Unit overview Accounting Information System Concept
2
Lecture 1Introduction to accounting systems
1
Accounting System Design and Development
Data (Singular form datum) are the
raw
materials of which Information Systems
are built.
Information is processed or value-
added
data.
Knowledge is understanding the meaning
of
information – knowledge is personal and
subjective.
What is information? What is a system?
What is information system?
What is an accounting information system?
Why do business need IS?
Why do accountant need to know about IS?
‘A collection of parts that work together
to
achieve some purpose.’ Systems can be man-made or natural
Identify some systems that you know about –what do they have in common?
Can you give an example which links
all
three? Data
Information
Knowledge
System – data conversion
Inputs Data
Processing
Outputs Information
Processes are the sets of activities that
are
performed on the inputs into the system
Examples:o Format checks on data
o Validity checks on data
Manual keying
Scanning through barcode technology
Scanning through image scanners
Magnetic ink character recognition [MICR]
Voice recognition
Optical mark readers
A system whose purpose is the
efficient
storage, manipulation, processing and
retrieval of information.
A set of interrelated components that
collect
(or retrieve), process, store, and distribute
information to support decision marking and
control in an organization.
Outputs refer to what is obtained from
a
system, or the result of what the system
does
Examples:
o Receipts
o Invoices
Outputs are normally the starting
point
when designing a system
Source: Laudon and Laudon 2006
The components of an information
system
are:◦ People
◦ Data/information
◦ Procedures
◦ Software
◦ Hardware
◦ Communication
We can use technology to create barriers
to
competition.
We can use technology to lower the costs
of
market entry.
We can shorten timelines, speed cashflow,
cut
out intermediaries,
We can be better informed than
our
competitors.
Internet growth and technology convergence. Transformation of business enterprise.
Growth of a globally connected economy.
Growth of knowledge and information-
based
economies. Emergence of the digital firm.
Business process
Source: Laudon and Laudon 2006
Source: Laudon and Laudon 2006
Transaction Processing Systems (TPS)◦ serves the operational level of an organization.
◦ are designed to process routine
transactions
efficiently
◦ E.g. Systems to calculate the weekly and
monthly
payroll and tax payments Knowledge management systems (KMS)
◦ helps businesses create and share information.
◦ uses group collaboration systems such as
an
intranet.
1. When describing systems, a component
may
belong to more than one system.
2. Information Systems is purely and simply
about
technology
3. Successful Information Systems are centered
on
technology
◦ improves the productivity of employees who need to
◦ provides individuals effective ways to process personal and
documents. e.g. word processing, spreadsheets, file
◦ serves the management level of the organization.
usually take data from the TPS and summarise it into a
◦ MIS reports tend to be used by middle management and
Decision-support systems (DSS)
◦ helps management make decisions in situations where
there is uncertainty about the possible outcomes of those
decisions.
◦ DSS comprise tools and techniques to help gather
relevant
information and analyse the options and alternatives.
◦ DSS often involves use of complex spreadsheet
and
databases to create "what-if" models. Executive support systems (ESS)
◦ serves the strategic level of an organization.
◦ It gathers, analyses and summarises the key internal
and
external information used in the business.
Office automation systems (OAS)
process data and information.
organisational data, perform calculations, and
create managers, personal calendars, presentation
packages Management information systems (MIS)
◦ mainly concerned with internal sources of
information. MIS
series of management
reports.
operational supervisors.
A collection of data and information
processing procedures aimed at converting
economic data into the accounting
information needed by users for decision
about the allocation of scare resource.
AIS = Accounting + Information System
Source: Laudon and Laudon 2006
Accounting and IS – a changing relationship
Evolution of AIS
Pre 15th century: recording economic activities
15th century: Pacioli’s development of double-entry accounting
19th century: adding machines and cash registers >> batch totals
20th century: punch cards >> fully integrated computerised systems
21st century: accounting information systems
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