Group No.

- One

GRO
UP
MEM Pinky Ansari Awolad Mia Mehedi Hasan
BERS 1912033101 1910433105 1910233102

Rabia Jannat Raisa Al-Amin

1910433103 1911133104
Accounting and Information Systems-
An Overview

• Introduction
• Components of an AIS
• Business process and AIS
• AIS and value to an organization
• AIS and corporate strategy
• Role of the AIS in the value chain
 Accounting Information Systems

Accounting information system is a system that collects,

records, stores and processes data to produce information for
decision makers. It includes people, procedures and
instructions data, software, information technology,
infrastructure, and internal controls and security measures. AIS
must collect, enter, process, store and report data and
information.
Basically the word AIS consists of three words
Accounting, Information and Systems.

Accounting: Accounting is the systematic and

comprehensive recording of an organization's financial
transactions. It includes summarizing, analyzing and
reporting these transactions to all users.

Information: Information is the data that have been

organized and processed to provide meaning and improve
the decision making process. Users make better decision
as the quantity and quality of information increase.
System: A system is a set of two or more interrelated
components that interact to achieve a goal. A system is a
detailed methods, procedures and routines that carry out
specific activities, perform a duty, achieve goals or
objectives or solve one or more problems. Most system are
composed of smaller subsystems that support the larger
system. Each subsystem is designed to achieve one or more
organizational goals.

Data: Data are the facts that are collected, recorded, stored
and processed by an information system.
 Data processing Systems in AIS

Data Decision

AIS AIS
Information
 Qualitative Characteristics of Information

Relevant: Reduces uncertainty, improves decision making, or

confirms or corrects prior expectations.
Reliable: Free from error or bias; accurately represents
organization events or activities.
Complete: Does not omit important aspects of the events or
activities it measures.
Timely: Provided in time for decision makers to make
decisions.
Understandable: Presented in a useful and intelligible format.
 Components of AIS
1. The people who use the systems.
2. The procedures and instructions used to collect, process
and store data.
3. The data about the organizations and its business activities.
4. The software used to process the data
5. The information and technology infrastructure, including
the computers, peripheral devices, and network
communications derives used in the AIS.
6. The internal controls and security measures that
safeguard AIS data.
 Business Process & Transaction Cycle
Business processes are the major give-get exchanges that
occur frequently in most companies.
Transaction Cycle the process that begins with capturing
transaction data and ends with informational output, such as
the financial statements, is called transaction cycle
A transaction is an agreement between two entities to
exchange goods or services or any other event that can be
measured in economic terms by an organization.
Many business activities are pairs of events involved in a give-
get exchange. Most organizations engage in a small number of
give-get exchanges, but each type of exchange happens many
times. These exchanges can be grouped into five major
business processes or transaction cycles;

Revenue cycle, where goods and services are sold for cash or
a future promise to receive cash.

The expenditure cycle, where companies purchase inventory

for resale or raw materials to use in producing products in
exchange for cash or a future promise to pay cash.
Production or conversion cycle- Activities associated with
using labor, raw materials and equipment to produce finished
goods.

The human resources/payroll cycle, where employees are

hired, trained, compensated, evaluated, promoted, and
terminated.

Financing cycle - Activities associated with raising money by

selling shares in the company to investors and borrowing
money as well as paying dividends and interest.
 Transaction cycles

Transaction cycles relate to one another and interface with the

general ledger and reporting system, which is used to generate
information for both management and external parties. In
many accounting software packages, the various transaction
cycles are implemented as separate modules. Not every
organization needs to implement every module.
 Get
Financing Cycle Give
Cash Fu n
ds Cash ds
Fu n
Funds

Give Expenditure Cycle Get Raw

Payroll Cycle Cash Materials
Give Get
Cash Labor Data
Data Information for Both
Data Internal and External Users
General Ledger &
Raw Materials
Reporting System
Dat
a
Revenue Cycle Da
ta Production Cycle
Lab
or Give Labor Get
Give Get
Goods Cash Finished Goods Give Raw Finished
Materials Goods

AIS and It’s Subsystems

 AIS and Value to an Organization
An Accounting Information System (AIS) can add significant value to an
organization in several ways;

1. Efficient data processing: An AIS can collect data from source documents,
record transactions in journals and post to ledgers. Moreover AIS automates
data entry and processing tasks, reducing the likelihood of errors and
improving efficiency in handling financial transactions.

2. Improving the quality and reducing the costs: For example, An AIS can
monitor the machinery, so operators notified immediately when performance
falls outside. This helps maintain product quality as well as reduces cost. Also
by automating routine accounting tasks, AIS reduces the need for manual
labor, leading to cost savings in terms of personnel and resources.
3. Enhance internal control structure: AIS can incorporate
controls and security measures to prevent fraud, errors, system
failures and unauthorized access to financial data therefore
strengthening an organizations internal control environment.

4. Better cash flow management: With access to accurate and

current financial data, organization can optimize cash flow
management, ensuring they have the necessary funds for operations
and investments.

5. Strategic planning: AIS provides historical and projected

financial data, enabling organizations to develop long term strategic
plans and forecast financial performance.
6. Customer and supplier relationships: AIS can improve
relationships with customers and suppliers by providing timely
and accurate invoices, payments and financial information. This
can lead to a better negotiation terms and stronger partnerships.

7. Improved decision-making: Decision making is a complex,

multistep activity including identify the problem, collect and
interpret information, evaluate ways to solve the problem, select a
solution methodology and implement the solution. An AIS can
provide assistance in all phase of decision making. AIS helps
management make informed decisions based on up to date
financial information.
8. Improving the efficiency and effectiveness of its supply
chain: Allowing customers to directly access inventory and
sales order entry systems can reduce sales and marketing costs,
thereby increasing customer retention rates.
9. Audit and Transparency: AIS maintains an audit trail of
financial transactions, making it easier for external auditors to
verify financial statements. This transparency enhances the
trust of investors, stakeholders, and regulatory bodies.
10. Competitive Advantage: By leveraging financial data
effectively, organizations can gain a competitive edge by
identifying opportunities, optimizing resources, and
responding swiftly to market changes.
 AIS and Corporate Strategy
Since most organizations have limited resources, it is
important to identify the AIS improvements likely to yield the
greatest return. Making a wise decision requires an
understanding of the organization’s overall business strategy.

The three factors that influence the design of an AIS;

1. Developments in IT,
2. Business strategy
3. Organizational culture.
Organizational Business
Culture Strategy

AIS

Information
Technology

Factors influencing Design of the AIS

1. Information technology (IT) is the use of computers,
software, networks, and other devices to create, store, transmit,
and manipulate data. Developments in IT can affect the design
of an AIS by introducing new capabilities, opportunities,
challenges, and risks for the accounting information and its
users. For example, developments in IT can enable the AIS to
use cloud computing, big data, blockchain, internet of things
(iot), and artificial intelligence (AI) to enhance the quality,
efficiency, security, and innovation of the accounting
information .
2. Business strategy is the plan of action that an organization
adopts to achieve its goals and objectives in a competitive
environment. Business strategy can affect the design of an AIS
by determining the data needs, information requirements, and
performance measures of the organization and its stakeholders.
For example, business strategy can influence the selection of
the hardware and software components of the AIS, as well as
the integration of the AIS with other information systems
within and outside the organization.
3. Organizational culture is the set of values, beliefs, norms,
and behaviors that shape the way an organization operates and
interacts with its internal and external environment.
Organizational culture can affect the design of an AIS by
influencing the attitudes, perceptions, expectations, and
preferences of the accounting information users. For example,
organizational culture can affect the adoption, implementation,
use, and evaluation of the AIS by creating a supportive or
resistant climate for change.
 Role of the AIS in the value chain
To provide value to the customers, most organizations perform a
number of different activities. The value chain activities can be
grouped into primary activities and supporting activities.

Value chain is linking together of all the primary and supporting

activities in a business. Value is added when a product passes
through the chain.
Primary activities are the value chain activities that produce,
market, and deliver products and services to customers and provide
post-delivery service and support.
Supporting activities are the value chain activities such as firm
infrastructure, technology, purchasing, and human resources that
enable primary activities to be performed efficiently and
effectively.

Primary Activities Supporting Activities

1. Inbound Logistics 1. Firm Infrastructure

2. Operations 2. Human Resources
3. Outbound Logistics 3. Technology
4. Marketing & Sales 4. Purchasing
5. Services
 Primary Activities
1. Inbound logistics consists of receiving, storing, and
distributing the materials an organization uses to create the
services and products it sells. For example, an automobile
manufacturer receives, handles, and stores steel, glass, and
rubber.
2. Operations activities transform inputs into final products
or services. For example, assembly line activities convert
raw materials into a finished car.
3. Outbound logistics activities distribute finished products
or services to customers. An example is shipping
automobiles to car dealers.
4. Marketing and sales activities help customers to buy the
organization’s products or services. Advertising is an
example of a marketing and sales activity.

5. Service activities provide post-sale support to customers.

Examples include repair and maintenance services.
 Supporting Activities
1. Firm infrastructure is the accounting, finance, legal, and
general administrative activities that allow an organization to
function effectively. The AIS is part of the firm infrastructure.
2. Human resources activities include recruiting, hiring,
training, and compensating employees.
3. Technology activities improve a product or service quality.
Using IT to redesign supply chain systems yields tremendous
benefits and cost savings.
4. Purchasing activities procure raw materials, supplies,
machineries, and the buildings used to carry out the primary
activities.
THANK YOU
FOR YOUR PATIENCE!!