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115 terms

Accounting Information Systems Test 1

STUDY
PLAY
system
a set of two or more interrelated components interacting to achieve a goal
Goal Conflict
components act in their own interest without regard for overall goal
Goal congruence
Act in own interest to achieve overall goal
Data
Facts recorded and stored; a companies main resources
Information
processed data used in decision making
information overload
too much information to make a decision
Benefits of Information
reduce uncertainty, improve decisions, improves planning, improves scheduling
Costs of Information
Time and resources
Relevant, reliable, complete
What makes information useful?
Relevant
The capacity of information to make a difference in a decision by helping users to form predictions about the outcomes of past, present, and future
Business Process
A set of related, coordinated, and structured activities performed to carry out a certain goal
Transaction
is an agreement between two two entities to exchange goods or services
Transaction Processing
The process that begins with capturing transaction data and ends with informational output, such as the financial statements
Give-get exchange
An agreement between two entities to exchange goods or services
Revenue, expenditure, production, human resource, financing
5 business process transaction cycles
revenue cycle
where goods and services are sold for cash or a future promise to receive cash
expenditure cycle
where companies purchase inventory for relsale or raw materials to use in producing products in exchange for cash or future promise to pay cash
production cycle
where raw materials are transformed into finished goods
Human resources/payroll cycle
where employees are hired, trained, compensated, evaluated, promoted, and terminated
Financing
where companies sell shares in the company to investors and borrow money and where investors are paid dividends and interest is paid on loans
General ledger and reporting system
used to generate information about business transactions for both management and external parties; at the heart of the AIS in fig 1-2
Accounting information system
collects, records, stores, and processes accounting and other data to produce information for decision makers; primary information system for an organization; information providing vehicle; can be paper and pencil or a computer system
predictive analysis
uses data warehouses and complex algorithms to forecast future events, based on historical trends and calculated probabilities
value chain
consists of five primary activities that directly provide value to customers
primary activities of value chain
inbound logistics, operations, outbound logistics, marketing and sales, service
support activities
firm infrastructure, human resources, technology, purchasing
supply chain
a set of activities a product or service moves along before as output it is sold to a customer
inbound logistics, operations, outbound logistics, marketing and sales, service
5 primary activities of the value chain
firm infrastructure, human resources, technology, purchasing
4 support activities of the value chain
business strategy, organizational culture, business developments
3 factors that influence the design of AIS
Components of AIS
1. the people who use the system 2. the procedures and instructions used to collect, process, and store data 3. the data about the organization and its business activities 4. the software used to process the date 5. the information technology infrastructure 6. The internal controls and security measures that safeguard AIS data
How AIS adds value
improves quality and reduces costs of products or services, improves efficiency, shares knowledge, improves the efficiency and effectiveness of its supply chain, improving the internal control structure, improving decision making
Data processing cycle
The operations performed on data to generate meaningful and relevant information
Data Input, data storage, Data processing, information output
4 Stages of the data processing cycle
Source Documents
paper documents, like a purchase order
turnaround documents
company output sent to an external party, who often adds data to the document, and then are returned to the company as an input document, usually paper based
Source data automation
devices capture transaction data in machine-readable form at the time and place of their origin. ATMs, POS Scanners, bar codes
okay got it
Review Table 2-1
Accurate and Complete
well designed documents and screens improve this by providing instructions or prompts, grouping logically related pieces of information, using checkoff boxes or pull down menus to present the available options and using appropriate shading and borders to clearly separate data items.
General ledger
contains SUMMERY-level data for every asset, liability, equity, revenue, and expense account
subsidiary ledger
contains DETAILED data for any general ledger account with many individual sub accounts
General Journal
used to record INFREQUENT or non routine transactions such as payments and end of period adjusting and closing entries
Specialized journal
records large numbers of REPETITIVE transactions such as sales, cash receipts, and cash disbursements
Coding
companies assign systematic assignment of numbers or letters to items to classify and organize them
sequence codes
items are numbered consecutively (pre-numbered checks)
block code
numbers are reserved for specific categories of data
Group codes
tow or more subgroups of digits used to code items, are often used in conjunction with block codes
mnemonic codes
letters and numbers are interspersed to identify an item. dry300w05, or low end (300), white (W), dryer (dry), whirlpool (05)
Guidelines for a better coding system
consistent with intended use, allow for growth, simple as possible, consistent with the company's organizational structure
Audit trail
traceable path of a transaction through a data processing system from point of origin to final output, or backwards from final output to point of origin
entity
something an orginization wants to tore data about
database
a collection of integrated files
transaction file
contains data used to update master file
master file
all permanent records
4 main activities of data processing
create new records, read existing records, update records, delete records C.R.U.D.
batch processing
update something periodically - once a week updating sales records
Online/Real-time processing
updates as they occur
hard copy
printed on paper
soft copy
on a computer
Enterprise Resource Planning systems (ERP)
Provides a single view of an organization's data in one place, integrate all aspects of a company's operations with a traditional AIS
Advantages of an ERP system
Greater visability, data entered once, one stop shop
Disadvantages of an ERP system
extremely costly, time consuming (lots of testing), extremely complicated
Fraud
gain an unfair advantage over another person, must have a false statement, material fact that induces someone to act, intent to deceive, justifiable reliance, injury or loss suffered by another person
white collar criminal
people who commit fraud
misappropriation of assets
theft of company assets, largest factors are absence of internal control system and failure to enforce internal control system
fraudulent financial reporting
intentional or reckless conduct, whether by act or omission, that results in materially misleading financial statements
Reasons for fraudulent financial reporting
deceive invested creditors, increases a companies stock price, meet cash flow needs, hide company losses or other problems
Tread way commission
commission suppose to reduce fraud, recommends four actions to reduce fraudulent financial reporting. establish an environment that contributes to integrity, identify and understand the factors that lead to fraudulent financial reporting, assess the risk of FFR within the company, design and implement internal controls to provide reasonable assurance of preventing fraudulent financial reporting
SAS # 99
in their responsibility to detect fraud it requires auditors to: understand fraud, discuss the risks of material fraudulent misstatements, obtain information, identify asses and respond to risks, evaluate the results of their audit tests, document and communicate findings, incorporate a technology focus
Fraud triangle
Pressure, Opportunity, Rationalization
pressure
motivation to commit fraud; two types employee and financial reporting
employee pressure
needs more money, life style, emotional
financial statements pressure
industry conditions, management characteristics
Opportunity
condition that allows someone to: commit fraud, conceal fraud (lapping, kiting), or convert theft of misrepresentation to personal gain
rationalization
Justification, attitude, lack of personal integrity
Lapping
a perpetrator steals the cash or check payments customer A mails in to pay its accounts receivable, later funds from customer B are used to pay off A's balance, funds from customer C are used to pay B's balance and so on
Kiting
cash is created using the lag between the time a check is deposited and the time it clears the bank.
computer fraud
illegal act in which computer technology knowledge is used for perpetration, investigation, or procecution
Input fraud
altering or falsifying input
processor fraud
unauthorized system use
computer instructions fraud
modifying software, illegal copying of software in an unauthorized manner, creating software
Data fraud
illegally using copying, browsing, searching, or harming company data
Hacking
unauthorized access, modification or use of a computer sytem or other electronic data
social engineering
Techniques that trick a person into disclosing confidential information, used to gain access to a secure environment
Bot-net
Network of hijacked computers, carry out processes without user's knowledge
zombie
hijacked computer
Denial-of-service attack
constant stream of requests made to a web-server, usually in a botnet, that overwhelms and shuts down service
spoofing
making electronic communication look like it came form a trusted source
virus
attacks on computers/programs
worms
attacks on networks
password cracking
penetrating system defenses, stealing passwords, and decrypting them to access system programs, files, and data
war dialing
dialing phone lines to find idle modems to use ro enter a system, capture the attached computer, and gain access to its networks
phreaking
attacking phone systems to get free phone access; using phone lines to transmit viruses and to access, steal and destroy data
data diddling
changing data before, during, or after it is entered into the system
data leakage
unauthorized copying of company data
salami technique
stealing tinay slices of money over time
economic espionage
the theft of information, trade secrets , and intellectual property
cyber bullying
using computer technology to harm another person
internet terrorism
using the internet to disrupt communications and ecommerce
internet auction
using an internet auction site (ebay) to defraud another person
internet misinformation
using the internet to spread false or misleading information
identity theft
assuming someone's identity by illegally obtaining confidential information such as a social security number
posing
creating a seemingly legitimate business, collecting personal data while making a sale, and never delivering items sold
phishing
communications that request recipients to disclose confidential information by responding to an email or visiting a web site
type squatting
web sites with names similar to real web sites users making typographical errors are sent to a site filled with malware
scavenging
searching for confidential information by searching for document and records in garbage cans, communal trash bins, and city dumps
shoulder surfing
watching or listening to people enter or disclose confidential data
Lebanese looping
inserting a sleeve into an ATM so that it will not eject the victim's card, pretending to help the victim as a means to discover his or her pin, and then using the card and pin to drain the account
chipping
planting a chip that records transaction data in a legitimate credit card reader
eavesdropping
Listening to private voice or data transactions
spyware
secretly goes in your computer, gets information and sends it to someone else
ad-ware
type of spyware that collects information about spending habits
Trojan Horse
Malicious computer instructions in an otherwise properly functioning program
Time bomb/ logic bomb
software that sits idle until a specified circumstance or time triggers it, destroying programs, data, or both
Trap door/ back door
a back door into a system that bypasses normal system controls