chapter 1

Question 1

information objectives

Answer 1

To support the firm’s day-to-day operations

to support management decision making

to support the stewardship function of managment

Question 2

Operations personnel use information to assist
them in the efficient and effective discharge of their daily tasks.

Answer 2

To support the firm’s day-to-day operations

Question 3

Managers use information to assist them in planning
and control decisions related to their areas of responsibility.

Answer 3

support management decision making

Question 4

Stewardship refers to managers’
responsibility to properly manage the resources of the firm and to report on their activities.
External users receive stewardship information through traditional financial statements
and other mandated reports.

Answer 4

to support the stewardship function of management

Question 5

the set of formal procedures by which data are collected, stored, processed
into information, and distributed to users.

Answer 5

information system

Question 6

information system accepts inputs, called

Answer 6

transaction

Question 7

is an event that affects or is of interest to the organization and is processed by its
information system as a unit of work.

Answer 7

transaction

Question 8

3 management tiers

Answer 8

1. top management
2. middle management
3. operations management

Question 9

directly responsible for controlling day-to-day operations.

Answer 9

operations management

Question 10

accountable for the short-term planning and coordination of activities necessary to accomplish
organizational objectives

Answer 10

middle management

Question 11

responsible for longer-term planning and setting
organizational objectives.

Answer 11

top management

Question 12

is an economic event that affects the assets and equities of the organization,
is reflected in its accounts, and is measured in monetary terms.

Answer 12

financial transaction

Question 13

are events that do not meet the narrow definition of a financial transaction.

Answer 13

nonfinancial transactions

Question 14

process financial transactions and nonfinancial transactions that directly affect the
processing of financial transactions.

Answer 14

AIS Subsystems

Question 15

three major subsystems of AIS

Answer 15

transaction processing system (TPS),

general ledger/financial reporting system (GL/FRS),

management reporting system (MRS),

Question 16

supports daily business operations with numerous reports, documents, and messages for
users throughout the organization;

Answer 16

transaction processing system (TPS),

Question 17

which produces the traditional financial statements, such as the income statement, balance sheet,
statement of cash flows, tax returns, and other reports required by law

Answer 17

general ledger/financial reporting system (GL/FRS),

Question 18

provides internal management with special-purpose financial
reports and information needed for decision making such as budgets, variance reports, and
responsibility reports. We

Answer 18

management reporting system (MRS),

Question 19

processes nonfinancial transactions that are not normally processed
by traditional AIS.

Answer 19

Management Information System

Question 20

central to the overall function of the information system. It converts economic events
into financial transactions, records financial transactions in the accounting records (journals and
ledgers), and distributes essential financial information to operations personnel to support their
daily operations.

Answer 20

TPS

Question 21

TPS consists of three transaction cycles

Answer 21

the revenue cycle,
the expenditure cycle, and the conversion cycle.

Question 23

Because of their operational interdependency,
however, they are generally viewed as a single integrated system—

Answer 23

General Ledger/Financial Reporting Systems

Question 24

The FRS measures the status of financial resources and the changes in
those resources and communicate this information to external users.

Answer 24

nondiscretionary reporting

Question 25

provides the internal financial information needed to manage a business.

Answer 25

MRS Management Reporting System

Question 25

Typical reports produced by the MRS include budgets, variance reports, cost-volume-profit
analyses, and reports using current (rather than historical) cost data.

Answer 25

discretionary reporting

Question 26

include creditors,
stockholders, potential investors, regulatory agencies, tax authorities, suppliers, and customers.

Answer 26

external users

Question 26

include management at all levels of the organization as well as operations personnel.

Answer 26

internal users

Question 28

are facts,
which may or may not be processed

Answer 28

data

Question 29

defined simply as processed data, but
this definition is inadequate. Information is determined by the effect it has on the user, not by its
physical form.

Answer 29

information

Question 30

triggers users to take actions that
support their day-to-day business tasks, resolve conflicts, and plan for the future

Answer 30

information

Question 31

are financial transactions that enter the information system from either internal or
external sources.

Answer 31

data sources

Question 32

most common source of data.

Answer 32

External financial transactions

Question 33

involve the exchange or movement of
resources within the organization.

Answer 33

Internal financial transactions

Question 34

is the first operational stage in the information sys

Answer 34

data collection

Question 35

Once collected, data usually require processing to produce information

Answer 35

Data Processing

Question 36

physical repository for financial and nonfinancial data

Answer 36

database