ACCOUNTING INFORMATION SYSTEMS (AIS)
Data: are facts collected, recorded, and stored in the system
Decision Quality:
• Information helps us make better decisions.
• Too much information causing information overload can reduce decision quality.
• Information Technology (IT) is used to help decision makers more e ectively
lter and condense information.
Value of Information:
• Information is valuable when the bene ts exceed the costs of gathering,
maintaining, and storing the data.
• Bene t (i.e., improved decision making) - Cost (i.e., time and resources used to
get the information) = value of information
Characteristics that make information useful:
• Relevant: information needed to make a decision (e.g., the decision to extend
customer credit would need relevant information on customer balance from an
A/R ageing report)
• Reliable: information free from bias
• Complete: does not omit important aspects of events or activities
• Timely: information needs to be provided in time to make the decision
• Understandable: information must be presented in a meaningful
manner
• Veri able: two independent people can produce the same conclusion
• Accessible: available when needed
A business process:
• a set of related, coordinated, and structured activities and tasks performed by
people, machines, or both to achieve a speci c organisational goal.
• Key decisions and information needed often come from these business
processes.
• Transaction data is used to create nancial statements and is called transaction
processing.
• The ow of information between these users for the various business activities
involves a give-get exchange grouped into business processes or transaction
cycles.
Basic business processes:
• 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 nished goods
fi fiflfi fi fi fi fi ff
,• Payroll cycle: give cash—get labor
AIS:
• 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
• Can add value by:
1. Improving the quality and reducing the costs of products or
services
2. Improving e ciency
3. Sharing knowledge
4. Improving e ciency and e ectiveness of its supply chain
5. Improving the internal control structure
ffi ff
,6. Improving decision making
Value chain:
• links together the di erent activities within an organisation 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 e cient and e ective.
Supply chain:
• an extended system that includes the organisations value chain as well as its
suppliers, distributors, and customers.
TRANSATION PROCESSING
• Transaction processing is a style of computing, typically performed by large
server computers, that supports interactive applications
• Transaction processing systems consist of computer hardware and software
hosting a transaction-oriented application that performs the routine
transactions necessary to conduct business
• Examples include systems that manage sales order entry, airline reservations,
payroll, employee records, manufacturing, and shipping.
• The process takes place in a Transaction Processing System (TPS)
ff ffi ff
, Objectives:
• Carrying out the day-to-day transactions
• Collecting, capturing, processing, editing, updating, storing the data, and
generating the required reports or documents which would help in making
timely decisions.
• Supplying the necessary information to the organisation, which would enable
proper functioning of the business.
• Supplying data to other information systems.
Characteristics TPS:
Data: are facts collected, recorded, and stored in the system
Decision Quality:
• Information helps us make better decisions.
• Too much information causing information overload can reduce decision quality.
• Information Technology (IT) is used to help decision makers more e ectively
lter and condense information.
Value of Information:
• Information is valuable when the bene ts exceed the costs of gathering,
maintaining, and storing the data.
• Bene t (i.e., improved decision making) - Cost (i.e., time and resources used to
get the information) = value of information
Characteristics that make information useful:
• Relevant: information needed to make a decision (e.g., the decision to extend
customer credit would need relevant information on customer balance from an
A/R ageing report)
• Reliable: information free from bias
• Complete: does not omit important aspects of events or activities
• Timely: information needs to be provided in time to make the decision
• Understandable: information must be presented in a meaningful
manner
• Veri able: two independent people can produce the same conclusion
• Accessible: available when needed
A business process:
• a set of related, coordinated, and structured activities and tasks performed by
people, machines, or both to achieve a speci c organisational goal.
• Key decisions and information needed often come from these business
processes.
• Transaction data is used to create nancial statements and is called transaction
processing.
• The ow of information between these users for the various business activities
involves a give-get exchange grouped into business processes or transaction
cycles.
Basic business processes:
• 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 nished goods
fi fiflfi fi fi fi fi ff
,• Payroll cycle: give cash—get labor
AIS:
• 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
• Can add value by:
1. Improving the quality and reducing the costs of products or
services
2. Improving e ciency
3. Sharing knowledge
4. Improving e ciency and e ectiveness of its supply chain
5. Improving the internal control structure
ffi ff
,6. Improving decision making
Value chain:
• links together the di erent activities within an organisation 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 e cient and e ective.
Supply chain:
• an extended system that includes the organisations value chain as well as its
suppliers, distributors, and customers.
TRANSATION PROCESSING
• Transaction processing is a style of computing, typically performed by large
server computers, that supports interactive applications
• Transaction processing systems consist of computer hardware and software
hosting a transaction-oriented application that performs the routine
transactions necessary to conduct business
• Examples include systems that manage sales order entry, airline reservations,
payroll, employee records, manufacturing, and shipping.
• The process takes place in a Transaction Processing System (TPS)
ff ffi ff
, Objectives:
• Carrying out the day-to-day transactions
• Collecting, capturing, processing, editing, updating, storing the data, and
generating the required reports or documents which would help in making
timely decisions.
• Supplying the necessary information to the organisation, which would enable
proper functioning of the business.
• Supplying data to other information systems.
Characteristics TPS:
