Chapter 1

Question 1

A set of two or more interrelated components that interact to achieve a goal is

Answer 1

A system

Question 2

The results when a subsystem achieve its goals while contributing to the organization’s overall goal

Answer 2

Goal congruence

Question 3

Goal conflict may result when

Answer 3

A decision or action of a subsystem is inconsistent with he system as a whole

Question 4

Facts that are collected, recorded, stored and processed by an information system

Answer 4

Data

Question 5

Information is

Answer 5

Data that have been organized and processed to provide meaning to a user

Question 6

Data are

Answer 6

Facts entered, stored, and processed by an information system

Question 7

Which of the following statements below shows the contrast between data and information?

Answer 7

Information is the primary output of an AIS

Question 8

Information is

Answer 8

Data that have been organized and processed so that it’s meaningful

Question 9

Humans can absorb and process only so much information. Information ___ occurs whenbthose limits are passed.

Answer 9

Overload

Question 10

The value of information can be best defined as

Answer 10

The benefits produced by possessing and using the information minus the cost of producing it

Question 11

The benefit produced by information minus the cost of producing it

Answer 11

Value of information

Question 12

An accounting infornation system (AIS) peocesses _____ to provide users with ____

Answer 12

Data; information

Question 13

How many components ate found in AIS?

Answer 13

Six

Question 14

An accounting information system in part consists of

Answer 14

People, procedures, data, software, and information technology infrastructure

Question 15

Information that reduces uncertainty, improves decision makers’ ability to make predictions, or confirms or corrects their prior expectations, is said to be

Answer 15

Relevant

Question 16

Information that is free from error or bias and accurately represents the events or activities of the organization is

Answer 16

Reliable

Question 17

Information that does not omit important aspects of the underlying events or activities that it measures is

Answer 17

Complete

Question 18

When two knowledgeable people acting independently each produce the same information, this information is said to be

Answer 18

Verifiable

Question 19

Data must be converted into information to be considered useful and meaningful for decision-making. There are six characteristics that make information both useful and meaningful. If information is free from error or bias and accurately represents the events or activities of the organization, it is representative of the characteristic of

Answer 19

Reliability

Question 20

The primary consideration when producing this type of information is that its benefits exceeds its costs.

Answer 20

Discretionary information

Question 21

An AIS is a system of six interrelated components that interact to achieve a goal. One of these components, which includes both manual and automated activities that involve collecting, processing, and storing data, is known as

Answer 21

Procedures and instructions

Question 22

An accounting information system must be able to perform which of the following tasks?

Answer 22

• collect transaction data
• process transaction data
• provide adequate controls

Question 23

Which of the following is not an example of a common activity in an AIS?

Answer 23

recording of sales calls for marketing purposes

Question 24

Which of the following is not one of the components of an AIS?

a) Internal controls and security measures
b) People
c) Procedures and instructions
d) Software and hardware

Answer 24

D. Software and hardware

Question 25

An AIS must be able to fulfill three important functions in any organization. One such function is the collecting and storing of data about activities performed by the organization. One group that relies on both the adequate collection and transformation of data for decision-making purposes for an organization is

a) management.
b) interested outsiders.
c) competitors.
d) the government.

Answer 25

A. Management

Question 26

The primary objective of accounting is to
a) implement strong internal controls.
b) provide useful information to decision makers.
c) prepare financial statements.
d) ensure the profitability of an organization.

Answer 26

B. Provide useful information to decision makers

Question 27

The Financial Accounting Standards Board (FASB), in its Statement of Financial Accounting Concepts No. 2, has defined accounting as

a) an information identification, development, measurement, and communication process.
b) a way to provide adequate controls to safeguard an organization’s assets.
c) being an information system.
d) a way to collect and transform data into useful information.

Answer 27

C. Being an information system

Question 28

Which activity below would not be considered to be a “top” accountant work activity?

a) process improvement
b) input into future product marketing initiatives
c) long-term strategic planning
d) computer systems and operations

Answer 28

B. Input into future product marketing initiatives

Question 29

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 Management Accountant.
b) the Certified Information Technology Professional.
c) the Certified Internal Auditor.
d) the Certified Data Processing Professional.

Answer 29

B. The Certified Information Technology Professional

Question 30

An analysis conducted by the Institute of Management Accountants shows that the most important activities performed by corporate accountants relate to

a) customer and product profitability.
b) internal consulting.
c) process improvement.
d) accounting systems and financial reporting

Answer 30

d) accounting systems and financial reporting

Question 31

The primary focus of an AIS course, as opposed to other IS courses, is on

a) application of information technology.
b) use of accounting software.
c) understanding how information technology can be used to improve AIS processes.
d) preparation of financial statements.

Answer 31

c) understanding how information technology can be used to improve AIS processes.

Question 32

The AIS must include controls to ensure

a) safety and availability of data.
b) marketing initiatives match corporate goals.
c) information produced from data is accurate.
d) both A and C

Answer 32

d) both A and C

Question 33

A change in the AIS that makes information more easily accessible and widely available within an organization is most likely to first influence the

a) organizational culture.
b) customer base.
c) external financial statement users.
d) production activity.

Answer 33

a) organizational culture.

Question 34

The process of creating value for customers is the result of nine activities (five primary and four support) that taken together form a

a) value chain.
b) profitable operation.
c) successful business.
d) support system.

Answer 34

a) value chain.

Question 35

The value chain concept is composed of two types of activities known as

a) primary and support.
b) primary and secondary.
c) support and value.
d) technology and support.

Answer 35

a) primary and support.

Question 36

Which of the following is a primary activity in the value chain?
a) infrastructure
b) technology
c) purchasing
d) marketing and sales

Answer 36

d) marketing and sales

Question 37

In value chain analysis, what is the activity of arranging the delivery of products to customers called?

a) outbound logistics
b) inbound logistics
c) shipping
d) delivery

Answer 37

a) outbound logistics

Question 38

An AIS provides value by

a) improving products or services through information that increases quality and reduces costs.
b) providing timely and reliable information to decision makers.
c) creating new products.
d) both A and B

Answer 38

d) both A and B

Question 39

In Chapter 1, Figure 1-2 shows the factors that influence the design of AIS. The diagram shows a bi-directional arrow between the organizational culture and the AIS. The reason for this two-way interchange between organizational culture and AIS is

a) that the AIS should not influence the values of the organizational culture.
b) because the organization’s culture influences the AIS, and likewise the AIS influences the organization’s culture by controlling the flow of information within the organization.
c) due to the transfer of managers between the two corporate elements.
d) the AIS impacts the organization’s key strategies.

Answer 39

b) because the organization’s culture influences the AIS, and likewise the AIS influences the organization’s culture by controlling the flow of information within the organization.

Question 40

The objective of the majority of organizations is to provide value to their customers. The activities that support such an objective can be conceptualized as forming a value chain. Within this value chain, logistics plays an important role. Logistics is both
inbound and outbound in nature. An example of inbound logistics would consist of

a) the activities that transform inputs into final products or services.
b) the activities that help customers to buy the organization’s products or services.
c) the activities that provide post-sale support to customers.
d) the activities that consist of receiving, storing, and distributing the materials used as inputs by the organization to create goods and/or services it sells.

Answer 40

distributing the materials used as inputs by the organization to create goods and/or services it sells.

Question 41

A good example of how an AIS is used to share knowledge within an organization is

a) the use of an expert system to help staff identify the relevant experts who can help with a particular client.
b) the use of laptop computers to access a network for messaging worldwide.
c) the monitoring of production equipment to watch for defects.
d) the use of point-of-sale data to determine hot-selling items.

Answer 41

a) the use of an expert system to help staff identify the relevant experts who can help with a particular client.

Question 42

Within the value chain conceptual framework, organizations also perform a number of other support activities that enable the five primary value chain activities to be performed efficiently and effectively. One such support activity is research and
development. This activity can be identified as a

a) firm infrastructure activity.
b) human resources activity.
c) technology activity.
d) purchasing activity.

Answer 42

c) technology activity.

Question 43

Within the value chain conceptual framework, AIS is shown as a support activity. The AIS is of value to an organization when it provides accurate and timely information to help support the five primary value chain activities. When the AIS provides information in a timely and accurate manner, it stands as an example of

a) improved decision making.
b) improving the quality and reducing the costs of products or services.
c) improving efficiency.
d) All of the above

Answer 43

d) All of the above

Question 44

A decision situation that is non-routine and for which no established framework exists for making the decision is called a(n) __________ decision.

a) structured
b) semi structured
c) unstructured
d) strategic

Answer 44

c) unstructured

Question 45

A decision that is repetitive, routine and well understood is

a) structured
b) semistructured
c) unstructured
d) strategic

Answer 45

a) structured

Question 46

Which of the following is an example of a strategic planning decision?

a) setting financial and accounting policies
b) conducting a performance evaluation
c) budgeting
d) developing human resource practices

Answer 46

a) setting financial and accounting policies

Question 47

Decisions about the effective and efficient execution of specific tasks are concerned with

a) operational control.
b) management control.
c) strategic planning.
d) tactical planning.

Answer 47

a) operational control.

Question 48

Budgeting and human resource practices are examples of

a) operational control
b) management control
c) strategic planning
d) tactical planning

Answer 48

b) management control

Question 49

Accounting information plays major roles in managerial decision making by

a) identifying situations requiring management action.
b) reducing uncertainty.
c) providing a basis for choosing among alternative actions.
d) all of the above

Answer 49

d) all of the above

Question 50

Business activities that pertain to product pricing, discount and credit terms, and identifying the most and least profitable items are part of the __________ activity in the organization’s value chain.

a) service
b) marketing and sales
c) operations
d) inbound logistics

Answer 50

b) marketing and sales

Question 51

A principal focus of AIS is to assist with the decision-making function of an organization. The degree of support AIS can provide depends on the type of decision being made. Decisions are categorized in terms of the degree of existing structure or the effect of their scope. From the items below, select the description that is an example of a semi-structured decision.

a) selecting basic research projects to undertake
b) setting a marketing budget for a new product
c) extending credit to an established customer
d) hiring a senior manager

Answer 51

b) setting a marketing budget for a new product

Question 52

Regarding decision scope, which statement below is true?

a) Operational control is concerned with the effective and efficient use of resources for accomplishing organizational objectives.
b) Management control is concerned with the effective and efficient performance of specific tasks.
c) Strategic planning is concerned with establishing organizational objectives and policies for accomplishing those objectives.
d) There is no real correlation between a manager’s level in an organization and his or her decision-making responsibilities.

Answer 52

c) Strategic planning is concerned with establishing organizational objectives and policies for accomplishing those objectives.

Question 53

A well-designed AIS can improve the decision-making function within the organization. Which statement below would describe a limitation, rather than a benefit, of an efficient AIS?

a) An AIS reduces uncertainty, and therefore accounting information can provide a basis for choosing among alternative courses of action.
b) 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.
d) An AIS provides information about the results of previous decisions which provides decision makers with feedback that can be used in future decision
making.

Answer 53

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

Question 54

A strategic position is important to the success and growth of any organization. Harvard professor Michael Porter has identified three basic strategic positions. Which statement below is false regarding these basic strategic positions?

a) The three basic strategic positions are mutually exclusive of each other.
b) Part of a needs-based strategic position is to identify a target market.
c) An access-based strategic position involves serving a subset of customers who differ from other customers in terms of geographic location or size.
d) A variety-based strategic position involves producing or providing a subset of the industry’s products or services.

Answer 54

a) The three basic strategic positions are mutually exclusive of each other.

Question 55

A strategic position is important to the success and growth of any organization. Harvard professor Michael Porter has identified two basic business strategies. Which statement below is false regarding these basic strategies?

a) A product differentiation strategy entails adding features or services not provided by competitors to a product so customers can be charged a premium price.
b) A low-cost strategy entails striving to be the most efficient producer of a product or service.
c) Sometimes a company can succeed in both producing a better product and achieving low costs.
d) The two basic strategic positions are mutually exclusive.

Answer 55

d) The two basic strategic positions are mutually exclusive.

Question 56

According to Michael Porter, to be successful in the long run, a company must

a) deliver greater value to customers and/or create comparable value at a lower cost.
b) maximize profits.
c) maximize shareholder value.
d) both B and C

Answer 56

a) deliver greater value to customers and/or create comparable value at a lower cost.

Question 57

A variety-based strategic position involves

a) trying to serve most or all of the needs of a particular group of customers.
b) serving a subset of customers who differ from other customers.
c) providing a subset of the industry’s products or services.
d) serving all needs of all customers.

Answer 57

c) providing a subset of the industry’s products or services.

Question 58

A needs-based strategic position involves

a) trying to serve most or all of the needs of a particular group of customers.
b) serving a subset of customers who differ from other customers.
c) providing a subset of the industry’s products or services.
d) serving all needs of all customers.

Answer 58

a) trying to serve most or all of the needs of a particular group of customers.

Question 59

An access-based strategic position involves

a) trying to serve most or all of the needs of a particular group of customers.
b) serving a subset of customers who differ from other customers.
c) providing a subset of the industry’s products or services.
d) serving all needs of all customers.

Answer 59

b) serving a subset of customers who differ from other customers.

Question 60

The Internet has changed the way many processes are performed in business today. The Internet has had a material effect on the five primary characteristics in the value chain and on the strategy adopted by businesses that incorporate use of the Web into their business systems. Which statement below is true regarding the Internet relative to a strategic position that a business may adopt?

a) Use of the Internet has reduced the power of buyers.
b) The Internet has increased the barriers to entry in many industries.
c) Use of the Internet reduces pressure to compete on price.
d) The most important effect of the development of the Internet in business is the increased importance of adopting a viable business strategy.

Answer 60

d) The most important effect of the development of the Internet in business is the increased importance of adopting a viable business strategy.

Question 61

“Tasa Mamaq!” is a New York restaurant that specializes in the cuisine of Greenland. In addition to prawns, seal, and halibut prepared in the traditional style, the restaurant offers a signature dish of braised sea urchin with fermented herring that is truly unique. Which of the following best describes the strategy and strategic position of this business?

a) Product differentiation strategy combined with a variety-based strategic position.
b) Product differentiation strategy combined with a needs-based strategic position.
c) Product differentiation strategy combined with an access-based strategic position.
d) Low-cost strategy combined with a variety-based strategic position.
e) Low-cost strategy combined with a needs-based strategic position.
f) Low-cost strategy combined with an access-based strategic position.

Answer 61

a) Product differentiation strategy combined with a variety-based strategic position.

Question 62

Clint Smith operates a machine shop in Burbank, California. He places bids on small lot production projects submitted by firms throughout the Los Angeles area. By using the latest automation technology, Smith is able to keep prices low enough to ensure a backlog of projects and steady growth. Which of the following best describes the strategy and strategic position of this business?

a) Product differentiation strategy combined with a variety-based strategic position.
b) Product differentiation strategy combined with a needs-based strategic position.
c) Product differentiation strategy combined with an access-based strategic position.
d) Low-cost strategy combined with a variety-based strategic position.
e) Low-cost strategy combined with a needs-based strategic position.
f) Low-cost strategy combined with an access-based strategic position.

Answer 62

e) Low-cost strategy combined with a needs-based strategic position.

Question 63

Balcony Landscaping markets its unique services to condominium residents in West Palm Beach, Florida, who want to maintain gardens on their balconies. The service includes watering, trimming, weeding, feeding, pest control, and, of course, the design and installation of balcony gardens. Which of the following best describes the strategy and strategic position of this business?

a) Product differentiation strategy combined with a variety-based strategic position.
b) Product differentiation strategy combined with a needs-based strategic position.
c) Product differentiation strategy combined with an access-based strategic position.
d) Low-cost strategy combined with a variety-based strategic position.
e) Low-cost strategy combined with a needs-based strategic position.
f) Low-cost strategy combined with an access-based strategic position

Answer 63

c) Product differentiation strategy combined with an access-based strategic position.

Question 64

Sneezle Industries, Inc., is an Erie, Pennsylvania, firm that specializes in the mass production of injection-molded plastic components for the automobile industry. Because of product liability issues, these components must be subjected to carefully
documented quality assurance testing. Which of the following best describes the strategy and strategic position of this business?

a) Product differentiation strategy combined with a variety-based strategic position.
b) Product differentiation strategy combined with a needs-based strategic position.
c) Product differentiation strategy combined with an access-based strategic position.
d) Low-cost strategy combined with a variety-based strategic position.
e) Low-cost strategy combined with a needs-based strategic position.
f) Low-cost strategy combined with an access-based strategic position.

Answer 64

f) Low-cost strategy combined with an access-based strategic position.

Question 65

Companies often purchase an off-the-shelf software package and then hire a programming firm to add additional capabilities specific to their particular needs. Bodhisattva Software has a partnership agreement with the manufacturer of a well known accounting information system for medium-sized businesses. This relationship provides Bodhisattva with unique access to the system’s functionality that allows it to provide services not available from other programming firms. Based on this relationship, Bodhisattva hopes to dominate the software customization market for the system. Which of the following best describes the strategy and strategic position of this business?

a) Product differentiation strategy combined with a variety-based strategic position.
b) Product differentiation strategy combined with a needs-based strategic position.
c) Product differentiation strategy combined with an access-based strategic position.
d) Low-cost strategy combined with a variety-based strategic position.
e) Low-cost strategy combined with a needs-based strategic position.
f) Low-cost strategy combined with an access-based strategic position.

Answer 65

b) Product differentiation strategy combined with a needs-based strategic position.

Question 66

Designer Dry Cleaning of Chicago only cleans designer clothing created using unique materials (including latex) and having unusual cleaning requirements. It competes on price with other dry cleaning establishments, including several local chains, that offer similar cleaning services. The owner of DDS asserts that, since they don’t try to do it all, they do what they do better and that they don’t have customers, they have clientele. Which of the following best describes the strategy and strategic position of this business?

a) Product differentiation strategy combined with a variety-based strategic position.
b) Product differentiation strategy combined with a needs-based strategic position.
c) Product differentiation strategy combined with an access-based strategic position.
d) Low-cost strategy combined with a variety-based strategic position.
e) Low-cost strategy combined with a needs-based strategic position.
f) Low-cost strategy combined with an access-based strategic position.

Answer 66

d) Low-cost strategy combined with a variety-based strategic position.

Question 67

Jill Fredson is in charge of the mail room at Gammon University. Every Friday morning she receives a report via email that summarizes the number of outgoing and incoming pieces of mail by source and destination department. Every Friday afternoon, Jill deletes the report without reading it because it has no bearing on mail room operations. Which of the following characteristics of useful information is absent in the situation described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 67

a) Relevant

Question 68

Inventory information is provided in real time by a firm’s accounting information system. The accuracy of this information is questionable, however, since the production manager often reports stock outs of components that the system indicates are in stock. Which of the following characteristics of useful information is absent in the situation described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 68

b) Reliable

Question 69

Joe Marzetti has been the controller of Fairview Tires for 25 years. Ownership of the firm recently changed hands and the new owners are conducting an audit of the financial records. The audit has been unable to reproduce financial reports that were prepared by Marzetti. While there is no evidence of wrongdoing, the auditors are concerned that the discrepancies might contribute to poor decisions. Which of the following characteristics of useful information is absent in the situation described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 69

f) Verifiable

Question 70

In 2003, Custer Manufacturing implemented a Web-based information system that allows all employees to access mission-critical information. The intention was to increase production efficiency. Unfortunately, it had the opposite effect, as deliveries fell behind schedule and costs increased. Jeff Akspen, the director of information technology services, asked Joyce Jenkins to come in and talk with him about the system. Joyce is a long-time employee of Custer, and her opinion is valued by her peers and by her supervisor.
“So Joyce, how’s it going down there in the shop?”
“Not so good, Jeff. Used to be we got a weekly pick list so we knew how to plan production. Now, we got that computer system. Most of us can’t figure out how to use it to do our jobs. Is there some way to print out a pick list?”
Jeff thought for a while before responding. “Well, Joyce, to tell you the truth, I’m not so sure how to do it myself, but there must be a way. We’ll bring in the consultants that helped us build the system. Maybe they can help.”

Which of the following characteristics of useful information is absent in the situation described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 70

e) Understandable

Question 71

Razzmataz, Wisconsin, is a popular tourist destination. During the winter months, the population dwindles to a meager few, but when summer comes, the size of the town surges. Chuck Hewitt is the town sanitation engineer. When the size of the town surges, so do his responsibilities. Among them is management of the sewage processing volume.
In an interview with the local paper, Chuck complained that a report on tourist population that he uses to adjust processing volume refers to data that was collected five days ago and it takes him a week to make adjustments.
Which of the following characteristics of useful information is absent in the situation
described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 71

d) Timely

Question 72

A frantic Stro Frinzel called the home office from Des Moines.
“You have got to help me. I am about to close a great sale, but I have to be able to guarantee delivery by the fourteenth. I can’t get through to the company Web site to verify delivery!”
“Thank you for calling. Your call is very important to us. However, all of our lines are currently in use. Please try again later.”
Which of the following characteristics of useful information is absent in the situation described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 72

g) Accessible

Question 73

Message left on an answering machine: “Hi Bob! Just got into town. How about dinner this evening if you’re available. Call me!”
Which of the following characteristics of useful information is absent in the situation described above?

a) Relevant
b) Reliable
c) Complete
d) Timely
e) Understandable
f) Verifiable
g) Accessible

Answer 73

c) Complete

Question 74

Robinson Crusoe has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Friday, who manages the carving process. Monday is the newest employee. She collects the coconuts. Tuesday, as you might expect, takes calls from customers, oops, I mean customers, who are unhappy with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon they drift to the wholesaler. Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.
Which of the following functions in the value chain is Monday performing?

a) Inbound logistics
b) Operations
c) Outbound logistics
d) Marketing and sales
e) Service

Answer 74

a) Inbound logistics

Question 75

Robinson Crusoe has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Friday, who manages the carving process. Monday is the newest employee. She collects the coconuts. Tuesday, as you might expect, takes calls from customers, oops, I mean customers, who are unhappy with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon they drift to the wholesaler. Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.
Which of the following functions in the value chain is Friday performing?

a) Inbound logistics
b) Operations
c) Outbound logistics
d) Marketing and sales
e) Service

Answer 75

b) Operations

Question 76

Robinson Crusoe has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Friday, who manages the carving process. Monday is the newest employee. She collects the coconuts. Tuesday, as you might expect, takes calls from customers, oops, I mean customers, who are unhappy with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon they drift to the wholesaler. Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.
Which of the following functions in the value chain is Wednesday performing?

a) Inbound logistics
b) Operations
c) Outbound logistics
d) Marketing and sales
e) Service

Answer 76

c) Outbound logistics

Question 77

Robinson Crusoe has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Friday, who manages the carving process. Monday is the newest employee. She collects the coconuts. Tuesday, as you might expect, takes calls from customers, oops, I mean customers, who are unhappy with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon they drift to the wholesaler. Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.
Which of the following functions in the value chain is Thursday performing?

a) Inbound logistics
b) Operations
c) Outbound logistics
d) Marketing and sales
e) Service

Answer 77

d) Marketing and sales

Question 78

Robinson Crusoe has formed a business that sells carved gourmet coconuts. He has hired five employees. The most senior is Friday, who manages the carving process. Monday is the newest employee. She collects the coconuts. Tuesday, as you might expect, takes calls from customers, oops, I mean customers, who are unhappy with their coconuts. Wednesday tosses finished coconuts into the sea, whereupon they drift to the wholesaler. Thursday sends smoke signals to the wholesaler extolling the virtues of the latest production run of nuts that are drifting across the bay.
Which of the following functions in the value chain is Tuesday performing?

a) Inbound logistics
b) Operations
c) Outbound logistics
d) Marketing and sales
e) Service

Answer 78

e) Service

Question 79

Refer to the chart above. At what point, measured in terms of the net cost of
information, does information overload begin?

a) 0
b) 5
c) 10
d) 12

Answer 79

c) 10

Question 80

Tri-Anything, Limited, is a British company operating in New York state. It offers stylized, boutique public relations services to upscale retailers in quaint New England towns. A major source of revenue is a weekly newsletter that reports on current and projected tourist travel and spending patterns. Preparation of the newsletter requires study and analysis of weather conditions, economic activity, and travel costs. It is available at an annual subscription rate of $299.99. There are currently 190 subscribers. Preparation and distribution of the newsletter costs $12,000 annually. The value of information to subscribers is:

a) $236.83
b) $44,998.10
c) Less then $63.16
d) At least $300.00

Answer 80

d) At least $300.00

Question 81

Define the concept of a system.

Answer 81

A system is a set of two or more components that are somehow interrelated and
interact together to achieve a specific goal.

Question 82

Define data, information, and how the value of information is determined.

Answer 82

Data: facts that are collected, entered, recorded, stored, and processed by an AIS.

Information: data that has been organized and processed and is meaningful to its users. Such information is accessible, relevant, timely, reliable, verifiable, complete, and understandable. Information is of value when the benefits received from using or acting upon it outweighs the cost to produce the information.

Question 83

Define an accounting information system.

Answer 83

An AIS is a system that collects, records, stores, and processes data to produce
information for decision makers

Question 84

Identify the components of an accounting information system.

Answer 84

A well-designed AIS consists of people, procedures and instructions, data, software, information technology infrastructure, and internal controls and security measures.

Question 85

What is the CITP designation and why is it important to AIS?

Answer 85

The CITP designation stands for “Certified Information Technology Professional.” It is awarded to CPAs who have demonstrated a broad range of knowledge and skill sets in the areas of accounting and information systems and technology. The AICPA (American Institute of CPAs) has acknowledged the importance and close relationship that accounting and information systems share in creating this specialty designation for accounting information system professionals.

Question 86

Differentiate between an AIS course and other accounting courses.

Answer 86

Other accounting courses assume the preparation or reporting of accounting information is for external or internal users. However, the AIS course focuses on the flow of accounting information in the organization from a systems perspective. The AIS course traces the origin, processing, storing, and ultimate disposal of information. An AIS course also focuses on business processes, organization structure, information systems, and corporate planning and goals.

Question 87

Harvard professor Michael Porter contends that for a company to be successful in the long run it “must deliver greater value to customers or create comparable value at a lower cost, or do both” and suggests three strategic positions. Describe these strategic positions. How do these strategic positions relate to financial and managerial accounting information given?

Answer 87

The three strategic positions described are: a) a variety-based strategic position that involves producing or providing a subset of the industry’s products or services; b) a needs-based strategic position that involves trying to serve most or all of the needs of a particular group of customers in a target market; and c) an access-based strategic position that involves serving a subset of customers who differ from other customers in terms of factors such as geographic location or size which create different requirements for serving those customers. AIS that has been properly designed can support an organization in attaining and maintaining a strategic position. Such an information system can be a valuable asset in helping the organization to maintain a competitive position in the marketplace.

Question 88

What is the purpose behind the five primary activities in the value chain?

Answer 88

The goal of the five primary activities in the value chain is to facilitate the business in providing value to its customers. The five primary activities allow the business to create, market, and deliver its products and services to its customers, as well as providing post sale support

Question 89

Name the primary activities of a firm’s value chain.

Answer 89

Inbound logistics, operations, outbound logistics, marketing and sales, and service.

Question 90

How can an AIS add value to the organization?

Answer 90

An AIS can increase the efficiency and effectiveness of the value chain by improving the quality and lowering costs of products or services, improving efficiency of operations, improving decision making, enhancing the sharing of knowledge, improving the efficiency and effectiveness of its supply chain and improving the internal control structure.

Question 91

How can a well-designed AIS improve the efficiency and effectiveness of a company’s value chain?

Answer 91

The AIS can be designed to allow customers direct access to a company’s inventory and sales order entry systems. This allows the customer to do more of the work that traditionally has been done by sales, marketing, and administration personnel. This allows for faster ordering, and cuts the company’s labor costs. It may also have the effect of allowing the customer more control in a purchase transaction that may bring more satisfaction and value to the customer.