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 always 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. The starting point for an audit trail of a payroll system might be an employee time card. 8. The starting point for an audit trail of a production department might be the purchase of raw materials. 9. GIGO is an acronym that stands for “great investments are great opportunities.” 10. The term information overload refers to providing too much “information” to management, often resulting in confusion or ignoring it. 11. 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. 12. Computers tend to make audit trails easier to follow because everything is computerized. 13. The acronym ERP stands for “enterprise reporting system.” 14. The authors consider accountants to be “knowledge workers.” 15. AISs are only concerned with financial information. 16. One reason why AISs fail is because they require their users to conform to them, instead of the other way around. 17. One reason why AISs fail is because they do not adequately perform the processing tasks required of them. TB 1.1
18. Accounting systems are useful for performing accounting tasks, but cannot be used for such security purposes as countering terrorism. 19. An example of a corporate scandal mentioned in this chapter was the Enron case. 20. The Sarbanes-Oxley Act includes a provision that prohibits corporations from making personal loans to executives. 21. Predictive analytics use large databases to help organizations improve performance. 22. The Sarbanes-Oxley Act prohibits companies from using the same auditing firms for performing both auditing and management consulting services. 23. The term “wi-fi” stands for “wild financing”—an act expressly forbidden by the Sarbanes-Oxley Act of 2002. 24. A major output of financial accounting is the preparation of financial statements such as an income statement. 25. The series of steps leading from data recorded in transaction records to the information reported on financial statements is called the accounting cycle. 26.
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