Copyright 2015 Pearson Education, Inc.

1 Copyright © 2015 Pearson Education, Inc.Accounting Information Systems, 13e (Romney/Steinbart) Chapter 2 Overview of Transaction Processing and Enterprise Resource Planning Systems

2.1 Describe the four parts of the data processing cycle and the major activities in each.

1) Which of the following commonly initiates the data input process?

• a business activity
• automatic batch processing
• an accounting department source document
• a trial balance query

Answer: A

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

2) A typical source document could be

• some type of paper document.
• a computer data entry screen.
• the company's financial statements.
• both A and B

Answer: D

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

3) Which step below is not considered to be part of the data processing cycle?

• data input
• feedback from external sources
• data storage
• data processing

Answer: B

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

4) John Pablo works in the accounting department of a multinational manufacturing company.His job includes updating accounts receivable based on sales orders and remittance advices. His responsibilities are part of the company's

• revenue cycle.
• expenditure cycle.
• financing cycle.
• production cycle.

Answer: A

Objective: Learning Objective 1

Difficulty: Moderate

AACSB: Reflective Thinking

Accounting Information Systems 13th Edition Romney Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2015 Pearson Education, Inc.5) John Pablo works in the accounting department of a multinational manufacturing company.His job includes updating accounts payable based on purchase orders and checks. His responsibilities are part of the company's

• revenue cycle.
• expenditure cycle.
• financing cycle.
• production cycle.

Answer: B

Objective: Learning Objective 1

Difficulty: Moderate

AACSB: Reflective Thinking

6) Many small businesses choose to outsource their payroll activities to firms that specialize in providing payroll services. Dolores Yu operates a payroll processing business in Calabasas, California. When she sends bills out to her clients, her work is part of her firm's

• revenue cycle.
• expenditure cycle.
• financing cycle.
• production cycle.

Answer: A

Objective: Learning Objective 1

Difficulty: Moderate

AACSB: Reflective Thinking

7) A delivery of inventory from a vendor, with whom a credit line is already established, would be initially recorded in which type of accounting record and as part of what transaction cycle?

• purchases journal; expenditure cycle
• general journal; expenditure cycle
• general ledger; expenditure cycle
• cash disbursements journal; production cycle

Answer: A

Objective: Learning Objective 1

Difficulty: Difficult

AACSB: Reflective Thinking

8) Describe the basic cycles and business activities for a typical merchandising company.Answer: Revenue cycle — deliver inventory to customers and collect cash. Expenditure cycle — receive goods and services from vendors and pay cash. Human resources cycle — track hours worked by employees and record withholding data.

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

3 Copyright © 2015 Pearson Education, Inc.9) Identify the four parts of the transaction processing cycle.

• data input, data storage, data processing, information output
• data input, data recall, data processing, information output
• data input, data recall, data transmission, information output
• data input, data recall, data transmission, data storage

Answer: A

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

10) What is the most frequent revenue cycle transaction?

• purchase of inventory
• receipt of cash
• sale to customer
• billing

Answer: C

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

11) True or False: The existence of relevant data guarantees the data are useful.

Answer: FALSE

Objective: Learning Objective 1

Difficulty: Easy

AACSB: Analytic

12) Identify the item below that is not one of the four different types of data processing activities.

• creating
• reading
• using
• deleting

Answer: C

Objective: Learning Objective 1

Difficulty: Moderate

AACSB: Analytic

13) What is the final step in the data processing cycle?

• output
• storage
• processing
• input

Answer: A

Objective: Learning Objective 1

Difficulty: Moderate

AACSB: Analytic

4 Copyright © 2015 Pearson Education, Inc.

2.2 Describe documents and procedures used to collect and process transaction data.

1) The general ledger

• is the initial place to record general expenses.
• is posted in total to the general journal.
• only includes balance sheet accounts.
• summarizes the transactions in journals.

Answer: D

Objective: Learning Objective 2

Difficulty: Moderate

AACSB: Reflective Thinking

2) For a retail business, a delivery of inventory, from a vendor (with whom there is an established credit relationship) would be initially recorded in which type of accounting record as part of which transaction cycle?

• purchases journal; expenditure cycle
• general journal; expenditure cycle
• general ledger; expenditure cycle
• cash disbursements journal; production cycle

Answer: A

Objective: Learning Objective 2

Difficulty: Moderate

AACSB: Reflective Thinking

3) Data must be collected about three facets of each business activity. What are they?

• the business activity, the resources it affects, the people who participate
• the business activity, the transactions it creates, the impact on the financial statements
• the inputs, outputs and processes used
• who is involved, what was sold, how much was paid

Answer: A

Objective: Learning Objective 2

Difficulty: Easy

AACSB: Analytic

4) Issuing a purchase order is part of which transaction cycle?

• the revenue cycle
• the expenditure cycle
• the human resources cycle
• the production cycle

Answer: B

Objective: Learning Objective 2

Difficulty: Moderate

AACSB: Analytic