84 PART I Overview of Accounting Information Systems

Multiple-Choice Questions
1. Which of the following is NOT an advantage of a. data flow diagram.
real-time processing of files over batch b. programming flowchart.
processing?
c. entity relationship diagram.
a. Shorter transaction processing time
d. system flowchart.
b. Reduction of inventory stocks
e. all of the above.
c. Improved customer service
7. Which of the following is NOT a true statement?
d. All are advantages
a. Transactions are recorded on ledgers and are
e. None of the above are advantages posted to journals.
2. Which statement is NOT true? Batch processing b. Transactions are recorded in journals and are
a. is subject to deadlocks when processing com- posted to ledgers.
mon accounts. c. Infrequent transactions are recorded in the
b. permits data to be edited in a separate com- general journal.
puter run. d. Frequent transactions are recorded in special
c. can use databases and flat files. journal.
d. can be initiated from a terminal. 8. Which of the following is true of the relationship
3. Which is the least appropriate type of transaction between subsidiary ledgers and general ledger
for a real-time system? accounts?
a. Airline reservations a. The two contain different and unrelated data.
b. Point-of-sale transactions b. The relationship between the two constitute
part of the audit trail.
c. Weekly processing of payroll checks
c. All general ledger accounts have subsidiaries.
d. Air traffic control systems
d. The total of subsidiary ledger accounts usually
e. All of the above are real-time systems
exceeds the total in the related general ledger
4. Which of the following statements is not correct? account.
a. The database approach uses one common data- 9. (Appendix Question) Which statement is NOT
base to promote the concept of single user view. correct?
b. Database systems resolve task data a. Indexed random files are dispersed throughout
dependency. the storage device without regard for physical
c. The flat-file model encourages data proximity with related records.
redundancy. b. Indexed random files use disk storage space
d. A primary goal of database systems is to mini- efficiently.
mize data redundancy. c. Indexed random files are efficient when pro-
e. Database systems provide increased accessi- cessing a large portion of a file at one time.
bility to data and data integration. d. Indexed random files are easy to maintain in
5. Which of the following is NOT true of a turn- terms of adding records.
around document? 10. A database deadlock
a. It may reduce errors made by external parties. a. is a lock placed on a record to prevent it from
b. It is used as internal documents only. being accessed by other processes.
c. It is commonly used by utility companies (gas, b. occurs when two records are accidentally
power, water). assigned the same primary key.
d. It is both input and output document. c. occurs when a unique record is accessed by
6. A documentation tool used to represent the several different processes simultaneously.
logical elements of a system is a(n) d. is none of the above.

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 CHAPTER 2 Introduction to Transaction Processing 85

11. An invoice file would best be coded using a(n) d. all of the above are advantages of the physical
coding _____________ scheme. address pointer.
a. alphabetic 17. (Appendix Question) Which statement is NOT
b. mnemonic correct? The virtual storage access method
c. block a. is used for very large files that need both direct
access and batch processing.
d. sequential
b. may use an overflow area for records.
12. Which statement is NOT correct?
c. provides an exact physical address for each
a. Legacy systems do not process financially sig-
record.
nificant transactions.
d. is appropriate for files that require few inser-
b. Mainframes are exclusive to legacy systems,
tions or deletions.
while modern systems use only the client-
server model. 18. (Appendix Question) Which statement is true
about a hashing structure?
c. Legacy systems may use database technology.
a. The same address could be calculated for two
d. All the above are true.
different records.
13. A documentation tool that depicts the physical
b. Storage space is used efficiently.
flow of information relating to a particular trans-
action through an organization is a(n) c. Records cannot be accessed rapidly.
a. ER diagram. d. A separate index is required.
b. system flowchart. 19. Which of the following statements is NOT true?
c. program flowchart. a. Sorting records that are coded alphabetically
tends to be more difficult for users than sort-
d. decision table.
ing numeric sequences.
e. data flow diagram.
b. Mnemonic coding requires the user to memo-
14. A coding scheme in the form of acronyms and rize codes.
other combinations that convey meaning is a(n)
c. Mnemonic codes are limited in their ability to
a. sequential code. represent items within a class.
b. mnemonic code. d. Sequential codes carry no information content
c. alphabetic code. beyond their order in the sequence.
d. block code. 20. The production subsystem of the conversion cycle
15. (Appendix Question) In a hashing structure includes all of the following EXCEPT
a. pointers are used to indicate location of a a. make-or-buy decisions on component parts.
record with the same address as another b. determining raw materials requirements.
record. c. release of raw materials into production.
b. two records can be stored at the same d. scheduling the goods to be produced.
address.
21. Which statement is NOT true?
c. pointers are used to indicate the location of all
a. Manufacturing firms have a conversion cycle
records.
but retail firms do not.
d. all locations on the disk are used for record
b. The conversion cycle includes the task of
storage.
determining raw materials requirements.
16. (Appendix Question) An advantage of a physical
c. A payroll check is an example of a product
address pointer is that
document of the payroll system.
a. it remains unchanged when disks are
d. A general journal may be replaced by a col-
reorganized.
lection of journal voucher.
b. it is easily recovered if it is inadvertently lost.
e. Business activities begin with the acquisition of
c. it points directly to the actual disk storage materials, property, and labor in exchange for
location. cash.

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86 PART I Overview of Accounting Information Systems

22. Which of the following files is a temporary file? c. Master file

a. Reference file d. None of the above
b. Transaction file

Problems
1. TRANSACTION CYCLE and sent to the employees. In addition a summary
IDENTIFICATION report of total payroll charges is sent to each depart-
ment manager, who reviews it for correctness, signs
Categorize each of the following activities into the
the report, and returns it to the payroll department
expenditure, conversion, or revenue cycles, and iden-
to be files.
tify the applicable subsystem.
a. Preparing the weekly payroll for manufacturing
personnel
4. SYSTEM FLOWCHART AP
Using the format presented in Figure 2-4 in the text,
b. Releasing raw materials for use in the
develop a similar flowchart for the process of paying
manufacturing cycle
vendor accounts payable.
c. Recording the receipt of payment for goods sold The Process: Vendors send invoices to the AP
d. Recording the order placed by a customer department where they are reviewed and approved
e. Ordering raw materials for payment. Once approved, the invoice and a
f. Determining the amount of raw materials to cash disbursement voucher are sent to the cash dis-
order bursement department, where a check is prepared
and sent to the vendor. A copy of the check, the
invoice, and the voucher are returned to the AP
2. TYPES OF FILES department and filed.
For each of the following records, indicate the
appropriate related file structure: master file, trans-
action file, reference file, or archive file.
5. RECORD STRUCTURES FOR
a. Customer records INVENTORY RECEIPT PROCESS
b. Purchase orders Refer to Figure 2-30 in the text and the discussion
about updating master files from transaction files.
c. List of authorized vendors
The discussion pertains to the record structures for
d. Records related to prior pay periods a sales transaction. Prepare a diagram (similar to
e. Vendor records Figure 2-30) that presents the record structure for
f. Hours each employee has worked during the cur- the receipt of inventory items that had been ordered
rent pay period previously. Assume that a purchase order file exists
g. Tax tables and will be updated through information collected
h. Sales orders that have been processed and via a receiving report, which is the transaction
recorded record. Further, assume that the purchase was
made on account, and the vendor AP record needs
to be updated. Do not show the general ledger
3. SYSTEM FLOWCHART PAYROLL records in your diagram. Explain each step in the
Figure 2-4 in the text illustrates how a customer update process.
order is transformed into a source document, a prod-
uct document, and a turnaround document. Develop 6. RECORD STRUCTURES FOR
a similar flowchart for the process of paying hourly
employees.
RECEIPT OF CASH ON ACCOUNT
The Process: Supervisors collect time sheets from Refer to Figure 2-30 and the discussion about updat-
employees, review them for correctness, and submit ing master files from transaction files. The discussion
them to payroll where payroll checks are prepared presents the record structures for a sales transaction.

Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.