Accounting

Accounting Information Systems

Chapter 1

End of Chapter Activities

Reading review questions

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_1. _What are the essential elements of an accounting information system? Accounting information systems typically comprise five elements: inputs, processes, outputs, storage and internal controls. The elements work together to provide reliable information effectively and efficiently.

_In what ways would the use of computers increase the cost of operating an AIS? In what ways would computers decrease the cost_? Computers would increase the cost of operating an AIS because they create unique internal control issues; they also require training and updating. And, computers may require special environmental conditions such as locked doors and adequate ventilation. On the other hand, computers can decrease the cost of operating an AIS by making transaction processing more efficient.

How do the elements interact to provide accounting information to internal and external decision makers? Inputs, such as remittance advices and purchase requisitions, provide the necessary data for processes (such as creating journal entries). The processes reorganize or otherwise transform data, making it into output information that people can use for decision making. All three items typically need to be stored for a period of time, while internal controls throughout the system help promote integrity and reliability while keeping assets safe.

Terminology _Each chapter also includes an exercise like this one. Not only will completing them help you master each chapter’s vocabulary; you may also find questions like this one on your class exams and accounting professional exams. Please match each item on the left with the most appropriate item on the right._

Multiple choice questions _Each...