Chapter 1

1. c.) update valid vendor file

2. b.) human resources system
3. a.) managing and reporting on the status of financial investments
4. d.)efficient and relevant
5. d.) precision
6. c.) summarization
7. c.) file, record, attribute
8. which is NOT a source of evidence for an external auditor?
ANS: work performed by internal auditors who report to the audit committee of the BOD
9. Which of the following is NOT an objective of all information systems?
a.) support for the stewardship function of management
b.) support for management decision making
c.) support for the day-to-day operations of the firm
d.) all of the above are objecties
10. which of the following best describes the activities of the materials management
function?
a.) purchasing, receiving, and inventory control
b) receiving, sales, distribution, and purchasing
c) receiving, storage, purchasing, and accounts payable
d) purchasing, receiving, and storage
e) purchasing, storage, and distribution
11. which of the following best describes the activities of the production function?
a) maintenance, inventory control, and production planning
b) production planning, quality control, manufacturing, and cost accounting
c) quality control, production planning, manufacturing, and payroll
d) maintenance, production planning, storage, and quality control
e) manufacturing, quality control, and maintenance
12. which of the following best describes the activities of the accounting function?
a) inventory control, accounts payable, fixed assets, and payroll
b) fixed assets, accounts payable, cash disbursements, and cost accounting
c) purchasing, cash receipts, accounts payable, cash disbursements, and payroll
d) inventory control, cash receipts, accounts payable, cash disbursements, and
payroll
e) inventory control, cost accounting, accounts payable, cash disbursements, and
payroll
13. which statement about cloud computing is most true?
a) cloud computing involves long-term contracts.
b) cloud computing is location-independent computing
c) cloud computing involves an organization selling its IT resources to a vendor and
leasing back IT services from the vendor.
d) cloud computing involves fixed price contacts
e) cloud computing involves signing entering into multiple with each IP service
provider to create a cloud of resources.
14. which of the following statements is ost accurate?
a) ERP systems are commercial software packages that are sometimes called
 turnkey systems because they can be implemented by the user with little or no
modification.
b) substantive test provide evidence focused on the systems controls.
c) public accounting firms that provide attest services are not allowed under
SOX to offer IT advisory services.
d) both small and large firms that have standardized information needs are potential
customers for commercial software.
e) External auditors may rely on the work of internal auditors only if they report to the
controller or the CEO of the client company.

Chapter 2
1. c.) manufacturing firms have a conversion cycle but retail forms do not
2. a.) system flowchart

3. batch processing will not permit

a.) data to be edited on a separate computer run
b.) the use of a database structure
c.) decision table
d.) data flow diagram
e.) systems survey

4. the production subsystem of the conversion cycle includes all of the following EXCEPT
a.) determining raw materials requirements
b.) make or buy decisions on components parts
c.) release of raw materials into production
d.) scheduling the goods to be produced.

5. Which of the following files is a temporary file?

a.) transaction file
b.) master file
c.) reference file
d.) none of the above

6. A documentation tool used to represent the logical elements of a system is a(n)

a.) programming flowchart
b.) entity relationship diagram
c.) system flowchart
d.) data flow diagram

7. Which of the following is NOT an advantage of real-time processing of files over batch
processing?
a.) shorter transaction processing time
b.) reduction of inventory stocks
c.) improved customer service
d.) all are advantages
 8. Which statement is NOT correct?
a.) legacy systems may process financially significant transactions
b.) some legacy systems use database technology.
c.) mainframes are exclusive to legacy systems, while modern systems use only the client-
server model.
d.) all the above are true.

9. Which of the following is NOT true of a turnaround document?

a.) they may reduce the number of errors made by external parties.
b.) they are commonly used by utility companies (gas, power, water)
c.) they are documents used by internal parties only.
d.) they are both input and output documents

10. Which of the following is not a true statement?

a.) Transactions are recorded on source documents and are posted to journals
b.) transactions are recorded in journal and are posted to ledgers
c.) infrequent transaction are recorded in the general journal
d.) Frequent transactions are recorded in special journals.

11. Which of the following is true and the relationship between subsidiary ledgers
and general ledger accounts?
a.) the two contain different and unrelated data
b.) all general ledger accounts have subsidiaries
c.) the relationship between the two provides an audit trial from the financial
statements to the source documents.
d.) the total of subsidiary ledger accounts usually exceeds the total in the related
general ledger account.

12. real-time systems might be appropriate for all of te following EXCEPT

a.) airline reservations
b.) payroll
c.) point-of-sale transactions
d.) air traffic control systems
e.) all of these applications typically utilize real-time processing

13. A chart of accounts would be best be coded using a(n)_______ coding scheme
a.) alphabetic
b.) mnemonic
c.) block
d.) sequential

14. Which of the following statements is NOT true?

a.) Sorting records that are coded alphabetically tends to be more difficult for users than
sorting numeric sequences.
b.) Mnemonic coding requires the user to memorize codes.
c.) sequential codes carry no information content beyond their order in the sequence.
d.) Mnemonic codes are limited in their ability to represent items within a class.

15. A coding scheme in the form of acronyms and other combinations that convey
meaning is a(n)
a.) sequential codes
b.) block code
c.) alphabetic code
d.) mnemonic code

16. Which of the following statements is not correct?

a.) database systems resolve task data dependency.
b.) the flat-file model approach uses one common database to promote the concept of single
user view
c.) the database approach uses one common database to promote the concept of
single user view.
d.) a primary goal of database systems is to minimize data redundancy.
e.) database systems provide increased accessibility to data and data integration.

Chapter 3

1. b. prevention of employee collusion to commit fraud

2. a. the treasurer has the authority to sign checks but gives the signature block to the
assistant treasurer to run the check-signing machine
3. c. implementation of the control procedure should not have a significant adverse
effect on efficiency or profitability
4. d. sales returns/accounts receivable
5. c. require customers to send payments directly to the company's bank
6. c. information and communication
7. a. transaction authorization
8. b. Supervision
9. b. justifiable reliance
10. c. Lapping

11. Computer applications use routines for checking the validity and accuracy of transaction data
called
ANS: b. edit programs
12. How does a real-time file processing system edit individual transactions?
ANS: b. takes place in online mode as transactions are entered
13. Which of the following is an example of an input control?
ANS: d. recalculating an amount to ensure its accuracy

Chapter 4

1. bill of lading
2. b. stock release
 3. c. send the stock release document and the ship-
ping notice to the billing department as proof of shipment
4. b. when verifying that the current transaction is with a valid customer
5. c. Supervision
6. c. The use of prenumbered sales orders.
7. d. inventory control
8. a. the AR clerk authorizes the write off of bad debts
9. c. shipping clerk.
10. a. opening the mail and recording cash receipts in the journal

Chapter 5

1. blind copy of purchase order

2. standard cost inventory ledger

3. Accounts payable is responsible for paying invoices

4. authorizing payment and maintaining the check register

5. receiving reports

6. preparation of a receiving rep

7. general ledger

8. supplier's invoice

9. approve the liability

10. Cash disbursements is a treasury function

Chapter 6

1. Job Ticket
2. The general ledger department compares the labor distribution summary from cost
accounting to the disbursement voucher from accounts payable
3. The general ledger department compares the labor distribution summary from cost
accounting to the disbursement voucher from accounts payable
4. Personnel
5. Paymaster
6. purchase of raw materials
7. allocates the cost of the asset over its useful life
8. economic benefit of purchasing the asset
9. development of an economic order quantity model
10. maintaining a record of the fair market value of all fixed assets
 11. Acquisitions are routing transactions requiring general authorization

Chapter 7
1. Inventories provide a competitive advantage
2. focuses on the trade-off between production costs and carrying costs
3. b. 16
q=√2DS/H
q=Economic Order Quantity
D=annual Demand in Units
S=The fixed cost of placing each order
H=The holding or carrying cost per unit EACH YEAR
Q=√(s(1280)(240) )/2400=16
4. e
5. a
6. b
7. a. Products are pushed from the production end to the customer
8. e. All of these are problems associated with traditional accounting information
9. e. All of the above are problems with standard costing
10. c. MRP ll evolved from MRP and MRP ll evolved into ERP