Chapter 6: Enterprise information systems

True/False

1. Only large organisations should use the software framework to select appropriate systems for
their needs. (Introduction, 1st para)

2. When it comes to system selection, an organisation should see what vendors and products are
available in the first place. (Using the software framework, software selection)

3. The software framework suggests that ERP systems, because they are designed to capture a
wide range of information about all business transactions and processes related to four major
areas in an organisation, are superior to single entry systems. (Interpreting the soft. categories)

4. ERP systems streamline business processes and break down functional barriers in
organisations. (Sect. 2)

5. ERP systems adopt a centralised database approach for data storage. (Sect. 3, Operations
facilitation)

6. In ERP systems, business event data precedes master data. (Sect. 3, Operations facilitation)

7. ERP systems only capture data that are internal to an organisation. (Sect. 3, Operations
facilitation)

8. SCM and CRM extend the internal capabilities of ERP systems to suppliers and customers by
capturing data of those suppliers and customers that the organisation deals with respectively.
(Sect. 4, Outwardly organized ERP system modules)

9. The intangible benefits of an ERP system can be measured by calculating ROI. (Sect. 5, ERP
Benefits)

10. ERP systems need to be evaluated using a mix of qualitative and quantitative criteria.
 Chapter 6: Enterprise information systems

Multiple choice

11. An advantage of a single entry system for recording financial data is that it: (table 6.1)

a. allows streamlining of the financial function

b. requires little accounting knowledge in order to be used successfully
c. integrates both operational and financial aspects of business performance
d. is built around a business process based design

12. A major disadvantage of the hybrid systems is that they:

a. are based on business events rather than financial events

b. integrate only the financial and manufacturing areas of a business
c. use independent software
d. have not been able to provide seamless integration across the entire organisation

13. Which of the following is NOT part of the enterprise value chain?

a. Human resources
b. Sales and marketing
c. Accounting and finance
d. Customer relationships

14. When managing an organisation's value chain, the downstream focuses on ________ whereas
the upstream focuses on ________.

a. suppliers; customers
b. shareholders; government agencies
c. employees; managers
d. customers; suppliers

15. There are five steps in selecting the appropriate software for an organisation, being A) select
software; B) determine the software systems requirements; C) define business processes; D)
select vendor; E) develop business requirements. The correct sequence is:

a. ECDAB
b. DECBA
c. ECBDA
d. CEBAD

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16. Which of the following interpretations of the software categories is correct?

a. Systems are arranged in a chronological order (newer to older) from right to left in
Figure 6.1 in the textbook.
b. The distinctions among the categories are absolute.
c. The framework implies that systems to the right are more advanced than systems to the
left.
d. None of the above.

17. Which of the following is NOT an issue that restricts the adoption of outwardly organised
systems?

a. The transaction costs involved in executing a transaction

b. The need for agreement on account standardisation
c. The level of interaction that is to occur through the system
d. The feasibility of small businesses meeting the costs of inter-organisational
coordination

18. A small catering business determines that it must get ingredients freshly delivered the day
before they are required for meal preparation. This is an example of a:

a. Vendor selection
b. Business requirement
c. Business process
d. Stakeholder requirement

19. Which of the following statement is true?

a. The definition of business processes is based on an organisation's business

requirements.
b. The development of business requirements is based on an organisation's business
processes.
c. The definition of business processes and the development of business requirements do
not rely on each other.
d. None of the above.

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20. An organisation that needs to establish an electronic connection with its suppliers' computer
systems should choose a:

a. outwardly organised independent system

b. inwardly organised enterprise value chain system
c. outwardly organised trading partner system
d. inwardly organised hybrid system

21. Which of the following statement is true?

a. ERP systems capture the accounting information for all business processes
b. ERP systems capture a wide range of information for all key business events
c. ERP systems recognise that business functions are separate and unrelated
d. ERP systems divide a business based on either manufacturing or accounting

22. Which of the following statements is not true?

a. ERP systems grew from disparate manufacturing and financial systems into centralised
systems.
b. ERP systems have a centralised database that houses all the operational and financial
information for the business.
c. ERP systems could not become popular if businesses did not begin to view themselves
as a set of cross-functional business processes.
d. The stimulus for the development of ERP systems was brought about by the software
companies' competition on innovation.

23. ERP systems can:

a. assist in the value chain process by reducing costs or improving the quality of
performance of the value chain activities performed in the process.
b. assist in creating value within the activities that are not part of the value chain.
c. assist in creating value in the value chain process by removing non-value-adding
activities.
d. All of the above.

24. An ERP system can be applied to the production/inventory process to balance ________ and
________ of manufacturing.

a. costs; benefits
b. costs; efficiency
c. costs; timeliness
d. efficiency; timeliness

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25. An ERP system can be applied to optimise the ________ and ________ of raw materials by
providing information to assist in the selection of the right material at the right cost from the
right vendor.

a. cost; benefit
b. cost; quality
c. cost; timeliness
d. quality; timeliness

26. In most organisations, ERP systems need not support :

a. the general ledger and financial reporting process

b. the human resources and payroll process
c. the manufacturing process
d. the auditing process

27. Which of the following statements is correct?

a. Every aspect of a business activity can be reconstructed with the help of an ERP
system.
b. Both financial and non-financial data are collected by an ERP system.
c. Organisation can aggregate and summarise data in various forms to answer the
questions that a decision maker may ask with the help of an ERP system.
d. All of the above.

28. Data capture involves the system looking for four dimensions in the business activity,
namely:

a. who, what, where and how

b. who, what, how and when
c. who, when, where and how
d. who, what, where and when

29. There are two types of data in ERP systems that reside in one location in a centralised
database:

a. client data and server data

b. customer data and supplier data
c. business event data and master data
d. internal data and external data

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30. Which of the following statements regarding ERP system modules is incorrect?

a. The sales and distribution module contains functions related to the revenue or sales
order to cash process.
b. The materials management module does not contain functions related to the payment
or purchase to pay process.
c. The financial accounting module is connected to all of the other ERP system modules.
d. The human resources module contains functions that relate to personnel training and
travel.

31. Which of the following statements regarding the controlling and profitability analysis module
in ERP systems is correct?

a. The module handles the analysis of sales, costs and budgets that are used in internal
performance reporting.
b. The module handles the analysis of sales, costs and budgets that are used in external
performance reporting.
c. The module handles the analysis of sales, costs and budgets that are used in both
internal and external performance reporting.
d. None of the above.

32. The financial accounting module in ERP systems does not have:

a. the accounts receivable function

b. the accounts payable function
c. the inventory management function
d. the internal performance reporting function

33. Which of the following is not an example of outwardly organised ERP system modules?

a. Supply chain management

b. Customer relationship management
c. Supplier relationship management
d. None of the above

34. A best-of-breed ERP system

a. represents the latest version of ERP software available on the market

b. allows for easy integration and lower installation costs
c. is a mix of components from various vendors, matched to meet business requirements
d. will always have a consistent look and feel to it

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35. Quantifiable benefits of an ERP system include:

a. reductions in inventory, materials, labour and overhead costs

b. improvements in customer service and sales
c. both a and b.
d. neither a nor b.

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