ACCOUNTING INFORMATION SYSTEM

• Operations management


  Responsible for controlling day-to-day operations
• Middle management


  Accountable for the short-term planning and coordination of activities necessary to accomplish organizational objectives
• Top management


  Responsible for long-term planning and setting organizational objectives
• Every individual in the organization, from business operations to top management, needs information to accomplish his or her tasks
• How information flows in two directions within the organization

  1. Horizontal flow

  2. Vertical flow
• Horizontal flow


  Supports operations-level tasks with highly detailed information about the many business transactions affecting the firm
• Vertical flow


  Distribute information downward from senior managers to junior managers and operations personnel in the form of instructions, quotas, and budgets
• External users


  • Trading partners
  • Stakeholders
• System


  A group of two or more interrelated components or subsystems that serve a common purpose
• Types of systems


  • Natural system
  • Artificial system
• System


  • Multiple components
  • Relatedness
• System vs. subsystem


  • A system is called a subsystem when it is viewed in relation to the larger system of which it is a part
  • A subsystem is called a system when it is the focus of attention
• System decomposition


  The process of dividing the system into smaller subsystem parts
• System interdependency


  A system's ability to achieve its goal depends on the effective functioning and harmonious interaction of its subsystem
• Information system


  Set of formal procedures by which data are collected, processed into information, and distributed to users
• Transaction


  An event that affects or is of interest to the organization and is processed by its information system as a unit of work
• Types of transactions


  • Financial transactions
  • Nonfinancial transactions
• Accounting information system


  Subsystems process financial transactions and nonfinancial transactions that directly affect the processing of financial transactions
• Subsystems of the accounting information system

  • Transaction processing system
  • General ledger/financial reporting system
  • Management reporting system
• End users


  • External
  • Internal
• Data sources


  Financial transactions that enter the information systems from both internal and external sources
• Data collection


  Ensure that event data entering the systems are valid, complete, and free from material errors
• Data processing


  Tasks range from simple to complex
• Database management


  The organization's database is its physical repository for financial and non-financial data
• Data attribute


  The most elemental piece of potentially useful data in the database
• Record


  A complete set of attributes for a single occurrence within an entity class
• Files


  A complete set of records of an identical class
• Database management tasks


  • Storage tasks
  • Retrieval
  • Deletion
• Information generation


  The process of compiling, arranging, formatting, and presenting information to users
• Useful information


  • Relevance
  • Timeliness
  • Accuracy
  • Completeness
  • Summarization
• Feedback


  A form of output that is sent back to the system as a source of data
• Information system objectives


  • To support the stewardship function of management
  • To support management decision-making
  • To support the firm's day-to-day operations
• Types of information systems

  • Turnkey systems
  • Backbone systems
  • Vendor-supported systems
• Organizational structure


  It reflects the distribution of responsibility, authority, and accountability throughout the organization
• Business segments


  • Geographic location
  • Product line
  • Business function
• Functional segmentation


  The most common method of organizing
• Functional areas


  • Materials management
  • Production
  • Marketing
  • Personnel
  • Finance
  • Accounting
• Materials management


  To plan and control the materials inventory of the company
• Sub-functions of materials management

  • Purchasing
  • Receiving
  • Stores
• Production activities


  • Primary manufacturing activities
  • Production support activities