THE UNIVERSITY OF THE SOUTH PACIFIC

SCHOOL OF ACCOUNTING AND FINANCE

AF 121 – ACCOUNTING INFORMATION SYSTEMS

(Semester 1 / 2016)

(Face to Face)

MID–SEMESTER EXAM

(Time allowed: 2 hours + 10 mins extra reading time)

(Weighting: 35% towards Coursework)
INSTRUCTIONS FOR CANDIDATES:

 ANSWER ALL 3 QUESTIONS IN THE ANSWER BOOKLET

 ANSWER THE MULTIPLE CHOICE QUESTIONS IN THE ANSWER GRID
PROVIDED.
 ATTEMPT ALL QUESTIONS.
 LABEL YOUR ANSWERS CLEARLY.

SECTION DESCRIPTION MARK

ALLOCATION

A Multiple Choice Questions 30

B Short Answer Questions 25

C Case Study 25

TOTAL 80
_________________________________________________________________________

SECTION A MULTIPLE CHOICE QUESTIONS 30 marks____

Circle the BEST answer for each of the following multiple-choice questions in the answer
grid provided in the answer booklet. Each multiple-choice question is worth one (1) mark.

1. Which of the following is NOT true about Accounting Information Systems (AISs)?
A. All AIS are computerized
B AIS may report both financial and nonfinancial information
C. AIS, in addition to collecting and distributing large amounts of data and information, also
organize and store data for future issues
D. A student who has an interest in both accounting and IT, will find many job opportunities
that combine these knowledge and skills areas

2. Which of the following is likely to be information rather than data?

A. Sales price
B. Customer number
C. Net profit
D. Employee name

3. Which respect to computerized AIS, computers:

A. Turn data into information in all cases
B. Make audit trails easier to follow
C. Cannot catch mistakes as well as humans
D. Do not generally process information more quickly than humans

4. Which of the following is NOT an ethical theory?

A. Teleological
B. Geologicalism
C. Utilitarianism
D. Deontological

5. Which of the following is most likely to contain only numbers?

A. Domain address
B. URL address
C. IP address
D. Postal address

6. Which of the following enables users to view data with a web browser?
A. Intranet
B. Extranet
C. Internet
D. All of these
7. Which of the following is NOT an example of a computer fraud?
A. Entering invoices in the AIS for services that were not provided and depositing the cheque
in a private bank account
B. Sending an email to everyone in your address book asking for a $1 donation
C. Programming a change to decrease the dividend payment to stockholders to a firm and
issuing an cheque to your friend for the total change.
D. Using a university computer to set up a realistic looking virtual “store front” to sell toys,
although you don’t have any – you just don’t have time to get a real job and need some
money to cover the rent.

8. What is it called when someone intentionally changes data before, during, or after they are
entered into the computer (with the intent to illegally obtain information or assets)?
A. Trojan Horse
B. Logic Bomb
C. Data diddling
D. A Cookie

9. Which of these is not helpful in attempting to thwart computer crime and abuse?
A. Enlist the support of top management
B. Keep employees in the dark so that they cannot perpetrate them
C. Use strong passwords
D. Design and test disaster recovery programs

10. Which of the following is most likely correct with regards to computer criminals:
A. Have nontechnical backgrounds
B. Have noncriminal backgrounds
C. Are young and bright
D. Have probably not been caught, so we don’t really know much about them

11. Smishing is a form of:

A. Fishing
B. Local Area Network
C. Computer Worm
D. Identity Theft

12. While setting up the opening balances for a company, Jone observes an amount of $4,532
in the “Amount Left to be allocated.” Which of the following is NOT a possible reason for
this?
A. Jone entered GST Paid as a negative figure
B. Jone entered Accumulated Depreciation as a positive figure
C. Jone entered the amount for an account incorrectly
D. Jone did not enter one of the liability accounts
13. Mere is the owner of FijiCatering. She created her company file and saved it in the C Drive
of her computer. MYOB created two file types: FijiCatering.myo and FijiCatering.box. She
now wants to take the file home so she can complete her work on her Personal Computer at
home. Which of the following is INCORRECT with regards to transferring an MYOB file
from one PC to another?
A. Mere could email the MYOB file to herself and access it from home
B. Mere can copy the file to her flash drive
C. Mere has to copy both the *.myo and *.box file in order for the MYOB file to open at
home
D. Mere has to copy only one of the files in the PLUS19ED folder

14. Vijay uses MYOB to process his accounts. His computer settings is set to US(English).
He receives an invoice from Vinod Patel for 10 bags of cement. The date on the invoice
is
29/08/2015. Vijay enters the date of the transaction into MYOB as stated on the invoice.
Which of the following is INCORRECT with regards to this?

A. MYOB will not accept the date entered by Vijay

B. Vijay has to enter the date in the format: mm/dd/yy
C. Vijay can enter the date according to the format on the invoice if he changes the
computer settings to UK (English)
D. MYOB will automatically detect that 29 is a day as it is greater than 12 and will
adjust the date accordingly

15. Tanya has recorded a purchase bill in MYOB. Joseph who also has access to MYOB
accidentally deletes the bill created by Tanya. Which of the following is CORRECT with
respect to this?
A. The deleted bill is in the Recycle bin and can be restored
B. As long as the file has yet to be saved, the bill can be recovered
C. Tanya simply has to click on the Undo button to reverse the deletion by Joseph
D. The record has been deleted and it has to be re-entered again

16. By default, Accounts in MYOB will be set to which tax code?

A. N-T
B. GST
C. CAP
D. TAX

17. When entering transactions in the thirteenth period, dates must be prefixed with which of
the following?
A. #
B. $
C. *
D. %

18. Which of the following statements is FALSE?

A. The trial balance is a list of the active general ledger accounts with debit and credit
balances.
B. A balanced trial balance guarantees that there are no errors in the nominal ledger
entries.
C. An unbalanced trial balance indicates that an error is present.
D. Trial Balance while not as useful as financial reports for assisting managers make
decisions are useful for recording account balances according to the chart of accounts.

19. Which of the following is INCORRECT with regards to the following screenshot?

A. By default, MYOB does not require a password for users to sign on

B. You can only use the Administrator User ID if you have administrator privileges on
your PC
C. You can sign on by simply clicking on OK without entering a password
D. MYOB allows you to create a password whenever you want
20. In a document flowchart, what symbol represents a decision?
A. Diamond
B. Rectangle
C. Parallelogram
D. Circle

21. Which of the following is NOT a criteria for an account to be deleted in MYOB?
A. It must be a level 1 account
B. It must not be linked to any transactions
C. It must have a zero balance
D. It must be inactive for at least 2 years
22.
Which of the following is INCORRECT with respect to the 13th month in MYOB?
A. It is the conversion month
B. It is an accounting period option when setting up the company
C.
To enter transactions in the 13th period, users must enter the date preceded by an
asterisk
D. It is generally used by accountants to pass balance day adjustments so as not to
distort other months

23. Which of the following best defines VAT Exclusive Price (VEP)?
A. VAT does not apply to the product
B. The VAT is included in the price of the product
C. The price of the product does not include VAT
D. A VAT refund cannot be claimed on the product

24. A data flow diagram helps a reader to understand:

A. The data structures of tables
B. The resources involved in transactions
C. The destinations of important reports
D. The logical operations of programs

25. __________ is (are) a collection of activities or flow of work in an organization that

creates value.
A. An economic event
B. Accounting transactions
C. A business process
D. A chart of accounts

26. Which of the following is NOT true with regards to a header account in MYOB?
A. It can be deleted
B. Appears in bold
C. Specifies the title for a group of accounts
D. Transaction can be assigned to header accounts

27. When creating your company file in MYOB, which of the following is NOT an option
when setting up your accounts list?
A. Export a list of accounts
B. Build your own accounts list
C. Import a list of accounts
D. Start with a list provided by MYOB

28. Which of the following would be entered as a negative number in the MYOB Opening
Balances setup?
A. Inventory
B. Cash
C. Provision for Doubtful Debts
D. Accounts Payable

29. Which of MYOB’s modules can I use to record the payment of goods I received from
a supplier?
A. Banking
B. Sales
C. Purchases
D. Both A and C

30. Which of the following is NOT an option in MYOB’s Easy Setup Assistant?
A. Accounts
B. Sales
C. Inventory
D. Customize
SECTION B: SHORT ANSWER QUESTIONS: (25 marks)

Question 1

Define and describe the role of accounting and explain how information systems have altered the
role of accounting and the job of the accountant.

(5 marks)

The traditional role of accounting and accountants was recording the details of an
organization’s transactions. The accounting process, and the accountants who were part of that
process, acted as data storage and classification system, with transactions classified based on
the accounts they affected, with these accounts detailed in the general journal and then the
amounts posted to the respective accounts that appeared in the general ledger. Journalizing and
posting transactions, as well as preparing trial balances and financial systems, can now be
performed in a highly efficient manner by computerized information systems. Increasingly, the
role of the accountant is being seen as to add value and provide and interpret information for an
organization. The role of the accountant has changed from a recorder of data to a user of
information.

Question 2

Wantok Kava (Fiji) Limited (WKL) is a local Kava distributer in Fiji. WKL sources its Kava
from Fiji, Solomon Islands and Vanuatu. WKL has its main headquarters in Suva and has
branches in Solomon Islands and Vanuatu. WKL also sell soft drinks, cigarettes and lollies at
their branches. During the month of January WKL made $32,441 (VEP) of sales, 85% of these
sales were made in Fiji and the remainder were export sales. The company also incurred the
following expenses:

Description Amount (VEP)

Purchase of Kava plants $13,222
Wages $2,331
Soft Drinks $326
Cigarettes $882
Lollies $23

Required:

Calculate WKL’s VAT refund/VAT payable for the month of Jan. Assume a 9% Vat Rate.
(Show all working and round off to two decimal places).
 (6 marks)

Total Sales 32,411.00

Local Sales 27,549.35

VAT Collected 2,479.44

VAT Paid VAT

Soft Drinks $326 $29.34
Cigarettes $882 $79.38
Lollies $23 $2.07
VAT Paid $110.79

VAT Payable 2,368.65

Question 3

In MYOB’s purchasing module, users can either choose a quote, order and bill when entering a
purchase. Differentiate between a quote, order and bill. What is the relationship between these
three MYOB purchasing options and what are their accounting impact?

You can enter a quote to keep a record of an estimate or quote you received from one of your
suppliers. A quote has no impact on your inventory levels and can be changed to an order or a
bill when you are ready to purchase.

An order is a purchase where no service or item has been received. While orders do not affect
your financial figures, they do affect your inventory levels. Orders don’t create transactions
unless you have paid a deposit to the supplier. An order can be changed to a bill but not a quote.

An accounts payable transaction is not recorded at this time. You can only record a received
items transaction in the item layout, and only against an order.

A bill is usually created when you receive the items or services you ordered and are required to
pay the supplier. Recording a bill will update the appropriate accounts, including the account
for tracking payables. Bills can be open (unpaid), closed (paid) or debit (negative purchase). A
bill cannot be changed to a quote or an order.

(6 marks)
Question 4

How important is the presence of senior management in the IT governance committee?

An IT Governance committee should be comprised of top management in order to ensure that

appropriate priority is assigned to the function of governing the overall development and
operation of the organisation’s IT systems. Since the committee’s functions include aligning the
IT systems to business strategy and to budget funds and personnel for the effective use of IT
systems, it is important that high-ranking company officials be aware of these priorities and
involved in their development only top management has the power to undertake these
responsibilities.

(4 marks)

Question 5

Describe the steps to delete an account in MYOB

(4 marks)

Select Setup from the Menu Bar

Select Easy Setup Assistant

Select Accounts List

Highlight the account you wish to delete

Click on the Delete Button

______________________________________________________________________________

SECTION C Case Study (25 marks)_______________

Sunny Beach resort is an elegant, thriving resort with 200 rooms, 40 villas and 50 bures in Nadi
on the pristine Waivulavula beach. Guests visiting the resort can enjoy the outdoor water park,
play golf on one of the two championship golf courses, surf, and swim or enjoy a massage. There
are also three dining rooms, card rooms and nightly movies, and live weekend entertainment.

The resort uses a computerized system to make room reservations and bill customers. Following
standard policy for the industry, the resort also offers authorized travel agents a 10 percent
commission on room bookings made by unrecognized travel agents. Each week, the resort prints
an exception report of bookings made unrecognized travel agents. However, the managers
usually pay the commissions anyway, partly because they don’t want to anger the travel agencies
and partly because the computer file that maintains the list of authorized agents is not kept up-to-
date.

The current booking process commences with the customer making a booking with a travel
agent. The travel agent then calls the resort to make the booking. The resort makes the booking
and then emails a confirmation of the booking with the customer’s booking reference. The travel
agent will then email this to the customer. The resort then compiles a monthly commission report
for each travel agent and then emails this to the travel agents.

Although management has not discovered it, several employees are exploiting these
circumstances. As often as possible, they call the resort from outside phones, pose as travel
agents, book rooms for friends and relatives, and collect the commissions. The incentive is
obvious: rooms costing as little as $100 per day result in payments of $10 per day to “travel
agencies” that book them. The scam has been going on for years, and several guests now book
their rooms exclusively through these employees, finding these people particularly courteous and
helpful.

Questions:

1. Would you say this is a computer fraud? Why or why not?

(5 marks)

Define Computer fraud: (1 marks)

Refers specifically to the use of computers or networks to commit a fraudulent act. To be
defined as fraud the activity must involve:

1. The use of a computer to create an intentional, dishonest misrepresentation of fact and

 2. The intentional attempt to cause another person or business to do or refrain from
doing something which cause loss.

Why or why not (7 marks)

This is NOT a computer fraud (1 mark)

Use of computers NO – these employees do not 1 mark

necessarily use computers to
commit this scam. They
merely call from outside
booking rooms for customers
and pose as travel agents.
Intentional YES – the employees 1 mark
intentionally are posing as
travel agencies to receive
commissions
Dishonest Misrepresentation of YES – they are 1 mark
Fact misrepresenting the fact that
they are travel agents when
they are not
Cause Loss No – Although the resort pays 1 mark
a $10 commission to these
“travel agencies.” This is not
necessarily a loss as they
would have incurred this cost
anyway.

2. Identify one preventative, detective and corrective internal control you would recommend
that would enable the resort’s managers to prevent such offenses? Classify the controls as
either preventative, detective or corrective.
(6 marks)

Preventative Bookings for 2 marks

customers can only
be made by
recognized by
approved travel
agents. The travel
agent lists need to be
updated on a regular
basis.
Detective A periodic report of 2 marks
 bookings made by
travel agents can be
generated and
checked against the
approved travel
agent list.
Corrective Bookings made by 2 marks
illegal travel agents
will be cancelled and
commissions will not
be paid.

3. Draw a document flowchart of the Sunny Beach Resort booking system incorporating
your recommended internal controls.
(10 marks)
 4. The company is using an old computerized accounting system. The company is now
considering using MYOB. List and describe four (4) benefits of the MYOB software.

- Use friendly
- Menu driven
- Generate a variety of reports
- Affordable
- Easy to install and setup
(4 marks)

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