Accounting Systems (1-3)

Which symbol would be used in a flowchart to represent a manual process? A. #6 B. #5 C. #10 D. #8

A. #6

Information is best described as A. data that has been organized and processed so that it is meaningful to the user. B. the same thing as data. C. facts that are useful when processed in a timely manner. D. raw facts about transactions.

A. data that has been organized and processed so that it is meaningful to the user.

The primary objective of accounting is to A. provide useful information to decision makers. B. implement strong internal controls. C. ensure the profitability of an organization. D. prepare financial statements.

A. provide useful information to decision makers.

Expenditure Cycle

Get goods = give cash

Financing Cycle

Give cash = get cash

HR/Payroll Cycle

Give cash = get labor

Revenue Cycle

Give goods = get cash

Production Cycle

Give raw materials and labor = get product

Business Processes/Transaction Cycles

Revenue cycle, expenditure cycle, production cycle, HR/payroll cycle, and financing cycle.

Real-Time Processing

Updating as it occurs.

Batch Processing

Updating done periodically.

Data Flow Diagram

a graphical description of data sources, data flows, transformation processes, data storage, and data destinations.

Chart of Accounts

a list of the numbers assigned to each general ledger account. These account numbers allow transaction data to be coded, classified, and entered into the proper accounts. They also facilitate the preparation of financial statements and reports

Master File

like a ledger in a manual AIS, stores cumulative information about an organization. Permanent

Group Code

two or more subgroups of digits used to code items, are often used in conjunction with block codes.

Database

A set of interrelated, centrally coordinated files.

Guidelines for a Coding System:

- Be consistent with its intended use - Allow for growth - Be as simple as possible to minimize costs, facilitate memorization, and ensure employee acceptance. - Be consistent with the company's organizational structure and divisions.

Factors influencing the design of AIS:

- Developments in IT - Business strategy - Organizational culture

Value Chain

- Inbound Logistics - Operations - Outbound Logistics - Marketing and Sales - Service

The 6 components of an AIS allow it to fulfill 3 business functions:

1. Collect and store data about organizational activities, resources, and personnel. 2. Transform data into information so management can plan, execute, control, and evaluate activities, resources, and personnel. 3. Provide adequate controls to safeguard the organization's assets and data.

File

A group of related records

The American Institute of Certified Public Accountants (AICPA) has recognized the importance of AIS and the major impact information technology has on the area of accounting. To recognize individual CPAs who have met educational and experiential requirements in this area, the group formally created the designation known as A. the Certified Information Technology Professional. B. the Certified Data Processing Professional. C. the Certified Information Auditor. D. the Certified Internal Auditor.

A. the Certified Information Technology Professional.

Data must be collected about three facets of each business activity. What are they? A. the business activity, the resources it affects, the people who participate B. the inputs, outputs and processes used C. who is involved, what was sold, how much was paid D. the business activity, the transactions it creates, the impact on the financial statements

A. the business activity, the resources it affects, the people who participate

In which transaction cycle would customer sales transaction information be most likely to pass between internal and external accounting information systems? A. the revenue cycle B. the expenditure cycle C. the human resources / payroll cycle D. the financing cycle

A. the revenue cycle

Data must be converted into information to be considered useful and meaningful for decision making. There are 14 characteristics that make information both useful and meaningful. If the same information can be reproduced by two independent and knowledgeable people, it is representative of the characteristic of A. verifiability. B. truthful. C. reliability. D. relevance.

A. verifiability.

All of the following are disadvantages of an ERP system except A. ERPs frequently cause organizations to change their business processes to standardized ones. B. an ERP provides an integrated view of the organization's data. C. ERP software and hardware can cost midsized companies between $10 million and $20 million dollars. D. ERPs are relatively complex.

B. an ERP provides an integrated view of the organization's data.

All of the following are guidelines for developing a good coding system except A. be consistent with the company's organization structure. B. be as sophisticated as possible to promote usage. C. be flexible to allow for growth. D. be consistent with its intended use.

B. be as sophisticated as possible to promote usage.

A chart of accounts is an example of (select all that apply) A. mnemonic codes. B. block codes. C. sequence codes. D. group codes.

B. block codes. D. group codes.

Transaction cycles can be summarized on a high level as "give-get" transactions. An example of "give-get" in the revenue cycle would be A. give cash, get labor. B. give goods, get cash. C. give cash, get cash. D. give cash, get goods.

B. give goods, get cash.

A Business Process Diagram (BPD) provides the reader an easily understood ________ of what takes place in a business process. A. narrative B. pictorial view C. data flow D. decision flow

B. pictorial view

Data flow diagrams depict A. who is performing processes, but not the data that flows between processes. B. processes, but not who is performing the processes. C. who is performing processes, but not how they perform the process. D. processes, but not the data that flows between processes.

B. processes, but not who is performing the processes.

Identify the item below that is not one of the four different types of data processing activities. A. deleting B. using C. creating D. reading

B. using

Value of Information

Benefit produced by the information - the cost of producing it. Benefits: - Reduced uncertainty - Improved decisions - Improved ability to plan and schedule activities. Costs: - Time - Resources

Which symbol would be used in a flowchart to represent a computer process? A. #2 B. #1 C. #5 D. #3

C. #5

A well-designed AIS can improve the decision making in an organization. Identify the statement below that describes a situation where an AIS may actually inhibit effective decision making. A. An AIS provides information about the results of previous decisions which provides decision makers with feedback that can be used in future decision making. B. An AIS reduces uncertainty, and therefore accounting information can provide a basis for choosing among alternative courses of action. C. An AIS provides to its users an abundance of information without any filtering or condensing of such information. D. An AIS identifies situations requiring management action.

C. An AIS provides to its users an abundance of information without any filtering or condensing of such information.

The existence of multiple systems which provide information can result in all of the following except A. integration issues. B. discrepancies. C. efficiency. D. redundancies.

C. efficiency.

Source data automation refers to A. using an accounting information system to electronically bill customers. B. using an accounting information system to automate a previously manual transaction process. C. using devices to capture transaction data in machine-readable form at the time the transaction is initiated. D. using the internet as the operating platform of an accounting information system.

C. using devices to capture transaction data in machine-readable form at the time the transaction is initiated.

Which is a true statement regarding a document flowchart? A. A document flowchart is not normally used in evaluating internal control procedures. B. A document flowchart is more useful than a data flow diagram. C. A document flowchart illustrates the sequence of logical operations performed by a computer. D. A document flowchart is particularly useful in analyzing the adequacy of internal control procedures.

D. A document flowchart is particularly useful in analyzing the adequacy of internal control procedures.

Which of the following commonly initiates the data input process? A. automatic batch processing B. a trial balance query C. an accounting department source document D. a business activity

D. a business activity

An accounting information system must be able to perform which of the following tasks? A. process transaction data B. provide adequate controls C. collect transaction data D. all of the above

D. all of the above

The passage of the Sarbanes Oxley Act A. requires public companies to prepare an annual internal control report. B. mandates that auditors must be able to prepare, evaluate and read documentation tools such as flowcharts. C. made documentation skills even more important. D. all of the above

D. all of the above

An AIS provides value by A. providing timely and reliable information to decision makers. B. improving products or services through information that increases quality and reduces costs. C. creating new products. D. both A and B

D. both A and B

Which step below is not considered to be part of the data processing cycle? A. data storage B. data processing C. data input D. feedback from external sources

D. feedback from external sources

When a subsystem achieves its goals while contributing to the organization's overall goal, it is called A. system congruence. B. system match. C. goal match. D. goal congruence.

D. goal congruence.

All of the following are advantages of an ERP system except A. in an ERP, data input is captured or keyed once. B. ERPs permit management to gain greater visibility into every area of the enterprise. C. ERPs permit manufacturing plants to receive new orders in real time. D. it takes considerable experience and training to use an ERP system effectively.

D. it takes considerable experience and training to use an ERP system effectively.

Data Value

Each intersecting row and column is a field within a record, the contents of which are called

Control Account

The general ledger account corresponding to a subsidiary ledger.

Data Processing Cycle

The operations performed on data to generate meaningful and relevant information 4 Steps: 1. Data input 2. Data storage 3. Data processing 4. Data output

Transaction Processing

The process that begins with capturing transaction data and ends with informational output, such as the financial statements.

Smart Contract

a regular contract with the terms and agreed upon details built into a blockchain.

System

a set of detailed methods, procedures, and routines that carry out specific activities, perform a duty, achieve goals or objectives, or solve one or more problems.

Business Process

a set of related, coordinated, and structured activities and tasks that are performed by a person, a computer, or a machine, and that help accomplish a specific organizational goal.

Audit Trail

a traceable path of a transaction through a data processing system from point of origin to final output, or backward from final output to point of origin. It is used to check the accuracy and validity of ledger postings.

Support Activities:

allow the five primary activities to be performed efficiently and effectively. - Firm Infrastructure - H/R - Technology - Purchasing

Transaction

an agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization.

Block Code

blocks of numbers are reserved for specific categories of data.

Turnaround Documents

company output sent to an external party, who often adds data to the document, and then are returned to the company as an input document.

Subsidiary Ledger

contains detailed data for any general ledger account with many individual subaccounts. often used for accounts receivable, inventory, fixed assets, and accounts payable.

Transaction File

contains records of individual business transactions that occur during a specific time.

General Ledger

contains summary-level data for every asset, liability, equity, revenue, and expense account.

Information

data that have been organized and processed to provide meaning and context that can improve the decision-making process.

Source Data Automation

devices capture transaction data in machine-readable form at the time and place of their origin.

Data Dashboard

displays important data points, metrics, and key performance indicators in the form of line or bar charts, tables, or gauges.

Data

facts that are collected, recorded, stored, and processed by an information system. Most useful when machine-readable.

Record

fields containing data about entity attributes

Flowchart

graphical description of a system. 1. Input/output symbols show input to or output from a system. 2. Processing symbols show data processing, either electronically or by hand. 3. Storage symbols show where data is stored. 4. Flow and miscellaneous symbols indicate the flow of data, where flowcharts begin or end, where decisions are made, and how to add explanatory notes to flowcharts.

Business Process Diagram

graphical descriptions of the business processes used by a company. do not document the activities performed by external parties

Information Technology

helps decision makers more effectively filter and condense information.

Blockchain

individual digital records, called blocks, linked together using cryptography in a single list, called a chain. functions as a decentralized database The information recorded in the blockchain is made public, so everyone on the blockchain's peer-to-peer network has a copy of the blockchain and all transactions are accessible to everyone. Advantages: - Accuracy - Transparency - Data consistency - Trust - No need for 3rd parties - Single set of books - Cost - Decentralization Disadvantages - Cost - Loss of privacy and confidentiality Susceptibility

Enterprise Resource Planning Systems (ERP)

integrate all aspects of a company's operations with a traditional AIS. collects, processes, and stores data and provides the information managers and external parties need to assess the company. uses a centralized database to share information across business processes and coordinate activities

Sequence Code

items are numbered consecutively to account for all items.

Mnemonic Code

letters and numbers are interspersed to identify an item.

Goal Congruence

occurs when a subsystem achieves its goals while contributing to the organization's overall goal. The larger the organization and the more complicated the system, the more difficult it is to achieve goal congruence.

Goal Conflict

occurs when a subsystem's goals are inconsistent with the goals of another subsystem or with the system as a whole.

Information Overload

occurs when those limits are passed, resulting in a decline in decision-making quality and an increase in the cost of providing that information.

Specialized Journal

records large numbers of repetitive transactions such as sales, cash receipts, and cash disbursements.

Documents

records of transaction or other company ​​data.

Document Flowchart

shows the flow of documents and information between departments or areas of responsibility.

System Flowchart

shows the relationship among the input, processing, and output in an information system.

Cloud Computing

takes advantage of the high bandwidth of the modern global telecommunication network to enable employees to use a browser to remotely access software (software as a service), hardware (infrastructure as a service), and entire application environments (platform as a service).

Virtualization

takes advantage of the power and speed of modern computers to run multiple systems simultaneously on one physical computer.

Information System

the combination of the people and the technologies in an organization that collect, record, store, and process data to produce the information needed to make informed decisions.

Accounting Information System (AIS)

the intelligence—the information-providing vehicle—of that language (accounting).

Program Flowchart

the sequence of logical operations a computer performs as it executes a program.

Accounting

the systematic and comprehensive recording of an organization's financial transactions. accounting is a data identification, collection, and storage process as well as an information development, measurement, and communication process. an information system

Coding

the systematic assignment of numbers or letters to items to classify and organize them.

Data Analytics

the use of software and algorithms to discover, describe, interpret, communicate, and apply meaningful patterns in data to improve business performance.

Reports

used by employees to control operational activities and by managers to make decisions and to formulate business strategies.

General Ledger and Reporting System

used to generate information for both management and external parties.

Query

used to provide the information needed to deal with problems and questions that need rapid action or answers.

General Journal

used to record infrequent or nonroutine transactions, such as loan payments and end-of-period adjusting and closing entries.

Artificial Intelligence (AI)

uses computer systems to simulate human intelligence processes such as learning (acquiring information and rules for using it), reasoning (interpreting data and using its rules to arrive at conclusions), and self-improvement (learning from the information and past experiences to improve its rules).

Online Batch Processing

where transaction data are entered and edited as they occur and stored for later processing.