Week 1 - Introduction To Information Systems In Accounting And Systems Thinking

Question 1

What is ‘information overload’ and what is the consequence of it?

Answer 1

Information overload is the result of providing too much information to decision makers.
It results in reduced decision making quality.

Question 2

What is the formula for quantifying the ‘Value of Information’?

Answer 2

Value of Information = Benefit (Improved decision making) - Cost (Time, Resources etc)

Question 3

What are the ‘Seven-Things’ that make information useful? And What do each of them mean?

Answer 3

1) Relevant - Information is only useful if it helps decision making
2) Reliable - Information needs to be free from bias.
3) Complete - Information doesn’t omit important details from events and activities.
4) Timely - Information needs to be offered in time to make good decisions.
5) Understandable - Information needs to be made understandable for decision makers.
6) Verifiable - Two independent people can come to the same conclusion.
7) Accessible - Useful information needs to be accessible to be useful.

Question 4

What is a ‘business process’?

Answer 4

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

Something that someone or machine does to help achieve the organisational goals .

Question 5

What is the ‘Give-Get’ relationship in the revenue cycle?

Answer 5

Give Goods/services and receive cash

Question 6

What is the ‘Give-Get’ relationship in the expenditure cycle?

Answer 6

Give cash and receive goods/services

Question 7

What is the ‘Give-get’ relationship in the conversion cycle?

Answer 7

Give labour/raw materials and get finished goods

Question 8

What is the ‘Give-Get’ relationship in the management cycle?

Answer 8

Give cash and get labour

Question 9

What are the Key characteristics of a system?

Answer 9

• The elements of the system must be interrelated.
• The system must be indissoluble as a whole.
• Each subsystem must support the goal of any higher system.

Question 10

Systems can be categories in two ways, either … or …

Answer 10

Type or Nature

Question 11

What are the Five different types of systems?

Answer 11

1) Static system
2) Dynamic System
3) Continuous system
4) Abstract System (exists in theory)
5) Natural System

Question 12

What are the three different natures of systems?

Answer 12

1) Open System
2) Semi-Open system
3) Closed System

Question 13

What is the difference between systems 1 thinking and systems 2 thinking?

Answer 13

Systems 1 = Automatic response, leads to cognitive bias.

Systems 2 = Allocates attention to the effort required to complete a task.

Question 14

What is an ‘Accounting Information System’ (AIS)?

Answer 14

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

Question 15

What four things does an AIS consist of?

Answer 15

1) People who use the system.
2) Processes (Procedures)
3) Technology (software, IT)
4) Controls to safeguard information

Question 16

What is a ‘Value Chain’ in relation to the AIS?

Answer 16

The value chain is all the activities that when added together, add vale to an organisation.

Question 17

Value Chain activities can be either Primary or Support, what does this mean?

Answer 17

Primary:
Provides direct value to the organisation (Marketing, Sales, Service department etc)

Support:
Provides indirect value to the organisation by enabling primary activities to be performed more efficiently and effectively. (Firm infrastructure, Technology, Purchasing etc)

Question 18

What are the Five ways in which a well thought out AIS can add value to an organisation?

Answer 18

1) Improve the quality and reduce the costs of products and services.
2) Improve efficiency
3) Sharing Knowledge
4) Improves internal controls
5) IMPROVES DECISION MAKING

Question 19

What is the main focus of an AIS?

Answer 19

To improve decision making