Accounting information

Systems: An Overview

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LEARNING OBJECTIVES

• Distinguish between data and information.

• Describe the major business processes present in
most companies.
• Explain what an accounting information system
(AIS) is and describe its basic functions.
• Management Information Systems (MIS) vs
Accounting Information Systems (AIS)

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AIS - WHAT IS A SYSTEM?
• System
• A set of two or more
interrelated components
interacting to achieve a
goal
Process
• Goal Conflict 1
• Occurs when components
act in their own interest
without regard for overall
goal
Goal
• Goal Congruence Process
• Occurs when components 2
acting in their own interest
contribute toward overall
goal
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Q1. in a co – what components make up a co?
Q2. in UPSI – what components make up a university?
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DATA VS. INFORMATION

• Data are facts stored in the system

▫ A fact could be a number, date, name, and so on.
• For example:
22/2/2024
XYZ Company,
123, 99, 3, 20, 60
• If we put these facts within a context of a sales invoice, for
example, it is meaningful and considered as information.

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DATA VS. INFORMATION
Example:

Invoice Date : 22/2/24

Invoice #: 123
Customer: XYZ company

Item # Qty Price

99 3 $20

Total Invoice Amount: $60

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 VALUE OF INFORMATION

BENEFITS COSTS
• Reduce Uncertainty • Time & Resources
• Improve Decisions • Produce Information
• Distribute Information
• Improve Planning
• Improve Scheduling
Benefit $’s > Cost $’s
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*please relate this with you FYP (AT08’s students)

WHAT MAKES INFORMATION USEFUL?

• Necessary seven (7) characteristics:

• Relevant
• Reduce uncertainty, improves decision making
or confirm or corrects prior expectations
• Reliable
• Free from error or bias, accurately represents
org. events or activities
• Complete
• Does not omit important aspects of the events
or activities it measures
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WHAT MAKES INFORMATION USEFUL?

• Timely
• Provided in time for decision makers to make
decisions
• Understandable
• Presented in a useful and intelligible format
• Verifiable
• Two independent, knowledgeable people
produce the same information
• Accessible
• Available to users when they need it and in a
format they can use
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 Organizational Decisions And Information
Needed

• Business organizations –companies-use business processes

to get things done.
• These processes are a set of structured activities that are
performed by people, machines, or both to achieve a specific
goal.
• Key decisions and information needed often come from these
business processes

• Q – what business processes usually performed by

. companies? 1-10
 Transactional Information Between Internal
And External Parties In An AIS
• Business organizations conduct business transactions (eg.
Sales / purchase) between internal and external
stakeholders.

• The AIS captures the flow of information between these users

for the various business transactions.

• Q – in UPSI – Who are the internal and external parties?

What info traded among them?

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INTERACTIONS BETWEEN AIS AND INTERNAL
AND EXTERNAL PARTIES

Q. Which parties are internal / external?

BUSINESS PROCESS
Financing Revenue

• Systems working toward

organizational goals
• Usually to maximize profit
Human Expenditure
Resources

Production

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 BUSINESS PROCESS CYCLES
Transactions between the business organization and
external parties fundamentally involve a “give–get”
exchange. These basic business processes are:
• Revenue
• Expenditure
• Production
• Human Resources
• Financing

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BUSINESS TRANSACTIONS

• Give–Get exchanges
• Between two entities
• Measured in economic terms

Q. Discuss about give get exchange – you as an

UPSI student ?
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 BUSINESS CYCLE GIVE–GET
(The AIS And Its Subsystems)

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 ACCOUNTING INFORMATION
SYSTEMS (AIS)

• A system that collects, process,

stores, and report data and
information related to financial
aspects of business events for
decision makers.
• If Accounting = is language of
business
• AIS = is the intelligence -
information - providing - Eg. Salary – info
required attendance
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vehicle – of that language data (using punch
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card)
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Eg. Usage of actg software

The Role of AIS In The Value Chain

• To provide value to their customers, most organization

perform different number of activities.
• Those activities can be conceptualized as forming a
‘value-chain’ consisting 5 primary activities.

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VALUE CHAIN

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 PRIMARY ACTIVITIES
• 5 Primary Activities that directly provide value to its
customers:
• Inbound logistics consists of receiving, storing, and distributing
the materials an organization uses to create the services and
products it sells.
• Operations activities transform inputs into final products or
services
• Outbound logistics activities distribute finished products or
services to customers.
• Marketing and sales activities help customers buy the
organization’s products or services.
•
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Service activities provide post-sale support to customers.
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 SUPPORT ACTIVITIES
• Support activities allow the primary five activities to be
performed efficiently and effectively. There are 4
Categories of Support Activities:
• Firm infrastructure is the accounting, finance, legal, and general
administration activities that allow an organization to function.
• Human resources activities include recruiting, hiring, training,
and providing employee benefits and compensation
• Technology activities improve a product or services includes
R&D, investment in IT & product design.
• Purchasing activities procure raw materials, supplies, machinery,
and the buildings used to carry out the primary activities.
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 MIS VS AIS
• While MIS (management information system) is used to boost
management efficiency and effectiveness, AIS (a.k.a.
accounting information system) is an automated system utilized
by an organization to handle a company's accounting.
• AIS focuses on financial and accounting data, while MIS
focuses on operational data. AIS is used by accountants and
financial professionals, while MIS is used by managers and
executives. AIS is primarily concerned with the accuracy and
completeness of financial data, while MIS is concerned with the
relevance and timeliness of operational data.
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 CONT’D
• MIS (Management Information Systems) and AIS (Accounting
Information Systems) are both crucial information systems
within an organization, but they serve different purposes:
• MIS is broader, focusing on operational data to aid managers
and executives in decision-making. It is concerned with the
relevance and timeliness of operational data.
• AIS is more specific, dealing with financial and accounting
data. It is used by accountants and financial professionals,
emphasizing the accuracy and completeness of financial data.
• AIS is often considered a subset of MIS because the financial
information from AIS is critical for the overall management
information that MIS provides
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THANK YOU 1-25