AIS 8

Question 1

Represent items in sequential order

Answer 1

Sequential Codes

Question 2

Used to prenumber source documents​

Answer 2

Sequential Codes

Question 3

Track each transaction processed ​

Identify any out-of-sequence documents​

Answer 3

Sequential Codes

Question 4

Represent whole classes by assigning each class a specific range within the coding scheme​

Answer 4

Block Codes

Question 5

Used for chart of accounts ​

The basis of the general ledger​

Answer 5

Block Codes

Question 6

Allows for the easy insertion of new codes within a block ​

Answer 6

Block Codes

Question 7

Don’t have to reorganize the coding structure​

Answer 7

Block Codes​

Question 8

Represent complex items or events involving two or more pieces of data using fields with specific meaning​

Answer 8

Group Codes​

Question 9

Used for many of the same purposes as numeric codes ​

Answer 9

Alphabetic Codes​

Question 10

Can be assigned sequentially or used in block and group coding techniques​

Answer 10

Alphabetic Codes​

Question 11

May be used to represent large numbers of items​

Can represents up to 26 variations per field​

Answer 11

Alphabetic Codes

Question 12

Alphabetic characters used as abbreviations, acronyms, and other types of combinations​

Answer 12

Mnemonic Codes

Question 13

Do not require users to memorize the meaning since the code itself is informative – and not arbitrary ​

NY = New York​

Answer 13

Mnemonic Codes

Question 14

principal FRS file based on chart of accounts​

Answer 14

General ledger master file

Question 15

used for comparative financial support​

Answer 15

General ledger history file​

Question 16

all journal vouchers of the current period​

Answer 16

Journal voucher file​

Question 17

journal vouchers of past periods for audit trail​

Answer 17

Journal voucher history file​

Question 18

financial data by responsibility centers for MRS​

Answer 18

Responsibility center file​

Question 19

budget data by responsibility centers for MRS​

Answer 19

Budget master file​

Question 20

listing of transactions​
allocation of expenses to cost centers​
comparison of account balances from prior periods​
trial balances​

Answer 20

General ledger analysis:

Question 21

balance sheet​

income statement​

statement of cash flows​

Answer 21

Financial statements

Question 22

analysis of sales​

analysis of cash​

analysis of receivables

Answer 22

Managerial reports

Question 23

coded listing of accounts​

Answer 23

Chart of accounts

Question 24

journal vouchers must be authorized by a manager at the source dept​

Answer 24

Transaction authorization

Question 25

G/L clerks should not:​ have recordkeeping responsibility for special journals or subsidiary ledgers​ prepare journal vouchers​ have custody of physical assets​

Answer 25

Segregation of duties

Question 26

Unauthorized access to G/L can result in errors, fraud, and misrepresentations in financial statements.​

Answer 26

Access controls:

Question 27

requires controls that limit database access to only authorized individuals.​

Answer 27

Sarbanes-Oxley

Question 28

trace source documents from inception to financial statements and vice versa​

Answer 28

Accounting records

Question 29

G/L dept. reconciles journal vouchers and summaries. ​

Answer 29

Independent verification ​

Question 30

details of each journal voucher posted to the G/L​

Answer 30

journal voucher listing

Question 31

the effects of journal voucher postings on G/L accounts​

Answer 31

general ledger change report

Question 32

Produce financial and nonfinancial information needed by management to “plan, evaluate, control”​ Usually seen as discretionary reporting​

Answer 32

Management Reporting Systems ​

Question 33

Can argue that Sarbanes-Oxley requires MRS ​

Answer 33

Management Reporting Systems ​

Question 34

provide a formal means for monitoring the internal controls​

Answer 34

MRS

Question 35

structures the firm around the tasks performed rather than around individuals’ unique skills​ allows specification of the information needed to support the tasks​

Answer 35

Formalization of tasks

Question 36

obligation to achieve desired results​

Answer 36

responsibility

Question 37

power to make decisions within the limits of that responsibility​

Answer 37

authority

Question 38

delegated by managers to subordinates​ define the vertical reporting channels through which information flow

Answer 38

Responsibility and authority

Question 39

the number of subordinates directly under the manager’s control​ detailed reports for managers with narrow spans of control ​ summarized information for managers with broad spans of control​

Answer 39

Span of control

Question 40

Managers should limit their attention to potential problem areas. ​ Reports should focus on changes in key factors that are asymptomatic of potential problems.​

Answer 40

Management by exception

Question 41

firm’s goals and objectives​ scope of business activities​ organizational structure​ management philosophy​ long-term, with broad scope and impact​ non-recurring , with high degree of uncertainty​ need highly summarized information​ require external & internal information sources​

Answer 41

Strategic planning decisions

Question 42

subordinate to strategic decisions ​ short term ​ specific objectives​ recur often​ fairly certain outcomes​ limited impact on the firm ​

Answer 42

Tactical planning decisions

Question 43

using resources as productively as possible in all functional areas ​ evaluating the performance of subordinates against standards​

Answer 43

Management control decisions

Question 44

deal with routine tasks​ narrower focus, dependent on details ​ highly structured​ short time frame​

Answer 44

Operational control decisions

Question 45

Reflects and affects how well decision makers understand and solve problems​

Answer 45

Problem Structure

Question 46

Report objectives - reports must have value or information content ​ They should…​ reduce the level of uncertainty associated with a problem facing the decision maker​ influence the behavior of the decision maker in a positive way​

Answer 46

Management Reports

Question 47

Report Attribute useful to decision making​

Answer 47

Relevance

Question 48

Report Attribute that is appropriate level of detail​

Answer 48

Summarization

Question 49

Report Attributes that identify risks​

Answer 49

Exception orientation

Question 50

Report Attributes that is free of material errors​

Answer 50

Accuracy

Question 51

Report Attributes that refers to essential information​

Answer 51

Completeness

Question 52

Report Attributes that is in time for decisions​

Answer 52

Timeliness

Question 53

Report Attributes ataht refers to understandable format​

Answer 53

Conciseness

Question 54

produced at specified intervals, e.g., weekly​

Answer 54

scheduled reports

Question 55

triggered by events, e.g., inventory levels drop to a certain level​

Answer 55

on-demand reports

Question 56

designed and created “as needed” ​ situations arise that require new information​

Answer 56

Ad hoc reports

Question 57

Implies that every economic event that affects the organization is the responsibility of and can be traced to an individual manager​ Incorporates the fundamental principle that responsibility-area managers are accountable for items that they control​

Answer 57

Responsibility Accounting​

Question 58

helps management achieve financial objectives by setting measurable goals for each organizational segment.​

Answer 58

Budgeting

Question 59

flows downward and becomes increasingly detailed at each lower level.​

Answer 59

Budget information

Question 60

flows upward as responsibility reports.​

Answer 60

performance information

Question 61

responsible for keeping costs within budgetary limits​

Answer 61

Cost center

Question 62

Responsible for both cost control and revenue generation​

Answer 62

Profit center

Question 63

has general authority to make a wide range of decisions affecting costs, revenue, and investments in assets​

Answer 63

Investment center

Question 64

help to appropriately assign authority and responsibility.​

Answer 64

MRS and compensation schemes

Question 65

If _______ are not carefully designed, managers may engage in actions not optimal for the organization.​

Answer 65

compensation measures

Question 66

Occurs when managers receive more information than they can assimilate ​

Answer 66

Information Overload​

Question 67

Can cause managers to disregard formal information and rely on informal—probably inferior—cues when making decisions​

Answer 67

Information Overload​

Question 68

Stimulate behavior consistent with firm objectives​ Managers consider all relevant aspects, not just one​

Answer 68

ppropriate performance measures​

Question 69

Example of inappropriate measures that can affect the quality of the items purchased​

Answer 69

price variance

Question 70

Example of inappropriate measures that can affect quality control, material usage efficiency, labor relations, plant maintenance​

Answer 70

quotas

Question 71

Example of inappropriate measures that can affect plant investment, employee training, inventory reserve levels, customer satisfaction​

Answer 71

profit measures