Answer the following:

1. Explain what an accounting information system (AIS) is and describe the

functions it performs.
2. Discuss the importance of studying AIS.
3. Describe the role of the AIS to the components of a value chain.
4. How can AIS add Value to an Organization.

Answers:

1. Accounting information system is a system that collects, records, stores

and processes data to produce information for decision makers like
accountants, consultants, business analysts, managers, chief financial
officers, auditors, regulators and tax agencies. AIS can be a very simple
paper-and-pencil-based manual system. There are three business functions
of AIS. First, collect and store data about organizational activities,
resources, and personnel. Second, transform data into information that is
useful for making decisions so management can plan, execute, control and
evaluate activities, resources, and personnel. Third, provide adequate
controls to safeguard the organization’s assets, including its data to ensure
that the assets and data are available when needed and the data are
accurate and reliable.

2. Since the primary objective of accounting is to provide information that is

useful to decision makers, it is important that we study accounting
information system. The AIS course focuses on understanding how the
accounting system works, how to collect data about the organization’s
activities, how to transform data that can be of use of decision makers and
how to ensure reliability and accuracy of the information.

3. An organization’s value chain consists of five primary activities. One of

them is the inbound logistics that consists receiving, storing, and distributing
the materials that an organization uses to create services and products.
Operations activities transform inputs into final products or services.
Outbound logistics activities distribute finished products to customers.
Marketing and sale activities help customers buy the organizations’
products and services. Service activities provide post-sale support to
customers. In these activities, the role of accounting information system is
that the collected data can be used by the decision makers to provide value
to their customers.

4. The AIS can add value by providing accurate and timely information in
the five primary value chain activities so that it can be performed effectively
and efficiently. A well-designed AIS can do this by improving the quality and
reducing the cost of products and services, improving efficiency, sharing
knowledge, improving the efficiency and effectiveness of its supply chain,
improving the internal control structure, and improving decision making.