Internal Information Flows and Requirements in Business

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What is the primary difference between financial and nonfinancial transactions in an Accounting Information System (AIS)?

Financial transactions are recorded in the General Ledger/Financial Reporting System, while nonfinancial transactions are recorded in the Management Reporting System.
Financial transactions are processed by the AIS, while nonfinancial transactions are processed by the Management Information System (MIS).
Financial transactions involve the exchange of money, while nonfinancial transactions do not involve the exchange of money.
Financial transactions affect the assets and equities of the organization, while nonfinancial transactions do not. (correct)

Which of the following is NOT a characteristic of useful information in an Accounting Information System (AIS)?

Timeliness
Accuracy
Relevance
Complexity (correct)

What is the primary purpose of the General Ledger/Financial Reporting System (GL/FRS) in an Accounting Information System (AIS)?

To process nonfinancial transactions
To produce financial statements and reports (correct)
To support daily business operations
To produce special-purpose reports for internal use

Which of the following is NOT a function for transforming data into information in the general AIS model?

Data Interpretation (B) Signup and view all the answers

What is the primary role of the Accounting Independence principle in an Accounting Information System (AIS)?

To ensure that accounting activities are separate from the functional areas maintaining resources. (D) Signup and view all the answers

What is the primary goal of an information system in a business context?

All of the above (D) Signup and view all the answers

Which of the following is NOT a common method of organizing an organization's structure?

Segmenting by customer type (C) Signup and view all the answers

What is the primary purpose of the Transaction Processing System (TPS) in an Accounting Information System (AIS)?

To support the firm's day-to-day business operations (C) Signup and view all the answers

Which of the following is an example of an internal financial transaction in an Accounting Information System (AIS)?

Movement of raw materials into work-in-process (B) Signup and view all the answers

What is the primary difference between Accounting Information Systems (AIS) and Management Information Systems (MIS) in an organization?

AIS processes financial transactions, while MIS processes nonfinancial transactions. (A) Signup and view all the answers

What is the primary purpose of internal horizontal flows of information?

Capture transaction and operations data (B) Signup and view all the answers

In vertical information flows, what type of data travels upward?

Aggregated transaction and operations data (A) Signup and view all the answers

Why do higher levels of an organization require more aggregated information?

To reduce the need for detailed information (B) Signup and view all the answers

When is a system considered a subsystem?

When it is viewed as a component of a larger system (A) Signup and view all the answers

What happens if not all distinct parts of a system are functioning?

The system will fail (D) Signup and view all the answers

What is an information system responsible for distributing to users?

Processed information (A) Signup and view all the answers

What characterizes a transaction in the business context?

Business event (D) Signup and view all the answers

What is one of the potential advantages of Distributed Data Processing (DDP) mentioned in the text?

Improved cost control responsibility (B) Signup and view all the answers

Which of the following is NOT listed as a disadvantage of Distributed Data Processing (DDP)?

Improved cost control responsibility (A) Signup and view all the answers

In the Flat-File Model, what is identified as a potential problem?

Difficulty in updating all affected files (B) Signup and view all the answers

What does the REA model stand for in the context of accounting systems?

Resource, Event, Agent (D) Signup and view all the answers

What is the primary function of entity-relationship diagrams in accounting systems?

Modeling economic resources, events, and agents (A) Signup and view all the answers

What is a key responsibility of accountants in systems development projects?

Ensuring appropriate systems design (A) Signup and view all the answers

Why is the Database Model preferred over the Flat-File Model?

It integrates separate files easily (A) Signup and view all the answers

What does Distributed Data Processing (DDP) aim to improve in an organization?

Control over resources (D) Signup and view all the answers

In which function are accountants responsible for conceptual system design?

Determining the nature of information required (D) Signup and view all the answers

What is a common challenge associated with the Flat-File Model?

Data updating difficulties (C) Signup and view all the answers