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Chapter 8 - Managing Information

Terms in this set (24)

Data
A collection of raw facts and figures

- On their own, data are of little value. eg. "we sold 600 cups of coffee yesterday", purchase receipts
- They lack analysis + context
Information
Data that has been organized, analyzed, put into context

- Eg. "Yesteday we sold 600 cups of coffee, today we sold 500"
Data analysis
Any operation that organizes data to become useful info, eg. sorting data

- Eg. organizing data via time series analysis, cross sectional analysis, statistical analysis
Info - time-series analysis
Comparing data points across time

- Identify trends (eg. most coffee sold between 8-9am)
- Improve planning and scheduling
Info - cross-sectional analysis
Comparing data across units (eg. branches in different locations)

- Identify strong vs weak performers
- Control: who needs more training or resources
Info - statistical analysis
Comparing a data point to various statistical values, eg. mean/median/etc

- Eg. my midterm mark was 78%, class average was 68%
Knowledge
Through education and experience, use info to make decisions or judgements

- Eg. my mark is above average, I'm in top 25% of the class
Management information system (MIS)
System that collects data and organizes it to become info for managers of a business

Allows managers to:
- Record and store data
- Organize and analyze data
- And thus create info
- NOT necessarily via comp!
Information system
Any system that allows people to record and organize data, then transmit info
Information technology
Any tech that allows managers to collect, record, organize data

- DOES NOT NECESSARILY NEED TO INVOLVE A COMPUTER !!
- Eg. u write down a band's tour dates and locations. (record + store)
- then ur friend says o I can't make that date (analysis)
- then u pick which date to go to (decision)
Information age
The period since 1970s when development of affordable PC allowed large quantities to be collected, stored, organized by the average person

- aka the information revolution
Moore's law
The observation that the amount of data that can be recorded, etc, by IT doubles every two years
Accounting
The system for/purpose

- collecting, analyzing, communicating financial information
- measure a business' performance and condition
- present this info so managers+etc can use it
Accountants
Individuals trained in how to collect, organize, present financial data

- Need to create and operate systems for accounting
- Ensure records are accurate, taxes paid, etc
- Translate financial info into reports for others to read
- ex of accounting info: revenue was 854 million, down 6% from last year
Who the heck even cares
- Owners/investors. is their business making money??

- Lenders/banks. is the business gonna pay them back or what

- Employees. should I be asking for a raise

- Govt. does ur biz owe us tax

- Business managers. they look at info to set goals, budgets, etc
Managerial accounting (less important)
Collecting, organizing info of interest to people within business (eg. managers), to help it run more smoothly

- for planning, control purposes
- tends to look at individual products, divisions
Financial accounting (more important)
Collecting, organizing info of interest to people OUTSIDE business, ie. the general public

- looks at business as a whole
- tells people about its financial performance + condition
Fiscal year
A business' operating year for financial accounting purposes. esp for paying taxes

- independent of calendar year; business' owners pick when it starts/ends

- usually chosen to coincide w natural seasonality in biz activity (eg. if business is high in june, they will usually pick a date several weeks after this)
- this is bc they want to Look Good when preparing year-end financial statements
- also after the busy period, accountants have more time to better analyze data during the relative calm
Audit
Formal examination of organization's financial procedures and financial statements

- Not just businesses; eg. govt depts do this too
- can determine if firm has controls to prevent errors or fraud, + to detect such things
- all finance related documents examined!! eg receipts, cancelled cheques
Auditor
Someone authorized to perform checks on how data is being recorded, organized, presented, etc

- in order to prevent fraud
- reassure investors + lenders
- eg. banks will require audited financial statements from businesses when borrowing money
- may physically check warehouses, inspect capital equipment
Generally Accepted Accounting Principles (GAAP)
Rules and methods that an organization's accounting system must follow.

- set by canadian institute of chartered accountants
Financial statement
Two key reports all businesses must publish regularly: income statement, balance sheet

- Must conform to GAAP (standardization)
Income statement
Shows revenue, expenses, profit

- aka statement of profit and loss, "P and L"
- shows info about a business' activities over a period of time (ie. the fiscal year)
- eg. revenue, diff categories of costs, taxes paid, ends w profit after tax
Balance sheet
Shows capital/resources owned and available to the business, and how they've used it

- Eg. assets
- Ability of organization to raise capital/acquire resources is a measure of financial condition
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