Chapter 2

Question 1

is a prescribed sequence of work steps
completed in order to produce a desired result for the organization. A business
process is initiated by a particular kind of event, has a well-defined beginning
and end, and is usually completed in a relatively short period of time. Business
processes occur so that the organization may serve its customers.

Answer 1

business process

Question 2

is a record that captures the key data of a transaction. The
data on a source document usually include the date, purpose, entity, quantities, and
dollar amount of a transaction.

Answer 2

Source document

Question 3

is an output of the accounting system that can be
used as an input in a different part of the accounting system.

Answer 3

turnaround document

Question 4

provides details for the entire set of
accounts used in the organization’s accounting systems. Transactions or trans-
action summaries are posted to the general ledger from the general journal
and special journals

Answer 4

General ledger

Question 5

is the place of original entry for any
transactions that are not recorded in special journals. The general journal is
used to record nonroutine transactions and adjusting and closing entries.

Answer 5

general journal

Question 6

are established to record specific types of transactions. For
example, a sales journal records all sales. Other special journals could include
a purchases journal, payroll journal, cash receipts journal, and cash dis-
bursements journal. At regular intervals, such as at the end of each week or
month, the subtotals of the special journals are posted to the general ledger.

Answer 6

Special journals

Question 7

maintain detailed information regarding routine transac-
tions, with an account established for each entity.

Answer 7

Subsidiary ledgers

Question 8

is an existing system in operation within an organization.
A legacy system uses older technology in which the organization has a con-
siderable investment and that might be entrenched in the organization.

Answer 8

legacy system

Question 9

The advantages are that legacy systems

Answer 9

1. have often been customized to meet specific needs in the organization
2. often support unique business processes not inherent in generic accounting
   software
3. contain invaluable historical data that may be difficult to integrate into a
   new system
4. are well supported and understood by existing personnel who are already
   trained to use the system

Question 10

There are also many disadvantages to maintaining older systems. The disad-
vantages are that legacy systems

Answer 10

1. are costly to maintain in both dollars and time
2. often lack adequate, up-to-date supporting documentation
3. may not easily run on new hardware, and the old hardware and parts
   needed for maintenance may become obsolete
4. are not usually based on user-friendly interfaces such as Microsoft Windows
   or Apple’s Mac OS
5. tend to use software written in older computer languages, and fewer
   programmers are available for maintenance
6. are often difficult to modify to make them Web-based or user-friendly
7. become difficult to integrate when companies merge or acquire other com-
   panies, in which case consolidating subsidiary company information into
   one set of financial statements and reports can involve many manual and
   error-prone steps

Question 11

A second approach to upgrading is to use software that bridges legacy sys-
tems to new hardware and software systems and interfaces. These interface
bridges are called

Answer 11

enterprise application integration, or EAI. EAI

Question 12

is a set of
processes, software and hardware tools, methodologies and technologies to inte-
grate software systems

Answer 12

enterprise application integration, or EAI. EAI

Question 13

means that there are two types of comput-
ers networked together to accomplish the application processing. The server is
usually a large computer that contains the database and many of the application
programs.

Answer 13

Client–server computing

Question 14

main characteristics of
client server systems. Those characteristics are as follows:

Answer 14

1. Client and server computer are networked together.
2. The system appears to users to be one integrated whole.
3. Individual parts of processing are shared between the server and client.
4. The client computer participates in the processing or data manipulation in
   some meaningful way.

Question 15

Software that resides in the cloud is called

Answer 15

Software as a Service

Question 16

Databases that reside in the cloud are called

Answer 16

Database as a Service (Daas).

Question 17

Sometimes the database is combined with an
operating system, and it is referred to as

Answer 17

Platform as a Service (PaaS)

Question 18

the computer infrastructure in the cloud is called

Infrastructure is the actual computer servers, drives on which data are
stored, and the networking components.

Answer 18

Infrastructure as a Service
(IaaS).

Question 19

A company that wishes to buy cloud
computing services enters into an agreement with a cloud computing provider.
This agreement, or contract, is called a

Answer 19

Service Level Agreement (SLA).

Question 20

There are many advantages to cloud computing. A partial list of the advan-
tages follows:

Answer 20

Scalability
Expanded access
Infrastructure is reduced
Cost savings.

Question 21

As a company grows, it can easily purchase new capacity from
the cloud provider. It need not buy servers or new data storage, as the
cloud provider already has the capacity.

Answer 21

Scalability

Question 22

Once the software and data are stored in the cloud, it can
be accessed by multiple devices from many different locations. This gives the company much more flexibility for those who use or enter the accounting
data. It also makes it easier for users to start up new computing capabilities.

Answer 22

Expanded access

Question 23

The company has a reduced need for servers and
data storage, since most of these resources are provided by the cloud
provider. This also means that the cloud provider provides data security
and backup of data.

Answer 23

Infrastructure is reduced

Question 24

Because of the detailed advantages, there are usually signifi-
cant cost savings recognized from cloud computing. Cloud computing is
usually a pay-for-service model. In other words, a company pays the cloud
provider only for the level of services it actually uses.

Answer 24

Cost savings

Question 25

is a printed code consisting of a series of vertical, machine-readable, rectangular bars and spaces that vary in width and are arranged in a specific way to represent letters, numbers, and other human-readable symbols. Bar codes are “read” and decoded by bar code scanners.

Answer 25

Bar code

Question 26

is the intercompany, computer-to-computer transfer of business documents in a standard business format. EDI transmits purchase orders, invoices, and payments electronically between trading partners.

Answer 26

Electronic data interchange (EDI)

Question 27

various types of popular pictorial representations of processes and systems used in businesses today include the following:

Answer 27

1. Process maps 2. System flowcharts 3. Document flowcharts 4. Data flow diagrams 5. Entity relationship diagrams (ER diagrams)

Question 28

are pictorial representations of business processes in which the actual flow and sequence of events in the process are presented in diagram

Answer 28

Process maps

Question 29

is used to show the start and/or finish of a process. The start is usually the input of the business process, and the finish is the output. The input and output may be materials, activities, or information.

Answer 29

An oval

Question 30

shows a task or activity in the process. Typically, only one arrow comes out of a rectangle (one output). However, many arrows can come into a rectangle (inputs).

Answer 30

A rectangle

Question 31

represents a point in the process when a decision must be made. In many cases the dec

Answer 31

A diamond

Question 32

shows the direction of flow within the process.

Answer 32

arrow

Question 33

with a letter or number inside is used as a connector. A connector is used when there is a break in the process. The connector is used at the beginning of the break in the process, and again where the process resumes.

Answer 33

circle

Question 34

is intended to depict the entire system, including inputs, man- ual and computerized processes, and outputs. System flowcharts do not necessarily show details of each process, but display the overall sequence of processes and the media used for processing and storage.

Answer 34

system flowchart

Question 35

shows the flow of documents and information among departments or units within an organization. Document flowcharts are usually divided into columns, each representing a department or unit of the organi- zation. Document flowcharts trace each document in a process from its ori- gin to its final destination.

Answer 35

document flowchart

Question 36

is used by systems professionals to show the log- ical design of a system. The advantage of DFDs is that they use only four sym- bols and are simple to read and understand

Answer 36

data flow diagram, or DFD

Question 37

are pictorial representations of the logical structure of databases. An ER diagram identifies the entities, the attributes of entities, and the relationship between entities. Some accountants find ER diagrams to be an excellent tool to represent the accounting data and entities in accounting systems because ER diagrams are a simple way to ana- lyze the complex relationships between entities in an accounting system

Answer 37

Entity relationship diagrams, or ER diagrams,

Question 38

can be thought of as the nouns that represent items in the account- ing system. Employees, customers, vendors, and inventory items are examples of entities.

Answer 38

Entities

Question 39

Employees, customers, vendors, and inventory items are examples of entities. Each entity has attributes, or characteristics of the entity. For exam- ple, employees have attributes such as last name, first name, pay rate, and num- ber of withholdings.

Answer 39

Attributes

Question 40

refers to how many instances of an entity relate to each instance of another entity.

Answer 40

Cardinality

Question 41

use paper documents and records, including journals and ledgers.

Answer 41

Manual systems

Question 42

Legacy systems employ older technology in which the organization has a considerable investment and that might be entrenched in the organization.

Answer 42

Legacy systems

Question 43

offers companies powerful, technolog- ically advanced systems to serve as accounting information systems that inte- grate business processes across the organization.

Answer 43

Modern, integrated accounting software

Question 44

Types of accounting information system

Answer 44

Manual systems Legacy systems Modern, integrated accounting software

Question 45

means that there are two types of computers networked together to accomplish application processing. The important characteristics of client–server computing are as follows: Both client and server computers are networked together; the system appears to users to be one integrated whole; individual parts of processing are shared between the server and client; and the client computer participates in the data process- ing or data manipulation in some meaningful way.

Answer 45

Client–server computing

Question 46

offers a centralized approach to IT through virtual servers provided by a third party. The important characteristics of cloud computing

Answer 46

Cloud computing