College of Saint Lawrence, Inc

Balagtas, Bulacan
ACCOUNTING INFORMATION SYSTEM

SEMI-FINALS EXAMINATION

DIRECTION: This test consist of 70 items-multiple choice

questions with four answer choices. Read each question and
answer choice carefully and choose the ONE best answer. Try
to answer all questions. In general, if you have some
knowledge about a question, it is better to try to answer it.
Policy of RIGHT MINUS WRONG will be followed.

1. Who below is most likely to distribute paychecks?

A. Personnel Clerk
B. Timekeeping Clerk
C. Paymaster
D. Supervisor

2. Which of the following functions is responsible for submitting employee pay rate
change?

A. Payroll
B. Treasurer
C. Personnel
D. Cash Disbursements
E. None of the Above

3. Which of the following is not a payroll system internal control?

A. Supervisors verify the accuracy of employee time cards.

B. The accounts payable department verifies the accuracy of the payroll
register before transferring payroll funds to the general checking account.
C. Paychecks are distributed by an independent paymaster.
D. The general ledger department reconciles the labor distribution summary
and the payroll disbursement voucher.
E. All are payroll system controls.

4. An important reconciliation in the payroll system is when

A. the general ledger department compares the labor distribution summary

from cost accounting to the disbursement voucher from accounts
payable.
B. the personnel department compares the number of employees
authorized to receive a paycheck to the number of paychecks prepared.
C. the production department compares the number of hours reported on
job tickets to the number of hours reported on time cards.
D. the payroll department compares the labor distribution summary to the
hours reported on time cards.

5. Which one of the following documents captures the total amount of time that
individual workers spend on each production job?

A. Time card
B. Job ticket

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 C. Personnel action form
D. Labor distribution form
E. None of the above

6. Which of the following are fixed asset system tasks?

A. Authorizing the acquisition of fixed assets.

B. Recording depreciation expense.
C. Computing gain and/or loss on the disposal of fixed assets.
D. All of the above are tasks.

7. Which control is not a part of the fixed asset system?

A. Formal analysis of the purchase request

B. Review of the assumptions used in the capital budgeting model
C. Development of an economic order quantity model
D. Estimates of anticipated cost savings

8. Which of the following data items is not likely to be included in a fixed asset
record?

A. Residual value of an asset

B. Book value of the asset
C. Depreciation method being used
D. Location of the asset
E. All of the above would likely be included

9. Which of the following best describes depreciation?

A. Is calculated by the department that uses the fixed asset.

B. Allocates the cost of the asset over its useful life.
C. Is recorded weekly.
D. Results in book value approximating fair market value.

10. Which transaction is not processed in the fixed asset system?

A. Purchase of building
B. Repair of equipment
C. Purchase of raw materials
D. Sale of company van
E. All are fixed asset transactions

11. Which statement is true?

A. World-class companies must maintain strategic agility and be able to turn

on a dime.
B. World-class companies motivate and treat employees like appreciating
assets.
C. Manufacturing firms that achieve world-class status do so by following a
philosophy oflean manufacturing
D. All the above are true

12. The document that captures the total amount of time that individual workers
spend on each production job is called a

A. time card
B. job ticket
C. personnel action form
D. labor distribution form

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13. An important reconciliation in the payroll system is

A. general ledger compares the labor distribution summary from cost

accounting to the disbursement voucher from accounts payable
B. personnel compares the number of employees authorized to receive a
paycheck to the number of paychecks prepared
C. production compares the number of hours reported on job tickets to the
number of hours reported on time cards
D. payroll compares the labor distribution summary to the hours reported on
time cards

14. Which internal control is not an important part of the payroll system?

A. Supervisors verify the accuracy of employee time cards.

B. Paychecks are distributed by an independent paymaster.
C. Accounts payable verifies the accuracy of the payroll register before
transferring payroll funds to the general checking accounting.
D. General ledger reconciles the labor distribution summary and the payroll
disbursement voucher.

15. Which transaction is not processed in the Fixed Asset System?

A. purchase of building
B. improvement of equipment
C. purchase of raw materials
D. sale of company van

16. Depreciation

A. is calculated by the department that uses the fixed asset

B. allocates the cost of the asset over its useful life
C. is recorded weekly
D. results in book value approximating fair market value

17. Depreciation records include all of the following information about fixed assets
except

A. the economic benefit of purchasing the asset

B. the cost of the asset
C. the depreciation method being used
D. the location of the asset

18. Which control is not a part of the Fixed Asset System?

A. formal analysis of the purchase request

B. review of the assumptions used in the capital budgeting model
C. development of an economic order quantity model
D. estimates of anticipated cost savings

19. Objectives of the Fixed Asset System do not include

A. authorizing the acquisition of fixed assets

B. recording depreciation expense
C. computing gain and/or loss on disposal of fixed assets
D. maintaining a record of the fair market value of all fixed assets

20. Which of the following is not a characteristic of the Fixed Asset System?

A. Acquisitions are routine transactions requiring general authorization.

B. Retirements are reported on an authorized disposal report form.

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 C. Acquisition cost is allocated over the expected life of the asset.
D. Transfer of fixed assets among departments is recorded in the fixed asset
subsidiary ledger.

21. In the payroll subsystem, which function should distribute paychecks?

A. personnel
B. timekeeping
C. paymaster
D. Payroll

22. Where does the responsibility lie for reconciling the labor distribution summary
and the payroll disbursement voucher?

A. cash disbursements
B. cost accounting
C. personnel
D. general ledger

23. Which of the following statements is not true?

A. Routine payroll processing begins with the submission of time cards.

B. Payroll clerks must verify the hours reported on the time cards.
C. Payroll reconciles personnel action forms with time cards and prepares
paychecks.
D. Cash disbursements signs paychecks and forwards them to the
paymaster for distribution.

24. In a manufacturing firm, employees use time cards and job tickets. Which of the
following statements is not correct?

A. Job tickets are prepared by employees for each job worked on, so an
employee may have more that one job ticket on a given day.
B. An individual employee will have only one time card.
C. The time reported on job tickets should reconcile with the time reported
on time cards.
D. Paychecks should be prepared from the job tickets.

25. Which department is responsible for approving changes in pay rates for
employees?

A. payroll
B. treasurer
C. personnel
D. cash disbursements

26. Which of the following situations represents a serious control weakness?

A. Timekeeping is independent of the payroll department.

B. Paychecks are distributed by the employees immediate supervisor.
C. Time cards are reconciled with job tickets.
D. Personnel is responsible for updating employee records, including
creation of records for new hires.

27. Why would an organization require the paymaster to deliver all unclaimed
paychecks to the internal audit department?

A. to detect a "phantom employee" for whom a check was produced

B. to prevent an absent employee's check from being lost
C. to avoid paying absent employees for payday

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 D. to prevent the paymaster from cashing unclaimed checks

28. Which of the following is not a reasonable control for fixed assets?

A. Proper authorization is required for acquisition and disposal of fixed assets.

B. Fixed asset records show the location of each asset.
C. Fully depreciated assets are immediately disposed of.
D. Depreciation policies are in writing.

29. Cost accounting updates work-in-process accounts from

A. time cards
B. the labor distribution summary
C. job tickets
D. personnel action forms

30. Payroll uses time card data to do all of the following except

A. prepare the payroll register

B. update employee payroll records
C. prepare the labor distribution summary
D. prepare paychecks

31. Payroll checks are typically drawn on

A. the regular checking account

B. a payroll imprest account
C. a wages payable account
D. petty cash

32. The personnel action form provides authorization control by

A. preventing paychecks for terminated employees

B. verifying pay rates for employees
C. informing payroll of new hires
D. all of the above

33. Accounting records that provide the audit trail for payroll include all of the
following except

A. time cards
B. job tickets
C. payroll register
D. accounts payable register

34. Personnel actions forms are used to do all of the following except

A. activate new employees

B. terminate employees
C. record hours worked
D. change pay rates

35. The payroll department performs all of the following except

A. prepares the payroll register

B. distributes paychecks
C. updates employee payroll records
D. prepares paychecks

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36. The document that records the total amount of time spent on a production job is
the

A. time card
B. job ticket
C. labor distribution summary
D. personnel action form

37. A control technique that can reduce the risk of a terminated employee being
paid is

A. a security camera viewing the time clock

B. the supervisor taking role during the shift
C. paychecks being distributed by an independent paymaster
D. reconciliation of time cards and job tickets

38. Accounts payable

A. signs paychecks
B. prepares the payroll voucher
C. reconciles time cards and employee records
D. distributes paychecks to employees

39. All of the following are processed by the Fixed Asset System except

A. sale of unneeded equipment

B. purchase of raw materials
C. repair of production equipment
D. dpurchase of a new plant

40. The Fixed Asset System performs all of the following except

A. determines the need for new assets

B. maintains depreciation records
C. records retirement and disposal of assets
D. tracks the physical location of fixed assets

41. The payroll department performs all of the following except

A. prepares paychecks
B. transfers adequate funds to the payroll imprest account
C. updates employee payroll records
D. prepares the payroll register

42. Depreciation

A. assures that assets are reported at fair market value

B. is discretionary for many firms
C. allocates the cost of an asset over its useful life
D. is the responsibility of the department using the asset

43. The Fixed Asset System is similar to the expenditure cycle except

A. fixed asset transactions are non-routine and require special authorization

and controls
B. fixed assets are capitalized, not expensed
C. both a and b
D. none of the above

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44. Asset maintenance involves

A. the recording of periodic depreciation

B. adjusting the asset records to reflect the cost of physical improvements
C. keeping track of the physical location of the assets
D. all of the above

45. The Fixed Asset Systems does all of the following except

A. records acquisition of assets

B. records improvements to assets
C. estimates the fair market value of assets in service
D. records the disposal of assets

46. Asset disposal

A. occurs as soon as an asset is fully depreciated

B. requires no special authorization
C. automatically initiates the purchase of a replacement asset
D. must follow formal authorization procedures

47. All of the following are characteristics of batch processing except:

A. each item in the batch is similar

B. batches are produced in accordance with detailed customer
specifications
C. batches are produced to replenish depleted inventory levels
D. setting up and retooling is required for different batches

48. The productions schedule is:

A. the expected demand for the firm's finished goods for a given year
B. the formal plan and authority to begin production
C. a description of the type and quantity of raw materials and
subassemblies used to produce a single unit of finished product.
D. the sequence of operations during manufacturing

49. A move ticket

A. is the formal plan and authority to begin production

B. specifies the materials and production required for each batch
C. records the work done in each work center
D. authorizes the storekeeper to release materials to workcenters

50. Inventory control performs all of the following tasks except it:

A. provides production planning and control with the inventory status report
of finished goods
B. updates the raw material inventory records
C. prepares a materials requisition for each production batch
D. records the completed production as an increase to finished goods
inventory

51. Which of the following is not an assumption of the Economic Order Quantity
Model?

A. demand for the product is known with certainty

B. total cost per year of placing orders is fixed
C. lead time is known and is constant

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 D. there are no quantity discounts

52. If the daily demand is 40 units and the lead time is 12 days, the reorder point is:

A. 52 units
B. 48 units
C. 480 units
D. none of the above

53. A manufacturing process that is organized into group technology cells utilizing no
human labor is called:

A. islands of technology
B. process simplification
C. Computer Integrated Manufacturing
D. traditional manufacturing

54. An example of automation of manufacturing design is:

A. Computer Aided Engineering

B. Automated Storage and Retrieval Systems
C. Computer Numerical Control
D. Robotics

55. An example of automation of manufacturing planning is:

A. Computer Aided Engineering

B. Automated Storage and Retrieval Systems
C. Materials Requirements Planning
D. Computer Numerical control

56. Characteristics of Just-In-Time manufacturing include all of the following except:

A. push manufacturing
B. zero defects
C. reduced setup time and small lot sizes
D. reliable vendors

57. The cost of poor quality includes all of the following except:

A. cost of rework
B. warranty claims
C. scheduling delays
D. proceeds from the sale of scrap

58. Computer integrated manufacturing groups all of the following technologies

except:

A. robotics
B. materials requirements planning
C. automated storage and retrieval systems
D. computer aided design

59. Which situation violates the segregation of functions control procedures?

A. production planning and control is located apart from the work centers
B. inventory control maintains custody of inventory items
C. cost accounting has custody of and makes entries on cost records
D. work centers record direct labor on job tickets

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60. Firms implement a Just-In-Time inventory approach to:

A. reduce investment in inventories

B. determine the optimum inventory level using the EOQ model
C. camouflage production problems
D. ensure overproduction of inventory

61. The two subsystems of a traditional conversion cycle are the production system
and the delivery system.

A. True
B. False

62. Move tickets authorize the storekeeper to release materials to work centers.

A. True
B. False

63. The objective of the Economic Order Quantity model is to reduce total inventory
costs by minimizing carry costs and ordering costs.

A. True
B. False

64. The philosophy of customer satisfaction permeates the world-class firm.

A. True
B. False

65. Reports generated by the cost accounting system include performance reports
and budget reports.

A. True
B. False

66. The complexities of ABC have caused many firms to abandon this method in
favor of a simpler accounting model called value stream accounting.

A. True
B. False

67. The only objective of the Just-In-Time philosophy is to reduce inventory levels.

A. True
B. False

68. The bill of materials specifies the types and quantities of the raw materials and
subassemblies used in producing a single unit of finished product.

A. True
B. False

69. Batch processing creates a homogeneous product through a continuous series

of standard procedures

A. True
B. False

70. The work-in-process file is the subsidiary ledger for the work-in-process control
account.

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A. True
B. False

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