Accounting Multiple Choice Question Sample Assignment

1. Integrating separate REA diagrams developed for individual transaction cycles into a single, comprehensive enterprise-wide data model

1. is possible.
2. requires understanding what the cardinalities in each separate diagram reveal about the organization’s business policies and activities.
3. provides a single comprehensive enterprise-wide model of the organization.
4. all of the above are true.

2. An integrated REA diagram merges multiple copies of _______ and ______entities but retains multiple copies of ______ entities.

1. Resource, event, agent
2. Relationship, economic, accounting
3. Resource, economic, agent
4. Relationship, event, accounting

3. An integrated REA diagram contains multiple copies of

1. Accounts
2. Agents
3. Events
4. Resource

4. An integrated REA diagram merges multiple copies of some entities in order to

1. Minimize the repetition of agent entities.
2. Maximize the legibility of the comprehensive REA diagram by avoiding the need to have relationship lines cross one another.
3. Both A and B are true.
4. Both A and B are false.

5. An integrated REA diagram merges multiple copies of some entities in order to

1. Minimize the repetition of agent entities.
2. Maximize the legibility of the comprehensive REA diagram by avoiding the need to have relationship lines cross one another.
3. Both A and B are true.
4. Both A and B are false.

6. Combining REA diagrams for individual transaction cycles into a single, enterprise-wide model adds two more rules to the three basic principles for drawing REA diagrams. Which of the following is not one of those two new rules?

1. Every resource must be linked to at least one event that increments that resource and to at least one event that decrements that resource.
2. If a specific event can be linked to more than one other type of event, but cannot be linked simultaneously to all of those other events, then the minimum cardinality between that event and every other event with which it may be associated must be 0.
3. If a specific event can be linked to more than one other type of event, but cannot be linked simultaneously to all of those other events, then the maximum cardinality between that event and every other event with which it may be associated must be 0.
4. None of the above

7. Concerning a correctly drawn enterprise-wide REA diagram, which of the following statements is not true?

1. Every event must be linked to at least one resource.
2. Merging two transaction cycles on a common event may affect the minimum cardinalities between the merged event and the agents participating in that event.
3. Every event must be linked to one agent who participates in that event.
4. Creating a set of tables from an REA diagram automatically results in a well-structured relational database.

8. Which of the following is not one of the three steps to implementing an REA diagram in a relational database?

1. Assign attributes to appropriate tables.
2. Create a table for each distinct entity in the diagram and for each many-to-many relationship.
3. Every event must be linked to at least one resource.
4. Use foreign keys to implement one-to-one and one-to-many relationships.

9. REA diagrams for different organizations may be similar, but will likely result in different relationship cardinalities because of

1. Differences in business policies
2. Different designers of REA diagrams
3. Different methods of drawing REA diagrams
4. Errors in drawing REA diagrams

10. What is the first step to implementing an REA diagram in a relational database?

1. Assign attributes to appropriate tables.
2. Create a table for each distinct entity in the diagram and for each many-to-many relationship.
3. Identify cardinalities.
4. Use foreign keys to implement one-to-one and one-to-many relationships.

11. Concerning REA diagrams and relational databases, which of the following is true?

1. A well designed relational database is the starting point for creating an REA diagram.
2. A well-designed REA diagram will result in the occasional update, insert or delete anomaly problem in the relational database.
3. Database design is generic for similar organizations.
4. The design of a database is specific to the organization being modeled.

12. Concerning the creation of tables from an REA diagram, which of the following is false?

1. A properly designed relational database has a table for each distinct entity in an REA diagram.
2. A properly designed relational database has a table for each many-to-many relationship in an REA diagram.
3. To reduce confusion, table names should not duplicate REA diagram entities' names.
4. Many-to-many relationships will be shown in tables with hyphenated concatenations of the entities' names.

13. When assigning attributes to each table,

1. The database designer must interview users to identify which facts should be included in the database.
2. The database designer must interview management to identify which facts should be included in the database.
3. The database designer must use the REA diagram to help determine in which tables those facts belong.
4. All of the above.

14. Multiple attribute primary keys are

1. Common
2. Concatenated keys
3. Disallowed
4. Secondary keys

15. The primary key for M:N relationship tables

1. Is a single attribute
2. Always consists of two attributes
3. Is the primary key of the most important entity linked to that relationship
4. Is impossible to determine

16. Other attributes besides the primary key are

1. Included to satisfy transaction processing requirements.
2. Included to meet management's information needs.
3. Both A and B
4. None of the above

17. Concerning tables for M:N relationships, which of the following statements is false?

1. Non-key attributes may be included.
2. Multiple attribute primary keys are used.
3. Single attribute primary keys may be used.
4. Concatenated keys are used.

18. Concerning the creation of tables from an REA diagram, which of the following is false?

1. Foreign keys are used to implement 1:1 and 1:N relationships.
2. A table is created for each distinct entity.
3. A table is created for each M:N relationship.
4. Tables are completed with input data.

19. When implementing 1:1 and 1:N relationships

1. Foreign keys are used.
2. Separate tables could be used.
3. The primary key of one entity becomes a foreign key in the other entity's table.
4. Concatenated primary keys are used.

20. Concerning the creation of tables from an REA diagram, which of the following is false?

1. M:N relationships must be implemented as separate tables.
2. 1:N relationships are implemented with the primary key of the 1 side becoming a foreign key on the N side.
3. 1:1 relationships are implemented with the primary key of either entity included as a foreign key in the table representing the other entity.
4. All of the above are true

21. M:N relationships must be implemented

1. As separate tables
2. With concatenated primary keys
3. Both A and B
4. Neither A nor B

22. Which of the following is not part of a "final accuracy check" when creating relational tables from an REA diagram?

1. Every attribute in every table is single-valued (i.e., each table is a flat file).
2. Every event must be linked to at least one resource.
3. Every table must have a primary key.
4. Other non-key attributes in each table must be either a fact about the thing designated by the primary key or foreign keys used to link that table to another table.

23. When comparing REA diagrams used to design an AIS with a traditionally designed AIS,

1. Traditional AIS information, such as journals and ledgers no longer exist.
2. Similar information is present as in a traditional AIS but stored in a different format.
3. Queries are used to input data into the AIS.
4. An REA designed AIS cannot recreate a traditional journal.

24. Concerning the use of REA diagrams to retrieve information from a database:

1. Although neither journals nor ledgers appear explicitly in an REA diagram, each can be created through appropriate queries.
2. The information normally found in a journal is contained in the tables used to record data about events.
3. Much of the information about an organization’s assets that is traditionally recorded in ledgers is stored in resource tables in an REA-based relational database.
4. All of the above

25. Much of the information about an organization’s assets that is traditionally recorded in ledgers is stored in ______ tables in an REA-based relational database.

1. Account
2. Agent
3. Event
4. Resource

26. In an REA-based relational database, the information normally found in a _______ is contained in the tables used to record data about _______.

1. Journal, events.
2. Journal, resources.
3. Ledger, events.
4. Ledger, resources.

27. Concerning REA models, which of the following is false?

1. Many financial statement accounts are represented as resources in the REA model.
2. Accounts such as Accounts Receivable show up as entities in the REA model.
3. Some accounts represent an imbalance between two related events in the REA model.
4. Much of the information about an organization’s assets that is traditionally recorded in ledgers is stored in resource tables in an REA-based relational database.

28. Because information about temporal imbalances between two _________, such as accounts receivable and accounts payable, is needed so frequently, such calculated values are sometimes stored as _________ in the appropriate tables.

1. Events, agents.
2. Events, attributes.
3. Resources, agents.
4. Resources, attributes.

29. Concerning the generation of financial statements from an REA-based relational database, which of the following is false?

1. It is possible to use a completed REA diagram to guide the writing of queries to produce the information that would be included in financial statements.
2. Many financial statement items can be displayed by querying a single table.
3. It is unnecessary to understand the REA data model to know which tables need to be included in each query to generate the correct answers to financial statement questions.
4. A major advantage of the REA data model is that it integrates non-financial and financial data.

30. In comparing the REA model to the traditional AIS, which of the following is false?

1. Traditional AISs contain only data about the financial aspects of transactions.
2. A major advantage of the REA data model is that it integrates non-financial and financial data in the AIS and makes both types of data easily accessible to management.
3. In the REA model, many financial statement items can be displayed by querying a single table.
4. Accounts in the traditional AIS are analogous to resources in the REA-based relational database.

31. The majors benefits of using the REA model as the basis for designing an AIS include all of the following except:

1. The REA data model integrates non-financial and financial data in the AIS
2. The REA data model makes both non-financial and financial data easily accessible to management.
3. The REA data model provides the basis for building the kind of flexible AIS that is responsive to management’s changing information needs,
4. The REA data model reduces the need for accountants to understand the underlying accounting journals and ledgers.

32. Technological changes

1. Do not change the mechanics of accounting procedures.
2. Have little effect on accounting process.
3. Do not change the need for management reports and financial statements.
4. Are more easily adapted using traditional AIS models.

33. REA data modeling

1. Can be used only to model financial data.
2. Can provide accountants with a method for more easily adapting the AIS to respond to change.
3. Is an example of a traditional accounting concept.
4. Is just a fancy way of doing E-R diagramming.

34. Concerning REA diagrams for individual transaction cycles, which of the following is false?

1. They depict basic give-to-get economic duality relationships
2. They usually provide only a partial view of resources
3. They need to be combined in order to provide a comprehensive enterprise-wide data model. .
4. They show both how resources are acquired and how they are used

35. Concerning enterprise-wide REA diagrams, which of the following is false?

1. Merging two or more REA diagrams that contain the same resource entity does not require any changes to the cardinality pairs in the individual diagrams.
2. Merging two or more diagrams that contain a common event entity, however, often requires changing the minimum cardinalities associated with the other events to 0, to reflect the fact that the merged event may be connected to any one of several different events, but not to all of them simultaneously.
3. The minimum cardinalities associated with agents may also have to be changed to 0.
4. All of the above are true

36. Concatenated keys

1. Are only needed when combining two or more REA diagrams.
2. Are foreign keys used to implement 1:N or 1:1 relationships.
3. Are multiple attribute keys used to implement 1:M relationships.
4. Are required to implement M:N relationships.

37. Which types of REA entities become separate tables in a relational database?

1. Agents
2. Events
3. Resources
4. All of the above.

38. How many tables are needed to implement an REA data model that has six distinct entities, three M:N relationships and four 1:N relationships in a relational database?

1. 6
2. 9
3. 11
4. 13

39. How many tables are needed to implement an REA data model that has five distinct entities, two M:N relationships and three 1:N relationships in a relational database?

1. 5
2. 7
3. 8
4. 10

40. Which type of relationship cardinality requires the implementation of a separate table?

1. 1:0
2. 1:1
3. 1:N
4. M:N

41. When combining two REA diagrams by merging common entities, changes in the cardinality of the merged entity is needed when it is a

1. Agent
2. Event
3. Relationship
4. Resource

42. Where is information traditionally found in journals stored in an REA database?

1. Agent
2. Event
3. Relationship
4. Resource

43. Which table is most likely to have a concatenated key?

1. customer
2. sales
3. customer-sales
4. none of the above

44. An REA diagram contains five instances of the Customer entity. How many tables does this require in a relational database?

1. one
2. two
3. three
4. four

45. In an REA relational database, traditional ledger information is obtained by querying

1. Agents
2. Events
3. Resource
4. All of the above

46. Cardinalities reflect __________ about the organization being modeled and its business practices.

1. assumptions
2. opinions
3. facts
4. theories

47. _______ databases are commonly used to support transaction processing.

1. Access
2. E-R
3. REA
4. Relational

48. Integrating separate REA diagrams into a single comprehensive enterprise-wide model of the organization, requires understanding what the __________ in each separate diagram reveal about the organization's business policies and activities.

1. cardinalities
2. data
3. events
4. transactions

49. When merging redundant resource entities into a new REA diagram,

1. Common resources are placed between the events that affect them.
2. Each resource is connected to two agents that either increase or decrease it.
3. Resources are duplicated to show the give and get of economic duality relationships.
4. None of the above.

50. The five rules for drawing an integrated REA diagram

1. Help develop a correct REA diagram
2. Are used as check figures to validate the accuracy of a completed REA diagram.
3. Both
4. None of the above

SHORT ANSWER

51. What kinds of databases can the REA data model be used to design?

52. In order to integrate separate REA diagrams into an integrated organizational REA model, what must the designer understand?

53. List the five rules for drawing integrated REA diagrams.

54. What is a concatenated key?

55. What are the three steps to implementing an REA diagram in a relational database?

ESSAY

56. Explain a completeness check.

57. Explain where in the REA model you can find the information normally found in a ledger.

58. Explain where in the REA model you can find the information normally found in a journal.

59. What are the advantages of the REA data model over the traditional AIS model

ANSWER KEY

1. D
2. A
3. B

4. B
5. B
6. C
7. C
8. C
9. A
10. B
11. D
12. C
13. D
14. B
15. B
16. C
17. C
18. D
19. A
20. D
21. C
22. B
23. B
24. D
25. D
26. A
27. B
28. B
29. C
30. D
31. D
32. C
33. B
34. D
35. D
36. D
37. D
38. B
39. B
40. D
41. B
42. B
43. C
44. A
45. D
46. C
47. D
48. A
49. A
50. C
51. The REA data model can be used to design both relational and object-oriented databases.
52. The designer must understand what the cardinalities in each separate diagram reveal about the organization’s business policies and activities.
53. Every event must be linked to at least one resource. Every event must be linked to two agents who participate in that event. Every event that involves the disposition of a resource must be linked to an event that involves the acquisition of a resource. (This reflects the economic duality underlying “give-to-get” economic exchanges.) Every resource must be linked to at least one event that increments that resource and to at least one event that decrements that resource. If a specific event, referred to as the focal event, can be linked to more than one other type of event, but cannot be linked simultaneously to all of those other events, then the minimum cardinality between that focal event and every other event with which it may be associated must be 0.
54. A concatenated key is a multiple-attribute primary key, general used for M:N relationships.
55. Create a table for each distinct entity in the diagram and for each many-to-many relationship. Assign attributes to appropriate tables.  Use foreign keys to implement one-to-one and one-to-many relationships.
56. The list of attributes that users and management want included in the database provides a means to check and validate the implementation process. Every attribute in that list should appear in at least one table, as either a primary key or “other” attribute. Checking this list against the table column names may reveal not only the fact that a particular attribute has not been assigned to the appropriate table in the database but may even indicate the need to modify the REA diagram itself.
57. In traditional AISs, ledgers are master files that contain cumulative information about specific accounts. In a relational database designed according to the REA data model, resource and agent entities contain permanent information that is carried over from one fiscal year to the next. Thus, much of the information about an organization’s assets that is traditionally recorded in ledgers is stored in resource tables in an REAbased relational database.
58. In traditional AISs, journals provide a chronological listing of transactions. In a relational database designed according to the REA data model, event entities store information about transactions. Thus, the information normally found in a journal is contained in the tables used to record data about events. For example, each row in the Sales event table contains information about a particular sales transaction. Thus, a sales journal can be produced by writing a query that displays the appropriate entries in the sales table for a given period. In a similar manner, queries of the Order Inventory event and Cash Disbursements event tables can be used to generate purchases and cash disbursements journals.
59. A major advantage of the REA data model is that it integrates non-financial and financial data in the AIS and makes both types of data easily accessible to management. In contrast to the REA data model, the general ledger in traditionally designed AISs uses the chart of accounts to store and organize data based on the structure of financial Consequently, traditional AISs contain only data about the financial aspects of transactions. Other information that may be of use to management, such as the time of day a sale occurred or the reason why a customer was purchasing a specific item, would have to be stored in a separate database or information system. The existence of separate systems makes it more difficult for management to easily and quickly access the information it needs. It also provides opportunities for data entry errors to create inconsistencies between systems, thereby reducing the utility of any reports that are generated. Thus, a major benefit of using the REA model as the basis for designing an AIS is the ability to easily integrate information that traditionally appears in financial statements with other, non-financial information necessary to effectively manage operations and evaluate performance. It is vitally important that an organization’s AIS be capable of storing both traditional financial measures and other operational performance measures.