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ACTG 474 – MIDTERM STUDY GUIDE
Data - Answers - Facts collected, recorded, and stored in the system. Information - Answers - Organize the data with a context. Information Overload - Answers - Too much information can reduce decision quality. Information Technology (IT) - Answers - Help decision makers more effectively filter and condense information. Value of Information - Answers - Benefit - Cost Relevant - Answers - Information needed to make a decision. Reliable - Answers - Information free from bias. Complete - Answers - Does not omit important aspects. Timely - Answers - Information needs to be provided in time to make the decision. Understandable - Answers - Presented in a meaning manner. Verifiable - Answers - Two independent people can produce the same conclusion. Accessible - Answers - Available when needed. Business Process - Answers - Activities and tasks performed by people and/or machines to achieve an organizational goal. Transactions - Answers - Exchange of goods and services between two entities that can be measured by economic terms. (Give-Get Exchange) Transaction Processing - Answers - Create financial statements. Flow of Information - Answers - Give-get exchange grouped into business processes or transaction cycles. Accounting Information System at S&S - Answers - Vendors, customers, investors, employees, creditors, management, banks, and government agencies. Revenue or Expenditure Cycle - Answers - Goods or services for cash.
Production Cycle - Answers - Labor or raw materials for finished goods. Payroll Cycle - Answers - Cash for labor. Financing Cycle - Answers - Cash for cash. Accounting Information System - Answers - Collects, records, stores, and processes data to produce information for decision makers. Accounting Information System - Added Value - Answers - Improve quality, efficiency, internal control structure, and decision making. Reduce costs. Share knowledge. Value Chain - Answers - Links together different activities within an organization that provide value to the customer. Supply Chain - Answers - Extended system which includes the value chain, suppliers, distributors, and customers. Primary Activities - Answers - Inbound logistics, operations, outbound logistics, marketing & sales, service. Support Activities - Answers - Firm infrastructure, human resources, technology, purchasing. Data Processing Cycle - Answers - Data Input, Data Processing (Data Storage), Information Output. Data Input - Answers - Capture transaction, accurate & complete, and company policies are followed. Data Capture - Answers - Activity of interest, resources affected, and participants. Source Documents - Answers - Paper source and turnaround documents. (Source data automation) Data Storage - Answers - Chart of accounts, transaction journals, subsidiary ledgers, and general ledger. Coding Techniques - Answers - Sequence, block, group, and mnemonic codes. Sequence Codes - Answers - Numbered consecutively. Block Codes - Answers - Numbers reserved for specific categories. Group Codes - Answers - Two or more subgroups of digits that are used to code an item.
Application Controls - Answers - Prevent , detect, and correct transactions. Errors and fraud. Accuracy, completeness, validity, and authorization. Foreign Corrupt Practices Act (FCPA) - Answers - Prevent bribing and and maintain a system of internal accounting controls. Sarbanes-Oxley Act (SOX) - Answers - Prevent financial statement fraud, financial report transparent, protect investors, strengthen internal controls, and punish executives. COBIT - Answers - Framework for IT control. COSO - Answers - Framework for enterprise internal controls (control-based approach). COSO-ERM - Answers - Expands COSO framework taking a risk-based approach. Control - Answers - Stakeholders, enterprise (end to end), one framework (fully integrated), and governance (board of directors). COBIT5 Governance and Management - Answers - Governance: Monitor, evaluate (management feedback), and direct. Management: Plan, build, run, and monitor. Internal Environment - Answers - Management philosophy, integrity, ethical values, competence, organizing structure, authority, responsibility, and human resources standards. Objective Setting - Answers - Strategic, operations, reporting, and compliance objectives. Event Identification - Answers - External and internal incidents that affect the achievement of objectives. Risk Assessment - Answers - Likelihood and impact. Types of Risk - Answers - Inherent (exists before) and residual (left over). Risk Response - Answers - Reduce (ideal), accept, share, and avoid. Control Activities - Answers - Authorization, segregation, development, acquisition, management controls, documents, records, safeguarding, and independent checks. Segregation of Accounting Duties - Answers - Custodial (cash), recording (journal), and authorization functions (approval).
Document Systems - Purpose - Answers - Accountants read documents and understand the system. Sarbanes-Oxley Act requires internal controls and evaluate assessment. Data Flow Diagrams (DFD) - Answers - Process, sources & destinations, and data stores. Data Flow Diagram Elements - Answers - Data Source, Data Flow, Process (Data Destination), Data Flow, Process (Data Destination), Data Flow, Data Destination. Flowcharts - Answers - Inputs & outputs, information activities, data storage, data flows, and decision steps. Types of Flowcharts - Answers - Document (flow), system (data), and program (process).
