Romney Accounting Information System Ed 15

Romney Accounting Information System Ed 15

1. Accounting Information Systems Fifteenth Edition Chapter 1 Accounting Information Systems: An Overview Copyright © 2021, 2018, 2015 Pearson Education, Inc. All Rights Reserved

2. Learning Objectives Distinguish between data and information: Discuss the characteristics of useful information. Explain how to determine the value of information. Explain the decisions an organization makes: The information needed to make them. The major business processes present in most companies. Explain how an A I S adds value to an organization: How it affects and is affected by corporate strategy. The role of A I S in a value chain.

3. Distinguishing Between Data and Information Data are facts collected, recorded, and stored in the system A fact could be a number, date, name, and so on. For example: 2/22/14 A B C Company 123, 99, 3, 20, 60

4. Data v ersu s. Information The previous slide just showed data; if we organize the data within a context of a sales invoice, for example, it is meaningful and considered information . Invoice Date : 2/22/14 Invoice #: 123 Customer: A B C Company Item # Qty Price 99 3 $20 Total Invoice Amount $60

5. Decision Quality Information helps us make better decisions. Too much information causing information overload can reduce decision quality. Information Technology ( I T) is used to help decision makers more effectively filter and condense information.

6. Value of Information Information is valuable when the benefits exceed the costs of gathering, maintaining, and storing the data. Benefit (i.e., improved decision making) - Cost (i.e., time and resources used to get the information) = value of information

7. What Makes Information Useful? (1 of 2) There are 14 general characteristics that make information useful: Access restricted: limit access to authorized parties Accurate: accurate, correct, and free of error Available: available to users when needed Reputable: perceived as true and credible Complete: does not omit important aspects of events or activities Concise: clear, succinct, brief, but comprehensive Consistent: presented in the same format over time

8. What Makes Information Useful? (2 of 2) Current: up to the present data and time Objective: unbiased, unprejudiced, and impartial Relevant: reduces uncertainty and improves decision making Timely: provided in time for decision maker to make decisions Useable: easy to use for different task Understandable: easily comprehended and interpreted Verifiable: two independent people can produce the same information

9. Machine-Readable Format Data is most useful when it is in a machine-readable format that can be read and processed by a computer. X B R L is an example of a machine-readable format that can improve many of the characteristics that make information useful.

10. Information Needs and Business Processes Business organizations use business processes to get things done. A business process is a set of related, coordinated, and structured activities and tasks performed by people, machines, or both to achieve a specific organizational goal. Key decisions and information needed often come from these business processes.

11. Figure 1.1 The Components of an Information System

12. Transactional Information Between Internal and External Parties in an A I S Business organizations conduct business transactions , which is an agreement between two entities to exchange goods, services, or any other event that can be measured in economic terms by an organization. Transaction data is used to create financial statements and is called transaction processing . The flow of information between these users for the various business activities involves a give-get exchange grouped into business processes or transaction cycles .

13. Figure 1.2 Interactions Between S&S and External and Internal Parties

14. Basic Business Processes Transactions between the business organization and external parties fundamentally involve a “give–get” exchange. These basic business processes are: Revenue cycle: give goods / give service—get cash Expenditure cycle: get goods / get service—give cash Production cycle: give labor and give raw materials—get finished goods Payroll cycle: give cash—get labor Financing cycle: give cash—get cash

15. What Is an Accounting Information System ( A I S)? A I S is a system that collects, records, stores, and processes data to produce information for decision makers. Consists of People who use the system Processes (procedures and instructions) Technology (data, software, and information technology) Controls to safeguard information Thus, an A I S collects and stores data, transforms that data into information, and provides adequate controls.

16. How Does an A I S Add Value to an Organization? A well thought out A I S can add value by: Improving the quality and reducing the costs of products or services Improving efficiency Sharing knowledge Improving efficiency and effectiveness of its supply chain Improving the internal control structure Improving decision making

17. Artificial Intelligence Artificial intelligence ( A I) is the use of computer systems to simulate human intelligence processes such as learning, reasoning, and self-improvement. A I can be used in the following fields Business Education Finance Healthcare

18. Data Analytics Data analytics is the use of software and algorithms to find and solve problems and improve business performance. Analytics can help improve decision making by Identifying a problem/issue for management to resolve. Collecting the data needed to solve the problem, analyze it, and make recommendations to management on how to resolve it. Integrating actionable insights into the systems used to make decisions.

19. Blockchain Blockchain represents individual digital records, called blocks, linked together using cryptography in a single list, called a chain. Blockchain has several significant advantages, including accuracy, transparency, data consistency, trust, no need for third parties, single set of books, reduced cost, decentralization, efficiency, privacy, security, and provenance There are also significant challenges to its adoption including political and regulatory issues.

20. Cloud Computing, Virtualization, and the Internet of Things Cloud computing is the use of a browser to remotely access software, data storage, hardware, and applications. Virtualization is the running of multiple systems simultaneously on one physical computer. Internet of Things ( IoT ) refers to the embedding of sensors in a multitude of devices (lights, heating and air conditioning, appliances, etc.) so that those devices can now connect to the Internet.

21. A I S and Corporate Strategy An A I S is influenced by an organization’s strategy. A strategy is the overall goal the organization hopes to achieve (e.g., increase profitability). Once an overall goal is determined, an organization can determine actions needed to reach their goal and identify the informational requirements (both financial and nonfinancial) necessary to measure how well they are doing in obtaining that goal.

22. A I S in the Value Chain The value chain links together the different activities within an organization that provide value to the customer. Value chain activities are primary and support activities. Primary activities provide direct value to the customer. Support activities enable primary activities to be efficient and effective. A supply chain is an extended system that includes the organization’s value chain as well as its suppliers, distributors, and customers.

23. Figure 1.6 The Value Chain

24. Key Terms (1 of 2) System Goal conflict Goal congruence Data Information Machine-readable Information overload Information technology ( I T) Value of information Information system Business process Transaction Transaction processing Give-get exchange Business processes or transaction cycles Revenue cycle Expenditure cycle Production or conversion cycle Human resource/payroll cycle Financing cycle General ledger and reporting system Accounting information system ( A I S) Accounting Artificial intelligence

25. Key Terms (2 of 2) Data analytics Data dashboard Blockchain Virtualization Cloud computing Internet of Things ( IoT ) Value chain Primary activities Support activities Supply chain

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