B4-1 Flashcards
Which one of the following statements about an accounting information system (AIS) is incorrect?
a.
An AIS supports day-to-day operations by collecting and storing data about an organization’s transactions.
b.
An AIS is often referred to as a transaction processing system.
c.
The information produced by AIS is made available to all levels of management for use in planning and controlling an organization’s activities.
d.
An AIS is best suited to solve problems where there is great uncertainty and ill-defined reporting requirements.
Choice “d” is correct. An AIS is best suited to solve problems where there is certainty and clearly defined reporting requirements.
Choices “a”, “c”, and “b” are incorrect. All are correct statements regarding an AIS.
Which of the following statements is (are) correct for transaction processing modes?
I.
In batch processing, the grandfather-father-son file rotation procedure can be used either to recover from processing problems or to retain files off-site for disaster recovery.
II.
Batch totals, often used in batch processing, are totals of dollar fields in transactions. The total computed from the batch is compared to an input batch total for the batch of transactions; if the two totals are the same, processing of the batch can continue.
III.
Hash totals, often used in batch processing, are totals of fields in transactions other than dollars. The total computed from the batch is compared to an input hash total for the batch of transactions; if the two totals are the same, processing of the batch can continue.
IV.
In the past, batch processing predominated. These days, there is no justification for batch processing.
a.
II and III only are correct.
b.
I and IV only are correct.
c.
I and III only are correct.
d.
I, II, and III are correct.
Choice “d” is correct.
All of the statements other than IV are correct. In the past, batch processing predominated. These days, a much larger portion of system processing is on-line rather than batch, but batch processing is still often used for system to system transfers of data, updating separate data warehouses, and the like.
What statement best describes some of the general characteristics of Accounting Information Systems?
a.
AIS systems can only handle large volumes of identical transactions.
b.
All AIS systems are uniform since all businesses must deal with the same issues.
c.
AIS systems generally have similar capabilities; however, the applications implemented for a particular business are generally modified to meet the specific needs of that business.
d.
AIS systems cannot handle nonrecurring transactions.
Choice “c” is correct. An AIS is customized to the needs of a particular business or enterprise. The requirements of a manufacturer (including inventory and production) will be different from the requirements of a service firm that might not have any inventory.
Choice “b” is incorrect. AIS systems likely have similar capabilities, but the extent to which they are implemented will vary based on the requirements of the specific business.
Choice “a” is incorrect. An AIS can typically handle any transaction it is set up for. However, many AIS are set up to handle a large volume of transactions.
Choice “d” is incorrect. Nonrecurring transactions can be accommodated by an AIS. Typically, the initial organization of the business, debt issuance, capital outlay, etc., represent types of nonrecurring transactions that should be easily handled by an AIS.
A training organization is conducting a survey regarding students and instructors who participated in particular training seminars over the period Year 1 to Year 4. A report is generated that provides this information. This report is an example of:
a.
An exception report.
b.
A periodic scheduled report.
c.
A push report.
d.
An ad hoc report.
Choice ‘‘d’’ is correct. An ad hoc report is one that is created on demand generally to meet unique specifications that respond to a specific requirement (e.g., a survey). A well-designed database system (a database system is assumed in this question) should be able to produce this type of ad hoc report when required.
Choice ‘‘a’’ is incorrect. An exception report is produced when a specific condition or ‘‘exception’’ occurs. There is no such condition in this case.
Choice ‘‘b’’ is incorrect. A periodic scheduled report is a traditional report that displays information in a predefined format and that is made available on a regular basis. The report above is a specialized report that would not be considered ‘‘traditional.’’
Choice ‘‘c’’ is incorrect. A push report is a report that is ‘‘pushed’’ to a computer screen or desktop. It is typically a report that is needed regularly, possibly because the data that is being reported changes often.
A report that does not currently exist but that needs to be created on demand without having to get a software developer involved is known as a/an:
a.
Exception report.
b.
Demand report.
c.
Ad hoc report.
d.
Scheduled report.
Choice “c” is correct. An ad hoc report is a report that does not currently exist but that needs to be created on demand without having to get a software developer involved.
Choice “b” is incorrect. A demand report is a specific report that can be printed or viewed on demand.
Choice “a” is incorrect. An exception report is a report produced when a specific condition or “exception” occurs.
Choice “d” is incorrect. Scheduled reports are the more traditional reports that display information in a predefined format and that are made available on a regular basis.
Transaction processing typically includes all the following major functions except:
a.
Data input
b.
Information output
c.
Data storage
d.
Data analysis
Choice “d” is correct. Analysis of data is not a major function of transaction processing. Analysis is typically performed subsequent to transaction processing.
Choice “a” is incorrect. Data input is a major function of transaction processing along with data storage, data processing, and information output.
Choice “b” is incorrect. Information output is a major function of transaction processing along with data input, data storage, and data processing.
Choice “c” is incorrect. Data storage is a major function of transaction processing along with data input, data processing, and information output.
Which of the following terms represents the processing of large numbers of common business events that are processed in a predefined highly structured way?
a.
Data processing
b.
Information and communication
c.
Transaction processing
d.
Transaction controls
Choice “c” is correct. Transaction processing is the term used to describe processing large numbers of commonly occurring business events in a predefined, highly structured way. Common transaction processing systems include sales, cash receipts, accounts payable, etc.
Choice “a” is incorrect. The processing of data is part of transaction processing.
Choice “d” is incorrect. Transaction controls is not a term that describes the processing of business events. Transaction controls include policies and procedures used to safeguard assets, ensure accurate reporting, etc.
Choice “b” is incorrect. Information and communication is an element of the control grid described by the COSO and describes the efforts of an entity to capture information that will provide feedback on the effectiveness of controls.
The general characteristic of transactions processed within individual transaction cycles is that:
a.
Transactions are numerous but are generally similar and processed nearly identically.
b.
Transactions are few, generally dissimilar but processed identically.
c.
Transactions are numerous, generally similar but are processed in a variety of different ways.
d.
Transactions are numerous and vary widely in variety and type.
Choice “a” is correct. Transaction cycles generally capture commonly occuring transactions (e.g., customer orders) and process them repeatedly in a nearly identical fashion. Transaction cycles are established to organize and process data in an efficient manner.
Choice “d” is incorrect. Transaction cycles group transactions because they are similar in nature and have similar processing requirements. For example, most sales are processed in the same way for a particular business.
Choice “c” is incorrect. Transaction cycles are typically identified as a means of promoting processing efficiency. Transactions are processed in nearly identical ways.
Choice “b” is incorrect. Custom transactions may be identified within revenue cycles, however, they would be processed individually and specifically (e.g., establishing capital accounts for owners and borrowing funds for capital expansion would be handled individually).
A distributed processing environment would be most beneficial in which of the following situations?
a.
Large volumes of data are generated centrally and fast access is not required.
b.
Large volumes of data are generated at many locations and fast access is required.
c.
Small volumes of data are generated at many locations, fast access is required, and summaries of the data are needed promptly at a central site.
d.
Small volumes of data are generated centrally, fast access is required, and summaries are needed monthly at many locations.
Choice “b” is correct. A distributed (or decentralized) processing environment would be the most beneficial when large volumes of data are generated at many (remote) locations and fast access to the data is required. In centralized processing, there is always some delay (however small these days) in transmitting large volumes of data or transactions to the central site to be processed and then to be able to access the processed information. Decentralized processing eliminates that particular problem (although it does present other problems). Note that there seems to be an implied assumption in this question that the (remote) locations need access only to their own local data and not to all of the data for all locations. This choice seems to be better than choice “c”.
Choice “a” is incorrect. If large volumes of data are generated centrally, centralized processing would probably be more beneficial, regardless of whether or not fast access to that data is required. This choice implies that little, if any, data or transactions are generated at the remote locations so there would be no real need for distributed processing.
Choice “c” is incorrect. If summaries of the data are needed “promptly” at the central site, centralized processing MIGHT be more beneficial. Since only small volumes of data are generated at the remote locations, there would probably not be much delay in transmitting that data to the central location and probably not much delay in accessing that data. Since only summaries of the data are needed at the central location, those summaries could probably be readily prepared at the remote locations. This choice is the next best, and a case could certainly be made that the choice is correct. The decision could readily come down to summaries of “what” data. Is it summaries of all of the data generated by all locations or summaries of only the data generated by the remote location? If the former is what is meant, centralized processing would be more beneficial. If the latter is what is meant, distributed processing would probably be more beneficial.
Choice “d” is incorrect. If summaries of the data are needed “monthly” at the remote sites, centralized processing MIGHT be more beneficial. However, there is no way to tell in this choice how much data is generated at the remote locations. From the way the question in total is written, an assumption might be made that there is only a small volume of data at the remote locations. If there is a large volume of data at the remote locations, decentralized processing might be more beneficial because fast access is required.
Note: This question is rather vague and ambiguous. Candidates should not have to make too many assumptions or read too much into the question. Unfortunately, with this question, you do.
Credit Card International developed a management reporting software package that enables members to interactively query a data warehouse and drill down into transaction and trend information via various network set-ups. What type of management reporting system has Credit Card International developed?
a.
On-line analytical processing system.
b.
On-line executive information system.
c.
On-line transaction-processing system.
d.
On-line information storage system.
Choice “a” is correct. Online analytical processing allows end users to retrieve data from a system and perform analysis using statistical and graphical tools. A credit card company’s system that enables members to interactively query a data warehouse and drill down into transaction and trend information is an online analytical processing system.
Choice “c” is incorrect. On line transaction processing systems would process customer payments or other transactions, not analyze data.
Choice “b” is incorrect. On line executive information systems would likely provide strategic level information to company leadership, not analytical data to managers.
Choice “d” is incorrect. On line information storage systems would likely provide information storage services (e.g., lists of charges by month, etc.) for later retrieval by users without the analytical tools used by an online analytical processing system.
Which of the following errors most likely would be detected by batch financial totals?
a.
A transposition error on one employee’s paycheck on a weekly payroll run.
b.
A purchase order mistakenly entered into two different batches.
c.
A missing digit in an invoice number in a batch of daily sales.
d.
Malfeasance resulting from a receivable clerk’s pocketing of a customer’s payment and altering of the related records.
Choice “a” is correct. As part of batch processing, a manual total will be calculated for each transaction file and compared to a computer-generated batch control total. Any financial discrepancies (such as an error on an employee paycheck) will be identified and resolved as part of this process.
Choice “c” is incorrect. Batch financial totals would not capture missing digits on invoice numbers.
Choice “b” is incorrect. A company should have other controls in place to prevent this, as a batch financial total is only designed to ensure that what is in the purchase order itself is appropriately reconciled to the computer-generated control total.
Choice “d” is incorrect. A company should have other controls in place to ensure that all payments received are accounted for appropriately, as batch controls would not necessarily catch this activity.
Avon Corporation has a management information system. From the management information system, several different reports are available, including reports that are monthly budget vs. actual reports, reports that highlight where sales representatives have not met their assigned sales quotas, account analysis reports that can be requested by accountants as needed as a part of the closing process, and reports that are created by end users to obtain information as needed at any time during the month. The 4 types of reports are best described as:
a.
Scheduled reports, ad hoc reports, exception reports, and demand reports.
b.
Exception reports, scheduled reports, demand reports, and ad hoc reports.
c.
Scheduled reports, exception reports, demand reports, and ad hoc reports.
d.
Demand reports, scheduled reports, exception reports, and ad hoc reports.
Choice “c” is correct. Monthly reports of budget vs. actual data are normally called scheduled reports that are produced without anybody having to request them. Reports that highlight sales representatives not having met their assigned sales quotas are normally called exception reports. Reports that analyze accounts, or that provide other specific and non-changeable information, but only on demand, are normally called demand reports. Reports that provide information as requested by the end user, and are available on demand, are normally called ad hoc reports.
Note that these names are generic names.
Choices “d”, “a”, and “b” are incorrect, per the above descriptions.
In an accounting information system, which of the following types of computer files most likely would be a master file?
a.
Cash receipts.
b.
Inventory subsidiary.
c.
Payroll transactions.
d.
Cash disbursements.
Choice “b” is correct. The question can be readily addressed by using the “odd man out” principle. Just look at the other three choices. Each of them is a transaction file of some type; one of them is even called a transaction file. The other two (cash disbursements and cash receipts) are both transactions in a non-computerized accounting system and are transaction files in a computerized accounting system.
Choices “d”, “a”, and “c” are incorrect, per the above explanation.
Abbie mails her phone bill in every month with a remittance advice to the phone company. The remittance advice includes machine readable code that automates the input of the receipt. The remittance advice is sometimes referred with the following term:
a.
Sales order.
b.
Turnaround document.
c.
Echo check.
d.
Data processing.
Choice “b” is correct. Machine readable companion documents such as the remittance advice that goes with various bill payments are referred to as turnaround documents. These documents improve data input efficiency.
Choice “c” is incorrect. Echo checks are hardware devices that verify transmissions.
Choice “a” is incorrect. The remittance advice is not a sales order.
Choice “d” is incorrect. Data processing involves the treatment of the data input and does not describe the remittance advice.
An accounts payable clerk is accused of making unauthorized changes to previous payments to a vendor. Proof could be uncovered in which of the following places?
a.
Error files.
b.
Transaction logs.
c.
Error reports.
d.
Validated data file.
Choice “b” is correct. Transaction logs would include all transactions, including payments made to a vendor, that have been processed against the master files. Since any changes to vendor accounts would have to be applied by a transaction, the transaction logs would reflect incorrectly applied adjustments as well as the original correct transactions. The logs would also include the identification of the individual who authorized the transaction.
Choice “c” is incorrect. Error reports normally indicate transactions that contained some kind of error. If the accounts payable clerk were careful and made no errors, nothing about the unauthorized transactions would show up on error reports.
Choice “a” is incorrect. Errors are not always maintained on files and thus there are often no error files. Errors are meant to be corrected and then the correct transactions processed. If error reports are produced, they are often discarded once the errors have been corrected. Again, if the accounts payable clerk were careful, nothing about the unauthorized transactions would show up on any error files that were actually generated or maintained.
Choice “d” is incorrect. The validated transaction file would contain all transactions that have been edited and checked for processing. Since all transactions in the file would be assumed to be valid, the file might not include the identity of the individual who authorized each transaction since that information would be store in the transaction log.
What is the correct ascending hierarchy of data in a system?
a.
Field, record, file, character.
b.
Character, record, file, field.
c.
Character, field, record, file.
d.
Field, character, file, record.
Choice “c” is correct. The hierarchy of data in a system begins with the smallest component of data and ends with the most summarized. A character is a symbol such as a letter or number. A field is a collection of numbers or letters such as a name or a street address. A record is a group of fields such as a customer name and address and related accounts receivable amount. A file is a collection of records such as an account receivable subsidiary ledger.
Choice “b” is incorrect. A field is a combination of characters and would be second and not last on the hierarchy.
Choice “d” is incorrect. Character and field and record and file have been transposed in the answer provided. The correct hierarchy begins with the smallest component of data, the character in this instance and ends with a file in this case.
Choice “a” is incorrect. The hierarchy incorrectly reverses and jumbles the sequence of data as per explanation above.
