8

8
Student: ___________________________________________________________________________
1. View-driven accounting information systems have been criticized because they:

A. Focus on a very small, well-defined group of important business events.
B. Often process data in batches.
C. Both focus on a very small, well-defined group of important business events and often process data in
batches
D. Neither focus on a very small, well-defined group of important business events nor often process data
in batches
2. Data in a view-driven accounting information system are:
A. Highly aggregated.
B. Stored in a single place.
C. Both highly aggregated and stored in a single place
D. Neither highly aggregated nor stored in a single place
3. In view-driven accounting information systems, internal controls are often:
A. Protective.
B. Expensive.
C. Both protective and expensive.
D. Neither protective nor expensive.
4. In contrast with view-driven AIS, event-driven accounting information systems focus on:
A. Business processes.
B. Journal entries.
C. Ledger accounts.
D. All of these.
5. Data in a view-driven AIS are often stored in multiple places, such as:
A. Journals.
B. Ledgers.
C. Both journals and ledgers.
D. Neither journals nor ledgers.
6. In a view-driven AIS, where you would expect to see stored data about product quality?
A. In the journal
B. In the ledger
C. Both in the journal and in the ledger
D. Neither in the journal nor in the ledger
7. Which of the following pieces of data would you expect to find in an event-driven AIS, but not in a view-
driven AIS?
A. Accounts to debit
B. Accounts to credit
C. Details about customer preferences for product color
D. All of these
8. View-driven AIS are designed to support a particular way of looking at the data they contain. Which of
the following is not a view commonly supported by a view-driven AIS?
A. Balance sheet
B. Income statement
C. Statement of shareholders' equity
D. Budget variance report
9. A company wants to prepare a schedule of assets that separates current and long-term assets, as well as
reports relevant dollar amounts. Which type of AIS could the company use to prepare such a schedule?
A. View-driven
B. Event-driven
C. Either view-driven or event-driven
D. Neither view-driven nor event-driven
10. View-driven accounting information systems often foster the idea of stovepiping in organizations. Which
of the following is an example of stovepiping?
A. All department heads meet to discuss company strategy.
B. A sales representative quotes a price that is less than cost.
C Both all department heads meet to discuss company strategy and a sales representative quotes a price
. that is less than cost are examples of stovepiping.
D Neither all department heads meet to discuss company strategy nor a sales representative quotes a price
. that is less than cost is an example of stovepiping.
11. An accounting information system captures data that are eventually grouped by account, and then used to
prepare general purpose financial statements. The system could be described as:
A. A view-driven AIS.
B. An event-driven AIS.
C. Either a view-driven AIS or an event-driven AIS.
D. Neither a view-driven AIS nor an event-driven AIS.
12. Information technology controls, such as a password rotation policy, can be used in:
A. View-driven AIS.
B. Event-driven AIS.
C. Both view-driven AIS and event-driven AIS.
D. Neither view-driven AIS nor event-driven AIS.
13. Which of the following statements about view- and event-driven AIS is most true?
A. The two are differentiated by the presence or absence of information technology.
B. The two are differentiated by the use of paper or electronic documents.
C Both the two are differentiated by the presence or absence of information technology and the two are
. differentiated by the use of paper or electronic documents are true.
D Neither the two are differentiated by the presence or absence of information technology nor the two are
. differentiated by the use of paper or electronic documents is true.
14. View-driven AIS have been criticized because their data are often outdated. Which of the following
journal entries for the purchase of inventory best illustrates that criticism?
A. Debit purchases, credit cash
B. Debit inventory, credit cash
C. Debit purchases, credit inventory
D. Debit inventory, credit purchases
15. A journal entry in a view-driven AIS debits equipment for $10,000, credits cash for $2,000 and credits
notes payable for $8,000. Which of the following pieces of data would you expect to see in an event-
driven AIS but not in the view-driven AIS?
A. The transaction date
B. The expected life of the equipment
C. Both the transaction date and the expected life of the equipment
D. Neither the transaction date nor the expected life of the equipment
16. The accounting cycle comprises ten steps. In which step would you expect to find a difference between
view-driven and event-driven AIS?
A. Analyze transactions.
B. Record adjusting entries.
C. Both analyze transactions and record adjusting entries.
D. Neither analyze transactions nor record adjusting entries.
17. Consider the following REA diagram as you respond to the question:
The box in the first column represents a(n):

A. Resource
B. Event
C. Internal agent
D. External agent
The box in the second column represents a(n):

A. Resource
B. Event
C. Internal agent
D. External agent
The boxes in the third column represent a(n):

A. Resource and internal agent
B. Event and internal agent
C. Internal agent and external agent
D. Resource and external agent
The numbers and symbols in parentheses in the model are called:

A. Cardinalities
B. Database construction tools
C. Internal controls
D. Relationship descriptors
How many agents are represented in the model?

A. One
B. Two
C. Three
D. Four
Which of the following is an internal agent in the model?

A. Vendor
B. Purchasing agent
C. Both vendor and purchasing agent
D. Neither vendor nor purchasing agent
Which of the following is an external agent in the model?

A. Vendor
B. Purchasing agent
Which of the following statements about the REA model is least true?
A. A purchase of supplies can occur with no purchasing agent involvement.
B. A purchasing agent may be involved in no purchases of supplies.
C. Exactly one purchasing agent must be involved in each purchase of supplies.
D. Purchasing agents and vendors have no relationship outside the context of a "purchase supplies"
transaction.
25. Consider the following short case as you respond to the next nine questions:
ABC Consulting's employees include management, consultants and office staff. The company accepts
engagements related to internal control design and evaluation, as well as enterprise risk management
plans. A customer can purchase the two services independently of one another. The office staff bills
clients on a monthly basis with terms of 2/10, n/30. All consulting clients must sign a contract, which is
also signed by an ABC manager. One member of ABC's management team assigns at least one consultant
to work with the customer until the engagement is complete. Consultants can be assigned to multiple
engagements simultaneously, but every consultant must always be working on at least one engagement.
Each client may have only one contract with ABC at a time.
In a REA model of the case, how many boxes would you expect to see in the second column?
A. One
B. Two
C. Three or four
D. More than four
In a REA model of the case, events would include:
A. Sign contract
B. Assign employees
C. Bill customer
D. All of these
How many agents would be depicted in the rightmost column of a REA model of the case?
A. One
B. Two
C. Three
D. None. Agents do not appear in the rightmost column of a REA model.
A REA model of the case would include ___ resources.
A. Zero
B. One or two
C. Three or four
D. More than four
The smallest possible number of internal agents in the third column of a REA model of the case is:
A. One
B. Two
C. Three
D. None. Internal agents do not appear in the third column of a REA model.
How many external agents would be depicted in the first column of a REA model of the case?
A. Zero
B. One
C. Two
D. Three
In a REA model of the case, the cardinalities between the "assign employees" event and the
agent "employees" would be:
A. Assign employees (0,*) --- (1,1) Employees
B. Assign employees (0,*) --- (1,*) Employees
C. Assign employees (1,*) --- (1,*) Employees
D. None of these
32. To answer the question, consider the following partial REA model in the context of the case:
If Box A is labeled "assign employees," Box B could be labeled:

A. Management
B. Consultants
C. Complete engagement
D. Any of these
If Box B is labeled "consultants," Box A could be labeled:

A. Assign employees
B. Complete engagement
C. Either assign employees or complete engagement
D. Neither assign employees nor complete engagement
34. When the maximum cardinalities between two elements of a REA model are one and many:
A. Include the primary key from the "one side" in the table on the "many side."
B. Include the primary key from the "many side" in the table on the "one side."
C. Create a junction table.
D. The REA model has errors.
35. When the maximum cardinalities between two elements of a REA model are many and many:
A. Create a junction table.
B. Redesign the REA model to eliminate them.
C. The REA model has errors.
D. One of the elements must be a resource.
36. Enforcing ___ tells a database to update a junction table whenever separate tables are updated.
A. Internal control
B. Referential integrity
C. The accounting cycle
D. Expectancy theory
37. Which of the following statements about database tables and REA models is most true?
A. Every box in a REA model requires the creation of exactly one table.
B. Cardinalities help ensure that database tables are in third normal form.
C Both every box in a REA model requires the creation of exactly one table and cardinalities help ensure
. that database tables are in third normal form are true.
D Neither every box in a REA model requires the creation of exactly one table nor cardinalities help
. ensure that database tables are in third normal form is true.
38. Which of the following is likely to require at least one junction table if present in a REA model?
A. Purchasing goods from suppliers
B. Sending an order to a supplier
C. Both purchasing goods from suppliers and sending an order to a supplier
D. Neither purchasing goods from suppliers nor sending an order to a supplier
39. A REA model includes "send order" as an event and "customer" as an agent. Which of the following is
most true?
A. The primary key from the "send order" table should be included in the "customer" table.
B. The primary key from the "customer" table should be included in the "send order" table.
CBoth the primary key from the "send order" table should be included in the "customer" table and the
. primary key from the "customer" table should be included in the "send order" table
DNeither the primary key from the "send order" table should be included in the "customer" table nor the
40. Which of the following is most likely to be a primary key in an "employee" table?
A. Last name
B. Employee ID number
C. Both last name and employee ID number together
D. Either last name or employee ID number separately
41. Based on the principles of normalization, an inventory table would include all of the following fields
except:
A. Transaction number
B. Item code
C. Description
D. Beginning quantity on hand
42. Consider the following REA model as you answer the question:
How many database tables will be required by the preceding REA model?
A. Four
B. Five
C. Six
D. Some other number
How many junction tables will be required by the preceding REA model?
A. Two
B. Three
C. Four
Which of the following would be foreign keys in the "purchase inventory" table?
A. Supplier ID
B. Employee ID
C. Both supplier ID and employee ID
D. Neither supplier ID nor employee ID
45. Consider the following REA model as you answer the question?
Which of the following tables is indicated by the preceding REA model:

A. Supplier/employee table
B. Supplier/purchase inventory table
C. Employee/purchase inventory table
D. Inventory/purchase inventory table
Based on the preceding REA model, which of the following statements is most true?
A. The inventory table will not have a foreign key.
B. The primary key from the "purchase inventory" table will appear in the supplier table.
C. The primary key from the "purchase inventory" table will appear in the employee table.
D. All of these statements are true.
A field labeled "transaction ID" is likely to appear in which of the following tables based on the REA
model above?
A. Purchase inventory table
B. Inventory/purchase inventory table
C. Both purchase inventory table and inventory/purchase inventory table
D. Neither purchase inventory table nor inventory/purchase inventory table
A field labeled "inventory ID" is likely to appear in which of the following tables? (i) inventory table, (ii)
purchase inventory table, (iii) inventory/purchase inventory table.
A. I and II only
B. I and III only
C. II and III only
D. I, II and III
The "employee" table is likely to include which of the following fields? (i) department, (ii) gender.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
The "employee" table is likely to include all of the following fields except:
A. Department
B. Gender
C. Last name
D. Age
51. Consider the following diagram as you answer the questions:
The most appropriate label for "A" is:

A. applicant
B. application materials
C. submit application materials
D. some other label
The most appropriate label for "B" is:

A. perform initial screening
B. record receipt of application materials
C. either perform initial screening or record receipt of application materials
D. some other label
Every "Event B" is completed by exactly one employee, but an individual employee may complete
no "Event B" transactions. If employees who do complete "Event B" transactions may do so without
limit, which of the following is the most appropriate for "C?"
A. (0,1)
B. (1,1)
C. (0,*)
D. (1,*)
The most appropriate label for "D" is:

A. applicant
C. verify application materials
D. some other label
Jon and Sam are current employees. Jon has never hired a new employee, but Sam has hired many.
Which of the following is most appropriate for "E?"
A. (0,1)
B. (1,1)
C. (0,*)
D. (1,*)
Which of the following junction tables would be included in a relational database of the model?
A. employee/interview finalists
B. employee/hire applicant
C. Both employee/interview finalists and employee/hire applicant
D. Neither employee/interview finalists nor employee/hire applicant
Which of the following statements is most true?
A. A new agent should be added to the model.
B. A new event should be added to the model.
C. The primary key from the "hire applicant" table should be included in the "employee" table.
D. The primary key from the "employee" table should be included in the "hire applicant" table.
The smallest number of interviews an applicant may have is:

A. zero
B. one
C. many
D. not determinable based on the model.
Frodo and Gandalf are current employees. Frodo has participated in no instances of Event B, while
Gandalf has participated in at least five. Which of the following statements is most true?
A. The primary key from the "employee" table will be the primary key of the "Event B" table.
B. The primary key from the "Event B" table will be the primary key of the "employee" table.
C. The primary key from the "Event B" table will be a foreign key in the "employee" table.
D. The primary key from the "employee" table will be a foreign key in the "Event B" table.
All of the following will be fields in the "interview finalists" table except:
A. Employee ID
B. Applicant ID
C. Interview date
D. Interview time
61. Which of the following statements are true based on the REA model provided?
____ A sales transaction may involve five different inventory items.

____ All employees are in the sales department.
____ At least one foreign key will be present in the "sell inventory" table.
____ Every customer is assigned a specific sales representative.
____ Human error risk is likely to be a concern for this company.
____ Multiple junction tables will be required to implement the REA model in a database.
____ Some inventory items may sit in the warehouse indefinitely.
____ The "sell inventory" table will have a compound primary key.
____ The company appropriately segregates duties.
____ The company may be exposed to credit risk.
62. Fill in the blanks below based on the weaknesses of view-driven AIS described in the text.
a. They focus on a very small, well-defined group of important ___.
b. They often process data in ___, frequently at the ___.
c. The data in a view-driven AIS are often ___ because of when they are processed.
d. The system captures a very limited set of data: ___, ___ and ___.
e. Data in a view-driven system are highly ___ and stored in ___.
f. In view-driven systems, the ___ process is often protective and expensive.
63. Fill in the blanks below based on the principles of REA modeling.
a. ___ events focus on activities involved with providing goods and services to customers.
b. ___ events deal with recording and maintaining data.
c. ___ events are concerned with human decision making.
d. The leftmost column in a REA model presents ___.
e. The middle column in a REA model presents ___.
f. The rightmost column in a REA model presents ___.
g. ___ tell an accounting professional about the relationships between elements of a REA model.
64. Most AIS designers and auditors find it best to start a REA model by identifying events, which come in
three broad categories: operating, information and decision/management. Which category best describes
each item below?
a. Buying supplies
b. Deciding how to document an AIS
c. Designing internal controls
d. Developing a risk management plan
e. Issuing capital stock
f. Motivating employees
g. Posting transactions to the ledger
h. Purchasing advertising
i. Recording transactions in a journal
j. Selling equipment
65. Determine whether each of the following items applies to: (a) view-driven systems only, (b) event-driven
systems only, (c) both view- and event-driven systems or (d) neither view- nor event-driven systems.
1) Capable of generating a balance sheet
2) Captures a more comprehensive data set
3) Comprises five basic parts
4) Converts information into decisions
5) Incorporates data that may not be presented in the general purpose financial statements
6) Must use information technology
7) Records transactions using the principles of debit and credit
8) Should be designed with the FASB Conceptual Framework in mind
9) Transforms data into information
10) Typically incorporates journals and ledgers
66. Create cardinalities for each of the following independent situations. Format the cardinalities as they
would appear in a REA model.
a. A customer may purchase inventory multiple times; every inventory purchase is tied to a single
customer.
b. A "purchase inventory" transaction may involve multiple inventory items; an individual inventory item
may be sold many times or not at all.
c. Each inventory purchase is authorized by a single purchasing agent; the number of authorizations for
each purchasing agent can be as few as one, but has no upper limit.
d. A bank deposit is processed by a single teller; a teller can process an unlimited number of deposits, but
must process at least one each day.
e. An individual "process bank deposit" transaction may involve multiple checks; an individual check can
be deposited only one time.
67. Consider the REA model below:
List all the tables indicated by the model. In each table, specify the primary key.
68. Based on a REA model, an accountant created an inventory table, a purchase inventory table and
a purchases/inventory table. Several field names that might appear in those tables are listed below.
Organize them into the appropriate tables based on the principles of database normalization. Specify
primary keys with underlines and foreign keys with brackets. Some of the field names may be used in
more than one table; others may not be used at all.
"As of" date for beginning inventory
Beginning quantity on hand
Cost per unit of beginning inventory
Inventory description
Inventory item number
Number of units purchased
Price per unit purchased
Purchasing agent ID
Total cost of inventory on hand
Total cost of inventory purchases
Transaction date
Transaction number
Vendor ID
69. The Association of Certified Fraud Examiners offers one- and two-day seminars to its members
throughout the year; members find out about the seminars via the association's web site or a catalog
mailed on a quarterly basis. Each seminar must have at least ten registrants, but can have no more than
thirty registrants. The ACFE maintains registrant records independently of each seminar since a registrant
may be involved in multiple seminars over time. Association staff process seminar registrations, which
may come in through the mail, over the phone or via the web site. Payment must be made in advance in
one or more installments; the association does not refund registration fees for "no-shows." Each seminar
has a single speaker who is paid a fixed fee regardless of the number of attendees; the speaker's fee is
paid at the end of the seminar. A speaker may present the same seminar multiple times during the year,
but each speaker is focused on a single seminar topic. At the end of each seminar, attendees receive a
signed certificate of completion after they respond to a short quiz based on the seminar's content. Create a
REA model for the registration and collection process.
70. The Association of Certified Fraud Examiners offers one- and two-day seminars to its members
throughout the year; members find out about the seminars via the association's web site or a catalog
mailed on a quarterly basis. Each seminar must have at least ten registrants, but can have no more than
thirty registrants. Association staff process seminar registrations, which may come in through the mail,
over the phone or via the web site. Payment must be made in advance; the association does not refund
registration fees for "no-shows." Each seminar has a single speaker who is paid a fixed fee regardless of
the number of attendees; the speaker's fee is paid at the end of the seminar. A speaker may present the
same seminar multiple times during the year, but each speaker is focused on a single seminar topic. At the
end of each seminar, attendees receive a signed certificate of completion after they respond to a short quiz
based on the seminar's content.
Create database specifications (table and field names) for the registration and collection process. Indicate
primary keys by underlining and foreign keys with brackets.
71. List five weaknesses associated with view-driven accounting information systems.
72. In your own words, explain the steps used to create a REA model.
73. Prepare a narrative description of the business process illustrated in the REA model below.
74. Analyze the REA model below. Identify and describe (in narrative form) the tables you would create
based on the model; do not describe the tables by listing the field names.
75. REA models often are created using the six-step process described in the text; after they are created, they
are often used to create database tables. List and discuss three internal controls you would recommend
implementing in the six-step process and/or the database creation process.
8 Key
1. View-driven accounting information systems have been criticized because they:
A. Focus on a very small, well-defined group of important business events.
B. Often process data in batches.
C. Both focus on a very small, well-defined group of important business events and often process data
in batches
D. Neither focus on a very small, well-defined group of important business events nor often process
data in batches
AACSB: Analytical Thinking
AICPA: FN Reporting
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Hurt - Chapter 08 #1
Learning Objective: 08-01 Compare and contrast view-driven and event-driven accounting information systems.
Topic: Types of accounting information systems
2. Data in a view-driven accounting information system are:
A. Highly aggregated.
B. Stored in a single place.
C. Both highly aggregated and stored in a single place
D. Neither highly aggregated nor stored in a single place
AICPA: FN Reporting
Blooms: Remember
Difficulty: 1 Easy
3. In view-driven accounting information systems, internal controls are often:
A. Protective.
B. Expensive.
C. Both protective and expensive.
D. Neither protective nor expensive.
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
4. In contrast with view-driven AIS, event-driven accounting information systems focus on:
A. Business processes.
B. Journal entries.
C. Ledger accounts.
D. All of these.
AICPA: FN Reporting
Blooms: Remember
Difficulty: 1 Easy
5. Data in a view-driven AIS are often stored in multiple places, such as:
A. Journals.
B. Ledgers.
C. Both journals and ledgers.
D. Neither journals nor ledgers.
AICPA: FN Reporting
Blooms: Understand
Difficulty: 2 Medium
6. In a view-driven AIS, where you would expect to see stored data about product quality?
A. In the journal
B. In the ledger
C. Both in the journal and in the ledger
D. Neither in the journal nor in the ledger
AICPA: FN Reporting
Blooms: Understand
7. Which of the following pieces of data would you expect to find in an event-driven AIS, but not in a
view-driven AIS?
A. Accounts to debit
B. Accounts to credit
C. Details about customer preferences for product color
D. All of these
AICPA: FN Reporting
Blooms: Understand
8. View-driven AIS are designed to support a particular way of looking at the data they contain. Which
of the following is not a view commonly supported by a view-driven AIS?
A. Balance sheet
B. Income statement
C. Statement of shareholders' equity
D. Budget variance report
AICPA: FN Reporting
Blooms: Understand
9. A company wants to prepare a schedule of assets that separates current and long-term assets, as
well as reports relevant dollar amounts. Which type of AIS could the company use to prepare such a
schedule?
A. View-driven
B. Event-driven
C. Either view-driven or event-driven
D. Neither view-driven nor event-driven
AICPA: FN Reporting
Blooms: Understand
10. View-driven accounting information systems often foster the idea of stovepiping in organizations.
Which of the following is an example of stovepiping?
A. All department heads meet to discuss company strategy.
B. A sales representative quotes a price that is less than cost.
C Both all department heads meet to discuss company strategy and a sales representative quotes a
. price that is less than cost are examples of stovepiping.
D Neither all department heads meet to discuss company strategy nor a sales representative quotes a
. price that is less than cost is an example of stovepiping.
AICPA: BB Critical Thinking
Blooms: Analyze
Difficulty: 3 Hard
11. An accounting information system captures data that are eventually grouped by account, and then used
to prepare general purpose financial statements. The system could be described as:
A. A view-driven AIS.
B. An event-driven AIS.
C. Either a view-driven AIS or an event-driven AIS.
D. Neither a view-driven AIS nor an event-driven AIS.
AICPA: FN Reporting
Blooms: Analyze
Difficulty: 3 Hard
12. Information technology controls, such as a password rotation policy, can be used in:
A. View-driven AIS.
B. Event-driven AIS.
C. Both view-driven AIS and event-driven AIS.
D. Neither view-driven AIS nor event-driven AIS.
AICPA: FN Risk Analysis
Blooms: Understand
13. Which of the following statements about view- and event-driven AIS is most true?
A. The two are differentiated by the presence or absence of information technology.
B. The two are differentiated by the use of paper or electronic documents.
C Both the two are differentiated by the presence or absence of information technology and the two
. are differentiated by the use of paper or electronic documents are true.
D Neither the two are differentiated by the presence or absence of information technology nor the two
. are differentiated by the use of paper or electronic documents is true.
Blooms: Analyze
Difficulty: 3 Hard
14. View-driven AIS have been criticized because their data are often outdated. Which of the following
journal entries for the purchase of inventory best illustrates that criticism?
A. Debit purchases, credit cash
B. Debit inventory, credit cash
C. Debit purchases, credit inventory
D. Debit inventory, credit purchases
Blooms: Analyze
Difficulty: 3 Hard
15. A journal entry in a view-driven AIS debits equipment for $10,000, credits cash for $2,000 and credits
notes payable for $8,000. Which of the following pieces of data would you expect to see in an event-
driven AIS but not in the view-driven AIS?
A. The transaction date
B. The expected life of the equipment
C. Both the transaction date and the expected life of the equipment
D. Neither the transaction date nor the expected life of the equipment
Blooms: Analyze
Difficulty: 3 Hard
16. The accounting cycle comprises ten steps. In which step would you expect to find a difference
between view-driven and event-driven AIS?
A. Analyze transactions.
B. Record adjusting entries.
C. Both analyze transactions and record adjusting entries.
D. Neither analyze transactions nor record adjusting entries.
Blooms: Analyze
Difficulty: 3 Hard
The box in the first column represents a(n):

A. Resource
B. Event
C. Internal agent
D. External agent
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-02 Use REA modeling to represent an event-driven AIS.
Topic: REA modeling
The box in the second column represents a(n):

A. Resource
B. Event
C. Internal agent
D. External agent
Blooms: Remember
Difficulty: 1 Easy
Topic: REA modeling
The boxes in the third column represent a(n):

A. Resource and internal agent
B. Event and internal agent
C. Internal agent and external agent
D. Resource and external agent
Blooms: Remember
Difficulty: 1 Easy
Topic: REA modeling
The numbers and symbols in parentheses in the model are called:

A. Cardinalities
B. Database construction tools
C. Internal controls
D. Relationship descriptors
Blooms: Remember
Difficulty: 1 Easy
Topic: REA modeling
How many agents are represented in the model?

A. One
B. Two
C. Three
D. Four
Blooms: Remember
Difficulty: 1 Easy
Topic: REA modeling
Which of the following is an internal agent in the model?

A. Vendor
B. Purchasing agent
Blooms: Understand
Topic: REA modeling
Which of the following is an external agent in the model?

A. Vendor
B. Purchasing agent
Blooms: Understand
Topic: REA modeling
Which of the following statements about the REA model is least true?
A. A purchase of supplies can occur with no purchasing agent involvement.
B. A purchasing agent may be involved in no purchases of supplies.
C. Exactly one purchasing agent must be involved in each purchase of supplies.
D. Purchasing agents and vendors have no relationship outside the context of a "purchase supplies"
transaction.
Blooms: Understand
Topic: REA modeling
clients on a monthly basis with terms of 2/10, n/30. All consulting clients must sign a contract, which
is also signed by an ABC manager. One member of ABC's management team assigns at least one
consultant to work with the customer until the engagement is complete. Consultants can be assigned
to multiple engagements simultaneously, but every consultant must always be working on at least one
engagement. Each client may have only one contract with ABC at a time.
In a REA model of the case, how many boxes would you expect to see in the second column?
A. One
B. Two
C. Three or four
D. More than four
Sign contract, bill clients, assign consultants

Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
In a REA model of the case, events would include:
A. Sign contract
B. Assign employees
C. Bill customer
D. All of these
Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
How many agents would be depicted in the rightmost column of a REA model of the case?
A. One
B. Two
C. Three
D. None. Agents do not appear in the rightmost column of a REA model.
The agents are "employees" and "customer." Although ABC has three types of employees, separating
them would lead to four agents, which is not one of the choices.

Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
A REA model of the case would include ___ resources.
A. Zero
B. One or two
C. Three or four
D. More than four
The contract is definitely a resource. Cash may also be a resource if the REA model includes
collecting payment from the clients.

Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
The smallest possible number of internal agents in the third column of a REA model of the case
is:
A. One
B. Two
C. Three
D. None. Internal agents do not appear in the third column of a REA model.
The smallest number is "one," which would mean all employees are grouped together in the REA
model.

Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
How many external agents would be depicted in the first column of a REA model of the case?
A. Zero
B. One
C. Two
D. Three
Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
In a REA model of the case, the cardinalities between the "assign employees" event and the
agent "employees" would be:
A. Assign employees (0,*) --- (1,1) Employees
B. Assign employees (0,*) --- (1,*) Employees
C. Assign employees (1,*) --- (1,*) Employees
D. None of these
Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
If Box A is labeled "assign employees," Box B could be labeled:

A. Management
B. Consultants
C. Complete engagement
D. Any of these
Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
If Box B is labeled "consultants," Box A could be labeled:

A. Assign employees
B. Complete engagement
C. Either assign employees or complete engagement
D. Neither assign employees nor complete engagement
Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
34. When the maximum cardinalities between two elements of a REA model are one and many:
A. Include the primary key from the "one side" in the table on the "many side."
B. Include the primary key from the "many side" in the table on the "one side."
C. Create a junction table.
D. The REA model has errors.
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-03 Use a REA model to design a relational database for an event-driven AIS.
Topic: Database creation from a REA model
35. When the maximum cardinalities between two elements of a REA model are many and many:
A. Create a junction table.
B. Redesign the REA model to eliminate them.
C. The REA model has errors.
D. One of the elements must be a resource.
Blooms: Remember
Difficulty: 1 Easy
36. Enforcing ___ tells a database to update a junction table whenever separate tables are updated.
A. Internal control
B. Referential integrity
C. The accounting cycle
D. Expectancy theory
Blooms: Remember
Difficulty: 1 Easy
37. Which of the following statements about database tables and REA models is most true?
A. Every box in a REA model requires the creation of exactly one table.
B. Cardinalities help ensure that database tables are in third normal form.
C Both every box in a REA model requires the creation of exactly one table and cardinalities help
. ensure that database tables are in third normal form are true.
D Neither every box in a REA model requires the creation of exactly one table nor cardinalities help
. ensure that database tables are in third normal form is true.
Blooms: Understand
38. Which of the following is likely to require at least one junction table if present in a REA model?
A. Purchasing goods from suppliers
B. Sending an order to a supplier
C. Both purchasing goods from suppliers and sending an order to a supplier
D. Neither purchasing goods from suppliers nor sending an order to a supplier
Blooms: Understand
39. A REA model includes "send order" as an event and "customer" as an agent. Which of the following
is most true?
A. The primary key from the "send order" table should be included in the "customer" table.
B. The primary key from the "customer" table should be included in the "send order" table.
C Both the primary key from the "send order" table should be included in the "customer" table and the
DNeither the primary key from the "send order" table should be included in the "customer" table nor
. the primary key from the "customer" table should be included in the "send order" table
Blooms: Understand
40. Which of the following is most likely to be a primary key in an "employee" table?
A. Last name
B. Employee ID number
C. Both last name and employee ID number together
D. Either last name or employee ID number separately
Blooms: Understand
41. Based on the principles of normalization, an inventory table would include all of the following fields
except:
A. Transaction number
B. Item code
C. Description
D. Beginning quantity on hand
Blooms: Understand
How many database tables will be required by the preceding REA model?
A. Four
B. Five
C. Six
The model requires one table for each box PLUS an inventory/purchase inventory junction table.

Blooms: Apply
Difficulty: 3 Hard
How many junction tables will be required by the preceding REA model?
A. Two
B. Three
C. Four
The model requires one junction table (inventory/purchase inventory).

Blooms: Understand
Which of the following would be foreign keys in the "purchase inventory" table?
A. Supplier ID
B. Employee ID
C. Both supplier ID and employee ID
D. Neither supplier ID nor employee ID
Blooms: Apply
Difficulty: 3 Hard
45. Consider the following REA model as you answer the question?
Which of the following tables is indicated by the preceding REA model:

A. Supplier/employee table
B. Supplier/purchase inventory table
C. Employee/purchase inventory table
D. Inventory/purchase inventory table
Blooms: Apply
Difficulty: 3 Hard
Based on the preceding REA model, which of the following statements is most true?
A. The inventory table will not have a foreign key.
B. The primary key from the "purchase inventory" table will appear in the supplier table.
C. The primary key from the "purchase inventory" table will appear in the employee table.
D. All of these statements are true.
Blooms: Apply
Difficulty: 3 Hard
A field labeled "transaction ID" is likely to appear in which of the following tables based on the REA
model above?
A. Purchase inventory table
B. Inventory/purchase inventory table
C. Both purchase inventory table and inventory/purchase inventory table
D. Neither purchase inventory table nor inventory/purchase inventory table
Blooms: Apply
Difficulty: 3 Hard
A field labeled "inventory ID" is likely to appear in which of the following tables? (i) inventory table,
(ii) purchase inventory table, (iii) inventory/purchase inventory table.
A. I and II only
B. I and III only
C. II and III only
D. I, II and III
Blooms: Apply
Difficulty: 3 Hard
The "employee" table is likely to include which of the following fields? (i) department, (ii)
gender.
A. I only
B. II only
C. Both I and II
D. Neither I nor II
Blooms: Apply
Difficulty: 3 Hard
The "employee" table is likely to include all of the following fields except:
A. Department
B. Gender
C. Last name
D. Age
Age is a derivable attribute.

Blooms: Apply
Difficulty: 3 Hard
The most appropriate label for "A" is:

A. applicant
C. submit application materials
D. some other label
Blooms: Understand
Topic: REA modeling
The most appropriate label for "B" is:

A. perform initial screening
B. record receipt of application materials
C. either perform initial screening or record receipt of application materials
D. some other label
Blooms: Understand
Topic: REA modeling
Every "Event B" is completed by exactly one employee, but an individual employee may complete
no "Event B" transactions. If employees who do complete "Event B" transactions may do so without
limit, which of the following is the most appropriate for "C?"
A. (0,1)
B. (1,1)
C. (0,*)
D. (1,*)
Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
The most appropriate label for "D" is:

A. applicant
C. verify application materials
D. some other label
Blooms: Understand
Topic: REA modeling
Which of the following is most appropriate for "E?"
A. (0,1)
B. (1,1)
C. (0,*)
D. (1,*)
Blooms: Apply
Difficulty: 3 Hard
Topic: REA modeling
Which of the following junction tables would be included in a relational database of the model?
A. employee/interview finalists
B. employee/hire applicant
C. Both employee/interview finalists and employee/hire applicant
D. Neither employee/interview finalists nor employee/hire applicant
Blooms: Understand
Which of the following statements is most true?
A. A new agent should be added to the model.
B. A new event should be added to the model.
C. The primary key from the "hire applicant" table should be included in the "employee" table.
D. The primary key from the "employee" table should be included in the "hire applicant" table.
Blooms: Analyze
Difficulty: 3 Hard
The smallest number of interviews an applicant may have is:

A. zero
B. one
C. many
D. not determinable based on the model.
Blooms: Understand
Frodo and Gandalf are current employees. Frodo has participated in no instances of Event B, while
Gandalf has participated in at least five. Which of the following statements is most true?
A. The primary key from the "employee" table will be the primary key of the "Event B" table.
B. The primary key from the "Event B" table will be the primary key of the "employee" table.
C. The primary key from the "Event B" table will be a foreign key in the "employee" table.
D. The primary key from the "employee" table will be a foreign key in the "Event B" table.
Blooms: Analyze
Difficulty: 3 Hard
All of the following will be fields in the "interview finalists" table except:
A. Employee ID
B. Applicant ID
C. Interview date
D. Interview time
Blooms: Understand
61. Which of the following statements are true based on the REA model provided?
X A sales transaction may involve five different inventory items.

__ All employees are in the sales department.
X At least one foreign key will be present in the "sell inventory" table.
__ Every customer is assigned a specific sales representative.
X Human error risk is likely to be a concern for this company.
__ Multiple junction tables will be required to implement the REA model in a database.
X Some inventory items may sit in the warehouse indefinitely.
__ The "sell inventory" table will have a compound primary key.
__ The company appropriately segregates duties.
X The company may be exposed to credit risk.

Blooms: Analyze
Difficulty: 3 Hard
Topic: REA modeling
62. Fill in the blanks below based on the weaknesses of view-driven AIS described in the text.
a. They focus on a very small, well-defined group of important ___.
b. They often process data in ___, frequently at the ___.
c. The data in a view-driven AIS are often ___ because of when they are processed.
d. The system captures a very limited set of data: ___, ___ and ___.
e. Data in a view-driven system are highly ___ and stored in ___.
f. In view-driven systems, the ___ process is often protective and expensive.
a. business events
b. batches; end of the month
c. outdated
d. dates; accounts; amounts
e. aggregated; multiple places
f. internal control

Blooms: Remember
Difficulty: 1 Easy
63. Fill in the blanks below based on the principles of REA modeling.
a. ___ events focus on activities involved with providing goods and services to customers.
b. ___ events deal with recording and maintaining data.
c. ___ events are concerned with human decision making.
d. The leftmost column in a REA model presents ___.
e. The middle column in a REA model presents ___.
f. The rightmost column in a REA model presents ___.
g. ___ tell an accounting professional about the relationships between elements of a REA model.
a. operating
b. information
c. decision/management
d. resources
e. events
f. agents
g. cardinalities

Blooms: Remember
Difficulty: 1 Easy
Topic: REA modeling
64. Most AIS designers and auditors find it best to start a REA model by identifying events, which come
in three broad categories: operating, information and decision/management. Which category best
describes each item below?
a. Buying supplies
b. Deciding how to document an AIS
c. Designing internal controls
d. Developing a risk management plan
e. Issuing capital stock
f. Motivating employees
g. Posting transactions to the ledger
h. Purchasing advertising
i. Recording transactions in a journal
j. Selling equipment
Operating: a, e, h, j
Information: g, i
Decision/management: b, c, d, f

Blooms: Apply
Difficulty: 3 Hard
Topic: REA modeling
65. Determine whether each of the following items applies to: (a) view-driven systems only, (b) event-
driven systems only, (c) both view- and event-driven systems or (d) neither view- nor event-driven
systems.
1) Capable of generating a balance sheet
2) Captures a more comprehensive data set
3) Comprises five basic parts
4) Converts information into decisions
5) Incorporates data that may not be presented in the general purpose financial statements
6) Must use information technology
7) Records transactions using the principles of debit and credit
8) Should be designed with the FASB Conceptual Framework in mind
9) Transforms data into information
10) Typically incorporates journals and ledgers
1) c
2) b
3) c
4) d
5) b
6) d
7) a
8) c
9) c
10) a

Blooms: Analyze
Difficulty: 3 Hard
66. Create cardinalities for each of the following independent situations. Format the cardinalities as they
would appear in a REA model.
a. A customer may purchase inventory multiple times; every inventory purchase is tied to a single
customer.
b. A "purchase inventory" transaction may involve multiple inventory items; an individual inventory
item may be sold many times or not at all.
c. Each inventory purchase is authorized by a single purchasing agent; the number of authorizations
for each purchasing agent can be as few as one, but has no upper limit.
d. A bank deposit is processed by a single teller; a teller can process an unlimited number of deposits,
but must process at least one each day.
e. An individual "process bank deposit" transaction may involve multiple checks; an individual check
can be deposited only one time.
a. Purchase inventory (1,*) --- (1,1) Customer

b. Inventory (1,*) - (0,*) Purchase inventory
c. Purchase inventory (1,*) - (1,1) Purchasing agent
d. Process deposit (1,*) - (1,1) Bank teller
e. Check (0,*) - (1,1) Process deposit

Blooms: Apply
Difficulty: 3 Hard
Topic: REA modeling
67. Consider the REA model below:
List all the tables indicated by the model. In each table, specify the primary key.
Inventory: Inventory ID
Purchase inventory: Transaction ID
Inventory/purchase inventory: Inventory ID & Transaction ID
Supplier: Supplier ID
Employee: Employee ID

Blooms: Apply
Difficulty: 3 Hard
68. Based on a REA model, an accountant created an inventory table, a purchase inventory table and
a purchases/inventory table. Several field names that might appear in those tables are listed below.
Organize them into the appropriate tables based on the principles of database normalization. Specify
primary keys with underlines and foreign keys with brackets. Some of the field names may be used in
more than one table; others may not be used at all.
"As of" date for beginning inventory
Beginning quantity on hand
Cost per unit of beginning inventory
Inventory description
Inventory item number
Number of units purchased
Price per unit purchased
Purchasing agent ID
Total cost of inventory on hand
Total cost of inventory purchases
Transaction date
Transaction number
Vendor ID
Inventory table: Inventory item number, inventory description, beginning quantity on hand, cost per
unit of beginning inventory, "as of" date for beginning inventory
Purchase inventory table: Transaction number, transaction date, Purchasing agent ID, Vendor ID
Purchases/inventory table: [Transaction number], [Inventory item number], Number of units
purchased, Price per unit purchased

Blooms: Understand

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1. View-driven accounting information systems have been criticized because they:

The box in the first column represents a(n):

The box in the second column represents a(n):

The boxes in the third column represent a(n):

The numbers and symbols in parentheses in the model are called:

How many agents are represented in the model?

Which of the following is an internal agent in the model?

Which of the following is an external agent in the model?

If Box A is labeled "assign employees," Box B could be labeled:

If Box B is labeled "consultants," Box A could be labeled:

Which of the following tables is indicated by the preceding REA model:

The most appropriate label for "A" is:

The most appropriate label for "B" is:

The most appropriate label for "D" is:

The smallest number of interviews an applicant may have is:

____ A sales transaction may involve five different inventory items.

67. Consider the REA model below:

The box in the first column represents a(n):

The box in the second column represents a(n):

The boxes in the third column represent a(n):

The numbers and symbols in parentheses in the model are called:

How many agents are represented in the model?

Which of the following is an internal agent in the model?

Which of the following is an external agent in the model?

Sign contract, bill clients, assign consultants

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

If Box A is labeled "assign employees," Box B could be labeled:

If Box B is labeled "consultants," Box A could be labeled:

AACSB: Analytical Thinking

The model requires one junction table (inventory/purchase inventory).

AACSB: Analytical Thinking

Which of the following tables is indicated by the preceding REA model:

Age is a derivable attribute.

AACSB: Analytical Thinking

The most appropriate label for "A" is:

The most appropriate label for "B" is:

The most appropriate label for "D" is:

The smallest number of interviews an applicant may have is:

X A sales transaction may involve five different inventory items.

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

a. Purchase inventory (1,*) --- (1,1) Customer

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

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