Accounting Information Systems – Final Exam Vocabulary

Vocabulary flashcards covering key terms, documents, controls, and frameworks from the Accounting Information Systems final-exam study guide.

Accounting Information System (AIS)

A system that collects, stores, and processes accounting data to produce information for decision makers.

Flowchart

A graphical representation that depicts the flow of documents, data, or processing within a system.

Document Flowchart

A flowchart that traces the flow of documents and data among areas of responsibility inside an organization.

Internal Control Flowchart

A flowchart used to analyze and evaluate an organization’s internal controls, highlighting strengths and weaknesses.

System Flowchart

A chart that shows the relationships among system inputs, processing, storage, and outputs to provide a ‘big picture’ overview.

Program Flowchart

A detailed diagram illustrating the specific logical operations a computer program performs.

Data Flow Diagram (DFD)

A graphical tool that shows how data move through an organization, depicting sources, processes, stores, and destinations.

Context Diagram

The highest-level DFD containing one process symbol that shows the system’s interaction with external entities but no data stores.

Business Process Diagram (BPD)

A visual map of the steps in a business process, using swim lanes to assign tasks to employees or departments.

Swim Lane

A horizontal or vertical row in a BPD that segregates duties by employee, role, or department.

Fraud

Gaining an unfair advantage through a false statement, material fact, intent to deceive, justifiable reliance, and resulting injury.

Misappropriation of Assets

Employee theft of company assets such as cash or inventory; commonly called ‘stealing.’

Fraudulent Financial Reporting

Intentional misstatement or omission of financial information to deceive users; often called ‘lying.’

Computer Fraud

Any scheme that uses computers to commit fraud; includes input, processor, output, and data fraud.

Input Fraud

Altering or falsifying data entered into a computer system—the simplest and most common computer fraud.

Processor Fraud

Unauthorized system use such as using company computers for personal business.

Output Fraud

Stealing, copying, or misusing computer-generated outputs like reports or checks.

Data Fraud

Illegally using, copying, browsing, or damaging company data files.

Fraud Triangle

A model stating that fraud occurs when Pressure, Opportunity, and Rationalization coexist.

Pressure (Fraud)

The motivation or incentive—financial, emotional, lifestyle, or company-related—that drives someone to commit fraud.

Opportunity (Fraud)

A situation that allows a person to commit, conceal, and convert fraud, often due to weak controls.

Rationalization (Fraud)

The mindset that justifies fraudulent behavior, allowing the perpetrator to see the act as acceptable.

Preventive Control

An internal control that deters problems before they occur, e.g., segregation of duties or access restrictions.

Detective Control

An internal control that discovers problems after they have occurred, such as reconciliations or audits.

Corrective Control

An internal control that recovers from identified problems, like data backups or disaster recovery plans.

Sarbanes-Oxley Act (SOX)

A 2002 U.S. law aimed at preventing financial fraud and strengthening corporate governance and internal control.

Public Company Accounting Oversight Board (PCAOB)

A regulatory body created by SOX to oversee the auditing profession.

COBIT

A framework providing best practices for IT governance and management.

COSO Internal Control (COSO-IC)

The most widely used framework for designing and evaluating internal control systems.

Control Environment

The foundation of COSO; the organization’s culture and ‘tone at the top’ regarding control consciousness.

Risk Assessment

The COSO component involving identification and analysis of risks to achieving objectives.

Control Activities

Policies and procedures that help ensure management directives are carried out (e.g., authorizations, reconciliations).

Information and Communication

The COSO element focused on capturing and exchanging information needed to run and control the organization.

Monitoring (COSO)

Ongoing or periodic evaluation of internal control effectiveness over time.

Inherent Risk

Risk that exists before any controls are applied.

Residual Risk

Risk that remains after controls have been implemented.

Risk Response

Management’s choice to Reduce, Accept, Share, or Avoid a specific risk.

Segregation of Duties

Dividing responsibilities so no single employee controls Authorization, Recording, and Custody of assets.

Authorization (SoD)

The function of approving transactions and decisions within a process.

Recording (SoD)

The function of preparing source documents, maintaining journals/ledgers, and preparing reports.

Custody (SoD)

The function of handling cash, inventory, or other assets.

Revenue Cycle

Recurring set of activities related to selling goods/services and collecting cash.

Sales Order

A document created by Sales to record a customer’s request for goods or services.

Picking Ticket

A document authorizing the Warehouse to remove specific items from inventory for shipment.

Packing Slip

A document listing items included in a shipment, prepared by Shipping.

Bill of Lading

A legal contract that defines responsibility for goods in transit; issued by the carrier.

Sales Invoice

A document created by Billing to request payment from a customer.

Credit Memo

A document authorizing a credit to a customer’s account, approved by the Credit Manager.

Expenditure Cycle

A recurring set of activities related to ordering, receiving, and paying for goods and services.

Purchase Requisition

An internal request to Purchasing to order goods or services.

Purchase Order (PO)

A formal offer sent to a vendor to buy specified items at specified prices.

Receiving Report

A document completed by Receiving that records the quantity and condition of goods received.

Vendor Invoice

A bill sent by a supplier requesting payment for goods or services provided.

Debit Memo

A document used to authorize a reduction in the amount owed to a vendor, often for returns or allowances.

Production Cycle

Activities associated with designing, producing, and costing products.

Bill of Materials (BOM)

A document created by Engineering that lists components needed to produce a product.

Operations List

A document that details the sequence of steps required to manufacture a product.

Production Order

Authorization to produce a specified quantity of a particular product.

Materials Requisition

A document authorizing the release of raw materials into production.

Move Ticket

A document that tracks the movement of materials or work-in-progress throughout the factory.

Internal Control Framework

A structured guideline, such as COSO, for designing and evaluating an organization’s controls.

General Control

Control that ensures a stable, well-managed overall control environment (e.g., IT security, infrastructure).

Application Control

Control embedded in specific computer applications to ensure data accuracy, completeness, and validity.

Three-Way Match

The Accounts Payable control that matches PO, Receiving Report, and Vendor Invoice before payment.

Lockbox

A bank-maintained P.O. box where customers send payments directly, reducing theft of cash.

Audit Trail

A path of source documents and records that allows a transaction to be traced through a system.