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    Accounting Information Systems: An Overview

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    Pandu Rangarao
    accounting information systems overview

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    Accounting Information Systems: An Overview

    Uploaded by

    Pandu Rangarao
    23 views21 pages
    accounting information systems overview

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    accounting information systems overview

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    23 views21 pages

    Accounting Information Systems: An Overview

    Uploaded by

    Pandu Rangarao
    accounting information systems overview

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 21

    Chapter 1

    Accounting Information Systems: An Overview


    Copyright 2012 Pearson Education

    1-1

    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 companys 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

    Improve Decisions

    Improve Planning

    Improve Scheduling

    Time & Resources

    Produce Information

    Distribute Information

    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
    GiveGet exchanges
    Between two entities
    Measured in economic terms

    Copyright 2012 Pearson Education

    1-10

    Business Cycle GiveGet

    Copyright 2012 Pearson Education

    1-11

    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 ChainPrimary Activities

    Copyright 2012 Pearson Education

    1-18

    Value ChainSupport 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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