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.
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
, Chapter 17 page 2
inventory management. MIS often draws from and builds on data from the AIS.
4. Revenue cycle, expenditure cycle, and conversion cycle.
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
, Chapter 17 page 3
2. receiving
3. stores
b. Production
1. production planning
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
, Chapter 17 page 4
5. cash receipt
g. Accounting
1. inventory control
2. cost accounting
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
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.
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
, Chapter 17 page 2
inventory management. MIS often draws from and builds on data from the AIS.
4. Revenue cycle, expenditure cycle, and conversion cycle.
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
, Chapter 17 page 3
2. receiving
3. stores
b. Production
1. production planning
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
, Chapter 17 page 4
5. cash receipt
g. Accounting
1. inventory control
2. cost accounting
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
