Accounting Information Systems Chapter 2

Identify and distinguish between the physical and financial components of the expenditure cycle

B2B expenditure transactions are based on a credit rlationship between the trading parties. The actual disbursement of cash takes place at some point after the reciept of goods or services. The transaction has 2 parts. Physical: the acquisition of the good or services. Financial: the cash disbursement to the supplier

How may batch processing be used to improve operational efficiency?

Batch processing of noncritical accounts improves operational efficiency by eliminating unnecessary activities at critical points in the process.

What is task-data dependency

With the flat-file approach, the users inability to obtain additional information as his needs change

16. Which statement is NOT correct? a. Legacy systems may process financially significant transactions. b. Mainframes are exclusive to legacy systems, while modern systems use only the client-server model c. Legacy systems may use database technology d. all the above are true

b. Mainframes are exclusive to legacy systems, while modern systems use only the client-server model

Give an example of how cardinality relates to business policy

1 car to 1 Salesperson = 1:1; 1 car to many salespeople = 1:M

What are some of the more common uses of data codes in accounting information systems

1. concisely represent large complex info that would be unmanageable 2. Provide a means of accountability over the completeness of the transactions processed. 3. Identify unique transactions and accounts within a file. 4. Support the audit function by providing an effective audit trail.

Name the two types of journals

1. special journal 2. general journal

5. Which of the following is NOT an advantage of real-time processing of files over batch processing a. shorter transaction processing time b. reduction of inventory stocks c. improved customer service d. all are advantages

d. all are advantages

What is an entity

Anything about which the organization captures data

Why might an auditor use a program flowchart?

Auditor wishing to assess the correctness of the edit program's logic.

12. Which of the following is true of the relationship between subsidiary ledgers and general ledger accounts a. The two contain different and unrelated data b. The relationship between the two constitute part of the audit trail c. All general ledger accounts have subsidiaries d. The total of subsidiary ledger accounts usually exceeds the total in the related general journal account.

b. The relationship between the two constitute part of the audit trail

6. Which statement is NOT true batch processing a. permits data to be edited in a separate computer run b. is subject to deadlocks when processing common accounts. c. can use databases and flat files d. can be initiated from a terminal

b. is subject to deadlocks when processing common accounts.

17. A coding scheme in the form of acronyms and other combinations that convey meaning is a(n) a. sequential code b. mnemonic code c. alphabetic code d. block code

b. mnemonic code

7. Which is least appropriate type of transaction for a real-time system. a. airline reservations b. payroll c. point-of-sale transactions d. air traffic control systems e. all of these applications typically use real time processing

b. payroll

9. Which of the following is NOT true of a turn around document. a. They may reduce the number of errors made by external parties. b. They are commonly used by utility companies (gas, power, water). c. They are documents used by internal parties only. d. They are both input and output documents.

c. They are documents used by internal parties only.

14. A databas Deadlock a. is a lock placed on a record to prevent it from being accessed by other processes b. c. occurs when a unique record is accessed by several different processes simultaneously. d. none of the above.

c. occurs when a unique record is accessed by several different processes simultaneously.

10. A documentation tool used to represent the logical elements of a system is a(n) a. programming flowchart b. entity relationship diagram c. system flowchart d. data flow diagram

c. system flowchart ??

4. Which of the following statements is NOT true a. Sorting records that are coded alphabetically tends to be more difficult for users than sorting numeric sequences b. Mnemonic codes are limited in their ability to represent items within a class c. Sequential codes carry no information content beyond their order in the sequence d. Mnemonic coding requires the user to memorize code

d. Mnemonic coding requires the user to memorize code

1. The production subsystem of the conversion cycle includes all of the following EXCEPT a. determining raw materials requirements b. make or buy decisions on component parts c. release of raw materials into production d. scheduling the goods to be produced

d. scheduling the goods to be produced

15. An invoice file would best be coded by using a(n) coding ____________ scheme. a. alphabetic b. mnemonic c. block d. sequential

d. sequential?

8. Which of the following statements is NOT correct. a. Database systems resolve task data dependency. b. The flat-file model encourages data redundancy. c. A primary goal of database systems is to minimize data redundancy. d. Database systems provide increased accessibility to data and data integration e. The database approach uses one common data base to promote the concept of single user view.

e. The database approach uses one common data base to promote the concept of single user view.

What are the advantages of real-time data processing

improved productivity, reduced inventory, increased inventory turnover, decreased lags in customer billing, enhanced customer satisfaction.

What is meant by cardinality in entity relationship diagrams

Cardinality represents the degree of relationship 1:1; 1:M, M:M. It reflects normal business rules as well as organizational policy

What is the database model?

Centralizes the data into a common database that is shared by other users.

In one sentence, what does updating a master file record involve

Changing the value of one or more of its variable fields to reflect the effects of a transaction.

What is the confirmation process

Contacting selected customers to determine if the transactions recorded in the accounts actually took place and if customers agree with the recorded balance.

What are the three general problems associated with data redundancy?

Data storage, data updating, and currency of information

What is flat-file model

Describes an environment in which individual data files are not related to other files. End users own their data files rather than share them with other users.

Flat files limit data integration. Explain

Flat file is a single view model. They are structured, formatted, and arranged to suit the specific needs of the owner or primary user of the data which excludes data needed by other users. Does integrate across the organization.

Distinguish between a general journal and journal vouchers

General journals are used to record nonrecurring, infrequent, and dissimilar transactions. A journal voucher is a special source document that contains a single journal entry specifying the general ledger accounts that are affected. Journal vouchers are used to record summaries of routine transactions, non-routine transactions, adjusting entries, and closing entries. The total of journal vouchers processed is equivalent to the general journal.

What is the purpose of the DBMS

Need for the database model. Software system that permits users to access authorized data only

Is a data flow diagram an effective documentation technique for identifying who or what performs a particular task? Explain.

No because they are labeled as verbs, therefore are actions. What to do not who does it or how to do it.

Is a flowchart an effective documentation technique for identifying who or what performs a particular task? Explain.

Yes, the flowchart will layout the physical areas of the activity.

3. Which statement is NOT true a. Manufacturing firms have a conversion cycle but retail firms do not. b. The conversion cycle includes the task of determining raw materials requirements. c. A payroll check is an example of a product document of the payroll system d. A journal voucher is actually a special source document. e. Business activities begin with the acquisition of materials, property, and labor in exchange for cash.

a. Manufacturing firms have a conversion cycle but retail firms do not.

11. Which of the following is NOT a true statement a. Transactions are recorded on ledgers and are posted to journals b. Transactions are recorded in journals and are posted to ledgers c. Infrequent transactions are recorded in the general journal d. Frequent transactions are recorded in special journals

a. Transactions are recorded on ledgers and are posted to journals

2. Which of the following files is a temporary file a. transaction file b. master file c. reference file d. none of the above

a. transaction file

Name the two types of ledgers

1. General Ledger 2. Subsidiary Ledgers

Computer-based systems employ four types of files. Name them.

1. Master file 2. Transaction file 3. Reference file 4. Archive file

Give an example of a record for each of the four file types found in a computer-based system

1. Master file: Contains account data (GL, Subsidiary ledgers). 2. Transaction file: temporary file of transaction records used to update in a master file (sales orders, inventory receipts, cash receipts) 3. Reference file: sotes data that are used as standards for processing transactions (Payroll, price lists, authorized supplier list, employee rosters, customer credit files) 4. Archive file: contains records of past transactions that are retained for future reference and form an important part of the audit trail (journals, prior-period payroll information, lists of former employees, records of accounts written off, prior-period ledgers)

Name the major subsystems of the conversion cycle

1. Production system 2. Cost accounting system

Name the major subsystems of the expenditure cycle.

1. Purchases (AP) system, 2. Cash disbursement system, 3. Payroll system, 4. Fixed asset system

Name the major subsystems of the revenue cycle

1. Sales order processing 2. Cash receipts

Name the three types of documents

1. Source documents 2. Product documents 3. Turnaround documents

Distinguish between entity relationship diagrams, data flow diagrams, and system flowcharts

Entity: documentation technique used to represent the relationship between business entities. Data Flow: uses symbols to represent the entities, data flows, and data stores that pertain to the system. System Flowchart: is the graphical representation of the physical relationships among key elements of a system

Compare and contrast the relative advantages and disadvantages of sequential, block, group, alphabetic, and mnemonic codes

Sequential: Adv-supports the recon of a batch of transactions. Dis-carry no information content beyond their order in the sequence. Block: Adv-Allows for the insertion of new codes within a block without having to reorganized the entire coding structure. Dis-Information content is not readily apparent. Group: Adv-facilitate large amount of diverse data, allow complex data structures to be represented in a hierarchical form that is logical and more easily remembered, permit detailed analysis and reporting both within an item class and across different classes. Dis-Group codes tend to be overused linking unrelated data. Alphabetic: Adv-capacity to represent large numbers of items. Dis-difficulty rationalizing the meaning of codes that have been sequentially assigned and users tend to have difficulty sorting records that are coded alphabetically. Mnemonic: Adv-Doesn't require the user to memorize (The code conveys a high degree of info). Dis-Limited ability to represent items within a class

How are system flowcharts and program flowcharts related

System flowchart shows the relationship between computer programs, the files they use, and the outputs they produce. All high level. The program flowchart shows all the operation detail.

What three transaction cycles exist in all businesses?

The expenditure cycle, the conversion cycle, and the revenue cycle

What information is provided by a record layout diagram

The name, data type, and length of each attribute (field) in the record.

What factor influences the decision to employ real-time data collection with batch updating rather than purely real-time processing? Explain.

To achieve operational efficiency by avoiding potential processing delays

What is the purpose of a digital audit trail

To show the flow of events that are not recorded manually on source documents

For what purpose are entity relationship diagrams used

To show the relationship between business entities

What is an audit trail

Tracing account balances contained in the financial statements back to source documents and the economic events that created them.