Chapter 2 - CHAPTER 2 OVERVIEW OF BUSINESS PROCESSES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 2.1 Three different types of information exist in

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CHAPTER 2 OVERVIEW OF BUSINESS PROCESSES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 2.1 Three different types of information exist in Table 2.1: 1. Internally-generated financial data 2. Internally-generated operating data 3. Externally-generated data. Internally generated financial data would be captured directly on source documents that are processed by the AIS and would be reported in traditional financial statements. Internally generated operating data can be captured in two ways. Some of this data (e.g., time worked) would be captured on source documents. Other data (e.g., employee skills) would traditionally be captured and stored by an information system that is not part of the AIS itself. The AIS, however, should be redesigned so as to integrate this data with the other transaction-oriented data. Some of the data (e.g., information on market share and customer satisfaction) must come from external sources. The AIS should be designed to store this data in an integrated manner with internally generated data. 2.2 The fact that all documents are prenumbered provides a means for accounting for their use and for detecting unrecorded transactions. Thus, a missing check indicates a meal for which a customer did not pay. Since each server has his or her own set of checks, it is also easy to identify which server was responsible for that customer. This policy may help to deter theft (e.g., serving friends and not requiring them to pay for the meal, or pocketing the customer’s payment and destroying the check) because a reconciliation of all checks will reveal that one or more are missing. 2.3 An organization’s AIS must reflect its line of business. For example: Manufacturing companies will need a set of procedures and documents for the production cycle; non-manufacturing companies do not. Government agencies need procedures to separately track all inflows and outflows from various funds, to ensure that legal requirements about the use of specific funds are followed. Financial institutions do not need extensive inventory control systems. Passenger service companies (e.g., airlines, bus, and trains) generally receive payments in advance of providing services. Therefore, extensive billing and accounts receivable procedures are not needed; instead, they must develop procedures to account for prepaid revenue.
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Construction firms typically receive payments at regular intervals, based on the percentage of work completed. Thus, their revenue cycles must be designed to carefully track all work performed and the amount of work remaining to be done. Service companies (e.g., public accounting and law firms) do not sell physical goods and, therefore, do not need inventory control systems. They must develop and maintain detailed records of the work performed for each customer to provide backup for the amounts billed. Tracking individual employee time is especially important for these firms because
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This note was uploaded on 05/16/2011 for the course MBA 770 taught by Professor Richardkido during the Spring '11 term at Chaminade University.

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Chapter 2 - CHAPTER 2 OVERVIEW OF BUSINESS PROCESSES SUGGESTED ANSWERS TO DISCUSSION QUESTIONS 2.1 Three different types of information exist in

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