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Consider the following REA diagram as you respond to the question:
Which of the following statements about the REA model is least true?
A. A purchase of supplies can occur with no purchasing agent involvement.
B. A purchasing agent may be involved in no purchases of supplies.
C. Exactly one purchasing agent must be involved in each purchase of supplies.
D. Purchasing agents and vendors have no relationship outside the context of a
"purchase supplies" transaction.
Create cardinalities for each of the following independent situations. Format the
cardinalities as they would appear in a REA model.
a. A customer may purchase inventory multiple times; every inventory purchase is tied
to a single customer.
b. A "purchase inventory" transaction may involve multiple inventory items; an
individual inventory item may be sold many times or not at all.
c. Each inventory purchase is authorized by a single purchasing agent; the number of
authorizations for each purchasing agent can be as few as one, but has no upper limit.
d. A bank deposit is processed by a single teller; a teller can process an unlimited
number of deposits, but must process at least one each day.
e. An individual "process bank deposit" transaction may involve multiple checks; an
individual check can be deposited only one time.
Consider the table below as you answer the questions:
The data in the table were part of Microsoft's filings with the SE
C. Which of the following XBRL taxonomies would Microsoft use to make journal
entries in its AIS?
A. Global Ledger
B. US GAAP
C. SEC
D. Some other taxonomy
The table is a replica of the one in the chapter's "AIS in the Business World."
Generally accepted auditing standards are divided into three groups. Which of the
following is a standard in the "reporting" group?
A. Training
B. Supervision
C. Evidence
D. Disclosure
Most accounting information systems comprise five generic elements. As a tool for
preparing financial statements, XBRL is most closely associated with:
A. Processing
B. Input
C. Output
D. Storage
AIS is an important area of study for future accountants because a well-designed AIS
can respond to many elements of the conceptual framework. Which of the following
statements about qualitative characteristics of accounting information is most true?
A. Reliability is more important than relevance.
B. Relevance is more important than reliability.
C. Reliability must sometimes be sacrificed to attain relevance.
D. Tradeoffs between relevance and reliability violate the cost-benefit constraint.
Fill in the blanks below to complete the COSO definition of internal control. Internal
control is a (a), effected by an entity's (b), management and other personnel, designed to
provide (c), regarding the achievement of objectives relating to (d), (e) and (f).
a. _______________________________________________________
b. _______________________________________________________
c. _______________________________________________________
d. _______________________________________________________
e. _______________________________________________________
f. _______________________________________________________
Studying 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?
A. Work in process
B. Inventory
C. Supplies
D. Payroll expense
Which of the following most clearly differentiates accounting and bookkeeping?
A. Bookkeeping always involves information technology; accounting does not.
B. Accounting always involves information technology; bookkeeping does not.
C. Bookkeeping is the part of accounting most focused on rules and procedures.
D. A college degree is required for bookkeeping, but not for accounting.
Consider the following set of symbols and the ELM case as you respond to the
question:
ELM Corporation sells durable medical equipment, such as wheelchairs and hospital
beds; each salesperson at ELM specializes in a specific type of medical equipment.
When a prospective client comes into their store, a greeter does a preliminary needs
assessment to determine what type(s) of equipment the client requires. Based on that
preliminary assessment, the greeter will match the client with a member of the sales
staff. The staff specialist does a more detailed needs assessment, the results of which go
into a computerized database along with the client's name, address, phone number and
other related information. After the needs assessment, the staff specialist determines the
client's budget, as well as whether the client has insurance coverage for the desired
equipment; clients without insurance coverage receive a 10% discount on all equipment
purchased up to $1,000, and a 20% discount for any sales over $1,000. The staff
specialist makes recommendations based on the client's needs and budget. If the client
chooses to purchase from ELM, the store fills out any necessary insurance paperwork
and collects the client's portion of the bill. For example, if an insured client purchases a
wheelchair with a price of $2,000 and the insurance covers 80%, ELM collects $400
from the client at the time of the sale. ELM accepts cash, checks and major credit cards
from clients. Insurance payments go directly to ELM's bank account and normally
arrive within 60 days of the sale. If the client needs more than one type of durable
medical equipment, the first staff specialist introduces the client to a subsequent staff
specialist, who repeats the process until all the client's equipment needs are met.
In a systems flowchart of ELM's sales/collection process, "conduct preliminary needs
assessment" would most likely be depicted with:
A. Symbol C
B. Symbol D
C. Symbol F
D. Some other symbol not shown above
Internal control has four major purposes in organizations. Ways to achieve at least one
of the four include: (i) keeping cash in a bank, (ii) conducting a new employee
orientation.
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.
Which of the following statements about the role and purpose of the sales/collection
process is most true?
A. Only organizations that sell goods on credit have a true sales/collection process.
B. Government organizations do not need a sales/collection process.
C. Both only organizations that sell goods on credit have a true sales/collection process
and government organizations do not need a sales/collection process are true.
D. Neither only organizations that sell goods on credit have a true sales/collection
process nor government organizations do not need a sales/collection process is true.
Refer to theA. Process 2.0 is likely to be labeled "Bill client and collect payment."
B. Process 3.0 is likely to be labeled "Establish online account and update data store."
C. Both process 2.0 is likely to be labeled "Bill client and collect payment" and process
3.0 is likely to be labeled "Establish online account and update data store" are true.
D. Neither process 2.0 is likely to be labeled "Bill client and collect payment" nor
process 3.0 is likely to be labeled "Establish online account and update data store" is
true.
