Accounting InformationSystems: An Overview Flashcards
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What is an Accounting Information System (AIS)?
An AIS is a collection of resources (people, equipment, etc.) that transforms financial and other data into useful information, whether manually or through a computerized system.
Who are the two main users of accounting information?
External users – Stockholders, investors, creditors, government agencies, customers, and vendors.
Internal users – Managers at different levels.
What are the three levels of management and their focus areas?
Top-Level Management → Strategic decision-making
Middle Management → Tactical decision-making
Lower-Level Management → Operational/Transaction-Oriented decision-making
What are the primary business processes?
Inbound Logistics
Outbound Logistics
Operations
Marketing
Service
What are the four transaction processing cycles?
Revenue Cycle: Sales, accounts receivable, and cash collection.
Expenditure Cycle: Purchasing, accounts payable, and cash disbursements.
Production Cycle: Manufacturing and inventory management.
Finance Cycle: Managing capital, debt, and investments.
Financial Reporting Cycle: Prepares financial statements using data from other cycles.
What are the five transaction processing cycles in accounting?
Revenue cycle (Sales, billing, cash collection)
Expenditure cycle (Purchasing, payments to suppliers)
Production cycle (Manufacturing and production activities)
Finance cycle (Managing cash, investments, and financing)
Financial reporting cycle (Compiling financial reports)
What makes the financial reporting cycle different from the other four transaction cycles?
The financial reporting cycle is different from the other four transaction cycles because it is not an operating cycle. Instead, it collects data from all cycles and processes it into financial reports to provide a complete picture of a company’s financial health.
What is the purpose of the internal control process?
This is a process designed to ensure:
o Reliability of financial reporting.
o Efficiency and effectiveness of operations.
o Compliance with laws and regulations.
What are the five elements of internal control?
Control environment (Company culture and policies)
Risk assessment (Identifying financial risks)
Control activities (Actions to reduce risks)
Information and communication (Timely reporting)
Monitoring (Ongoing review of controls)
How does the segregation of duties principle apply to the accounting function?
No single person or department should control its own accounting records.
Responsibilities should be divided to prevent fraud and errors.
What is internal auditing?
Internal auditing is an independent review within an organization that ensures compliance with policies and regulations and identifies weaknesses in internal controls.
What is the role of the information system function in an organization?
- The Information System (IS) Function is responsible for data processing and has evolved into a complex structure with specialized roles:
o Chief Information Officer (CIO): Oversees the entire IS function.
o Managers: Systems analysis, programming, operations, technical support, and user support.
o Specialists: Application analysts, programmers, database administrators, etc.
How has the information system function evolved over time?
From simple organizational structures to complex systems.
Now includes highly specialized IT professionals.
What are the main roles in an information system function?
Systems Analysts – Design and analyze systems.
Application Programmers – Develop and maintain software.
What is end-user computing (EUC)?
End-user computing (EUC) is when users directly use computers to process information using the hardware, software, and IT resources provided by the organization.
What is the difference between the traditional approach and the end-user approach to data processing?
The traditional approach relies on information system specialists for data processing, while the end-user approach allows users to directly access and process data using database software or personal computers.
What is quick-response technology, and how does it relate to Total Quality Performance (TQP)?
Quick-response technology improves speed and efficiency in business operations. It supports Total Quality Performance (TQP) by helping businesses do things right the first time, reducing errors, and enhancing customer satisfaction.
Technologies like Electronic Data Interchange (EDI) and barcode scanning enable fast, accurate data processing, which is crucial for quality management and customer satisfaction.
What technologies make quick-response systems feasible?
Quick-response systems are made possible by hardware and software standardization, Electronic Data Interchange (EDI) for fast data exchange, and UPC bar codes with scanning for quick and accurate tracking.
What are the benefits of web commerce for consumers and merchants
Consumers: No waiting in line for salespeople and
Merchants: Cost savings through automated ordering.
What is Electronic Data Interchange (EDI)?
The computer-to-computer exchange of business documents over a network.
How does EDI differ from email?
Email: Messages are created and interpreted by humans.
EDI: Messages are exchanged between computers automatically.
What is Computer-Integrated Manufacturing (CIM)?
An integrated IT approach in manufacturing to improve efficiency.
Helps reduce information costs and brings producers, suppliers, and customers closer through EDI.
Uses IT to integrate all aspects of manufacturing, from design to production to inventory control
What are the key components of a CIM system?
Computer-aided design (CAD) workstations
Real-time production monitoring and control systems
Order and inventory control systems
What is Electronic Funds Transfer (EFT)?
A payment system where processing and communication are primarily electronic.
Banks can interface with corporate EDI applications for automated transactions.
