ppt 01 ge

Chapter 1Accounting Information Systems: An Overview

Copyright © 2012 Pearson Education1-1

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 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


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.


Value of Information

Benefits

Reduce Uncertainty

Improve Decisions

Improve Planning

Improve Scheduling

Costs

Time & Resources

Produce Information Distribute Information

1-5

Benefit $’s > Cost $’s

Copyright © 2012 Pearson Education

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.”


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).


Business Process

Systems working toward organizational goals


Business Process Cycles

Revenue

Expenditure

Production

Human Resources

Financing


Business Transactions

Give–Get exchanges

Between two entities

Measured in economic terms


Business Cycle Give–Get


Accounting Information Systems

Collect, process, store, and report data and information

If Accounting = language of business

AIS = information providing vehicle

Accounting = AIS


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


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


AIS Value Add

Improve Quality and Reduce Costs

Improve Efficiency

Improve Sharing Knowledge

Improve Supply Chain

Improve Internal Control

Improve Decision Making


Improve Decision Making

Identify situations that require action.

Provide alternative choices.

Reduce uncertainty.

Provide feedback on previous decisions.

Provide accurate and timely information.


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


Value Chain—Primary Activities


Value Chain—Support Activities


Value Chain


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


ppt 01 ge

Business

information data

information useful

capacity of information

quality of information

information available

reported information

information overload

pearson education