How an ais can add value to an organization

Accounting Information Systems

Fourteenth Edition

Chapter 1

Accounting Information Systems: An Overview

Copyright © 2018 Pearson Education, Inc. All Rights Reserved

Copyright © 2018 Pearson Education, Inc.

Chapter 1: Accounting Information Systems: An Overview

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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 AIS adds value to an organization.

How it affects and is affected by corporate strategy.

The role of AIS in a value chain.

Copyright © 2018 Pearson Education, Inc.

Chapter 1: Accounting Information Systems: An Overview

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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

ABC Company, 123,

99, 3, 20, 60

Copyright © 2018 Pearson Education, Inc.

Chapter 1: Accounting Information Systems: An Overview

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Data vs. 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: ABC company

Item # Qty Price

99 3 $20

Total Invoice Amount $60

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Chapter 1: Accounting Information Systems: An Overview

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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 effectively filter and condense information.

Copyright © 2018 Pearson Education, Inc.

Chapter 1: Accounting Information Systems: An Overview

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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

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Chapter 1: Accounting Information Systems: An Overview

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What Makes Information Useful? (1 of 2)

There are seven general 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 aging 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

Copyright © 2018 Pearson Education, Inc.

Chapter 1: Accounting Information Systems: An Overvi