THE UNIVERSITY OF THE SOUTH PACIFIC

SCHOOL OF ACCOUNTING AND FINANCE

AF 121 – ACCOUNTING INFORMATION SYSTEMS

(Semester 2 / 2019)

(ONLINE MODE)

FINAL EXAMINATION
(Time allowed: 3 hours + 10 min extra reading time)

(Weighting: 50% towards Final Grade)

(You must attain a minimum mark of 40% in the final examination to pass
this course and overall 50%).

INSTRUCTIONS FOR CANDIDATES:

 There are 5 questions in this paper. Attempt ALL 5 questions.

 Label your answers clearly. Start each new question on a new page.

Description MARK SUGGESTED

ALLOCATION TIME
Question 1 Multiple Choice 25 50 MINUTES
Question 2 Short-answer Questions 30 55 MINUTES
Question 3 Internal Controls 10 20 MINUTES
Question 4 Fraud 15 25 MINUTES
Question 5 Process Map 20 30 MINUTES

TOTAL 100 3 HOURS

_______________________________________________________________
Question 1 Multiple Choice Questions (25 marks)
Circle the BEST answer for each of the following multiple-choice items. Each
multiple-choice question is each worth one (1) mark. Multiple choice grid is
attached at the back of your Question Paper.

1. An accounting information system serves many functions - which of the

following is NOT one of those functions?
A. Capture the details of a transaction
B. Implement the start of a transaction
C. Provide reports of transactions
D. Process the transactions details into appropriate accounts

2. Which of the following statements, related to business processes, is false?

A. Each business process has a direct effect on the financial status of the
organization.
B. A business process is initiated by a particular kind of event.
C. A business process has a well-defined beginning and end.
D. Each business process is usually completed in a relatively short period.

3. When discussing the supply chain:

A. Any concern about vendors would relate only to those vendors with
which a company has direct contact.
B. Service providers would not be part of the supply chain.
C. Concern would not extend beyond the point where the product is
shipped to a customer.
D. An entity may not be able to directly control all of the interrelated
activities within the supply chain.

4. A set of related fields is referred to as a:

A. File.
B. Record.
C. Byte.
D. Binary Digit.

5. Which of the following is one of the disadvantages of maintaining the legacy

systems?
A. Often support unique business processes not inherent in generic
accounting software.
B. May not easily run on new hardware.
C. Contain invaluable historical data.
D. Existing personnel are already trained to use the system.

2
6. A collection of data stored in several small two-dimensional tables that can
be joined together in many varying ways to represent many different kinds
of relationships among the data is referred to as a(n):
A. Database.
B. Master File.
C. Relational Database.
D. Relation Based Accounting Software.

7. Accounting software traditionally uses two different types of files. The file
type that is relatively permanent and used to maintain the detailed data for
each major process is a(n):
A. General Ledger.
B. Master File.
C. Transaction File.
D. Subsidiary File.

8. The organization of files in a computer system normally uses one of two

different access methods. The access method where the files are not
stored in sequence, one record not stored immediately after another, is
referred to as:
A. Indexed Access.
B. Batch Access.
C. Sequential Access.
D. Random Access.

9. There are many risks that may affect the payroll and fixed asset
transactions. Which of the following is not one of those risks?
A. Recorded transactions may not be valid.
B. Expenditure transactions may be recorded in the wrong account.
C. Valid expenditures recorded properly by the wrong employee.
D. Transactions may not be recorded in a timely manner.

10. This type of database contains the data that are continually updated as
transactions are processed and includes data for the current fiscal year and
supports day-to-day operations is referred to as a(n):
A. Data Warehouse.
B. Data Storage.
C. Relational Database.
D. Operational Database.

3
11. The process of searching data within the data warehouse for identifiable
patterns that can be used to predict future behavior is referred to as:
A. Data mining.
B. Data digging.
C. Data housing.
D. Data querying.

12. Internal control activities within the payroll process, identified as

independent checks and reconciliations, would include which of the
following?
A. IT controls over computer records and physical controls in records
storage area.
B. Time sheets reconciled with the payroll register.
C. The payroll register is checked for mathematical accuracy and
agreement with authorized pay rates and deductions.
D. Supervisor approves time sheets prior to preparation of payroll
documents.

13. This type of computer network is one that spans a relatively small area -
often confined to a single building or group of buildings, and are intended
to connect computers within an organization.
A. Local Area Network
B. Land Arena Network
C. Extranet
D. Internet

14. The global computer network, or “information super highway”, is the:

A. WAN.
B. Intranet.
C. Internet.
D. LAN.

15. This term refers to a system of hardware and software that captures retail
sales transactions by standard bar coding.
A. E-business
B. Electronic data interchange
C. Point of sale system
D. E-commerce

4
16. Which of the following groups of professionals within an organization have a
history of designing and implementing the controls to lessen risks?
A. Management
B. Accountants
C. Human Resources
D. Lawyers

17. The proper management, control, and use of IT systems are known as:
A. IT Governance.
B. IT Controls.
C. IT Risk Management.
D. IT Code of Ethics.

18. Accountants have several possible roles related to accounting information

systems. Which of the following is not normally one of those roles?
A. Auditor of an AIS
B. User of the AIS
C. Programmer of the AIS
D. Design of the AIS

19. Source documents are usually preprinted and sequentially prenumbered.

Which of the following is not one of the reasons for this prenumbering and
preprinting?
A. To have an established format to capture data
B. To assure that there is no duplicate source documents
C. To be sure that all of the documents have been recorded
D. To be sure that all of the documents are accounted for

20. Bar codes can be used in a number of different instances for input:
A. Products that are sold
B. Identification of individuals
C. Track work in process
D. Prepare financial statements

21. The internal control process of requiring physical controls in the warehouse
and receiving areas, in order to limit access to inventory items, will help to
minimize the risk of:
A. Incorrect posting
B. Omitted purchases
C. Invalid vendors
D. Stolen goods

5
22. A situation where the organization’s cash is stolen before it is entered in
the accounting records is termed:
A. Kickback.
B. Larceny.
C. Collusion.
D. Skimming.

23. If an accounting supervisor were allowed to hire employees, approve the

hours worked, prepare the paychecks, and deliver the paychecks, which of
the categories of control activities would be violated?
A. Adequate records
B. Segregation of duties
C. Authorization of transactions
D. Independent checks

24. Fraudsters typically try to justify their behavior by telling themselves that
they intend to repay the amount stolen or that they believe the
organization owes them the amount stolen. This justification is referred to
as:
A. Opportunity.
B. Rationalization.
C. Incentive.
D. Concealment.

25. Financial pressures, market pressures, job-related failures, and addictive

behaviors are all examples of which condition of the Fraud Triangle?
A. Opportunity
B. Conversion
C. Incentive
D. Rationalization

6
_________________________________________________________
Question 2 Short-Answer Questions (30 marks)

1. What roles do accountants have in relation to the accounting information

system and describe why accountants should be concerned about ethics?
[10 marks]

2. You had a recent appointment at the dentist’s Clinic in CWM hospital.

Describe the business process that affected you as the patient/customer. In
addition, describe the administrative and accounting processes that are
likely to support this business. [10 marks]

3. Wishbone Pizza is a local chain of pizza restaurants in Fiji. The chain has 10
locations throughout the country and its suburbs. The management is
considering opening a Web site to conduct e-commerce with customers.
Describe any benefits that might be derived from this move. [10 marks]

_________________________________________________________
Question 3 Internal Controls (10 marks)

You are the recent heir of $20 000 cash, with which you are considering opening
a sushi bar in the University of the South Pacific dining hall food court. You
would accept cash and credit card payments, which would be handled primarily
by your servers. You also plan to offer introductory specials to attract customers
during the initial months of business such as the orientation and enrolment
weeks. You will be using the point of sale (POS) system as part of this new
business venture.

Required:

What internal controls should be implemented to reduce the risk of theft or error
related to the handling of cash, credit card payments and coupons?
[10 marks]

7
_________________________________________________________
Question 4 Fraud (15 marks)

Kristina frequently makes purchases from mail-order catalogs. Recently she

ordered a dress she intended to wear to her cousin’s wedding. Unfortunately,
she did not receive the package on time, and on the evening before the
wedding, Kristina went shopping and purchased another outfit at a local dress
shop.

Kristinas’ neighbour, Shah Rukh actually received the mail order package
intended for Kristina. Because Shah Rukh had been out of town last week, he
had not had the chance to promptly bring the package to Kristina’s house. Even
though the box correctly showed Kristina’s name and address, it appears that the
carrier merely left the package on the doorstep of the wrong house.

Disgusted with this chain of events, Kristina decided to claim that she had never
received the package. After all, she was not able to wear the dress for its
intended purposes; she should not have to pay for it. Moreover, the carrier was
not able to provide proof of delivery.

Required:

a) Discuss which type of fraud is involved in this case, from the

perspective of the mail order company.
[5 marks]

b) Describe a preventive control that could be performed by the carrier

to avoid the possible recurrence of this type of fraud.
[10 marks]

8
_________________________________________________________
Question 5 Process Map (20 marks)

The University Bookcentre

Ordering textbooks in the university bookcentre is a massive undertaking that

requires good organizational, communication, and coordination skills. The
process begins with faculty deciding which textbooks they want to use.
Professors communicate relevant information about the textbook (title, author,
ISBN, edition, publisher, copyright date) to a department chair or secretary, who
consolidates all the orders. That communication may take place with a paper
form or an email. In either case, the departmental representative prepares a
standard university book requisition form in triplicate: one copy for the
requesting faculty member, one for the department, and one for the bookcentre.
The bookcentre receives and consolidates requisition forms from all across the
university and prepares purchase orders for textbook publishers. Each purchase
order has 3 copies: one for the publisher, one for the purchasing department,
and one for the accounting department. When the publisher sends the books,
the bookcentre’s receiving department prepares 2 copies of a receiving report;
one is filed to indicate that the goods were received, while the second is
forwarded to the accounting department. The publisher sends a billing statement
(invoice) directly to the accounting department. Once all 3 documents have been
matched and verified, the accounting department writes a cheque or sends an
electronic funds transfer to the publisher. The book centre staff then sort the
books based on class and stock the shelves, where the books await purchase by
students.

Required:

Draw a process map demonstrating the book ordering process for the University
Bookcentre.
[20 marks]

9
Question 1 Multiple Choice Questions (25 marks)________
Circle the BEST answer for each of the following multiple-choice items. Each
multiple-choice question is each worth one (1) mark.
1. A B C D

2. A B C D

3. A B C D
4. A B C D
5. A B C D
6. A B C D
7. A B C D

8. A B C D
9. A B C D
10. A B C D
11. A B C D
12. A B C D
13. A B C D

14. A B C D

15. A B C D
16. A B C D
17. A B C D
18. A B C D
19. A B C D
20. A B C D
21. A B C D
22. A B C D
23. A B C D
24. A B C D

25. A B C D

10