AIS Chapter 1 Flashcards
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Questions and Answers

What are accounting information systems?

Include records, processes and reports.

Which of the following is not a characteristic of useful information?

  • Timely
  • Accurate
  • Easy to understand (correct)
  • Relevant

    • Which of the following are considered to be mandatory information required by a regulatory body?

  • Employee records
  • Financial reports for the Securities and Exchange Commission (correct)
  • Audit reports
  • Tax returns

    • What is the correct order of effects in the value chain?

    <p>Inbound Logistics → Operations → Outbound Logistics.</p> Signup and view all the answers

    What designation is most appropriate for professionals possessing IT audit, control, and security skills?

    <p>Certified Information Systems Auditors (CISA).</p> Signup and view all the answers

    What designation is for CPAs with a broad range of technology knowledge and experience?

    <p>Certified Information Technology Professional (CITP).</p> Signup and view all the answers

    What does a supply chain refer to?

    <p>The flow of materials, information, payments and services.</p> Signup and view all the answers

    A supply chain system includes information about prospective customers.

    <p>False</p> Signup and view all the answers

    What income statement line item is most likely affected by an AIS investment in enterprise systems?

    <p>Selling, General and Administrative Expenses.</p> Signup and view all the answers

    What income statement line item is most likely affected by an AIS investment in supply chain that would interface with suppliers?

    <p>Cost of Goods Sold.</p> Signup and view all the answers

    What are the IT strategic roles of AIS investments classified as?

    <p>Automate, Informate, Transform.</p> Signup and view all the answers

    How is the transform IT strategic role defined?

    <p>Fundamentally redefine business processes and relationships.</p> Signup and view all the answers

    How is the informate-up IT strategic role defined?

    <p>Provide information about business activities to senior management.</p> Signup and view all the answers

    What income statement account is most likely affected by an AIS investment in customer relationship management (CRM)?

    <p>Revenues.</p> Signup and view all the answers

    Many hospitals and doctor's offices are beginning to digitize the medical records of their patients. This is an example of the __________ strategic role.

    <p>Automate.</p> Signup and view all the answers

    EBay uses information technology to sell goods on the internet. This would be an example of the __________ strategic role.

    <p>Transform.</p> Signup and view all the answers

    What is the Information Value Chain?

    <p>The overall transformation of data from a business need to the ultimate decision.</p> Signup and view all the answers

    How is business value defined?

    <p>Items, events and interactions that determine the financial health and well-being of the firm.</p> Signup and view all the answers

    What is Customer Relationship Management (CRM)?

    <p>A system used to manage and nurture a firm's interactions with its current and potential customers.</p> Signup and view all the answers

    Support activities in the value chain include Accounting and Finance.

    <p>False</p> Signup and view all the answers

    The role of accountants in accounting information systems includes all except Operator.

    <p>True</p> Signup and view all the answers

    A simple information system includes reporting.

    <p>False</p> Signup and view all the answers

    What is activity-based costing an example of?

    <p>Discretionary information.</p> Signup and view all the answers

    What is an example of an AIS that primarily addresses internal business processes?

    <p>Enterprise systems.</p> Signup and view all the answers

    Bob's manager complains that Bob suffers from 'Analysis Paralysis;' that is, he spends too much time reviewing endless reports and is reluctant to make decisions. Bob most likely suffers from __________.

    <p>Information overload.</p> Signup and view all the answers

    Which systems would a company be most likely to employ for the primary purpose of generating additional sales revenue?

    <p>CRM</p> Signup and view all the answers

    In which activities does the primary transformation of data into information take place?

    <p>Processing.</p> Signup and view all the answers

    Discretionary information is most likely to be used in which activities?

    <p>Management decision-making.</p> Signup and view all the answers

    Which of the following is not a primary activity in the Value Chain?

    <p>Information Technology</p> Signup and view all the answers

    What is one of the most important ways that ERPs benefit organizations?

    <p>Current information is made available to all users involved in the activities and decisions associated with a company's business processes.</p> Signup and view all the answers

    What best describes the fill rate in supply chain management?

    <p>The percentage, in monetary value, of a supplier's order which is actually delivered to the organization.</p> Signup and view all the answers

    Investors reward companies most that announce IT initiatives with which type of strategic role?

    <p>Transform</p> Signup and view all the answers

    What type of strategic role is exemplified by a dental practice that upgraded its AIS to provide daily patient summaries?

    <p>Informate - up.</p> Signup and view all the answers

    Which statement most accurately describes IFAC's description of accounting and IT?

    <p>Accounting and IT are intertwined.</p> Signup and view all the answers

    What diagram most accurately illustrates an information system?

    <p>Storage ^ I v Input -&gt; Process -&gt; Output</p> Signup and view all the answers

    What activities must a company's attest auditors be able to perform under the Sarbanes-Oxley Act of 2002?

    <p>Evaluate the internal controls in an AIS.</p> Signup and view all the answers

    For a non-profit organization like Doctors without Borders, what is likely the best measure of business value?

    <p>Lives saved.</p> Signup and view all the answers

    Effective use of Supply Chain Management software is expected to reduce gross margins.

    <p>False</p> Signup and view all the answers

    What is usually the primary objective for companies when creating mandatory information?

    <p>Minimize cost</p> Signup and view all the answers

    How does the characteristics of useful information apply to a box score produced after a college football game?

    <ul> <li></li> </ul> Signup and view all the answers

    List and explain three ways AIS affects the income statement and firm's profitability.

    <ul> <li>Enterprise systems help lower expenses, leading to higher revenues. - AIS software tracks sales and inventory, improving efficiency and revenues. - CRM systems enhance engagement, converting potential clients into active clients, increasing revenues.</li> </ul> Signup and view all the answers

    What roles do accountants serve in business analysis to help address business opportunities?

    <ul> <li></li> </ul> Signup and view all the answers

    What are the types of discretionary information that a company like Google would collect from its accounting information system?

    <ul> <li></li> </ul> Signup and view all the answers

    Why is the transform IT strategic role more impactful on stock price than the automate IT strategic role?

    <ul> <li></li> </ul> Signup and view all the answers

    Why is Starbucks' use of customer data through loyalty cards a good example of CRM?

    <ul> <li></li> </ul> Signup and view all the answers

    How does supply chain management software enable precise communication with suppliers and save money?

    <ul> <li></li> </ul> Signup and view all the answers

    How can Amazon.com use customer purchase history to assist in marketing efforts?

    <ul> <li></li> </ul> Signup and view all the answers

    How is a professional designation such as CISA helpful for IT auditors?

    <ul> <li></li> </ul> Signup and view all the answers

    Why do AICPA and IFAC expect accountants to be proficient in AIS and at least one other role?

    <ul> <li></li> </ul> Signup and view all the answers

    Why is accounting now interdependent with IT?

    <ul> <li></li> </ul> Signup and view all the answers

    How does Wal-Mart's Retail Link database benefit suppliers and customers?

    <ul> <li></li> </ul> Signup and view all the answers

    How would a not-for-profit like the International Red Cross define business value?

    <ul> <li></li> </ul> Signup and view all the answers

    Study Notes

    Accounting Information Systems

    • Comprise records, processes, and reports that facilitate financial data management.
    • Characterized by the ability to provide easy-to-understand information.
    • Mandatory information required includes financial reports for regulators like the SEC.

    Value Chain Concepts

    • The correct sequence of effects in the value chain: Inbound Logistics → Operations → Outbound Logistics.
    • Primary activities in the value chain exclude Information Technology, which falls under support activities.

    Professional Designations in IT and Accounting

    • Certified Information Systems Auditors (CISA) focus on IT audit, control, and security.
    • Certified Information Technology Professionals (CITP) cover a broad range of technology knowledge for CPAs.

    Supply Chain Dynamics

    • Defined as the flow of materials, information, payments, and services.
    • Prospective customer information is typically excluded from supply chain systems.

    AIS Impact on Financial Statements

    • Investments in AIS primarily affect Selling, General and Administrative Expenses and Cost of Goods Sold.
    • Effective AIS can lower expenses and track financial metrics, contributing to increased revenues.

    IT Strategic Roles

    • Classified into three categories: Automate (digitization tasks), Informate (provide business insights), Transform (redefine processes).
    • Transformational initiatives generally have a more positive impact on stock prices compared to automation.

    Information Value Chain

    • Represents the transformation of data to inform business decisions.
    • Discretionary information aids in management decision-making and is often utilized in financial contexts.

    Organizational Benefits and Value Metrics

    • Supply Chain Management software enhances operational efficiency and can lead to significant savings.
    • Business value reflects items and interactions impacting the financial health of a firm; non-profits may measure value in terms of lives saved or social impact.

    Information Systems Complexity

    • Basic information systems consist of Storage, Input, Process, and Output.
    • Overreliance on reports can lead to analysis paralysis or information overload for decision-makers.

    Regulatory Compliance

    • The Sarbanes-Oxley Act mandates evaluation of internal controls within AIS by auditors.

    Customer Relationship Management (CRM)

    • Systems designed to manage interactions with current and potential customers are crucial for driving sales and leveraging data analytics for marketing strategies.

    Importance of IT in Accounting

    • IT is integrated with accounting, leading organizations to expect accountants to be proficient in both AIS and additional roles like management or system evaluation.
    • Keeping up with technological advancements is vital in maintaining relevance within the accounting field.

    Case Studies

    • Companies like Amazon and Starbucks utilize CRM systems and customer data to improve marketing and customer engagement, demonstrating the effectiveness of technology in driving business success.
    • Wal-Mart’s Retail Link exemplifies real-time sales data sharing, optimizing supplier inventory and logistics costs, ultimately benefiting both Wal-Mart and its customers.

    Insights on Discretionary Information

    • Discretionary information, like budget forecasting or strategic planning resources, enhances managerial decision-making and operational effectiveness, emphasizing its value to companies like Google.

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    Description

    Test your knowledge on Accounting Information Systems with these flashcards covering key definitions and concepts from Chapter 1. This quiz will help reinforce your understanding of useful information characteristics and regulatory requirements.

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