Chapter 1

Question 1

accounting information system (AIS)

Answer 1

A system that records, processes, reports, and communicates the results of business transactions to provide financial and non-financial information to make decisions and have appropriate levels of internal controls for those transactions.

Question 2

automate

Answer 2

The use of technology to replace human labor in automating business processes.

Question 3

business value

Answer 3

Items, events, and interactions that determine the financial health and well-being of the firm.

Question 4

Certified Information Systems Auditor (CISA)

Answer 4

The CISA designation identified those professionals possessing IT audit, control, and security skills. Generally, CISAs will perform IT audits to evaluate the accounting information system’s internal control design and effectiveness.

Question 5

Certified Information Technology Professional (CITP)

Answer 5

The CITP designation identifies accountants (CPAs) with a broad range of technology knowledge and experience.

Question 6

Certified Internal Auditor

Answer 6

The CIA designation is the certification for internal auditors and is the standard to demonstrate competency and professionalism in the internal auditing field.

Question 7

customer relationship management (CRM) software

Answer 7

Software used to manage and nurture a firm’s interaction with its current and potential clients. CRM software often include the use of database marketing tools to learn more about the customers and to develop strong firm-to-customer relationships.

Question 8

data

Answer 8

Raw facts of statistics that, absent a context, may have little meaning.

Question 9

discretionary information

Answer 9

Information that is generated according to one’s own judgement.

Question 10

enterprise system (ES)

Answer 10

A centralized database that collects data from throughout the firm. Commercialized information system that integrates and automates business processes across a firm’s value chain located within and across organizations. Also called an enterprise resource planning (ERP) system.

Question 11

firm infrastructure

Answer 11

Activities needed to support the firm, including the CEO and finance, accounting, and legal departments.

Question 12

human resource management

Answer 12

Activities include recruiting, hiring, training, and compensating employees.

Question 13

inbound logistics

Answer 13

Activities associated with receiving and storing raw materials and other partially completed materials and distributing those materials to manufacturing when and where they are needed.

Question 14

informate-down

Answer 14

The use of computer technology to provide information about business activities to employees across the firm.

Question 15

informate-up

Answer 15

The use of computer technology to provide information about business activities to senior management.

Question 16

information

Answer 16

Data organized in a meaningful way to the user.

Question 17

information overload

Answer 17

The difficulty a person faces in understanding a problem and making a decision as a consequence of too much information.

Question 18

information value chain

Answer 18

The overall transformation from a business need and business event to the collection of data and information to an ultimate decision.

Question 19

mandatory information

Answer 19

Information that is required to be generated or provided by law or regulation.

Question 20

marketing and sales activities

Answer 20

Activities that identify the needs and wants of their customers to help attract them to the firm’s products and buy them.

Question 21

operations

Answer 21

Activities that transform inputs into finished goods and services.

Question 22

outbound logistics

Answer 22

Activities that warehouse and distribute the finished goods to the customers.

Question 23

procurement

Answer 23

Activities that involved purchasing inputs such as raw materials, supplies, and equipment.

Question 24

Sarbanes-Oxley Act of 2002 (SOX)

Answer 24

A response to business scandals such as Enron, WorldCom, and Tyco International; requires public companies registered with the SEC and their auditors to annually access and report on the design and effectiveness of internal control over financial reporting.

Question 25

service activities

Answer 25

Activities that provide the support of customers after the products and services are sold to them (e.g., warranty repairs, parts, instruction manuals, etc.)

Question 26

supply chain

Answer 26

The flow of materials, information, payments, and services from raw materials suppliers, through factories and warehouses, all the way to the final customers of the firm’s products.

Question 27

supply chain management (SCM) software

Answer 27

Software that connects the focal firm with its suppliers. It generally addresses segments of the supply chain, including manufacturing, inventory control, and transportation.

Question 28

system analyst

Answer 28

Person responsible for both determining the information needs of the business and designing a system to meet those needs.

Question 29

technology

Answer 29

Supports value-creating activities in the value chain. These technologies also include research and development to develop new products or determine ways to produce products at a cheaper price.

Question 30

transform

Answer 30

The use of computer technology to fundamentally redefine business processes and relationships.

Question 31

value chain

Answer 31

A chain of critical business processes at a company that creates value.

Question 32

order of the information value chain

Answer 32

Business need and business event to data to information to knowledge to decision

Question 33

list primary activities in the value chain in order

Answer 33

inbound logistics
operations
outbound logistics
marketing
service

Question 34

list the support activities in the value chain

Answer 34

procurement
information technology
human resource management
infrastructure

Question 35

Effect of AIS on Revenues

Answer 35

CRM techniques could attract new customers, or better service existing customers to generate additional sales revenue.

Question 36

Effect of AIS on Cost of Goods Sold

Answer 36

SCM software allows firms to carry the right inventory and have it in the right place and the right time. This, in turn, will lower obsolescence as well as logistics and procurement costs.

Question 37

Effect of AIS on selling, general and administrative expenses

Answer 37

An efficient enterprise system can significantly lower the cost of support processes included in sales, general, and administrative expenses.

Question 38

Effect of AIS on interest expense

Answer 38

SCM software allows the firm to carry less inventory. Less inventory on hand leaves fewer assets to finance, potentially reducing the amount of debt and the related interest to service the debt.