Chapter 1

Question 1

Internal Information Flows

Answer 1

horizontal and vertical

Question 2

Horizontal flows of information

Answer 2

used primarily at the operations level to capture transaction and operations data

Question 3

Vertical flows of information

Answer 3

downward flows — instructions, quotas, and budgets
upward flows — aggregated transaction and operations
data

Question 4

Information Requirements

Answer 4

Each user group has unique information requirements.
The higher the level of the organization, the greater the need for more aggregated information and less
need for detail.

Question 5

The higher the level of the organization, the greater _____
the need for more information and ___ need for detail.

Answer 5

aggregated, less

Question 6

Information in Business

Answer 6

is a business resource
that:
needs to be appropriately managed
is vital to the survival of
contemporary businesses

Question 7

What is a System?

Answer 7

A group of interrelated multiple components or subsystems that serve a common purpose

Question 8

A system is called a ____ when it is viewed as a component of a larger system.

Answer 8

subsystem

Question 9

___ is considered a system when it is the focus of attention.

Answer 9

subsystem

Question 10

What is System Decomposition?

Answer 10

process of dividing the system into smaller
subsystem parts

Question 11

What is System Interdependency?

Answer 11

• distinct parts are notself-contained
• they are reliant upon the functioning of the other parts of the system
• all distinct parts must be functioning or the system will fail

Question 12

What is an Information System?

Answer 12

An information system is the set of formal procedures by which data are collected, processed into information,
and distributed to users

Question 13

A ____ is a business event

Answer 13

transaction

Question 14

Financial transactions

Answer 14

• economic events that affect the assets and equities of the organization

Question 15

Example of Financial transactions

Answer 15

e.g., purchase of an airline ticket

Question 16

Nonfinancial transactions

Answer 16

all other events processed by the organization’s
information system

Question 17

Example of Nonfinancial transactions

Answer 17

e.g., an airline reservation — no commitment by the
customer

Question 18

______It identifies, collects, processes, and
communicates economic information about
a firm using a wide variety of technologies

Answer 18

Accounting Information
Systems

Question 19

___It captures and records the of the firm’s
transactions.

Answer 19

financial effects

Question 20

It is a financial transactions (e.g., sale of goods) and nonfinancial transactions that directly affect the processing of financial transactions; (e.g., addition of newly approved vendors)

Answer 20

Accounting Information Systems (AIS)

Question 21

It nonfinancial transactions that are not normally processed by traditional AIS; e.g., tracking customer complaint

Answer 21

Management Information Systems(MIS)

Question 22

AIS

Answer 22

AIS
- GLS/ FRS , TPS, MRS

Question 23

MIS

Answer 23

FINANCE, MARKETING, PRODUCTION, HRS, DISTRIBUTION

Question 24

supports daily business operations

Answer 24

Transaction processing system (TPS)

Question 25

produces financial statements and reports

Answer 25

General Ledger/ Financial ReportingSystem (GL/FRS)

Question 26

produces special-purpose reports for internal use

Answer 26

Management Reporting System(MRS)

Question 27

financial transactions that enter the information system from internal and external sources.

Answer 27

Data sources

Question 28

Functions for transforming data into information according to the general AIS model:

Answer 28

1.Data Collection 2. Data processing 3. Data Management 4. Information Generation

Question 29

Capturing transaction data

Answer 29

Data Collection

Question 30

Data Processing

Answer 30

-Classifying -Transcribing -Sorting -Batching * Merging * Calculating * Summarizing * Comparing

Question 31

Data Management

Answer 31

Storing Retrieving Deleting

Question 32

Information Generation

Answer 32

Compiling Arranging Formatting Presenting

Question 33

Characteristics of Useful Information- Relevance

Answer 33

serves a purpose

Question 34

Characteristics of Useful Information- Timeliness

Answer 34

no older than the time period of the action it supports

Question 35

Characteristics of UsefulInformation -accuracy

Answer 35

free from material errors

Question 36

Characteristics of UsefulInformation - completeness

Answer 36

all information essential to a decision or task is present

Question 37

Characteristics of UsefulInformation - summarization

Answer 37

aggregated in accordance with the user’s needs

Question 38

Information System Objectives in a Business Context

Answer 38

The goal of an information system is to support

Question 39

Information reliability requires______

Answer 39

Accounting Independence

Question 40

accounting independence

Answer 40

• Accounting activities must be separate and independent of the functional areas maintaining resources. • Accounting supports these functions with information but does not actively participate. • Decisions makers in these functions require that such vital information be supplied by an independent source to ensure its integrity.

Question 41

What is the two processing under the Computer Services Function?

Answer 41

1. Distributed Data Processing 2. Centralized Data Processing

Question 42

What is Distributed Data Processing?

Answer 42

- Reorganizing the computer services function into SMALL information processing units that are distributed to end users and placed under their control

Question 43

What is Centralized Data Processing?

Answer 43

All data processing is performed by one or more large computers housed at a central site that serves users throughout the organization.

Question 44

What are the primary areas under the Centralized Data Processing? (DDSS)

Answer 44

1. Database Administration 2. Data Processing 3. Systems Development 4. Systems Maintenance

Question 45

What are the potential advantages of DDP?

Answer 45

1. Cost reductions in hardware and data entry tasks 2. Improved cost control responsibility 3. Improved user satisfaction since controlis closer to the user level 4. Backup of data can be improved through the use of multiple data storage sites

Question 46

What are potential disadvantages of DDP?

Answer 46

1. Loss of control 2. Mismanagement of company resources 3. Hardware and software incompatibility 4. Redundant tasks and data 5. Consolidating tasks usually segregated 6. Difficulty attracting qualified personnel 7. Lack of standards

Question 47

What is Manual Process Model?

Answer 47

- Transaction processing, information processing, and accounting are physically performed by people, usually using paper documents.

Question 48

Manuel Process Model is useful to study because?

Answer 48

1. helps link AIS courses to other accounting courses 2. often easier to understand business processes when not shrouded in technology 3. facilitates understanding internal controls

Question 49

What are the Data Redundancy Problems?

Answer 49

1. Data Storage 2. Data Updating 3. Currency of Information 4. Task-Data Dependency 5. Data Integration

Question 50

It is the excessive storage costs of paper documents and/or magnetic form

Answer 50

Data Storage

Question 51

It is the changes or additions must be performed multiple times

Answer 51

Data Updating

Question 52

It is the potential problem of failing to update all affected files

Answer 52

Currency of Information

Question 53

It is the user’s inability to obtain additional information as needs change

Answer 53

Task-Data Dependency

Question 54

It is the separate files are difficult to integrate across multiple users

Answer 54

Data Integration

Question 55

What is REA Model?

Answer 55

- It is an accounting framework for modeling an organization’s -economic resources; e.g., assets -economic events; i.e., affect changes in resources -economic agents; i.e., individuals and departments that participate in an economic event

Question 56

——— among resources, events and agents

Answer 56

Interrelationships

Question 57

This diagram are often used to model these relationship

Answer 57

Entity-relationship diagrams (ERD)

Question 58

Accountants as Information System Users

Answer 58

- Accountants must be able to clearly convey their needs to the systems professionals who design the system. - The accountant should actively participate in systems development projects to ensure appropriate systems design.

Question 59

Accountants as System Designers The accounting function is responsible for the _______ while the computer function is responsible for the _____.

Answer 59

conceptual system, physical system

Question 60

The ______ determines the natureof the information required, its sources, its destination, and the accounting rules that must be applied.

Answer 60

conceptual system

Question 61

Accountants as System Auditors What type of Auditors? - attest to fairness of financial statements - assurance service: broader in scopethan - traditional attestation audit

Answer 61

External Auditors

Question 62

Accountants as System Auditors What type of Auditors? - evaluate IT, often as part of externalaudit

Answer 62

IT Auditors

Question 63

Accountants as System Auditors What type of Auditors? - in-house IS and IT appraisal services

Answer 63

Internal Auditors