chapter 1 Flashcards
information objectives
To support the firm’s day-to-day operations
to support management decision making
to support the stewardship function of managment
Operations personnel use information to assist
them in the efficient and effective discharge of their daily tasks.
To support the firm’s day-to-day operations
Managers use information to assist them in planning
and control decisions related to their areas of responsibility.
support management decision making
Stewardship refers to managers’
responsibility to properly manage the resources of the firm and to report on their activities.
External users receive stewardship information through traditional financial statements
and other mandated reports.
to support the stewardship function of management
the set of formal procedures by which data are collected, stored, processed
into information, and distributed to users.
information system
information system accepts inputs, called
transaction
is an event that affects or is of interest to the organization and is processed by its
information system as a unit of work.
transaction
3 management tiers
- top management
- middle management
- operations management
directly responsible for controlling day-to-day operations.
operations management
accountable for the short-term planning and coordination of activities necessary to accomplish
organizational objectives
middle management
responsible for longer-term planning and setting
organizational objectives.
top management
is an economic event that affects the assets and equities of the organization,
is reflected in its accounts, and is measured in monetary terms.
financial transaction
are events that do not meet the narrow definition of a financial transaction.
nonfinancial transactions
process financial transactions and nonfinancial transactions that directly affect the
processing of financial transactions.
AIS Subsystems
three major subsystems of AIS
transaction processing system (TPS),
general ledger/financial reporting system (GL/FRS),
management reporting system (MRS),
supports daily business operations with numerous reports, documents, and messages for
users throughout the organization;
transaction processing system (TPS),
which produces the traditional financial statements, such as the income statement, balance sheet,
statement of cash flows, tax returns, and other reports required by law
general ledger/financial reporting system (GL/FRS),
provides internal management with special-purpose financial
reports and information needed for decision making such as budgets, variance reports, and
responsibility reports. We
management reporting system (MRS),
processes nonfinancial transactions that are not normally processed
by traditional AIS.
Management Information System
central to the overall function of the information system. It converts economic events
into financial transactions, records financial transactions in the accounting records (journals and
ledgers), and distributes essential financial information to operations personnel to support their
daily operations.
TPS
TPS consists of three transaction cycles
the revenue cycle,
the expenditure cycle, and the conversion cycle.
Because of their operational interdependency,
however, they are generally viewed as a single integrated system—
General Ledger/Financial Reporting Systems
The FRS measures the status of financial resources and the changes in
those resources and communicate this information to external users.
nondiscretionary reporting
provides the internal financial information needed to manage a business.
MRS Management Reporting System
Typical reports produced by the MRS include budgets, variance reports, cost-volume-profit
analyses, and reports using current (rather than historical) cost data.
discretionary reporting
include creditors,
stockholders, potential investors, regulatory agencies, tax authorities, suppliers, and customers.
external users
include management at all levels of the organization as well as operations personnel.
internal users
are facts,
which may or may not be processed
data
defined simply as processed data, but
this definition is inadequate. Information is determined by the effect it has on the user, not by its
physical form.
information
triggers users to take actions that
support their day-to-day business tasks, resolve conflicts, and plan for the future
information
are financial transactions that enter the information system from either internal or
external sources.
data sources
most common source of data.
External financial transactions
involve the exchange or movement of
resources within the organization.
Internal financial transactions
is the first operational stage in the information sys
data collection
Once collected, data usually require processing to produce information
Data Processing
physical repository for financial and nonfinancial data
database
