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 Two:

1. Know the four major steps in the data processing cycle.

2. 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.

3. Know the purpose of the two types of subsidiary ledgers.

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

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

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

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

Chapter Three:

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

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

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

Explanation / Answer

1.

Stages of the Data Processing Cycle

1) Collection is the first stage of the cycle, and is very crucial, since the quality of data collected will impact heavily on the output. The collection process needs to ensure that the data gathered are both defined and accurate, so that subsequent decisions based on the findings are valid. This stage provides both the baseline from which to measure, and a target on what to improve.

Some types of data collection include census (data collection about everything in a group or statistical population), sample survey (collection method that includes only part of the total population), and administrative by-product (data collection is a byproduct of an organization’s day-to-day operations).

2) Preparation is the manipulation of data into a form suitable for further analysis and processing. Raw data cannot be processed and must be checked for accuracy. Preparation is about constructing a dataset from one or more data sources to be used for further exploration and processing. Analyzing data that has not been carefully screened for problems can produce highly misleading results that are heavily dependent on the quality of data prepared.

3) Input is the task where verified data is coded or converted into machine readable form so that it can be processed through a computer. Data entry is done through the use of a keyboard, digitizer, scanner, or data entry from an existing source. This time-consuming process requires speed and accuracy. Most data need to follow a formal and strict syntax since a great deal of processing power is required to breakdown the complex data at this stage. Due to the costs, many businesses are resorting to outsource this stage.

4) Processing is when the data is subjected to various means and methods of manipulation, the point where a computer program is being executed, and it contains the program code and its current activity. The process may be made up of multiple threads of execution that simultaneously execute instructions, depending on the operating system. While a computer program is a passive collection of instructions, a process is the actual execution of those instructions. Many software programs are available for processing large volumes of data within very short periods.

5) Output and interpretation is the stage where processed information is now transmitted to the user. Output is presented to users in various report formats like printed report, audio, video, or on monitor. Output need to be interpreted so that it can provide meaningful information that will guide future decisions of the company.

6) Storage is the last stage in the data processing cycle, where data, instruction and information are held for future use. The importance of this cycle is that it allows quick access and retrieval of the processed information, allowing it to be passed on to the next stage directly, when needed. Every computer uses storage to hold system and application software.

2.General Journal

3.

What is the purpose of subsidiary ledgers?

A subsidiary ledger contains the details to support a general ledger control account. For instance, the subsidiary ledger for accounts receivable contains all of the information on each of the credit sales to customers, each customer's remittance, return of merchandise, discounts, and so on. With these details in the subsidiary ledger, the Accounts Receivable account in the general ledger can be a control account. As a control account, it will simply report the aggregate amounts of the accounts receivable activity.

5.

Online means that there is some kind of interactivity involved, but doesn't enforce limits in latency.

Realtime means that there are limits on latency.

If you move your computer's mouse, you expect the pointer to react immediately and precisely follows your actions. That's realtime. Another example is playing on a music keyboard controller and have some synthesizer program generating the sounds.

Online however is, that your actions show some response in some timely manner, but there's no timely relationship enforced to it. For example starting a videostream from a (remote controllable) webcam may show you the pictures with less than 1 secons latency, or even up to seveal minuts, yet be online.

6.

Master File

Transaction File

7.

In order to understand computer networks better, it would be helpful to have an overview of the applications running on the network. ERP or Enterprise Resource Planning is an important enterprise application that integrates all the individual department functions into a single software application.

ERP Systems make it easier to track the workflow across various departments. They reduce the operational costs involved in manually tracking and (perhaps) duplicating data using individual & disparate systems. In this article, let us have a look at the advantages and dis-advantages of implementing ERP (Enterprise Resource Management) Software Systems.

Advantages of ERP (Enterprise Resource Planning) System:

1. Complete visibility into all the important processes, across various departments of an organization (especially for senior management personnel).

2. Automatic and coherent workflow from one department/function to another, to ensure a smooth transition and quicker completion of processes. This also ensures that all the inter-departmental activities are properly tracked and none of them is ‘missed out’.

3. A unified and single reporting system to analyze the statistics/status etc. in real-time, across all functions/departments.

4. Since same (ERP) software is now used across all departments, individual departments having to buy and maintain their own software systems is no longer necessary.

5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities, that can give overall insights on business processes and identify potential areas of problems/improvements.

6. Advanced e-commerce integration is possible with ERP systems – most of them can handle web-based order tracking/ processing.

7. There are various modules in an ERP system like Finance/Accounts, Human Resource Management, Manufacturing, Marketing/Sales, Supply Chain/Warehouse Management, CRM, Project Management, etc.

8. Since ERP is a modular software system, its possible to implement either a few modules (or) many modules based on the requirements of an organization. If more modules implemented, the integration between various departments may be better.

9. Since a Database system is implemented on the backend to store all the information required by the ERP system, it enables centralized storage/back-up of all enterprise data.

10. ERP systems are more secure as centralized security policies can be applied to them. All the transactions happening via the ERP systems can be tracked.

11. ERP systems provide better company-wide visibility and hence enable better/faster collaboration across all the departments.

12. It is possible to integrate other systems (like bar-code reader, for example) to the ERP system through an API(Application Programing Interface).

13. ERP systems make it easier for order tracking, inventory tracking, revenue tracking, sales forecasting and related activities.

14. ERP systems are especially helpful for managing globally dispersed enterprise companies, better.

Disadvantages of ERP (Enterprise Resource Planning) Systems:

1. The cost of ERP Software, planning, customization, configuration, testing, implementation, etc. is too high.

2. ERP deployments are highly time-consuming – projects may take 1-3 years (or more) to get completed and fully functional.

3. Too little customization may not integrate the ERP system with the business process & too much customization may slow down the project and make it difficult to upgrade.

4. The cost savings/payback may not be realized immediately after the ERP implementation & it is quite difficult to measure the same.

5. The participation of users is very important for successful implementation of ERP projects – hence, exhaustive user training and simple user interface might be critical. But ERP systems are generally difficult to learn (and use).

6. There maybe additional indirect costs due to ERP implementation – like new IT infrastructure, upgrading the WAN links, etc.

7. Migration of existing data to the new ERP systems is difficult (or impossible) to achieve. Integrating ERP systems with other stand alone software systems is equally difficult (if possible). These activities may consume a lot of time, money & resources, if attempted.

8. ERP implementations are difficult to achieve in decentralized organizations with disparate business processes and systems.

9. Once an ERP systems is implemented it becomes a single vendor lock-in for further upgrades, customizations etc. Companies are at the discretion of a single vendor and may not be able to negotiate effectively for their services.

10. Evaluation prior to implementation of ERP system is critical. If this step is not done properly and experienced technical/business resources are not available while evaluating, ERP implementations can (and have) become a failure.

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