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ACCOUNTING INFORMATION SYSTEMS: AN OVERVIEW

ACCOUNTING INFORMATION SYSTEMS: AN OVERVIEW. Chapter 1. What is an ACCOUNTING INFORMATION SYSTEM ?. A system is an entity consisting of two or more interacting parts (subsystems) that attempts to achieve one or more goals.

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ACCOUNTING INFORMATION SYSTEMS: AN OVERVIEW

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  1. ACCOUNTING INFORMATION SYSTEMS: AN OVERVIEW Chapter 1

  2. What is an ACCOUNTINGINFORMATIONSYSTEM?

  3. A systemis an entity consisting of two or more interacting parts (subsystems) that attempts to achieve one or more goals. • Each subsystem performs a specific function supportive of the larger system

  4. System goals • Goal conflict occurs when the activity of a subsystem is not consistent with another subsystem or with the larger system. • Goal congruence occurs when the subsystem’s goals are in line with the organization’s goals.

  5. Systems concept • The systems concept encourages integration (i.e., minimizing the duplication of recording, storing, reporting and processing).

  6. Information is data that are organized, meaningful and useful to the recipient

  7. Value of Information Benefits of information - Cost of producing information Value of information

  8. Value of Information • Relevance • Reliability • Completeness • Timeliness • Understandability • Verifiability • Accessibility

  9. An AIS • collects and stores data • processes data to produce information that is useful for making decisions for • planning • executing and • controlling activities • provides controls to protect the organization’s assets and assurances that business is operating as planned

  10. Components of an AIS • People • Procedures • Data • Software • Information technology infrastructure

  11. Why Study AIS? • It’s fundamental to accounting. • The skills are critical to career success. • The AIS course complements other systems courses. • AIS topics are tested on the new CPA exam. • AIS topics impact corporate strategy and culture.

  12. Why Study AIS? Occupational Culture Strategy AIS Information Technology

  13. The Value Chain What is the goal of any organization? How is this goal achieved?

  14. The Value Chain Support Activities 1. Firm infrastructure 2. Human resources 3. Technology 4. Purchasing 1. Inbound logistics Materials Receiving Storing 2. Operations Manufacturing 3. Outbound logistics Distribution Order processing 4. Marketing and sales Advertising Selling 5. Service Repair Maintenance Primary Activities

  15. The Value System Rawmaterialsupplier’s value chain Company’s(manufacturer) value chain Distribution system’s value chain Buyer’s(retailer) value chain Consumer’s value chain

  16. AIS’s Provide Value • An AIS provides useful information to decision makers for activities involving • planning • controlling • evaluating so that the value chain activities can be performed more effectively and efficiently • An AIS adds value by • Improving communication • Improving efficiency • Improving decision making capabilities • improving the sharing of knowledge • An AIS helps define business policies to shape and control business processes

  17. AIS’s Provide Value • There is variation in the degree of structure used to make decisions: • Structured decisions • Semistructured decisions • Unstructured decisions

  18. Information Technologyand Corporate Strategy • Develop a basic understanding of… • corporate strategies. • how IT developments can be used to implement existing organizational strategies. • how IT developments can be used to create an opportunity to modify existing strategies.

  19. The AIS and Corporate Strategy • Michael Porter suggests that there are two basic business strategies companies can follow: • Product-differentiation strategy • Low-cost strategy

  20. Strategy and Strategic Positions Three Basic Strategic Positions Variety-based strategic position Need-based strategic position Access-based strategic position

  21. Strategy and Strategic Positions • What role does the AIS play in helping organizations adopt and maintain a strategic position? • data collection about each activity • transforming data into information that can be used by management to coordinate those activities

  22. Summary • We have: • Defined data and information • Identified the properties that make information useful • Calculated the value of information • Defined an AIS and described its basic functions • Defined the value chain activities and explained how the AIS adds value • Identified the basic strategies and strategic positions that a business can adopt

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