QUIZ 2 Flashcards
primary recipients of financial statement information are _______ such as _______
external users
stockholders, creditors, and government agencies
Is the Internet standard specifically designed for business reporting and information exchange.
XBRL(Extensible Business Reporting Language)
Is a freely available and global standard for exchanging business
information.
XBRL(Extensible Business Reporting Language)
________ is the financial and
operational business reporting offshoot of Extensible Markup Language
(XML)
Extensible business reporting language (XBRL)
BENEFITS OF XBRL
● Investors will have more time for analysis and insight.
● The influence of XBRL in the financial reporting chain is such that regulatory reporting agencies like the Security Exchange Commission (SEC) are able to receive financial information faster, and hopefully detect and prevent fraud.
The entity should be available to classify the important activities, particularly for economic operations.
Transaction Authorization
In transaction authorization, documentation should be ______
complete, accurate, and in accordance with the structures and policies of the management.
The task of updating the general ledger must be
separate from all accounting and asset custody responsibility within the organization.
Segregation of duties
Individuals with access authority to GL accounts should not:
● Have record-keeping responsibility for special journals or subsidiary ledgers.
● Prepare journal vouchers.
● Have custody of physical assets.
Unauthorized access to the GL accounts can result in
errors, fraud, and misrepresentations in financial statements.
Access Controls
______ must undergo an audit trail because it facilitates error prevention and correction when the data files are conveniently and logically organized.
Accounting records
Management Reporting System
● Provides a formal means for monitoring the function of internal controls.
● Applications are discretionary.
● Produces the financial and nonfinancial information needed by management
to plan and control its business.
Factors That Influence the MRS
-Management Principles
-Management function, levels, and decision type
-Problem Structure
-Types of management reports
-Responsibility accounting
-Behavioral Considerations
● Management structures the firm around the tasks it performs rather than around individuals with unique skills.
● It allows specification of the information needed to support the tasks
Formalization of tasks
● Responsibility is an individual’s obligation to achieve desired results.
● Authority is an individual’s power to make decisions within the limits of that responsibility.
● Managers delegate responsibility and authority downward to subordinates.
Responsibility and authority
● The number of subordinates directly under the manager’s control.
● Detailed reports for managers with narrow spans of control.
● Summarized information for managers with broad spans of control.
Span of controls
● Managers should limit their attention to potential problem areas.
● Reports should focus on changes in key factors that are asymptomatic of potential problems.
Management by exception
Management Principles
-Formalization of tasks
-Responsibility and authority
-Span of Controls
-Management by exception
Strategic planning
Top Management
Tactical Planning
Middle Management
Operational control
Operations Management
reflects how well the decision maker understands the
problem.
Problem Structure
provide information to solve problems that users have
anticipated.
Programmed reports
reports designed and created on an “as needed” basis as situations arise that require new information needs.
Ad hoc reports
according to established time frame
Scheduled
triggered by events not by passage of times.
On demand
● Implies that every economic event that affects the organization is the
responsibility of and can be traced to an individual manager.
● Incorporates the fundamental principle that responsibility-area managers are accountable for items that they control.
Responsibility Accounting
Behavioral Considerations
-Goal Congruence
-A carefully structured management reporting system and compensation schemes help to appropriately assign authority and responsibility
-If compensation measures are not carefully designed, managers may be tempted to engage in actions not optimal for the organization in the long-run
-Occurs when a manager receives more information than he or she can assimilate
-Can cause managers to disregard their formal information and rely on informal-probably inferior-cues to help them make decisions.
-Appropriate performance measures
-Stimulate behavior consistent with the objectives of the firm
-Consider all relevant aspects, not just one
-Inappropriate performance measures, examples of adverse effects
-The use of price variation to evaluate a purchasing agent can affect the quality of the items purchased.
-The use of quotas (such as units produced) to evaluate a supervisor can
affect quality control, material usage efficiency, labor relations, and plant
maintenance.
- The use of profit measures such as ROI, net income, and contribution
margin can affect plant investment, employee training, inventory reserve
levels, customer satisfaction, and labor relations.
integrates all functional areas of the organization
Enterprise Resource Planning System
- processes transaction data from events
Transaction Processing System
supports the activities within a
specific area
Functional Area Information System
supports daily work activities of individuals and groups
Office Automation System
mimics human expertise in a particular area and makes
decision
Expert System
presents structured, summarized about aspects of business
Dashboards
enable transactions among organization and between organization and customers
Electronic Commerce System
manages flow of products, services and information among organization
Supply Chain Management System
________ is a statement that identifies a business’s strategies to compete, its goals and the plans and policies that will be required to carry out those goals.
Competitive Strategy
provide a competitive advantage by
helping an organization implement its strategic goals and increase its performance and productivity.
Strategic Information Systems (SISs)
The best-known framework for analyzing competitiveness is _____
Michael Porter’s
Competitive Forces Model
5 Major Forces
- The threat of entry of new competitors
- The bargaining power of suppliers.
- The bargaining power of customers
- The threat of substitute products and services
- The rivalry among existing firms in the industry
To identify specific activities in which they can use competitive
strategies for greatest impact, they use ____
Porter’s Value Chain Model
2 categories of activities
Primary Activities
Support Activities
5 primary activities
- Inbound Logistics (inputs)
- Operations (manufacturing and testing)
- Outbound logistic (storage and distribution)
- Marketing and sales
- After-sales services
Support Activities
- Administration and Management
- Human Resource Management
- Products and technology development
- Procurement
- Produce products and/or services at the lowest
cost in the industry.
Cost Leadership Strategy
- Offer different product features
Differentiation Strategy
Introduce new products and services, add new features
to existing products and services, or develop new ways to produce them.
Innovation strategy
Improve the manner in which internal
business processes are executed so that a firm performs similar activities better
than its rivals. Such improvements increase quality, productivity, and employee
and customer satisfaction while decreasing time to market.
Operational effectiveness strategy
Concentrate on making customers happy.
Web-based systems are particularly effective in this area because they can
provide a personalized, one-to-one relationship with each customer.
Customer orientation strategy
_______ collection of facts such as number, words, measurement,
observation, symbol or even just a description of things
data
Managing Data
Data should be of high quality, meaning that they should be accurate, complete,
timely, consistent, accessible, relevant, and concise
Why is Managing Data Important?
a) Less waste of money
b) Gaining competitive advantage
c) Better functioning organization
Difficulties in managing data:
▪ The amount of data increases exponentially with time.
▪ Data are scattered throughout organization
▪ Data come from multiple sources
- Internal sources
- External sources
- Personal sources
▪ Data security, quality and integrity are critical yet easily jeopardized
▪ New sources of data such as blogs, podcasts, video casts and RFID tags
and otherwise sensors are constantly being developed
Sources of data
- Internal sources
- External sources
- Personal sources
Data Management: The Hierarchy of Data
Bit
Byte
Field
Record
File
represents the smallest unit of data a computer can process “binary” means that bit can consist only of a 0 or a 1.
Bit (a binary digit)
group of 8 bits represent a single character. A _____ can be a letter, a number, or a symbol.
Byte
a logical grouping of character into a word, a small group of words, or an identification number. Example, a student’s name in university’s computer files would appear in the “name” field. ___ can also contain an image or any
other type of multimedia.
Field
logical grouping of related fields.
Record
group of related records
File
A collection of application programs that perform services for the end-users
such as the production of reports.
● Each program defines and manages its own data.
● Specific data file is created for each application
● Data files developed for individual application
● Application programs are data dependent
Files Based Approach
