The document provides an overview of Accounting Information Systems (AIS), detailing its components, functions, and the value it adds to organizations through improved decision-making. It distinguishes between data and information, emphasizing the importance of useful characteristics of information, and outlines various business processes and transactional information flows. Additionally, it discusses the role of Enterprise Resource Planning (ERP) systems in integrating and automating business processes across organizations.

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Accounting Information
Systems: An Overview
Chapter 1
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Learning Objectives
• Distinguish between data and information:
▫ Understand the characteristics of useful information.
▫ Explain how to determine the value of information.
• Explain fundamental decisions an organization makes:
▫ Understand basic information needed to make them.
• Identify the transactional information that passes between internal and external
parties and an AIS.
• Describe the major business processes present in most companies.
• Explain what an accounting information system (AIS) is and describe its basic
functions.
• Discuss how an AIS can add value to an organization.
• Explain how an AIS and corporate strategy affect each other.
• Explain the role an AIS plays in a company’s value chain. 1-2

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Data vs. Information
• Data are facts stored in the system
▫ A fact could be a number, date, name,
and so on.
For example:
2/22/14
ABC Company, 123,
99, 3, 20, 60
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Data vs. Information
The previous slide just showed facts, if we put those facts
within a context of a sales invoice, for example, it is
meaningful and considered information.
Invoice Date : 2/22/14 Invoice #: 123
Customer: ABC company
Item # Qty Price
99 3 $20
Total Invoice Amount $60
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What is information?
• The term data refers to any and all of the
facts that are collected, stored, and processed
by an information system. Information is data
that has been organized and processed so
that it is meaningful
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Value of Information
• Information is valuable when the benefits exceed
the costs of gathering, maintaining, and storing
the data.
Benefit (i.e., improved decision making)
> Cost (i.e., time and resources used to get
the information)
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What Makes Information Useful?
There are seven general characteristics that make
information useful:
1. Relevant: information needed to make a decision
(e.g., the decision to extend customer credit would
need relevant information on customer balance from
an A/R aging report)
2. Reliable: information free from bias
3. Complete: does not omit important aspects of
events or activities
4. Timely: information needs to be provided in time to
make the decision
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What Makes Information Useful?
5. Understandable: information must be
presented in a meaningful manner
6. Verifiable: two independent people can
produce the same conclusion
7. Accessible: available when needed
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Organizational Decisions and Information
Needed
• Business organizations use business processes to
get things done. These processes are a set of
structured activities that are performed by
people, machines, or both to achieve a specific
goal.
• Key decisions and information needed often
come from these business processes.
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Transactional Information Between Internal
and External Parties in an AIS
• Business organizations conduct business
transactions between internal and external
stakeholders.
• Internal stakeholders are employees in the
organization (e.g., employees and managers).
• External stakeholders are trading partners such as
customers and vendors as well as other external
organizations such as Banks and Government.
• The AIS captures the flow of information between
these users for the various business transactions.
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Interactions Between AIS and Internal and
External Parties
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Basic Business Processes
• Transactions between the business organization
and external parties fundamentally involve a
“give–get” exchange. These basic business
processes are:
▫ Revenue: give goods / give service—get cash
▫ Expenditure: get goods / get service—give cash
▫ Production: give labor and give raw materials—get
finished goods
▫ Payroll: give cash—get labor
▫ Financing: give cash—get cash
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What Is an Accounting Information System?
• It can be manual or computerized
• Consists of
▫ People who use the system
▫ Processes
▫ Technology (data, software, and information
technology)
▫ Controls to safeguard information
• Thus, transactional data is collected and stored into
meaningful information from which business
decisions are made and provides adequate controls
to protect and secure the organizational data assets.
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How Does an AIS Add Value?
• A well thought out AIS can add value through
effective and efficient decisions.
▫ Having effective decisions means quality decisions
▫ Having efficient decisions means reducing costs of
decision making
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AIS and Strategy
• An AIS is influenced by an organization’s
strategy.
• A strategy is the overall goal the organization
hopes to achieve (e.g., increase profitability).
• Once an overall goal is determined, an
organization can determine actions needed to
reach their goal and identify the informational
requirements necessary to measure how well
they are doing in obtaining that goal.
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AIS in the Value Chain
• The value chain shows how the different
activities within an organization provide value to
the customer.
• These activities are primary and support
activities.
▫ Primary activities provide direct value to the
customer.
▫ Support activities enable primary activities to be
efficient and effective.
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Key Terms
• System
• Goal conflict
• Goal congruence
• Data
• Information
• Information technology (IT)
• Information overload
• Value of information
• Business process
• Transaction
• Transaction processing
• Give-get exchange
• Revenue cycle
• Expenditure cycle
• Production (conversion) cycle
• Human resource/payroll cycle
• Financing cycle
• General ledger and reporting
system
• Accounting information system
(AIS)
• Predictive analytics
• Value chain
• Primary activities
• Support activities
• Supply chain
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Overview of Transaction Processing and
Enterprise Resource Planning Systems
Chapter 2
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Learning Objectives
• Describe the four parts of the data processing cycle and the major
activities in each.
• Describe documents and procedures used to collect and process
transaction data.
• Describe the ways information is stored in computer-based
information systems.
• Discuss the types of information that an AIS can provide.
• Discuss how organizations use enterprise resource planning (ERP)
systems to process transactions and provide information.
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Data Processing Cycle
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Data Input
Steps in Processing Input are:
• Capture transaction data triggered by a business
activity (event).
• Make sure captured data are accurate and
complete.
• Ensure company policies are followed (e.g.,
approval of transaction).
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Data Capture
• Information collected for an activity includes:
▫ Activity of interest (e.g., sale)
▫ Resources affected (e.g., inventory and cash)
▫ People who participated (e.g., customer and
employee)
• Information comes from source documents.
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Source Documents
• Captures data at the source when the transaction
takes place
▫ Paper source documents
▫ Turnaround documents
▫ Source data automation (captured data from
machines, e.g., Point of Sale scanners at grocery
store)
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Data Storage
• Important to understand how data is organized
▫ Chart of accounts
 Coding schemas that are well thought out to
anticipate management needs are most efficient and
effective.
▫ Transaction journals (e.g., Sales)
▫ Subsidiary ledgers (e.g., Accounts receivable)
▫ General ledger
Note: With the above, one can trace the path of the
transaction (audit trail).
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Audit trail for
Invoice #156 for
$1,876.50 sold to
KDR Builders
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Computer-Based Storage
Data is stored in master files or transaction files.
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Data Processing
Four types of processing (CRUD):
• Creating new records (e.g., adding a customer)
• Reading existing data
• Updating previous record or data
• Deleting data
Data processing can be batch processed (e.g., post
records at the end of the business day) or in real-
time (process as it occurs).
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Information Output
The data stored in the database files can be viewed
• Online (soft copy)
• Printed out (hard copy)
▫ Document (e.g., sales invoice)
▫ Report (e.g., monthly sales report)
▫ Query (question for specific information in a
database, e.g., What division had the most sales
for the month?)
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Enterprise Resource Planning
• Perencanaan sumber daya perusahaan ( ERP )
adalah sistem informasi yang diperuntukkan
bagi perusahaan manufaktur maupun jasa
yang berperan mengintegrasikan dan
mengotomasikan proses bisnis yang
berhubungan dengan aspek operasi,
produksi maupun distribusi di perusahaan
bersangkutan
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Enterprise Resource Planning (ERP) Systems
• Integrates activities from the entire organization
▫ Production
▫ Payroll
▫ Sales
▫ Purchasing
▫ Financial Reporting
Sistem ERP secara modular biasanya menangani proses manufaktur,
logistik, distribusi, persediaan (inventory), shipping, invoice, dan
akuntansi perusahaan. Sistem membantu mengontrol aktivitas bisnis
seperti penjualan, pengiriman, produksi, manajemen persediaan,
manajemen kualitas, dan sumber daya manusia. ERP merupakan Back
Office System yang mengindikasikan bahwa pelanggan dan publik
secara umum tidak dilibatkan dalam sistem ini
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Advantages of ERP System
• Integrated enterprise-wide allowing for better flow of the
information as it’s stored in a centralized database and can be
accessed by various departments which also improves
customer service.
• Data captured once (i.e., no longer need sales to enter data
about a customer and then accounting to enter same customer
data for invoicing)
• Improve access of control of the data through security settings
• Standardization of procedures and reports (Menstandarkan
data dan informasi melalui keseragaman pelaporan, terutama
untuk perusahaan besar yang biasanya terdiri dari banyak unit
business dengan jumlah dan jenis bisnis yg berbeda-beda).
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Disadvantages of ERP System
• Costly
• Significant amount of time to implement
• Complex
• User resistance (learning new things is
sometimes hard for employees)
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Key Terms
• Data processing cycle
• Source documents
• Turnaround documents
• Source data automation
• General ledger
• Control account
• Coding
• Sequence code
• Block code
• Group code
• Mnemonic code
• Chart of accounts
• General ledger
• Specialized journal
• Audit trail
• Entity
• Attributes
• Field
• Record
• Data value
• File
• Master file
• Transaction file
• Database
• Batch processing
• Online, real-time processing
• Document
• Report
• Query
• Enterprise resource planning
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