Accounting

Information Systems:
An Overview
CHAPTER 1
Learning Objectives
Distinguish data from information, discuss the characteristics of useful
information, and explain how to determine the value of information.
Explain the decisions an organization makes, the information needed to make them,
and the major business processes present in most companies.
Explain how an AIS adds value to an organization, how it affects and is affected
by corporate strategy, and its role in a value chain.
Important terms (1/2)
System is a set of two or more interrelated components that interact to
achieve a goal
Goal occurs when a subsystem achieves its goals while contributing to
congruence the organization’s overall goal
Goal conflict occurs when a subsystem’s goals are inconsistent with the goals of
another subsystem or with the system as a whole
Data are facts that are collected, recorded, stored, and processed by an
information system
Information data that have been organized and processed to provide meaning
and improve the decision-making process
Important terms (2/2)
Value of the benefit produced by the information minus the cost of
information producing it
Information occurs when the limits of human mind are passed, resulting in a
overload decline in decision-making quality and an increase in the cost of
providing that information
Information specific information that an organization needs for a specific goal
needs
Business a set of related, coordinated, and structured activities and tasks
Process that are performed by a person, a computer, or a machine, and
that help accomplish a specific organizational goal
Transaction agreement between two parties to exchange goods or services or
any other event that can be measured in economic terms by an
organization
Accounting Information System (AIS)
the information-providing vehicle of accounting
collects, records, stores, and processes accounting and other
data to produce information for decision makers
Example of AIS with core transaction
cycles
COMMON ACCOUNTING CYCLES
Revenue Cycle
◦ Revenue to Receivables – Delivery of goods or completion of services
◦ Receivables to Collection – Collection of payment from customers

Expenditure Cycle
◦ Purchases to Payable – Receipt of ordered goods or requested services
◦ Payable to Disbursement – Payment of balances to supplier
◦ Inventory Management – Processing of receipt and inspection of Goods or Services
including storing of goods in warehouses and releasing it to production or repairs.
◦ Fixed Asset (PPE) Management – Processing construction of Plant, Building, or Heavy
Machineries & Equipment. Includes assigning of useful life and proper valuation of
assets.
COMMON ACCOUNTING CYCLES
Human Resources/Payroll
◦ Human Resources – Processing of Hiring, Separation, and Retirement of Employees.
Includes other personnel action such as regularization or promotion.
◦ Payroll – Computation of employee salaries starting from time sheets to pay slip.

Financial Statement Closing Process

◦ Recording of adjustments including transactions not covered by a specific accounting
cycle such as recording of depreciation expense, accruals, and reversals. Include
reports such bank reconciliation.
ACCOUNTING CYCLES IN A
FINANCIAL STATEMENTS
END