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Chapter 1: Systems fundamentals – Introduction
Multiple-choice questions
1
...

*b
...

d
...

computer systems have emerged to handle the classification and recording
tasks traditionally associated with the accounting function
...

knowledge workers have increasingly replaced accountants in the performance
of recording and classification tasks
...
1 – critically evaluate accounting practices, reflecting on how
accounting information systems enrich and extend the role of the accountant
...


As computer systems have been developed to perform the recording and classification
tasks associated with business activities, the nature of accounting and the work of the
accountant have also been pushed in a new direction
...

b
...

d
...

ensure that businesses invest in new software
...

outsource accounting work to bookkeepers
...
1 – critically evaluate accounting practices, reflecting on how
accounting information systems enrich and extend the role of the accountant
...


The ICAA requires that its members should bring their analytic expertise to several
fields
...

b
...

*d
...

Market analysis and compliance
...

Human resource management
...
1 – critically evaluate accounting practices, reflecting on how
accounting information systems enrich and extend the role of the accountant
...


What does ERP stand for?

Chapter 1: Systems fundamentals - Introduction

*a
...

c
...


Enterprise Resource Planning
...

Electronic Resource Planning
...


Correct answer: a
Learning objective 1
...

5
...

b
...

*d
...

Accountants are increasingly exposed to and working with technology and
information systems
...

Accountants need to lead and oversee the design of an accounting information
system
...
1 – critically evaluate accounting practices, reflecting on how
accounting information systems enrich and extend the role of the accountant
...


Information is:
a
...

c
...


the same as data
...

less useful than data
...


Correct answer: b
Learning objective 1
...


1
...


What is information overload?
a
...

c
...


The situation where a computer has more information than is needed or is able
to be processed in a meaningful way when a computer program is executed
...

The situation where a computer has more information than is needed or is able
to be processed when data storage is taking place
...


Correct answer: b
Learning objective 1
...

8
...

b
...

*d
...

information is less useful than data
...

information is data that has been processed and converted

Correct answer: d
Learning objective 1
...

9
...

b
...

*d
...

process
...

feedback
...
3 – critique and synthesise system concepts, giving examples
...

A system can be defined as:

1
...

b
...

*d
...

any device used to capture data including manual keying and scanning
...

something that takes inputs, applies a set of rules or processes to the inputs
and generates outputs
...
3 – critique and synthesise system concepts, giving examples
...


Inputs can include:
a
...

c
...


receipts and invoices that are given to customers
...

any process that an accountant is involved in
...


Correct answer: b
Learning objective 1
...

12
...
Which of the following is an example of a factor in the
external environment that would impact on the design of this system:
a
...

c
...


the specification details gained from users
...

the defence force requirement regarding e-commerce
...


Correct answer: d
Learning objective 1
...

13
...

*b
...

d
...

on bank cheques
...

by many organisations to expedite the processing of accounts payable
invoices
...
3 – critique and synthesise system concepts, giving examples
...
3

14
...

*b
...

d
...

information systems gain an increased role as the emphasis shifted from
accounting to information systems
...

both accounting and information systems become part of a wider
organisational IT function
...
4 – explain ‘accounting information systems’ and discuss their
evolution
...


“Charlie & Dave’s Computer Store” is considering the best way to enter data about
new customers that sign up as part of a new marketing campaign
...
The best
method for capturing this data would be:
a
...

*c
...


scanning through barcode technology
...

manual keying
...


Correct answer: c
Learning objective 1
...

16
...

b
...

*d
...

the application of technology to the capturing, storing, sorting and reporting of
information
...

the application of technology to the capturing, verifying, storing, sorting and
reporting of financial data relating to an organisation’s activities
...
4 – explain ‘accounting information systems’ and discuss their
evolution
...


Which of the following is unlikely to be the accounting’s role to an organisation?

1
...

b
...

*d
...

Provide a means for business data storage and processing
...

Exercise strategic decision-making according to accounting information
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


An accounting information system is unlikely to help a firm to:
a
...

c
...


determine whether to approve a credit sale
...

determine the provision for bad debts
...


Correct answer: d
Learning objective 1
...

19
...
An accounting clerk
enters these data into an accounting program hosted in a computer
...

In this scenario, the accounting information system consists of:
a
...

c
...


the accounting program
...

source document, the accounting program, and the computer
...


Correct answer: d
Learning objective 1
...

20
...

b
...

d
...

the screen for selecting what report to produce
...

the screen for entering file saving locations
...
3 – critique and synthesise system concepts, giving examples
...
5

21
...

b
...

*d
...

is the method to indicate that a problem exists
...

is the method for ensuring that the system is running as normal and that there
are no problems or exceptional circumstances
...
3 – critique and synthesise system concepts, giving examples
...


The role of the accountant has changed in recent times because:
a
...

c
...


professional bodies have sought to redefine and reposition the accounting
function
...

the accounting cycle is too complex and involved to be performed solely by
the accountant
...


Correct answer: b
Learning objective 1
...

23
...

b
...

*d
...

A working professional in a domain extended beyond accounting is more
likely to be involved in system development than their counterparts in the
accounting domain
...

System development will be part of the career of a working professional in the
accounting domain
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Data Mining is:

1
...

b
...

*d
...

declining in popularity with companies due to the emergence of newer
technologies
...

a technology that analyses large pools of data and identifies patterns in them
that can then be used by organisations for decision making
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Which of the following factors will impact on the way an auditor goes about the audit
of an information system?
(i) Legislative requirements
...

(iii) Prescription of the various auditing standards
...

a
...

c
...


(i) (iii)
(i) (ii) (iii)
(i) (ii) (iv)
(i) (ii) (iii) (iv)

Correct answer: d
Learning objective 1
...

26
...

b
...

d
...

Electronic accounting information systems eliminate the need for ethical
behaviour
...

Ethical issues and legal issues are the same
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...
7

27
...

b
...

*d
...

Business processes represent the series of discrete activities that deliver
something of value to both internal and external customers
...

Business processes represent the series of interlocking activities that deliver
something of value to both internal and external customers
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Relational database approach:
a
...

c
...


looks for relationships between different business processes of logically
connecting the different pieces of data
...

looks for relationships between different transactions as a means of logically
connecting the different pieces of data
...


Correct answer: b
Learning objective 1
...

29
...

b
...

*d
...

ensures all the higher-level operational aspects are also included, as
normalisation starts with the tables, forms and data of the organisation
...

minimises potential anomalies that can emerge in a data management system
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


An ER diagram shows:

1
...

b
...

d
...

the physical design of the database from a top-down perspective
...

the physical design of the database from a bottom-up perspective
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


When it comes to capturing the underlying design and structure of a database, the
term “ER diagram” refers to:
a
...

c
...


Enterprise Resource diagram
...

Enterprise Relationship diagram
...


Correct answer: b
Learning objective 1
...

32
...

b
...

*d
...

the culmination of hardware, software and data
...

the culmination of people, procedures, hardware, software and data
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Which of the following description of XBRL is true?
a
...

c
...


XBRL is a new technology that yet to be made a practical reality
...

XBRL is fundamentally different from HTML
...


Correct answer: b
Learning objective 1
...


1
...


In general, system documentations cannot show:
a
...

c
...


how business processes are designed
...

the activities that occur within the processes
...


Correct answer: d
Learning objective 1
...

35
...

b
...

d
...

Systems documentation is increasingly being phased out of organisations due
to newer technology
...

Answers a and c are both correct
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Which one of the following is often overlooked by businesses when it comes to
internal control?
a
...

*c
...


Fraud
...

Disaster recovery
...


Correct answer: c
Learning objective 1
...

37
...

b
...

*d
...

detect anomalous and undesirable occurrences
...

reverse the effects brought about by anomalous and undesirable occurrences
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...

Which of the following statement regarding internal control is correct?

1
...

b
...

d
...

Internal controls can prevent and detect anomalous and undesirable
occurrences, but they cannot reverse the effects caused by such occurrences
...

Internal controls are only implemented in the most important functions of an
organisation
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Internal controls do not control:
a
...

c
...


physical assets in an organisation
...

human behaviours in an organisation
...


Correct answer: d
Learning objective 1
...

40
...

b
...

*d
...

Checking credit history
...

Ordering new goods from suppliers
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Which of the following activities is not part of the expenditure cycle?
a
...

c
...


Purchasing
...

Authorising payment
...


Correct answer: d
Learning objective 1
...

1
...


Which of the following activities is not part of the production cycle?
a
...

*c
...


Managing raw materials
...

Keeping the finished goods
...


Correct answer: c
Learning objective 1
...

43
...

b
...

*d
...

The cycle involves managing and paying employees
...

Decisions about who to hire will not impact upon the way the other processes
are executed
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Which of the following activities is NOT part of the general ledger and financial
reporting cycle?
a
...

c
...


Preparing and updating journals and ledger accounts
...

Preparing trial balances and producing financial reports
...


Correct answer: d
Learning objective 1
...


1
...


Which of the following statements regarding the auditing of accounting information
systems is NOT true?
a
...

c
...


When conducting an audit, the auditors should consider legislative
requirements
...

When conducting an audit, the auditors should consider prescriptions of
various accounting standards
...


Correct answer: d
Learning objective 1
...

46
...

b
...

*d
...

Accountants are bound by professional ethics
...

A casual bookkeeping employee, who is not a member of any professional
association, need not adhere to professional accounting ethics
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


Systems development is unlikely to be driven by:
a
...

c
...


a change in the regulatory environment
...

a business need from within the organisation
...


Correct answer: d
Learning objective 1
...


1
...


The ability to accurately ___ a system is an important skill for both accountants and
auditors:
a
...

c
...


change
document
store
validate

Correct answer: b
Learning objective 1
...

49
...

b
...

d
...

Data management
...

Data validation
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...


The domain that a system addresses is called:
*a
...

c
...


system scope
...

external environment
...


Correct answer: a
Learning objective 1
...


1
...
Traditionally, the role of an accountant is to capture and record financial information
...
The days of the accountant
only being the one who maintains the books are long gone
...
Accounting is still an important skill
to possess — it is just that what those with accounting skills do with them has changed
...
1 – critically evaluate accounting practices, reflecting on how
accounting information systems enrich and extend the role of the accountant
...
What are the differences between data and information?
Answer:
Data are the raw facts relating to or describing an event
...
Information is used in decision making and can prompt action, as well as be a
guiding tool for decision making, while data cannot be used in this way
...
2 – compare and contrast data and information
...
Information overload can be harmful to both individuals and the relevant organisation,
why?
Answer:
Organisations need to be conscious of what information they produce (whether reports or
some other type of information) and make sure that it is relevant to the people who need it
...
Over
time that problem may disappear, yet the reports are still produced
...
So resources
are wasted in generating the reports
...
This can lead to undesirable consequences, such as reduction in efficiency, decrease
in productivity, and increased stress
...
2 – compare and contrast data and information
...
15

4
...

Answer:
Inputs can include data, as well as other resources, that are the starting point for a system
...
Outputs
refer to what is obtained from a system, or the result of what the system does
...
As such, for any process, there must be at least one input and one output associated
with it
...
3 – critique and synthesise system concepts, giving examples
...
What is feedback and how does it interact with the system?
Answer:
Interacting with the inputs, processes and output will be the provision of feedback, which is
the method for ensuring that the system is running as normal and that there are no problems
or exceptional circumstances
...
If the system finds an error in the customer
number (e
...
it has been entered as alpha-numeric when it should be numeric), then it will
alert the data entry person responsible and prompt them to re-enter the customer number in
the correct format
...
3 – critique and synthesise system concepts, giving examples
...
What is the relationship between system scope and the external environment?
Answer:
A system will also have a defined task or domain to which it is applied - one system cannot
do everything
...
Systems
also operate within a particular external environment or context, which will affect the
operation of the system
...
Collectively, the things belong to the external
environment are factors or pressures outside a system that influence its design and operation
...
3 – critique and synthesise system concepts, giving examples
...
16

Chapter 1: Systems fundamentals - Introduction

7
...
Explain how this definition is arrived
...

“Capturing, verifying, storing, sorting and reporting” describes the functions of accounting
within an organisation, whereas “data relating to an organisation’s activities” is relevant to
the definition of information
...

Learning objective 1
...

8
...
What happened afterwards as technology continued to develop?
Answer:
As technology continued to develop, including management information systems, database
technology and electronic data processing technologies, and with the emergence of the
microcomputer, organisations began to see that the technology of the computer could be
applied beyond the domain of the accounting function
...
As these new
techniques emerged, the accounting function’s reliance on the information systems function
increased
...
Such developments meant that information systems technologies were being
incorporated into other functional areas of the organisation apart from accounting
...

Learning objective 1
...


1
...
What kind of information can an accounting information system provide and what are the
uses of such information?
Answer:
The information that can be generated by an accounting information system is diverse
...
These reports
represent information generated by the accounting system to support decision making by
providers of scarce economic resources
...

However, the traditional financial statements are by no means the only source of information
available through the accounting information system
...
Accounting information that typically extends further is also
available for decision makers within an organisation
...
A properly
designed accounting information system can satisfy internal users' needs by providing
relevant information (e
...
in the form of reports)
...
5 – justify and communicate the role of accounting information in
supporting decision makers
...
Give five examples of decision-making (within a firm) that require accounting
information
...
determining whether to approve a credit sale
ii
...
determining the quantity of raw materials to order
iv
...
determining the provision for bad debts
Learning objective 1
...


1

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