actg 134 - ch2b
73) Describe four advantages and four disadvantages of implementing an ERP system at a multinational corporation.
Advantages Integrating information breaks down barriers between departments and streamlines the flow of information. Data input is captured or keyed only once. Management gains greater visibility into every area of the enterprise and has improved monitoring capabilities. Better access control is established by consolidating multiple permissions and security models into a single data access structure. Standardization of procedures and reports across business units. Customer service improves as employees can quickly access data. Increased productivity of employees. Disadvantages ERP systems are very costly. Implementation is time consuming. Changes to business processes are sometimes required, in order to minimize the customization needed. Complexity of the system. Employees may be resistant to implement and use an ERP system and change business processes.
68) Describe an audit trail.
An audit trail provides a means to check the accuracy and validity of postings to the ledger. The posting references and document numbers help provide the audit trail. An audit trail exists when company transactions can be traced through the AIS from where it originated to where they end up on the financial statements
71) Describe guidelines to follow for a well-designed coding system
First, the code should be consistent with its intended use. Second, the code should allow for growth in the number of items to be coded. The coding system should be as simple as possible. The coding system should be consistent with the company's organizational structure and it should be consistent across the different divisions of an organization.
69) Explain how data is organized and stored in an AIS
The smallest unit of data is known as a data value. A data value is physically stored in a space called a field. Any number of fields can be grouped together to form a record. Related records are grouped together to form a file. Files are then combined to form a database.
74) Describe the methods used to collect data about business activities. Describe design and control considerations for each of the data collection methods.
Data about business activities can be collected with source documents, either on paper or electronic, turnaround documents, and source data automation. Source documents define what data to collect about an activity, group logically related data close together, provide instructions on how to complete the document, include fields for approvals, and use preprinted standard data. Paper documents should be sequentially prenumbered to allow verification that all documents have been recorded. Electronic source documents should also utilize pull-down menus, drop-down boxes, default values, preformatting, auto sequential numbering, and prompting for complete data entry. Turnaround documents often begin as output documents that are then sent to external users for further completion. Turnaround documents should utilize most of the same design and control considerations as source documents, but should include data in machine-readable form, such as bar codes or optical character recognition. Source data automation utilizes technology to capture data in machine-readable form at the time and place the business activity occurs. Source data automation technology includes point-of-sale terminals, bar codes, RFID tags, and electronic data interchange. An especially important control consideration for source data automation is a way to indicate authorization of the activity.
70) Describe the basic cycles and business activities for a typical merchandising company.
Revenue cycle deliver inventory to customers and collect cash. Expenditure cycle receive goods and services from vendors and pay cash. Human resources cycle track hours worked by employees and record withholding data.
72) Describe the relationship between the general and subsidiary ledgers.
The general ledger contains summary-level information about every asset, liability, equity, revenue, and expense account in an organization. The balances in general ledger accounts form the starting point for preparation of financial statements and various other financial reports. A subsidiary ledger account provides support for any general ledger account for which individual subaccounts (for example, accounts receivable, accounts payable, inventory, and fixed assets) are required. The subsidiary ledger records and maintains the detail-level information by having a separate record for each customer, vendor, inventory item, or fixed asset. The sum of the subsidiary ledger balances should equal the balance in the general ledger account. A general ledger account that corresponds to a subsidiary ledger account is known as a control account.
67) What is the purpose of source documents? What controls are embedded in source documents? Give two examples of source documents.
The primary purpose of source documents is to record data about business activities. Source documents standardize data collection procedures for an organization and provide better control and accuracy. Source documents are generally pre-numbered, which helps to verify that all transactions have been recorded and there is no missing document; if a document is missing, then which one(s) can be determined. Proper design of source documents ensures which information to collect, preprints standard information such as addresses, and provides directions for completing the form. Examples include: invoices, timecards, sales orders, and purchase orders.
