Accoun ng Informa on System Midterm 1/ Accoun ng
Info Systems – Midterm| Updated 2026 New Edi on
Define what an AIS is
A system that is used to iden fy, analyze, measure, record, summarize, and communicate
relevant economic informa on to interested par es.
It is also a system for the collec ng, storing and processing of financial and accoun ng data
used by decision makers.
What are several things an AIS can do?
It can capture data about an organiza on, stores and maintains the data, provides meaningful
informa on for management, produces informa on that helps monitor and control business
processes, ERP systems integrate all aspects of a firm's business processes in one AIS
What type of data can you receive from an AIS?
master data and transac on data
What are the reports used for from an AIS?
the data and reports are used internally by management for making business decisions or
externally by other interested par es including investors and creditors
What is an AIS usually called?
Informa on technology or IT based and is generally computer-based
What are the two types of applica on controls?
prevent controls/automated and detect and correct/manual controls
What do AIS transac on processing systems (TPSs) do?
They capture and process detailed data necessary to update the organiza on's records about
fundamental business opera ons
They include sale order entry, inventory control, payroll, accounts payable, accounts receivable,
general ledger, etc.
What does the transac on processing systems (TPS) provide valuable input to
,Management informa on systems
Decision support systems
knowledge management systems
What are transac on processing system examples
OLTP - online transac on processing and batch processing system
What does an OLTP do?
Data processing in which each transac on is processed immediately
At any me, the data in an online system reflects the current status
Many organiza ons find that OLTP enables them to provide faster, more efficient service
What does a batch processing system do?
Business transac ons are accumulated over a period of me and prepared for processing as a
single unit or batch
Essen al characteris c: the delay between an event and the processing of the related
transac on to update the organiza on's records
What is structured data?
Informa on easily displayed in tled columns and rows which can easily by ordered and
processed
Where is TPS data o4en stored?
Rela onal Database - database so4ware (database mgmt system, DBMS)
ex: Oracle, SQL server, Access
What for things can the AIS do?
Create (create and add), Retrieve (read), Update (modify), Delete (remove)
What are the two types of structured data?
Transac on data - generated and captured by opera ons (orders, cash receipts, deliveries)
,Master data - applied to mul ple transac ons, aggregate/categorize transac on data
(customers, products)
What are the four strengths of a database for the AIS?
1. you can create meaningful reports from data in a database
2. your data has a built-in structure to it
3. Informa on of a given type is always stored only once
4. Databases are concurrent; mul ple users can use them at the same me without corrup ng
the data
What are all the cycles that feed into the general ledger and repor ng system?
Revenue, expenditure, produc on, human resources/payroll, financing
How does the general ledger and repor ng system work?
- gets data from all of the cycles
- records the data as J.E. and posts to the general ledger accounts
- Provides informa on for internal and external users
What is the revenue business process?
Sale order (sale order #, date, total $, customer, sales rep...), delivery (delivery #, date, sale
order being delivered, customer, etc.), bill, cash receipt (CR#, Date, $ amount received,
Customer, cashier, etc.)
In the revenue business processes when are journal entries recorded?
Sale order - nothing
Delivery - revenue, cogs, AR, inv't
Cash receipt - cash and AR
What are the 8 objec ves of internal controls?
1. Valid - no fic ous or duplicated transac ons
2. Complete - prevent or detect omission of transac ons
3. Accurate (correct amounts assigned to transac ons)
4. Restricted Access
5. Classified - transac ons charged to correct account
6. Summarized - transac ons summarized and totaled correctly
7. Posted - accumulated totals in transac on file are correctly transferred to the general and
, subsidiary ledgers
8. Timely - transac ons recorded in correct accoun ng period
What is the audi ng of internal controls?
- Auditor aims to gain an understanding of how the client uses internal controls
- Focusing on these objec ves helps auditor select controls for tes ng to gain greatest assurance
that controls are opera ng effec vely
- Failure of an en ty's controls to meet any of these objec ves is a weakness in internal control
What do the absence of applica on controls lead to?
1. incomplete, inaccurate, and invalid transac on data which leads to..
2. Incomplete, inaccurate, and invalid journal entries which leads to...
3. Financial statements filled with material mistatements
What are an AIS's internal controls?
The policies, procedures, and computer-programmed logic placed within the AIS to ensure that
complete, accurate, and valid business data is maintained within a company (including
accoun ng data)
What exactly are WCGWs?
Errors that could occur in processing the transac ons or in the maintenance of master data that
could have an impact on the financial statements. These are the points where applica on
controls are needed to mi gate the threat
What exactly to controls do?
They mi gate the threat by either preven ng or detec ng errors
Why are they called applica on controls?
each cycle there are different computer applica ons taking place
Do all companies rely on applica on controls across all the cycles?
yes
When do financial statement audits happen?
At periods of me - need to make sure it worked the ENTIRE me
What happens when there are integrated financial statement audits?
Info Systems – Midterm| Updated 2026 New Edi on
Define what an AIS is
A system that is used to iden fy, analyze, measure, record, summarize, and communicate
relevant economic informa on to interested par es.
It is also a system for the collec ng, storing and processing of financial and accoun ng data
used by decision makers.
What are several things an AIS can do?
It can capture data about an organiza on, stores and maintains the data, provides meaningful
informa on for management, produces informa on that helps monitor and control business
processes, ERP systems integrate all aspects of a firm's business processes in one AIS
What type of data can you receive from an AIS?
master data and transac on data
What are the reports used for from an AIS?
the data and reports are used internally by management for making business decisions or
externally by other interested par es including investors and creditors
What is an AIS usually called?
Informa on technology or IT based and is generally computer-based
What are the two types of applica on controls?
prevent controls/automated and detect and correct/manual controls
What do AIS transac on processing systems (TPSs) do?
They capture and process detailed data necessary to update the organiza on's records about
fundamental business opera ons
They include sale order entry, inventory control, payroll, accounts payable, accounts receivable,
general ledger, etc.
What does the transac on processing systems (TPS) provide valuable input to
,Management informa on systems
Decision support systems
knowledge management systems
What are transac on processing system examples
OLTP - online transac on processing and batch processing system
What does an OLTP do?
Data processing in which each transac on is processed immediately
At any me, the data in an online system reflects the current status
Many organiza ons find that OLTP enables them to provide faster, more efficient service
What does a batch processing system do?
Business transac ons are accumulated over a period of me and prepared for processing as a
single unit or batch
Essen al characteris c: the delay between an event and the processing of the related
transac on to update the organiza on's records
What is structured data?
Informa on easily displayed in tled columns and rows which can easily by ordered and
processed
Where is TPS data o4en stored?
Rela onal Database - database so4ware (database mgmt system, DBMS)
ex: Oracle, SQL server, Access
What for things can the AIS do?
Create (create and add), Retrieve (read), Update (modify), Delete (remove)
What are the two types of structured data?
Transac on data - generated and captured by opera ons (orders, cash receipts, deliveries)
,Master data - applied to mul ple transac ons, aggregate/categorize transac on data
(customers, products)
What are the four strengths of a database for the AIS?
1. you can create meaningful reports from data in a database
2. your data has a built-in structure to it
3. Informa on of a given type is always stored only once
4. Databases are concurrent; mul ple users can use them at the same me without corrup ng
the data
What are all the cycles that feed into the general ledger and repor ng system?
Revenue, expenditure, produc on, human resources/payroll, financing
How does the general ledger and repor ng system work?
- gets data from all of the cycles
- records the data as J.E. and posts to the general ledger accounts
- Provides informa on for internal and external users
What is the revenue business process?
Sale order (sale order #, date, total $, customer, sales rep...), delivery (delivery #, date, sale
order being delivered, customer, etc.), bill, cash receipt (CR#, Date, $ amount received,
Customer, cashier, etc.)
In the revenue business processes when are journal entries recorded?
Sale order - nothing
Delivery - revenue, cogs, AR, inv't
Cash receipt - cash and AR
What are the 8 objec ves of internal controls?
1. Valid - no fic ous or duplicated transac ons
2. Complete - prevent or detect omission of transac ons
3. Accurate (correct amounts assigned to transac ons)
4. Restricted Access
5. Classified - transac ons charged to correct account
6. Summarized - transac ons summarized and totaled correctly
7. Posted - accumulated totals in transac on file are correctly transferred to the general and
, subsidiary ledgers
8. Timely - transac ons recorded in correct accoun ng period
What is the audi ng of internal controls?
- Auditor aims to gain an understanding of how the client uses internal controls
- Focusing on these objec ves helps auditor select controls for tes ng to gain greatest assurance
that controls are opera ng effec vely
- Failure of an en ty's controls to meet any of these objec ves is a weakness in internal control
What do the absence of applica on controls lead to?
1. incomplete, inaccurate, and invalid transac on data which leads to..
2. Incomplete, inaccurate, and invalid journal entries which leads to...
3. Financial statements filled with material mistatements
What are an AIS's internal controls?
The policies, procedures, and computer-programmed logic placed within the AIS to ensure that
complete, accurate, and valid business data is maintained within a company (including
accoun ng data)
What exactly are WCGWs?
Errors that could occur in processing the transac ons or in the maintenance of master data that
could have an impact on the financial statements. These are the points where applica on
controls are needed to mi gate the threat
What exactly to controls do?
They mi gate the threat by either preven ng or detec ng errors
Why are they called applica on controls?
each cycle there are different computer applica ons taking place
Do all companies rely on applica on controls across all the cycles?
yes
When do financial statement audits happen?
At periods of me - need to make sure it worked the ENTIRE me
What happens when there are integrated financial statement audits?
