9) Who of the following would not be involved in the revenue cycle?
A) accounts payable clerk
B) customer
C) cashier
D) credit manager
10) How are “Give and Take” transactions classified in business today and what impact does this
have on AIS?
1.5 Explain what an accounting information system (AIS) is and describe its basic functions.
1) An accounting information system must be able to perform which of the following tasks?
A) collect transaction data
B) process transaction data
C) provide adequate controls
D) all of the above
2) Which of the following is not an example of a common activity in an AIS?
A) buy and pay for goods and services
B) sell goods and services and collect cash
C) summarize and report results to interested parties
D) record sales calls for marketing purposes
3) Which of the following is not one of the components of an AIS?
A) internal controls and security measures
B) people
C) procedures and instructions
D) hardware
4) The primary objective of accounting is to
A) implement strong internal controls.
B) provide useful information to decision makers.
C) prepare financial statements.
D) ensure the profitability of an organization.
5) Many modern accounting software packages offer separate transaction cycle modules. What is
the reason for this?
A) Every organization does not need to implement all of the available transaction cycle modules.
B) Most businesses do not need the revenue cycle module as part of their AIS.
C) The nature of a given transaction cycle is the same irrespective of the type of organization.
D) A properly designed AIS does not use the concept of separate business transaction cycles to
process transactions.
6) Define an accounting information system.
7) Identify the components of an accounting information system.
8) Explain what an AIS is, describe the basic tasks it performs in an organization, and give some
examples of the types of accounting transactions it processes.
9) Why have accounting software packages been designed with separate transaction modules?
10) True or False: An accounting information system requires at least one computer.
1.6 Discuss how an AIS can add value to an organization.
1) The American Institute of Certified Public Accountants (AICPA) has recognized the
importance of AIS and the major impact information technology has on the area of accounting.
To recognize individual CPAs who have met educational and experiential requirements in this
area, the group formally created the designation known as
A) the Certified Information Auditor.
B) the Certified Internal Auditor.
C) the Certified Information Technology Professional.
D) the Certified Data Processing Professional.
2) The AIS must include controls to ensure
A) safety and availability of data.
B) marketing initiatives match corporate goals.
C) information produced from data is accurate.
D) both A and C
3) An AIS provides value by
A) improving products or services through information that increases quality and reduces costs.
B) providing timely and reliable information to decision makers.
C) creating new products.
D) both A and B
4) A good example of how an AIS is used to share knowledge within an organization is
A) the use of a corporate database to help staff identify the relevant experts who can help with a
particular client.
B) the use of tablets to access a network for messaging worldwide.
C) the monitoring of production equipment to watch for defects.
D) the use of point-of-sale data to determine hot-selling items.
5) When the AIS provides information in a timely and accurate manner, it stands as an example
of
A) improved decision making.
B) improving the quality and reducing the costs of products or services.
C) improving efficiency.
D) all of the above
6) Accounting information plays major roles in managerial decision making by
A) identifying situations requiring management action.
B) reducing uncertainty.
C) providing a basis for choosing among alternative actions.
D) all of the above
7) A well-designed AIS can improve the decision making in an organization. Identify the
statement below that describes a situation where an AIS may actually inhibit effective decision
making.
A) An AIS provides to its users an abundance of information without any filtering or condensing
of such information.
B) An AIS identifies situations requiring management action.
C) An AIS reduces uncertainty, and therefore accounting information can provide a basis for
choosing among alternative courses of action.
D) An AIS provides information about the results of previous decisions which provides decision
makers with feedback that can be used in future decision making.
8) Which of the following is not an example of how an AIS adds value to an organization?
A) All employees at a hospital can access and update patient records from any computer terminal
in the hospital.
B) A customer service representative can find a customer’s account data, purchase history,
payment history, and salesperson’s name while on the phone with the customer, to resolve issues
quickly.
C) Suppliers are able to access sales data directly from the point-of-sale system of a retailer and
deliver inventory automatically when needed.
D) Client tax files are encrypted and made available on the CPA firm’s network to any employee
with an access code.
9) What is the CITP designation and why is it important to AIS?
10) Differentiate between an AIS course and other accounting courses.
11) How can an AIS add value to the organization?
12) How can an AIS become part of the firm’s value chain and add value to the business?
13) How can the value of the information produced by an accounting information system be
determined? What would a measurement and verification expert think about quantification and
verification of such information?
1.7 Explain how an AIS and corporate strategy affect each other.
1) A change in the AIS that makes information more easily accessible and widely available
within an organization is most likely to first influence the
A) organizational culture.
B) customer base.
C) external financial statement users.
D) production activity.
2) In Chapter 1, Figure 1-4 shows the factors that influence the design of AIS. The diagram
shows a bi-directional arrow between the organizational culture and the AIS. The reason for this
two-way interchange between organizational culture and AIS is
A) that the AIS should not influence the values of the organizational culture.
B) because the organization’s culture influences the AIS, and likewise the AIS influences the
organization’s culture by controlling the flow of information within the organization.
C) due to the transfer of managers between the two corporate elements.
D) the AIS impacts the organization’s key strategies.
3) Which of the following is a true statement?
A) Business strategy directly influences AIS, but not information technology.
B) Information technology directly influences organizational culture, but not business strategy.
C) Organizational culture directly influences business strategy, but not AIS.
D) AIS directly influences information technology, but not business strategy.
4) True or False: Corporate strategy should affect the way a firm deploys an accounting
information system.
5) Identify the primary reason that it is important for a firm to identify the AIS improvements
likely to yield the greatest return.
A) because business strategy directly influences AIS, but not information technology
B) because most organizations have limited resources
C) because a firm never wants to waste time addressing issues that are not urgent
D) because it is expensive to improve accounting information systems
6) An AIS that makes information more easily accessible and more widely available is likely to
increase pressure for
A) centralization and defined procedures.
B) centralization and autonomy.
C) decentralization and defined procedures.
D) decentralization and autonomy.
7) Identify how firms use predictive analysis.
A) to provide an educated guess regarding what is expected to occur in the near future
B) to engage in data warehousing
C) to engage in a low-cost strategy
D) to design the most effective accounting information system
8) Identify a recent technological advance that provides an opportunity to gain a competitive
advantage.
A) CVVP analysis
B) discounted cash flows
C) predictive analysis
D) economic order quantity (EOQ)
9) True or False: It is important that a firm’s AIS collect and integrate financial and non-
financial information about the organization’s activities if the firm seeks use its AIS to gain a
competitive advantage.
10) True or False: When properly deployed, accounting information systems can provide firms
with a competitive advantage.
1.8 Explain the role an AIS plays in a company’s value chain.
1) The process of creating value for customers is the result of nine activities that form a
A) value chain.
B) capitalist operation.
C) profitable business.
D) information system.
2) The value chain concept is composed of two types of activities known as
A) primary and support.
B) primary and secondary.
C) support and value.
D) technology and support.
3) Which of the following is a primary activity in the value chain?
A) infrastructure
B) technology
C) purchasing
D) marketing and sales
4) Arranging delivery of products to customers constitutes ________ in value chain analysis.
A) shipping
B) inbound logistics
C) outbound logistics
D) delivery
5) ________ are examples of activities that constitute inbound logistics
A) Activities that transform inputs into final products or services
B) Activities that consist of receiving, storing, and distributing the materials used as inputs by
the organization to create goods and/or services it sells
C) Activities that provide post-sale support to customers
D) Activities that help customers to buy the organization’s products or services
6) One activity within the value chain is research and development. This activity can be
identified as a
A) firm infrastructure activity.
B) human resources activity.
C) technology activity.
D) purchasing activity.
7) Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process. Monday is the
newest employee. She collects the coconuts. Tuesday takes calls from unhappy customers.
Wednesday tosses finished coconuts into the sea, sending them to the wholesaler. Thursday
sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts
that are drifting across the bay. Which of the following functions in the value chain is Monday
performing?
A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service
8) Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process. Monday is the
newest employee. She collects the coconuts. Tuesday takes calls from unhappy customers.
Wednesday tosses finished coconuts into the sea, sending them to the wholesaler. Thursday
sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts
that are drifting across the bay. Which of the following functions in the value chain is Friday
performing?
A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service
9) Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process. Monday is the
newest employee. She collects the coconuts. Tuesday takes calls from unhappy customers.
Wednesday tosses finished coconuts into the sea, sending them to the wholesaler. Thursday
sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts
that are drifting across the bay. Which of the following functions in the value chain is
Wednesday performing?
A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service
10) Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process. Monday is the
newest employee. She collects the coconuts. Tuesday takes calls from unhappy customers.
Wednesday tosses finished coconuts into the sea, sending them to the wholesaler. Thursday
sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts
that are drifting across the bay. Which of the following functions in the value chain is Thursday
performing?
A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service
11) Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired
five employees. The most senior is Friday, who manages the carving process. Monday is the
newest employee. She collects the coconuts. Tuesday takes calls from unhappy customers.
Wednesday tosses finished coconuts into the sea, sending them to the wholesaler. Thursday
sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts
that are drifting across the bay. Which of the following functions in the value chain is Tuesday
performing?
A) Inbound logistics
B) Operations
C) Outbound logistics
D) Marketing and sales
E) Service
12) What is the purpose behind the five primary activities in the value chain?
13) How can a well-designed AIS improve the efficiency and effectiveness of a company’s value
chain?
14) Discuss the components of a supply chain.