chapter 19

Accounting Information Systems, 12e (Romney/Steinbart)Chapter 19 Special Topics in REA Modeling

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.Answer: DPage Ref: 555Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

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 mass-produced 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.Answer: CPage Ref: 553Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

3) In an expanded revenue cycle REA diagram, sales order number is most likely to be a foreign key in A) Call on Customer.B) Fill Customer Order.C) Ship Order.D) Take Customer Order.Answer: BPage Ref: 549Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

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4) In an expanded revenue cycle REA diagram, 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.Answer: DPage Ref: 549Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

5) In an expanded revenue cycle REA diagram, 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.Answer: BPage Ref: 549Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

6) In an expanded revenue cycle REA diagram, picking ticket number is most likely to be a primary key inA) Call on Customers.B) Fill Customer Order.C) Ship Order.D) Take Customer Order.Answer: BPage Ref: 549Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

7) In an expanded revenue cycle REA diagram, picking ticket number is most likely to be a foreign key inA) Customers.B) Fill Customer Order.C) Ship Order.D) Take Customer OrderAnswer: CPage Ref: 549Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic


8) In an REA model, rental transactions differ from sales transactions in thatA) each rental has a part number.B) each rental has a unique serial number.C) rental transactions require completely different REA models than sales transactions.D) All of the above are ways in which rental transactions differ from sales transactions.Answer: BPage Ref: 553Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

9) Concerning the relationship from the Rent Item to the Receive Cash events: 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) 0,1B) 1,1C) 1,ND) N,MAnswer: CPage Ref: 554Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

10) The relationship between the Rent Item and Return Item events is most likely 1:1 for all except which of the following reasons?A) A return must be for a rented item.B) A rented item can only be returned once.C) Rented items are accounted for separately.D) All rented items must be returned.Answer: DPage Ref: 554Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

11) In an expenditure cycle diagram, which of the following is an example of an event that larger organizations might want to include in their extended REA model?A) Request B) OrderC) Ship OrderD) Fill OrderAnswer: APage Ref: 549Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic


12) 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 a relationship table because prices can vary over time. D) Actual cost can be stored as an attribute of the Inventory table for organizations that value inventory based on the most recent amount paid.Answer: DPage Ref: 550-551Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

13) Which is the most likely primary key for the Inventory–Request_Goods table?A) Product numberB) Product number - Purchase order numberC) Product number - Purchase requisition numberD) Purchase requisition numberAnswer: CPage Ref: 551Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

14) Which is the most likely primary key for the Pay for Goods table?A) Cash transaction numberB) Check number C) Invoice numberD) Receiving report number, check numberAnswer: BPage Ref: 551Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

15) For a service business, the minimum cardinalities between Sales event and Inventory entity are most likely both 0 for all except which of the following reasons?A) Service businesses don't sell inventory, they only use inventory to perform services.B) A sale doesn't have to include any inventory.C) Inventory can exist that hasn't been part of a sale yet.D) Some services only require labor.Answer: APage Ref: 552Objective: Learning Objective 1Difficulty : DifficultAACSB: Analytic


16) The minimum cardinality from the Sales event to the Services entity is most likely 1 becauseA) every sale includes performing a service.B) a service is only recorded once a sale has occurred.C) only 1 service is provided for each sale.D) the minimum cardinality would not be 1; it would most likely be 0.Answer: APage Ref: 552Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

17) A dental office would likely model the relationships between the Sales event and both the Services and Supplies Resource entities asA) M:NB) 1:1C) 1:ND) 0:1Answer: APage Ref: 552Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

18) In a relational database, details about activities such as Cleaning, X-Rays, Fillings, Root Canals, Crowns, and Extractions would all be stored in which table?A) Services B) Sales C) Inventory D) Those activities would be stored as part of a relationship, not a table.Answer: APage Ref: 552Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

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; groupB) more than one; individualC) one; group D) one; individualAnswer: BPage Ref: 555Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic


20) The minimum cardinalities between a location, such as Warehouse, and a resource, like Inventory, will likely be 0 for all except which of the following reasons?A) One specific inventory item could be stored at several different warehouses.B) A warehouse could be currently empty. C) Not all kinds of inventory are stored at each warehouse.D) Inventory could include products not yet available for sale.Answer: APage Ref: 555Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

21) Since the same inventory items may be stored in several different warehouses, the maximum cardinality from Inventory to Warehouse is most likely ________.A) 0B) NC) 1D) determined by the number of warehouses compared to the number of inventory itemsAnswer: BPage Ref: 555Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

22) Relationships between resources and agents, such as Inventory and Supplier, reflect the 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) cost; revenueB) performance; behaviorC) responsibility; accountabilityD) segregation of duties; internal controlAnswer: CPage Ref: 555Objective: Learning Objective 1Difficulty : DifficultAACSB: Reflective Thinking

23) Warehouse number is most likely to be a foreign key in: A) Order InventoryB) Disburse CashC) Receive InventoryD) InventoryAnswer: CPage Ref: 551Objective: Learning Objective 1Difficulty : DifficultAACSB: Analytic


24) Supplier number is least likely to be a foreign key in: A) Order InventoryB) Disburse CashC) Receive InventoryD) WarehouseAnswer: DPage Ref: 551Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

25) Financial Institution number is most likely to be a foreign key in: A) CashB) Disburse CashC) Receive InventoryD) WarehouseAnswer: APage Ref: 551Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

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) 0; NB) 0; 1C) 1; ND) M; NAnswer: CPage Ref: 551Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic

27) Supplier number is most likely to be a foreign key in: A) Inventory–Request_InventoryB) Receive InventoryC) SupplierD) WarehouseAnswer: BPage Ref: 551Objective: Learning Objective 1Difficulty : EasyAACSB: Analytic


28) In an REA diagram for HRM/payroll cycles, the ________ entity is linked to almost every other entity in the diagram.A) EmployeeB) Job titleC) PayrollD) Worker I.D.Answer: APage Ref: 559Objective: Learning Objective 2Difficulty : EasyAACSB: Analytic

29) In the human resources REA model, the relationship between Skills and Employees is typically modeled as M:N becauseA) one employee may possess many skills, and one skill may be possessed by more than one employee.B) many employees possess skills, and many skills are possessed by employees.C) employees can be trained to learn all skills, and all skills are possessed by at least one employee.D) the relationship would be 1:N not M:N, because most employees are hired for a specific job that requires a specific skill, even though a specific job could be done by many employees.Answer: APage Ref: 559Objective: Learning Objective 2Difficulty : DifficultAACSB: Analytic

30) The ________ entity stores much of the data typically found in the employee (payroll) master file.A) Time WorkedB) EmployeeC) HRD) PayrollAnswer: BPage Ref: 559Objective: Learning Objective 2Difficulty : EasyAACSB: Analytic

31) In an REA diagram for the HR/Payroll cycle, the relationship between Employees and Training is typicallty M:N for all except which of the following reasons?A) One employee may attend the same training event more than once.B) Each employee may attend more than one training event.C) Each training event may have more than one employee attend.D) One training event may be offered more than once. Answer: APage Ref: 559Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic


32) In an REA diagram for the HR/Payroll cycle, the ________ relationship between Skills and Recruiting reflects the fact that one specific advertisement may list several specific skills and, over time, there may be several advertisements for one specific skill. A) 1:1B) 1:NC) M:ND) 0:NAnswer: CPage Ref: 560Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

33) The Interview event stores detailed data about each job interview. Since hiring only happens once, but there may have been several interviews, Interview is linked to the Hire Employees event in a(n) ________ relationship.A) 1:NB) 1:1C) M:ND) 0:NAnswer: APage Ref: 560Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

34) When modeling the issuance of debt, the maximum cardinality from Disburse Cash to Issue Debt is 1 because A) interest is usually only paid at the maturity date.B) one check is written for the total interest due.C) the Issue Debt event is not related to Disburse Cash event; cash is received, not given.D) the minimum cardinality would be 1, but the maximum cardinality should be N.Answer: BPage Ref: 561Objective: Learning Objective 2Difficulty : DifficultAACSB: Analytic

35) The temporal difference between Request Inventory and Order Inventory is reflected by theA) Request Inventory minimum cardinality of 1.B) Request Inventory maximum of N.C) Order Inventory maximum of N.D) Order Inventory minimum of 0.Answer: DPage Ref: 561Objective: Learning Objective 1Difficulty : DifficultAACSB: Reflective Thinking


36) The relationship between the Disburse Cash and Issue Stock events is modeled as being M:N for all except which of the following reasons?A) One dividend check could be paid to shareholders that purchased stock at different times.B) Shareholders could receive several dividend checks over time.C) Checks must be written to each shareholder for dividend payments.D) Stock can be issued more than once over a period of time.Answer: CPage Ref: 561Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

37) 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) 1:1B) 1:NC) M:ND) none of the aboveAnswer: APage Ref: 553Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

38) It is not necessary to connect the Time Used entity to specific business events, however, doing so facilitates A) evaluating performance at a very detailed level.B) general performance evaluation.C) evaluating the quality of the services received.D) determining productivity of employees, such as how many customer calls were made, or how many sales were made.Answer: APage Ref: 560Objective: Learning Objective 2Difficulty : DifficultAACSB: Analytic

39) An REA diagram for the production cycle models the relationships between the Perform Job Operations event and the Job Operations List entity, as 1:N becauseA) time standards change over time. B) one specific activity has only one standard time for completion.C) activities are only performed once on work in process jobs.D) many activities are usually required for specific work in process jobs.Answer: BPage Ref: 558Objective: Learning Objective 2Difficulty : DifficultAACSB: Analytic


40) Data about actual raw materials used in production is stored in the ________ entity.A) Finished goodsB) Raw materialsC) Raw materials issuance D) Work-in-processAnswer: CPage Ref: 557Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

41) The ________ entity is used to collect and summarize data about the raw materials, labor, and machine operations used during production of inventory.A) Finished Goods InventoryB) Raw MaterialsC) Issue Raw Materials D) Work-in-ProcessAnswer: DPage Ref: 558Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

42) In the table called Perform Machine Operations, which is the most likely primary key?A) Equipment numberB) Job Operation numberC) Machine Operation NumberD) Machine Operations List NumberAnswer: CPage Ref: 557Objective: Learning Objective 2Difficulty : EasyAACSB: Analytic

43) Employee number is most likely to be a foreign key in A) Perform Job Operations.B) Perform Machine Operations.C) Machine Operations List.D) Work in Process.Answer: APage Ref: 557Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic


44) 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 materialsB) Order raw materialsC) Use of labor in productionD) Use of machinery and equipment in productionAnswer: BPage Ref: 556Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

45) 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 are benefits of an integrated enterprise-wide data model.Answer: APage Ref: 562Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

46) Which of the following diagrams represents the cardinality pairs for a typical, hierarchical organization?A)

B)

C)

D)

Answer: BPage Ref: 559Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic


47) Which of the following diagrams represents the cardinality pairs for a CPA firm where managers drop off tax files in a 'check out' area, and any available employee can check out the file and complete the return for the manager. Of course, employees are always working on more than one return at a time, and all managers are dropping off files.A)

B)

C)

D)

Answer: DPage Ref: 560Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

48) Which of the following diagrams represents the cardinality pairs in a situation where a specific skill is taught at training sessions held periodically, but training is not offered for all skills? A)

B)

C)

D)

Answer: APage Ref: 559Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic


49) Which of the following accurately represents typical cardinalities for two entities in the finance cycle?A)

B)

C)

D)

Answer: CPage Ref: 561Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

50) Which of the following accurately represents typical cardinalities for two entities in the finance cycle?A)

B)

C)

D)



51) Which of the following diagrams represents the cardinality pairs in a situation where a finished product requires one or more machine operations, and machines usage is recorded to specific production runs?A)

B)

C)

D)



52) Which of the following diagrams represents the cardinality pairs in a situation where a finished product requires one or more labor operations, and labor usage is recorded to specific production runs?A)

B)

C)

D)



53) Which of the following diagrams represents the cardinality pairs in a situation where a specific production run results in a specific finished good, and a specific finished good is produced periodically?A)

B)

C)

D)


54) Which of the following diagrams represents the cardinality pairs in a situation where some services are offered that have not been performed, other services have been performed many times, and sometimes several services are provided together for a client?A)

B)

C)

D)



55) Which of the following accurately represents typical cardinalities for two entities in the production cycle?A)

B)

C)

D)


56) Which of the following accurately represents typical cardinalities for two entities in the HR/Payroll cycle?A)

B)

C)

D)



57) Which of the following diagrams represents the cardinality pairs in a situation where interviews are conducted individually and potential employees are able to interview for more than one position, or the same position at different times?A)

B)

C)

D)


58) Which of the following diagrams represents the cardinality pairs in a situation where many people will apply for a specific position, and some of the applicants have applied in the past?A)

B)

C)

D)



59) Which of the following diagrams represents the cardinality pairs in a situation where supervisors conduct individual performance evaluations with each of the employees they supervise?A)

B)

C)

D)


60) Which of the following diagrams represents the cardinality pairs in a situation where a business that rents power tools (not all of which get rented) writes separate rental agreements for each tool, so renters don't have to return all items at the same time?A)

B)

C)

D)



61) Which of the following diagrams represents the cardinality pairs in a situation where rented items must be returned intact, and several rented items could be returned at the same time?A)

B)

C)

D)


62) Which of the following diagrams represents the cardinality pairs in a situation where deliveries are frequently made to the specific warehouse where the goods will be stored?A)

B)

C)

D)



63) Which of the following diagrams represents the cardinality pairs in a situation where one or more warehouses are currently empty due to downsizing, and production of new products has been delayed due to difficulty obtaining materials?A)

B)

C)

D)

Answer: APage Ref: 550Objective: Learning Objective 1Difficulty : DifficultAACSB: Analytic

64) Which of the following diagrams represents the cardinality pairs in a situation where goods don't have to be requisitioned, but if they are, requisitions are approved and processed before purchase orders are issued?A)

B)

C)

D)

Answer: DPage Ref: 550Objective: Learning Objective 1Difficulty : DifficultAACSB: Analytic


65) Which of the following diagrams represents the cardinality pairs in a situation where customer orders are filled one by one, but not all ordered items may be available at all times?A)

B)

C)

D)

Answer: BPage Ref: 548Objective: Learning Objective 1Difficulty : DifficultAACSB: Analytic

66) Give an example of an M:N Agent-Event relationship.Answer: 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 the ability to monitor each individual's performance.Page Ref: 555Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

67) Why is the event Issue Debt often modeled as a separate event entity?Answer: 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.Page Ref: 560Objective: Learning Objective 2Difficulty : EasyAACSB: Analytic


68) Why might an REA diagram show relationships between agents?Answer: 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.Page Ref: 558Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

69) Why might an REA diagram show relationships between resources and agents?Answer: 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.Page Ref: 555Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic

70) Why is cost information stored in several relational tables?Answer: 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.Page Ref: 550-551Objective: Learning Objective 1Difficulty : ModerateAACSB: Analytic


71) What are the benefits of an integrated enterprise-wide data model?Answer: 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 non-financial data also results in improved internal reporting. It can also significantly improve the support provided for managerial decision-making.Page Ref: 562Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic

72) Describe the relationships between Recruiting event and Skills, and between Recruiting event and Job Applicants.Answer: 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.Page Ref: 559-560Objective: Learning Objective 2Difficulty : ModerateAACSB: Analytic


chapter 19

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