Chapter 1

Accounting Information Systems: An Overview

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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.

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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
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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.
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Value of Information
Benefits
Reduce Uncertainty
Improve Decisions
Improve Planning
Improve Scheduling

Costs
Time & Resources
Produce Information
Distribute
Information

Benefit $s > Cost $s

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What Makes Information Useful?

Karakteristik Informasi yang Berguna:
Relevant (relevan) menambah pengetahuan atau nilai bagi pengambil
keputusan dengan mengurangi ketidakpastian, meningkatkan kemampuan
untuk meramalkan atau mengkonfirmasi atau membetulkan harapan
sebelumnya.
Reliable (dapat dipercaya) tidak ada kesalahan atau tidak bias dan
akurat untuk suatu kejadian atau aktivitas organisasi
Complete (lengkap) tidak mengabaikan data penting
Timely (tepat waktu) tersedia tepat waktu untuk pengambilan keputusan
Understandable (dapat dimengerti) dalam bentuk yang dapat
dimengerti
Verifiable (dapat dibuktikan kebenarannya) menghasilkan informasi yang
sama dari dua orang yang saling independen.
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Business Process

Systems working
toward
organizational
goals

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Business Process Cycles

Revenue
Expenditure
Production
Human Resources
Financing

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Business Transactions
GiveGet exchanges
Between two entities
Measured in economic terms

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Business Cycle GiveGet

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AIS vs MIS

IS

AIS

GLS/FRS

TPS

MIS

MRS

Finance

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Marketing

Production

HRS

Distribution

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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

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Components of an AIS
People using the system
Procedures and Instructions

For collecting, processing, and storing data

The Data about the organization & its business activities

The Software used to process the data
Information Technology (IT) Infrastructure

Computers, peripherals, networks, and so on

Internal Control and Security

Safeguard the system and its data

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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
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AIS Value Add

Improve Quality and Reduce Costs
Improve Efficiency
Improve Sharing Knowledge
Improve Supply Chain
Improve Internal Control
Improve Decision Making

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Improve Decision Making

Identify situations that require action.
Provide alternative choices.
Reduce uncertainty.
Provide feedback on previous
decisions.
Provide accurate and timely
information.
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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

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Value ChainPrimary Activities

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Value ChainSupport Activities

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Value Chain

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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

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