Lecture 5- The Information System: A general model of Accounting Iformation System

1. Habib Ullah Qamar
Govt. college of Commerce Gujranwala
1/22/2016

2.  Accounting information System
 TRP
 GL/FRS
 MRS
 MIS
 AIS vs MIS
1/22/2016

3.  We will an AIS Model
 Components of AIS Model
 End Users
 Data collection
 Data processing
 Data sources
 Feedback
1/22/2016

4.  In the Figure 1 A General Model is described
for AIS which may be considered for any
Information System
 Key Elements are
 Data Sources, End Users, Data Collection,
Data Processing, Database Management,
Information generation

6.  Two general groups of end users
 External users include creditors, stockholders,
potential investors, regulatory agencies, tax
authorities, suppliers, and customers.
 Institutional users such as banks, and the
Internal Revenue Service (IRS) receive information
in the form of financial statements, tax returns
 Trading partners (customers and suppliers)
receive transaction-oriented information,
including purchase orders, billing statements,
and shipping documents.

7.  Internal users include management,
operations personnel.
 Organization has a great deal of freedom in
the way it meets the needs of internal users
as compared to External users
 Still in well-accepted conventions and
practices, internal reporting is governed
primarily by what gets the job done.
 System designers, including accountants

8.  important distinction between the terms data and
information.
 Data are facts, which may or may not be processed
(edited, summarized, or refined) and have no direct effect
on the user.
 By contrast, information causes the user to take an action
 Information is often defined simply as processed data.
 For example, a purchasing agent receives a daily report
listing raw material inventory items that are at low levels.
 This report causes the agent to place orders for more
inventory. The facts in this report have information
content for the purchasing agent.
 However, this same report in the hands of the personnel
manager is a mere collection of facts, or data, causing no
action and having no information content.

9.  Data sources are financial transactions that enter the
information system from both internal and external
sources.
 External financial transactions are the most common
source of data for most organizations. These are economic
exchanges with other business entities and individuals
outside the firm. Examples include the sale of goods and
services, the purchase of inventory, the receipt of cash etc.
 Internal financial transactions involve the exchange or
movement of resources within the organization. Examples
include the movement of raw materials into work-in-
process (WIP), the application of labor and overhead to
WIP, the transfer of WIP into finished goods inventory, and
the depreciation of plant and equipment.

10.  First Operations Stage in An AIS
 Data must be entered or collected complete,
correct and valid
 Incorrect data (erroneous data) will lead to
miss reporting and false information
generation
 Two Rules must be Followed
 Relevancy : Only capture relevant Data
 Efficiency: timely, no redundancy,
inconsistancy

11.  Processing of data is done to produce
information.
 All mathematical and logical tasks ranging
from simple to complex.
 Examples include mathematical algorithms
used for production scheduling applications.
 statistical techniques for sales forecasting,
and posting
 summarizing procedures used for accounting
applications.

12.  The organization’s database is its physical
repository for financial and nonfinancial data.
 Database will be used. It can be a filing
cabinet or a computer disk.
 Regardless of the database’s physical form,
we can represent its contents in a logical
hierarchy.
 The levels in the data hierarchy—attribute,
record, and file.

13.  process of compiling, arranging, formatting, and
presenting information to users.
 Information can be an operational document
such as a sales order, a structured report, or a
message on a computer screen.
 Relevance: must contain relative data and facts
for mangers to decide. Irrelevant data waste
time.
 Timeliness. The age of information is a critical
factor in determining its usefulness. Information
must be no older than the time period of the
action it supports.
 Accurate : information must be accurate

14.  Feedback is a form of output that is sent back
to the system as a source of data.
 Feedback may be internal or external and is
used to initiate or alter a process.

15.  Components of AIS Model
 End Users
 Data collection
 Data processing
 Data sources
 Feedback

16. See you again in sha ALLAH
1/22/2016