AIS: Systems, Data & Information

• System: Two or more interrelated components interacting to achieve a goal.
• Goal Conflict: Subsystem goals inconsistent with the larger system's goals.
• Goal Congruence: Subsystems achieving their goals while contributing to the organization's overall objectives.
• Data: Facts collected, recorded, stored, and processed by an information system.
• Information: Organized and processed data that improves decision-making.
• Information Overload: Exceeding the amount of information a human mind can absorb.
• Information Technology (IT): Computers and electronic devices used to store, retrieve, transmit, and manipulate data.
• Value of Information: Benefit produced by information minus the cost of producing it.
• Business Process: Related, coordinated, structured activities performed by a person, computer, or machine.
• Transaction: Agreement between two entities to exchange goods or services measurable in economic terms.
• Transaction Processing: Capturing transaction data, processing it, storing it, and producing output like managerial reports.
• Revenue Cycle: Goods and services are sold for cash or a future promise to receive cash.
• Expenditure Cycle: Companies purchase inventory for resale or raw materials.
• Production or Conversion Cycle: Raw materials transformed into finished goods.
• Human Resources/Payroll Cycle: Employees are hired, trained, compensated, evaluated, promoted, and terminated.
• Financing Cycle: Companies sell shares to investors and borrow money, paying dividends and interest.
• Accounting Information System (AIS): Provides intelligence and information.
• Accounting: Data identification, collection, storage, information development, measurement, and communication process.
• Accounting is an Information System.

Six Components of AIS (2P.DA.SOF.I.I.)

• The people who use the system.
• The procedures/instructions used to collect, process, and store data.
• Data about the organization and its business activities.
• Software used to process the data.
• The information technology infrastructure including computers and network devices.
• Internal controls and security measures safeguarding AIS data.

Three Business Functions

• Collect and store data about organizational activities, resources, and personnel.
• Transform data into information for management to plan, execute, control, and evaluate.
• Provide adequate controls to safeguard assets and data.

Principles of Reliable AIS that Adds Value

• Improving the quality and reducing the costs of products or services.
• Improves efficiency.
• Sharing knowledge.
• Improving the efficiency and effectiveness of its supply chain.
• Improving the internal control structure.
• Improving decision making.