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Accounting Information Systems Questions and Answers Graded A+
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Accounting Information Systems Questions and Answers Graded A+ What is a system? A system is an organised set of principles or procedures created and used to carry out a specific activity. What is an Accounting Information system A system that captures, records processes and reports accou...

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  • August 4, 2024
  • 31
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • accounting information systems questions and answe
  • what is a system a system is an organised set of
  • what is an accounting information system a system
  • components of an ais 1 people using the system 2

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Accounting Information Systems
Questions and Answers Graded A+
What is a system? - answer A system is an organised set of principles or procedures
created and used to carry out a specific activity.

What is an Accounting Information system - answer A system that captures, records
processes and reports accounting information

Components of an AIS - answer 1. People using the system
2. Procedures and instructions (For collecting, processing, and storing data)
3. Data
4. Software
5. IT Infrastructure (Computers, peripherals, networks, and so on)
6. Internal Control and Security (Safeguard the system and its data)

Business functions of an AIS - answer > Collect and store data about organisational
activities, resources and personnel

> Transform data into information enabling management to plan execute, control and
evaluate their activities, resources and personnel

> Provide adequate control to safeguard assets and data

Definition of Accounting information system - answer Can best be defined as the
application of technology to the capturing, verifying, storing, sorting and reporting of
data relating to an organisations activities

AIS and Corporate strategy - answer Organisation have limited resources, therefore
investments to AIS should have greatest impact on ROI.

Organisation need to understand:
> IT developments
> Business strategy
> Organisational culture
> They will effect and be effected by new AIS

Data v Information - answer Data are facts that are collected, recorded, stored and
processed:
- Insufficient for decision making

Information is processed data used in decision making:

,- Too much information however, will make it more, not less, difficult to, make decisions.
This is known as "data overload" or "information overload".

Value of information - answer Benefits: Reduce uncertainty, improve decisions

Costs: Time and resources, produces information

Characteristics of useful information - answer > Relevant: Reduces uncertainty,
improves decision-making, or confirms or corrects prior expectations.
> Reliable: Free from error or bias; accurately represents organisation events or
activities.
> Existence: The transactions, assets, obligations and equity generated in the system
exist.
> Valid: Only those transactions and reports that are authorised by the firm should be
processed.
> Complete: Does not omit important aspects of the events or activities it measures.
> Timely: Provided in time for decision-makers to make decisions.
> Measurable: Transactions, assets, liabilities, and equities processed in the system are
measured accurately.
> Understandable: Presented in a useful and intelligible format.
> Verifiable: Two independent, knowledgeable people can produce the same
information.
> Accessible: Available to users when they need it and in a format they can use

Input-processing-output (IPO) Model - answer Where information systems receive
inputs, process those inputs and use those processed inputs to generate outputs.

>Inputs: Are the starting point of a system. The primary inputs are the data extracted
from each business transaction as it occurs.

> Processing: Refers to activities that are preformed on the inputs into the system

> Outputs: refer to what is obtained from a system, or result of what the system does.

> Control system: is the interacting with inputs, processes and outputs, it is a set of
checks and balances that ensure the system is running as expected

Business process - answer A business process is a series of interlocking activities
that work together, across the organisation, to achieve some predetermined
organisational goal. This predetermined goal is typically defined around satisfying
customer need

3 main business processes - answer 1. Sale process/Revenue transaction cycle
2. Purchasing process/purchasing transaction cycle
3. General Ledger and reporting process

,Sale process/Revenue transaction cycle - answer Aim: To sell goods to the customer
and collect cash from sales.
Participants: Sales staff, customer, billing staff, warehouse.
Inputs: Sales order.
Outputs: Invoice, receipt, shipping document.

Purchasing process/purchasing transaction cycle - answer Aim: To acquire goods
from suppliers and manage stock in order to sell to customers and avoid stock-outs.
Participants: Warehouse staff, purchasing staff, sales staff, vendor.
Inputs: Purchase requisition, back-order.
Outputs: Purchase order.

General ledger and reporting process - answer The general ledger and financial
reporting cycle commences when budgets are created and ends when reports have
been generated and distributed. During this cycle all data needs to be validated and
correctly input and transferred. Adjusting journal entries must be prepared accurately
and independently authorised. Reports must be well designed and contain relevant and
accurate data.

Internal Controls - answer > An organization's financial resources can be protected
from loss, waste or theft by; developing an internal control system and implementing it
within its AIS.
> An internal control system ensures reliable data processing and promotes operational
efficiency
> An internal control is a process which is effected by; a board of directors,
management and other personnel
> An internal control is a process which provides reasonable assurance in; effectiveness
and efficiency, reliability of financial reporting and Compliance with applicable laws and
regulations

Objectives of internal Control - answer > Safeguard assets
> Maintain records in sufficient detail to report company assets accurately and fairly
> Provide accurate and reliable information
> Prepare financial reports in accordance with established criteria
> Promote and improve operational efficiency
> Encourage adherence to prescribed managerial policies
> Comply with applicable laws and regulations

Three main frameworks used to develop internal control system - answer 1. Control
Objectives for information and related technology (COBIT)

2. Committee of sponsoring organisations (COSO)'s internal control framework

3. COSO's enterprise risk management framework

, Control Objectives for information and related technology (COBIT) - answer This
framework address control from three main points; business objectives, IT resources
and IT processes.

COSO's internal control framework - answer Develop five components under this
framework:
I. Control environment
The Control Environment
- establishes the tone of a company,
- influences the control awareness of the employees.
Factors included within the control environment are:
- Integrity, ethical values and competence of employees
- Management philosophy and operating style
- Assignment of authority and responsibility
- The attention and direction provided by the board of directors

II. Control activities
Control activities are the policies and procedures that ensure;
- Management directives are carried out
- Protection of the assets of the firm
Control activities includes a combination of
- Manual controls
- Automated controls
Control activities can be categorised as;
- approvals,
- authorisations,
- verifications,
- reconciliations,
- reviews of operating performance, and
- segregation of duties.


III. Risk assessment
Risk assessment involves
- the consideration of the risk factor
- recognition that every organisation faces risks to its success
- recognition that the sources are internal and external
Identification, analysis and action to achieve the company's goals

IV. Information and communication

V. Monitoring

COSO's Enterprise Risk Management Framework - answer I. Internal environment
- Management's philosophy, operating style, and risk appetite.
- The board of directors.

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