Topic 1.1 Accounting Information Systems: An Overview Flashcards
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
Reliability
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
Verifiability
Information is best described as
Data that has been organised and processed so that it is meaningful to the user
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?
Understandable
In which transaction cycle would information for paying dividends be most likely to pass between internal and external accounting information systems
The financing cycle
Accounting information plays major roles in managerial decision making by
- Identifying situations requiring management action
- reducing uncertainty
- providing a basis for choosing amount alternative actions
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
An ais provides to its users an abundance of information without and filtering or condensing of information
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
Marketing and sales
The transaction cycle that includes product design is known as the
Production cycle
Transaction cycle can be summarised on a high level as “give-get” transactions. An example of this in the revenue cycle would be
Give goods, get cash
The value of information can be best determined by
The benefits associated with obtaining the information minus the cost of producing it
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?
Accessible
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
$12,000
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?
Daily sales quota
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?
The revenue cycle
An accounting information system must be able to perform which of the following tasks?
Collect transaction data
Process transaction data
Provide adequate controls
Which of the following is a primary activity in the value chain?
Marketing and sales
What is data
Facts that are collected, recorded and stored in a system
What is information?
Organised data becomes information that is useful for decision makers
What can information overload do
Can reduce the decision making quality
When does information become valuable
When the benefits exceed the costs of gathering, maintaining and storing data
What is the value of information formula
Benefit - cost = value of information
What makes information useful?
What are the seven characteristics
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
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?
Inbound logistics
What is a key decision that needs to be made with regards to borrowing money from lenders?
How much capital to acquire
The transaction cycle approach yields efficiencies when processing of a large number of transactions because
a large number of transactions within a given cycle can be categorized into a relatively small number of distinct types.
What is a business process
A set of related,coordinated, and structured activities and tasks performed by people, machines or both to achieve a specific organisational goal
What is a business transaction
An agreement between two entities to exchange goods, services, or any other event that can be measured in economic terms
What is transaction processing?
Transaction data that is used to create financial statements
What is the give get exchange for revenue cycle?
Give goods, get cash
What is the give get for the expenditure cycle
Get goods, give cash
What is the give get for production cycle
Give labour and raw materials, get goods
What is the give get for the payroll cycle
Give cash, get labour
What is the give get for the financing cycle
Give cash, get goods
When do you recognise revenue
When the entity give the goods or does the service as it is invoice basis accounting
What is a system?
A set of two or more interrelated components interacting to achieve a goal
What is goal conflict in a system?
It’s the inconsistency between goal
E.g revenue wants to be improved but you buy more expenditures
What is goal congruence
Two processes or sub systems are aligned and wanting to achieve the goal
What is an ais?
Is a system that collects, records, stores and processes data to produce information for decision makers
What does the ais consist of?
People who use the system
Processes
Technology
Controls to safeguard information
How does an ais add value to an organisation
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
Value chain of an ais
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
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?
Reliable
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?
Complete
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
Goal conflict
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?
Verifiable
How can query languages be used to help make better decisions?
They can gather relevant data for decision making
Arranging delivery of products to customers constitutes ________ in value chain analysis.
Outbound logistics
An ais provides value by
both improving products or services through information that increases quality and reduces costs and providing timely and reliable information to decision makers
Identify the primary reason that it is important for a firm to identify the AIS improvements likely to yield the greatest return.
Because most organisations have limited resources
In which transaction cycle would information for retiring long-term debt be most likely to pass between internal and external accounting information systems?
The financing cycle
