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    Accounting Information Systems: An Overview

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    Janina Marie Garcia

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    Accounting Information Systems: An Overview

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    Janina Marie Garcia
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    30 views21 pages

    Accounting Information Systems: An Overview

    Uploaded by

    Janina Marie Garcia

    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


    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

    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 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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