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Understanding AIS and Information

1. The document discusses key concepts in accounting information systems including: the difference between data and information; characteristics that make information useful; and how to determine the value of information. 2. It also provides examples that test understanding of these concepts, such as describing how accounting systems process data to provide users with information, and what characteristic is absent when inventory information provided in real-time lacks reliability. 3. The final example demonstrates goal conflict, where rewarding employees based on return on investment alone discouraged an innovation that could improve a product despite having a lower projected ROI.

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182 views3 pages

Understanding AIS and Information

1. The document discusses key concepts in accounting information systems including: the difference between data and information; characteristics that make information useful; and how to determine the value of information. 2. It also provides examples that test understanding of these concepts, such as describing how accounting systems process data to provide users with information, and what characteristic is absent when inventory information provided in real-time lacks reliability. 3. The final example demonstrates goal conflict, where rewarding employees based on return on investment alone discouraged an innovation that could improve a product despite having a lower projected ROI.

Uploaded by

HagarMahmoud
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1- Explain system concept, goal conflict, and goal congruence.

2- Distinguish between data and information, discuss the characteristics of useful


information, and explain how to determine the value of information.

3- Which of the following statements below shows the contrast between data and
information?
A) Data is the output of an AIS.
B) Information is the primary output of an AIS.
C) Data is more useful in decision making than information.
D) Data and information are the same.
Answer: B

4- Information is best described as


A) raw facts about transactions.
B) data that has been organized and processed so that it is meaningful to the
user.
C) facts that are useful when processed in a timely manner.
D) the same thing as data.
Answer: B

5- 3) The value of information can best be determined by


A) its usefulness to decision makers.
B) its relevance to decision makers.
C) the benefits associated with obtaining the information minus the cost of
producing it.
D) the extent to which it optimizes the value chain.
Answer: C

6- An accounting information system (AIS) processes ________ to provide users


with ________.
A) data; information
B) data; transactions
C) information; data
D) data; benefits
Answer: A

7- ________ information reduces uncertainty, improves decision makers' ability to


make predictions, or confirms expectations.
A) Timely
B) Reliable
C) Relevant
D) Complete
Answer: C
8- Information that is free from error or bias and accurately represents the events
or activities of the organization is
A) relevant.
B) reliable.
C) verifiable.
D) timely.
Answer: B

9- Information that does not omit important aspects of the underlying events or
activities that it measures is
A) complete.
B) accessible.
C) relevant.
D) timely.
Answer: A

10- Information is ________ when two knowledgeable people independently


produce the same information.
A) verifiable
B) relevant
C) reliable
D) complete
Answer: A

11- 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
A) relevancy.
B) timeliness.
C) understandability.
D) reliability.
Answer: D

12- Inventory information is provided in real time by a firm's accounting information


system. The accuracy of this information is questionable, however, since the
production manager often reports stock outs of components that the system
indicates are in stock. Which of the following characteristics of useful
information is absent in the situation described above?
A) relevant
B) reliable
C) complete
D) timely
E) understandable
F) verifiable
G) accessible
Answer: B

13- Cheryl Metrejean has been the controller of Downtown Tires for 25 years.
Ownership of the firm recently changed hands and the new owners are
conducting an audit of the financial records. The audit has been unable to
reproduce financial reports that were prepared by Ms. Metrejean. While there is
no evidence of wrongdoing, the auditors are concerned that the discrepancies
might contribute to poor decisions. Which of the following characteristics of
useful information is absent in the situation described above?
A) relevant
B) reliable
C) complete
D) timely
E) understandable
F) verifiable
G) accessible
Answer: F

14- Baggins Incorporated identifies new product development and product


improvement as the top corporate goals. An employee developed an innovation
that will correct a shortcoming in one of the company's products. Although
Baggins current Return on Investment (ROI) is 15%, the product innovation is
expected to generate ROI of only 12%. As a result, the employee fails to follow
up. As a result, awarding bonuses to employees based on ROI resulted in
A) goal conflict.
B) information overload.
C) goal congruence.
D) decreased value of information.
Answer: A

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