Note for Accounting Info System Class

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CHAPTER 1
ACCOUNTING INFORMATION SYSTEMS:

AN OVERVIEW

Learning Objectives:

1. Distinguish between data and information, discuss the characteristics of useful information and explain how to determine the value of information

2. Explain what an accounting information system (AIS) is and describe the basic functions it performs.

3. Discuss why studying accounting information systems is important.

4. Explain the role an AIS plays in a company’s value chain and discuss how the AIS can add value to a business.

5. Discuss how an AIS can provide management with information for decision making.

6. Compare and contrast the basic strategies and strategic positions that a business can adopt.

Questions to be addressed in this chapter include:
[Also provided in power point slide #2]

1. What is the meaning of system, data, and information?

2. What is an accounting information system (AIS)?

3. Why is the AIS an important topic to study?

4. What is the role of the AIS in the value chain?

5. How does the AIS provide information for decision making?

6. What are the basic strategies and strategic positions an organization can pursue?

OUTLINE

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Systems, Data and Information

Systems:

A System is a set of two or more interrelated components that interact to achieve a goal

Systems are almost always composed of smaller subsystems

Each subsystem is designed to achieve one or more organizational goals.

When the Systems Concept is used in systems development, changes in subsystems cannot be made without considering the effect on other subsystems and the system as a whole.

Goal Conflict occurs when a decision or action of a subsystem is inconsistent with another subsystem or the system s a whole. Goal Congruence is achieved when a subsystem achieves its goals while contributing to the organization’s overall goal

The systems concept also encourages Integration, which is eliminating duplicate recording, storage, reporting and other processing activities in an organization.

Data:

Data are fact that are collected, recorded, stored and processed by an information system

Several kinds of data need to be collected in businesses, such as:

➢ Facts about the activities that take place

➢ The resources affected by the activities

➢ The people who participate in the activity

Information:

Information is data that have been organized and processed to provide meaning to a user.

There are limits to the amount of information the human mind can effectively absorb and process.

Information Overload occurs when those limits are passed.

The value of information is the benefit produced by the information minus the cost of producing it.

Table 1-1 on page 6 provides the seven characteristics that make information useful and meaningful for decision making.

1. Relevant

2. Reliable

3. Complete

4. Timely

5. Understandable

6. Verifiable

7. Accessible

What Is An Accounting Information System?

An Accounting Information System (AIS) is a system that collects, records, stores, and processes data to produce information for decision makers.

Six components of an Accounting Information System

1. The people who operate the system and perform various functions

2. The procedures and instructions, both manual and automated, involved in collecting, processing, and storing data about the organization’s activities

3. The data about the organization and its business processes

4. The software used to process the organization’s data...
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