Quiz

1. Which level of management is responsible for controlling day-to-day operations?

a. top management
b. middle management
c. operations management
d. executive management
ANSWER: c

2. Which of the following is not a business resource?

a. raw material
b. labor
c. information
d. all are business resources
ANSWER: d

3. An example of a nonfinancial transaction is

a. sale of products
b. cash disbursement
c. log of customer calls
d. purchase of inventory
ANSWER: c

4. 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
ANSWER: a

5. 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
ANSWER: b

6. The major difference between the financial reporting system (FRS) and the management
reporting system (MRS) is the
a. FRS provides information to internal and external users; the MRS provides informationto
internal users
b. FRS provides discretionary information; the MRS provides nondiscretionary information
c. FRS reports are prepared using information provided by the general ledger system; the
MRS provides information to the general ledger system
 d. FRS reports are prepared in flexible, nonstandard formats; the MRS reports areprepared
in standardized, formal formats
ANSWER: a

7. When designing the data collection activity, which type of data should be avoided?
a. data that is relevant
b. data that is efficient
c. data that is redundant
d. data that is accurate
ANSWER: c

8. What does the REA model stand for in accounting?

a. Resources, Events, and Actions
b. Resources, Events, and Agents
c. Records, Entries, and Assets
d. Reports, Expenditures, and Allocations

Answer: b) Resources, Events, and Agents

9. What is the primary purpose of the REA model?

a. To create financial reports
b. To provide an accounting framework for modeling an organization’s resources, events,
and agents
c. To track employee performance
d. To manage customer relationships

Answer: b) To provide an accounting framework for modeling an organization’s resources,

events, and agents

10. In the REA model, what do economic resources represent?

a. Transactions between customers and suppliers
b. Assets such as cash, inventory, and equipment
c. Financial statements
d. Business reports

Answer: b) Assets such as cash, inventory, and equipment

11. Which of the following best describes economic events in the REA model?
a. Individuals and departments that participate in transactions
b. Changes that affect an organization’s resources
c. A set of financial statements for auditing purposes
 d. External factors that influence market trends

Answer: b) Changes that affect an organization’s resources

12. Who are economic agents in the REA model?

a. Machines used in production
b. Individuals and departments that participate in an economic event
c. Financial documents such as invoices
d. Third-party organizations that audit financial records

Answer: b) Individuals and departments that participate in an economic event

13. What is the significance of interrelationships in the REA model?

a. They connect financial reports across different years
b. They define the connections between resources, events, and agents
c. They determine how quickly a company can process payments
d. They classify data based on customer preferences

Answer: b) They define the connections between resources, events, and agents

14. What tool is commonly used to model the relationships in the REA model?
a. General Ledger Reports
b. Flowcharts
c. Entity-Relationship Diagrams (ERD)
d. Balance Sheets

Answer: c) Entity-Relationship Diagrams (ERD)

15. Which system is not part of the expenditure cycle?

a. cash disbursements
b. Payroll
c. production planning/control
d. purchases/accounts payable

ANS: C

16. Which system produces information used for inventory valuation, budgeting, cost control,
performance reporting, and make-buy decisions?
a. sales order processing
b. purchases/accounts payable
c. cash disbursements
d. cost accounting

ANS: D
17. Which symbol represents a manual operation?
a. b.

c. d.

18. What is a key difference between batch processing and real-time processing in terms of
information time frame?

a. Batch processing occurs instantly, while real-time processing is delayed

b. Batch processing has a lag between the event and recording, while real-time processing
happens immediately
c. Both batch and real-time processing occur at the same time
d. Real-time processing delays the recording of events

Answer: b) Batch processing has a lag between the event and recording, while real-time
processing happens immediately

19. Which of the following statements about batch processing is true?

a. Processing takes place immediately as an event occurs

b. More resources are required compared to real-time processing
c. It requires fewer resources such as hardware, programming, and training
d. All records are processed immediately

Answer: c) It requires fewer resources such as hardware, programming, and training

20. Why does batch processing require fewer resources than real-time processing?

a. It processes data continuously as events happen

b. It only processes certain records after the event occurs
c. It requires constant monitoring
d. It updates all records immediately

Answer: b) It only processes certain records after the event occurs

21. What is a defining characteristic of real-time processing?

a. Processing occurs when the economic event takes place

 b. It is always slower than batch processing
c. It requires fewer resources than batch processing
d. It is mainly used for archiving old records

Answer: a) Processing occurs when the economic event takes place

22. How does operational efficiency differ between batch processing and real-time processing?

a. Batch processing avoids delays by processing all records immediately

b. Real-time processing avoids delays by processing all records immediately
c. Both methods process data in real-time
d. Batch processing requires more resources to be efficient

Answer: b) Real-time processing avoids delays by processing all records immediately

23. Which processing method is better for handling large amounts of data at once with fewer
resources?

a. Batch processing
b. Real-time processing
c. Neither; both use the same resources
d. It depends on the size of the organization

Answer: a) Batch processing

24. Which of the following is NOT listed as an ethical issue under “Equity”?

a) Executive Salaries
b) Comparable Worth
c) Product Pricing
d) Workplace Safety

Answer: d) Workplace Safety

25. Which of the following is an example of an ethical issue related to “Honesty”?

a) Employee Health Screening

b) Misleading Advertising
c) Workplace Safety
d) Whistle-Blowing

Answer: b) Misleading Advertising

26. What concerns the social impact of computer technology?

 a. Computer Ethics
b. Business Ethics
c. Fraud
d. Corruption

Answer: a. Computer Ethics

27. What does “False Representation” mean in the context of fraud?

a) A factual and truthful statement

b) A false statement or disclosure
c) A legally binding contract
d) A subjective opinion

Answer: b) A false statement or disclosure

28. Fraud requires that the misrepresentation must have caused what?

a) A legal dispute
b) Injury or loss
c) An emotional response
d) A business disagreement
Answer: b) Injury or loss

29. Who primarily commits employee fraud?

a) Shareholders
b) Non-management personnel
c) Government regulators
d) External auditors
Answer: b) Non-management personnel

30. Employee fraud usually involves which of the following?

a) Manipulation of financial statements

b) Taking cash or assets for personal gain
c) Shifting company liabilities to future periods
d) Writing fraudulent investment reports
Answer: b) Taking cash or assets for personal gain
31. Management fraud is usually perpetrated by whom?

a) External consultants
b) Lower-level employees
c) Top management personnel
d) Internal auditors
Answer: c) Top management personnel

32. Which of the following is a common characteristic of management fraud?

a) Using financial statements to create a misleading image of financial health

b) Stealing petty cash from office drawers
c) Making unauthorized personal calls using company phones
d) Manipulating time cards for extra pay
Answer: a) Using financial statements to create a misleading image of financial health

33. What is the primary goal of fraudulent financial statements?

a) To provide accurate financial information
b) To make the company appear more financially stable than it actually is
c) To lower the company’s tax obligations
d) To increase production efficiency
Answer: b) To make the company appear more financially stable than it actually is

34. Fraudulent financial statements are most commonly associated with what type of fraud?
a) Employee fraud
b) Management fraud
c) Consumer fraud
d) Cyber fraud
Answer: b) Management fraud

35. Which of the following is NOT an example of corruption?

a) Bribery
b) Illegal gratuities
c) Employee performance incentives
d) Economic extortion
Answer: c) Employee performance incentives

36. What is the purpose of the Foreign Corrupt Practices Act of 1977?
a) To regulate tax policies for international businesses
b) To indicate and address corruption in the business world
c) To provide incentives for whistleblowers
 d) To promote business expansion overseas
Answer: b) To indicate and address corruption in the business world

37. Which of the following is an example of program fraud?

a) Using company internet for personal browsing
b) Altering programs to allow illegal access to data files
c) Using a company-issued laptop at home
d) Printing personal documents at work
Answer: b) Altering programs to allow illegal access to data files

38. Destroying programs with a virus falls under which type of fraud?
a) Database management fraud
b) Program fraud
c) Operational fraud
d) Accounting fraud
Answer: b) Program fraud

39. Operations fraud involves:

a) Misuse of company computer resources for personal business
b) Hacking into another company’s database
c) Altering financial statements to mislead investors
d) Selling trade secrets to competitors
Answer: a) Misuse of company computer resources for personal business

40. Which document is NOT prepared by the sales department?

a. packing slip
b. shipping notice
c. bill of lading
d. stock release

Answer: c. bill of lading

41. Which document triggers the update of the inventory subsidiary ledger?
a. bill of lading
b. stock release
c. sales order
d. shipping notice

Answer: b. stock release

42. Which function should the billing department NOT perform?

a. record the sales in the sales journal
b. send the ledger copy of the sales order to accounts receivable
 c. send the stock release document and the shipping notice to the billing department as
proof of shipment
d. send the stock release document to inventory control

Answer: c. send the stock release document and the shipping notice to the billing
department as proof of shipment

43. Which type of control is considered a compensating control?

a. segregation of duties
b. access control
c. supervision
d. accounting records

Answer: c. supervision

44. Which function or department below records the decrease in inventory due to a sale?
a. warehouse
b. sales department
c. billing department
d. inventory control

Answer: d. inventory control

45. Where are customer checks and remittance advices received?

a) Accounts Receivable Department
b) Mail Room
c) General Ledger Department
d) Controller’s Office
Answer: b) Mail Room

46. What does a mail room clerk do with the received checks?
a) Deposits them directly in the bank
b) Sends them to the Controller for verification
c) Prepares a cash prelist and sends the checks to Cash Receipts
d) Records them in the general ledger
Answer: c) Prepares a cash prelist and sends the checks to Cash Receipts

47. Which of the following is NOT a function of the Cash Receipts department?
a) Verifying the accuracy and completeness of checks
b) Updating the cash receipts journal
c) Preparing a journal voucher for G/L
d) Posting entries to the accounts receivable subsidiary ledger
Answer: d) Posting entries to the accounts receivable subsidiary ledger
48. Which department posts from the remittance advices to the accounts receivable subsidiary
ledger?
a) Cash Receipts
b) A/R (Accounts Receivable)
c) General Ledger (G/L)
d) Controller’s Office
Answer: b) A/R (Accounts Receivable)

49. What is the role of the G/L department in the manual cash receipts process?
a) Reconciling the bank accounts
b) Preparing the deposit slip
c) Reconciling the journal voucher from Cash Receipts with A/R summaries
d) Receiving the cash directly from customers
Answer: c) Reconciling the journal voucher from Cash Receipts with A/R summaries

50. Who is responsible for reconciling the bank accounts?

a) Cash Receipts department
b) Accounts Receivable department
c) General Ledger department
d) Controller
Answer: d) Controller