Chapter 1: The Information System Flashcards
Accounting Information System
Is a system of collecting, storing, and processing financial and accounting data that are used by decision makers
Information Objectives
To support the firm’s day to day operations, to support management decision making, to support the stewardship function of management
Information System
Is the set of formal procedures by which data is collected, stored, processed into information, and distributed to users
Management Information System
a computerized information-processing system designed to support the activities of company or organizational management.
Transaction
Is an event that affects or is of interest to the organization and is processed by its information system as a unit of work
Financial Transaction
Is an economic event that affects the assets and equities of the organization and is measured in monetary terms
Nonfinancial Transactions
Are events that do not meet the narrow definition of a financial transaction
The 3 parts of the Accounting Information System
The transaction processing system, general ledger/financial reporting system, and management reporting system
Transaction Processing System
Supports daily business operations with numerous reports, documents, and messages for users throughout the organization
General Ledger/Financial Reporting System
Produces the traditional financial statements such as the income statement, balance sheet, statement of cash flows, tax returns, and other reports
Management Reporting System
Provides internal management with special purpose financial reports and information needed for decision making such as budgets, variance reports, and responsibility reports
Non discretionary Reporting
The organization has few or no choices in the information it provides
Discretionary Reporting
The organization can choose what information to report and how to present it
External Users
Creditors, stockholders, and customers among others
Internal Users
Include management at all levels of the organization
Data
Are facts which may or may not be processed and have no direct effect on a user’s actions
Information
Causes the user to take an action that he or she otherwise could not or would not have taken
Data Sources
Are financial transactions that enter the information system from either internal or external sources
Data Collection
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 errors
Data Processing
Once data is collected it usually requires processing to produce information.
Examples of Data Processing
Mathematical algorithms used for producing scheduling applications, statistical techniques for forecasting, and posting procedures used for accounting applications
Database
Is its physical repository for financial and non financial data. Regardless of the databases physical form business data is organized in a logical hierarchy
Database Management
Involves three fundamental tasks: storage, retrieval, and deletion.
Storage Task
Assigns keys to new records and stores them in their proper location in the database
Retrieval
Is the task of locating and extracting an existing record from the database for processing
Deletion
Is the task of permanently removing obsolete or redundant records from the database
Information Generation
Is the process of compiling, arranging, formatting, and presenting information to users
Feedback
Is a form of output that is sent back to the system as a source of data
Materials Management
The three sub functions of materials management are purchasing, receiving, and stores
Materials Management: Purchasing
Is responsible for ordering inventory from vendors when inventory levels fall to their reorder points
Materials Management: Receiving
Is the task of accepting the inventory previously ordered by purchasing.
Materials Management: Stores
Takes physical custody of the inventory received and releases these resources into the production process as needed
Production Planning
Involves scheduling the flow of materials, labor, and machinery to efficiently meet production needs
Quality Control
Monitors the manufacturing process at various points to ensure that the finished products meet the firms quality standards
Maintenance
Keeps the firms machinery and other manufacturing facilities in running order.
Central Data Processing
All data processing is performed by one or more large computers housed in a common data center that serves users throughout the organization
Distributed Data Processing
Users process their transactions locally. Each user segment possesses the IT personnel, facilities, hardware, software, and data they need to support their operations
Commercial Software
Is available for both general accounting use and for industry specific such as medical billing
Enterprise Resource Planning
Is comprised of thousands of small program modules. The IT team select modules that support the organization’s specific information and data processing needs
Network
Is a collection of interconnected computers and communication devices that allows users to communicate, access data, and share information
Network Administration
Is responsible for the effective functioning of the software and hardware that constitute the organization’s network
IT Outsourcing
The organization sells its IT resources to a third party outsourcing vendor
Cloud Computing
Is a location independent computing where shared data centers deliver hosted IT services over the Internet
Domain Experts
This involves specifying certain operational rules, reporting requirements, and framing internal control objectives the system must achieve
Conceptual System
Involves specifying the criteria for identifying delinquent customers and the information that needs to be reported
Physical System
Includes the data storage medium to be used and the method for capturing and presenting the information
Attest Function
Is performed by CPAs who work for public accounting firms that are independent of the client organization being audited
Internal Auditing
Is an independent appraisal function established within an organization to examine and evaluate its activities
