AIS chapter 1
Elliot received raw materials that he had ordered earlier in the month and has sent all the paperwork to his accounts payable department for payment processing. What step would this be in a process-based system?
Expenditures/Accounts Payable
What is an Information System
Interrelated components • Hardware • Software Networks " Send DATA throughout the system • Also needs - PEOPLE, Processes and Internal Controls
Additional Data Capture for the Process Approach: ACQUISITION AND PAYMENT PROCESSES
Monitor supplier performance Monitor employee performance • Monitor cash flow
Additional Date capture for the Process Approach: MARKETING, SALES, and COLLECTION PROCESS
Monitor: • Gustomer satisfaction • customer complaints • Customer engagement Custorte retention
What are "Data" and "Information"?
"Data" are raw facts
The franchise business model
allows individuals to purchase and run a franchise of a popular fast food chain (for example, McDonald's).
Which of the following activities would be considered a financial business event?
Receiving payment on a customer invoice.
Financial accounting data is a subset of
business data
Marketing, sales and collection processes are one of three primary types of
business processes
Information quality refers to the suitability of the information for a particular purpose for a specific task. Which of the following would NOT be suitable information for management evaluating if they should extend credit to a potential new customer? historical company bad debt accrual obtaining a banking reference for the new customer the new customer's overall credit rating references provided by the new customer
historical company bad debt accrual
Which of the following is NOT one of the three types of business activities or events included on the statement of cash flows? information operating investing financing
information
Which of the following events are in an operating activity?
paying an invoice received from a vendor
Which transaction cycle involves transactions between a Company and its emptoyees?
payroll cycle
Fundamental qualities: Relevance
predictive value, confirmatory value, materiality
The basic business model includes the conversion process, which is also called the 'heart of the business' The conversion process includes which of the following?
production planning and operations
Conversion Process
"Heart of the business" • Product design • Production planning • Procluction scheduling • Production operations • Quality control
Three Primary Types of Business Processes
Acquisitions and Payments Processes Conversion Processes Marketing, Sales, and Collections Processes
How Data is Transformed into Information
But we also have to store the data Databases——> STORAGE Flat Files Spreadsheets
Investing events Examples include:
Buy / sell property, plant., and equipment Buy / sell marketable secunties Buy / sell other businesses
Operating events Examples include:
Collect customer payment Fire emplovee • Pay employee • Deliver goods
As part of the marketing, sales and collections processes in a processed-based system, which of the following would NOT be considered non-financial additional data?
Collecting payment from a customer.
An online ordering business has three major business events. Which of these business events results in the exchange of economic resources recorded by the AlS?
Collecting the customer payment and delivering goods to the customer.
Information that presents similar items in a similar manner makes it easy to identify similarities and differences when necessary. What characteristic of useful information is this?
Comparability
EBITDA is a financial ratio and KPI that means what?
Earnings before interest, taxes, depreciation and amortization
On Thursday afternoon, Elliot sent an order for raw materials to his local supplier. In a processed-based system, what step would this be?
Expenditures/Accounts Payable
To compare performance against competitors, many businesses use BLANK also called KPIs.
benchmarks
Which transaction cycle involves transactions between a Company and its suppliers?
expenditure cycle
• All.of this data and information, hopefully leads to
knowledge
Business Process
• How businesses achieve their goals • Group of related event • In short -the stuff that businesses do day to day to get things done
What is an Accounting Information System (AI)?
A subsystem of an organization's information system that collects, stores, processes, and distributes accounting and financial information for its users An AIS depends on the flow of data through various organizational subsystems (e.g., finance, marketing, human resources, production)
Financing events:
Help the company operate by acquiring incoming cash flows to fund operating events.
Which of the following is NOT an explanation for how information improves decision-making within an organization? Information provides management with feedback regarding prior actions. Information reduces uncertainty. Information identifies business situations requiring management action. Information increases information overload.
Information increases information overload.
Acquisitions and Payments Processes
Inputs •Financing (including Cash • Property, plant, and equioment •Emplovees • Inventory • Goods and services
What does a process-based accounting information system do?
It captures all the data of interest generated in a business process, including informational events.
A pizza company is evaluating the following measures: the amount of sales realized from each customer in their database; how much it costs to acquire each new customer added to their database; ratings of customer satisfaction with the quality of the pizzas they ordered and paid for; and the number of new customers added to their database. Which of the following best describes the tasks undertaken by the pizza company?
KPIS
Operating events:
Occur during the normal operations of a company's business and directly relate to the company's creating and providing a good or service to its customers.
Business events are
Operating Financing Investing Information
Marketing, Sales, and Collections Processes
Outputs • Customer acquisition and retention • Sales • Cash collection
Conversion processes example: Production/ Cost Accounting
Produce product
Investing events:
Provide long-term value to the company by purchasing long-term assets that will deliver value in the future.
BLANK is the process of aggregating data into information on the activities and performance in a company.
Reporting
Which of the following KPIs (ratios) would be considered an accounting ratio?
Return on assets
Information events Examples include:
Take customer order Create purchase order Interview candidate Print report
Which of the following is true regarding horizontal and vertical financial statement analysis?
This type of financial statement analysis is considered to be a form of data analytics.
The peer-to-peer business model
connects individuals with one another (for example, Airbnb).
Pavilion Coffee Growers is looking at new software that will greatly improve the information they receive through customer reviews after purchase. The cost of the software is $250,000, and the Chief Financial Officer is asking if it will be worth the investment. What is the process called that will help to determine if this is a valuable investment?
cost-benefit analysis
AIS captures
data generated from business events that result in economic activities, like transactions
Information is
data that have been organized and processed to be useful to decision-makers • Providing useful information to decision makers is the primary obiective of an accounting information system
Information events
exchange of information and never involve an exchange of economic resources.
The subscription business model
involves charging a monthly subscription fee for unlimited access to a service or product (for example, Netflix).
The freemium business model
involves offering free services but charging a fee to access upgraded features (for example, Dropbox).
The direct-to-consumers business model
involves selling directly to customers. For example. Tulia's Cookies, uses a mobile app to sell cookies directly to customers instead of using a third-party delivery vendor like DoorDash.
In the acquisitions and payments process, which of the following would be an example of additional data capture that would be useful information for this process?
monitoring supplier delivery performance
Which of the following would NOT be recorded or captured in a transaction-based accounting information system? receiving a customer order shipping goods to a customer paying a vendor invoice receiving goods from a vendor
receiving a customer order
The two fundamental characteristics BLANK. and BLANK work with the enhancing characteristics to create useful information
relevance; faithful representation
The informational output of an accounting information system is best represented by which of the following reports?
reports used by stockholders and creditors
Reporting is
the process of aggregating data into information on the activities and performance in a company • It provides a strictly descriptive view of what happened and does not seek insights into the context or reasons
Data analytics is
the process of using technology to transform raw data, or facts, into useful information • It answers strategic questions beyond historical reporting by transforming dafa into insights It can use either raw data from an information system or reports generated by the information system
• Organizations collect data about:
• Business Events • Resources • People
Business Models
• Direct to Consumer • Franchise • Subscription • Freemium • Peer to Peer
Acquisition & Payment Processes Example: PAYROLL
• Hire employee • Pay employee • Terminate employee
Financing events Examples include:
• Issue stocks • Declare dividends Apply for a loan • Pay loan installment
There are four types of business events or activities
• Operating events (All sales, production and purchasing activities) • Financing events (Stock, dividends, loans) Investing events (Buy/sell fixed assets, other businesses, marketable securities) • Information events (No exchange of economic resources)
Acquisition & Payment Processes Example: Expenditures/ Accounts Payable
• Place vendor order • Recoive goods * Pay vendor
Marketing, Sales, & Collection Processes Example: Revenues Accounts Recolvable
• Take customer order • Deirver goods to customer • Collecs payment from customer
When reviewing the fundamental characteristics of useful information, what is an overall constraint that must be considered?
• cost-effectiveness
Acquisition & Payment Processes Example: Financing
• get a loan • Pay loan Installment , Pay dividends
Additional Data Capture for the Process Approach: CONVERSION
•Monitor design changes •test quality • monitor detects • Reduce downtime • Reduce waste • Comply with regulations
Fundamental qualities: Faithful Representation (Accuracy)
Complete Neutral Error Free
A phone company is planning to use data analytics to examine certain types of basic information related to the manufacturing of its phones overseas. Which of the following would be an example of a data analytics-related project the company may consider implementing to determine if vendors have duplicated charges for deliveries made over a period of time?
Checking to determine if vendors have sent multiple invoices to the company for the same orders.
Enhancing Characteristics
Comparability (Consistency) Verifiability Timeliness Understandability
For the acquisition and payment process, specifically 'order materials from the vendor, which data item below would NOT be collected during this process? The price to charge for the order. The delivery date promised. • A material code or ID number. • The price to be paid for the order.
The price to charge for the order.
