Financial and Accounting Systems – CA Inter EIS Question Bank

Financial and Accounting Systems – CA Inter EIS Question Bank is designed strictly as per the latest syllabus and exam pattern.

Financial and Accounting Systems  – CA Inter EIS Question Bank

Question 1.
A business organization is shifting from traditional accounting system to computerized accounting system. The organization needs to store the data that is relatively permanent and not expected to change frequently in accounting system. As a financial expert, suggest any two types of such data In accounting system. (May 2019,2 marks)
Answer:
In this case, a business organization Is shifting from traditional accounting system to computerised accounting system. The organization needs to store the data that is relatively permanent and not expected to change frequently In accounting system, so such type of data is called master data.
The following are the types of such data (i.e. master data) in the accounting system:
1. AccountIng Master Data
2. Inventory Master Data
3. Payroll Master Data.
4. Statutory Master Data.

Question 2.
What is Enterprise Resource Planning? Briefly describes its benefits. (Nov 2007, 10 marks)
Answer:

Question 3.
Briefly explain the characteristics and features of an Enterprise Resource Planning. (May 2008, 5 marks)
Answer:

Question 4.
Write short note on Components of ERP model. (Nov 2015, 4 marks)
Answer:
Components of ERP Model:
ERP model is consists of tour components which are Implemented through a methodology. All tour components are as follows:

1. Software	The software component is the component that is component most visible part and consists of several modules such as Finance, HR. Supply Chain Management, Supplier Relationship Management Customer Relationship and Business Relationship.
2. Process flow	It is the model that illustrates the way how information flows among the different modules within an ERP system. By creating this model it easier to understand how ERP work.
3. Customer Mindset	By implementation of ERP system, the old ways for working which user understand and comfortable with have to the changed and may lead to user’s resistance. E.g. some users may say that they have spent many years doing an excellent job without help of ERP system. In order to lead ERP implementation to succeed, company needs to eliminate negative value or beliefs that users may carry toward utilizing new system.
4. Change management	In ERP implementation, change needs to the managed several levels user attitude; resistance to change; and business process changes.

Question 5.
Explain the significance of Front End and Back End in a software. (May 2018, 2 marks)
Answer:
Front End and Back End are used by software people again and again. The understanding of this words are:

• Front End: It Is part of the overall software which actually interacts with the user who is using the software.
• Back End: It Is a part of the overall software which does not directly interact with the user, but interact with Front End only.
• If a user wants to have some Information from the system i.e. Balance Sheet.
• User will interact with Front End part of the software and request Front End to generate the report.
• Front End will receive the Instruction from user and pass It on the Back End.
• Back End will pass the data, generate the report and send It to the Front End.
• Front End will now display the Information to user.
• This es how the process gets completed each and every time.

Question 6.
Web Applications are one of the two ways of using a software including Financial and Accounting Software and now-a-days, the use of web applications is Increasing rapidly. You, being an IT consultant, have to list out some of the advantages and disadvantages of using web applications. (Nov 2018, 6 marks)
Answer:
Web Applications are one of the two ways of using a software including financial and Accounting software and nowadays, the use of web applications is increasing rapidly.
Advantages of Web Applications:

1. Installation and Maintenance	As software is installed on only one computer, i.e. a web server it need not be installed on each computer. Hence, installation on user computer is not required and maintenance and updating of software becomes extremely easy.
2. Accessibility	As software is not installed on the hard disc of user’s computer and it is used through browser and internet, can be used from any computer in the world. Access to the software becomes very easy.
3. Mobile Application	Using mobile applications becomes very easy as data is available 24×7.

Disadvantages of using Web Applications:

1. Data Storage	Data is not stored in the user’s server computer. It is stored on a web server. Hence, user will not have any control over the data.
2. Data Security	Data security is a big challenge in case of web application as the data is not In control of the user or owner of data. It is maintained on a web server.
3. Performance	As data is picked from web server using internet, speed of operation may be slower in web applications.
4. flexibility	Web applications do not even compare to the flexibility of desktop applications. If you want to write a web application that basically interacts with the user’s hardware, you are doing it wrong Just stick with a desktop application (e.g. c # Net In visual studio) for your program.

Question 7.
Major features of an ERP system Is central database. What are the options possible to different users while assigning access to it? (May 2019, 2 marks)
Answer:
Major feature of an ERP system is Central database. As the Complete data is stored centrally at one place, ensuring safety of data and minimising risk of loss of data is a big challenge.
The following options are possible to different users while assigning access to It

1. Create	Allows to create data.
2. Alter	Allows to after data.
3. View	Allows only to view data.
4. Print	Allows to print data.

Question 8.
Many organizations are implementing Enterprise Resource Planning (ERP) software, where it integrates all of the processes needed to run their business with a single system. As a System analyst briefly explain the benefits of ERP systems. (Nov 2020, 6 marks)

Question 9.
Explain the term Master Data and its types.
Answer:
Master Data: Master Data is relatively permanent data that is not expected to change again and again. It may change, but not again and again. It accounting systems, there may be following types of master data.

Accounting Master Data: This includes names of ledgers, groups, cost centers, accounting voucher types, etc. E.g. Capital Ledger is created once and not expected to change frequently. Similarly, all other ledgers like sales, purchase, expenses, and income ledgers are created once and not expected to change again arid again. Opening balance carried forward from previous year to next year is also a part of master data and not expected to change.

Inventory Master Data: This Includes stock items, stock groups, godowns, inventory voucher types, etc. Stock item Is something which bought and sold for business purposes, as trading goods. E.g. If a person is Into the business of dealing in white goods, stock items shall be Televisions, Fridges, Air conditioners, etc. For a person running a medicine shop, all types of medicines shall be stock items for him/her.

Question 10.
Explain the ‘Dashboards’ and Scorecards’ as tools of Business Intelligence. (May 2016, 4 marks)
Answer:
Dashboards and scorecards are analytical tools that allow organizations to focus on the measurements that are important to their business

Dashboard	A business intelligence dashboard is a data visualization tool that displays the current status of metrics and key performance Indicators (KPIs) for an enterprise. Dashboards consolidate and arrange numbers, metrics, and sometimes performance scorecards on a single screen. They may be tailored for a specific role and display metrics targeted for a single point of view of department. The essential features of a BI dashboard product Include a customizable interface and the ability to pull real-time data from multiple sources. Dashboards provide advanced operational efficiencies and user experience by enabling availability of frequently used functions on a single console.
Scorecard	A scorecard is a data visualization tool that helps organizations, individuals, or groups of individuals to reach goals by displaying progress toward objectives against the objective themselves. Scorecards can be arranged into many visual configurations, but most will at least place goals alongside a running tally of current totals, In order to provide an at a glance measure of progress. This tool is typically a top-down approach that allows management to implement its strategy by aligning performance with goals. Similar to a grade school report card, the scorecard measures periodic results (weekly, monthly, quarterly, annually) against a pre-determined goal, allowing users to gauge how their performance stacks up against expectations.
Dashboard Vs. Scorecard	The business intelligence dashboard is often confused with the performance scorecard. The main difference between the two, traditionally, is that a business intelligence dashboard, like the dashboard of a car, indicates the status at a specific point in time. A scorecard, on the other hand, displays progress over time towards specific goals. Dashboard and scorecard designs are increasingly converging. For example, some commercial dashboard products also Include the ability to track progress onwards a goal. A product combining elements of both dashboards and scorecards is sometimes referred to as a scorecard.

Question 11.
Expian, the following in brief:
Business Intelligence (BI) (May 2018, 2 marks)
Answer:
Business Intelligence:
Business intelligence (BI) may be defined as the delivery of accurate, useful Information to the appropriate decision-makers within the necessary time frame to support effective decision-making for business processes. BI is comprised of Information that contains patterns, relationships, and trends about customers, suppliers, business partners, and employees.

Bi is essentially timely, accurate, high-value, and actionable business Insights and the work processes and technologies used to obtain them. Business intelligence systems process, store and provide useful information to the user who needs it, when they need it. BI can handle large amounts of information to help identify and develop new opportunities. Making use of
new opportunities and Implementing an effective strategy can provide a competitive market advantage and long-term stability.

Question 12.
Define Data Analytics. (Nov 2018, 2 marks)
Answer:
Data Analytics:
Data Analytics is the process of examining data sets to draw conclusions about the information they contain, increasingly with the aid of specialized systems and software. As a term, Data Analytics predominantly refers to an assortment of applications, from basic Business Intelligence (BI) reporting and online Analytical processing (OLAP) to various forms of advanced analytics.

Question 13.
Data Analytics is the process of examining data sets to draw conclusions about the information they contain, increasingly with the aid of specialized systems and software. List out any three application areas of Data Analytics in today’s world. (Nov 2020, 3 marks)

Question 14.
Discuss Business Intelligence tools.
Answer:
Business Intelligence Tools
Business Intelligence tools are a type of software that Is designed to retrieve, analyze and report data. Some of the key Business Intelligence tools are given as follows:

Simple Reporting and Querying: This involves using the data warehouse to get response to the queue: TelI me what happened. The objective of a BI implementation is to turn operational data into meaningful knowledge. This requires that BI must be connected with the enterprise data and all the necessary data is available in one place, in one common format, Data warehousing (DW) provides the perfect architecture to combine all the data dispersed throughout the enterprise in different applications in a variety of formats, on a range of hardware, which could be anywhere to be cleaned up, summarized, converted and integrated Into one common format and available centrally for further processing. There are reporting tools used to arrange information into a readable format and distribute it to the people who need it.

Business Analysis: This involves using the data to get response to the query: Tell me what happened and why. Business analysis refers to presenting visualizing data in a multidimensional manner. Business analysis allows the user to plot data In row and column coordinates to further understand the Intersecting points. ETL (Extract, Transform, Load) tools bring in data from outside sources, transform It to meet business-specified operational needs and then load the results into the company database. Metadata tools gather and analyze metadata, helping to increase data quality.

Dashboards: This involves using the Information gathered from the data warehouse and making it available to users as snapshots of many different things with the objective of getting response to the query: Tell me a lot of things, but without too much effort. Dashboards are flexible tools that can be bent into as many different shapes as per user requirements. It includes a collection of graphs, reports, and KPls that can help monitor such business activities as progress on a specific Initiative.

Scorecards: This involves providing a visual representation of the enterprise strategy by taking critical metrics and mapping them to strategic goals throughout the enterprise. Scorecards offer a rich, visual gauge to display the performance of specific Initiatives, business units, or the enterprise as a whole and the individual goals in the context of larger enterprise strategy. Scorecards distill information into a small number of metrics and targets and provide users with an at-a-glance perspective of information. A scorecard has a graphical list of specific, attainable strategic milestones, combined with metrics that serve as benchmarks. Specific measures on how well the company has actually performence specified activities are linked In the scorecard with graphical display highlighting the status of each goal.

Data Mining or Statistical Analysis: This involves using statistical, artificial intelligence, and related techniques to mine through large volumes of data and providing knowledge without users even having to ask specific questions. The objective is to provide interesting and useful information to users by design even without their querying. Data Mining involves data analysis for discovering useful patterns that are hidden in large volumes of diverse data.

Question 15.
Wnle short note on the Extensible Business Reporting Language (XBRL) (Nov 2014, 2 marks)
Answer:
XBRL, Is a freely available XML-based specification that uses accepted financial reporting standards and practices to exchange financial statements across all software and technologies, including the Internet. It is an XML- based framework that provides the financial community a standards-based method to prepare, publish In a variety of formats, reliably extract and automatically exchange mandate statements of publicly held companies. XBRL is not about establishing new accounting standards but enhancing the usability of the ones that we have through the digital language of business, XML.

XBRL could also be described as a computer programming add-on that tags each segment of computerized business information with an identification code or marker. In most cases, accounting software will insert XBRL tags automatically. If an accounting system lacks XBRL a user can still add XBRL tags to financial information using an add-on program or customized software tagging tools.

XBRL works by taking company business reporting data, mapping the structure of the Information to XBRL for financial statements, and creating any additional tags needed to render a full set of financial statements. The result of the process is an additional identifier attached to each piece of business data that can provide clues at to its origin, its relationship to other data, the rules used to prepare the information, and more.

Multiple Choice Questions

Question 1.
Financial and Accounting Systems include other aspects of business management like:
(a) Inventory
(b) Human Resource
(c) Customers Relationship Management
(d) All of the above.
Answer:
(d) All of the above.

Question 2.
A set of principles or procedures per which something Is done; an organized scheme or method called ………………. .
(a) Set
(b) Syntex
(c) System
(d) Process
Answer:
(c) System

Question 3.
Co-ordinated and standardized flow of activities performed by people or machines, which can traverse functional oc departmental boundaries to achieve a business objective and creates value for internal or external customers, called …………………. .
(a) Set
(b) Syntex
(c) System
(d) Process
Answer:
(d) Process

Question 4.
Master data is relatively permanent data that is not expected to change again and again, ………………….. .
(a) It may change
(b) It may not change
(c) It may change, but not again and again.
(d) None of the above.
Answer:
(c) It may change, but not again and again.

Question 5.
Master Data Include:
(a) Accounting Master Data
(b) Inventory Master Data
(c) Payroll Master Data
(d) All of the above.
Answer:
(d) All of the above.

Question 6.
……………… is an enterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes such as order fulfillment or billing.
(a) Enterprise Resource Planning
(b) Integrated Resource Planning
(c) Integrated Information System
(d) Overall Resource Planning
Answer:
(a) Enterprise Resource Planning

Question 7.
Enterprise Resource Planning (ERP) system is based on
(a) common database
(b) a modular software design
(c) based on real-time
(d) both (a) and (b)
Answer:
(d) both (a) and (b)

Question 8.
Well-known ERPs available in the market except
(a) SAP& Orado
(b) MFG Pro
(c) MS Axapta
(d) MRC Ortra
Answer:
(d) MRC Ortra

Question 9.
An Ideal ERP System is that system which
(a) Caters all types of needs of an organization
(b) Provides right data
(c) Right Point of time of time to right users for their purpose.
(d) All of the above.
Answer:
(d) All of the above.

Question 10.
Major Feature of an ERP System is:
(a) Central Framework
(b) Central Database
(c) Integral Control
(d) All of the above.
Answer:
(b) Central Database

Question 11.
In Computer Systems, Role – Based – Access – Control (RBAC) Is an approach to restricting system access to …………………. .
(a) end-users
(b) controlling personnel
(c) management
(d) authorized users
Answer:
(d) authorized users

Question 12.
Fundamental objectives of an audit of controls ………………………… In an ERP Environment.
(a) can Change
(b) maybe change
(c) do not change
(d) change automatically
Answer:
(c) do not change

Question 13.
ERP System should produce accurate complete and authorised information that is ……………. .
(a) usefulness.
(b) timely manner.
(c) supportable and timely.
(d) none of the above.
Answer:
(c) supportable and timely.

Question 14.
……………….. consists of a set of activities that are performed In Co ordination in an organisational and technical environment.
(a) Information System
(b) Database Process
(c) Business Process
(d) Integrated System
Answer:
(c) Business Process

Question 15.
Process Management is based on a view of an organization as a system of ……………………… , which involves concerted efforts to map, improve and adhere to organizational process
(a) interlinked process
(b) consolidation process
(c) business process
(d) central process
Answer:
(a) interlinked process

Question 16.
Controlling Module facilitates ……………… all the processes in an Organisation.
(a) co-ordinating
(b) monitoring
(c) optimizing
(d) All of the above.
Answer:
(d) All of the above.

Question 17.
Process In Production Planning Module includes (s):
(a) Issue of raw material from store
(b) Conversion into W.LP then into Finished Goods
(c) Stock transfer to godown.
(d) All of them.
Answer:
(d) All of them.

Question 18.
Customer Relationship Management (CRM) is a system which aims at improving the relationship with eicisting customers, ………………………. .
(a) fining new prospective customers.
(b) winning back former customers.
(c) Either (a) or (b)
(d) Both (a) and (b)
Answer:
(d) Both (a) and (b)

Question 19.
Which of the following about Back End is false?
(a) Communicates with user directly
(b) Communicates with front end directly
(c) Processes the data
(d) Generates the report.
Answer:
(a) Communicates with user directly

Question 20.
MIS system collects data from various areas within a business ………………… .
(a) individually
(b) intermitantally
(c) automatically
(d) on – demand
Answer:
(c) automatically

Question 21.
Most of the MIS system generates reports.
(a) auto
(b) on demand
(c) on site
(d) required
Answer:
(b) on demand

Question 22.
……………… process of examining data sets to draw conclusions about the information they contain, Increasingly with the aid of specialised systems and software is known as:
(a) Data Science
(b) Data Analysis
(c) Data Analytics
(d) Business Analytics
Answer:
(c) Data Analytics

Question 23.
…………….. Pre- dominantly refers to an assortment of applications, from basic Business Intelligence (BI). reporting and Online Analytical Processing (O LAP) to various forms of advanced analytics.
(a) Data Analytics
(b) Data Analysis
(c) Data Science
(d) Data Analysis Technologies
Answer:
(a) Data Analytics

Question 24.
OLAP stands for …………………………. .
(a) Online Analytical Processing
(b) Offline Analytical Processing
(c) Online Analytical Product.
(d) Offline Analytical Product.
Answer:
(a) Online Analytical Processing

Question 25.
Which of the following is not an attribute of information?
(a) Availability
(b) Mode and Format
(c) Completeness
(d) Inadequacy
Answer:
(c) Completeness

Question 26.
XBRL is used by …………………. .
(a) Government only
(b) Accountants only
(c) Investors only
(d) All of above
Answer:
(d) All of above

Question 27.
……………………. is the public reporting of operating arid financial data by a business enterprise, or the regular provision of information to decision maker within an organization to support them In their work.
(a) Business Reporting
(b) Business Analytics
(c) Enterprise Process
(d) Business or Enterprise Reporting.
Answer:
(d) Business or Enterprise Reporting.

Question 28.
XBRL Stands for …………………….. .
(a) extensible Business Reporting Language
(b) extensible Business Reporting Language
(c) extensible Business Report Logbook
(d) extensible Business Reporting Ledger
Answer:
(b) extensible Business Reporting Language

Question 29.
Which sentence is true about installed software applications?
(a) It is installed on the hard disc of the computer of the user.
(b) It is installed on the web server.
(c) It is installed on a website.
(d) It is Installed on cloud.
Answer:
(a) It is installed on the hard disc of the computer of the user.

Question 30.
Regulatory compliance is an oganlsation’s adherence to ……………….. relevant to its business
(a) Laws and Regulations
(b) Guidelines
(c) Specifications
(d) All of above
Answer:
(d) All of above

Question 31.
If Cash ledger is grouped under Indirect income ………………..
(a) It shall still be considered in balance sheet as it is a cash ledger.
(b) It shall be displayed In profit and loss account.
(c) Software shall show error message.
(d) None of above
Answer:
(b) It shall be displayed In profit and loss account.