Interrelated Components


A set of two or more interrelated components that interact to achieve a goal is:

a) A system

This results when a subsystem achieves its goals while contributing to the organization’s overall goal.

b) Goal congruence

Goal conflict may result when

a) A decision or action of a subsystem is inconsistent with the system as a whole.

Facts that are collected, recorded, stored and processed by an information system

b) Data

Information is

d) Data that have been organized and processed to provide meaning to a user.

Data are

a) facts entered, stored, and processed by an information system.

Which of the following statements below shows the contrast between data and


b) Information is the primary output of an AIS.

Information is

d) data that has been organized and processed so that it's meaningful.

Humans can absorb and process only so much information. Information __________

occurs when those limits are passed.

a) overload

The value of information can best be defined as

b) the benefits produced by possessing and using the information minus the cost of

producing it.

The benefit produced by the information minus the cost of producing it.

d) Value of information

An accounting information system (AIS) processes __________ to provide users with


a) data; information

How many components are found in an AIS?

d) six

An accounting information system in part consists of

c) People, procedures, data, software and information technology infrastructure.

Information that reduces uncertainty, improves decision makers' ability to make

predictions, or confirms or corrects their prior expectations, is said to be

b) Relevant

Information that is free from error or bias and accurately represents the events or

activities of the organization is

b) Reliable

Information that does not omit important aspects of the underlying events or activities

that it measures is

a) Complete

When two knowledgeable people acting independently each produce the same

information, this information is said to be

d) Verifiable

Data must be converted into information to be considered useful and meaningful for

decision-making. There are six characteristics that make information both useful and

meaningful. If information is free from error or bias and accurately represents the

events or activities of the organization, it is representative of the characteristic of

d) Reliability

The primary consideration when producing this type of information is that its benefits

exceeds its costs.

a) Discretionary information

An AIS is a system of six interrelated components that interact to achieve a goal.

One of these components, which includes both manual and automated activities that

involve collecting, processing, and storing data, is known as

b) Procedures and instructions

An accounting information system must be able to perform which of the following


a) collect transaction data

b) process transaction data

c) provide adequate controls

d) all of the above

Which of the following is not an example of a common activity in an AIS?

d) recording of sales calls for marketing purposes

Which of the following is not one of the components of an AIS?

d) Software and hardware

An AIS must be able to fulfill three important functions in any organization. One

such function is the collecting and storing of data about activities performed by the

organization. One group that relies on both the adequate collection and

transformation of data for decision-making purposes for an organization is

a) management.

The primary objective of accounting is to

b) provide useful information to decision makers.

The Financial Accounting Standards Board (FASB), in its Statement of Financial

Accounting Concepts No. 2, has defined accounting as

c) being an information system

Which activity below would not be considered to be a "top" accountant work


b) input into future product marketing initiatives

The American Institute of Certified Public Accountants (AICPA) has recognized the

importance of AIS and the major impact information technology has on the area of

accounting. To recognize individual CPAs who have met educational and

experiential requirements in this area, the group formally created the designation

known as

b) the Certified Information Technology Professional.

An analysis conducted by the Institute of Management Accountants shows that the

most important activities performed by corporate accountants relate to

d) accounting systems and financial reporting.

The primary focus of an AIS Assignment, as opposed to other IS Assignments, is on

c) understanding how information technology can be used to improve AIS


The AIS must include controls to ensure

a) safety and availability of data.

c) information produced from data is accurate.

d) both A and C

A change in the AIS that makes information more easily accessible and widely

available within an organization is most likely to first influence the

organizational culture.

The process of creating value for customers is the result of nine activities (five

primary and four support) that taken together form a

value chain.

The value chain concept is composed of two types of activities known as

a) primary and support.

Which of the following is a primary activity in the value chain?

d) marketing and sales

In value chain analysis, what is the activity of arranging the delivery of products to

customers called?

outbound logistics

An AIS provides value by

a) improving products or services through information that increases quality and

reduces costs.

b) providing timely and reliable information to decision makers.

d) both A and B

In Chapter 1, Figure 1-2 shows the factors that influence the design of AIS. The

diagram shows a bi-directional arrow between the organizational culture and the AIS.

The reason for this two-way interchange between organizational culture and AIS is

b) because the organization's culture influences the AIS, and likewise the AIS

influences the organization's culture by controlling the flow of information within

the organization.

The objective of the majority of organizations is to provide value to their customers.

The activities that support such an objective can be conceptualized as forming a value

chain. Within this value chain, logistics plays an important role. Logistics is both

inbound and outbound in nature. An example of inbound logistics would consist of

d) the activities that consist of receiving, storing, and distributing the materials used

as inputs by the organization to create goods and/or services it sells.

A good example of how an AIS is used to share knowledge within an organization is

a) the use of an expert system to help staff identify the relevant experts who can help

with a particular client.

Within the value chain conceptual framework, organizations also perform a number

of other support activities that enable the five primary value chain activities to be

performed efficiently and effectively. One such support activity is research and

development. This activity can be identified as a

c) technology activity.

Within the value chain conceptual framework, AIS is shown as a support activity.

The AIS is of value to an organization when it provides accurate and timely

information to help support the five primary value chain activities. When the AIS

provides information in a timely and accurate manner, it stands as an example of

a) improved decision making.

b) improving the quality and reducing the costs of products or services.

c) improving efficiency.

d) All of the above

A decision situation that is non-routine and for which no established framework exists

for making the decision is called a(n) __________ decision.

c) unstructured

A decision that is repetitive, routine and well understood is

a) structured

Which of the following is an example of a strategic planning decision?

a) setting financial and accounting policies

Decisions about the effective and efficient execution of specific tasks are concerned


a) operational control.

Budgeting and human resource practices are examples of

b) management control

Accounting information plays major roles in managerial decision making by

a) identifying situations requiring management action.

b) reducing uncertainty.

c) providing a basis for choosing among alternative actions.

d) all of the above

Business activities that pertain to product pricing, discount and credit terms, and

identifying the most and least profitable items are part of the __________ activity in

the organization's value chain.

b) marketing and sales

A principal focus of AIS is to assist with the decision-making function of an

organization. The degree of support AIS can provide depends on the type of decision

being made. Decisions are categorized in terms of the degree of existing structure or

the effect of their scope. From the items below, select the description that is an

example of a semi-structured decision.

b) setting a marketing budget for a new product

Regarding decision scope, which statement below is true?

c) Strategic planning is concerned with establishing organizational objectives and

policies for accomplishing those objectives.

A well-designed AIS can improve the decision-making function within the

organization. Which statement below would describe a limitation, rather than a

benefit, of an efficient AIS?

c) An AIS provides to its users an abundance of information without any filtering or

condensing of such information.

A strategic position is important to the success and growth of any organization.

Harvard professor Michael Porter has identified three basic strategic positions.

Which statement below is false regarding these basic strategic positions?

a) The three basic strategic positions are mutually exclusive of each other.

A strategic position is important to the success and growth of any organization.

Harvard professor Michael Porter has identified two basic business strategies. Which

statement below is false regarding these basic strategies? .

d) The two basic strategic positions are mutually exclusive.

According to Michael Porter, to be successful in the long run, a company must

a) deliver greater value to customers and/or create comparable value at a lower cost.

A variety-based strategic position involves

c) providing a subset of the industry's products or services.

A needs-based strategic position involves

a) trying to serve most or all of the needs of a particular group of customers.

An access-based strategic position involves

b) serving a subset of customers who differ from other customers.

The Internet has changed the way many processes are performed in business today.

The Internet has had a material effect on the five primary characteristics in the value

chain and on the strategy adopted by businesses that incorporate use of the Web into

their business systems. Which statement below is true regarding the Internet relative

to a strategic position that a business may adopt?

d) The most important effect of the development of the Internet in business is the

increased importance of adopting a viable business strategy.