Q1.

What are the four levels of activity in the pyramid representing the business
organization?
1. Top management is responsible for longer-term planning and setting
organizational objectives.
2. Middle management is accountable for the short-term planning and coordination
of activities necessary to accomplish organizational objectives.
3. Operations management is directly responsible for controlling day-to-day
operations.
4. Operations personnel​ perform the day-to-day operations.

Distinguish between horizontal and vertical flows of information.

The ​horizontal flow supports operations-level tasks with highly detailed information
about the many business transactions affecting the firm.
The ​vertical flow distributes information downward from senior managers to junior
managers and operations personnel in the form of instructions, quotas, and budgets.

What is external flow of information?

It is the third flow of information which represents exchanges between the organization
and users in the external environment. External users fall into two groups: trading
partners and stakeholders. Exchanges with trading partners include customer sales and
billing information, and so on. Stakeholders are entities outside (or inside) the
organization (such as stockholders, financial institutions, and government agencies)
with a direct or indirect interest in the firm.

Q2. Distinguish between natural and artificial systems.

Natural systems range from the atom —a system of electrons, protons, and neutrons—
to the universe; a system of galaxies, stars are man-made. Examples of natural
systems include all life forms, plants and animals.
Artificial systems are man-made. These systems include everything from clocks to
submarines and social systems to information systems.

Q3. What are the elements of a system?

1. Multiple Components.​ A system must contain more than one part.
2. Relatedness​. A common purpose relates the multiple parts of the system.
Although each part functions independently of the others, all parts serve a
common objective.
3. System versus subsystem. The distinction between the terms system and
subsystem is a matter of perspective.
4. Purpose​. A system must serve at least one purpose, but it may serve multiple.
Q4. What is system decomposition and subsystem interdependency? How are
they related?
System Decomposition is the process of dividing the system into smaller subsystem
parts. This is a convenient way of representing, viewing, and understanding the
relationships among subsystems. By decomposing a system, we can present the overall
system as a hierarchy and view the relationships between subordinate and higher-level
subsystems.
Subsystem Interdependency. A system’s ability to achieve its goal depends on the
effective functioning and harmonious interaction of its subsystems. If a vital subsystem
fails or becomes defective and can no longer meet its specific objective, the overall
system will fail to meet its objective.
The relation of these two points is that these are important to the study of information
systems.

Q5. What is the relationship among data, information, and an information

system?
Data are facts, which may or may not be processed (edited, summarized, or refined)
and have no direct effect on a user's actions.
Information causes the user to take an action that he or she otherwise could not, or
would not, have taken. Information is determined by the effect it has on the user. Thus,
the relation is an information system is the act of formal procedures by which data are
collected, stored, processed into information, and distributed to users.

Q6. Distinguish between AIS and MIS.

The distinction between AIS and MIS centres on the concept of a transaction.
The ​Accounting Information System or the ​AIS subsystems process financial
transactions and non financial transactions that directly affect the processing of financial
transactions. It includes the General Ledger/Financial Reporting System (GL/FRS),
Transaction Processing System (TPS), and Management Reporting System (MRS).
The ​Management Information System or MIS processes non financial transactions that
are not normally processed by traditional AIS. This includes the Financial Management
Systems, Marketing Systems, Distribution Systems, and Human Resource Systems.
MIS manages the information systems for specialized functional areas such as
production planning and control, sales forecasting, inventory warehouse planning,
market research, and so on.

What is a transaction?
A ​transaction as an event that affects or is of interest to the organization and is
processed by its information system as a unit of work.
What is a financial transaction?
A ​financial transaction is an economic event that affects the assets and equities of the
organization, is reflected in its accounts, and is measured in monetary terms. Some
examples of financial transactions are sales of products to customers, purchases of
inventory from vendors, and cash disbursements and receipts.

What is a non-financial transaction?

Non-financial transactions are events that do not meet the narrow definition of a
financial transaction. For example, adding a new supplier of raw materials to the list of
valid suppliers is an event that may be processed by the enterprise’s information system
as a transaction.

Q7. What are the three cycles of transaction processing systems?

The types of transactions are grouped together into transaction cycles. These include:
the revenue cycle, the expenditure cycle, and the conversion cycle. Each of these
cycles captures and processes different types of financial transactions.

Q8. What is discretionary reporting?

Discretionary reporting ​is when the organization can choose information to report and
how to present it. Typically these are reports generated for internal use. Management
Reporting System is a type of discretionary reporting.

Q9. What are the characteristics of good or useful information?

● Relevance​. The contents of a report must serve purpose
● Timeliness. Information must be no older than the time frame of the action it
supports,
● Accuracy.​ Information must be free from material errors
● Completeness. No piece of information essential to a decision or task should be
missing.
● Summarization.​ Information should be aggregated in accordance with the user's
needs.

Q10. What rules govern data collection?

The two rules that govern the design of data collection procedures are ​relevance and
efficiency.

Q11. What are the levels of data hierarchy?

The levels of data hierarchy are ​attribute, record, and file.​ Each file is a complete set of
records of an identical class. Each record is a complete set of attributes for a single
occurrence within an entity class. Each attribute is the most elemental piece of
potentially useful data in the database.

Q12. What are the three fundamental tasks of database management?

● Storage.​ It assigns keys to new records and stores them in their proper location
in the database.
● Retrieval​. The task of locating and extracting an existing record from the
database for processing.
● Deletion​. The task of permanently removing obsolete or redundant records from
the database.

Q13. What is feedback and how is it useful in an information system?

Feedback is a form of output that is sent back to the system as a source of data.
Feedback may be internal or external and is used to initiate or alter a process. Internal
feedback from this information will initiate the inventory ordering process to replenish
the inventories. Similarly, external feedback about the level of uncollected customer
accounts can be used to adjust the organization’s credit-granting policies.

Q14. What are the fundamental objectives of all information systems?

● To support the stewardship function of management
● To support management decision making
● To support the firm’s day-to-day operations

Q15. What does stewardship mean and what is its role in an information system?
Stewardship refers to management’s responsibility to properly manage the resources of
the firm. The information system provides information about resource utilization to
external users via traditional financial statements and other mandated reports.
Internally, management receives stewardship information from various responsibility
reports.

Q16. Distinguish among responsibility, authority, and accountability. Which flow

upward and which flow downward?
● Responsibility is the state or fact of having a duty to deal with something or of
having control over someone.
● Authority is the power or right to give orders, make decisions, and enforce
obedience.
● Accountability is the state of being accountable, meaning responsible for
something or obligated to answer to someone, such as a person with more
authority, like a boss.
Responsibility and Authority flows downward to the managers while Accountability flows
upward to the president.

Q17. Distinguish between turnkey, backbone, and vendor-supported systems.

Turnkey systems are completely finished and tested systems that are ready for
implementation. Typically, they are general-purpose systems or systems customized to
a specific industry.
Backbone systems consist of a basic system structure on which to build. The primary
processing logic is preprogrammed, and the vendor then designs the user interfaces to
suit the client’s unique needs. This approach can produce satisfactory results, but
customizing the system is costly.
Vendor-supported systems are custom systems that client organizations purchase
commercially rather than develop in-house. The software vendor designs, implements,
and maintains the system for its client.

Q18. List each of the functional areas and their sub-functions.

1. Materials Management
● Purchasing
● Receiving
● Stores
2. Production
● Manufacturing
● Support
3. Marketing
● Promotion
● Advertising
● Market Research
● Sales
4. Distribution
● Warehousing
● Shipping
5. Personnel
● Recruiting
● Training
● Benefits
● Counseling
6. Finance
● Portfolio Management
● Treasury
● Credit
 ● Cash Disbursement
● Cash Receipts
7. Accounting
● Inventory Control
● Cost Accounting
● Payroll
● Accounts Payable
● Accounts Receivable
● Billing
● Fixed Assets
● General Ledger
8. Information Technology
● Centralized Data Processing Approach
● Distributed Data Processing Approach
● System Development and Maintenance

Q19.

Q20. What is the role of a database administrator?

The database administration which is headed by the database administrator who is
responsible for the security and integrity of the database. Centrally organized
companies maintain their data resources in a central location that is shared by all end
users.

Q21. Name the three most common ways to segment an organization.

● Geographic Location. Many organizations have operations dispersed across the
country and around the world. They do this to gain access to resources, markets,
or lines of distribution.
● Product Line. Companies that produce highly diversified products often organize
around product lines, creating separate divisions for each.
● Business Function. Functional segmentation divides the organization into areas
of specialized responsibility based on tasks.

Q22. What is the role of the accounting function in an organization?

The accounting function manages the financial information resource of the organization.
It plays two significant roles in transaction processing. First, accounting captures and
records the financial effects of the firm’s transactions. Second, it distributes transaction
information to operations personnel to coordinate many of their key tasks.
Q23. Distinguish between the centralized and distributed approaches to
organizing the IT function.
Under the ​centralized data processing model of the IT function, all data processing is
performed by one or more large computers housed at a central site that serve users
throughout the organization. IT activities are consolidated and managed as a shared
organization resource.
On the other hand, the ​distributed data processing (DDP) approach is an alternative to
the centralized model. DDP involves reorganizing the IT function into small information
processing units (IPUs) that are distributed to end users and placed under their control.

Q24. What is the role of the data control group?

The data control groups have all but disappeared from modern organizations.
Traditionally, this function was responsible for receiving batches of transaction
documents for processing from end users and then distributing computer output back to
the users. Today, this function is usually automated and distributed back to the end
users. However, some organizations with older legacy systems may still use a data
control group as a liaison between the end user and data processing.

Q25. What is distributed data processing?

DDP involves reorganizing the IT function into small information processing units (IPUs)
that are distributed to end users and placed under their control. IPUs may be distributed
according to business function, geographic location, or both. Any or all of the IT
activities like systems development, database administration, and the like, may be
distributed.

Q26. What are the advantages and disadvantages of distributed data processing?

Advantages Disadvantages

● Cost reductions ● Mismanagement of

● Improved cost control responsibility organization-wide resources
● Improved user satisfaction ● Hardware and software
● Backup incompatibility
● Redundant tasks
● Consolidating incompatible
activities
● Hiring qualified professionals
● Lack of standards

Q27. What types of tasks become redundant in a distributed data processing

system?
Autonomous systems development activities distributed throughout the firm can result in
each user area reinventing the wheel. For example, application programs created by
one user, which could be used with little or no change by others, will be redesigned from
scratch rather than shared. Likewise, data that are common to many users may be
recreated for each IPU, resulting in a high level of data redundancy.