Topic 1.1 Accounting Information Systems: An Overview

Question 1

Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If information is free from error or bias and accurately represents the events or activities or the organisation, it is represented as

Answer 1

Reliability

Question 2

Data must be converted into information to be considered useful and meaningful for decision making. There are seven characteristics that make information both useful and meaningful. If the same information can be reproduced by two independent and knowleagble people, it is a representative of the characteristic of

Answer 2

Verifiability

Question 3

Information is best described as

Answer 3

Data that has been organised and processed so that it is meaningful to the user

Question 4

In 2015, Singh Manufacturing implemented a Web-based information system that allows all employees to access mission-critical information. The intention was to increase production efficiency. Unfortunately, it had the opposite effect, as deliveries fell behind schedule and costs increased. Shaman Gupta, the director of information technology services, asked Ashlee Wells to come in and talk with him about the system. Ashlee is a long-time employee of Singh, and her opinion is valued by her peers and by her supervisor.
“So Ashlee, how’s it going down there in the shop?”
“Not so good, Shaman. Used to be we got a weekly pick list so we knew how to plan production. Now, we got that computer system. Most of us can’t figure out how to use it to do our jobs. Is there some way to print out a pick list?”
Shaman thought for a while before responding. “Well, Ashlee, to tell you the truth, I’m not so sure how to do it myself, but there must be a way. We’ll bring in the consultants that helped us build the system. Maybe they can help.”
Which of the following characteristics of useful information is absent in the situation described above?

Answer 4

Understandable

Question 5

In which transaction cycle would information for paying dividends be most likely to pass between internal and external accounting information systems

Answer 5

The financing cycle

Question 6

Accounting information plays major roles in managerial decision making by

Answer 6

• Identifying situations requiring management action
• reducing uncertainty
• providing a basis for choosing amount alternative actions

Question 7

A well designed ais can improve the decision making in an organisation. Identify the statement that describes a situation where an ais may actually inhibit effective decision making

Answer 7

An ais provides to its users an abundance of information without and filtering or condensing of information

Question 8

A value chain typically consists of five primary activities that can directly provide value to customers. The activities that help customers buy the organisation’s products or service represent

Answer 8

Marketing and sales

Question 9

The transaction cycle that includes product design is known as the

Answer 9

Production cycle

Question 10

Transaction cycle can be summarised on a high level as “give-get” transactions. An example of this in the revenue cycle would be

Answer 10

Give goods, get cash

Question 11

The value of information can be best determined by

Answer 11

The benefits associated with obtaining the information minus the cost of producing it

Question 12

A frantic Barney Rubble lost a large sale because he could not access the system to verify the inventory was in stock and ready to be shipped. Which of the following characteristics of useful information is absent in the situation described above?

Answer 12

Accessible

Question 13

Question text
Chopra, Limited, is an Indian company operating in New York state. It offers stylized, boutique public relations services to upscale retailers in quaint New England towns. A major source of revenue is a weekly newsletter that reports on current and projected tourist travel and spending patterns. Preparation of the newsletter requires study and analysis of weather conditions, economic activity, and travel costs. It is available at an annual subscription rate of $299.99. There are currently 190 subscribers. Preparation and distribution of the newsletter costs $12,000 annually. Chopra has always been able to manage to keep its newsletter operation above their breakeven point. The value of information to Chopra is

Answer 13

$12,000

Question 14

Which of the following is not one of the three basic types of data about a specific sales transaction that should be captured by an Accounting Information System?

Answer 14

Daily sales quota

Question 15

In which transaction cycle would information for initiating back orders for out of stock goods be most likely to pass between internal and external accounting information systems?

Answer 15

The revenue cycle

Question 16

An accounting information system must be able to perform which of the following tasks?

Answer 16

Collect transaction data
Process transaction data
Provide adequate controls

Question 17

Which of the following is a primary activity in the value chain?

Answer 17

Marketing and sales

Question 18

What is data

Answer 18

Facts that are collected, recorded and stored in a system

Question 19

What is information?

Answer 19

Organised data becomes information that is useful for decision makers

Question 20

What can information overload do

Answer 20

Can reduce the decision making quality

Question 21

When does information become valuable

Answer 21

When the benefits exceed the costs of gathering, maintaining and storing data

Question 22

What is the value of information formula

Answer 22

Benefit - cost = value of information

Question 23

What makes information useful?

What are the seven characteristics

Answer 23

Relevant - information needed to make a decision
Reliable - information free from bias
Complete - does not omit important aspects of events or activities
Timely - information needs to be provided in time to make a decision
Understandable - information needs to be presented that user understand
Verifiable - two independent people can produce the same conclusion
Accessible - available when needed

Question 24

Clemente Santiago has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Mary, who manages the carving process. Jane is the newest employee. She collects the coconuts. Joe takes calls from unhappy customers. Tom tosses finished coconuts into the sea, sending them to the wholesaler. Annie sends letters to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.
Which of the following functions in the value chain is Jane performing?

Answer 24

Inbound logistics

Question 25

What is a key decision that needs to be made with regards to borrowing money from lenders?

Answer 25

How much capital to acquire

Question 26

The transaction cycle approach yields efficiencies when processing of a large number of transactions because

Answer 26

a large number of transactions within a given cycle can be categorized into a relatively small number of distinct types.

Question 27

What is a business process

Answer 27

A set of related,coordinated, and structured activities and tasks performed by people, machines or both to achieve a specific organisational goal

Question 28

What is a business transaction

Answer 28

An agreement between two entities to exchange goods, services, or any other event that can be measured in economic terms

Question 29

What is transaction processing?

Answer 29

Transaction data that is used to create financial statements

Question 30

What is the give get exchange for revenue cycle?

Answer 30

Give goods, get cash

Question 31

What is the give get for the expenditure cycle

Answer 31

Get goods, give cash

Question 32

What is the give get for production cycle

Answer 32

Give labour and raw materials, get goods

Question 33

What is the give get for the payroll cycle

Answer 33

Give cash, get labour

Question 34

What is the give get for the financing cycle

Answer 34

Give cash, get goods

Question 35

When do you recognise revenue

Answer 35

When the entity give the goods or does the service as it is invoice basis accounting

Question 36

What is a system?

Answer 36

A set of two or more interrelated components interacting to achieve a goal

Question 37

What is goal conflict in a system?

Answer 37

It’s the inconsistency between goal

E.g revenue wants to be improved but you buy more expenditures

Question 38

What is goal congruence

Answer 38

Two processes or sub systems are aligned and wanting to achieve the goal

Question 39

What is an ais?

Answer 39

Is a system that collects, records, stores and processes data to produce information for decision makers

Question 40

What does the ais consist of?

Answer 40

People who use the system
Processes
Technology
Controls to safeguard information

Question 41

How does an ais add value to an organisation

Answer 41

It adds value by:
Improving the quality and reducing the costs of products and services
Improving efficiency 
Sharing knowledge 
Improving efficiency 
Improving internal control structure 
Improving decision making

Question 42

Value chain of an ais

Answer 42

Primary activities  - activities providing direct value to the customer 
1) inbound logistics
2)operations
3)outbound logistics 
4)marketing and sales
5)service
Support activities - enable primary activities to be efficient and effective 
1)firm infrastructure
2)Human Resources 
3) technology 
4) purchasing

Question 43

Wisconsin Dells, Wisconsin, is a popular tourist destination. During the winter months, the population dwindles to a meager few, but when summer comes, the size of the town surges. Hunter Jackson is the town sanitation engineer. When the size of the town surges, so do his responsibilities. Among them is management of the sewage processing volume.
In an interview with the local paper, Hunter complained that a report on tourist population that he uses to adjust processing volume refers to data that was not always accurate and it is really giving him a hard time to make adjustments.
Which of the following characteristics of useful information is absent in the situation described above?

Answer 43

Reliable

Question 44

In 2015, Singh Manufacturing implemented a Web-based information system that allows all employees to access mission-critical information. The intention was to increase production efficiency. Unfortunately, it had the opposite effect, as deliveries fell behind schedule and costs increased. Shaman Gupta, the director of information technology services, asked Ashlee Wells to come in and talk with him about the system. Ashlee is a long-time employee of Singh, and her opinion is valued by her peers and by her supervisor.
“So Ashlee, how’s it going down there in the shop?”
“Not so good, Shaman. Used to be we got a weekly pick list so we knew how to plan production. Now, we got that computer system. Most of the time we can’t get all of the information that we need. Is there some way to print out a list that has everything that we need?”
Shaman thought for a while before responding. “Well, Ashlee, to tell you the truth, I’m not so sure how to do it myself, but there must be a way. We’ll bring in the consultants that helped us build the system. Maybe they can help.”
Which of the following characteristics of useful information is absent in the situation described above?

Answer 44

Complete

Question 45

Baggins Incorporated identifies new product development and product improvement as the top corporate goals. An employee developed an innovation that will correct a shortcoming in one of the company’s products. Although Baggins current Return on Investment (ROI) is 12%, the product innovation is expected to generate ROI of only 10%. As a result, awarding bonuses to employees based on ROI resulted in

Answer 45

Goal conflict

Question 46

Sam Jones has been the controller of Downtown Tires for 25 years. Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records. The audit has been unable to reproduce financial reports that were prepared by Sam. While there is no evidence of wrongdoing, the auditors are concerned that the discrepancies might contribute to poor decisions. Which of the following characteristics of useful information is absent in the situation described above?

Answer 46

Verifiable

Question 47

How can query languages be used to help make better decisions?

Answer 47

They can gather relevant data for decision making

Question 48

Arranging delivery of products to customers constitutes ________ in value chain analysis.

Answer 48

Outbound logistics

Question 49

An ais provides value by

Answer 49

both improving products or services through information that increases quality and reduces costs and providing timely and reliable information to decision makers

Question 50

Identify the primary reason that it is important for a firm to identify the AIS improvements likely to yield the greatest return.

Answer 50

Because most organisations have limited resources

Question 51

In which transaction cycle would information for retiring long-term debt be most likely to pass between internal and external accounting information systems?

Answer 51

The financing cycle