Untitled Flashcards Set

How does accounting help a business and society?

It measures and communicates financial outcomes of decisions, leading to positive business decisions and a prosperous society.

What are the components of an information system?

Interrelated components including hardware, software, databases, networks, and users who maintain the system.

What are the three basic business processes?

Acquisitions & payments, conversion, and marketing, sales & collection.

Define a business event.

A single activity that occurs during normal business operations.

What are the four types of business events?

Operating, financing, investing, and information events.

What are management's responsibilities for overseeing business processes?

Planning, implementing, monitoring, and changing/improving processes.

What are the fundamental characteristics of useful information?

Relevance and faithful representation, including aspects like predictive value and neutrality.

What is Risk Assessment?

The process that identifies, categorizes, and prioritizes individual risks within a company.

What is Enterprise Risk Management (ERM)?

A comprehensive process of identifying, categorizing, prioritizing, and responding to company risks.

Define Likelihood in the context of risk severity.

The estimated probability of a risk occurrence.

What is a risk matrix?

A diagram that visualizes variations in risk scores, with impact on the y-axis and likelihood on the x-axis.

What are the four traditional risk responses?

Accept, mitigate, transfer, and avoid.

Define internal control.

A process that mitigates risk to the company's financial information.

What are General Controls?

Controls that apply to the entire operation of the system and its environment.

What is an application software?

Software that allows end users to perform specific functions.

What is an ERP system?

A solution that integrates multiple systems into a single communication system for business functions.

What are the benefits of an ERP system?

Improved data transparency, future cost savings, increased efficiency, quality improvement, and automation.

What is segregation of duties?

A type of preventive control ensuring different employees manage separate parts of a business activity.

What are automated controls?

Controls that use technology and require no human intervention.

Distinguish between preventive and detective controls with examples.

Preventive controls prevent problems (e.g., firewall); detective controls alert to issues (e.g., cash count).

What are the types of software in an information system?

Database management systems, data communication software, and utility programs.

What is continuous monitoring?

Data analytics technology used to detect risks in business data.

What is a maturity model used for?

It shows how far along a company is in reaching its ideal state for performance and improvement.

What is a risk statement?

A summary of a potential problem that outlines the issue and its possible outcome.

List two examples of external risks.

Regulatory fines and natural disasters.