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AIS practice questions

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Question 1Exam identification pending - no source supplied

Which of the following best describes the primary purpose of an accounting information system (AIS)?

  1. To replace all human judgment in financial reporting
  2. To collect, record, store, and report accounting data for decision makers Correct answer.
  3. To guarantee that a company never suffers a fraud loss
  4. To prepare only the annual tax return for a business

Explanation

An AIS is a system that captures accounting transactions and events, stores them in structured records, and produces reports used by internal and external decision makers. It supports and informs judgment rather than eliminating it, and it does not by itself prevent fraud.

Question 2Exam identification pending - no source supplied

In the data processing cycle, which step immediately follows data input?

  1. Feedback collection
  2. Data storage
  3. Information output
  4. Data processing Correct answer.

Explanation

The data processing cycle proceeds from input, to processing, to storage, and finally to information output. Processing transforms captured transaction data into meaningful results before those results are stored or reported.

Question 3Exam identification pending - no source supplied

A company wants each transaction to be recorded with the date, amount, and identity of the person who entered it. Which characteristic of useful information does this primarily support?

  1. Comparability
  2. Relevance
  3. Timeliness
  4. Verifiability Correct answer.

Explanation

Verifiability means independent observers can reach a consensus that the information is a faithful representation, which is aided by traceable source details such as date, amount, and preparer. These attributes let another party confirm the recorded event.

Question 4Exam identification pending - no source supplied

Which document is typically prepared first in the revenue cycle when a customer places an order?

  1. Sales order Correct answer.
  2. Sales invoice
  3. Remittance advice
  4. Credit memo

Explanation

The sales order captures the customer's request and authorizes the transaction before goods or services are provided. The invoice, remittance advice, and credit memo come later in the cycle.

Question 5Exam identification pending - no source supplied

In the expenditure cycle, what is the main purpose of a three-way match?

  1. To verify payroll hours against the time clock and pay rate
  2. To reconcile the bank statement with the cash ledger at month end
  3. To compare the purchase order, receiving report, and supplier invoice before payment Correct answer.
  4. To compare the sales order, shipping notice, and customer invoice before billing

Explanation

A three-way match verifies that what was ordered, what was received, and what the supplier billed agree before the payable is approved for payment. This control helps prevent paying for goods not received or at incorrect prices.

Question 6Exam identification pending - no source supplied

Which of the following is a key objective of the general ledger and reporting system?

  1. Shipping goods to customers on schedule
  2. Authorizing credit limits for new customers
  3. Producing accurate financial statements and management reports Correct answer.
  4. Capturing each customer order as it is received

Explanation

The general ledger and reporting system aggregates journal entries and produces financial statements and other reports for internal and external users. Order capture, credit authorization, and shipping are operating activities of the revenue cycle.

Question 7Exam identification pending - no source supplied

In a relational database, what is the role of a primary key?

  1. To encrypt sensitive columns automatically
  2. To sort the records in ascending order
  3. To link two tables by referencing another table's key
  4. To uniquely identify each row in a table Correct answer.

Explanation

A primary key is an attribute or combination of attributes that uniquely identifies each record in a table. Uniqueness and non-nullness are the defining properties that let records be reliably retrieved.

Question 8Exam identification pending - no source supplied

A table stores customer orders with a foreign key pointing to the customer table. What does this foreign key enforce?

  1. That each customer may have only one order
  2. That the order amount cannot be null
  3. That the customer table is sorted by customer name
  4. That every order references a customer that exists in the customer table Correct answer.

Explanation

Referential integrity requires that a foreign key value match an existing primary key value in the related table or be null. This prevents orphan records that point to nonexistent customers.

Question 9Exam identification pending - no source supplied

Which control is designed specifically to prevent one employee from both initiating and recording the same transaction?

  1. Segregation of duties Correct answer.
  2. Data validation rules
  3. Backup and recovery
  4. Physical access control

Explanation

Segregation of duties separates incompatible functions such as authorization, custody, and recordkeeping so no single person controls an entire transaction. This reduces both error and fraud opportunity.

Question 10Exam identification pending - no source supplied

A clerk can create a new supplier in the vendor master file and also approve payments to that supplier. Which risk is most directly created?

  1. Duplicate sales invoices to customers
  2. Fictitious suppliers receiving fraudulent payments Correct answer.
  3. Understated payroll tax withholding
  4. Inaccurate depreciation of fixed assets

Explanation

Combining vendor master maintenance with payment approval lets a single person set up a fake supplier and then pay it. Segregation of duties normally assigns vendor setup and payment approval to different people.

Question 11Exam identification pending - no source supplied

Which of the following is a detective control?

  1. Requiring a password to log into the accounting system
  2. Encrypting data in transit
  3. Restricting warehouse access to authorized staff
  4. Reconciling the bank account monthly Correct answer.

Explanation

Detective controls identify problems after they occur, and bank reconciliation compares independent records to surface discrepancies. Passwords, physical restrictions, and encryption are preventive controls that stop problems before they happen.

Question 12Exam identification pending - no source supplied

A batch total that sums the dollar amounts of all transactions in a batch and is compared to the sum of posted amounts is an example of which control?

  1. Financial total Correct answer.
  2. Hash total
  3. Sequence check
  4. Record count

Explanation

A financial total sums a meaningful field such as dollar amounts so that input and processed totals can be compared. Hash totals sum a field with no meaning, record counts tally the number of items, and sequence checks verify ordering.

Question 13Exam identification pending - no source supplied

Which of the following is a general control rather than an application control?

  1. A limit check on an employee's weekly hours
  2. An access control restricting who can run payroll programs Correct answer.
  3. A validity check comparing a code to a lookup table
  4. A field check on a date-entry field

Explanation

General controls apply across the IT environment and support the reliable operation of all applications, including access controls over programs and data. Field, limit, and validity checks operate within a specific application on specific data.

Question 14Exam identification pending - no source supplied

A company processes all its sales orders in real time over the internet. Which risk is most directly associated with this approach?

  1. Slower batch turnaround at month end
  2. Exposure to unauthorized access and interception of transactions Correct answer.
  3. Increased cost of physically storing paper documents
  4. Loss of the ability to record revenue

Explanation

Real-time internet processing exposes transactions to interception, unauthorized entry, and tampering unless protected by encryption, authentication, and access controls. The benefit of immediate processing comes with these network-based risks.

Question 15Exam identification pending - no source supplied

Which of the following best describes the function of a firewall?

  1. To verify user identity with a one-time password
  2. To control network traffic between trusted and untrusted networks Correct answer.
  3. To encrypt files stored on a laptop's hard drive
  4. To detect and remove viruses from email attachments

Explanation

A firewall inspects and filters network traffic according to rules, allowing or blocking connections between internal and external networks. Antivirus, disk encryption, and authentication serve different security functions.

Question 16Exam identification pending - no source supplied

A payroll system rejects any hourly rate above $500 per hour. This is an example of which type of input control?

  1. Limit check Correct answer.
  2. Field check
  3. Check digit
  4. Reasonableness check

Explanation

A limit check tests whether a value falls within a predetermined maximum or minimum boundary. Rejecting rates above a fixed ceiling applies a hard boundary to the input value.

Question 17Exam identification pending - no source supplied

What is the primary purpose of a disaster recovery plan?

  1. To restore IT systems and data after a disruptive event Correct answer.
  2. To define the annual audit schedule
  3. To assign employee performance goals
  4. To record daily sales transactions

Explanation

A disaster recovery plan specifies how critical systems and data will be restored after an outage or disaster. It focuses on recovery of technology and operations rather than routine business activities.

Question 18Exam identification pending - no source supplied

A company wants to ensure that a data file has not been altered without detection. Which technique is most appropriate?

  1. Renaming the file to a random string
  2. Appending a computed checksum or hash value Correct answer.
  3. Compressing the file to save space
  4. Storing the file on a removable drive

Explanation

A checksum or cryptographic hash is computed from the file's contents, so any change alters the resulting value and reveals tampering. Compression, renaming, and media choice do not provide integrity verification.

Question 19Exam identification pending - no source supplied

In an entity-relationship model, what does a cardinality of many-to-many between two entities indicate?

  1. No relationship exists between the entities
  2. One entity must contain the primary key of the other
  3. Each record in one entity relates to at most one record in the other
  4. Each record in one entity relates to several records in the other, and vice versa Correct answer.

Explanation

Many-to-many cardinality means a record in either entity can be associated with multiple records in the other. Relational databases implement it with an intermediate linking table.

Question 20Exam identification pending - no source supplied

Which audit trail feature is most important for an accounting information system?

  1. It removes all historical transactions after year end
  2. It permits authorized changes to be traced from source document to financial statement Correct answer.
  3. It prevents managers from viewing reports
  4. It allows records to be edited without leaving evidence

Explanation

An audit trail provides a path from source documents through processing to reported amounts, so changes and balances can be verified. It supports both internal control and external audit.

Question 21Exam identification pending - no source supplied

A company's system allows a cashier to both collect customer payments and update the accounts receivable records. Which internal control weakness does this represent?

  1. Failure to use batch totals
  2. Inadequate segregation of custody and recordkeeping Correct answer.
  3. Improper approval of credit limits
  4. Lack of physical safeguards over inventory

Explanation

Handling cash (custody) and recording receivables (recordkeeping) are incompatible duties that should be separated. Combining them allows a person to conceal a theft by altering the records.

Question 22Exam identification pending - no source supplied

Which of the following best describes the purpose of a systems development life cycle (SDLC)?

  1. To provide a structured sequence of phases for building and maintaining information systems Correct answer.
  2. To guarantee that a new system will have no software defects
  3. To replace the need for testing before implementation
  4. To eliminate the need for user involvement in system design

Explanation

The SDLC organizes system development into phases such as planning, analysis, design, implementation, and maintenance. This structure improves control and communication but does not eliminate defects or testing.

Question 23Exam identification pending - no source supplied

During which SDLC phase are user information requirements most heavily gathered and documented?

  1. Systems analysis Correct answer.
  2. System design
  3. Implementation
  4. Maintenance

Explanation

The systems analysis phase investigates the existing system and defines user needs, producing documented requirements. Design then translates those requirements into technical specifications.

Question 24Exam identification pending - no source supplied

A company wants a new accounting system with minimal development cost and rapid deployment, and it is willing to accept limited customization. Which acquisition approach best fits?

  1. Building a custom system from scratch
  2. Extending the SDLC with additional design cycles
  3. Outsourcing full custom development
  4. Purchasing commercial off-the-shelf software Correct answer.

Explanation

Commercial off-the-shelf software is prebuilt and configured rather than coded, which lowers cost and speeds deployment. The trade-off is reduced flexibility to fit unusual requirements.

Question 25Exam identification pending - no source supplied

Which of the following is a characteristic of a well-designed data warehouse used for management reporting?

  1. It stores only the most recent transaction for each customer
  2. It integrates data from multiple sources and is organized for query and analysis Correct answer.
  3. It replaces the need for source systems entirely
  4. It is optimized for high-volume daily transaction entry

Explanation

A data warehouse consolidates data from operational systems and structures it for analysis and reporting. It complements rather than replaces the transaction-processing systems that feed it.

Question 26Exam identification pending - no source supplied

Which element of the COBIT framework describes the collection of practices and activities that must be performed to achieve a governance or management objective?

  1. A maturity level
  2. A domain
  3. A process Correct answer.
  4. An enabler

Explanation

COBIT organizes governance and management objectives into processes, which are sets of practices and activities that accomplish a specific objective. Enablers are broader organizational resources that support governance, and domains are groupings of processes.

Question 27Exam identification pending - no source supplied

In an accounting information system, which component is responsible for capturing transaction data at the point where an economic event occurs?

  1. The source data automation subsystem Correct answer.
  2. The internal audit function
  3. The reporting subsystem
  4. The general ledger master file

Explanation

Source data automation captures transaction data as close to the event as possible, reducing manual entry errors. Reporting and the general ledger operate on data after capture, and internal audit provides independent assurance.

Question 28Exam identification pending - no source supplied

A company's sales system automatically checks a customer's available credit before accepting an order. This is best classified as which type of control?

  1. Compensating physical control
  2. Detective general control
  3. Preventive application control Correct answer.
  4. Corrective general control

Explanation

The credit check blocks an order before it is accepted, which makes it preventive, and it operates on a specific transaction-processing function, which makes it an application control. Detective controls identify problems after the fact, and general controls apply to the IT environment as a whole.

Question 29Exam identification pending - no source supplied

Which document typically authorizes a vendor payment by matching a purchase order, receiving report, and vendor invoice?

  1. A three-way match voucher Correct answer.
  2. A bill of lading
  3. A purchase requisition
  4. A remittance advice

Explanation

A voucher package supported by a three-way match of the purchase order, receiving report, and invoice authorizes payment and helps ensure only ordered and received goods are paid for. Requisitions and bills of lading precede this step.

Question 30Exam identification pending - no source supplied

In the revenue cycle, which control best mitigates the risk of shipping goods to a customer with poor credit?

  1. Reconciling the bank statement monthly
  2. Segregating the credit approval function from the sales function Correct answer.
  3. Restricting access to the cash receipts journal
  4. Requiring sequential numbering of shipping documents

Explanation

Independent credit approval before shipment prevents sales personnel from overriding credit limits to make a sale. The other controls address cash handling, completeness of shipments, and access, but not credit risk.

Question 31Exam identification pending - no source supplied

Which of the following best describes the purpose of an enterprise resource planning (ERP) system?

  1. To eliminate the need for a chart of accounts
  2. To store only historical financial data for external reporting
  3. To integrate data and business processes across functional areas into a single system Correct answer.
  4. To replace the need for internal controls over financial reporting

Explanation

An ERP system uses a centralized database and integrated modules so that data entered once is shared across functions such as sales, inventory, and accounting. It does not remove the need for controls or for accounts.

Question 32Exam identification pending - no source supplied

A firm uses a database where each transaction record stores the complete customer name and address along with every sale. Which data-modeling problem does this create?

  1. Insufficient data encryption
  2. Referential integrity enforcement
  3. Data redundancy with update anomalies Correct answer.
  4. Loss of primary key uniqueness

Explanation

Storing the same customer attributes on every transaction record duplicates data and creates update anomalies, where a change must be made in many places. Normalization separates customer data into its own table referenced by a key.

Question 33Exam identification pending - no source supplied

Which of the following is the most appropriate technique for validating that a customer identification number entered on a sales order already exists in the customer master file?

  1. A validity check Correct answer.
  2. A reasonableness check
  3. A limit check
  4. A field format check

Explanation

A validity check compares entered data against an existing master file to confirm the value exists. Limit and reasonableness checks test magnitude, and format checks test the pattern of characters.

Question 34Exam identification pending - no source supplied

A company wants to test whether all shipments made during a period were billed to customers. Which audit procedure provides the strongest evidence?

  1. Recalculate the sales tax on a sample of invoices
  2. Compare the sales journal to the general ledger
  3. Trace a sample of shipping documents forward to sales invoices Correct answer.
  4. Trace a sample of sales invoices back to shipping documents

Explanation

Testing completeness requires starting with the source evidence of shipments and tracing forward to recorded invoices to detect unrecorded sales. Tracing from invoices back to shipments tests occurrence, not completeness.

Question 35Exam identification pending - no source supplied

Which of the following best describes the role of a data dictionary in an accounting information system?

  1. It stores the transaction history for the general ledger
  2. It documents the definition, format, and allowed values of data elements Correct answer.
  3. It schedules batch jobs for nightly processing
  4. It encrypts data during transmission

Explanation

A data dictionary is a repository of metadata that defines each data element, its type, size, and permissible values, supporting consistent data use and control. It does not store transactions, encrypt data, or schedule jobs.

Question 36Exam identification pending - no source supplied

A company implements a hot site as part of its business continuity planning. What distinguishes a hot site from a cold site?

  1. A hot site is a mutual agreement with another company to share facilities
  2. A hot site is fully equipped and ready to operate almost immediately Correct answer.
  3. A hot site is used only for testing recovery procedures
  4. A hot site stores only backup tapes off-site

Explanation

A hot site contains the hardware, software, and network connections needed to resume operations with minimal delay. A cold site provides space and basic infrastructure but requires equipment installation.

Question 37Exam identification pending - no source supplied

Which of the following is the primary purpose of segmenting a local area network and placing the accounting database on an internal subnet protected by access rules?

  1. To eliminate the need for user authentication
  2. To limit the scope of access and reduce the risk of unauthorized internal exposure Correct answer.
  3. To convert batch processing into real-time processing
  4. To increase the speed of internet browsing for employees

Explanation

Network segmentation restricts which hosts can reach sensitive systems, containing the impact of compromised accounts or malware. It does not replace authentication or affect processing mode.

Question 38Exam identification pending - no source supplied

Which of the following best describes the concept of defense in depth in information security?

  1. Relying on a single strong password policy for all users
  2. Layering multiple independent controls so that a failure of one does not expose the system Correct answer.
  3. Encrypting all data with one algorithm
  4. Restricting security responsibility to the IT department

Explanation

Defense in depth uses overlapping controls across people, process, and technology so that no single control failure results in a breach. Single controls and centralized responsibility create single points of failure.

Question 39Exam identification pending - no source supplied

An employee receives an email that appears to come from the payroll office and asks the employee to confirm login credentials via a link. Which threat does this represent?

  1. Eavesdropping
  2. Shoulder surfing
  3. Data diddling
  4. Phishing Correct answer.

Explanation

Phishing uses fraudulent messages that impersonate a trusted source to trick recipients into revealing credentials or other sensitive information. Shoulder surfing and eavesdropping involve direct observation or interception, and data diddling involves altering data before or during entry.

Question 40Exam identification pending - no source supplied

Which of the following is the most significant risk created when a company grants a single database administrator both the ability to modify production data and the ability to change access permissions?

  1. The company will need to purchase additional storage
  2. The administrator can conceal unauthorized changes by altering access rights Correct answer.
  3. The administrator will require additional training
  4. The database will process transactions more slowly

Explanation

Combining data modification rights with the power to change access permissions lets one person both commit and conceal a fraudulent act, violating segregation of duties. Performance, training, and storage are not the primary control risk.

Question 41Exam identification pending - no source supplied

Which of the following best describes the purpose of generalized audit software in an AIS audit?

  1. To extract and analyze client data for tests of controls and substantive testing Correct answer.
  2. To replace the auditor's professional judgment
  3. To design the client's internal control system
  4. To prepare the client's financial statements

Explanation

Generalized audit software lets auditors read, extract, and analyze client data files to perform tests such as recomputation, stratification, and exception reporting. It supports but does not replace auditor judgment, and it is not a client accounting tool.

Question 42Exam identification pending - no source supplied

A company processes payroll for 500 employees but the payroll register shows 505 paychecks issued. Which control would most likely detect this discrepancy?

  1. Requiring supervisors to approve overtime hours
  2. Reconciling the number of paychecks issued to the number of employees in the payroll master file Correct answer.
  3. Using prenumbered paychecks
  4. Restricting access to the payroll master file

Explanation

A reconciliation comparing checks issued with the authorized employee list detects fictitious or duplicate payments. Prenumbering supports completeness of the check sequence but does not by itself reveal extra payees.

Question 43Exam identification pending - no source supplied

Which of the following best describes the role of extensible Business Reporting Language (XBRL) in financial reporting?

  1. It replaces the need for an audit of the financial statements
  2. It encrypts financial reports during transmission
  3. It tags financial data with standardized definitions to enable automated exchange and analysis Correct answer.
  4. It stores the general ledger's detailed transaction records

Explanation

XBRL applies standardized tags to financial facts so that software can consistently extract, compare, and analyze reported data. It is a reporting format, not an encryption method, audit substitute, or transaction repository.

Question 44Exam identification pending - no source supplied

Which of the following is the most appropriate control over the risk of unauthorized changes to a production application program?

  1. Monthly review of the aged accounts receivable trial balance
  2. Daily reconciliation of the bank account
  3. Formal change management with testing and approval before implementation Correct answer.
  4. Annual physical inventory counts

Explanation

Change management ensures that program modifications are authorized, tested, and approved before being placed in production, reducing the risk of unauthorized or faulty changes. The other controls address financial data accuracy, not program integrity.

Question 45Exam identification pending - no source supplied

A system records the user ID, date, and time of every entry made to the accounts payable master file. Which control objective does this logging primarily support?

  1. Confidentiality of vendor pricing
  2. Availability of the system during peak loads
  3. Accountability for changes through an audit trail Correct answer.
  4. Accuracy of currency translation

Explanation

Logging user identity and timing creates an audit trail that supports accountability by allowing changes to be traced to individuals. It does not by itself ensure confidentiality, availability, or computational accuracy.

Question 46Exam identification pending - no source supplied

Which of the following best describes the role of a check digit in data entry controls?

  1. It confirms that a field contains only alphabetic characters
  2. It detects transcription errors in an identification number Correct answer.
  3. It compares two fields for consistency
  4. It verifies that a value falls within an acceptable range

Explanation

A check digit is computed from the other digits of an identification number and recomputed on entry, so a single-digit error or transposition usually causes the recomputation to fail. It does not test range, character type, or field consistency.

Question 47Exam identification pending - no source supplied

A company's system allows the same user to enter a journal entry and approve it for posting. Which risk is most directly created?

  1. Unauthorized or fraudulent entries can be posted without independent review Correct answer.
  2. The chart of accounts will become invalid
  3. The system will run out of storage space
  4. The audit trail will be deleted automatically

Explanation

Combining entry and approval removes the independent check that catches errors or fraud, allowing unauthorized entries to reach the ledger. The other outcomes are unrelated to the segregation failure.

Question 48Exam identification pending - no source supplied

Which of the following best describes the purpose of a request for proposal (RFP) when a company acquires a new accounting system?

  1. To communicate detailed requirements so vendors can propose solutions and pricing Correct answer.
  2. To serve as the final user acceptance test plan
  3. To replace the feasibility study
  4. To document the completed system design after implementation

Explanation

An RFP states the organization's functional and technical requirements and invites vendors to respond with proposed solutions, costs, and terms. It precedes design and testing and complements rather than replaces feasibility analysis.

Question 49Exam identification pending - no source supplied

A company chooses a commercial off-the-shelf accounting package instead of custom development. Which trade-off is most typical of this choice?

  1. Elimination of the need for user training
  2. Complete control over source code with minimal configuration
  3. Lower licensing cost with unlimited customization
  4. Faster deployment at the cost of adapting processes to the package Correct answer.

Explanation

Commercial packages can be acquired and implemented quickly, but organizations often must adapt their business processes to the software's built-in logic. Custom development offers more tailoring but takes longer and costs more.

Question 50Exam identification pending - no source supplied

Which of the following is the best example of an output control in an accounting information system?

  1. Requiring a valid password at login
  2. Distributing payroll reports only to authorized recipients Correct answer.
  3. Reconciling the accounts payable subsidiary ledger to the general ledger
  4. Using a check digit on a part number

Explanation

Output controls govern the distribution, retention, and review of system reports to ensure they reach only authorized users. Passwords and check digits are input controls, and reconciliation is a processing control.