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Accounting Information Systems: Essential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Won PowerPoint Presentation
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Accounting Information Systems: Essential Concepts and Applications Fourth Edition by Wilkinson, Cerullo, Raval, and Wong-On-Wing. The Study of Accounting Information Systems. What Is Accounting?.

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Accounting Information Systems: Essential Concepts and ApplicationsFourth Edition by Wilkinson, Cerullo,Raval, and Wong-On-Wing

The Study of Accounting Information Systems

what is accounting
What Is Accounting?
  • It is the principal way of organizing and reporting financial information. It has been called the “language of business.”
  • Accounting and information systems comprise the functional area of business responsible for providing information to the other areas to enable them to do their jobs and for reporting the results to interested parties.
  • To that end, an accounting system is used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties.
what is a system
What Is a System?
  • A System is an entity consisting of interacting parts that are coordinated to achieve one or more common objectives. Systems must possess
slide4

FEEDBACK

SYSTEM

INPUT

PROCESS

OUTPUT

slide5

FEEDBACK

INFORMATION SYSTEM

INFORMATION

DATA

INPUT

PROCESS

OUTPUT

data versus information
Data Versus Information
  • Data are raw facts and figures that are processed to produce information
  • Information is data that have been processed and are meaningful and useful to users. The terms “meaningful” and “useful” are value-laden terms and usually subsume other qualities such as timeliness, relevance, reliability, consistency, comparability, etc.
functional steps in transforming data into information
Functional Steps in Transforming Data into Information
  • Data collection - capturing, recording, validating and editing data for completeness and accuracy
  • Data Maintenance/Processing - classifying, sorting, calculating data
  • Data Management - storing, maintaining and retrieving data
  • Data Control - safeguarding and securing data and ensuring the accuracy and completeness of the same
  • Information Generation - interpreting, reporting, and communicating information
what is an information system
What Is an Information System?
  • An Information system is a framework in which data is collected, processed, controlled and managed through stages in order to provide information to users
  • It evolves over time and becomes more formalized as a firm grows and becomes more complex. It can be a manual or computerized system
  • Firms depend on information systems in order to survive and stay competitive
the universal data processing model
The Universal Data Processing Model

Storage

Processing

Consumers

}

Exchange Events

Internal Events

Environmental Events

accounting information system
Accounting Information System
  • An Accounting Information System is a unified structure that employs physical resources and components to transform economic data into accounting information for external and internal users.
the business firm as a system

Organization

Environment

of the Firm

Information

System

Business

Firm

Operational

System

The Business Firm as a System

Organization’s

functions

AIS Transaction

Cycles

Business Events

from Operations

system characteristics of business firms
System Characteristics of Business Firms
  • Objectives
  • Environment
  • Constraints
  • Input-Process-Output
  • Feedback
  • Controls
  • Subsystems
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ENVIRONMENT

Customers Suppliers

ORGANIZATION

INFORMATION SYSTEM

INPUT

PROCESS

OUTPUT

FEEDBACK

Regulatory Stockholders Competitors

Agencies

FUNCTIONS OF AN INFORMATION SYSTEM

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SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

MARKETING

RESOURCES

TYPES OF INFORMATION SYSTEMS

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &

DATA WORKERS

OPERATIONAL OPERATIONAL LEVEL MANAGERS

ais as an mis subsystem
AIS as an MIS Subsystem

Sales/

Marketing

Production

Info

AIS

Personnel

Finance

relationship of ais mis

Order entry/Sales

Billing/A.Rec./Cash receipts

Purchasing/A. Pay./Cash disb.

Inventory

Payroll

General ledger

Production

Relationship of AIS & MIS

MIS

Finance

Sales/Marketing

Production

AIS

Personnel

examples of ais subsystems merchandising

Order entry

Sales

System

Purchasing/

A.Payable/

CashDisb.

System

Inventory

System

Shipping

Receiving

Revenue

Cycle

Expenditure

Cycle

General

Ledger

System

Human

Resource

Management

(Payroll)

System

Billing/

A. Receivable

CashReceipts

System

Ext/Fin. reporting

Tax & req. reporting

Internal reporting

Examples of AIS Subsystems(Merchandising)

No Planning/Control, Investment, or Production Cycles reflected here

the operational system of a manufacturing firm

Facilities

Manufacturing Firm

Supporting

Operations

Labor

(human

services)

Material

from

Supplier

Acquiring

Materials

Producing

Finished

Goods

Storing

Finished

Goods

Shipping

Finished

Goods

Goods

to

Customer

Data

Information

AIS

Funds

Funds

Data and information flow

Physical flows

The Operational System of a Manufacturing Firm
examples of ais subsystems production cycle

Inventory

System

Purchasing/

A.Payable/

CashDisb.

System

Production

System

Production Cycle

Human

Resource

Management

(Payroll

System

General

Ledger

System

Examples of AIS Subsystems: Production Cycle

No Revenue, and Investment Cycles reflected here

organizational structure in business firms
Organizational Structure in Business Firms
  • Hierarchical
  • Matrix: Blend functional and project-oriented structures
  • Decentralized
  • Network
objectives and users of ais
Objectives and Users of AIS
  • Support day-to-day operations
    • Transaction processing
  • Support Internal Decision-Making
    • Trend Analyses
    • Quantitative & Qualitative Data
    • Non-transactional sources
  • Help fulfill Stewardship Role
resources required for an ais
Resources Required for an AIS
  • Processor(s): Manual or Computerized
  • Data Base(s): Data Repositories
  • Procedures: Manual or Computerized
  • Input/Output Devices
  • Miscellaneous Resources
reasons for studying accounting information systems
Reasons for Studying Accounting Information Systems
  • Career accountants will be users, auditors, and developers of AIS
  • Modern-day AIS are complex because of new technologies
  • Concepts studied in AIS are integrated into every other accounting course
information oriented professionals
Information-Oriented Professionals
  • An array of professionally trained persons from different fields of study have focused on providing information to users
  • These professionals include system and managerial accountants and auditors, system analysts and industrial engineers
  • Professional certifications are increasing. These include Certified Computing Professional, Certified Information Systems Auditor, Certified Managerial Accountant, Certified Fraud Examiner, etc.
roles of accountants with respect to an ais
Roles of Accountants With Respect to an AIS
  • Financial accountants prepare financial information for external decision-making in accordance with GAAP
  • Managerial accountants prepare financial information for internal decision-making
roles of accountants with respect to an ais1
Roles of Accountants With Respect to an AIS
  • Auditors - evaluate controls and attest to the fairness of the financial statements.
  • Accounting managers - control all accounting activities of a firm.
  • Tax specialists - develop information that reflects tax obligations of the firm.
  • Consultants- devise specifications for the AIS.
ethical standards for consulting
Ethical Standards for Consulting
  • Professional competence
  • Exercise due professional care
  • Plan and supervise all work
  • Obtain relevant data to support reasonable recommendations
  • Maintain integrity and objectivity
  • Understand and respect the responsibilities of all parties
  • Disclose any conflicts of interest