ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT

TB 1.1

Chapter 1

ACCOUNTING INFORMATION SYSTEMS AND THE ACCOUNTANT

True-False Questions 1.The acronym AIS stands for “Accounting Information Standards.” 2.Accounting information systems must be computerized to be effective.

3.It is best to view an AIS as an accounting system that must be computerized.

4.AISs often create information that is useful to non-accountants.

5.In order to be useful, raw accounting data must be processed by a computer.

6.The path that data follow in an AIS, for example from manual source document to completed output report, is called an audit trail.

7.A company's audit trail is normally easier to follow under a manual data processing system compared to a computerized information processing system.

8.The starting point for an audit trail of a weekly payroll system might be an employee time card.

9.The starting point for an audit trail of a production department might be the purchase order for raw materials.

10.The acronym ERP stands for “electronic reporting plan.” 11.The term information overload refers to providing too much data to management, often resulting in managers ignoring it.

12.An advantage of computerized AISs is that they do not need to be programmed to catch simple input errors such as entering “4.0” instead of “40.0” for hours worked in a payroll application.

13.Computers tend to make audit trails easier to follow because everything is computerized.

14.The acronym ERP stands for “enterprise reporting system.” 15.The authors consider accountants to be “knowledge workers.” 16.Predictive analytics use large data warehouses to help organizations improve performance by predicting future outcomes.Core Concepts of Accounting Information Systems, 14e Mark Simkin, James Worrell, Arline Savage (Test Bank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of PDF 1 / 4

Core Concepts of Accounting Information Systems, 14 th Edition, by Simkin, Worrell, and Savage

TB 1.2

17.As used in this chapter, the acronym SAR stands for “suspicious accounting reporting.” 18.Sections of the Patriot Act mandate suspicious activity reporting.

19.One of the motivations for SAR is to identify money laundering activities.

20.The term “Patriot” in the “Patriot Act of 2001 is an acronym for “providing appropriate tools required to intercept and obstruct terrorism.” 21.Accounting rules do not allow for any flexibility in financial reporting by management.

22.Accounting systems are useful for performing accounting tasks, but cannot be used for such security purposes as countering terrorism.

23.An example of a corporate scandal that was mentioned in this chapter is the Enron case.

24.The Sarbanes-Oxley Act allows CPA firms to help clients acquire, install and use information systems and to also act as those clients’ external auditor.

25.The Sarbanes-Oxley Act prohibits companies from using the same auditing firms for performing both auditing and management consulting services.

26.Cloud computing is a way of using business applications over the Internet.

27.A consulting service provided by CPA firms is risk assessment.

28.A major output of financial accounting is the preparation of financial statements such as an income statement.

29.The series of steps leading from data recorded in transaction records to the information reported on financial statements is called the accounting cycle.

30.AISs are only concerned with financial information.

31.One major difference between financial accounting and managerial accounting is that financial accountants prepare financial statements for external investors while managerial accountants prepare financial statements for internal managers.

32.In a responsibility accounting system, managers trace unfavorable performance to the department or persons causing the inefficiencies.

33.One major difference between financial accounting and managerial accounting is that financial accountants use dashboards while managerial accountants do not. 2 / 4

Core Concepts of Accounting Information Systems, 14 th Edition, by Simkin, Worrell, and Savage

TB 1.3

• An example of a financial report that would be prepared by a managerial accountant

(instead of a financial accountant) is a budget report.

• XBRL is a business reporting language that is used to define interactive financial data.

• “Cost accounting” is a subset of managerial accounting.

• An ABC inventory system refers to an “activity-based costing” system.

• As used in chapter 1, the term “dashboard” refers to a quick and easy plan to install a

computerized accounting system in an organization.

• As used in Chapter 1, a dashboard is an up-to-the-minute graphic depiction of key

performance measures.

• The purpose of the assurance services of an accounting firm is to give a company’s

managers moral support when they are audited by the federal or state government.

• “CPA Trust Services” performed by a CPA provides assurance that a company engaged

in electronic commerce has an information system that is secure.

• An example of a value-added reseller (VAR) is a dealer who sells software but does not

help with the installation, training and customization of that software for the customer.

• Some possible career opportunities for AIS majors or minors include consulting

positions, computerized auditing, or computer security positions.

• Accountants are usually classified as “line workers” within business organizations.

• Today's AIS is an enterprise-wide information system that focuses on interdepartmental

business processes.

• A good audit trail within the financial accounting system should allow a manager or

auditor to trace any source document back from a report to the original data entry.

• Managerial accounting principally provides decision-making information to a company's

internal managers.

• As a result of computerized information processing systems in many organizations today,

the need for accountants in these organizations has significantly declined.

• Activity-based costing systems focus on allocating overhead on the basis of direct labor

hours used.

• / 4

Core Concepts of Accounting Information Systems, 14 th Edition, by Simkin, Worrell, and Savage

TB 1.4

• Because accountants are not normally computer programmers working within the

information processing subsystem, it is unnecessary for them to understand the capabilities and limitations of computers.

• Within the traditional AIS, a sales order would not be considered an accounting

transaction.

• Students majoring in AIS are unlikely to assume jobs in traditional accounting positions

because they know too much.

• There are limited career opportunities available for students who study both accounting

and information systems.

• One possible career for AIS majors is in the traditional area of financial or managerial

accounting.

• The CISA is an acronym for a professional accounting certification.

Multiple-Choice Questions

56. The “S” in the acronym “AIS” stands for:

a) Standard

b) System

c) Symbol

• none of these

57. The letter “P” in the acronym “ERP” stands for:

a) Production

b) Planning

c) Project

• none of these

• Which of the following is true about the terms “data” and “information” within the

context of Chapter 1?

a) These terms are exactly the same

b) These terms are exact opposites

c) Processed “data” becomes “information”

• none of these

• Which of the following captures the same idea as the term “Garbage In Garbage Out?”

a) Too much information is the same as garbage

b) The quality of computer output is determined by the quality of the input

c) Great investments lead to great returns

d) Too many cooks spoil the broth

• / 4