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Accounting Information Systems: An Overview

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Janina Marie Garcia
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40 views

Accounting Information Systems: An Overview

Uploaded by

Janina Marie Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 21

Chapter 1

Accounting Information Systems: An Overview


1-1
Copyright © 2012 Pearson Education
Learning Objectives

 Distinguish between data and information.

 Discuss the characteristics of useful information.


 Explain how to determine the value of information.

 Explain the decisions an organization makes and the information needed to make them.

 Identify the information that passes between internal and external parties and an AIS.

 Describe the major business processes present in most companies.

 Explain what an accounting information system (AIS) is and describe its basic functions.

 Discuss how an AIS can add value to an organization.

 Explain how an AIS and corporate strategy affect each other.

 Explain the role an AIS plays in a company’s value chain.

Copyright © 2012 Pearson Education 1-2


What Is a System?

 System
 A set of two or more interrelated
components interacting to achieve
a goal

 Goal Conflict
 Occurs when components act in
their own interest without regard
for overall goal

 Goal Congruence
 Occurs when components acting in
their own interest contribute
toward overall goal

Copyright © 2012 Pearson Education 1-3


Data vs. Information

 Data are facts that are recorded


and stored.
 Insufficient for decision
making.

 Information is processed data


used in decision making.
 Too much information
however, will make it more,
not less, difficult to make
decisions. This is known as
Information Overload.

Copyright © 2012 Pearson Education 1-4


Value of Information

Benefits Costs
 Reduce Uncertainty  Time & Resources

 Improve Decisions
 Produce Information
 Improve Planning  Distribute Information

 Improve Scheduling
Benefit $’s > Cost $’s

Copyright © 2012 Pearson Education 1-5


What Makes Information Useful?
 Necessary characteristics:
 Relevant
 “The capacity of information to make a difference in a decision by
helping users to form predictions about the outcomes of past, present,
and future events or to confirm or correct prior expectations.”
 Reliable
 “The quality of information that assures that information is
reasonably free from error and bias and faithfully represents what it
purports to represent.”
 Complete
 “The inclusion in reported information of everything material that is
necessary for faithful representation of the relevant phenomena.”

Copyright © 2012 Pearson Education 1-6


What Makes Information Useful?
 Timely
 “Having information available to a decision maker before it loses its
capacity to influence decisions.”
 Understandable
 “The quality of information that enables users to perceive its
significance.”
 Verifiable
 “The ability through consensus among measurers to ensure that
information represents what it purports to represent or that the
chosen method of measurement has been used without error or bias.”
 Accessible
 Available when needed (see Timely) and in a useful format (see
Understandable).

Copyright © 2012 Pearson Education 1-7


Business Process

 Systems working toward


organizational goals

Copyright © 2012 Pearson Education 1-8


Business Process Cycles

 Revenue

 Expenditure

 Production

 Human Resources

 Financing

Copyright © 2012 Pearson Education 1-9


Business Transactions

 Give–Get exchanges

 Between two entities

 Measured in economic terms

Copyright © 2012 Pearson Education 1-10


Business Cycle Give–Get

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Accounting Information Systems

 Collect, process, store, and report data and information

 If Accounting = language of business

 AIS = information providing vehicle

 Accounting = AIS

Copyright © 2012 Pearson Education 1-12


Components of an AIS

 People using the system

 Procedures and Instructions


 For collecting, processing, and storing data

 Data

 Software

 Information Technology (IT) Infrastructure


 Computers, peripherals, networks, and so on

 Internal Control and Security


 Safeguard the system and its data

Copyright © 2012 Pearson Education 1-13


AIS and Business Functions

 Collect and store data about organizational:


 Activities, resources, and personnel

 Transform data into information enabling


 Management to:
 Plan, execute, control, and evaluate
 Activities, resources, and personnel

 Provide adequate control to safeguard


 Assets and data

Copyright © 2012 Pearson Education 1-14


AIS Value Add

 Improve Quality and Reduce Costs

 Improve Efficiency

 Improve Sharing Knowledge

 Improve Supply Chain

 Improve Internal Control

 Improve Decision Making

Copyright © 2012 Pearson Education 1-15


Improve Decision Making

 Identify situations that require action.

 Provide alternative choices.

 Reduce uncertainty.

 Provide feedback on previous decisions.

 Provide accurate and timely information.

Copyright © 2012 Pearson Education 1-16


Value Chain

 The set of activities a product or service moves along before as


output it is sold to a customer
 At each activity the product or service gains value

Copyright © 2012 Pearson Education 1-17


Value Chain—Primary Activities

Copyright © 2012 Pearson Education 1-18


Value Chain—Support Activities

Copyright © 2012 Pearson Education 1-19


Value Chain

Copyright © 2012 Pearson Education 1-20


AIS and Corporate Strategy
Organizations have limited
resources, thus investments to AIS
should have greatest impact on
ROI.

Organizations need to understand:

IT developments

Business strategy

Organizational culture

Will effect and be effected by new


AIS

Copyright © 2012 Pearson Education 1-21

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