AIS : CH 1

SFD

SF

SBF

SDFB

What activities form the base of the business organization pyramid?

Product-oriented work such as manufacturing, sales, and distribution activities.

What is the primary responsibility of operations management?

Directly controlling day-to-day operations of the business organization.

What is middle management accountable for?

Short-term planning and coordination necessary to accomplish organizational objectives.

What is top management responsible for?

Longer-term planning and setting overall organizational objectives.

What are horizontal flows of information used for?

Capturing transaction and operations data primarily at the operations level.

What do downward vertical information flows consist of?

Instructions, quotas, and budgets sent from management to operations.

What do upward vertical information flows consist of?

Aggregated transaction and operations data sent to higher management.

Who are the two groups of external users?

External users are categorized as trading partners and stakeholders.

What information do exchanges with trading partners include?

Customer sales, billing, supplier purchases, and inventory receipts information.

How do information requirements change at higher organization levels?

Higher levels need more aggregated information and less specific detail.

Why is information considered a vital business resource?

It must be managed correctly and is vital for business survival.

How is management information oriented differently than operations?

It is more summarized and focuses on overall performance and problems.

What is the definition of a system?

Interrelated components or subsystems that serve a common purpose.

When is a system called a subsystem?

When it is viewed as a component of a larger system.

When is a subsystem considered a system?

When it becomes the primary focus of attention.

What are the four basic elements of a system?

Multiple components, relatedness, system versus subsystem, and purpose.

What is system decomposition?

The process of dividing a system into smaller subsystem parts.

What is the definition of system interdependency?

Distinct parts reliant on each other; all must function or fail.

What is an information system?

Formal procedures where data is collected, processed, and distributed.

What is a transaction?

A transaction is defined as a business event.

What are financial transactions?

Economic events that affect the assets and equities of the firm.

What are nonfinancial transactions?

All other events processed by the information system without financial commitment.

What is an Accounting Information System (AIS)?

System that identifies, collects, processes, and communicates economic information.

How does AIS support operations personnel?

By distributing transaction information to coordinate many key tasks.

What transactions does AIS process?

Financial transactions and nonfinancial transactions directly affecting financial processing.

What transactions does MIS process?

Nonfinancial transactions not normally processed by traditional AIS.

What is the function of the Transaction Processing System (TPS)?

Supports daily operations by converting economic events into financial transactions.

What are the three transaction cycles of the TPS?

The revenue cycle, expenditure cycle, and the conversion cycle.

What is the General Ledger/Financial Reporting System (GL/FRS)?

It updates control accounts and produces financial statements and reports.

What is the Management Reporting System (MRS)?

Produces special-purpose, discretionary reports for internal management use.

Who are external end users?

Creditors, stockholders, investors, regulatory agencies, tax authorities, suppliers, and customers.

Who are internal end users?

Management at every level and operations personnel within the firm.

What is the difference between data and information?

Data are facts; information is processed data that causes action.

What is the organization's database?

A physical repository for financial and nonfinancial data.

What is a data attribute?

The most elemental piece of potentially useful data in a database.

What is a record?

A complete set of attributes for a single entity occurrence.

What is a file?

A complete set of records of an identical class.

What are external data sources?

Financial transactions entering the system from external business partners.

What are internal data sources?

Exchanges or movement of resources within the organization.

What tasks are involved in data collection?

Capturing, recording, validating, and editing transaction data onto forms.

What activities define data processing?

Classifying, transcribing, sorting, batching, merging, calculating, summarizing, and comparing.

What is the storing task in data management?

Assigning keys and storing new records in the database.

What is the retrieving task in data management?

Locating and extracting an existing record for processing and updates.

What is the deleting task in data management?

Permanently removing obsolete or redundant records from the database.

What is information generation?

Compiling, arranging, formatting, and presenting information to users.

What is Relevance in useful information?

Information is relevant when it serves a specific purpose.

What is Timeliness in useful information?

Information no older than the time period of the action.

What is Accuracy in useful information?

Information that is free from any material errors.

What is Completeness in useful information?

Presence of all information essential to a decision or task.

What is Summarization in useful information?

Information aggregated in accordance with the user's specific needs.

What is the definition of feedback?

Output sent back to the system to initiate or alter processes.

What are the three goals of an information system?

Support stewardship, management decision making, and day-to-day operations.

What does organizational structure help allocate?

Responsibility, authority, and accountability within the firm.

What is the objective of Materials Management?

To plan and control the materials inventory of the company.

What is the responsibility of Purchasing?

Ordering inventory when levels fall to their reorder points.

What is the task of Receiving?

Accepting, counting, and checking the physical condition of ordered inventory.

What is the function of Stores?

Taking physical custody and releasing resources to the production process.

What does the Production function include?

Production planning, quality control, and maintenance activities.

What does the Marketing function deal with?

Product promotion, advertising, and strategic market research problems.

What is the definition of Distribution?

The activity of getting the product to the customer after sale.

What is the objective of the Personnel function?

To effectively manage competent and reliable employees as a resource.

How does Finance manage resources?

Through banking, treasury, portfolio management, credit, and cash activities.

How does Accounting play a role in transaction processing?

It captures financial effects and distributes information to operations.

What does information reliability require?

Accounting independence from functional areas that maintain resources.

What is Distributed Data Processing (DDP)?

Reorganizing computer services into small units under end-user control.

What is Centralized Data Processing?

All processing performed by large computers at a central site.

What is Database Administration in a centralized system?

Maintaining data resources in a central location shared by users.

What are systems development and systems maintenance?

Related functions that meet the information needs of users.

What are the advantages of DDP?

Cost reductions, improved control, user satisfaction, and improved data backup.

What are the disadvantages of DDP?

Loss of control, mismanagement, incompatibility, redundancy, and lack of standards.

What is the Manual Process Model?

Processing and accounting performed physically by people using paper documents.

What is the Flat-File Model?

An environment where individual data files are not related or shared.

What is the data storage problem in flat-files?

Excessive storage costs of paper documents and magnetic form data.

What is the data updating problem in flat-files?

Changes or additions must be performed multiple times across files.

What is the currency of information problem?

Failing to update all affected files when data changes occur.

What is task-data dependency?

User's inability to obtain additional information as their needs change.

What is the data integration problem?

Separate files are difficult to integrate across multiple organizational users.

How can flat-file problems be overcome?

By implementing the database model for data management.

What does the REA model stand for?

Economic resources, economic events, economic agents, and their interrelationships.

What is used to model REA relationships?

Entity-relationship diagrams (ERD) are often used for modeling relationships.

What is the accountant's role as a system user?

Conveying needs to professionals and participating in development projects.

What is the accountant's responsibility as a system designer?

Responsibility for the conceptual system and applying accounting rules.

What is the computer function's responsibility in design?

Responsibility for the physical system and technical implementation.

What does the conceptual system determine?

Information nature, sources, destinations, and applied accounting rules.

What is the role of External Auditors?

Attesting to financial statement fairness and providing assurance services.

What is the role of IT Auditors?

Evaluating information technology, often as part of an external audit.

What is the role of Internal Auditors?

Providing in-house information system and IT appraisal services.