ACCT 312 – Accounting Information Systems Exam One (Ch. 1-3) Review Sheet: The e

Question

ACCT 312 – Accounting Information Systems

Exam One (Ch. 1-3) Review Sheet:

The exam will consist of 25 multiple choice questions at 2 points each.

Chapter One:

Know the difference between data versus information.

Know the seven characteristics that make information useful and meaningful. (Problem 1.4)

Be able to recognize the specific business processes that appear in the five business cycles. (Problem 1.8)

Know the six components of an AIS and the three important business functions they serve.

Know the relation between IT and business strategy.

Know the definition of a value chain and supply chain.

Chapter Two:

Know the four major steps in the data processing cycle.

Know which type of special journal would be used for a variety of business transactions: the sales journal, cash receipts journal, purchases journal, cash payments journal and general journal.

Know the purpose of the two types of subsidiary ledgers.

Understand the basics of how coding (e.g., account numbers) works.

Understand the difference between online or offline data entry and batch or real-time processing.

Know the difference between master files and transaction files. (Problem 2.8)

Understand the basic components of an ERP and its advantages and disadvantages.

Chapter Three:

Be able to read and understand the symbols used in data flow diagrams (DFDs – context and level 0), BPD, and document flowcharts.

Know why it is so very important for accountants to be able to read and/or prepare flowcharts.

You will not have to prepare a DFD, BPD, or document flowchart.

Explanation / Answer

The difference between data versus information

Data

Information

Data is raw, unorganized facts that need to be processed. Data can be something simple and seemingly random and useless until it is organized.

When data is processed, organized, structured or presented in a given context so as to make it useful, it is called information.

"Data" comes from a singular Latin word, datum, which originally meant "something given." Its early usage dates back to the 1600s. Over time "data" has become the plural of datum.

"Information" is an older word that dates back to the 1300s and has Old French and Middle English origins. It has always referred to "the act of informing, " usually in regard to education, instruction, or other knowledge communication.

Data is an unprocessed information.

While information is processed data

Seven characteristics that make information useful and meaningful.

1. Relevant :pertains to a manger’s area of responsibility and is essential

2. Reliable: accurate, consistent with fact and is verifiable

3. Complete: contains all the facts that a manager needs to solve and tackle problems

4. Timely: available when needed, in real time when possible

5. Understandable: presented in a suitable form

6   Concise: just enough, omitting material which I not needed

7. Accessible: should be readily available and cost effective in nature

Recognize the specific business processes that appear in the five business cycles

Recession

A recession—also sometimes referred to as a trough—is a period of reduced economic activity in which levels of buying, selling, production, and employment typically diminish. This is the most unwelcome stage of the business cycle for business owners and consumers alike. A particularly severe recession is known as a depression.

Recovery

Also known as an upturn, the recovery stage of the business cycle is the point at which the economy "troughs" out and starts working its way up to better financial footing.

Growth

Economic growth is in essence a period of sustained expansion. Hallmarks of this part of the business cycle include increased consumer confidence, which translates into higher levels of business activity. Because the economy tends to operate at or near full capacity during periods of prosperity, growth periods are generally accompanied by inflationary pressures.

Decline

Also referred to as a contraction or downturn, a decline basically marks the end of the period of growth in the business cycle. Declines are characterized by decreased levels of consumer purchases (especially of durable goods) and, subsequently, reduced production by businesses.

Recovery

Once the economy reaches to the lowest level of shrinking it tends to be the end of negativism and the beginning of positivism. This leads to reversal of business processes and the economy starts building a positive attitude towards various economic factors

Six components of an AIS and the three important business functions they serve

An accounting information system typically has six basic components:

These six components of AIS enable to fulfill the following three business functions

Relation between IT and business strategy

Previously in most of the organizations there was no much interest from the senior management about the relationship between the Information technology strategy and organization strategy.

Recently, things have been changes with the fast growth in the Information Technology and telecommunication services and applications that became very important for the organizations and businesses success. IT became the central of the organizations and very important to the existence and success of the organizations. As result the senior managements are now paying more attention to the IT strategy, however uniting IT and business strategies together is not easy and it’s indefinable due to the trouble incorporating technology and system into already shaped businesses.

However, what makes this uniting between IT and business strategies works is the collaborating in the organization level between the IT senior managers and business top management, IT managers and IT professionals and all the departmental workers. There are so many factors that contribute to the uniting IT and business strategies together and the most important factor are having the right CIO, having the right top management team, having a good IT governance and having business drive IT strategy.

The CIOs need to have both the business and technical knowledge in order to know the business needs from IT and the expectations from IT. Also, the CIOs need to have a vision for the business and how IT will better incorporate and support the organization strategy, create and strong senior IT management team and information services. The CIOs need to propagate the company and business vision to the rest of top managements. Top management team they are the right hands for the CIOs and their role is very important, they are the ones who take the time to work and support the integrated strategies between IT and business. They have clear understanding of the business strategies and they create business guidelines which is called “business maxims” which give a clear direction to “IT investments” and help to create “IT maxims” that define the organization’s needs for IT. Those maxims are usually created through conducting interview and workshop for the top managements. Good IT governance give you the ability to make better decision and help you to implement the base for uniting IT and business strategies together. Also, having good IT governance increase the probability of making the correct IT related decisions in the organizations. Your business driven IT strategy should contain the guidelines for the IT needs which is IT maxims, the organization technical selections such as software and hardware, which services needs to be centralized and which needs to decentralize and applications needs which one to stay, retired and introduced.

Definition of a value chain and supply chain

Value chain: The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources - money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.

supply chain: A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains

Data

Information

Data is raw, unorganized facts that need to be processed. Data can be something simple and seemingly random and useless until it is organized.

When data is processed, organized, structured or presented in a given context so as to make it useful, it is called information.

"Data" comes from a singular Latin word, datum, which originally meant "something given." Its early usage dates back to the 1600s. Over time "data" has become the plural of datum.

"Information" is an older word that dates back to the 1300s and has Old French and Middle English origins. It has always referred to "the act of informing, " usually in regard to education, instruction, or other knowledge communication.

Data is an unprocessed information.

While information is processed data

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