Test Definitions

Question 1

Define AIS

Answer 1

AIS is a system that collects, processes, summarises, reports and communicates financial and non-financial transactional data for decision making and control purposes.

Question 2

Define Data

Answer 2

Data is the raw facts that describes the characteristics of an event.

Question 3

Define Information

Answer 3

Information is data organised in a meaningful way with a context that is useful for users.

Question 4

Define Discretionary

Answer 4

Discretionary is where there is no legal requirement for the information to be provided to management. e.g. gross margins by product type or obsolete stock.

Question 5

Define Mandatory

Answer 5

Mandatory is where there is a legal requirement for the information to be provided to management. e.g. tax returns.

Question 6

Define Relevance

Answer 6

Relevance refers to how helpful the information is. Information must have confirmatory value by providing confirmatory value, predictive value and materiality in order to be relevant for decision makers.

Question 7

Define Faithful Representation

Answer 7

Faithful representation refers to the extent to which information accurately reflects the company’s position. Information must be complete, neutral and free from error in order to be faithfully represented.

Question 8

What are the Key components of AIS?

Answer 8

AIS collects data, processes data, reports information to facilitate decision making.

Question 9

How do the components of AIS fulfill three business functions?

Answer 9

1. It collects and stores data about organisational activities, resources and workforce.
2. It transforms the data into information so that management can plan, execute, control and evaluate the activities, resources and personnel.
3. It provides adequate controls to safeguard the organisations assets and data.

Question 10

Identify two users in a school that will need to use AIS information and what type of information will they need

Answer 10

1. Business managers and the principal will need a more detailed information across all areas of the school to identify areas where the school may be overspending, know the number of students enrolled etc for funding.
2. Department heads will need detailed information about the budget and spending of their departments only.

Question 11

Explain why it is important to evaluate the information needs of senior managers and end users when determining the requirements of AIS. Give 5 examples.

Answer 11

1. Consideration of the information needs of all users is important when determining the requirements of the AIS.
2. Lack of consultation with end users can lead to training issues and system implementation failure.
3. Senior managers have different needs to end users.
4. Senior managers need a highly summarised information, whereas, end users need more detailed information.
5. The information needs to relate to the decisions that the users make.

Question 12

Explain the Information needs of staff at different levels of the organisation

Answer 12

The information that is needed by senior management is highly summaried, whereas the information that is needed at lower levels of the organisation needs to be more detailed.

Question 13

Explain the factors affecting the successful acquisition of a new AIS

Answer 13

The successful acquisition of an AIS depends on a number of factors involving end users and meeting the information needs of the organisation. Therefore, consultation of a range of end users is necessary to ensure the needs of management and non-management staff are included as they will be using the system.

Question 14

Analyse the role of AIS in the value chain and its impact on various stages such as procurement.

Answer 14

Procurement: helps streamline the procurement process by automating tasks such as supplier selection, purchase order generation and inventory management.
This can help monitor supplier performance and manage inventory levels. By having real-time information, the overall efficiency of the supply chain can be improved.

Question 15

Analyse the role of AIS in the value chain and its impact on various stages such as production.

Answer 15

Production: production activities supported by providing essential information about planning, scheduling and controlling manufacturing processes. Helps with inventory management, tracking raw material usage, monitoring work in progress and optimising production capacity.
Can integrate with production equipment and systems to enable real-time data collection to improve decision making. Improving the production planning and control can help the organisation identify areas to reduce costs, minimise waste and improve product quality.

Question 16

Analyse the role of AIS in the value chain and its impact on various stages such as marketing.

Answer 16

Marketing: contributes to marketing activities by collecting, analysing and interpreting data related to customer behavior, market trends and product performances. This enables the organisation to gather information about sales, pricing, promotions and customer preferences. Decision makers can use this information to develop marketing campaigns, identify target markets and evaluate the effectiveness of their marketing campaigns.
This ultimately facilitates customer relationship management (CRM) by tracking customer interactions and managing sales.

Question 17

Analyse the role of AIS in the value chain and its impact on various stages such as customer service.

Answer 17

Customer Service: enhances the customer service by enabling efficient order processing, order tracking and delivery management.
Integrates with customer service systems to provide timely and accurate information to customer service staff to help address customer inquiries, resolve issues and provide support. Also helps in managing customer feedback, tracking customer satisfaction levels and identifying any areas for improvement.

Question 18

Analyse how an effective AIS contributes to improving the efficiency and effectiveness of two (2) value chain activities.

Answer 18

1. Streamlining Data Collection and Processing: automates the collection and processing of financial and non-financial data related to various value chain activities.
   This reduces the manual effort and minimises the risk of errors, resulting in an improved efficiency and accuracy in data management.
2. Improved Decision Making: provides timely and accurate financial and operational information to decision makers at different levels of the organisation.
   This helps managers make informed decisions about value chain activities and with better decision making, organisations can optimise their overall effectiveness.

Question 19

Analyse the impact of an AIS on an organisation and three (3) of the activities in an organisation’s value chain.

Answer 19

AIS can provide real time and accurate data that enables the organisation to make informed decisions and improve the efficiency and effectiveness of their operations. By integrating AIS into the value chain, organisations can achieve cost savings, improve customer services and increase their competitive advantage.
1. Inbound Logistics: AIS can help track the receipt of raw materials from suppliers, the inventory levels and the delivery of goods from suppliers. This information is useful for inventory management and planning for future purchases.
2. Operations: AIS can help monitor the production process by tracking the work in progress, finished goods, machine utilisation and the time spent on each activity. This information is useful for assessing the efficiency and effectiveness of the operations.
3. Outbound Logistics: AIS can help track the delivery of products to customers and managing the associated costs such as transportation and packing. This information is useful for management to find areas of improvement to reduce costs and improve the overall customer service.

Question 20

Analyse three (3) ways an AIS can add value to an organisation.

Answer 20

1. Improved decision making: by providing real-time and accurate data enabling managers to make informed decisions. This helps in addressing operational challenges, improving business processes and identifying areas of opportunities and growth.
2. Efficient operations: by automating the manual process of collecting and storing data, paper transactions are reduced. This helps in improving the operational efficiency, reduce costs and increase the overall productivity.
3. Increased customer satisfaction: helps in managing customer relationships by tracking their purchase histories, preferences and feedback. This helps in developing targeted marketing campaigns, improve customer service and the overall customer experience.

Question 21

Analyse the role of AIS in its strategy aspirations.

Answer 21

An organisation’s AIS plays a crucial role in facilitating the adoption and preservation of a strategic position. attaining a seamless alignment among activities allows for the collection of data from each activity. It is also important that the AIS is able to gather and integrate both financial and non-financial data regarding the organisation’s activities.

Question 22

What is an ERP system?

Answer 22

An ERP system is a software solution that integrates all departments and functions throughout the organisation into a single IT system.

Question 23

How organisations use enterprise resource planning (ERP) systems to process transactions including the business processes supported by ERP systems.

Answer 23

1. Financial and accounting processes: general ledger, accounts payable, accounts receivable, fixed assets, asset accounting, tax accounting and financial reporting.
2. Human resources processes: personnel administration. time accounting, payroll, personnel planning and developing, performance management, workforce planning.
3. Manufacturing and production processes: procurement, inventory management, purchasing, shipping, quality control, distribution, transportation, PPE maintenance.
4. Sales and marketing process: order processing, quotes, contracts, pricing, billing, credit checking and commission management.

Question 24

Discuss 3 advantages of ERP system

Answer 24

Advantages:
1. Streamlined business process: by combining data and processes into a single system, helps streamline the business operations. This leads to improved efficiency, reduced duplicates of efforts and better co-ordination between different departments.
2. Improved collaboration and communication: by enabling departments within the organisation to share information easily across their teams as they share the same database.
3. Improved data visibility and decision making: by providing real time and accurate data across the organisation. This helps management make informed decision based on up to date information.

Question 25

Discuss 3 disadvantages of ERP system

Answer 25

1. Resource allocation and skills gap: organisations may struggle to allocate the necessary resources and expertise for implementing, training and maintaining the system.
2. Integrating with current systems: integrating with current systems such as CRM or supply chain management can be hard. The lack of integration can also result in data silos and inefficiencies.
3. User training and adoption: adequate training is important for users of the system to understand and use the system effectively. Organisations may face challenges in providing comprehensive training to staff and lack of training can cause system adoption failiure.