Accounting Information Systems (AIS) MCQs

1. What is the primary objective of an AIS?
(A) To prepare tax returns
(B) To manage financial data for decision-making
(C) To monitor employee performance
(D) To provide marketing insights

2. Which of the following is NOT a component of an AIS?
(A) People
(B) Procedures and instructions
(C) Software and hardware
(D) Customer preferences

3. The general ledger in an AIS primarily:
(A) Tracks inventory movements
(B) Summarizes all financial transactions
(C) Handles payroll calculations
(D) Analyzes customer behavior

4. Which of the following is an example of input in an AIS?
(A) Financial statements
(B) Journal entries
(C) Internal audit reports
(D) Budget forecasts

5. Real-time processing in an AIS is most suitable for:
(A) Generating financial statements
(B) Processing customer payments
(C) Conducting quarterly reviews
(D) Preparing tax returns

6. Which of the following is an example of an AIS output?
(A) Trial balance
(B) Source document
(C) User manual
(D) Data entry template

7. Which system integrates financial data with other functional areas like HR and supply chain?
(A) AIS
(B) ERP
(C) CRM
(D) IMS

8. The key advantage of a cloud-based AIS is:
(A) Higher hardware costs
(B) Enhanced data accessibility
(C) Reduced internet dependency
(D) Limited scalability

9. A database in an AIS is primarily used for:
(A) Storing, retrieving, and managing data
(B) Marketing analysis
(C) Legal compliance checks
(D) Auditing financial transactions

10. Batch processing is ideal for:
(A) Payroll
(B) Real-time inventory updates
(C) Online banking
(D) Customer service management

11. Which of the following describes an AIS audit trail?
(A) Documentation of marketing strategies
(B) A chronological record of system changes
(C) A log of all transactions and adjustments in the system
(D) An analysis of the organization’s performance

12. What is a primary function of internal controls in an AIS?
(A) Enhance system speed
(B) Ensure data security and reliability
(C) Simplify financial statements
(D) Analyze employee performance

13. A preventive control in an AIS includes:
(A) Segregation of duties
(B) Reconciliation of accounts
(C) Generating reports
(D) Reviewing historical trends

14. In AIS, a “turnaround document” refers to:
(A) A management report
(B) A document used to improve internal controls
(C) An output document used as input for subsequent processing
(D) An audit review checklist

15. Which of the following ensures data integrity in an AIS?
(A) Use of strong passwords
(B) Data validation checks
(C) Regular software updates
(D) All of the above

16. What is the role of an AIS in fraud detection?
(A) To conceal fraudulent activities
(B) To prevent all fraudulent activities
(C) To monitor and identify irregularities in data and processes
(D) To focus solely on financial reporting

17. Which technology is commonly used for AIS data encryption?
(A) Blockchain
(B) VPN
(C) AES (Advanced Encryption Standard)
(D) HTML

18. An ERP system differs from a traditional AIS in that it:
(A) Focuses solely on financial transactions
(B) Integrates data across multiple business functions
(C) Requires manual data entry
(D) Lacks scalability

19. Which of the following is an example of AIS hardware?
(A) Financial reports
(B) Servers
(C) Database software
(D) Customer invoices

20. Which module of an AIS typically handles vendor invoices and payments?
(A) Accounts receivable
(B) Accounts payable
(C) General ledger
(D) Payroll

21. A well-designed AIS improves decision-making by:
(A) Providing timely and accurate information
(B) Generating financial reports faster
(C) Simplifying data entry processes
(D) Reducing system maintenance costs

22. The function of a data flow diagram in AIS is to:
(A) Describe system hardware specifications
(B) Represent data processes and flows within the system
(C) Track physical assets of the company
(D) Highlight internal control weaknesses

23. In AIS, the segregation of duties helps prevent:
(A) Errors in data processing
(B) Fraud and unauthorized access
(C) Delays in financial reporting
(D) Redundancies in data storage

24. Which of the following best describes an AIS control weakness?
(A) Excessive documentation requirements
(B) Inadequate user training
(C) Failure to segregate critical duties
(D) Outdated financial data

25. What is a key risk in AIS data migration?
(A) Data redundancy
(B) Loss of critical information during transfer
(C) Increased system accessibility
(D) Reduced processing speed