Accounting Information Systems

Question 1

What is a system?

Answer 1

Is a set of detailed methods, procedures, and routines that carry out specific activities, perform a duty, achieve goals or objectives, or solve problems. Most systems are composed of smaller subsystems that support the larger system.

Question 2

What is a system?

Answer 2

Two or more interrelated components that interact to achieve a goal, often composed of a subsystems that support the larger system.

Question 3

What is the purpose of a subsystem?

Answer 3

They are meant to support the larger system by achieving one or more organizational goals. For example, the college of business is a system composed of various subsystems known as departments (e.g., Marketing, Management, Accounting, etc.).

Question 4

What is goal conflict?

Answer 4

Goal conflict occurs when a subsystem’s goals are inconsistent with the goals of another subsystem or with the system as a whole.

Question 5

What is goal congruence?

Answer 5

This is when a subsystem achieves its goals while contributing to the organization’s overall goals.

Question 6

What is data?

Answer 6

These are facts that are collected, recorded, stored and processed by any information system. Data is most useful when it is in a machine-readable format.

Question 7

What does it mean for data to be in a machine-readable format?

Answer 7

This is when data is in a format that can be processed by a computer.

Question 8

What is the process behind making data machine-readable?

Answer 8

It entails data collection, recording, storage, updating and data dissemination.

Question 9

What is XBRL?

Answer 9

eXtensible Business Reporting Language is a programming language. It is a standard for exchanging business information in a structured and machine-readable format. XBRL uses tags to identify and define the meaning of data. This makes it possible for computers to understand the data and process it automatically.

Question 10

Who makes use of XBRL?

Answer 10

XBRL is used by a variety of organizations to exchange financial information: Publicly traded companies; Government agencies; Non-profit organizations; Banks; Insurance companies; Securities firms.

For example:

• A government agency uses XBRL to tag its budget data with the names of the different programs, such as “Education” and “Healthcare.”
• A non-profit organization uses XBRL to tag its financial information with the names of the different donors, such as “Bill Gates” and “Warren Buffett.”

Question 11

What are the benefits of XBLR?

Answer 11

• Increased transparency: XBRL makes it easier for investors, analysts, and regulators to understand financial information.
• Improved efficiency: XBRL can automate the process of exchanging financial information, which can save time and money.
• Enhanced analysis: XBRL makes it easier to analyse financial information and identify trends.
• Increased compliance: XBRL can help organizations comply with regulations that require the disclosure of financial information.

Question 12

What is information?

Answer 12

This is data that has been organized and processed to provide meaning and improved decision making.

Question 13

What is the purpose of an information system designer?

Answer 13

They use Information Technology (IT) to help decision markers more effectively filter and condense information.

Question 14

What is the value of information?

Answer 14

This is the benefit of provided information less the cost of producing it.

Question 15

The characteristics of useful information are as follows:

Answer 15

Available; Access restricted; Accurate; Reputable; Complete; Concise; Consistent; Current; Objective; Relevant; Timely; Useable; Understandable; Verifiable.

Question 16

What is a business process?

Answer 16

These are a set of related, coordinated, and structured activities and tasks, performed by a person, a computer, or a machine, that help accomplish a specific organisational goal.

Question 17

How are effective decisions made?

Answer 17

To make effective decisions, organizations must decide what decisions they need to make, what information they need to make the decisions, and how to gather and process the data needed to produce the information.

Question 18

What is a transaction?

Answer 18

An agreement between two entities to exchange goods or services, such as selling inventory in exchange for cash; any other event that can be measured in economic terms by an organisation. For example, selling goods to a customer, buying inventory from suppliers etc.

Question 19

What is transaction processing?

Answer 19

This is the process of capturing transaction data, processing it, storing it for later use, and producing information output, such as managerial report or a financial statement.

Question 20

What is a business cycle?

Answer 20

Business cycles are recurring patterns of economic expansion and contraction. They are caused by a variety of factors, such as changes in consumer spending, investment, and government policy. Business cycles can have a significant impact on businesses and individuals, as they can lead to periods of economic growth and prosperity, as well as periods of recession and hardship.

Question 21

What is a transaction cycle?

Answer 21

Transaction cycles are the recurring series of steps that businesses take to complete a business transaction. For example, the revenue cycle is the transaction cycle that a business follows to sell goods or services to customers and collect payment. The expenditure cycle is the transaction cycle that a business follows to purchase goods or services from suppliers and pay for them.

Question 22

What is an Accounting Information System?

Answer 22

The Accounting Information System (AIS) is a system that collects, records, and processes financial information about a business. The AIS is used to track the financial performance of the business, to prepare financial statements, and to make financial decisions.

Question 23

Is there a connection between a business cycle, a transaction cycle and an Accounting Information System?

Answer 23

The three concepts are related, but they are not the same thing. Business cycles affect the transaction cycles of businesses, and the transaction cycles of businesses are recorded in the AIS.

However, business cycles are a broader concept that encompasses the overall economic environment, while transaction cycles and the AIS are more specific to individual businesses.

Question 24

What are some of the processes found in most organizations?

Answer 24

Revenue; Purchases; Human Resources/Payroll; Financing; Production.