Deck 1: Accounting Information Systems and Firm Value

Question 1

Information overload is defined as the difficulty a person faces in understanding a problem and making a decision as a consequence of too much information.

Answer 1

True

Question 2

Service Activities as defined in the value chain are those activities that provide the support of customers after the products and services are sold to them (e.g.warranty repairs,parts,instruction manuals,etc.).

Answer 2

True

Question 3

The Certified Information Technology Professional (CITP)is a professional designation for those with broad range of technology knowledge and does not require a CPA.

Answer 3

False

Question 4

The characteristics of relevant information include predictive value,feedback value and timeliness.

Question 5

Outbound logistics are the activities associated with receiving and storing raw materials and other partially completed materials,and distributing those materials to manufacturing when and where they are needed.

Question 6

The characteristics of reliable information are that the information is verifiable,without bias and timely.

Question 7

Relevant information is that information that is free from bias and error.

Question 8

An efficient Enterprise System can significantly lower the cost of support processes included in sales,general,and administrative expenses.

Question 9

A systems analyst analyzes a business problem that might be addressed by an information system and recommends software or systems to address that problem.

Question 10

A well-designed and well-functioning AIS can be expected to create value by providing relevant information helpful to management to increase revenues and reduce expenses.

Question 11

Business value includes all those items,events and interactions that determine the financial health and well-being of the firm.

Question 12

A value chain is defined as the flow of materials,information,payments,and services from customer to supplier.

Question 13

Information is defined as being data organized in a meaningful way to be useful to the user.

Question 14

Accounting and Finance is a primary activity in the value chain.

Question 15

An enterprise system is a centralized database that collects data from throughout the firm.This includes data from orders,customers,sales,inventory and employees

Question 16

Accounting Information Systems at this date are all computerized.

Question 17

The Certified Information Systems Auditor (CISA)is a professional designation generally sought by those performing IT audits.

Question 18

An accounting information system (AIS)is defined as being an information system that records,processes and reports on transactions to provide financial information for decision making and control.

Question 19

Data is defined as being information organized in a meaningful way to be useful to the user.

Question 20

The main financial benefit of Customer Relationship Management practices reduces the cost of goods sold.

Question 21

A supply chain system does not include information about

A) Current customers
B) Prospective customers
C) Availability of inventory
D) Current suppliers

Question 22

The income statement line item most likely affected by an AIS investment in enterprise systems would be:

A) Revenues
B) Cost of Goods Sold
C) Selling, General and Administrative Expenses
D) Unearned Revenue

Question 23

The income statement account most likely affected by an AIS investment in customer relationship management (CRM)would be:

A) Revenues
B) Cost of Goods Sold
C) Selling, General and Administrative Expenses
D) Unearned Revenue

Question 24

The IT strategic roles of AIS investments are classified as:

A) Automate, Informate, Transform
B) Value creation, Value Destruction, Value Neutral
C) Digitize, Report, Transform
D) Automate, Digitize, Transport

Question 25

A supply chain:

A) Refers to the supplies needed to build products
B) Refers to the flow of materials, information, payments and services.
C) Is similar in function and purpose to the value chain
D) Does not apply to a service firm like an accounting firm.

Question 26

Many hospitals and doctor's offices are beginning to digitize the medical records of their patients.This is an example of the ____________ strategic role.

A) Automate
B) Informate - up
C) Transform
D) Informate - down

Question 27

Accounting information systems are:

A) Always computerized.
B) Report only accounting information.
C) Records, processes and reports
D) Are for computer games

Question 28

An enterprise system is primarily used to manage and nurture a firm's interactions with its current and potential clients.

Question 29

Which designation is for CPAs with a broad range of technology knowledge and experience?

A) Certified Internal Auditor (CIA)
B) Certified Public Accountant (CPA)
C) Certified Information Technology Professional (CITP)
D) Certified Information Systems Auditors (CISA)

Question 30

Which designation would most appropriate for those professionals possessing an IT audit,control and security skills?

A) Certified Internal Auditor (CIA)
B) Certified Public Accountant (CPA)
C) Certified Information Technology Professional (CITP)
D) Certified Information Systems Auditors (CISA)

Question 31

Which of the following are considered to be mandatory information required by a regulatory body?

A) Financial reports for the Securities and Exchange Commission
B) The amount of taxes saved by a merger
C) The total dollar value of fireworks that are sold on July 4.
D) The cost to build an all-new Starbucks restaurant in Abu Dhabi.

Question 32

According to a recent study,the transform IT strategic role is defined as systems that:

A) replacing human labor in automating business processes
B) provides information about business activities to all employees
C) provide information about business activities to senior management
D) fundamentally redefine business processes and relationships

Question 33

According to a recent study,the informate-up IT strategic role is defined as systems that:

A) replacing human labor in automating business processes
B) provides information about business activities to all employees
C) provide information about business activities to senior management
D) fundamentally redefine business processes and relationships

Question 34

The Sarbanes-Oxley Act of 2002 is a federal law in the United States that set new and enhanced standards for all U.S.public companies,management and public accounting firms.

Question 35

Production of a 1040 tax form from the AIS to be delivered to the Internal Revenue Service is an example of discretionary information.

Question 36

The Certified Information Technology Professional is the position created by the AICPA to recognize CPAs who have the ability to provide skilled professional services on Information Technology.

Question 37

The correct order of effects in the value chain are:

A) Inbound Logistics → Operations → Service
B) Inbound Logistics → Outbound Logistics → Marketing & Sales
C) Inbound Logistics → Operations → Outbound Logistics
D) Inbound Logistics → Operations → Shipping

Question 38

The income statement line item most likely affected by an AIS investment in supply chain that would interface with suppliers would be:

A) Revenues
B) Cost of Goods Sold
C) Selling, General and Administrative Expenses
D) Research and Development Expenses

Question 39

CRM software often includes the use of database marketing tools to learn more about the customers and to develop strong firm-to-customer relationships.

Question 40

Which of the following are not a characteristic of useful information?

A) Easy to understand
B) Feedback value.
C) Timely
D) Representational Faithfulness

Question 41

List and explain three ways that AIS affects the income statement and the firm's profitability.

Question 42

Explain the types of discretionary information a company like Google would collect from its accounting information system.

Question 43

Amazon.com is one of the best at fostering its interaction with their customers by keeping a record of their past purchases and product searches and using that information to recommend other similar products for the customer to consider.How can they use that information to help them in their marketing efforts?

Question 44

The Information Value Chain is defined as:

A) The flow of materials, information, payments, and services
B) The use of computer technology to provide information about business activities to employees across the firm.
C) The overall transformation of data from a business need to the ultimate decision.
D) A centralized database that collects data from throughout the firm.

Question 45

Why would the transform IT strategic role be more impactful on stock price than the automate IT strategic role?

Question 46

Support activities in the value chain does not include:

A) Firm Infrastructure
B) Human Resource Management
C) Procurement
D) Accounting and Finance

Question 47

An example of an AIS that primarily addresses internal business processes includes:

A) Supply chain software
B) Customer relationship management software
C) B2B transaction software
D) Enterprise systems

Question 48

The International Federation of Accountants says:
"IT has grown (and will continue to grow)in importance at such a rapid pace and with such far reaching effects that it can no longer be considered a discipline peripheral to accounting.Rather,professional accounting has merged and developed with IT to such an extent that one can hardly conceive of accounting independent from IT."
In your opinion,why is accounting now interdependent with IT?

Question 49

Stephen Gillett,Starbucks CIO,argues that his most crucial duty is to enhance Starbucks' ability to mine its customer data to help "reignite our passion with our customers." Starbucks used loyalty cards (Starbucks' Reward cards)and surveys to track its customers' purchases and build profiles of their customers as mentioned in the opening chapter vignette.Why is this a good example of customer relationship management (CRM)?

Question 50

A simple information system includes all but the following elements except:

A) Processing
B) Storage
C) Input
D) Reporting

Question 51

The role of accountants in accounting information systems include all except:

A) User
B) Manager
C) Operator
D) Evaluator

Question 52

Some would argue that the role of accounting is simply as an information provider.Others suggest that accountants serve the role of business analyst.Which role produces more value for a company like Starbucks? In the area of accounting information systems,what specifically can the accountant do to serve as a business analyst to help address business opportunities?

Question 53

EBay uses information technology to sell goods on the internet.This would be an example of the ___________ strategic role.

A) Automate
B) Informate - up
C) Transform
D) Informate - down

Question 54

Activity-based costing is an example of:

A) Information overload
B) Mandatory information
C) Discretionary information
D) Enterprise System

Question 55

Business Value is defined as:

A) The monetary value of a business.
B) Items, events and interactions that determine the financial health and well-being of the firm
C) The cost to acquire a business by an outsider.
D) The overall value of taking data and transforming it in to information needed for decision making.

Question 56

Michael Dell of Dell Computer explained:
We tell our suppliers exactly what our daily production requirements are so it is not,"Well,every two weeks deliver 5,000 to this warehouse,and we'll put them on the shelf,and then we'll take them off the shelf." It is,"Tomorrow morning we need 8,562,and deliver them to door number seven by 7 am."
How does the supply chain management software allow this to happen? And how does it save Dell money?

Question 57

The American Institute of Certified Public Accountants (AICPA)and International Federation of Accountants (IFAC)assumes that,at a minimum,all accountants will be proficient in the AIS user role and at least one other role listed above (manager or designer or evaluator).Why would the AICPA and IFAC expect this proficiency?

Question 58

Customer Relationship Management is defined as:

A) A system used to manage and nurture a firm's interactions with its current and potential customers
B) A system used to track a customer's past purchases
C) A system used to connect a firm's suppliers with a firm's customers.
D) A system used to advertise current items on sale to customers.

Question 59

After a college football game,a box score is produced detailing the number of yards passing and running,receptions made and the number of interceptions and fumbles lost (among other statistics).Using the characteristics of useful information (including relevance and reliability),please explain how this box score meets (or does not meet)the characteristics of useful information.How would the football coach use this information to prepare for the next game,decide which players to start,etc.?

Question 60

The Certified Information Systems Auditors (CISA)designation identifies those professionals possessing IT audit,control and security skills.How do you think a professional designation is helpful for IT auditors?

Question 61

Wal-Mart's Retail Link database is one of the world's largest databases and allows many of their suppliers to view real-time sales data of their products for each store.This allows suppliers to assess the demand for their products and to optimize their own level of inventory and related logistics costs.How is this cost savings ultimately passed on to Wal-Mart and its customers?

Question 62

Business value is defined as all items,events and interactions that determine the financial health and well-being of the firm.This value may come from suppliers,customers or employees or even information systems.How would a not-for-profit group like the International Red Cross define business value for its group?