Accounting Information Systems, 3rd Edition TEST BANK by
Vernon Richardson, Verified Chapters 1 - 18, Complete Newest
Version
Data - ANSWER:facts that are collected, recorded, stored, and processed by an
information system
Information - ANSWER:data that has been organized and processed to provide
meaning and improve decision making process
Characteristics of Useful Information - ANSWER:1 Relevant
2 Reliable
3 Complete
4 Timely
5 Understandable
6 Verifiable
7 Accessible
Relevant - ANSWER:Reduces uncertainty, improves decision making, or confirms or
corrects prior expectations
Reliable - ANSWER:Free from error or bias; accurately represents organization events
or activities
Complete - ANSWER:Does not omit important aspects of the events or activities it
measures
Timely - ANSWER:Provided in time for decision makers to make decisions
Understandable - ANSWER:Presented in a useful and intelligible format
Verifiable - ANSWER:Two independent, knowledgeable people produce the same
information
Accessible - ANSWER:Available to users when they need it and in a format they can
use
Revenue Cycle - ANSWER:where goods and services are sold for cash or a future
promise to receive cash
Expenditure Cycle - ANSWER:where companies purchase inventory for resale or raw
materials to use in producing products in exchange for cash or a future promise to
pay cash
,Production/Conversion Cycle - ANSWER:where raw materials are transformed into
finished goods
Human Resources/Payroll Cycle - ANSWER:where employees are hired, trained,
compensated, evaluated, promoted and terminated
Financing Cycle - ANSWER:where companies sell shares in the company to investors
and borrow money, and where investors are paid dividends and interest is paid on
loans
Primary Activities in Value Chain - ANSWER:1 Inbound Logistics
2 Operations
3 Outbound Logistics
4 Marketing and Sales
5 Service
Inbound Logistics - ANSWER:consists if receiving, storing , and distributing the
materials an organization uses to create the services and products it sells
Operations - ANSWER:activities transform inputs into final products or services
Outbound Logistics - ANSWER:activities distribute finished products or services to
customers
Marketing and Sales - ANSWER:activities help customers buy the organization's
products or services
Service - ANSWER:activities provide post-sale support to customers
Support Activities of Value Chain - ANSWER:1 Firm Infrastructure
2 HR
3 Technology
4 Purchasing
Firm Infrastructure - ANSWER:accounting, finance, legal, and general administrative
activities that allow an organization to function
Human Resources - ANSWER:activities include recruiting, hiring, training, and
compensating employees
Technology - ANSWER:activities improve a product or service
Purchasing - ANSWER:activities procure raw materials, supplies, machinery, and the
buildings used to carry out the primary activities
Four operations of Data Processing Cycle - ANSWER:1 Data Input
2 Data Storage
, 3 Data Processing
4 Information Output
*Users are also involved in entire process
Two steps in Data Input - ANSWER:1 Capture transaction data (each activity,
resource affected, and people participating)
2 Verify captured data are accurate and complete
Source Documents - ANSWER:Documents used to capture transaction data at its
source - when the transaction takes place
Turnaround Document - ANSWER:Records of company data sent to an external party
and then returned to the system as input (sales orders, purchase orders, employee
time cards)
Source Data Automation - ANSWER:The collection of transaction data in machine
readable form at the time and place of origin
Six Data Storage Concepts - ANSWER:1 Ledgers
2 Coding Techniques
3 Chart of Accounts
4 Journals
5 Audit Trail
6 Computer Based Storage Concepts
General Ledger - ANSWER:Ledger that contains summary-level data for every asset,
liability, equity, revenue, and expense account of the organization
Subsidiary Ledger - ANSWER:Ledger used to record detailed data for a general ledger
account with many individual sub-accounts such as accounts receivable, inventory
and accounts payable
Control Account - ANSWER:Title given to a general ledger account that summarizes
the total amounts recorded in a subsidiary ledger
Coding - ANSWER:The systematic assignment of numbers or letters to items to
classify and organize them
Sequence Code - ANSWER:Items are numbered consecutively so that gaps in the
sequence code indicate missing items that should be investigated.
Block Code - ANSWER:Blocks of numbers that are reserved for specific categories of
data, thereby helping to organize the data (chart of accounts)
Group Code - ANSWER:Two or more subgroups of digits that are used to code an
item. A group code is often used in conjunction with a block code.
Vernon Richardson, Verified Chapters 1 - 18, Complete Newest
Version
Data - ANSWER:facts that are collected, recorded, stored, and processed by an
information system
Information - ANSWER:data that has been organized and processed to provide
meaning and improve decision making process
Characteristics of Useful Information - ANSWER:1 Relevant
2 Reliable
3 Complete
4 Timely
5 Understandable
6 Verifiable
7 Accessible
Relevant - ANSWER:Reduces uncertainty, improves decision making, or confirms or
corrects prior expectations
Reliable - ANSWER:Free from error or bias; accurately represents organization events
or activities
Complete - ANSWER:Does not omit important aspects of the events or activities it
measures
Timely - ANSWER:Provided in time for decision makers to make decisions
Understandable - ANSWER:Presented in a useful and intelligible format
Verifiable - ANSWER:Two independent, knowledgeable people produce the same
information
Accessible - ANSWER:Available to users when they need it and in a format they can
use
Revenue Cycle - ANSWER:where goods and services are sold for cash or a future
promise to receive cash
Expenditure Cycle - ANSWER:where companies purchase inventory for resale or raw
materials to use in producing products in exchange for cash or a future promise to
pay cash
,Production/Conversion Cycle - ANSWER:where raw materials are transformed into
finished goods
Human Resources/Payroll Cycle - ANSWER:where employees are hired, trained,
compensated, evaluated, promoted and terminated
Financing Cycle - ANSWER:where companies sell shares in the company to investors
and borrow money, and where investors are paid dividends and interest is paid on
loans
Primary Activities in Value Chain - ANSWER:1 Inbound Logistics
2 Operations
3 Outbound Logistics
4 Marketing and Sales
5 Service
Inbound Logistics - ANSWER:consists if receiving, storing , and distributing the
materials an organization uses to create the services and products it sells
Operations - ANSWER:activities transform inputs into final products or services
Outbound Logistics - ANSWER:activities distribute finished products or services to
customers
Marketing and Sales - ANSWER:activities help customers buy the organization's
products or services
Service - ANSWER:activities provide post-sale support to customers
Support Activities of Value Chain - ANSWER:1 Firm Infrastructure
2 HR
3 Technology
4 Purchasing
Firm Infrastructure - ANSWER:accounting, finance, legal, and general administrative
activities that allow an organization to function
Human Resources - ANSWER:activities include recruiting, hiring, training, and
compensating employees
Technology - ANSWER:activities improve a product or service
Purchasing - ANSWER:activities procure raw materials, supplies, machinery, and the
buildings used to carry out the primary activities
Four operations of Data Processing Cycle - ANSWER:1 Data Input
2 Data Storage
, 3 Data Processing
4 Information Output
*Users are also involved in entire process
Two steps in Data Input - ANSWER:1 Capture transaction data (each activity,
resource affected, and people participating)
2 Verify captured data are accurate and complete
Source Documents - ANSWER:Documents used to capture transaction data at its
source - when the transaction takes place
Turnaround Document - ANSWER:Records of company data sent to an external party
and then returned to the system as input (sales orders, purchase orders, employee
time cards)
Source Data Automation - ANSWER:The collection of transaction data in machine
readable form at the time and place of origin
Six Data Storage Concepts - ANSWER:1 Ledgers
2 Coding Techniques
3 Chart of Accounts
4 Journals
5 Audit Trail
6 Computer Based Storage Concepts
General Ledger - ANSWER:Ledger that contains summary-level data for every asset,
liability, equity, revenue, and expense account of the organization
Subsidiary Ledger - ANSWER:Ledger used to record detailed data for a general ledger
account with many individual sub-accounts such as accounts receivable, inventory
and accounts payable
Control Account - ANSWER:Title given to a general ledger account that summarizes
the total amounts recorded in a subsidiary ledger
Coding - ANSWER:The systematic assignment of numbers or letters to items to
classify and organize them
Sequence Code - ANSWER:Items are numbered consecutively so that gaps in the
sequence code indicate missing items that should be investigated.
Block Code - ANSWER:Blocks of numbers that are reserved for specific categories of
data, thereby helping to organize the data (chart of accounts)
Group Code - ANSWER:Two or more subgroups of digits that are used to code an
item. A group code is often used in conjunction with a block code.
