EXAM ACCOUNTING 3303 1-2 CHAPTER 16-17 REVIEW

EXPLAIN THE INFORMATION VALUE CHAIN. HOW DO BUSINESS EVENTS TURN INTO DATA THEN INTO INFORMATION AND THEN INTO KNOWLEDGE? LET'S LOOK AT THE BUSINESS EVENT OF THE PURCHASE OF A SUPER SMASH BROS. NINTENDO SWITCH GAME AT GAMESTOP, ALL THE WAY TO GIVING USEFUL INFORMATION FOR THE CEO AND OTHER DECISION MAKERS.

- The information value chain represents the overall transformation from a business need and business event (like each individual sale of U.S. flag) to an ultimate decision. The information value chain might be represented considering the purchase of a Nintendo Switch Game at Best Buy in the following way:•The game will be recorded as sales revenue and then after deducting its costs will add to or subtract from corporate income. The cash from the game sale will also add to the operating cash flows. - The specific game will be recorded in the information as a sale to monitor which games are selling within Best Buy. This will help Best Buy and its suppliers know which games are selling and which type of games should be reordered. The type of game will also help the marketing department better understand its customers and their respective demographic profile to better market to them. -In addition, knowing the location of the game sale will also help decision makers know where its sales are occurring. -The CEO can look at the profitability of games overall, the specific types of games that are selling and the location of those sales all due to the information value chain.

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF TAKING KPI'S AND ASSIGNING THEM TO THE BALANCED SCORECARD PRESPECTIVES?

-Any well-managed organization has formed objectives and key performance indicators. They need to know whether they are meeting their objectives. So, their existing systems already collect information about their key performance indicators. -Thus, the advantages of using current objectives and KPIs are several. They exist, they are already measured, and systems do not need to be changed. -Conversely, the disadvantages would relate to the way that the existing objectives and measures were developed. It is likely that they are not truly balanced in terms of leading and lagging indicators and internal and external perspectives. - It is also possible that the organization has not clearly linked the KPIs in a series of cause-and-effect chains aligned with their overall strategy. - Additionally, organizations may form KPIs based on the ease of collecting the information, rather than the true importance of the KPI to their strategy.

4. GIVE TWO EXAMPLES OF TYPES OF DISCRETIONARY INFORMATION AT YOUR COLLEGE OR UNIVERSITY AND EXPLAIN HOW THE BENEFITS OF RECEIVING THAT INFORMATION OUTWEIGH THE COSTS.

1. Universities are often interested in their freshmen retention (the percentage of sophomores that return after their freshman year). They also quite interested in their four- or five-year graduation rates. 2. Universities are also interested in their production of research grants. This is often used to monitor the success of their research and their ability to get interested sponsors (such as the National Institute of Health or the National Science Foundation).

MATCH THE DESCRIPTION TO THE FINANCIAL METRICS

1.Average Annual Income from the initiative / Investment Cost - AAR 2.Sum of Present Value of all cash inflows less sum of cash outflows - NPV 3.Discount rate that makes the NPV equal zero - IRR 4.Amount of time to recoup the initial investment in the project - Payback Period

MATCH THE EXAMPLE OF THE RISK MITIGATION TECHNIQUE TO THE TYPE OF RISK BEING MITIGATED.

1.Ensure Top Management Support - Project Risk 2.Sensitivity analyst for alternative benefits - Solution Risk 3.Demonstrate a product to show it can meet requirements - Tech Risk 4.Give employees an incentive to use a new program - Change Risk

LIST AND EXPLAIN THREE WAYS THAT AN AIS CAN ADD VALUE TO THE FIRM.

Accounting Information Systems add value by providing decision relevant information to management. 1. Three specific examples would include the following: Customer relationship management (CRM) techniques could attract new customers, generating additional sales revenue. 2.Enterprise systems can significantly lower the cost of support processes included. 3.Supply Chain Management Software allows firms to carry the right inventory and have it in the right place at the right time.

HOW WOULD AN AIS HELP A COMPANY IDENTIFY THE PRODUCTS WITH THE HIGHEST PROFIT MARGIN?

Accounting information systems can keep track of the revenues and the costs of each product. If the data (and the associated information) is reliable, and it exhibits the faithful representation qualities, then an AIS can accurately compute the highest profit margin and highest profit margin percentages. The company could use the information to help understand how to best to grow its profits, potentially by increasing sales of the products with highest profit margins, and perhaps deemphasizing those of lowest profit margin.

THERE ARE THREE TYPES OF IT: FUNCTION, IT, AND ENTERPRISE, WHICH HAS THE GREATEST IMPACT ON BUSINESS PERFORMANCE? WHICH REQUIRES THE MOST COMPLEMENTARY CHANGES?

All three types of IT could affect business performance; however, the enterprise IT by its nature would seem most likely to have the greatest impact. Enterprise IT technologies restructure interactions within the organization as well as with external partners, while Network IT technologies simply allow people to communicate with one another, and Function IT technologies support single, standalone functions. Similarly, since Enterprise IT often results in changes to business processes, those technologies would require the most complementary changes.

why study AIS?

BECASUE IT'S fundamental to accounting

iF YOUR COMPANY HAD BPMN DIAGRAMS OF ALL THE MAIN PROCESSES, HOW COULD YOU LEVERAGE THIS INFORMATION?

BPMN activity diagrams support process documentation, process evaluation, and process improvement. BPMN diagrams would document the finance and accounting processes to support employee training. An accurate documentation would support an evaluation of process inefficiencies and potential process improvements including applications of technology, as well as a review of internal controls over the process and identification of potential weaknesses.

THE BALANCED SCORECARD CAN LEAD TO INFORMATION OVERLOAD BECAUSE IT'S MEASURING MULTIPLE PERFORMANCE INDICATORS? IS THIS TRUE AND WHY OR WHY NOT?

Consider the impact of balanced scorecard measures in a multi-divisional, multi-level organization. Since the balanced scorecard typically requires measurement of performance along four perspectives, a multi-division organization could need to collect information on numerous measures to assess performance. However, the balanced scorecard also requires organizations to select the relatively few, most important, measures for each organizational element. Some divisions may only be responsible for managing one or two measures. So, while the possibility of information overload exists, the judicious use of the balanced scorecard should avoid the development of more measures than can be easily managed.

GIVE ME AN EXAMPLE OF EXCLUSIVE, INCLUSIVE, AND PARALLEL GATEWAYS

Exclusive gateways show distinct choices, such as when you select one option among multiple alternatives. inclusive gateways allow selection of one or more options, such as ordering both an entrée and an appetizer or just an entrée. •Parallel gateways take all possible options, such as when dining at a restaurant that charges one price for the meal that includes an appetizer, main course, beverage, and dessert.

IF A COMPANY DOESN'T WANT TO IMPLEMENT A BALANCED SCORECARD, SHOULD THEY DEVELOP A STRATEGY MAP? WHY OR WHY NOT?

Organizations do not need to implement a comprehensive system to measure performance to benefit from articulating their strategy in a strategy map. The map is a communications tool that allows managers to discuss and clarify performance cause-and-effect relationships. This is especially true when the organization is considering changes. The strategy map augments capital budgeting techniques by placing proposed investments in the context of the organization's strategy.

DESCRIBE A PROCESS THAT WOULD START WITH A TIMER EVENT.

Processes that start with a timer event could be •Time to prepare financial reports •Time to pay taxes •Time to attend class

balanced scorecard framework

Provides an integrating framework that describes organizational performance relative to its strategic objectives across four perspectives: learning and growth, process, customer, and financial. Objectives for each perspective describe the strategy in a series of cause-and-effect relationships.

To be useful information must have these attributes:•

Relevant—information capable of making a difference in a decision. •Predictive Value.•Feedback Value.•Timely. Faithful Representation—information produced accurately reflects the condition of the business. •Complete.•Neutral.•Free from Error.

supply chain management ( SCM) software

Software that connects the focal firms with its suppliers. It generally addresses segments of the supply chain, including manufacturing, inventory control, and transportation.

THE BENEFITS OF AN IT INITIATIVE SHOULD BE MEASURED IN COMPARISON TO THE REVENUES AND COSTS THAT WOULD OCCUR IF THE INITIATIVE ISN'T IMPLEMENTED? HOW DOES THAT IMPACT THE ASSESSMENT OF RISK?

The benefits of an IT initiative should be compared to the revenues and costs expected if the IT initiative is not implemented. The biggest issue faced in making this comparison is that an IT project is most likely to exceed expected costs while also failing to achieve expected benefits. Thus, the evaluation team should carefully test the sensitivity to cost overruns as well as the failure to achieve benefits, and the team should pay careful attention to project risk and financial risk.

WALMART COMPETES ON PRICE, AND STARBUCKS COMPETES ON OTHER FACTORS, HOW TO THEIR OBJECTIVES AND MEASURES DIFFER ACROSS THE FOUR BALANCED SCORECARD PERSPECTIVES?

The fundamental reason for differences between Wal-Mart and Starbucks is that they have different value propositions. Wal-Mart aims to compete on price, while Starbucks competes on other value proposition factors, such as quality, availability, relationship, and brand image. Since Wal-Mart seeks low prices, their business processes must be structured to minimize costs. Starbucks, on the other hand, is more focused on creating a consistent customer experience at all its stores. Be sure to understand that differences in the value proposition require differences in the importance of specific processes, as well as differences in the learning and growth perspective.

balanced scorecard management process

The process by which companies plan, implement, and monitor performance. It consists of five steps: formulate the strategy, translate the strategy, link the strategy to operations, monitor performance, and adapt.

REMEMBER THAT AN ACTIVITY OR TASK CAN ONLY BE ASSIGNED TO ONE POOL OR LANE, WHY IS THIS IMPORTANT?

The use of pools and lanes help to establish responsibilities. It would be hard to enforce responsibility when multiple departments are involved. Also, the assignment process helps define tasks/activities at an appropriate level of detail that allows the models to be used for training, process change, performance management, etc.

YOUR COMPANY JUST COMPLETED A MAJOR IT INITIATIVE. THE MAJOR IT INITIATIVE TOOK LONGER THAN EXPECTED AND THE BAR CODE READERS DID NOT WORK AS WELL AS EXPECTED. HOWEVER, THE EMPLOYEES UNEXPECTEDLY EMBRACED THE CHANGE AND MADE THE TECHNOLOGY WORK BETTER THAN EXPECTED. HOW DO THOSE OUTCOMES ALIGN TO THE RISK CATEGORIES IN TABLE 17.1?

This situation provides an example of Project Risk (the project will not be completed on time) and Technological Risk (the technology will not deliver expected benefits). The technological risk is mitigated by employee commitment to the use of the technology. The project risk was not mitigated.

FLOWCHART

Visualizations of a process activity ; they are activity models much like models using BPMN

IN YOUR PROCESS, YOU HAVE TO WAIT UNTIL YOU RECEIVED A REPLY FROM A CUSTOMER, WHAT OBJECT WOULD BE USED TO REPRESENT THIS IN A FLOW?

When the process experiences a delay such as described, the best way to model that is through the use of an intermediate event, such as an intermediate message (catching) event.

DOES THE BALANCED SCORECARD FRAMEWORK PROVIDE A PERFORMANCE MEASUREMENT SYSTEM OR A PERFORMANCE MANAGEMENT SYSTEM?

You could develop arguments for both: the balanced scorecard framework provides a performance measurement system as well as a performance management system. In truth, one requires the other. Measures provide feedback on the organization's performance with respect to its objectives. This feedback allows management to improve what the organization is doing or, in some cases, revisit the strategy.

business process modeling notation (BPMN)

a standard for the description of activity models

information

data organized in a meaningful way to the user

discretionary information

information that is generated according to one's own judgement.

mandatory information

information that is required to be generated or provided by law or regulation

Accounting Information Systems

is defined as a system that records, processes and reports on transactions to provide financial and non-financial information to make decisions and have appropriate levels of internal controls An AIS is important because it provides information that companies are required to have and also information that can be used to make important decisions

gateway

process branching and merging as the result of decisions

data

raw facts or statistics that, absent a context have little meaning

accounting information system (AIS)

records, processes, reports, and communicates and provided financial and nonfinancial information

sequence flows

represented by arrows to indicate the progression of activity within the process

information overload

the difficulty a person faces in understanding a problem and making a decision as a consequence of too much information.

supply chain

the flow of materials, information , payments, and services from raw materials suppliers , through factories and warehouses , all the way to the final customers of the firm's products