Transcript Slide 1
Chapter 1
Accounting Information Systems: An Overview
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 and the information needed to make them.
Identify the information that passes between internal and external parties and an AIS.
Describe the major business processes present in most companies.
Explain what an accounting information system (AIS) is and describe its basic functions.
Discuss how an AIS can add value to an organization.
Explain how an AIS and corporate strategy affect each other.
Explain the role an AIS plays in a company’s value chain.
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What Is a System?
System
A set of two or more
interrelated
components
interacting to
achieve a goal
Most systems are
composed of smaller
subsystems . . .
. . . And vice versa
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SYSTEMS, DATA, AND INFORMATION
Every organization has goals.
The susbsystems should be designed to
maximize achievement of the organization’s
goals
Even to the detriment of the subsystem itself
EXAMPLE: The production department (a
subsystem) of a company might have to
forego its goal of staying within its budget in
order to meet the organization’s goal of
delivering product on time.
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SYSTEMS, DATA, AND INFORMATION
Goal conflict occurs when the activity of a subsystem is
not consistent with another subsystem or with the larger
system.
Goal congruence occurs when the subsystem’s goals are
in line with the organization’s goals.
The larger and more complicated a system, the more
difficult it is to achieve goal congruence.
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SYSTEMS, DATA, AND INFORMATION
The systems concept encourages
integration (i.e., minimizing the
duplication of recording, storing,
reporting and processing).
Data are facts that are collected,
recorded, stored, and processed by an
information system.
Organizations collect data about:
Events that occur
Resources that are affected by those events
Agents who participate in the events
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SYSTEMS, DATA, AND INFORMATION
Information is different from data.
Information is data that have been organized and
processed to provide meaning to a user.
Usually, more information and better information
translates into better decisions.
Information
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SYSTEMS, DATA, AND INFORMATION
However, when you get more information than you can
effectively assimilate, you suffer from information
overload.
Example: Final exams week!
When you’ve reached the overload point, the quality of
decisions declines while the costs of producing the
information increases.
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Value of Information
Benefits
Costs
Reduce Uncertainty
Time & Resources
Improve Decisions
Improve Planning
Produce Information
Distribute Information
Improve Scheduling
Benefit $’s > Cost $’s
Value of information occurs
when benefits exceed costs
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall
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What Makes Information Useful?
ما الذي يجعل المعلومات مفيدة
Necessary characteristics: خصائص المعلومات المفيدة
Relevant مالئمة
“The capacity of information to make a difference in a
decision by helping users to form predictions about the
outcomes of past, present, and future events or to confirm or
correct prior expectations.”
It reduces uncertainty by helping you predict what will
happen or confirm what already has happened
Reliable يعتمد عليها
“The quality of information that assures that information is
reasonably free from error and bias and faithfully represents
what it purports ()الغاية او الغرضto represent.”
Complete كاملة
“The inclusion in reported information of everything material
that is necessary for faithful representation of the relevant
phenomena.”
It doesn’t leave out anything that’s important
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What Makes Information Useful?
Timely التوقيت المناسب
“Having information available to a decision maker before it
loses its capacity to influence decisions.”
Understandable امكانية فهمها واستيعابها من قبل المستخدم
“The quality of information that enables users to perceive its
significance.” It’s presented in a manner you can
comprehend and use.
Verifiable
“The ability through consensus among measurers to ensure
that information represents what it purports to represent or
that the chosen method of measurement has been used
without error or bias.” the nature of the information is such
that different people would tend to produce the same result
Accessible امكانية الوصول للمعلومة بالوقت المناسب وبالشكل الذي يمكننا من فهمها
Available when needed (see Timely) and in a useful format
(see Understandable).
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SYSTEMS, DATA, AND INFORMATION
Information is provided to both:
External users , investors (المستثمرونcurrent and potential ), creditors المقرضون,
Government agencies المؤسسات الحكومية, Securities commission هيئة االوراق المالية, Labor
unions االتحادات العمالية, customers العمالء, suppliers …الموردون
Internal Users: management ادارة الشركة, employees الموظفين, organization
departments دوائر الشركة المختلفة
External users primarily use information that is either:
MANDATORY INFORMATION—Required by a governmental entity, such as Form
10-K’s required by the SEC; or
ESSENTIAL INFORMATION—Required to conduct business with external parties,
such as purchase orders.
In providing mandatory or essential information, the focus should be on:
Minimizing costs
Meeting regulatory requirements
Meeting minimum standards of reliability and usefulness
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Business Transactions
Give–Get exchanges
Between two entities
Measured in economic terms
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Business Process
Systems working toward
organizational goals
Financing
Revenue
Human
Resources
Expenditure
Production
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INFORMATION NEEDS AND
BUSINESS ACTIVITIES
Businesses engage in a variety of activities,
including:
Acquiring capital الحصول على االموال
Buying buildings and equipment شراء المباني والمعدات
Hiring and training employees تعين وتدريب الموظفين
Purchasing inventory شراء المخزون
Doing advertising and marketing اجراء دعاية وتسويق
Selling goods or services بيع بضاعة او خدمات
Collecting payment from customers التحصيل من العمالء
Paying employees الدفع للموظفين
Paying taxes دفع الضرائب
Paying vendors الدفع للموردين
Each activity
requires different
types of
decisions!
Each decision
requires different
types of
information
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INFORMATION NEEDS AND
BUSINESS ACTIVITIES
Types of information needed for
decisions:
Some is financial
Some is nonfinancial
Some comes from internal sources
Some comes from external sources
An effective AIS needs to be able to
integrate information of different types
and from different sources.
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INTERACTION WITH EXTERNAL AND
INTERNAL PARTIES
Internal
Parties
AIS
External
Parties
The AIS interacts with external parties, such as customers,
vendors, creditors, and governmental agencies.
The AIS also interacts with internal parties such as employees
and management
The interaction is typically two-way, in that the AIS sends
information to and receives information from these parties.
هذا التفاعل يتم باتجاهين. يتفاعل مع اطراف داخلية وخارجيةAIS
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BUSINESS CYCLES
A transaction is:
An agreement between two entities to exchange goods or
services; OR .اتفاقية بين طرفين لتبادل بظائع او خدمات
Any other event that can be measured in economic terms by
an organization. كا النقد, او ايحدث يمكن قياسة بالوحدات االقتصادية
EXAMPLES:
Sell goods to customers بيع بضائع للعمالء
Depreciate equipment استهالك المعدات
The transaction cycle is a process: دورة االتفاقية تمر بسلسلة اجراءات
Begins with capturing data about a transaction
Ends with an information output, such as financial statements
.تبدا بالحصول على بيانات متعلقة بالعملية وتنتهي بمخرجات على شكل معلومات مثل القوائم المالية
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BUSINESS Process CYCLES
Many business activities are paired in give-get
exchanges العديد من نشاطات االعمال هي تزاوج لتبادالت اعطي وخذ
The basic exchanges can be grouped into five
major transaction cycles.
Revenue cycle دورة االيراد
Expenditure cycle دورة االنفاق
Production cycle دورة االنتاج او التحويل
Human resources/payroll cycle دورة الرواتب
Financing cycle دورة التمويل
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REVENUE CYCLE
The revenue cycle involves interactions with your
customers. تشتمل على تفاعالت مع العمالء
You sell goods or services and get cash.
.بيع بضاعة او خدمات وتحصل في المقابل على نقد
Give
Goods
Get
Cash
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EXPENDITURE CYCLE
The expenditure cycle involves interactions with
your suppliers. تشتمل على تفاعالت مع الموردين
You buy goods or services and pay cash.
انت تشتري بضاعة او خدمات وفي المقابل تدفع نقد
Give
Cash
Get
Goods
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PRODUCTION CYCLE
In the production cycle, raw materials and labor
are transformed into finished goods.
. المواد االولية والعمالة يتم تحويلها الى بضاعة تامة الصنع,في دورة االنتاج
Give Raw
Materials &
Labor
Get
Finished
Goods
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HUMAN RESOURCES/
PAYROLL CYCLE
The human resources cycle involves interactions
with your employees. تشتمل على تفاعالت مع الموظفين
Employees are hired, trained, paid, evaluated,
promoted, and terminated.
.الموظفين يعينو ويدربو ويدفع لهم ويقيمو من قبل االدارة ويتم االستغناء عنهم
Give
Cash
Get
Labor
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FINANCING CYCLE
The financing cycle involves interactions with investors and
creditors. تتضمن على تافاعالت مع المستثمرين والمقرضين
You raise capital (through stock or debt), repay the capital,
and pay a return on it (interest or dividends).
اعادة دفع رأس,)الشركات ترفع راسمالها من خالل طرح االسهم او االستدانة(سندات او قروض
. والديون على شكل فوائد, االسهم على شكل توزيعات ارباح,المال ودفع عائد علية
Give
Cash
Get
cash
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BUSINESS CYCLES
Thousands of transactions can occur within any
of these cycles. االالف من العمليات ممكن حدووثها خالل هذه
الدورات
But there are relatively few types of transactions
in a cycle. لكن نسبيا هناك عدد محدود من انواع العمليات في اي
دورة
EXAMPLE: In the revenue cycle, the basic giveget transaction is: :خذ هو-في دورة االيراد االساس في اعطي
Give goods اعطي بضاعة
Get cash خذ نقد
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BUSINESS CYCLES
Other transactions in the revenue cycle
include:
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Handle customer inquiries
التعامل مع استفسارات العمالء
Take customer orders
أخذ اوامر العمالء
Approve credit sales
المصادقة على قيمة امبيعات
Check inventory availability
التأكد من توفر البضاعة في المخازن
Initiate back orders
)انشاء اوامر عكسية( اوامر بيع
Pick and pack orders تجهيز االوامر
Ship goods شحن البضاعة
Bill customers تنظيم فواتير العمالء
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Update sales and Accts Rec. for sales
تحديث المبيعات و حسابات العمالء بقيمة المبيعات
Receive customer payments
استالم مدفوعات العميل
Update Accts Rec. for collections
تحديث حسابات العمالء بالمبالغ المحصلة
Handle sales returns, discounts, & bad
debts
معالجة المردودات والخصومات والديون المعدومة
Prepare management reports
اعداد تقارير ادارية بالعمليات التي تمت
Send info to other cycles
ارسال معلومات الى الدورات االخرى
Note that the last activity in any cycle is to
send information to other cycles.
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BUSINESS CYCLES
Every transaction cycle:
Relates to other cycles
كل دورة عملية متصلة بدورات اخرى
Interfaces with the general ledger and
reporting system, which generates
information for management and external
parties.
والذي,ترتبط وتتصل بدفتر االستاذ العام ونظام اعداد التقارير
بدورهما يزودوا االدارة واالطراف الخارجية بالمعلومات التي
يحتاجونها التخاذ القرارات
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Finished Goods
Revenue
Cycle
Expenditure
Cycle
General Ledger
and Reporting
System
Human Res./
Payroll Cycle
Financing
Cycle
Production
Cycle
The revenue cycle
Gets finished goods
from the production
cycle
تحصل عاى البضاعة الجاهزة من
دورة االنتاج
Provides funds to the
financing cycle
يزود دورة التمويل باالموال
Provides data to the
General Ledger and
Reporting System
تزويد االستاذ العام ونظام التقارير
بالبيانات
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Expenditure
Cycle
Data
Revenue
Cycle
General Ledger
and Reporting
System
Human Res./
Payroll Cycle
Financing
Cycle
Raw
Mats.
Production
Cycle
The expenditure cycle
Gets funds from the
financing cycle
تحصل على االموال من دورة التمويل
Provides raw
materials to the
production cycle
تزويد دورة االنتاج بالمواد االولية
Provides data to the
General Ledger and
Reporting System
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Finished Goods
Revenue
Cycle
Expenditure
Cycle
Raw
Mats.
General Ledger
and Reporting
System
Human Res./
Payroll Cycle
Financing
Cycle
Production
Cycle
The production cycle:
Gets raw materials from
the expenditure cycle
تحصل على المواد االولية من دورة االنفاق
Gets labor from the
HR/payroll cycle
تحصل على العمالة من دورة الرواتب
Provides finished goods
to the revenue cycle
تزويد دورة االيراد بالبضاعة الجاهزة
Provides data to the
General Ledger and
Reporting System
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Expenditure
Cycle
Revenue
Cycle
General Ledger
and Reporting
System
Human Res./
Payroll Cycle
Funds
Financing
Cycle
Production
Cycle
The HR/payroll cycle:
Gets funds from the
financing cycle
تأخذ اموال من دورة التمويل
Provides labor to
the production
cycle
تزويد دورة االنتاج بالعمالة
Provides data to
the General Ledger
and Reporting
System
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Expenditure
Cycle
Revenue
Cycle
General Ledger
and Reporting
System
Human Res./
Payroll Cycle
Funds
Financing
Cycle
Production
Cycle
The Financing cycle:
Gets funds from the
revenue cycle
تحصل على اموال من دورة االيراد
Provides funds to the
expenditure and
HR/payroll cycles
.تزويد دورة االنفاق والرواتب باالموال
Provides data to the
General Ledger and
Reporting System
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Revenue
Cycle
Expenditure
Cycle
Production
Cycle
Data
Data
General Ledger
and Reporting
System
Human Res./
Payroll Cycle
Information for
Internal & External Users
The General Ledger and
Reporting System:
Gets data from all of
the cycles
تحصل بيانات من جميع الدورات
Financing
Cycle
Provides information
for internal and
external users
تزود االطراف الداخلية والخارجية
بالمعلومات
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BUSINESS CYCLES
Many accounting software packages implement the different transaction
cycles as separate modules.
.الكثير من البرمجيات المحاسبية تطبق هذة الدورات بشكل منفصل
Not every module is needed in every organization, e.g., retail companies
don’t have a production cycle.
. مثال شركات المتاجر للبيع بالتجزئة اليتطلب وجود دورة لالنتاج,ليس كل الشركات تتطلب وجود جميع الدورات
Some companies may need extra modules.
.بعض الشركات تتطلب اجزاء اضافية
The implementation of each transaction cycle can differ significantly
across companies.
.تطبيق كل دورة يختلف تطبيقها من شركة الخرى
However the cycles are implemented, it is critical that the AIS be able
to:
: فأن النظم المحاسبية يجب ان تكون قادرة على,اي تطبيق لهذه الدورات
Accommodate the information needs of managers
تزويد المدراء باحتياجاتهم من المعلومات
Integrate financial and nonfinancial data.
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وايضا قادرة على ان تحقق التكامل بين المعلومات المالية وغير المالية
Business Cycle Give–Get
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Accounting Information Systems
Collect, process, store, and report data and information
If Accounting = language of business
AIS = information providing vehicle
Accounting = AIS
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WHAT IS AN AIS?
An AIS is a system that collects, records, stores, and
processes data to produce information for decision
makers.
It can:
Use advanced technology; or
Be a simple paper-and-pencil system; or
Be something in between.
Technology is simply a tool to create, maintain, or
improve a system.
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WHAT IS AN AIS?
The functions of an AIS are to:
Collect and store data about events, resources, and agents.
Transform that data into information that management can use to
make decisions about events, resources, and agents.
Provide adequate controls to ensure that the entity’s resources
(including data) are:
Available when needed
Accurate and reliable
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Components of an AIS
People using the system
Procedures and Instructions
For collecting, processing, and storing data
Data
Software
Information Technology (IT) Infrastructure
Computers, peripherals, networks, and so on
Internal Control and Security
Safeguard the system and its data
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AIS and Business Functions
Collect and store data about organizational:
Activities, resources, and personnel
Transform data into information enabling
Management to:
Plan, execute, control, and evaluate
Activities, resources, and personnel
Provide adequate control to safeguard
Assets and data
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AIS Value Add
Improve Quality and Reduce Costs
Improve Efficiency
Improve Sharing Knowledge
Improve Supply Chain
Improve Internal Control
Improve Decision Making
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Improve Decision Making
Identify situations that require action.
Provide alternative choices.
Reduce uncertainty.
Provide feedback on previous decisions.
Provide accurate and timely information.
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ROLE OF THE AIS IN THE VALUE CHAIN
The objective of most organizations is to provide value to
their customers.
What does it mean to deliver value?
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ROLE OF THE AIS IN THE VALUE CHAIN
While “adding value” is a commonly
used buzzword, in its genuine sense, it
means making the value of the finished
component greater than the sum of its
parts.
It may mean:
Making it faster
Making it more reliable
Providing better service or advice
Providing something in limited supply (like Onegative blood or rare gems)
Providing enhanced features
Customizing it
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ROLE OF THE AIS IN THE VALUE CHAIN
Value is provided by performing a series of activities
referred to as the value chain. These include:
Primary activities
Support activities
These activities are sometimes referred to as “line” and
“staff” activities respectively.
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Value Chain—Support Activities
Firm
Infrastructure
Technology
Human
Resources
Purchasing
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Value Chain
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ROLE OF THE AIS IN THE VALUE CHAIN
Primary activities include:
Inbound logistics
Receiving, storing, and distributing the
materials that are inputs to the
organization’s product or service.
For a pharmaceutical company, this activity
might involve handling incoming chemicals
and elements that will be used to make their
drugs.
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ROLE OF THE AIS IN THE VALUE CHAIN
Primary activities include:
Operations
Transforming those inputs into products or
services.
For the pharmaceutical company, this step
involves combining the raw chemicals and
elements with the work of people and equipment to
produce the finished drug product that will be sold
to customers.
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ROLE OF THE AIS IN THE VALUE CHAIN
Primary activities include:
Inbound logistics
Operations
Outbound logistics
Distributing products or services to customers.
For the pharmaceutical company, this step involves
packaging and shipping the goods to drug stores,
doctors, and hospitals.
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ROLE OF THE AIS IN THE VALUE CHAIN
Primary activities include:
Marketing and sales
Helping customers to buy the organization’s
products or services.
A pharmacy rep may visit with drug stores, doctors,
etc. to inform them about their products and take
orders.
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ROLE OF THE AIS IN THE VALUE CHAIN
Primary activities include:
Service
Post-sale support provided to customers such as
repair and maintenance function.
A pharmaceutical firm will typically not be repairing
it’s product (though the product may be periodically
reformulated). The pharmaceutical company is
more likely to be providing advisory services to
pharmacists, etc.
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ROLE OF THE AIS IN THE VALUE CHAIN
Support activities include:
Firm infrastructure
Accountants, lawyers, and administration.
Includes the company’s accounting information
system.
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ROLE OF THE AIS IN THE VALUE CHAIN
Support activities include:
Firm infrastructure
Human resources
Involves recruiting and hiring new
employees, training employees, paying
employees, and handling employee
benefits.
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ROLE OF THE AIS IN THE VALUE CHAIN
Support activities include:
Firm infrastructure
Human resources
Technology
Activities to improve the products or services
(e.g., R&D, website development).
For the pharmaceutical company, these activities
would include research and development to
create new drugs and modify existing ones.
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ROLE OF THE AIS IN THE VALUE CHAIN
Support activities include:
Purchasing
Buying the resources (e.g., materials, inventory,
fixed assets) needed to carry out the entity’s primary
activities.
In the pharmaceutical company, the purchasing
folks are trying to get the best combination of cost
and quality in buying chemicals, supplies, and other
assets the company needs to run its operations.
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ROLE OF THE AIS IN THE VALUE CHAIN
Information technology can significantly impact the
efficiency and effectiveness with which the preceding
activities are carried out.
An organization’s value chain can be connected with
the value chains of its customers, suppliers, and
distributors.
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ROLE OF THE AIS IN THE VALUE CHAIN
Smith Supply Co.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
And the outbound logistics of Pharmaceuticals,
Inc., links to the inbound logistics of its
customers.
Pharmaceuticals,
Inc.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
Customer Pharmacy
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
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ROLE OF THE AIS IN THE VALUE CHAIN
Smith Supply Co.
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
The linking of these separate value chains
creates a larger system known as a supply
chain.
Pharmaceuticals,
Inc.
Inbound Logistics
Information
technology can
facilitate synergistic
linkages that improve
the performance of
each company’s value
chain.
Operations
Outbound Logistics
Marketing & Sales
Service
Customer Pharmacy
Inbound Logistics
Operations
Outbound Logistics
Marketing & Sales
Service
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AIS and Corporate Strategy
Organizations have limited
resources, thus investments
to AIS should have greatest
impact on ROI.
Organizations need to
understand:
IT developments
Business strategy
Organizational culture
Will effect and be effected
by new AIS
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