Chapter 1 Flashcards
System
Two or more interrelated components that interact to achieve a goal, often composed of subsystems that support the larger system.
Data
Are facts stored in the system.
Information
Is valuable when the benefits exceed the costs of gathering, maintaining, and storing the data.
Information technology (IT)
The computers and other electronic devices used to store, retrieve, transmit, and manipulate data.
Information overload
Exceeding the amount of information a human mind can absorb and process, resulting in a decline in decision-making quality and an increase in the cost of providing information.
Value of information
The benefit provided by information less the cost of producing it.
Business process (transaction cycles)
A set of related, coordinated, and structured activities and tasks, performed by a person, a computer, or a machine, that help accomplish a specific organizational goal.
Transaction
An agreement between two entities to exchange goods or services, such as sell- ing inventory in exchange for cash; any other event that can be measured in economic terms by an organization.
Transaction processing
Process of capturing transaction data, processing it, storing it for later use, and producing information output, such as a managerial report or a financial statement.
Revenue cycle
Activities associated with selling goods and services in exchange for cash or a future promise to receive cash.
Expenditure cycle
Activities associated with purchasing inventory for resale or raw materials in exchange for cash or a future promise to pay cash.
Production (conversion) cycle
Activities associated with using labor, raw materials, and equip- ment to produce finished goods.
Human resource/payroll cycle
Activities associated with hiring, training, compensating, evaluating, promoting, and terminating employees.
Financing cycle
Activities associated with raising money by selling shares in the company to investors and borrowing money as well as paying dividends and interest.
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General ledger and reporting system
Information-processing operations involved in updating the general ledger and preparing reports for both management and external parties.
Accounting information system (AIS)
A system that collects, records, stores, and processes data to produce information for decision makers. It includes people, procedures and instructions, data, software, information technology infrastructure, and internal controls and security measures.
Supply chain
An extended system that includes an organization’s value chain as well as its suppliers, distributors, and customers.
relevant
Information need to make a decision.
reliable
Information has to be free from bias.
complete
Does not omit important information of a event or activities.
timely
Information needs to be provided in time to make a decision.
understandable
Information must be presented in meaningful manner.
verifiable
Two independent people can produce the same conclusion.
accessible
Available when needed.
