Ch 3 - Electronic Business (E-Business) Systems

Describe Business event data processing

- EDM system manages the workflow and routes the documents to the appropriate people Ex. Loan applications pass through several stages such as origination, underwriting and closing

Describe an Online Real-Time (OLRT) System

- Gathers and records business event data at time of occurrence - Updates master data instantaneously - Provides results in real time

What is the main difference between a traditional and Internet EDI?

- Main difference between traditional and Internet EDI is use of a VAN for the traditional method

Describe immediate mode

- Processing mode in which LITTLE OR NO DELAY occurs between any two data processing steps - Withdrawing money from an ATM - Account balance is immediately updated

Describe periodic mode and give an example

- Processing mode with delay between the various data processing steps - Heavily dependent on the use of batch processing - Ex. payroll

Describe Internet Assurance and give an example

- Service provided for a fee to vendors to provide LIMITED ASSURANCE to users of the vendor's Web site that the site is in fact reliable and event data security is reasonable - Ex. WebTrust

Describe Electronic Document Management (EDM)

- The capture, storage, management, and control of electronic document images for the purpose of supporting management decision making and facilitating business event data processing

Describe Electronic Data Interchange (EDI)

- The computer-to-computer exchange of business data (i.e. documents) in structured formats that allow direct processing of those electronic documents by the receiving computer system

Describe Internet Commerce

- The computer-to-computer exchange of business event data in structured (such as IEDI) or semistructured formats via Internet communication that allows the initiation and consummation of business events - Method of conducting business without human interaction

Describe Commerce through E-mail

- The electronic transmission of nonstandardized messages between two individuals who are linked via a communication network - Weak form for E-business because the message format is nonstandardized

What is Electronic Business (E-Business)?

- The use of electronic networks (including the Internet) to exchange information and link business processes among organization's and individuals - Paper records are replaced with electronic ones

Describe an Internet Electronic Data Interchange (IEDI)

- The use of secure, structured messages over the Internet to execute business transactions

What is an Online Transaction Entry (OLTE) System?

- Use of data entry devices to enter business event data directly into the information system at time and place that business event occurs - Merges the traditional subprocesses of business event occurrences and records business event data into a single operation

What is batch processing?

- the aggregation of several business events over some period of time with the subsequent processing of these data as a group by the information system

What are the steps that occur in batch processing?

1. Business event occurs 2. Record business event 3. Update master data 4. Generate outputs

What are the three basic subprocesses to be completed in an Online Real-Time system?

1. Business event occurs; record business event data 2. Update master data 3. Generate reports (and support queries)

What are some examples of communication pathways?

1. Client/server technology 2. Local area networks (LANs) 3. Wide area networks (WANs) 4. Internet 5. Web browsers 6. Intranet 7. Extranet

What are the methods for conducting E-Business?

1. Commerce through e-mail 2. Electronic Document Management (EDM) 3. Document storage and retrieval 4. Business event data processing 5. Electronic Data Interchange (EDI) 6. Internet EDI (IEDI) 7. Internet Commerce

What are the two categories that business applications of EDM fall into?

1. Document storage 2. Business event data processing

What are the two types of updates that can be made in the manual accounting process?

1. Information processing 2. Data maintenance

What are the activities in the Manual Accounting Process?

1. Journalize the business event 2. Post the business event from the journal to a subsidiary ledger 3. Post the total from the journal to the general ledger 4. Summarize the business events by preparing a trial balance

What are the benefits of an Electronic Document Management (EDM) System?

1. Reduced cost of handling and storing paper 2. Improved productivity and customer service 3. Enhanced management of workflow 4. Faster processing

What happens when a business event is recorded in batch processing?

A batch of source documents is entered in a computerized format using an offline device

What is required for a processing method?

Data communications pathways among PCs, terminals, or other systems

What does the "capture" aspect of Electronic Document Management rely on?

Digital image processing systems

Describe Document storage and retrieval

Ex. Mortgages, deeds, and liens are archived and made available to the public for uses such as title searches

True or False: We must complete the 3 steps of batch processing to generate an output

False, We don't have to do the 3 steps of batch processing to generate an output, BUT we DO have to do these 3 steps to generate an ACCURATE output

True or False: IEDI's replace traditional EDI's

False, it is EXPECTED that IEDI's will replace traditional EDI's, but they have not yet

What is another name for Online Real-Time System?

Immediate mode

What is data maintenance?

Includes activities related to adding, deleting, or replacing standing data (relatively permanent portions of master data)

What is information processing?

Includes data processing functions related to economic events

What happens when a "business event occurs" in batch processing?

Information is recorded on a source document

What happens during the "generate outputs" step of batch processing?

Periodic outputs (i.e., reports) are generated for management

What is Master Data?

Repositories of relatively permanent data maintained over an extended period of time

What happens when the master data is updated in batch processing?

The computer processes the entered information and updates the master data

Describe Cloud Computing and give an example

The use of the Internet to provide scalable services (such as software, resources, hardware, and data storage) to users Ex. Gmail

True or False: Batch processing is industry specific

True

As an auditor, would we be more concerned with master files or transaction files? Why?

We would be more concerned with transaction files because this data transforms through the accounting periods and these files would not need to be closed out.