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AIS Chapter 2

Terms in this set (46)

transaction
an agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization
transaction process
begins with capturing transaction data and ends with an informational output such as the financial statements
business or transaction cycles
revenue cycle, expenditure cycle, production cycle, human resources/payroll cycle, financing cycle
revenue cycle
where goods and services are sold for cash or a future promise to receive cash
expenditure cycle
where companies purchase inventory for resale or raw materials to use in producing products in exchange for cash or a 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 cycle
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 for both management and external parties
data processing cycle
operations performed on data to generate meaningful and relevant information are referred to collectively
source documents
paper documents to collect data about their business activities
turnaround documents
records of company data sent to an external party and then returned to the system as input; prepared in machine-readable form to facilitate their subsequent processing as input records
source data automation
another means to improve the accuracy and efficiency of data input; capture transaction data in machine-readable form at the time and place of their origin.
general ledger
contains summary-level data for every asset, liability, equity, revenue, and expense account of the organization
subsidiary ledger
records all the detailed data for any general ledger account that has many individual subaccounts
control account
the general ledger account corresponding to a subsidiary ledger
coding
the systematic assignment of numbers or letters to items to classify and organize them.
sequence codes
items are number consecutively to ensure that there will be no gaps in the sequence.
block codes
blocks of numbers within a numerical sequence are reserved for categories having meaning for the user
group codes
often used in conjunction with the block code; two or more subgroups of digits are used to code the item
chart of accounts
a list of all general ledger accounts an organization uses
general journal
used to record infrequent or nonroutine transactions
specialized journal
used to simplify the process of recording large numbers of repetitive transactions such as credit sales, cash receipts, purchases on account, and cash disbursements
audit trail
provides a means to check the accuracy and validity of ledger postings
entity
something about which information is stored
attributes
characteristics of interest
field
a physical space
record
a set of fields that contain data about various attributes of the same entity
data value
contents of a field
file
when related records are grouped
master file
store cumulative information about an organization's resources and the agents with whom it interacts
transaction file
contain records for the individual business transactions that occur during a specific fiscal period
database
a set of interrelated, centrally coordinated files
creating
adding new data records
reading
retrieving or viewing existing data
batch processing
periodic updating of data
online real-time processing
updating as each transaction occurs
documents
records of transaction or other company data
operational documents
documents generated at the end of transaction processing activities
reports
prepared for both internal and external users. used by employees to control operational activities and by managers to make decisions and to design strategies for the business
budgets
formal expressions of goals in financial terms
cash budget
shows projected cash inflows and outflows
performance reports
compare standard, or expected, performances with actual performance
Enterprise resource planning systems
designed to overcome problems as they integrate all aspects of a company's operations with its traditional AIS
The four steps of Data Processing Cycle
1) Data Input
2) Data Storage
3) Data Processing
4) Information Output
Three facets that must be collected about data of each business activity
1) Each activity of interest
2) The resource(s) affected by each activity
3) The people who participate in each activity
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