AIS Chapters 1-3

Claudia borrowed money from her bank, signing a five-year note payable. She then calculated the monthly payment needed to pay off the loan within three years. Which of the following statements is/are most true?

The required monthly payment is an example of "information," as the term is used in the definition of an accounting information system.

The five-year note payable would be considered a "technology" if it were prepared with computer software.

Both the required monthly payment is an example of "information," as the term is used in the definition of an accounting information system and the five-year note payable would be considered a "technology" if it were prepared with computer software are true.

Neither the required monthly payment is an example of "information," as the term is used in the definition of an accounting information system nor the five-year note payable would be considered a "technology" if it were prepared with computer software is true.
Click the card to flip 👆
1 / 28
Terms in this set (28)
Claudia borrowed money from her bank, signing a five-year note payable. She then calculated the monthly payment needed to pay off the loan within three years. Which of the following statements is/are most true?

The required monthly payment is an example of "information," as the term is used in the definition of an accounting information system.

The five-year note payable would be considered a "technology" if it were prepared with computer software.

Both the required monthly payment is an example of "information," as the term is used in the definition of an accounting information system and the five-year note payable would be considered a "technology" if it were prepared with computer software are true.

Neither the required monthly payment is an example of "information," as the term is used in the definition of an accounting information system nor the five-year note payable would be considered a "technology" if it were prepared with computer software is true.
The required monthly payment is an example of "information," as the term is used in the definition of an accounting information system.
Which of the following best explains why AIS is an important area of study for future accountants?

AIS connects other areas of accounting, such as intermediate and cost accounting.

AIS connects accounting with other subjects, such as finance and management.

Both AIS connects other areas of accounting, such as intermediate and cost accounting and AIS connects accounting with other subjects, such as finance and management.

Neither AIS connects other areas of accounting, such as intermediate and cost accounting nor AIS connects accounting with other subjects, such as finance and management.
Both AIS connects other areas of accounting, such as intermediate and cost accounting and AIS connects accounting with other subjects, such as finance and management.
Studying AIS helps students understand business processes from an accounting perspective. Which of the following activities would commonly be associated with the financing process?

Selling goods and services on credit

Issuing equity securities

Making payments to vendors

Hiring employees to work in the finance department
Issuing equity securities
Accounting information systems has links with other areas of accounting study, including financial accounting. Which of the following combines an example of an AIS output with information you would expect to find in the output?

Income statement, net sales broken down by product line

Journal entries, accounts to debit and credit

Balance sheet, listing of current asset accounts with their balances

All of these
Balance sheet, listing of current asset accounts with their balances
Bumble Beasley, a recent accounting graduate from a private, for-profit university, started his own accounting consulting firm. His web page discussed internal controls, inputs, processes and outputs in relation to the design and implementation of accounting information systems. Should his web page be considered a good source of information about the generic structure of AIS?

Yes. Because he has a college degree, he has authority.

Yes. Because he is a recent graduate, the information is current
.
No. Since his degree is from a private, for-profit university, he cannot be objective.

No. He is in violation of at least one of the UMUC criteria for evaluating information.
No. He is in violation of at least one of the UMUC criteria for evaluating information.
Which of the following statements about accounting and bookkeeping is most true?

The FASB Conceptual Framework is relevant in accounting, but not in bookkeeping.

The FASB Conceptual Framework is relevant in bookkeeping, but not in accounting.

As an element of the AIS, internal controls are irrelevant to bookkeeping.

As an element of the AIS, outputs are relevant to accounting.
As an element of the AIS, outputs are relevant to accounting.
Which of the following sets includes examples of the same element of financial statements?

Accounts payable, deferred revenue, prepaid wages

Accounts receivable, deferred revenue, prepaid wages

Accounts payable, deferred revenue, wages payable

Deferred revenue, wages payable, prepaid wages
Accounts payable, deferred revenue, wages payable
As a form of internal control, transaction limits are most likely to be associated with which step in the accounting cycle?

Second
Fourth
Ninth
Last
Second
NTR Corporation has offices in both Los Angeles and San Francisco. In the Los Angeles office, the account number for cash is 001.101. In San Francisco, the account number for cash is 002.101. Which of the following statements is most true?

NTR uses sequential coding for its chart of accounts.

One of the offices should change its account number for cash to promote consistency and efficiency.

The first set of digits denotes the office.

The second set of digits denotes the office.
The first set of digits denotes the office.
SBL Corporation's accounting records were destroyed in a fire. In reconstructing them:

Human judgment will be important, but information technology will not.

Information technology will be important, but human judgment will not.

Both human judgment and information technology may be important.

Neither human judgment nor information technology will be useful.
Both human judgment and information technology may be important.
Internal control relates to an organization's achievement of objectives in three major categories. Which of the following pairs gives an example of two controls that fulfill a single category? Fulfilling the requirements of the Foreign Corrupt Practices Act, developing a clear job description for each position in the company Developing a clear job description for each position in the company, calculating profits on the accrual basis Fulfilling the requirements of the Foreign Corrupt Practices Act, calculating profits on the accrual basis Ensuring that plant assets are listed on the balance sheet at their net book value, listing appropriate assets at their current market valueEnsuring that plant assets are listed on the balance sheet at their net book value, listing appropriate assets at their current market valueANF Corporation's company procedures manual is available to all employees on the corporate network, while RSP Corporation distributes a hard copy of its company procedures manual to all new employees. Which of the following statements is most true? Because the procedures manual would be reported as an asset on the balance sheet, RSP is doing a better job safeguarding its assets. Because the procedures manual would be reported as an asset on the balance sheet, ANF is doing a better job safeguarding its assets. ANF employees are more likely to comply with management directives than RSP employees. The method of distributing the procedures manual is unlikely to be related to ensuring financial statement reliability.The method of distributing the procedures manual is unlikely to be related to ensuring financial statement reliability.Differences between legal & regulatory risk and directors' & officers' liability risk in Brown's taxonomy include: The cause of the risk. The things directly affected by the risk. Both the cause of the risk and the things directly affected by the risk. Neither the cause of the risk nor the things directly affected by the risk.The things directly affected by the risk.A department manager at TRS Corporation attended a seminar on internal control; afterward, the manager formed a five-person departmental team to create an internal control plan for the department. After a one-day off-site meeting, the team produced a document titled "Departmental Internal Control Plan." It was formatted as a risk/control matrix. One member of the team commented that, although the work was interesting, the team was glad the task was complete and wouldn't have to be redone. Which element of COSO's internal control framework does the department's plan lack? Risk assessment Control activities Information and communication MonitoringMonitoringWhen employees of the City of Fenris need supplies, they fill out a purchase requisition and send it to the city's purchasing department. The purchasing agents consolidate requisitions for similar supplies and prepare a purchase order to send to a vendor. The vendor ships the supplies directly to the purchasing department and then bills the city. Accounting clerks pay vendor invoices within thirty days. Within the context of that business process, which of the following best pairs a risk with an internal control that will address the risk? Purchasing supplies from an unauthorized vendor, separation of duties Paying for supplies that were not received, document matching Receiving supplies that were not ordered, limit checks Requisitioning supplies that are not needed, pre-numbered purchase requisitionsPaying for supplies that were not received, document matchingClaudia borrowed money from her bank, signing a five-year note payable. She then calculated the monthly payment needed to pay off the loan within three years. Based on the definition of an accounting information system provided in the text, the five-year note payable could be considered: (i) an input, (ii) an output, (iii) a document. I and II only I and III only II and III only I, II and IIII, II and IIIStudying AIS helps students understand business processes from an accounting perspective. Which of the following general ledger accounts would be unique to a company with a conversion process? Work in process Inventory Supplies Payroll expenseWork in processAccounting information systems has links with other areas of accounting study, including financial accounting. Which of the following combines an example of AIS storage with information you would expect to find in it? Balance sheet, listing of current asset accounts with their balances Master file, customer address Both balance sheet, listing of current asset accounts with their balances and master file, customer address Neither balance sheet, listing of current asset accounts with their balances nor master file, customer addressMaster file, customer addressStorage is one generic element of the AIS; the text explains that data stored electronically often are grouped into three types of files. Which of the following includes one example of each file type? Purchases, sales, inventory Purchases, inventory, purchases/inventory Cash receipts, cash payments, cash on hand Sales, cost of goods sold, inventoryPurchases, inventory, purchases/inventoryGloria wrote a paper on the AICPA core competencies for her accounting information systems class. She organized the paper in three main parts: broad business perspective competencies, functional competencies, conceptual framework competencies. In terms of the UMUC criteria for information evaluation, which of the following statements is most true? Gloria must add at least one section for the paper to have sufficient coverage. Gloria must add one section and delete one section for the paper to have sufficient coverage. Unless the paper is published within six months, it will not be current. The section on conceptual framework competencies must discuss all elements of the conceptual framework.Gloria must add one section and delete one section for the paper to have sufficient coverage.The concept of bookkeeping includes: (i) distinguishing relevant from irrelevant information, (ii) calculating amounts to record in the AIS, (iii) reporting financial results. I and II only. I and III only. II and III only. I, II and III.I and II onlyAt the end of 2014, CNC Corporation's accounting information system produced the following trial balance: CNC Corporation Post-closing trial balance December 31, 2014 Cash 6,400 AR 2,300 Inventory 1,000 Supplies 700 Land 2,600 Equipment 3,200 Accumulated dep: equipment 400 AP 1,600 Bonds payable 4,000 Discount on bonds payable 500 Common stock 7,100 Additional paid-in capital 3,300 Retained earnings 300 Totals 16,700 16,700 CNC completed the following transactions in January 2015: a. Purchased inventory on account, $300. b. Collected cash from customers for prior year sales, $500. c. Paid current month's wages, $900. d. Had land appraised. Cost of doing the appraisal (paid in cash), $700. Appraised value of land, $3,000. e. Sold inventory with a cost basis of $200 on account, $800. f. Declared dividends, $50. g. Hired additional sales staff. Expected monthly salaries, $80. h. Purchased supplies for cash, $150. i. Paid creditors for previous purchases, $150. j. Signed a contract for annual employee retreat, $450. The accounting cycle includes three different versions of the trial balance. For CNC, the totals of the trial balance prepared in the seventh step at the end of January will be: $17,650. some other amount. CNC cannot complete the seventh step in the accounting cycle at the end of January. Cannot be determined from the information given.Cannot be determined from the information given.As a form of internal control, sequential numbering is most likely to be associated with which step in the accounting cycle? First Fifth Sixth LastFirstABT Corporation uses block coding for its chart of accounts, which includes Cash (101), Land (201), Accounts payable (301) and Retained Earnings (501). Which of the following account numbers is most likely associated with an account that will appear on the adjusted trial balance but not on the post-closing trial balance? 203 405 504 701701As an internal control, RSR Corporation requires two signatures on all checks over $500, thus illustrating the importance of: Human judgment. Information technology. Both human judgment and information technology. Neither human judgment nor information technology.Neither human judgment nor information technology.Bumble Beasley was making a presentation on internal control to a group of prospective clients. Which of the following statements is the least appropriate for Bumble to make? Responsibility for internal control should be shared throughout the organization. All companies must use the COSO definition of internal control as a guide. Internal controls are not designed specifically to prevent fraud. Part of internal control is ensuring that a company is making the best possible use of its resources.All companies must use the COSO definition of internal control as a guide.Dale is an employee of Big State University who also does some independent consulting to supplement income. Because consulting engagements are infrequent, Dale has not purchased insurance for the company. If Dale requires consulting clients to pay in cash, which of the following risk exposures is most serious? Directors' and officers' liability risk Systems risk Credit risk Consulting riskDirectors' and officers' liability riskPRL Corporation's internal control plan is based on the COSO framework. It includes five items: (i) conducting ongoing evaluations of internal control during the normal course of operations, (ii) hiring accountants who understand the importance of strong internal control, (iii) including a segment in new employee orientation on the importance of strong internal control, (iv) periodic employee surveys that identify new issues that require internal controls, (v) a quarterly newsletter explaining elements of the internal control plan. Based on those five items alone, which element of PRL's internal control plan is weakest? Risk/control matrix Control activities Information and communication MonitoringControl activities