Accounting Information System Answer Key Chapter 17

ANSWER KEY 1. D 2. C 3. B 4. B 5. B 6. D 7. B 8. B 9. D 10. B 11. C 12. B 13. A 14. D 15. C 16. B 17. C 18. D 19. B 20. A 21. B 22. C 23. C 24. D 25. A 26. C 27. B 28. A 29. D 30. B 31. C 32. C 33. B 34. B 35. A 36. B 37. B 38. C 39. A 40. A 41. A 42. B 43. C 44. D 45. C 46. A 47. D 48. B 49. A 50. B 51. 1 Issuance of raw materials. 2 Use of labor in production. 3 Use of machinery and equipment in production. 4 Production of new finished products. 52. Some deliveries are so large that several employees must work together to unload and store the items. M:N agent-event relationships occur whenever an activity is performed by more than one employee, yet management wants to retain he abili o monior each indiidal performance. 53. The event Issue Debt is a special kind of cash receipt. It is often modeled as a separate event entity because it contains distinctly different attributes from those associated with cash receipts that arise from the Sales event, such as the face amount of debt issued, total amount received, date issued, maturity date, and interest rate. 54. Relationships between internal agents may be created to model lines of responsibility. Relationships between internal and external agents can also occur. For example, some organizations that provide primarily services, such as banks and insurance companies, may assign customers to specific employees who are responsible for effectively managing the overall quality of the ongoing association with each customer. Relationships between external agents are rare but may sometimes be implemented to satisfy the requirements for a well-structured database. 55. For example, the REA model for the expenditure cycle includes a relationship between the Inventory Resource entity and the Supplier Agent entity. This relationship reflects the common best practice of identifying preferred and alternative suppliers for specific inventory items. Similar relationships between resources and employees can be used to model responsibility and accountability. 56. Cost information is stored in several tables. Standard cost is stored as an attribute of the Inventory table because it is the same for all units of a given inventory item for a fiscal year. In contrast, the actual cost of inventory is stored in the Inventory- Order_Goods table. This reflects the fact that purchase prices can vary over time. By storing the cost of each order with the quantity purchased, the system can calculate the actual cost of ending inventory and the cost of goods sold according to any accepted inventory valuation method (LIFO, FIFO, weighted-average, or specific identification). If, on the other hand, actual cost were stored as an attribute of the Inventory table, it would necessitate using the weighted-average method because all units of a given inventory item would be assigned the same cost. In addition, cost data would be available only in this format; it would be impossible to compute alternative values for inventory because the detailed data about the cost associated with each purchase would not be stored in the database. 57. One of the benefits of an integrated enterprise-wide data model is that auditors can use it to guide the development of queries to validate the completeness and accuracy of transaction processing. In contrast, an integrated, enterprise-wide data model provides greater flexibility for analyzing data. Creating an integrated, enterprise-wide data model also facilitates the amalgamation of financial and non-financial information in the same database. Effective integration of financial and nonfinancial data also results in improved internal reporting. It can also significantly improve the support provided for managerial decision-making. 58. The Recruiting event entity stores data about activities performed to notify the public of job openings. The data recorded in this entity are useful for documenting compliance with employment laws and also for evaluating the effectiveness of various methods used to announce job opportunities. The M:N relationship between Skills and Recruiting reflects the fact that each advertisement may seek several specific skills and that, over time, there may be several advertisements for a given skill. The relationship between the Recruiting event and Job Applicants is modeled as being M:N because many people typically apply for each job opening, but a given individual may also respond to more than one recruiting event. Also, more than one employee may participate in each recruiting event, and, over time, a given employee may participate in many such events. Chapter 17 MULTIPLE CHOICE 1. Explicitly identifying the different employees who participate in each event by their job functions is helpful when verifying a) Internal controls. b) Job descriptions. c) Proper supervision. d) Segregation of duties. 2. Many companies sell software, music, or digital photographs over the Internet. They give up a digital copy of those resources, but not the actual resource itself. How will this company's REA model differ from those selling traditional inventory? a) These companies do not need an Inventory table. b) The structure of Inventory table is completely different from that of massproduced merchandise. c) The inventory table is only different in that it doesn't need attributes such as quantity-on-hand, quantity-available, reorder point, and standard reorder quantity. d) The Inventory table need not include information about the standard list price of each item and its description. 3. The minimum cardinality from the Take Order event to the Call on Customer event is _____ and the maximum cardinality is _____. a) b) c) d) 0;0 0;1 1;0 1;1 4. The relationship between the Fill Customer Order and Ship Order events is 1-1. The minimum cardinalities reflect the fact that the two events are sequential. a) b) c) d) 0:N 1:1 1:N M:N 5. Sales order number is most likely to be a foreign key in: a) Call on Customers b) Fill Customer Order c) Ship Order d) Take Customer Order 6. Sales order number is most likely to be a primary key in: a) Call on Customers b) Fill Customer Order c) Ship Order d) Take Customer Order 7. Customer number is least likely to be a foreign key in: a) Call on Customers b) Customers c) Fill Customer Order d) Take Customer Order 8. Picking ticket number is most likely to be a primary key in: a) Call on Customers b) Fill Customer Order c) Ship Order d) Take Customer Order 9. Picking ticket number is most likely to be a foreign key in: a) b) c) d) Call on Customers Customers Fill Customer Order Ship Order e) Take Customer Order 10. In an REA model, rental transactions differ from sales transactions in that a) b) c) d) Each rental has a part number. Each rental has a unique serial number Rental transactions require completely different REA models than sales transactions. All of the above. 11. Concerning the relationship from the Rent Item to the Receive Cash event: The minimum cardinality is______ because customers typically pay first, prior to taking possession of the item. The maximum cardinality is _____ because there may be additional charges imposed when the item is returned. a) 0,1 b) 1,1 c) 1,N d) N,M 12. The relationship between the Rent Item and Return Item events is ____. a) b) c) d) 13. 0:N 1:1 1:N M:N Which of the following is an example of an additional event that larger organizations might want to include in their REA models? a) Purchase requests b) Purchase orders c) Sales d) None of the above 14. Concerning cost data, which of the following is false? a) Cost information is stored in several tables. b) Standard cost is stored as an attribute of the Inventory table because it is the same for all units of a given inventory item for a fiscal year. c) In contrast, the actual cost of inventory is stored in the Inventory-Order_Goods table because purchase prices can vary over time. d) Actual cost can be stored as an attribute of the Inventory table for organizations using LIFO or FIFO. 15. Which is the most likely primary key for the InventoryRequest_Goods table? a) b) c) d) Product number Product number - Purchase order number Product number - Purchase requisition number Purchase requisition number 16. Which is the most likely primary key for the Pay for Goods table? a) b) c) d) Cash transaction number Check number Receiving report number Receiving report number, check number 17. Concerning the sale of services, the minimum cardinality from the Sales event to the Services entity is ____. However, the minimum cardinality from the Sales event to the Inventory Resource is ____. a) 0;0 b) 0;1 c) 1;0 d) 1;1 18. The REA model for sale of services includes relationships between the Sales event and both the Services and Inventory Resource entities. The nature of the cardinality of those relationships depends on the specific business, but usually both relationships will be modeled as being _____because most businesses provide the same types of services to many different customers, using standard mass-produced parts. a) b) c) d) 0:N 1:1 1:N M:N 19. M:N agent-event relationships occur whenever an activity is performed by _________ employee and management wants to retain the ability to monitor _________ performance. a) More than one, group b) More than one, individual c) One, group d) One, individual 20. Most locations, such as Warehouse or Financial Institution, will have a minimum cardinality of a) b) c) d) 0 1 M None of the above 21. Since, the same inventory items may be stored in several different warehouses, hence the maximum cardinality from Inventory to Warehouses is ____ and the minimum cardinality from the Inventory resource to Warehouses may be ____. a) b) c) d) 0; N N; 0 1; N M; N 22. Relationships between resources and agents, such as the Inventory Resource entity and the Supplier Agent entity, reflect the common best practice of identifying preferred and alternative suppliers for specific inventory items. Similar relationships between resources and employees can be used to model __________ and __________. a) b) c) d) Cost; revenue Performance; behavior Responsibility; accountability Segregation of duties; internal control 23. Warehouse number is most likely to be a foreign key in: a) b) c) d) Order Goods Pay for Goods Receive Goods Warehouse 24. Supplier number is least likely to be a foreign key in: a) b) c) d) Order Goods Pay for Goods Receive Goods Warehouse 25. Financial institution number is most likely to be a foreign key in: a) b) c) d) Cash Pay for Goods Receive Goods Warehouse 26. The cardinality pair from the Financial Institution entity to the Cash resource has a ___ minimum and an ___ maximum because companies will probably only keep information about financial institutions with which they have accounts but may have more than one account at the same financial institution. a) b) c) d) 0; N 0; 1 1; N M; N 27. Supplier number is most likely to be a foreign key in: a) b) c) d) InventoryRequest_Goods Receive Goods Supplier Warehouse 28. In the HR REA M/payroll diagram, the __________ entity is linked to almost every other entity in the diagram. a) Employee b) Job title c) Payroll d) Worker I.D. 29. In the human resources REA model, the relationship between Skills and Employees is modeled as a) b) c) d) 0:N 1:1 1:N M:N 30. The __________ entity stores much of the data typically found in the employee (payroll) master file: a) b) c) d) Accounting Employee HR Payroll 31. In the human resources REA model, the relationship between the Employees and Training is a) b) c) d) 1:1 1:N M:N None of the above 32. The ______ relationship between Skills and Recruiting reflects the fact that each advertisement may seek several specific skills and that, over time, there may be several advertisements for a given skill. a) b) c) d) 1:1 1:N M:N None of the above 33. The Interview event stores detailed data about each job interview. It is linked to the Hire Employees event in a(n) _____ relationship. a) b) c) d) 1:1 1:N M:N None of the above 34. Concerning the issuance of debt, the cardinality of the relationship from the Disburse Cash event to the Issue Debt event has a _____ maximum. a) b) c) d) 0 1 M None of the above 35. Concerning the issuance of debt, the cardinality of the relationship from the Disburse Cash event to the Issue Debt event has a _____ minimum. a) b) c) d) 0 1 M None of the above 36. The cardinality pair from the Order Goods event back to the Request Goods event also has a ___ minimum and ___ maximum. a) 0,1 b) 0,N c) 1,N d) N,M 37. The cardinality pair from the Request Goods event to the Order Goods event has a minimum cardinality of ____ and a maximum of ____. a) 0,1 b) 0,N c) 1,N d) N,M 38. The relationship between the Disburse Cash and Issue Stock events is modeled as being a) b) c) d) 1:1 1:N M:N None of the above 39. Concerning the relationship between the Disburse Cash and Issue Stock events the minimum cardinalities are (respectively) a) 0;0 b) 0;1 c) 1;0 d) 1;1 40. The relationship between the Acquire Services and Disburse Cash events is modeled as ____ to reflect the common situation in which the organization obtains the use of a specific service for a particular period of time and makes a payment each month for the services it acquired and used that month. a) b) c) d) 1:1 1:N M:N None of the above 41. Concerning tracking employee time, it is not necessary to link the Track Time Used entity to specific business events, however, but doing so facilitates a) evaluating performance at a very detailed level b) general performance evaluation c) evaluating the quality of the services d) All of the above are true 42. An REA diagram for the production cycle, models the relationships between the Job Operations event and the Job Operations List entity, and between the Machine Operations event and the Machine Operations List entity, as being (respectively) a) b) c) d) 1:1; 1:1 1:N; 1:N M:N; M:N 1:N; M;N 43. Data about actual raw materials used in production is stored in the __________ entity. a) b) c) d) Finished goods Raw materials Raw materials issuance Work-in-process 44. The _________ entity is used to collect and summarize data about the raw materials, labor, and machine operations used to produce a batch of goods. a) b) c) d) Finished goods Raw materials Raw materials issuance Work-in-process 45. In the table called Perform Machine Operations, which is the likeliest primary key? a) Equipment number b) Job Operation number c) Machine Operation Number d) Machine Operations List Number 46. Employee number is most likely to be a foreign key in: a) b) c) d) Perform Job Operations Perform Machine Operations Machine Operations List Work in Progress 47. W-I-P job number is least likely to be a foreign key in: a) b) c) d) Perform Job Operations Perform Machine Operations Issue Raw Materials Machine Operations List 48. There are four main events of interest included in a typical production cycle REA diagram. Which of the following is not one of them? a) Issuance of raw materials b) Use of general and administrative expenses c) Use of labor in production d) Use of machinery and equipment in production 49. One of the benefits of an integrated enterprise-wide data model is that a) Auditors can use it to guide the development of queries to validate the completeness and accuracy of transaction processing. b) Journals and ledgers will be more accurate than in a traditional AIS data model. c) Workers can understand information flows better. d) All of the above 50. An REA diagram for the production cycle would likely show _____ relationships between the Bill of Materials entity and both the Raw Materials and Finished Goods entities. a) b) c) d) 1:1 1:N M:N None of the above SHORT ANSWER 51. What four main events of interest are included in a typical production cycle REA diagram? 52. Give an example of an M:N Agent-Event relationship 53. Why is the event Issue Debt often modeled as a separate event entity? 54. Why might an REA diagram show relationships between agents? 55. Why might an REA diagram show relationships between resources and agents? ESSAY 56. Why is cost information stored in several relational tables? 57. What are the benefits of an integrated enterprise-wide data model? 58. Describe the relationships between Recruiting event and Skills, and between Recruiting event and Job Applicants.