THE UNIVERSITY OF THE SOUTH PACIFIC

SCHOOL OF ACCOUNTING AND FINANCE

AF 121 – ACCOUNTING INFORMATION SYSTEMS

(Semester 1 / 2015)

(Face to Face)

MID–SEMESTER EXAM

(Time allowed: 2 hours + 10 min 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 SUGGESTED

ALLOCATION TIME

A Multiple Choice Questions 35 42 MINUTES

B Short Answer Questions 30 36 MINUTES

C Case Study 35 42 MINUTES

TOTAL 100 2 HOURS

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SECTION A MULTIPLE CHOICE QUESTIONS 35 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 INCORRECT regarding the conversion month?

A. It can be any month within the current financial year
B. Opening Account balances should be entered in this month
C. You cannot enter transactions prior to that month in the current financial year
D. It can only be the month prior to the month you plan to start entering data

2. Jone created a company file and named it Bob’s Sports Barn – s11111100. Which of the
following is the location that MYOB will save the file automatically in?
A. C: drive\MYOB\ Bob’s Sports Barn – s11111100.myo
B. C: drive\Ring\ Bob’s Sports Barn – s11111100.myo
C. C: drive\Bobs\ Bob’s Sports Barn – s11111100.myo
D. C: drive\Plus19ED\ Bob’s Sports Barn – s11111100.myo

3. After you create your MYOB company, two files will be created. What are the extensions
of these two files?
A. .myo & .box
B. .myo & .exe
C. .myob & .txt
D. .myb & .exe

4. If you are using a computer with Australia (English) Time and Date settings, which of the
following is the CORRECT format to enter the dates of transactions?
A. dd/mm/yy
B. mm/yy/dd
C. mm/dd/yy
D. yy/mm/dd

5. Which of the following statements related to internal control systems is FALSE?

A. Good controls can break down due to tiredness
B. Absolute assurance is not possible
C. Detecting computer fraud is easy
D. Effectiveness is influenced by size of entity’s operations

6. What does MYOB use the Historical Balancing account for?

A. If you do not know where to allocate a transaction, you stick it in the Historical
Balancing account.

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 B. When setting up opening balances, if there is an amount left to be allocated, this
amount is taken to Historical Balancing.
C. When MYOB starts a new year, the current year’s profit rolls into Historical
Balancing.
D. If the file gets corrupted and the trial balance goes out, the difference sits in Historical
Balancing.

7. Account number 1-2200 Lease Improvements for the last 2 years has had no transactions.
The account balance is zero. Which of the following statements regarding this account
balance is CORRECT?

A. The account cannot be deleted

B. The account can be deleted
C. The account will automatically be made inactive by MYOB
D. The account is a Level 1 account

8. Which of the following is NOT one of the elements of the fraud triangle?

A. Pressure
B. Ability
C. Opportunity
D. Rationalization

9. My company sells sports goods to customers. Most of my customers are individuals. When
creating my account list in MYOB which of the following industry classifications would I
MOST likely select?

A. Service
B. Manufacturing
C. Retail
D. Other

10. Which of the following is NOT a sub process of the revenue process?

A. Sales
B. Cash Payment
C. Sales Returns
D. Cash Collection

11. Which of the following BEST defines the term: Business Process?

A. Technique that helps organisations fundamentally rethink how they work.

B. The process that assists businesses in achieving their objectives.
C. Sequence of steps performed to produce a desired result.
D. A system that provides data to assist users in performing business functions.

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12. MYOB software is divided into portions of a program that carries out a specific function.
The term that BEST describes these portions is:
A. Subprogram
B. Pieces
C. Parts
D. Modules

13. Which of the following Easy Setup Assistant Icons would you select when creating a new
customer?
A. Purchases
B. Sales
C. Inventory
D. Accounts

14. In the purchasing process, a ‘Three-Way Match’ is performed as an internal control

procedure. Which of the following documents would NOT be one of the documents involved
in a ‘Three-Way Match’ in the purchasing cycle?

A. Receipt
B. Purchase Order
C. Invoice Received
D. Receiving Report

15. Which of the following accounts should be entered as a positive number in MYOB?
A. Merchandise Inventory
B. GST Paid
C. Provision for doubtful debts
D. Improvements Amortisation

16. In order to close a customer’s account on MYOB you need to:

A. check the “inactive card” check box on the customer’s card

B. delete the customer’s card from MYOB
C. Both A and B
D. None of the above

17. Which of the following would represent proper segregation of duties?

A. The employee who has custody of cash also does accounts receivable
record keeping.
B. The employee who has custody of cash completes the bank reconciliation.
C. The employee who opens mail containing checks prepares a list of checks
received.
D. The employee who opens mail containing checks records transactions in the
general ledger.

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18. Personnel who work in the receiving area should complete all of the following processes
except

A. counting the goods received.

B. inspecting goods received for damage.
C. preparing a receiving report.
D. preparing an invoice.

19. The document prepared when purchased items are returned is a(n)

A. debit memo.
B. credit memo.
C. receiving report.
D. sales journal.

20. Which of the following tabs would I select to generate an Ageing Receivables Report?

A. Sales
B. Purchases
C. Banking
D. Payroll

21.Which of the following accounts would MOST likely be classified as a Header Account?

A. Depreciation
B. Cheque Account
C. Prepaid Expenses
D. GST Liabilities

22. Which of the following is the CORRECT procedure to enter the opening balances for
a company?

A. File  Easy Setup Assistant  Accounts  Opening Balances

B. Setup  Preferences  Accounts  Opening Balances
C. Setup  Easy Setup Assistant  Accounts  Opening Balances
D. File  Setup  Accounts  Opening Balances

23. Which of the following is the CORRECT MYOB order of the purchase process?

A. Quote  Bill  Receive Items Order

B. Quote  Order  Receive Items  Bill
C. Quote  Order  Receive Items  Invoice
D. Quote  Bill  Receive Items  Invoice

24. The Cash Purchases card is created for all EXCEPT which one of the following types of
suppliers:

A. Suppliers we deal with a one off basis

B. Suppliers whose purchases are of relatively low monetary value
C. Suppliers who do not provide discounts
D. Suppliers we deal primarily with cash

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25. MYOB comes with a sample company: Clearwater Pty Ltd. This sample company can be
used by students to practice using MYOB. Which of the following options should I click if I
want to open the sample company file?

A. SAMPLE
B. EXPLORE
C. CLEARWATER
D. OPEN

26. I have entered the details for a sales invoice. Before I click record I wish to review the
journal entries that will be affected by recording the transaction. Which of the following is
the CORRECT procedure for me achieve my objective?

A. File  Review Transaction

B. Review  Check Transaction
C. View  Journal Entry
D. Edit  Recap Transaction

27. Which of the following is the CORRECT option that I should choose if I were paying a
supplier for goods which I have recorded using the purchases module?

A. Pay Supplier
B. Pay Bill
C. Pay Invoice
D. Spend Money

28. Which of the following documents lists the quantity and description of each item included
in the shipment?

A. Picking List
B. Packing Slip
C. Shipping Document
D. Bill of Lading

29. According to the Fiji Vat Decree, which of the following is NOT an exempt supply?

A. Financial Services
B. Exported Goods
C. Receipts from Gambling
D. Supply of Education by Educational Institutions

30. You bought $23,000 (VIP) worth of goods subject to VAT from Company X. What is the
VEP of the goods? Assuming a 15% VAT rate.

A. 20,000
B. 3,000
C. 26.450
D 25,000

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31. The purpose of tracing sales invoices to shipping documents would be to provide
evidence that

A. shipments to customers were properly invoiced.

B. no duplicate shipments or billings occurred
C. goods billed to customers were shipped.
D. all prenumbered sales invoices were accounted for.

32. Every month, the bank debits your bank account for your motor vehicle lease. What is the
BEST way to record this transaction in MYOB?

A. Create a recurring transaction for the lease, with automatic reminders when it
is due
B. Create a recurring transaction for the lease, setting it up to record
automatically
C. Record this transaction in Write Cheques every month, typing in the details
from scratch each time. This is the safest method, just in case the amount of
the lease changes.
D. Record all transactions by importing your bank statement.

33. You have accidently paid for a personal expense out of your business account. How do
you record this expense in MYOB?

A. Allocate the expense to Directors Loans.

B. Allocate the expense to Drawings or Partners Drawings.
C. Choose either a) or b), depending on whether you’re a company, a sole
trader, or a partnership.
D. Don’t record the expense at all: only business expenses should be recorded in
MYOB.

34. When designing your Chart of Accounts, which of the following selection of accounts
would all correctly have Cost of Goods Sold as the Account Type?

A. Advertising, wages, motor vehicle expenses, electricity

B. Legal costs, freight, bank charges, subcontract labour
C. Accounting fees, computer consumables, purchases, raw materials
D. Raw materials, factory consumables, subcontract labour, purchases

35. Which of the following is CORRECT with respect to the open invoice method?

I. An advantage is that it is conducive to offering discounts for prompt payment, as

invoices are individually tracked and aged.
II. A disadvantage is the added complexity required to maintain information about the
status of each individual invoice for each customers.
III. The customer is asked to return a copy of the invoice when mailing in their payment.

A. I & III only

B. II & III only
C. II only
D. I, II and III

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SECTION B: SHORT ANSWER QUESTIONS: (30 marks)

1. What is a purchase order and give three (3) reasons companies use purchase orders?
(5 marks)

A purchase order (PO) is a commercial document and first official offer issued by a
buyer to a seller, indicating types, quantities, and agreed prices for products or
services.

• Purchase orders allow buyers to clearly and explicitly communicate their intentions
to sellers

• Sellers are protected in case of a buyer's refusal to pay for goods or services

• Purchase orders help a purchasing agent to manage incoming orders and pending
orders

• Purchase orders provide economies in that they streamline the purchasing process to
a standard procedure

2. Identify and discuss 3 motivations of cybercriminals? (6 marks)

Any of three of the following motivations

Anonymity

Anonymity in cyberspace has changed the mindset of online users in that it decreases
their sense of personal accountability and therefore contributes to an increased propensity
to commit crimes online that they may not typically commit in person. A recurring
symptom of this behavior is the general increase in cyberbullying and cyberstalking.
Social networking sites (such as Facebook and MySpace) provide outlets for bullying and
stalking. In some ways cyberbullying and cyberstalking can be more harmful to victims
than traditional bullying and stalking because victims can’t escape criminals – the internet
is accessed 24/7, whereas a bully at school leaves with the school bus.

New Social Norms

The adherence to copyright laws has drastically decreased with the advent of the Internet.
Somehow, theft of copyrighted materials via file-sharing website is considered relatively
socially acceptable by internet users today. Napster, the peer-to-peer file sharing website
that was sued for copyright infringement? That wasn’t the only one shut down in the past
few years – Pirate Bay, MegaUpload, LimeWire, and BearShare were a few more to
name a few. It’s difficult to prosecute these companies and their customers, so many
people around the world continue to obtain illegal files every day.

Emotions

Because internet users don’t typically consider themselves experts in cyberspace or

technology, they often feel that there is not much they can personally do to either prevent
cybercrimes or resolve them if they have fallen victim. Cybercriminals know this and
prey on that sense of helplessness.

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 Some people aren’t necessarily ‘criminals’ at heart, but become cybercriminals to fulfill
an emotional void in their lives. Cyberspace is anonymous (as mentioned above) and
traditional crimes cannot fulfill such void. It’s much harder to fake your identity in person
than it is online, so why not pretend to be someone else online or make defaming
comments about a person/organization online? A bad experience at a restaurant is much
easier stated (for some) on Yelp than it is in person with the manager of said
establishment.

Financial Incentive

Cybercriminals have much to gain financially through identity theft, credit card fraud, and
online banking fraud. While personal online banking has provided customers with
convenience, it has also made banking fraud more convenient for cybercriminals.

Lack of Legislation and Punishment

Crimes are often prevented simply because the fear of being caught and punished is so
high. Over the past decade, several laws and acts have been passed to help combat
cybercrime and prosecute cybercriminals.

3. Company A has made $56,500 (VIP) worth of sales during the period. Of these sales,
14,300 are NOT subject to VAT. Company A also made $74,000 worth of purchases,
all of which are subject to VAT.

Required

What are the VAT implications for Company A for the period? (Show full working)

Sales subject to VAT:

 $56,500 – $14,300 = $42,200
 VAT portion = $42,200*(3/23)
 = $5,504.35
 VAT Collected = $5,504.35
 VAT Paid = $74,000 *(.15)
 VAT Paid = $11,100
 VAT Paid > VAT Collected = Refund
 $11,100 - $5,504.35

 VAT Refund = $5,595.65

(8 marks)

4. Describe the steps to delete an account in MYOB

Select Setup from the Menu Bar

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 Select Easy Setup Assistant

Select Accounts List

Highlight the account you wish to delete

Click on the Delete Button

(5 marks)

5. Company X sold goods to Company Y on credit. Company X uses MYOB. The sale
was recorded in the Sales Command Center  Enter Sales. 30 days later Company
Y pays Company X for the goods. During this time a graduate accountant has
replaced the previous accountant who recorded the initial sale. The graduate
accountant records the receipt of payment in the Banking Command Center 
Receive Money.

Required:

a.) Explain the error made by the graduate accountant. (2 marks)

The graduate account should have recorded the receipt of the monies using the
Receive Payments in the Sales Command Center as the invoice was initially
recorded using the Sales module.

b.) How will this error affect the accounting reports? (Specifically comment on the
effect of the error on Company Y’s profit and loss and balance sheet) (4 marks)

Company Y’s balance will be overstated as the payment it has recorded has not been
recorded against the initial invoice recorded. Furthermore the revenue will be
overstated as when the payment is recorded from Company Y, another revenue
account will be credited even though the revenue account was already recorded
when the sale was initially recognized. Furthermore, the assets will be overstated as
the receipt of money would increase the cash but not decrease the debtors account.

(TOTAL 6
marks)

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_____________________________________________________________________________

SECTION C Case Study (35 marks)_______________

The University of the North Pacific (UNP) is a regional tertiary institution located in the
Marshall Islands. One thousand students from the Pacific attend this University.

The University provides lockers to students as a means for them to store their books and other
items. To hire a locker a student must first pay the locker hire fee to the cashier at the
University. Only cash is accepted by the cashier. The cashier will receive the money and
record the receipt of cash. The cashier will then issue the student a receipt. The student must
then take this receipt to the University Student Academic Services where an SAS staff will
then show the student the list of lockers available. The student will then select their desired
locker from the list provided. Once selected the SAS staff will record the student’s name on
the list next to the locker number. The receipt will be kept by the SAS staff and will be filed.

At the end of the day the cashier will count all cash received and record this in the cash
receipts journal. The cashier is also responsible for banking the cash. Banking of cash is
usually done once a month. At the end of the month, the cash receipts journal is then
forwarded to the Manager who performs the bank reconciliation.

Required:

i.) Draw a Document Flowchart of the University’s Locker Hire System.

(14marks)

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 ii.) Evaluate the University’s Locker Hire System Internal Controls. Make 3
recommendations to improve the internal controls.

Strengths
1. The person who issues the locker to the students is different from
the person who receives the cash and a receipt is required before
the locker is issued.
2. The Manager performs the bank reconciliation.

Weaknesses
1. The cashier receives the cash, records the cash and does the
banking.
2. There is no one who reconciles the lockers issued with cash
receipts.
3. Banking is done once a month.
4. The organization is still using a manual system but has a higher
number of students and thus many transactions.

Recommendations:
1. The cashier should not be solely responsible for receiving,
recording and banking the cash. Another individual should check
the cash received against the receipts issued.
2. This individual should also be responsible for banking the cash.
3. Banking should be done on a daily basis.
4. Introduce a computerized accounting system.
(8 marks)

iii.) The Manager is thinking of implementing a computerized accounting system.

Discuss 4 advantages and 4 disadvantages of a computerized accounting system
as compared to a manual based accounting system.

Advantages
- Can operate at higher speed and faster processing due to
technological capabilities
- Updates ledgers automatically thus saves time and effort and
more accurate in the preparation of financial reports
- internal control system of increased productivity,
- easy back up and restoration of records;

Disadvantages
- More expensive than manual,
- introducing and using the system, employees maybe resistant to
change,
- special trainings for personnel,
- increased personnel costs,
- dependence on machines
(8 marks)

iv.) While performing the banking reconciliation the Manager discovers that one of
the day’s deposits did not correspond to the total cash received on that day by

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 $20. The Manager questions the cashier and the cashier claims that it was a
mistake as a student gave her $80 but she incorrectly recorded $100.

Required:
Discuss the considerations that need to be made to determine if the cashier is
guilty of fraud.

Fraud is the intentional act of depriving someone of resources with the use of
guile, misrepresentation and deceit.

The key issue here was whether there was actual intention. The cashier claims
that it was a mistake. And if this is true then she would not be guilty of fraud.
However, it can be proven that it was not a mistake but an intentional act to steal
from the university then most likely she will be found guilty.

Students should discuss the difficulties with proving intention and can refer to the
case for clues that may indicate whether the cashier genuinely made a mistake.

(5 marks)

THE END

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