Hall 5e Reviewer Chp1

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Chapter 1—The Information System: An Accountant’s Perspective

TRUE/FALSE

1.Information is a business resource.

ANS:T

2.An information system is an example of a natural system.

ANS:F

3.Transaction processing systems convert non-financial transactions into financial transactions.

ANS:F

4.Information lacking reliability may still have value.

ANS:F

5.A balance sheet prepared in conformity with GAAP is an example of discretionary reporting.

ANS:F

6.The Management Reporting System provides the internal financial information needed to manage a business.

ANS:T

7.Most of the inputs to the General Ledger System come from the Financial Reporting System.

ANS:F

8.When preparing discretionary reports, organizations can choose what information to report and how to present it.

ANS:T

9.Retrieval is the task of permanently removing obsolete or redundant records from the database.

ANS:F

10.Systems development represents 80 to 90 percent of the total cost of a computer system.

ANS:F

11.The database administrator is responsible for the security and integrity of the database.

ANS:T

12.A backbone system is completely finished, tested, and ready for implementation.

ANS:F

13.The internal auditor represents the interests of third-party outsiders.

ANS:F

14.Information Technology (IT) audits can be performed by both internal and external auditors.

ANS:T

15.The single largest user of computer services is the personnel function.

ANS:F

16.Increased control is one of the key advantages of distributed data processing.

ANS:F

17.The flat-file approach is most often associated with so-called legacy systems.

ANS:T

18.In a flat-file system, files are easily shared by users.

ANS:F

19.Legacy systems were eliminated in the effort to make systems Y2K compliant.

ANS:F

20.One of the greatest disadvantages of database systems is that all data is always available to all users.

ANS:F

21.Under SOX legislation auditors are no longer allowed to provide consulting services to audit clients.

ANS:T

22.Under SOX legislation auditors are no loger allowed to provide consulting services to their clients.

ANS:F
They cannot provide such services to audit clients but may still provide them to non-audit clients

MULTIPLE CHOICE

1.Which of the following is not a business resource?
a.
raw material
b.
labor
c.
information
d.
all are business resources

ANS:D

2.Which level of management is responsible for short-term planning and coordination of activities necessary to accomplish organizational objectives? a.
operations management
b.
middle management
c.
top management
d.
line management

ANS:B

3.Which level of management is responsible for controlling day-to-day operations? a.
top management
b.
middle management
c.
operations management
d.
executive management

ANS:C

4.The ability to achieve the goals of a system depends upon the effective functioning and harmonious interaction between its subsystems. This is called a.
system decomposition
b.
system redundancy
c.
backup system
d.
subsystem interdependency

ANS:D

5.The value of information for users is determined by all of the following but a.
reliability
b.
relevance
c.
convenience
d.
completeness

ANS:C

6.An example of a nonfinancial transaction is
a.
sale of products
b.
cash disbursement
c.
log of customer calls
d.
purchase of inventory

ANS:C

7.An example of a financial transaction is
a.
the purchase of computer
b.
a supplier’s price list
c.
a delivery schedule
d.
an employee benefit brochure

ANS:A

8.Which subsystem is not part of the Accounting Information System? a.
Transaction Processing System
b.
Expert System
c.
General Ledger/Financial Reporting System
d.
Management Reporting System

ANS:B

9.The major...
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