of physical resources
c. generation of accurate and timely information
d. business segmentation by function
ANS: B PTS: 1
24. In the distributed data processing approach
a. computer services are consolidated and managed as a shared organization resource
b. the computer service function is a cost center
c. the end users are billed using a charge-back system
d. computer services are organized into small information processing units under the control
of end users
ANS: D PTS: 1
All Chapters
Chapter 1—The Information System: An Accountant’s Perspective
TRUE/FALSE
1. Information is a business resource.
ANS: T PTS: 1
2. IT outsourcing is location-independent computing.
ANS: F PTS: 1
3. Transaction processing systems convert non-financial transactions into financial transactions.
ANS: F PTS: 1
4. Information lacking reliability may still have value.
ANS: F PTS: 1
5. A balance sheet prepared in conformity with GAAP is an example of discretionary reporting.
ANS: F PTS: 1
6. The Management Reporting System provides the internal financial information needed to manage a
business.
ANS: T PTS: 1
7. Most of the inputs to the General Ledger System come from the Financial Reporting System.
ANS: F PTS: 1
8. When preparing discretionary reports, organizations can choose what information to report and how to
present it.
ANS: T PTS: 1
9. Retrieval is the task of permanently removing obsolete or redundant records from the database.
ANS: F PTS: 1
10. Systems development represents 80 to 90 percent of the total cost of a computer system.
ANS: F PTS: 1
11. The database administrator is responsible for the security and integrity of the database.
ANS: T PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
12. Custom software is completely finished, tested, and ready for implementation.
ANS: F PTS: 1
13. The internal auditor represents the interests of third-party outsiders.
ANS: F PTS: 1
14. Information Technology (IT) audits can be performed by both internal and external auditors.
ANS: T PTS: 1
15. Custom software is the most affordable systems development option.
ANS: F PTS: 1
16. A database is a collection of interconnected computers and communications devices that allows users to
communicate, access data and applications, and share information and resources.
ANS: F PTS: 1
17. Systems maintenance consumes the majority of a system’s total costs.
ANS: T PTS: 1
18. Cloud computing is a practice in which the organization sells its IT resources to a third-party outsourcing
vendor then leases back IT services from the vendor for a contract period.
ANS: F PTS: 1
19. A potential benefit of cloud computing is that the client firm does not need to know where its data are
bring processed.
ANS: F PTS: 1
20. One of the greatest disadvantages of database systems is that all data is always available to all users.
ANS: F PTS: 1
21. Under SOX legislation public accounting firms are no longer allowed to provide consulting services to
audit clients.
ANS: T PTS: 1
22. One member of a company’s audit committee must be an independent CPA.
ANS: F PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
MULTIPLE CHOICE
1. Which of the following is not a business resource?
a. raw material
b. labor
c. information
d. all are business resources
ANS: D PTS: 1
2. Which level of management is responsible for short-term planning and coordination of activities
necessary to accomplish organizational objectives?
a. operations management
b. middle management
c. top management
d. line management
ANS: B PTS: 1
3. Which level of management is responsible for controlling day-to-day operations?
a. top management
b. middle management
c. operations management
d. executive management
ANS: C PTS: 1
4. Location-independent computing in which shared data centers deliver hosted IT services over the Internet.
a. IT outsourcing
b. Network administration
c. Cloud computing
d. Custom software
ANS: C PTS: 1
5. The value of information for users is determined by all of the following but
a. reliability
b. relevance
c. convenience
d. completeness
ANS: C PTS: 1
6. An example of a nonfinancial transaction is
a. sale of products
b. cash disbursement
c. log of customer calls
d. purchase of inventory
ANS: C PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
7. An example of a financial transaction is
a. the purchase of computer
b. a supplier’s price list
c. a delivery schedule
d. an employee benefit brochure
ANS: A PTS: 1
8. Which subsystem is not part of the Accounting Information System?
a. Transaction Processing System
b. Expert System
c. General Ledger/Financial Reporting System
d. Management Reporting System
ANS: B PTS: 1
9. The major difference between the Financial Reporting System (FRS) and the Management Reporting
System (MRS) is the
a. FRS provides information to internal and external users; the MRS provides information to
internal users
b. FRS provides discretionary information; the MRS provides nondiscretionary information
c. FRS reports are prepared using information provided by the General Ledger System; the
MRS provides information to the General Ledger System
d. FRS reports are prepared in flexible, nonstandardized formats; the MRS reports are
prepared in standardized, formal formats
ANS: A PTS: 1
10. The purpose of the Transaction Processing System includes all of the following except
a. converting economic events into financial transactions
b. recording financial transactions in the accounting records
c. distributing essential information to operations personnel to support their daily operations
d. measuring and reporting the status of financial resources and the changes in those
resources
ANS: D PTS: 1
11. The Transaction Processing System includes all of the following cycles except
a. the revenue cycle
b. the administrative cycle
c. the expenditure cycle
d. the conversion cycle
ANS: B PTS: 1
12. The primary input to the Transaction Processing System is
a. a financial transaction
b. an accounting record
c. an accounting report
d. a nonfinancial transaction
ANS: A PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
13. When designing the data collection activity, which type of data should be avoided?
a. data that is relevant
b. data that is efficient
c. data that is redundant
d. data that is accurate
ANS: C PTS: 1
14. The most basic element of useful data in the database is
a. the record
b. the key
c. the file
d. the attribute
ANS: D PTS: 1
15. In a database, a complete set of attributes for a single occurrence of an entity class is called
a. a key
b. a file
c. a record
d. a character
ANS: C PTS: 1
16. Effective information has all of the following characteristics except
a. relevance
b. completeness
c. summarization
d. structure
ANS: D PTS: 1
17. Database management tasks do not include
a. summarization
b. storage
c. retrieval
d. deletion
ANS: A PTS: 1
18. The author distinguishes between the Accounting Information System and the management Information
System based on
a. whether the transactions are financial or nonfinancial
b. whether discretionary or nondiscretionary reports are prepared
c. the end users of the reports
d. the organizational structure of the business
ANS: A PTS: 1
, Accounting Information Systems, 9e – Test Bank, Chapter 1
19. Which activity is not part of the finance function?
a. cash receipts
b. portfolio management
c. credit
d. general ledger
ANS: D PTS: 1
20. Market research and advertising are part of which business function?
a. materials management
b. finance
c. marketing
d. production
ANS: C PTS: 1
21. Which function manages the financial resources of the firm through portfolio management, banking,
credit evaluation, and cash receipts and disbursements?
a. accounting
b. finance
c. materials management
d. distribution
ANS: B PTS: 1
22. Which of the following is not part of the accounting function?
a. managing the financial information resource of the firm
b. capturing and recording transactions in the database
c. distributing transaction information to operations personnel
d. managing the physical information system of the firm
ANS: D PTS: 1
23. The term “accounting independence” refers to
a. data integrity
b. separation of duties, such as record keeping and custody of physical resources
c. generation of accurate and timely information
d. business segmentation by function
ANS: B PTS: 1
24. In the distributed data processing approach
a. computer services are consolidated and managed as a shared organization resource
b. the computer service function is a cost center
c. the end users are billed using a charge-back system
d. computer services are organized into small information processing units under the control
of end users
ANS: D PTS: 1
