Accounting Information Systems: The Information Environment

Vast quantities of information flow only to external users such as customers and suppliers.

Information is not considered a business resource in contemporary business organizations.

The pyramid in Figure 1-1 shows the business organization divided vertically into several levels of activity.

Information in the organization only flows vertically, from senior managers to junior managers and operations personnel.

Middle management is accountable for the longer-term planning and setting organizational objectives.

The level of detail and nature of information received by external stakeholders is similar to that received by operations personnel.

Management information is highly detailed and oriented toward reporting on routine operations.

Horizontal flow of information supports operations-level tasks with summarized information about business transactions affecting the firm.

The external stakeholders include trading partners and internal auditors.

External users receive detailed financial statement information based on generally accepted accounting principles (GAAP).