Chapter 1 and 2 Flashcards
What is AIS?
structural, repeatable approach to collecting and storing relevant data about financial transactions AND processing and aggregating the data to create info. for users and decision makers
AIS transactions must be effective and efficient (2)
internal control activities
efficient design
internal control activities
ensure accurate and appropriate accounting records
efficient design
reduces time and labor (cost) or enhance customer experience (revenue)
business process
a set of related, coordinated, and structured activities and tasks that are performed by a person or computer, or machine and that helps accomplish a specific organizational goal
Transaction processing
the process that begins with capturing transaction data and ends with informational output, such as financial statements
accountant events
ship goods
receive goods
receive cash
pay employees
ship goods
revenue
receive goods
liability
receive cash
reduce receivable
pay employees
expense
5 transaction cycles FERPH
- financing cycle
- expenditure cycle
- revenue cycle
- production or conversion cycle
- human resources/payroll cycle
revenue cycle
where goods and services are sold for cash or a future promise to receive cash
expenditure cycle
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
where raw materials are transformed to finished goods
human resourcing/payroll cycle
where employees are hired, trained, compensated, evaluated, promoted, and terminated
financing cycle
where companies sell shares in the company to investors and borrow money and where investors are paid dividends and interest is paid on loans.
general ledger and reporting system
used to generate for both management and external parties.
6 components to AIS (IIDSPP)
- information technology infrastructure
- Internal controls and security measures
- Data
- software
- People
- Procedures and instructions
3 important AIS business functions
- collect and store data about organizational activities, resources, and personnel
- Transform data into information so management can plan, execute, control, and evaluate activities, resources, and personnel
- provide adequate controls to safeguard the organization’s assets and data
data
facts about processes (events), resources or people (agents). Data is collected, processed and stored.
information
data that is aggregated and organized to provide basis for decision making or general knowledge
Characteristics of useful information RRUCAVT
- relevant
- reliable
- understandable
- complete
- accessible
- verifiable
- timely
How AIS can value to an organization
- improving the quality and reducing the costs of products or services
- improving efficiency
- sharing knowledge
- improving the efficiency and effectiveness of its supply chain
- improving the internal control structure
- improving decision making
3 factors that influence the design of an AIS
- developments in IT
- business strategy
- organizational culture
Value Chains 5 primary activities that directly provide value to customers
- inbound logistics
- outbound logistics
- operations
- marketing and sales
- Service
Inbound logistics
consists of receiving, storing, and distributing the materials an organization uses to create the services and products it sells
outbound logistics
activities distribute finished products or services to customers
operations
activities transform inputs into final products
Marketing and sales
activities help customers buy the organizations products and services (advertising).
Service
activities provide post sale support to customers (repairs and maintenance services)
4 supporting activities
allow primary activities to be performed efficiently and effectively: firm infrastructure human resources technology purchasing
firm infrastructure
the accounting, financing, legal, and general admin. activities that allow an organization to function.
