Question 1

Time that employees devote to self-training on new technology is an example of direct operating costs.

Accepted Answer

A) True 
 B)False  False

Question 2

Pacific Green Company is considering buying a unique bar-coding machine to help them track their plant inventory.They evaluated the payback period and accounting rate of return and selected the project for further evaluation.Relevant information on the machine is repeated as follows:Acquisition cost = $48,000
Expected salvage value = $0
Expected annual cash inflow benefits = $13,000 per year for 5 years
Expected useful life = 5 yearsRequired:
Compute the net present value of the project assuming a discount rate of 16%.Use EXCEL to compute the internal rate of return.Advise PGC on the best course of action with respect to the investment.

Accepted Answer

NPV is negative
IRR is approximately 11% (and below GPC's hurdle rate)
Do not invest

Question 3

Which of the following is the formula for payback period?

Accepted Answer

A) Increased cash flow per period / initial investment. 
B) Initial investment / increased cash flow per period. 
C) CFt / (1 + r)t 
D) (Average annual income from IT initiative)/ (Total IT initiative investment cost). 
A) Increased cash flow per period / initial investment. 
B) Initial investment / increased cash flow per period. 
C) CFt / (1 + r)t 
D) (Average annual income from IT initiative)/ (Total IT initiative investment cost). B

Question 4

Which of the following is not a reason that large IT projects require economic justification?

Accepted Answer

A) IT is a commodity,every firm makes IT investments 
B) IT investments require large amounts of capital 
C) Capital resources are limited 
D) Major IT projects can affect substantial portions of the organization 
A) IT is a commodity,every firm makes IT investments 
B) IT investments require large amounts of capital 
C) Capital resources are limited 
D) Major IT projects can affect substantial portions of the organization

Question 5

Which of the following is an example of project risk?

Accepted Answer

A) The technology will not work as expected. 
B) The IT project is not aligned with the company's strategy. 
C) The financial benefits may not be delivered. 
D) The IT project may exceed budget. 
A) The technology will not work as expected. 
B) The IT project is not aligned with the company's strategy. 
C) The financial benefits may not be delivered. 
D) The IT project may exceed budget.

Question 6

The International Federation of Accountants recommends creating a business case for an IT investment.Which of the following is not a question the business case should answer?

Accepted Answer

A) What are the alternatives? 
B) How will we fund the investment? 
C) What are the risks of not doing the project? 
D) Why are we doing this project? 
A) What are the alternatives? 
B) How will we fund the investment? 
C) What are the risks of not doing the project? 
D) Why are we doing this project?

Question 7

Which of the following is an example of solution risk?

Accepted Answer

A) The solution is not aligned with the company's strategy. 
B) The solution will not generate projected benefits. 
C) The solution will be delayed. 
D) Employees are unwilling to make the necessary changes. 
A) The solution is not aligned with the company's strategy. 
B) The solution will not generate projected benefits. 
C) The solution will be delayed. 
D) Employees are unwilling to make the necessary changes.

Question 8

Acquisition costs for an IT initiative include all of the following except:

Accepted Answer

A) Software licenses. 
B) Training. 
C) Maintenance fees. 
D) Project management. 
A) Software licenses. 
B) Training. 
C) Maintenance fees. 
D) Project management.

Question 9

Which of the following is not a potential benefit of an IT investment?

Accepted Answer

A) Revenue enhancement 
B) Revenue savings 
C) Cost avoidance 
D) Revenue protection 
A) Revenue enhancement 
B) Revenue savings 
C) Cost avoidance 
D) Revenue protection

Question 10

Capital budgeting techniques provide precise estimates on an IT projects costs and benefits.

Accepted Answer

A) True 
 B)False

Question 11

In addition to technology,which of the following is required in order that a firm may achieve desired business process improvements for its IT investment?

Accepted Answer

A) Other enabling (complementary)changes. 
B) Software configuration. 
C) The Balanced Scorecard and associated strategy map. 
D) Business Intelligence. 
A) Other enabling (complementary)changes. 
B) Software configuration. 
C) The Balanced Scorecard and associated strategy map. 
D) Business Intelligence.

Question 12

Which of the following is the best approach to mitigate alignment risk?

Accepted Answer

A) Assure top management support. 
B) Conduct training and provide incentives. 
C) Use the balanced scorecard framework. 
D) Use sensitivity analysis. 
A) Assure top management support. 
B) Conduct training and provide incentives. 
C) Use the balanced scorecard framework. 
D) Use sensitivity analysis.

Question 13

In making the business case for an IT investment,companies should assess the sensitivity of results to the assumptions.

Accepted Answer

A) True 
 B)False

Question 14

Pacific Green Company is considering buying a unique bar-coding machine to help them track their plant inventory.They are using the payback period and accounting rate of return methods to evaluate the purchase.They will consider the project further if the payback period is less than four years and it has a minimum accounting rate of return of 7%.Relevant information on the machine is as follows:Acquisition cost = $48,000
Expected salvage value = $0
Expected annual cash inflow benefits = $13,000 per year for 5 years
Expected useful life = 5 yearsRequired:
Compute the payback period and ARR.Advise GPC on their appropriate action.

Accepted Answer

Payback period = $48,000/$13,0

Question 15

If the implementation costs greatly exceed the expected cost,the firm may have not done an appropriate job assessing which type of risk?

Accepted Answer

A) Financial Risk. 
B) Implementation Risk. 
C) Cost Risk. 
D) Technological Risk. 
A) Financial Risk. 
B) Implementation Risk. 
C) Cost Risk. 
D) Technological Risk.

Question 16

The value proposition step in the analysis of an IT initiative should focus on five questions,including the timing of expected benefits.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the order of tasks when evaluating AIS Investments?

Accepted Answer

A) Develop the Business case→Define Business Requirements→Estimate Benefits→Estimate Costs→Asess Risks→Prepare the value proposition. 
B) Develop Financials→Estimate Benefits→Estimate Costs→Asess Risks→Prepare the value proposition. 
C) Obtain management support→Estimate Benefits→Estimate Costs→Asess Risks→Prepare the value proposition. 
D) Develop the Business case→Define Business Requirements→Estimate Benefits→Estimate Costs→Asess Risks→Implement. 
A) Develop the Business case→Define Business Requirements→Estimate Benefits→Estimate Costs→Asess Risks→Prepare the value proposition. 
B) Develop Financials→Estimate Benefits→Estimate Costs→Asess Risks→Prepare the value proposition. 
C) Obtain management support→Estimate Benefits→Estimate Costs→Asess Risks→Prepare the value proposition. 
D) Develop the Business case→Define Business Requirements→Estimate Benefits→Estimate Costs→Asess Risks→Implement.

Question 18

Benefits are often estimated without complete information.

Accepted Answer

A) True 
 B)False

Question 19

By having a software vendor present a proof of concept,a firm is trying to mitigate which risk?

Accepted Answer

A) Project Risk. 
B) Solution Risk. 
C) Feasibility Risk. 
D) Technological Risk. 
A) Project Risk. 
B) Solution Risk. 
C) Feasibility Risk. 
D) Technological Risk.

Question 20

Organizations have developed techniques for evaluating IT projects for several reasons.Which of the following is not one of those reasons?

Accepted Answer

A) Selecting one investment often means forgoing other potentially value-increasing investments. 
B) IT projects change regularly. 
C) IT projects often require large amounts of capital,and for most firms,capital resources are limited. 
D) IT projects often involve changes in business processes that will affect substantial portions of the organization. 
A) Selecting one investment often means forgoing other potentially value-increasing investments. 
B) IT projects change regularly. 
C) IT projects often require large amounts of capital,and for most firms,capital resources are limited. 
D) IT projects often involve changes in business processes that will affect substantial portions of the organization.

Time that employees devote to self-training on new technology is an example of direct operating costs.

Which of the following is the formula for payback period?

Which of the following is not a reason that large IT projects require economic justification?

Which of the following is an example of project risk?

The International Federation of Accountants recommends creating a business case for an IT investment.Which of the following is not a question the business case should answer?

Which of the following is an example of solution risk?

Acquisition costs for an IT initiative include all of the following except:

Which of the following is not a potential benefit of an IT investment?

Capital budgeting techniques provide precise estimates on an IT projects costs and benefits.

In addition to technology,which of the following is required in order that a firm may achieve desired business process improvements for its IT investment?

Which of the following is the best approach to mitigate alignment risk?

In making the business case for an IT investment,companies should assess the sensitivity of results to the assumptions.

If the implementation costs greatly exceed the expected cost,the firm may have not done an appropriate job assessing which type of risk?

The value proposition step in the analysis of an IT initiative should focus on five questions,including the timing of expected benefits.

Which of the following is the order of tasks when evaluating AIS Investments?

Benefits are often estimated without complete information.

By having a software vendor present a proof of concept,a firm is trying to mitigate which risk?

Organizations have developed techniques for evaluating IT projects for several reasons.Which of the following is not one of those reasons?

Accounting Information Systems and Firm Value

Accountants As Business Analysts

Data Modeling

Relational Databases and Enterprise Systems

Sales and Collections Business Process

Purchases and Payments Business Process

Conversion Business Process

Reporting Processes and Extensible Business Reporting Language Xbrl

Data Analytics in Accounting: Concepts and the Amps Model

Data Analytics in Accounting: Tools and Practice

Emerging Technologies: Blockchain and Ai Automation

Accounting Information Systems and Internal Controls

Information Security and Computer Fraud

Monitoring and Auditing Ais

The Balanced Scorecard, Business Model Canvas, and Business Value of Information Technology

Filters

Exam 17: Evaluating Ais Investments

Time that employees devote to self-training on new technology is an example of direct operating costs.

Which of the following is the formula for payback period?

Which of the following is not a reason that large IT projects require economic justification?

Which of the following is an example of project risk?

The International Federation of Accountants recommends creating a business case for an IT investment.Which of the following is not a question the business case should answer?

Which of the following is an example of solution risk?

Acquisition costs for an IT initiative include all of the following except:

Which of the following is not a potential benefit of an IT investment?

Capital budgeting techniques provide precise estimates on an IT projects costs and benefits.

In addition to technology,which of the following is required in order that a firm may achieve desired business process improvements for its IT investment?

Which of the following is the best approach to mitigate alignment risk?

In making the business case for an IT investment,companies should assess the sensitivity of results to the assumptions.

If the implementation costs greatly exceed the expected cost,the firm may have not done an appropriate job assessing which type of risk?

The value proposition step in the analysis of an IT initiative should focus on five questions,including the timing of expected benefits.

Which of the following is the order of tasks when evaluating AIS Investments?

Benefits are often estimated without complete information.

By having a software vendor present a proof of concept,a firm is trying to mitigate which risk?

Organizations have developed techniques for evaluating IT projects for several reasons.Which of the following is not one of those reasons?

Accounting Information Systems and Firm Value

Accountants As Business Analysts

Data Modeling

Relational Databases and Enterprise Systems

Sales and Collections Business Process

Purchases and Payments Business Process

Conversion Business Process

Reporting Processes and Extensible Business Reporting Language Xbrl

Data Analytics in Accounting: Concepts and the Amps Model

Data Analytics in Accounting: Tools and Practice

Emerging Technologies: Blockchain and Ai Automation

Accounting Information Systems and Internal Controls

Information Security and Computer Fraud

Monitoring and Auditing Ais

The Balanced Scorecard, Business Model Canvas, and Business Value of Information Technology

Filters