IT in Business

Question 1

What is the role of It in business? (5)

Answer 1

1. Better communication
2. Efficiency in business
3. Innovation and integration
4. Security of sensitive information
5. Keeps people connected

Question 2

What are the 4 steps of data and processing in reporting?

Answer 2

Step 1: Raw data
Raw facts, figures statistics can be processed into information that has not been sorted or organized to enable analysis.

Step 2: Information
Data that is streamlined and organized, build knowledge to enable the end-user to analyze and understand the business and make informed decisions using the information system.

Step 3: Knowledge
The finished product is knowledge which equips the end user to contextualize, contrast, communicate and discuss before making decisions based on facts that have been collated in a strategic manner.

Step 4: Wisdom
Enable decision making through integration of accumulated principles, concepts and values and beliefs, understanding through knowledge and information produced and ensuring a comprehensive understanding of the current day business

Question 3

Describe the three sources of data:

Answer 3

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

1. External Financial Information:
   Is the most common source of data for most organizations. eg: sale of goods, purchasing of inventory, receipt of cash, and disbursement of cash (including salaries).
2. Internal Financial Information:
   It involves the exchange or movement of resources within the organization. eg: movement of raw materials from work-in-progress (W-I-P) to finished goods inventory as well as depreciation of equipment.

Question 4

Describe the 7 characteristics of useful information?

Answer 4

1. Timely: Information must be delivered at the right time, at the right place to the right person.
2. Relevant: It must be useful to decision making and for the end user.
3. Accurate: Correct Information must be provided.
4. Reliable: information must be verifiable and authentic.
5. Complete: Ensure that all relevant information included.
6. Summarized/Format: Information must be disclosed in a strategic manner to inform users.
7. Cost Effective: The costs should not out way the benefits.

Question 5

What is the flow of the accounting system?

Answer 5

Page 12 of PowerPoint Number 1.

Question 6

What is a system?

Answer 6

It is a group of interrelated multiple components or subsystems that serve a common purpose?

Question 7

Describe what a subsystem is?

Answer 7

A system is called a subsystem when it is viewed as a component of a larger system.
A subsystem is considered a system when it is the focus of attention.

Question 8

What is an information system?

Answer 8

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

Question 9

What is an Accounting Information System?

Answer 9

Accounting is an information system which identifies, collects, processes, and communicates economic information about an entity to a wide variety of people regardless of the technology – captures and records the financial effects of the firm’s transactions – distributes transaction information to operations personnel to coordinate many key tasks

Question 10

What is an AIS and MIS System?

Answer 10

Accounting Information System: process financial (e. g. , sale of goods) and nonfinancial transactions (e. g. , addition of newly approved vendor) that directly affect the processing of financial transactions.

Management Information System: process nonfinancial transactions that are not normally processed by traditional AISs (e. g. , tracking customer complaints).

Question 11

What are the three different types of AIS Subsystems?

Answer 11

1. TPS:
   Transaction Processing System. Supports daily business operations.
2. GL/FRS:
   General Ledger or Financial Reporting System. Produces financial statements and reports.
3. MRS:
   Management Report System. Produces special-purpose reports for internal use.

Question 12

How to transform data into information:

Answer 12

1. Data Collection:
   - Capturing transaction data.
   - Recording data onto forms.
   - Validating and editing of data.
2. Data Processing
3. Data Management
   - Storing
   - Retrieving
   - Deleting
4. information Generation
   - Compiling
   - Arranging
   - Formatting
   - Presenting

Question 13

What are the goals of information system?

Answer 13

The goal is to support:

1. Management stewardship
2. Management decision making
3. Firm’s day-to-day operations

Question 14

What are the different types of internal information flows?

Answer 14

1. Horizontal flow of information:
   - Used primarily at the operations level to capture transactions and operations data.
2. Vertical Flows of Information:
   - Downward flows including instructions, quotas, and budgets.
   - Upward flows include aggregated transactions and operations data.

Question 15

What is a DBMS (Database management System) and how is the data stored?

Answer 15

How is data stored?

• An accounting information system must have a database structure to store information.
• The database structure is typically programmed with query language that allows for table and data manipulation. An AIS has numerous fields to input data as well as to edit previously stored data.

Question 16

What database is used by DBMS?

Answer 16

• The procedure and instructions of an AIS are the methods it uses for collecting, storing, retrieving, and processing data. These methods areboth manual and automated.
• The data can come from both internal sources (e.g., employees) and external sources (e.g., customers’ online orders).
• Procedures and instructions will be coded into the AIS software. However, the procedures and instructions should also be “coded” into employees through documentation and training.
  The procedures and instructions must be followed consistently in order to be effective.

Question 17

Describe what a database model is:

Answer 17

A database model shows the logical structure of a database:
- including the relationships and constraints that determine how data can be stored and accessed.

• Individual database models are designed based on the rules and concepts of whichever broader data model the designers adopt.
• Most data models can be represented by an accompanying database diagram.

Question 18

Describe what a flat file system is?

Answer 18

A flat file database is:
- is a collection of records in which the data follows a uniform format and follows rules on value types where applicable.

• The database is flat because every line only holds one data input, depending on the categorization of the columns.
• Flat file databases store plain text records and binary files that are needed for a specific purpose in a single directory for easy access and transfer. Mainstream operating systems (OSes) like Windows, Linux, and macOS all use a series of flat files to launch and run the OS, all while conserving storage space and ensuring none of the files essential to running the OS are damaged or altered.
• One of the most common flat file examples is a comma-separated values (CSV) file. In a CSV file, table data is represented by lines ofASCIItext.
• The value of each table cell in the example below is separated by a comma and each row is represented by a new line in Notepad.

Question 19

What are the 6 benefits of DBMS?

Answer 19

1. Improved data sharing
2. Improved data security
3. Better data integration
4. Minimized data inconsistency
5. Improved data access
6. Improved decision making

Question 20

Disadvantages to DBMS:

Answer 20

1. Increased costs
2. management complexity
3. maintaining currency
4. Frequent upgrade/replacement cycles

Question 21

Centralized vs decentralized networks:

Answer 21

In a centralized network:

• all users are connected to a central server that stores complete network data and user information.
• A centralized server monitoring the complete flow of network data works best for companies that need greater network control and visibility.

In a decentralized network:
- Has several peer-to-peer user groups wherein each group has its separate server that stores data and information relevant to only that particular group.

• Decentralization is a practical approach when different departments in a company have different IT needs and strategies.
• It allows each business unit to maintain a separate server and choose hardware and applications based on individual needs.

Question 22

What is cloud accounting?

Answer 22

Cloud accounting software is:

• is similar to traditional, on-premises, or self-install accounting software, only the accounting software is hosted on remote servers
• All application functions are performed off-site, not on the user’s desktop. In cloud computing, users access software applications remotely through the Internet or other network via a cloud application service provider.
• Using cloud accounting software frees the business from having to install and maintain software on individual desktop computers.
• Cloud accounting solutions also allow employees in other departments, remote or branch offices to access the same data and the same version of the software.

Question 23

CA vs TS (Cloud Accounting vs Traditional Systems)

Answer 23

CA is more flexible: Accounting data can be accessed from anywhere on any device with an internet connection, rather than on premises computers.

Update automatic CA: Unlike TA software, CA software updates financial information automatically and provides financial reporting in real-time.

CA is better with complexity: CA is also better abled to handle multi-currency and multi-company transactions more efficiently.

Expansion doesn’t affect CA: Every time a firm grows, greater software license and maintenance costs, new licenses and fees for DBMS and other software are incurred.
There is expensive capital purchases for things such as hardware.

No loss of capital / hardware
No expensive equipment, licenses when contracts end/expand a little. CA is less maintenance than its traditional counterpart.
The cloud provider completes back ups, updates automatically and no need for downloading software.