Chapter 1

Question 1

We should recognize that information is a

Answer 1

business resource

Question 2

The tiers of the pyramid

Answer 2

1. Business operations
2. Operations management
3. Middle management
4. Top management

Question 3

External users fall into two groups:

Answer 3

trading partners and stakeholders

Question 4

are entities outside (or inside) the organization with a direct or indirect interest in the firm

Answer 4

Stakeholders

Question 5

is a group of two or more interrelated components or subsystems that serve a common purpose.

Answer 5

System

Question 6

System can be

Answer 6

natural or artificial

Question 7

What are the elements of a system?

Answer 7

1. Multiple Components
2. Relatedness
3. System versus subsystem
4. Purpose

Question 8

A system is called a _________ when it is viewed in relation to the larger system of which it is a part.

Answer 8

subsystem

Question 9

is the process of dividing the system into smaller sub-system parts.

Answer 9

System Decomposition

Question 10

This concept means a system’s ability to achieve its goal depends on the effective functioning and harmonious interaction of its subsystems. If a vital subsystem fails or becomes defective
and can no longer meet its specific objective, the overall system will fail to meet its objective

Answer 10

System Interdependency

Question 11

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

Answer 11

Information system

Question 12

two broad classes of systems emerge from the decomposition of a hypothetical manufacturing firm

Answer 12

1. AIS
2. MIS

Question 13

The information system accepts input, called

Answer 13

transactions

Question 14

Transactions fall into two classes:

Answer 14

financial transactions and nonfinancial transactions

Question 15

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

Answer 15

Transaction

Question 16

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 16

Financial Transaction

Question 17

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

Answer 17

Nonfinancial Transaction

Question 18

AIS features three major subsystems which are:

Answer 18

1. transaction processing system (TPS)
2. general ledger/financial reporting system (GL/FRS)
3. management reporting system (MRS

Question 19

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

Answer 19

management information system (MIS)

Question 20

is central to the overall function of the information system by converting economic events into financial transactions, recording financial transactions in the accounting records (journals and ledgers), and distributing essential financial information to operations personnel to support their daily operations.

Answer 20

Transaction Processing System (TPS)

Question 21

The TPS deals with business events that occurs

Answer 21

frequently

Question 22

because of their operational interdependency, they are generally viewed as a single integrated
system

Answer 22

general ledger system (GLS) and the financial reporting system (FRS)

Question 23

provides the internal financial information needed to manage a business. Managers must deal immediately with many day-to-day business problems, as well as plan and control their operations

Answer 23

Management Reporting System (MRS)

Question 24

The elements of the general model for AIS are

Answer 24

1. end users
2. data sources
3. data collection
4. data processing
5. database management
6. information generation
7. feedback

Question 25

__________ fall into two general groups: external and internal. External _____ include creditors, stockholders, potential investors, regulatory agencies, tax authorities, suppliers, and customers. Internal _______ include management at every level of the organization, as well as operations personnel

Answer 25

End users

Question 26

are financial transactions that enter the information system from both internal and external sources

Answer 26

Data Sources

Question 27

___________ are the most common source of data for most organizations.

Answer 27

External financial transactions

Question 28

is the first operational stage in the information system. The objective is to ensure that event data entering the system are valid, complete, and free from material errors

Answer 28

Data Collection

Question 29

Two rules govern the design of data collection procedures:

Answer 29

relevance and efficiency

Question 30

Once collected, data usually require ____________to produce information

Answer 30

processing (Data Processing)

Question 31

The organization’s________ is its physical repository for financial and nonfinancial data

Answer 31

database

Question 32

is the most elemental piece of potentially useful data in the database. An __________ is a logical and relevant characteristic of an entity about which the firm captures data

Answer 32

Data attribute

Question 33

is a complete set of attributes for a single occurrence within an entity class

Answer 33

Record

Question 34

is a complete set of records of an identical class

Answer 34

File

Question 35

Database management involves three fundamental tasks

Answer 35

Storage, Retrieval and Deletion

Question 36

___________ task assigns keys to new records and stores them in their proper location in the database

Answer 36

Storage

Question 37

is the task of locating and extracting an existing record from the database for processing

Answer 37

Retrieval

Question 38

is the task of permanently removing obsolete or redundant records from the database.

Answer 38

Deletion

Question 39

Information generation is the process of _____________________ information to users

Answer 39

compiling, arranging, formatting, and presenting

Question 40

Regardless of physical form, useful information has the following characteristics:

Answer 40

relevance, timeliness, accuracy, completeness, and summarization

Question 41

is a form of output that is sent back to the system as a source of data. _______ may be internal or external and is used to initiate or alter a process

Answer 41

Feedback

Question 42

Information System Objectives

Answer 42

1. To support the stewardship function of management 2. To support management decision making 3. To support the firm’s day-to-day operations

Question 43

refers to management’s responsibility to properly manage the resources of the firm

Answer 43

Stewardship

Question 44

Larger organizations with unique and frequently changing needs engage in in-house development. The formal process by which this is accomplished is called the

Answer 44

system development life cycle

Question 45

Three basic types of commercial software are

Answer 45

turnkey systems, backbone systems, and vendor-supported system

Question 46

are completely finished and tested systems that are ready for implementation. Typically, they are general-purpose systems or systems customized to a specific industry

Answer 46

Turnkey systems

Question 47

consist of a basic system structure on which to build. The primary processing logic is preprogrammed, and the vendor then designs the user interfaces to suit the client’s unique needs.

Answer 47

Backbone Systems

Question 48

are custom (or customized) systems that client organizations purchase commercially rather than develop in-house. Under this approach, the software vendor designs, implements, and maintains the system for its clients

Answer 48

Vendor-supported systems

Question 49

The value of information to a user is determined by its

Answer 49

reliability

Question 50

Information reliability rests heavily on the concept of

Answer 50

accounting independence

Question 51

Under the ____________________, all data processing is performed by one or more large computers housed at a central site that serve users throughout the organization.

Answer 51

centralized data processing model

Question 52

The information needs of users are met by two related functions:

Answer 52

systems development and systems maintenance

Question 53

An alternative to the centralized model is the concept of ___________________. Simply stated, ____ involves reorganizing the IT function into small information processing units (IPUs) that are distributed to end users and placed under their control. IPUs may be distributed according to business function, geographic location, or both.

Answer 53

distributed data processing (DDP)

Question 54

DISADVANTAGES OF DDP

Answer 54

1. Mismanagement of company resources 2. Hardware and software incompatibility 3. Redundant tasks and data 4. Consolidating tasks usually segregated 5. Difficulty attracting qualified personnel 6. Lack of standards 7. Loss of control

Question 55

ADVANTAGES OF DDP

Answer 55

1. Cost reductions 2. Improved cost control responsibility 3. Improved user satisfaction 4. Backup

Question 56

The ____________ is the oldest and most traditional form of accounting systems. _____________ constitute the physical events, resources, and personnel that characterize many business processes

Answer 56

manual process model

Question 57

The flat-file approach is most often associated with so-called

Answer 57

legacy systems

Question 58

The _______ model describes an environment in which individual data files are not related to other files

Answer 58

flat-file

Question 59

significant problems in the flat-file environment:

Answer 59

data storage, data updating, and currency of information

Question 60

Another problem with the flat-file approach is the user’s inability to obtain additional information as his or her needs change. This problem is called

Answer 60

task-data dependency

Question 61

The flat-file approach is a single-view model. Files are structured, formatted, and arranged to suit the specific needs of the owner or primary user of the data. Such structuring, however, may exclude data attributes that are useful to other users, thus preventing successful

Answer 61

data integration

Question 62

is an accounting framework for modeling an organization’s critical resources, events, and agents and the relationships between them

Answer 62

REA model

Question 63

are the assets of the organization

Answer 63

Economic resources

Question 64

are phenomena that affect changes in resources

Answer 64

Economic events

Question 65

are individuals and departments that participate in an economic event

Answer 65

Economic agents

Question 66

is an information system model that enables an organization to automate and integrate its key business processes. ERP breaks down traditional functional barriers by facilitating data sharing, information flows, and the introduction of common business practices among all organizational users

Answer 66

Enterprise resource planning (ERP)