Chapter 1—Introduction to Accounting Information Systems Key
1. The three themes of the text are operating systems, e-business, and internal control.
2. In an assurance service the accountant will provide the original information used for decision making.
3. Information systems reliability and electronic commerce have been identified by the AICPA as potential
assurance services.
4. E-business is the application of electronic networks to undertake business processes among the functional
areas in an organization.
5. The role of the accountant has evolved to include non-financial information and information technology.
6. Enterprise systems integrate an organization’s business processes and information from all of an
organization’s functional areas.
7. An information system consists of an integrated set of computer-based and manual components established to
provide information to users.
8. Internal control is a process that provides complete assurance that the organization is meeting its objectives,
such as efficiency and effectiveness of operations and reliable reporting.
9. The Sarbanes-Oxley Act of 2002 has dramatically changed the daily work of financial accountants and
auditors.
10. According to the Sarbanes-Oxley Act of 2002, management must identify, document, and evaluate
significant internal controls.
11. According to the Sarbanes-Oxley Act of 2002 and PCAOB Auditing Standard No. 5, management must
audit and report on auditors’ assertions about the organizations’ systems of internal controls.
12. According to the Sarbanes-Oxley Act’s Section 409, material changes in the organization’s financial
condition must be disclosed to the public on a rapid and current basis.
13. The Sarbanes-Oxley Act’s Section 404 creates changes in both how companies document and evaluate
internal control and how auditors audit and report on internal control.
14. Sarbanes-Oxley Section 404 compliance is a major line of business for the biggest accounting firms.
15. The Sarbanes Oxley Act of 2002 applies to publicly traded companies and not-for-profit entities.
16. Historically the purpose of an accounting information system is to collect, process, and report financial
aspects of business events.
17. The MIS is a subsystem of the AIS.
18. Sales/marketing information system is traditionally part of the AIS.
19. Billing/accounts receivable is traditionally part of the AIS.
20. Production and personnel are part of the operations process.
21. The management process includes marketing and sales.
22. Information that is capable of making a difference in a decision-making situation, by reducing uncertainty or
increasing knowledge for that particular decision, has the quality of relevance.
23. Information about a customer’s credit history that is received after the decision to grant additional credit
lacks completeness.
24. The consistency principle is violated when a firm uses straight-line depreciation one year and changes to
declining balance depreciation the next year.
25. Accuracy is the correspondence or agreement between the information and the actual events or objects that
the information represents.
26. To be reliable information must be relevant.
27. The most important information for tactical management involves information about the organization’s
environment.
28. Deciding how much credit to grant to a customer is a structured decision.
29. Strategic management requires more detailed information than operations management.
30. The three steps in decision making take place in the sequence of (1) intelligence (2) design (3) choice.
31. Strategic managers use more information from outside the organization than do operations managers.
32. Operations management requires information that is more accurate and timely than strategic management.
33. What controls will be necessary is a question that an accountant answers in the design of the AIS.
34. As a designer of an AIS the accountant will test a new system’s controls.
35. As a user of an AIS an accountant must know how systems are developed.
36. The three themes of the text book include all of the following except:
37. Efficiency and effectiveness of operations are goals of:
38. A set of interdependent elements that together accomplish specific objectives is a
39. A system can be further divided into
40. A system that consists of an integrated set of computer-based and manual components established to collect,
store, and manage data and to provide output information to users is a(n)
A. output
41. An information system:
A. is composed of only the computer-based information resources of an organization
42. The AICPA has identified all but which of the following as assurance services?
A. risk assessment
43. The sequence of components in the functional model of an information system is
44. Historically, the relationship between an information system and an accounting information system has
been:
45. The text takes the following view of the relationship between an IS and an AIS:
46. A man-made system that generally consists of an integrated set of computer-based components and manual
components established to collect, store, and manage data and to provide output information to users.
47. The ____ suggests that technology improves information available for decision making
48. A man-made system consisting of people, equipment, organization, policies and procedures with the
objective of accomplishing the work of the organization.
49. A man-made system consisting of people, authority, organization, policies and procedures whose objective
is to accomplish the work of planning and controlling the operations of the organization.
50. The three logical components of a business process include all of the following except:
A. management process
51. Which of the following statements is true?
A. The information process facilitates operations by maintaining data such as inventory and customer data.
52. Which of the following statements is false?
A. Management designs the operations and information processes and establishes these processes with people,
53. ____ is (are) data presented in a form that is useful to decision makers.
A. activities
54. ____ are facts and figures in raw form.
55. All of the following are components of relevance except:
56. All of the following are components of reliability except:
57. The Sarbanes-Oxley Act of 2002 dramatically changed the daily work of financial accountants and auditors
because it
A. expanded the scope of the audit beyond financial information
58. Internal control is a process designed to provide absolute assurance regarding achieving objectives in which
of the following?
A. efficiency and effectiveness of operations
59. ____ improves the decision maker’s capacity to predict, confirm, or correct earlier expectations
A. understandability
60. The information quality that enables users to identify similarities and differences in two pieces of
information is
A. understandability
61. The correspondence or agreement between the information and the actual events or objects that the
information represents is known as
62. The degree to which information includes data about every relevant object or event necessary to make a
decision is
63. The ability of more than one individual to come to the same measurement is known as
64. A primary reason that the FASB requires that GAAP be consistently applied from one period to the next is
A. accuracy
65. If information arrives too late to impact a decision then there is a problem with
66. Which of the following is NOT one of the three steps in decision making as described in the text
67. Regarding management problem structure and information requirements, which of the following represents
the vertical information flows from lowest to highest?
A. strategic management, tactical management, operations management, operations and business event
processing
68. Which of the following statements is true?
A. With a more structured decision, there is a need for less accurate information.
69. Which of the following is an unstructured decision?
A. how much inventory to reorder
70. At which level of the organization are decisions most unstructured?
A. operations and business event processing level
71. ____ requires information to assess the environment and to project future events and conditions.
72. ____ requires information that focuses on the day to day management of the business.
73. The central repository for all the data related to the enterprise’s business activities and resources.
74. E-business does not include
75. Enterprise systems
76. Which of the following statements is false?
77. Generally, which of the following is NOT one of the three roles an accountant typically fills in relation to
the AIS?
A. designer
78. Which of the following questions might the accountant answer in the design of the AIS?
A. what will be recorded
79. Which of the following is an element of the operations process?
80. Which of the following is one of the three most prominent management activities?
A. production
81. Accounting is an activity of the
82. Decision-making is an activity of the
83. ______________________________, ______________________________, and
______________________________ are the three themes of the textbook.
84. The ______________________________ Act of 2002 changed the daily work of financial accountants,
auditors, and others.
85. A(n) ______________________________ is a set of independent elements that together accomplish
specific objectives.
86. The component parts of any system are known as ______________________________.
87. Software packages that can be used for the core systems necessary to support enterprise systems are called
______________________________.
88. ______________________________ is the application of electronic networks (including the Internet) to
undertake business processes between individuals and organizations.
89. ______________________________ is a process¾effected by an entity’s board of directors, management,
and other personnel¾designed to provide reasonable assurance regarding achieving objectives in the following
categories: efficiency and effectiveness of operations, reliability of reporting, and compliance with applicable
laws and regulations.
90. The ______________________________ units of the Big Four public accounting firms have accounted for
a significant percentage of the firm’s business and, prior to the Sarbanes-Oxley Act of 2002, were growing
faster than the accounting, auditing, and tax portions of their businesses.
91. To provide non-audit ______________________________ services the accountant will be required to have
core competencies that include “interpretation of converging information” (able to interpret and provide a
broader context using financial and nonfinancial information) and ”technology adept” (able to use and leverage
technology in ways that add value to clients, customers, and employers).
92. Three of the five proposed core services of the ______________________________ are assurance and
information integrity, management consulting and performance measurement, and technology services.
93. Historically, the accountant has performed a(n) ______________________________ function to determine
the reliability of financial information presented in printed financial statements.
94. A(n) ______________________________ system generally consists of both computerized and manual
components that operate to collect, store, and manage data and to provide output information to users.
95. The ______________________________ is a man-made system consisting of the people, equipment,
organization, policies, and procedures whose objective is to accomplish the work of the organization.
96. To present the results of their endeavors effectively, accountants must possess strong
______________________________.
97. ______________________________ decisions are those for which all three decision phases (intelligence,
design, and choice) are relatively routine or repetitive.
98. A(n) ______________________________ is designed to collect, process, and report information related to
financial transactions.
99. Input, processing, ______________________________, and users are included in a functional model of an
information system.
100. The highest level of management activity and the one with the broadest scope is
______________________________ management.
101. In the management hierarchy, the level that lies between strategic management and operations
management is called ______________________________ management.
102. Facts or figures in raw form are referred to as ______________________________.
103. The quality of information ______________________________ concerns the provision of information
through the optimal (most productive and economical) use of resources.
104. The quality of information ______________________________ deals with information being relevant and
pertinent to the business process as well as being delivered in a timely, correct, consistent, and usable manner.
105. Information that is capable of making a difference in a decision of a user is said to possess the quality of
______________________________.
106. Information that is available before it loses its capacity to influence a user’s decision possesses the quality
of ______________________________.
107. Information that improves a decision makers ability to predict, confirm, or correct earlier expectations has
the quality known as ______________________________.
108. The quality of information when there is a high degree of consensus about the information among
independent measurers using the same measurement methods is referred to as
______________________________.
109. Information that is not biased is said to possess ______________________________.
110. The quality of information that enables users to identify similarities and differences in two pieces of
information is referred to as ______________________________.
111. GAAP is applied ______________________________ when we can compare financial statements and
related information from one period to the next.
112. Section ______________________________ of the Sarbanes-Oxley Act of 2002 requires auditors to
report on about the effectiveness of the organizations’ systems of internal control.
113. Section ______________________________ of the Sarbanes-Oxley Act of 2002 requires management to
identify, document and evaluate significant internal controls.
114. Section ______________________________ of the Sarbanes-Oxley Act of 2002 requires disclosure to the
public on a rapid and current basis of material changes in an organization’s financial condition.
115. The ______________________________ is a man-made system consisting of the people, authority,
organization, policies, and procedures whose objective is to plan and control the operations of the organization
116. ______________________________ is data presented in a form that is useful in a decision-making
activity.
117. Information about actual authorized events and objects has ______________________________.
118. ______________________________ is the correspondence or agreement between the information and the
actual events or objects that the information represents.
119. ______________________________ is the degree to which information includes data about every relevant
object or event necessary to make a decision and includes that information only once.
120. Describe the activities performed and information used by each of the following levels in the management
structure:
Strategic management
Tactical management
Operations management
Suggested answer:
121. Describe the three roles that an accountant can play in the AIS?
122. Discuss five of the ten items that comprise the components of the study of AIS in this text.