CHAPTER 1

What are the four levels of activity in the pyramid representing the business organization?
Distinguish between horizontal and vertical flows of information.
The four levels of activity in the pyramid representing the business organizations are the
Operational, operations management, middle management and the top management. Horizontal
flows support operation-level task. The information is highly detailed about the day-to-day
operations. Vertical flows distribute summarized information to managers at all levels, and this
information flows upward.
Distinguish between natural and artificial systems.
Natural system range from the atom to the universe. All life forms, plants and animals,
are example of natural system. While on the other hand, artificial systems are manmade which
includes everything from clocks to airplane and social system to information system.
What are the elements of a system?
The elements of a system are the multiple components, relatedness, subsystem purpose,
and interdependency.
What is system decomposition and subsystem interdependency? How are they related?
System decomposition is the process of dividing the system into smaller subsystem parts,
while the interdependency is the interaction between the subsystems. They area related by the
degree and nature of interaction between the subsystems. If the vital subsystem fails, the entire
system will most likely fail.
What is the relationship among data, information, and an information system?
Data are facts that are collected in a “raw” form and made meaningful through process
such as sorting, aggregating, classifying, mathematically manipulating, and summarizing. The
meaningful data is considered to be information.
Distinguish between AIS and MIS.
AISs process financial transaction and certain nonfinancial transactions that directly
affect the processing financial transactions. The external financial reporting document of AIS are
subject to legal and responsibility for AIS applications than for MIS applications. The MIS
processes nonfinancial transactions that are outside the scope of AIS. MIS applications expand
the information set provided to such areas as production, sales, marketing, and inventory
management. MIS often draws, form and builds on data from the AIS.
What are the three cycles of transaction processing systems?
The three cycles of transaction processing systems are the Revenue Cycle, Expenditure
Cycle, and the Conversion Cycle.
What is discretionary reporting?
Discretionary reporting is a reports used by management, which the company is not
obliged by law, regulation and contract provide. These are often used by internal problem
solving issues rather than by external constituents.
What are the characteristics of good or useful information?
The characteristics of good or useful information are the Relevance, Accuracy,
Completeness, Summarization, and Timeliness.
What rules govern data collection?
The rules govern data collection are the Relevance which make a difference I the
decisions of the users, and the Efficiency.
What are the levels of data hierarchy?
The levels of data hierarchy are the Data attribute, Record, File, and the Database.
What are the three fundamental tasks of database management?
The three fundamental tasks of database management are the Storage, Retrieval and
Deletion.
What is feedback and how is it useful in an information system?
Feedback is output that is sent back to the system as a source of data. Feedback is useful
because it can be used to initiate or adjust the system processes.
What are the fundamental objectives of all information systems?
The fundamental objectives of all information systems are first to support the stewardship
function of management, second is to support the decision-making processes of managers, and
lastly is to support the da-to-day operations of the firm.
What does stewardship mean and what is its role in an information system?
Stewardship is the responsibility of management to properly utilize the resources of the
firm entrusted to them. Information system provide management with reports to better manage
the resources and also to provide responsibility reports by which management may be evaluated.
Distinguish between responsibility, authority, and accountability. Which flow upward and
which flow downward?
Budgets and standards are set by the upper-management levels. The responsibility for
meeting these goals is passed to managers at the closest operational level. In order for these
managers to have power to make a difference as to whether these goals and/or standards are met,
they must be entrusted with the appropriate level of authority to make decisions. Responsibility
of goals and standard, along with corresponding authoritative powers, flow downward. The
result of the operations must flow upward to upper-level management. These upward flows
represents report, which hold managers accountable for their decisions and management actions.
Distinguish between turnkey, backbone, and vendor-supported systems.
Turkey systems are ready to implement systems that may be purchased. Backbone system
are partially developed system with an underlying basic structure that is built on to suit the
client’s unique needs. Vendor-supported system are custom system provided, maintained and
supported by a commercial vendor.