IT KNOWLEDGE

CHAPTER O1: INFORMATION WITHIN ORGANIZATION

01. What is Information Technology? (May’2010)

Information technology is the study, design, development, implementation, management of computer
based information system particularly software application and hardware.

02. What is information?

Information is data that has been processed into a form that is meaningful to the recipient and helps to
make decision. For example: Data regarding sales.

03. What are the difference between data and information? (Nov’2010)
Data is raw, unanalyzed fact figure and events.
Data is unprocessed instruction

On the other hand,

Information is the structured format of data that is sensible to human.
Information is knowledge of specific events.
If data is processed it will become information.

Example:
If you had a sum: 123+123(Data)=246(Information)

04. What are the factors determine value of information?

Value of information depends on the following factors:
– Accurate.
– Clean or readable or jargon free.
– Complete.
– Timely.
– Right quantity. And
– Relevant.

05. Importance of information technology.

IT is fundamental to the success of any business. IT may cover
- Market trends.
- Buying preferences.
- Customer profiles.
And it must be:
- Accurate.
- Complete.
- Up-to-date.

06. How information systems impact organization and business firm? (May’2011)
- IT changes both the relative cost of capital and the cost of information.
- IT can be viewed as substitute for traditional capital and labor.
- IT can reduce transaction costs.
- IT can help firms lower the cost of market participation.

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 07. What are the attributes of useful and effective information? (May’2011)
Availability:
Information should be available. If information is not available at the time of need, it is useless.

Purpose:
Information must have purposes at the time it is transmitted to a person or machine, otherwise it is
simple date.

Mode and format:

The mode of communicating information in business are either visual, verbal and in written form.
Format of information should be so designed that is assists in decision making and problem solving.

Decay:
Value of information usually decays with time so it should be refreshed from time to time.

Completeness:
The information should be as complete as possible.

Reliability:
Information should leads to correct decision-making on many occasions.

Frequency:
The frequency with which information is transmitted or received affects its value.

Costs benefit analysis:

The benefit that is derived from the information must justify the cost incurred in procuring information.

Validity:
It measures the closeness of the information to the purpose which it purports to serve.

Transparency:
Information should reveal directly what we want to know for decision making.

08. What is an organization? How do organizations differ?

An organization is a social arrangement for the controlled performance of collective goals, which has a
boundary separating it from its environment.

Organization may differ by the following ways:

• Ownership (public or private).
• Control (by owner or govt.)
• Activity (manufacturing, healthcare or service)
• Profit seeking or not for profit seeking.
• Size (local or multinational).
• Legal status (company, partnership or sole trader)
• Source of finance (borrowing, govt. Funding or share issues).

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 09. Why organizations do exists?
An organization may exist for the following reasons:
 To overcome people’s individual limitations.
 To enable people to specialize in what they do best.
 To enable people to poll their expertise.
 To enable synergy to exceed individual’s output.
 To accumulate and share knowledge.

10. What do you mean by system? What are the types of system?
System is a collection of some integrated components that works to accomplish a specific task. There
are some properties of a good system. Those are as follows:
 Consist of several components.
 Logical relationship within components.
 Components will be controlled to accomplish a specific task.

11. What types of information systems are used at different levels of management in an organization?
(May’2011)
– TPS (Transaction Processing System)
User: Lower level management.
– MIS, DSS (Management Information System)
User: Middle level management.
– EIS (Executive Information System)
User: Higher level management.

12. What is a DSS? (Nov’2011)

A decision support system can be defined as a system that provides tools to managers to assist them in
solving semi structured and un-structured problem. DSS provides managers with a set of capabilities
that enables them to generate the information required by them in making decisions.

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 13. What are the characteristics of DSS?
Three properties:
 They support unstructured or semi-structured decision-making.
 They are easy to use.
 They are flexible enough to respond to the changing needs.

14. What are the components of DSS? (Nov’2011)

(a) The users:
Usually a manager with an unstructured or semi-structured problem.

(b) Database:
DSS include one or more database which contains routine or non-routine data from both
internal and external sources.

(c) Planning language:

General purpose planning language (electronic spreadsheet).
Special purpose planning language (SAP, SPSS)

(d) Model base:

the brain of DSS because it performs data manipulations and computations.

15. What is TPS? What activities are involved in TPS?

TPS is an information system at the lower level of management that manipulates data from business
transactions. i.e sales, purchase, production, delivery, payments or received.

A TPS involves the following activities:

 Capturing data to organize in files or database.
 Processing of file/ database using application software.
 Generating information in the form of reports.
 Processing of queries from various quarters of the organization.

16. What is MIS?

MIS assists managers in decision making and problem solving.
“An integrated user-machine system designed for providing information to support operational control,
management control and decision making functions in an organization”.

17. What is EIS?

Sometimes referred to ESS (executive Support System) is a DSS that is designed to meet the special
needs of top level managers.

18. What is Knowledge-based system? (Nov’2011)

Knowledge based systems are artificial intelligent tools that provide intelligent decisions with
justification. Knowledge is acquired and represented using various knowledge representation
techniques rules, frames and scripts. The basic advantages offered by such system are documentation of
knowledge, intelligent decision support, self learning, reasoning and explanation.

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 19. What are the types of KBS? (Nov’2011)
There are three different types of KBS. Those are as follows:
 Diagnostic:
The user interface gives a series of questions, each of which has a limited number of possible
answers, each one of which leads to another question. Gradually, the amount of data in the
knowledge base is reduced until there is only a small amount of relevant data which must
provide the answer to the query.

 Advice Giving:
An advice giving system is one that follows some process being done and then offers advice on
how to proceed if something needs to be done or goes wrong.

 Decision making:
It is a system which understands what is happening in a system and has been given enough rules
to be able to make and carry out decisions without further intervention.

20. Types of information

 Internal information:
Information that has been generated from the operations of the organizations at various
functional areas.
 External information:
Information that is collected from the external environment of the business organization.

21. What is the different between the passive IS and interactive IS? (Nov’2010)
Passive information systems are systems that will answer queries based on the data that is held within
them, but the data is not altered. A simple example would be an electronic encyclopedia where queries
can be used to search for data and much valuable information can be learned but the user is not allowed
to alter the data.

An interactive system is one that data can be entered for processing which may alter the contents of the
database. For examples, stock control system of a super market which shows price and description of
the goods as well as updates the number in stock immediately.

22. What is Batch processing?

A batch processing system is used when the output does not have to be produced immediately. For
example, credit card bill.

23. What is rapid response processing?

Rapid response processing also known as real time processing referred to a process control system
where the results of the process are used to inform the next input. i.e,
Air line booking system.

24. What is financial reporting system?

Financial reporting involves all the procedures necessary to ensure that the financial performance of a
department is clearly and effectively reported on to the relevant authorities.

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 25. Write the functions of financial reporting?
The functions performed by financial reporting specialists cover the following areas:
 Undertaking the monthly closure of accounts.
 Compiling quarterly reports.
 Undertaking the annual closure of accounts
 Compiling overall annual reports.

26. What is objective of any financial accounting system?

A primary objective of any financial accounting systems is to provide accurate financial statements on a
timely basis.

27. What is ‘Pivot Table’? (Nov’2011)

Pivot Table is one of the most powerful analytical tools that are used in spreadsheets.

28. Discuss the terms ‘Evert Triggered’.

Many accounting software products have the ability to alter users to predefined financial condition.
With such a feature, a CFO can create simple calculation that the accounting software continuously
compares against a present values.

29. Write something about the International Financial Reporting Standards (IFRSs).
IFRSs are standards, interpretations and the framework adopted by the International Accounting
Standards Board (IASB).

30. Discuss the structure of IFRS.

International Financial Reporting Standards comprise:
 IFRS’s- issued after 1 April 2001.
 IAS’s- issued before 1 April 2001.
 Interpretation originated from the IFRIC (International Financial Reporting Interpretation
Committee)- issued after 1 April 2001.
 Standing Interpretation Committee (SIC)- issued before 1 April 2001.
 Framework for the preparation and presentation of financial statement.

31. Write the qualitative characteristics of financial statement?

Qualitative characteristics of financial statements include:
 Relevance.
 Reliability.
 Understandability. And
 Comparability.

32. What is the component of IFRS’s financial statement?

IFRS financial statements consist of:
 A statement of financial position.
 A statement of comprehensive income.
 A statement of change in equity.
 A statement of cash flows.
 Note, including a summary of the significant accounting policies.

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