31 terms

AIS Chapter 1

set of two or more interrelated components that interact to achieve a goal.
*Accounting is an information system
*People may be a system
10 Most Important Work Activities for Accountants
1. Acct. System & Fin. Reporting
2. LT strategic planning
3. Managing acct. and finance function of bus.
4. Internal consulting
5. ST budgeting
6. Fin. and economic analysis
7. Process improvement
8. CPU systems and ops
9. Performance Eval for the bus.
10. Customer and Product Profitability analysis
Facts that are collected, recorded, stored, and processed by an info system
-Represent observations/measurements of business activity that are of importance to system users
-Bus. Data Ex: 1)Facts about activities that take place 2)Resources affected by activities 3)People who participate in activity
Data that have been organized and processed to provide meaning to a user. Need to make decisions.
Info Overload
occurs when you surpass the limit of info the human mind can effectively absorb and process.
-too much data can be meaningless
Value of Info
Benefit produced by info minus the cost of producing it.
Mandatory Info
govt. required
-Primary consideration: minimize costs while meeting min. standards of reliability and usefulness and meeting regulatory standards.
Essential Info
necessary to conduct bus with outside entities
-Primary consideration: minimize costs while meeting min. standards of reliability and usefulness and meeting regulatory standards.
Discretionary Info
Most internal info
-called "discretionary" since choices must be made regarding what info should be made available, to whom, and how frequently
-primary consideration: benefits exceeds costs
system that collects, records, stores, and processes data to produce info for decision makers
-Example: Data (transactions) are journalized and then posted to the general ledger, to there specific accounts, where the data transforms into information (aggregated data in each ledger account)
- The general ledger is the first place where we have information.
3 Functions of AIS
1) Collect/store data about activities, resources, & personnel. Efficiently/Effectively
2) Transform data into info that is useful for decision-making
3) Provide adequate controls to safeguard bus's assets, to ensure that the A's and data are available when needed, and data are accurate and reliable.
AIS Components (6)
1. People who operate the system and perform functions.
2. Procedures and instructions involved in collecting, processing, and storing data about orgs activities.
3. Data about org and its bus processes
4. Software used to process orgs data
5. IT infrastructure used to collect, store, process, and transmit data and info (ex. cpu and other devices)
6. Internal Controls that safeguard data in AIS
Characteristics of Useful Info
1. Relevant
2. Reliable
3. Timely
4. Complete
5. Verifiable
6. Understandable
7. Accessible
*Timely and Complete are in conflict with each other: cannot have all info (complete) to make a timely decision. Will always be inevitably lacking some information.
Reduces uncertainty, aides decision maker, and provides feedback
free from material error and unbiased towards outcome.
all material elements of data has been considered.
provided to user in timely manner before decision has to be made
presented in understandable manner for intended USER
independent, reasonably informed people provided equal info will come up with similar outcomes when performing same task
Available to users when they need it. Also info is controlled.
Primary Activities (5)
1. Inbound Logistics - receiving, storing, and distributing materials an org uses to create services/products (Receiving and Storing Materials)
2. Ops - transform inputs into final products/servs (Manufacturing and Repackaging)
3. Outbound Logistics - Distribution Shipping
4. Marketing and Sales - Advertising and Selling
5. Service - post-sale support to customers (Repair and Maintenance)
Support Activities (4)
1. Firm Infrastructure - acct, finance, legal, and general admin activities that allow an org to function. AIS is part of firm infrastructure
2. HR - recruiting, hiring, training, and compensating employees
3. Tech - R&D, investments in new IT, website development, product design.
4. Purchasing - procure raw materials, supplies, machinery, and buildings used to carry out primary activities.
Value Chain
How companies provide value to its customers. All of these activities form the Value Chain.
-Focuses mgmt on what creates value
-Goal: Better, Faster, and Cheaper.
-Primary activities - directly provide value to customers
-Support activities - allow primary activities to be performed efficiently and effectively.
Supply Chain
The value chain is a subsystem within the supply chain.
- A co. can improve its performance by helping other orgs in the supply chain to improve their performance
Structured Decisions
repetitive, routine and understood well enough that they can be delegated to lower-level employees in the org.
-all relevant instances known
-based on simple yes/no Qs. and known set of rules
-Ex. students enrollment
-Often structured decisions can be automated.
Semistructured Decisions
based on incomplete rules
-All relevant instances not known
-Ex. setting a marketing budget for a new project. or exceptions to the rules
- Cannot be fully automated, but are supported by cpu-based decision aids. Decision involves subjectivitiy
Unstructured Decisions
nonrecurring and nonroutine.
-need to gather info, not available in database
-need to evaluate existing info in diff way
-Ex. strategic decisions
-no framework or model exists to solve these problems, instead require judgment and intuition.
-may still be supported by cpu-based decision aids.
Value System
Set of electronically interconnected integrated Value Chains
-Supplier's VC, Co's VC, Distributor's VC, and Buyer's VC are connected by a two-way relationship
How an AIS adds value to an Org (6)
1)Improve quality and reduce costs of prods/services
2)Improving efficiency
3)Sharing knowledge
4)Improve efficiency/effectiveness of supply chain
5)Improving internal ctrl structure
6)Improve Decision making
Info Improves Decision Making
1)Identifies situations requiring mgmt action
2)Reducing uncertainity
3)Valuable Feedback
4)Providing accurate info
Info VC
Transaction (Data/Input) changed into info by using an AIS which is changed into knowledge for users to make a decision.
**1st point you have info in acct cycle is when you post to ledgers and have aggregated data