MIDTERMS Flashcards
___________ must be able to clearly convey their needs to the systems professionals who design the system.
Accountants
The _________ should actively participate in systems development projects to ensure appropriate systems design.
Accountants must be able to clearly convey their needs to the systems professionals who design the system.
Accountants as Information System Users
responsible for the conceptual system
accounting function
responsible for the physical system
computer function
determines the nature of the information required, its sources, its destination, and the accounting rules that must be applied.
conceptual system
ROLES OF THE ACCOUNTANT
Information System Users
System Designers
System Auditor
attest to fairness of financial statements
external auditors
evaluate IT, often as part of external audi
IT auditors
in-house IS and IT appraisal services
Internal Auditors
produces special-purpose reports for internal use
Management Reporting System (MRS)
produces financial statements and reports
General Ledger/ Financial Reporting System (GL/FRS)
Summaries of transaction cycle activity are processed by the ________ to update the general ledger control accounts.
General Ledger/ Financial Reporting System (GL/FRS)
measures and reports the status of financial resources and the changes in those resources.
Financial Reporting System
communicates status of financial resources and the changes in those resources primarily to external users
Financial Reporting System
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
supports daily business operations
Transaction processing system
Major Subsystems of AIS
Transaction processing system (TPS)
General Ledger/ Financial Reporting System (GL/FRS)
Management Reporting System (MRS)
The collection of data and processing procedures that creates needed information for its users.
Information Systems in an Organization
economic event that affects the assets and equities of the organization, is reflected in its accounts, and is measured in monetary terms.
Financial Transaction
events that do not meet the narrow definition of a financial transaction.
Non-financial
Types of Transactions
Financial and Non-financial
Objectives of Information Systems
support the stewardship function of management
support management decision making
support the firm’s day-to-day operations
the set of formal procedures by which data are collected, processed into information, and distributed to users
Information System
A group of interrelated multiple components or subsystems that serve a common purpose
System
a set of two or more interrelated components that interact to achieve a goal
System
Must contain more than one part
Multiple Components
Although each part functions independently of the others, all parts serve a common objective.
Relatedness
a subsystem when it is viewed as a component of a larger system.
System
considered a system when it is the focus of attention
Susbsystem
the process of dividing the system into smaller subsystem parts
System Decomposition
distinct parts are not self-contained
System Interdependency
they are reliant upon the functioning of the other parts of the system
System Interdependency
all distinct parts must be functioning or the system will fail
System Interdependency
Information Generation
Compiling
Arranging
Formatting
Presenting
Database Management
Storing
Retrieving
Deleting
Data Processing
Classifying
Transcribing
Sorting
Batching
Merging
Calculating
Summarizing
Comparing
Data Collection
Capturing transaction data
Recording data onto forms
Validating and editing the data
financial transactions that enter the information system from internal and external sources.
Data sources
the most common source of data for most organizations.
External Financial Transactions
involve the exchange or movement of resources within the organization.
Internal Financial Transactions
financial transactions that enter the information system from internal and external sources.
Data Sources
T/F
The higher the level of the organization, the greater the need for more aggregated information and less need for detail.
True
exchanges between the organization and users in the external environment (trading partners and the stakeholders).
External Information Flows
flows of information used primarily at the operations level to capture transaction and operations data
Horizontal Flows
Types of Vertical Flows
Downward Flows
Upward Flows
Example of Downward Info Flows
Quotas, instructions, budgets
Example of Upward Info Flows
aggregated transaction and operations data
T/F
Transaction processing systems convert non-financial transactions into financial transactions
False
T/F
Information lacking reliability may still have value
False
T/F
A balance sheet prepared in conformity with GAAP is an example of discretionary reporting
False
T/F
The Management Reporting System provides the internal financial information needed to manage a business.
True
T/F
Most of the inputs to the General Ledger System come from the Financial Reporting System.
False
T/F
When preparing discretionary reports, organizations can choose what information to report and how to
present it.
True
T/F
Retrieval is the task of permanently removing obsolete or redundant records from the database.
False
T/F
Systems development represents 80 to 90 percent of the total cost of a computer system.
False
T/F
The internal auditor represents the interests of third-party outsiders.
False
Information Technology (IT) audits can be performed by both internal and external auditors.
True
Which level of management is responsible for short-term planning and coordination of activities necessary to accomplish organizational objectives?
a. operations management
b. middle management
c. top management
d. line management
B. Middle Management
Which level of management is responsible for controlling day-to-day operations?
a. top management
b. middle management
c. operations management
d. executive management
C. Operations Management
The value of information for users is determined by all of the following but
a. reliability
b. relevance
c. convenience
d. completeness
C. Convenience
Which subsystem is not part of the Accounting Information System?
a. Transaction Processing System
b. Expert System
c. General Ledger/Financial Reporting System
d. Management Reporting System
B. Expert System
The purpose of the Transaction Processing System includes all of the following except
a. converting economic events into financial transactions
b. recording financial transactions in the accounting records
c. distributing essential information to operations personnel to support their daily operations
d. measuring and reporting the status of financial resources and the changes in those
resources
D.
The Transaction Processing System includes all of the following cycles except
a. the revenue cycle
b. the administrative cycle
c. the expenditure cycle
d. the conversion cycle
B
The primary input to the Transaction Processing System is
a. a financial transaction
b. an accounting record
c. an accounting report
d. a nonfinancial transaction
A. Financial Transaction
Which individual is least involved in new systems development?
a. systems analyst
b. external auditor
c. end user
d. data librarian
D. Data Librarian
The task of locating and transferring an existing record from the database for processing is called data _________.
Retrieval
The three major subsystems of the AIS are _______________________________,
___________________________, and _______________________________. ANS:
the transaction processing system, the general ledger/financial reporting system, the management reporting system
TPS, GL/FRS, MRS
The transaction processing system is comprised of three cycles: __________________________,
__________________________, and __________________________.
revenue, expenditure, conversion
T/F
Batch processing is best used when timely information is needed because this method processes data efficiently.
False
Real time processing is used for routine transactions in large numbers.
False
T/F
Real-time processing in systems that handle large volumes of transactions each day can create operational inefficiencies.
True
Which of the following is a turn-around document?
a. remittance advice
b. sales order
c. purchase order
d. payroll check
A
Subsidiary ledgers are used in manual accounting environments. What file is comparable to a subsidiary ledger in a computerized environment?
a. archive file
b. reference file
c. transaction file
d. master file
D
A journal is used in manual accounting environments. What file is comparable to a journal in a computerized environment?
a. archive file
b. reference file
c. transaction file
d. master file
A
In a computerized environment, a list of authorized suppliers would be found in the a. master file
b. transaction file
c. reference file
d. archive file
C
Which document is not a type of source document?
a. a sales order
b. an employee time card
c. a paycheck
d. a sales return receipt
C
The most important purpose of a turnaround document is to
a. serve as a source document
b. inform a customer of the outstanding amount payable
c. provide an audit trail for the external auditor
d. inform the bank of electronic funds deposits
A
The type of transaction most suitable for batch processing is a. airline reservations
b. credit authorization
c. payroll processing
d. adjustments to perpetual inventory
C
The type of transaction most suitable for real-time processing is a. recording fixed asset purchases
b. recording interest earned on long-term bonds
c. adjusting prepaid insurance
d. recording a sale on account
D
All of the following can provide evidence of an economic event except
a. source document
b. turn-around document
c. master document
d. product document
C
A file that stores data used as a standard when processing transactions is
a. a reference file
b. a master file
c. a transaction file
d. an archive file
A
Real-time processing would be most beneficial in handling a firm’s
a. fixed asset records
b. retained earning information
c. merchandise inventory
d. depreciation records
C
Documents that are created at the beginning of the transaction are called __________________________.
source document
______________________________________ are the two data processing approaches used in modern systems.
Batch processing and real-time processing
Basic segregation of duties requires the credit manager reports to the ________ and the treasurer report to the ________.
A) treasurer; controller
B) treasurer; vice president of finance
C) controller; vice president of finance
D) marketing manager; vice president of finance
B
The ________ normally triggers the customer payment recording process.
A) sales invoice
B) deposit slip
C) remittance advice
D) customer monthly statement
C
The ________ should always be included with a merchandise shipment to a customer. A) picking ticket
B) packing slip
C) sales invoice
D) remittance advice
B
What is a typical procedure for processing sales orders from new customers or customers making a purchase that causes their credit limit to be exceeded?
A) General authorization to approve the order is given to sales clerks.
B) Specific authorization must be granted by the credit manager.
C) The sale should be rejected.
D) The sales clerk should order a report from a credit bureau before approving the order.
B
The ________ is a legal contract that defines responsibility for goods that are in transit. A) bill of lading
B) packing slip
C) back order
D) picking list
A
The basic document created in the billing process is call a ________. A) bill of lading
B) sales invoice
C) sales order
D) packing list
B
A company uses the method for tracking accounts receivable where customers pay according to individual sales invoices. This describes the ________ method.
A) monthly statement
B) open-invoice
C) balance forward
D) cycle billing
B
The document a customer returns with their payment and that identifies the source and the amount of the payment is called a
A) remittance advice.
B) remittance list.
C) credit memorandum.
D) debit memorandum.
A
A type of business document in which part of the original document is returned to the source for further processing is called a ________ document.
A) feedback
B) returnable
C) closed-loop
D) turnaround
D
A document typically encountered in the revenue cycle that is both an output document and a source document is the
A) sales invoice.
B) customer purchase order.
C) sales order.
D) packing slip.
A
38) It costs ________ times as much to acquire a new customer as it does to make a sale to an existing customer.
A) two
B) five
C) eight
D) ten
B
The packing slip
A) lists the quantity, price, and description of each item included in the shipment. B) lists the price and description of each item included in the shipment.
C) lists the quantity and description of each item included in the shipment.
D) lists the quantity and price of each item included in the shipment.
C
