Chapter 1 Flashcards
We should recognize that information is a
business resource
The tiers of the pyramid
- Business operations
- Operations management
- Middle management
- Top management
External users fall into two groups:
trading partners and stakeholders
are entities outside (or inside) the organization with a direct or indirect interest in the firm
Stakeholders
is a group of two or more interrelated components or subsystems that serve a common purpose.
System
System can be
natural or artificial
What are the elements of a system?
- Multiple Components
- Relatedness
- System versus subsystem
- Purpose
A system is called a _________ when it is viewed in relation to the larger system of which it is a part.
subsystem
is the process of dividing the system into smaller sub-system parts.
System Decomposition
This concept means a system’s ability to achieve its goal depends on the effective functioning and harmonious interaction of its subsystems. If a vital subsystem fails or becomes defective
and can no longer meet its specific objective, the overall system will fail to meet its objective
System Interdependency
is the set of formal procedures by which data are collected, processed into information, and distributed to users
Information system
two broad classes of systems emerge from the decomposition of a hypothetical manufacturing firm
- AIS
- MIS
The information system accepts input, called
transactions
Transactions fall into two classes:
financial transactions and nonfinancial transactions
as an event that affects or is of interest to the organization and is processed by its information system as a unit of work.
Transaction
is an economic event that affects the assets and equities of the organization, is reflected in its accounts, and is measured in monetary terms
Financial Transaction
are events that do not meet the narrow definition of a financial transaction.
Nonfinancial Transaction
AIS features three major subsystems which are:
- transaction processing system (TPS)
- general ledger/financial reporting system (GL/FRS)
- management reporting system (MRS
The ____________ processes nonfinancial transactions that are not normally processed by
traditional AIS.
management information system (MIS)
is central to the overall function of the information system by converting economic events into financial transactions, recording financial transactions in the accounting records (journals and ledgers), and distributing essential financial information to operations personnel to support their daily operations.
Transaction Processing System (TPS)
The TPS deals with business events that occurs
frequently
because of their operational interdependency, they are generally viewed as a single integrated
system
general ledger system (GLS) and the financial reporting system (FRS)
provides the internal financial information needed to manage a business. Managers must deal immediately with many day-to-day business problems, as well as plan and control their operations
Management Reporting System (MRS)
The elements of the general model for AIS are
- end users
- data sources
- data collection
- data processing
- database management
- information generation
- feedback
__________ fall into two general groups: external and internal. External _____ include creditors, stockholders, potential investors, regulatory agencies, tax authorities, suppliers, and customers. Internal _______ include management at every level of the organization, as well as operations personnel
End users
are financial transactions that enter the information system from both internal and external sources
Data Sources
___________ are the most common source of data for most organizations.
External financial transactions
is the first operational stage in the information system. The objective is to ensure that
event data entering the system are valid, complete, and free from material errors
Data Collection
Two rules govern the design of data collection procedures:
relevance and efficiency
Once collected, data usually require ____________to produce information
processing (Data Processing)
The organization’s________ is its physical repository for financial and nonfinancial data
database
is the most elemental piece of potentially useful data in the database. An __________ is a logical and relevant characteristic of an entity about which the firm captures data
Data attribute
is a complete set of attributes for a single occurrence within an entity class
Record
is a complete set of records of an identical class
File
Database management involves three fundamental tasks
Storage, Retrieval and Deletion
___________ task assigns keys to new records and stores them in their proper location in the database
Storage
is the task of locating and extracting an existing record from the database for processing
Retrieval
is the task of permanently removing obsolete or redundant records from the database.
Deletion
Information generation is the process of _____________________ information to users
compiling, arranging, formatting, and presenting
Regardless of physical form, useful information has the following characteristics:
relevance, timeliness, accuracy, completeness, and summarization
is a form of output that is sent back to the system as a source of data. _______ may be internal or external and is used to initiate or alter a process
Feedback
Information System Objectives
- To support the stewardship function of management
- To support management decision making
- To support the firm’s day-to-day operations
refers to management’s responsibility to properly manage the resources of the firm
Stewardship
Larger organizations with unique and frequently changing needs engage in in-house development. The formal process by which this is accomplished is called the
system development life cycle
Three basic types of commercial software are
turnkey systems, backbone systems, and vendor-supported system
are completely finished and tested systems that are ready for implementation. Typically, they are general-purpose systems or systems customized to a specific industry
Turnkey systems
consist of a basic system structure on which to build. The primary processing logic is preprogrammed, and the vendor then designs the user interfaces to suit the client’s unique needs.
Backbone Systems
are custom (or customized) systems that client organizations purchase commercially rather than develop in-house. Under this approach, the software vendor designs, implements, and maintains the system for its clients
Vendor-supported systems
The value of information to a user is determined by its
reliability
Information reliability rests heavily on the concept of
accounting independence
Under the ____________________, all data processing is performed by one or more large computers housed at a central site that serve users throughout the organization.
centralized data processing model
The information needs of users are met by
two related functions:
systems development and systems maintenance
An alternative to the centralized model is the concept of ___________________. Simply stated, ____ involves reorganizing the IT function into small information processing units (IPUs) that are distributed to end users and placed under their control. IPUs may be distributed according to business function, geographic location, or both.
distributed data processing (DDP)
DISADVANTAGES OF DDP
- Mismanagement of company resources
- Hardware and software incompatibility
- Redundant tasks and data
- Consolidating tasks usually segregated
- Difficulty attracting qualified personnel
- Lack of standards
- Loss of control
ADVANTAGES OF DDP
- Cost reductions
- Improved cost control responsibility
- Improved user satisfaction
- Backup
The ____________ is the oldest and most traditional form of accounting systems. _____________ constitute the physical events, resources, and personnel that characterize many business processes
manual process model
The flat-file approach is most often associated with so-called
legacy systems
The _______ model describes an environment in which individual data files are not related to other files
flat-file
significant problems in the flat-file environment:
data storage, data updating, and currency of information
Another problem with the flat-file approach is the user’s inability to obtain additional information as his or her needs change. This problem is called
task-data dependency
The flat-file approach is a single-view model. Files are structured, formatted, and arranged to suit the specific needs of the owner or primary user of the data. Such structuring, however, may exclude data attributes that are useful to other users, thus preventing successful
data integration
is an accounting framework for modeling an organization’s critical resources, events, and agents and the relationships between them
REA model
are the assets of the organization
Economic resources
are phenomena that affect changes in resources
Economic events
are individuals and departments that participate in an economic event
Economic agents
is an information system model that enables an organization to automate and integrate its key business processes. ERP breaks down traditional functional barriers by facilitating data sharing, information flows, and the introduction of common business practices among all
organizational users
Enterprise resource planning (ERP)
