ACC 416: Key Concepts and Terms for Exam 1

System

A set of interdependent elements that work together to accomplish specific objectives.

Four characteristics of a system

Organization, interrelationships, integration, and central objectives.

Subsystem

A component of a larger system that may be divided into smaller components.

Data

Raw facts or figures representing observations or measurements of objects and events.

Information

Data transformed into a useful form that adds knowledge or reduces uncertainty for a decision maker.

Information system (IS)

Integrated computer-based and manual components that collect, store, manage, and report information.

Management information system (MIS)

Another term for an information system that supplies information to organizational users.

Accounting information system (AIS)

A specialized information-system subsystem that collects, processes, and reports information about the financial aspects of business events.

Operations process

The people, equipment, policies, and procedures that perform an organization's actual work.

Information process

The activities that collect, store, maintain, process, and communicate data about operations.

Management process

The activities used to plan, authorize, control, and evaluate an organization's operations.

Intelligence phase

The decision phase in which a person searches for conditions or problems requiring a decision.

Design phase

The decision phase in which possible courses of action are developed and analyzed.

Choice phase

The decision phase in which one course of action is selected.

Structured decision

A decision for which the intelligence, design, and choice phases are routine or repetitive.

Unstructured decision

A nonroutine decision requiring significant judgment because its decision phases are not repetitive.

Accountant as AIS user

An accountant enters transactions, runs reports, and uses system output to make decisions.

Accountant as AIS designer or analyst

An accountant identifies information needs, documents processes, and helps design controls.

Accountant as AIS evaluator or auditor

An accountant tests information reliability, internal controls, compliance, and protection of assets and data.

Enterprise system

An organization-wide information system that integrates and automates business processes and information from functional areas.

Enterprise resource planning (ERP) system

A software package containing the core applications needed to support an enterprise system.

Benefits of ERP integration

Less duplicate entry, more consistent data, faster communication, standardized processes, and organization-wide visibility.

Costs or risks of ERP

High cost, difficult implementation, extensive training, process disruption, and limited customization.

Customer relationship management (CRM)

Software that builds and maintains customer-related data and supports customer relationships.

Customer self-service (CSS)

Software that allows customers to complete tasks without help from employees.

Sales force automation (SFA)

Software that automates sales activities such as order processing, contact management, and tracking.

Supplier relationship management (SRM)

Software that manages supplier interactions, procurement, and contracts.

Supply chain management (SCM)

Coordination of materials, products, and information across suppliers, the company, and customers.

Sales and Distribution module (SD)

ERP module responsible for order entry, shipment, and billing.

Materials Management module (MM)

ERP module responsible for purchasing goods from vendors and managing goods in stock.

Financial Accounting module (FI)

ERP module containing the general ledger, external financial statements, accounts receivable, and accounts payable.

Controlling module (CO or CO/PA)

ERP module for internal accounting, cost centers, budgeting, and profitability analysis.

Human Capital Management module (HCM)

ERP module for recruiting, personnel administration, payroll, training, benefits, travel, and work shifts.

Order-to-cash process

Revenue process beginning with a customer order and ending with collection of cash.

Three main SD steps

Order entry, shipment, and billing.

Purchase-to-pay process

Expenditure process beginning with a request for goods and ending with payment to the vendor.

Value chain

A linked set of activities through which an organization creates value for customers.

Character

A single letter, number, or symbol and the smallest basic data element.

Field

A group of characters representing one attribute, such as a customer number.

Record

A group of related fields describing one entity or business event.

Table or file

A collection of related records that have the same fields.

Database

An integrated collection of related tables or files.

Master data

Relatively permanent data maintained over time, often including standing information and cumulative balances.

Standing data

The relatively permanent portion of master data, such as a customer's name, address, or credit limit.

Business-event data

Facts describing a specific economic event, such as an invoice date, quantity, or sale amount.

Information processing

Processing related to economic events, such as recording a sale and updating a customer's balance.

Data maintenance

Adding, deleting, or changing standing data, such as changing a customer's address.

Journalize

Record a business event chronologically in the proper journal.

Post

Transfer information from a journal to a subsidiary ledger or general-ledger account.

Subsidiary ledger

A detailed ledger containing separate records for individual customers, vendors, or inventory items.

General-ledger control account

A summary account whose balance should equal the total of the related subsidiary ledger.

Periodic processing mode

A processing method involving a time delay between data-processing stages.

Batch processing

Accumulating multiple business events and processing them together as a group.

Online transaction entry (OLTE)

Entering business-event data directly into the system at the time and place the event occurs.

Immediate processing mode

Processing in which little or no delay exists between processing stages.

Online real-time processing (OLRT)

Online capture of an event followed by instantaneous master-data updates and real-time results.

OLTE versus OLRT

OLTE requires immediate online entry, while OLRT also requires immediate processing and master-data updating.

Electronic mail (e-mail)

Nonstandardized electronic messages exchanged between people through a communications network.

Electronic Document Management (EDM)

The capture, storage, management, and control of electronic document images.

Two EDM application categories

Document storage and retrieval, and business-event data processing.

Electronic Data Interchange (EDI)

Computer-to-computer exchange of business data in structured formats that permit direct processing.

Traditional EDI

Structured electronic transactions transmitted through a value-added network.

Value-added network (VAN)

A third-party communications network traditionally used to transmit EDI transactions.

Internet EDI (IEDI)

The use of secure, structured messages over the Internet to execute business transactions.

Internet commerce

Computer-to-computer exchange over the Internet that allows business events to be initiated and completed.

EDI versus e-mail

EDI is structured system-to-system data for automatic processing; e-mail is usually an unstructured message interpreted by a person.

WebTrust

CPA assurance that an organization's online systems meet relevant trust-services criteria.

WebTrust criteria

Security, availability, processing integrity, confidentiality, and privacy.

Data flow diagram (DFD)

A diagram showing the logical movement, storage, and transformation of data within a system.

External entity in a DFD

A source or destination outside the system boundary, shown as a square or rectangle.

Data flow in a DFD

Data moving between DFD components, shown as a labeled arrow.

Process in a DFD

An activity that transforms input data into output data, shown as a circle or rounded shape.

Data store in a DFD

Data held for later use, shown as parallel lines or an open-ended rectangle.

Context diagram

The highest-level DFD, showing the entire system as one process with its external entities and major data flows.

Logical DFD

A DFD showing what a system does without describing people, devices, or implementation details.

Physical DFD

A DFD showing how and where a system operates, including people, departments, devices, and physical files.

Level 0 DFD

A DFD that breaks the context-diagram process into the system's major processes and data stores.

Lower-level DFD

A DFD that decomposes one parent process into more detailed child processes.

Top-down partitioning

Beginning with a broad system view and progressively decomposing processes into greater detail.

Balancing DFDs

Ensuring that the inputs and outputs of a parent process also appear on its more detailed child diagram.

DFD black hole

A process that receives input but produces no meaningful output.

DFD miracle

A process that produces output without receiving sufficient input.

DFD versus systems flowchart

A DFD shows logical data movement; a systems flowchart shows documents, procedures, devices, departments, and processing sequence.

Document flowchart symbol

A rectangle with a wavy bottom representing a paper document or report.

Manual keying flowchart symbol

A slanted-top input symbol representing data entered through a keyboard or other entry device.

Computer process flowchart symbol

A rectangle representing computer processing, inquiries, or file updates.

Manual process flowchart symbol

A trapezoid representing a task performed by a person, such as preparing or signing a document.

Offline process flowchart symbol

A processing symbol representing devices such as scanners, MICR readers, or RFID readers.

Display flowchart symbol

A screen-shaped symbol representing electronically displayed output.

General-purpose input-output symbol

A parallelogram used when the input-output medium is unknown or represents manual records.

Disk or database flowchart symbol

A cylinder representing data stored electronically on disk or in a database.

Paper file flowchart symbol

An inverted triangle representing documents stored in a manual file.

Flowchart filing code A

Documents are filed alphabetically.

Flowchart filing code C

Documents are filed chronologically.

Flowchart filing code N

Documents are filed numerically.

Start-stop flowchart symbol

A rounded rectangle marking the beginning or end of a process.

On-page connector

A small circle showing that processing continues elsewhere on the same page.

Off-page connector

A pentagon-shaped symbol showing that processing continues on another page.

Logic flow line

A straight line with an arrowhead showing the direction and sequence of processing.

Telecommunications link

A wavy line representing electronic transmission of data.