Chapter 1 part 2

Question 1

Business process

Answer 1

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

Question 2

Transaction

Answer 2

an agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization

Question 3

Transaction processing

Answer 3

the process that begins with capturing transaction data and ends with informational output, such as the financial statement

Question 4

the give-get exchange can be grouped into five business processes or transaction cycles, which are

Answer 4

the revenue cycle
the expenditure cycle
the production or conversion cycle
the human resources/paryroll cycle
the financial cycle

Question 5

The revenue cycle

Answer 5

where goods and services are sold for cash or a future promise to receive cash

Question 6

The expenditure cycle

Answer 6

where companies purchase inventory for resale or raw materials to use in producing products in exchange for cash or a future promise to pay in cash

Question 7

The production or conversion cycle

Answer 7

where raw materials are transformed into finished goods

Question 8

The human resources/paryroll cycle

Answer 8

where employees are hired, trained, compensated, evaluated, promoted, and terminated

Question 9

The financial cycle

Answer 9

where companies sell shares in the company to investors and borrow money and where investors are paid dividends and interest in paid on loans

Question 10

Accounting Information System (AIS)

Answer 10

it is often been said that accounting is the language of business. If that is the case, then an accounting information system (AIS) is the intelligence of the language

Question 11

What are the six component of an AIS

Answer 11

1. the people who use the system
2. the procedures and instructions used to collect, process, and store data
3. the data about the organization and its business activities
4. the software used to process the data
5. the information technology infrastructure, including the computers, peripheral devices, and network communication devices used in the AIS
6. the internal controls and security measures that safeguard AIS data

Question 12

These six components enable an AIS to fulfill three important business functions

Answer 12

1. collect and store data about organizational activities, resources, and personnel.
2. transform data into information so management can plan, execute, control, and evaluate activities, resources, and personnel.
3. provide adequate control to safeguard the organization’s assets and data

Question 13

A well-designed AIS can add value to an organization by

Answer 13

1. improving the quality and reducing the costs of products or services
2. improving efficiency
3. sharing knowledge
4. improving the efficiency and effectiveness of its supply chain
5. improving the internal control structure
6. improving decision making

Question 14

An AIS can help improve decision making in several ways

Answer 14

1. it can identify situation requiring management action
2. it can reduce uncertainty and thereby provide a basis for choosing among alternative
3. it can store information about the results of previous decisions
4. it can provide accurate information in a timely manner
5. it can analyze sales data to discover items that are purchased together

Question 15

Predictive analysis

Answer 15

is a complex algorithm to forecast future events, based on historical trends and calculated probabilities