CHAPTER 1
THE INFORMATION SYSTEM: AN ACCOUNTANT’S PERSPECTIVE
REVIEW QUESTIONS
1. Operational, operations management, middle management, and top management.
Horizontal flows support operation-level tasks. The information is highly detailed
about the day-to-day operations. Vertical flows distribute summarized information to
managers at all levels, and this information flows upward. Instructions, quotas, and
budgets also flow downward.
2. Data are facts that are collected in a “raw” form and made meaningful through
processes such as sorting, aggregating, classifying, mathematically manipulating,
and summarizing. The meaningful data is considered to be information. Information
Systems are the formal procedures by which data are collected, stored and
processed into the system and distributed to users.
3. AISs process financial transactions and certain nonfinancial transactions that directly
affect the processing financial transactions. The external financial reporting
documents of AIS are subject to legal and professional standards. Consequently,
management and accountants have greater legal responsibility for AIS applications
than for MIS applications. The MIS processes nonfinancial transactions that are
outside the scope of the AIS. MIS applications expand the information set provided
to such areas as production, sales, marketing, and inventory management. MIS
often draws from and builds on data from the AIS.
4. Revenue cycle, expenditure cycle, and conversion cycle.
, Chapter 1 Page 2
5. Reports used by management, which the company is not obligated by law,
regulation, or contract to provide. These are often used for internal problem-solving
issues rather than by external constituents.
6. Relevance, accuracy, completeness, summarization, and timeliness.
7. Relevance and efficiency.
8. Data attribute (field), record, file, and database.
9. Storage, retrieval, and deletion.
10. Feedback is output that is sent back to the system as a source of data. Feedback is
useful because it can be used to initiate or adjust the system processes.
11. A. to support the stewardship function of management,
B. to support the decision-making processes of managers, and
C. to support the day-to-day operations of the firm.
12. Stewardship is the responsibility of management to properly utilize the resources of
the firm entrusted to them. Information systems provide management with reports to
better manage the resources and also provide responsibility reports by which
management may be evaluated.
13. A. Materials Management
1. purchasing
2. receiving
3. stores
B. Production
1. production planning
, Chapter 1 Page 3
2. quality control
3. maintenance
C. Marketing
1. advertising
2. market research
3. sales order processing
D. Distribution
1. warehousing
2. shipping
E. Personnel
1. recruiting
2. training
3. benefits
4. counseling
F. Finance
1. portfolio management
2. treasury
3. credit
4. cash disbursement
5. cash receipt
G. Accounting
1. inventory control
2. cost accounting
, Chapter 1 Page 4
3. payroll
4. accounts payable
5. accounts receivable
6. billing
7. fixed-asset accounting
8. general ledger
H. Computer Service
1. data processing
2. systems development and maintenance
3. database administration
14. Internal auditors are responsible for in-house appraisal of the financial reporting
system. Internal auditors are concerned with deterring and detecting fraud and
for conducting EDP audits. External auditors are independent CPAs engaged by
the firm to attest to the completeness and accuracy of the financial statements.
External auditors work together with the internal auditors.
15. The database administrator is responsible for the security and integrity of data
stored in a central database.
16. The role of the accounting function is to manage the financial information
resources of the firm. First, the accountants must capture and record business
events of a firm and their financial impact. Secondly, the accounting function
distributes transaction information to decision makers and operations personnel
to help them coordinate their many tasks. The accountants must also assign
accountability for each of these tasks.
THE INFORMATION SYSTEM: AN ACCOUNTANT’S PERSPECTIVE
REVIEW QUESTIONS
1. Operational, operations management, middle management, and top management.
Horizontal flows support operation-level tasks. The information is highly detailed
about the day-to-day operations. Vertical flows distribute summarized information to
managers at all levels, and this information flows upward. Instructions, quotas, and
budgets also flow downward.
2. Data are facts that are collected in a “raw” form and made meaningful through
processes such as sorting, aggregating, classifying, mathematically manipulating,
and summarizing. The meaningful data is considered to be information. Information
Systems are the formal procedures by which data are collected, stored and
processed into the system and distributed to users.
3. AISs process financial transactions and certain nonfinancial transactions that directly
affect the processing financial transactions. The external financial reporting
documents of AIS are subject to legal and professional standards. Consequently,
management and accountants have greater legal responsibility for AIS applications
than for MIS applications. The MIS processes nonfinancial transactions that are
outside the scope of the AIS. MIS applications expand the information set provided
to such areas as production, sales, marketing, and inventory management. MIS
often draws from and builds on data from the AIS.
4. Revenue cycle, expenditure cycle, and conversion cycle.
, Chapter 1 Page 2
5. Reports used by management, which the company is not obligated by law,
regulation, or contract to provide. These are often used for internal problem-solving
issues rather than by external constituents.
6. Relevance, accuracy, completeness, summarization, and timeliness.
7. Relevance and efficiency.
8. Data attribute (field), record, file, and database.
9. Storage, retrieval, and deletion.
10. Feedback is output that is sent back to the system as a source of data. Feedback is
useful because it can be used to initiate or adjust the system processes.
11. A. to support the stewardship function of management,
B. to support the decision-making processes of managers, and
C. to support the day-to-day operations of the firm.
12. Stewardship is the responsibility of management to properly utilize the resources of
the firm entrusted to them. Information systems provide management with reports to
better manage the resources and also provide responsibility reports by which
management may be evaluated.
13. A. Materials Management
1. purchasing
2. receiving
3. stores
B. Production
1. production planning
, Chapter 1 Page 3
2. quality control
3. maintenance
C. Marketing
1. advertising
2. market research
3. sales order processing
D. Distribution
1. warehousing
2. shipping
E. Personnel
1. recruiting
2. training
3. benefits
4. counseling
F. Finance
1. portfolio management
2. treasury
3. credit
4. cash disbursement
5. cash receipt
G. Accounting
1. inventory control
2. cost accounting
, Chapter 1 Page 4
3. payroll
4. accounts payable
5. accounts receivable
6. billing
7. fixed-asset accounting
8. general ledger
H. Computer Service
1. data processing
2. systems development and maintenance
3. database administration
14. Internal auditors are responsible for in-house appraisal of the financial reporting
system. Internal auditors are concerned with deterring and detecting fraud and
for conducting EDP audits. External auditors are independent CPAs engaged by
the firm to attest to the completeness and accuracy of the financial statements.
External auditors work together with the internal auditors.
15. The database administrator is responsible for the security and integrity of data
stored in a central database.
16. The role of the accounting function is to manage the financial information
resources of the firm. First, the accountants must capture and record business
events of a firm and their financial impact. Secondly, the accounting function
distributes transaction information to decision makers and operations personnel
to help them coordinate their many tasks. The accountants must also assign
accountability for each of these tasks.
