Summary: Accounting Information Systems - Book

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• 1 Accounting Information Systems: An overview

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• Explain what an Accounting Information system (AIS) is?

  An Accounting Information System (AIS) is a system that collects record, stores, and process data to produce information useful for decision making.

• Describe the basic function of an AIS.

  1) The efficient and effective collection and data concerning an organization's financial activities, including getting the financial data from journal to ledgers.
  2) To supply information useful for management making decisions.
  3) To make sure controls are in place to accurately record and process data

• What are the seven characteristics that determine the usefulness of information?

  1. Relevant
  2. Reliable
  3. Complete
  4. Timely
  5. Understandable
  6. Verifiable
  7. Accessible

• What are benefits of information?

  Benefits of information include reduced uncertainty, improved decisions, and improved ability to plan and schedule activities.

• What are costs of information

  The costs include the time and resources spent to produce and distribute the information.

• Give an example that differentiate Goal conflict and Goal Congruence?

  Goal Conflict: In an organization level; two parties are working with each other, trying to achieve something in return. However despite wanting the same thing, each of two parties used different methods.
  
  Goal Congruence: Between the two parties there is consistency on using the same method.

• What does an organization need to understand, to make effective decisions?

  To make effective decisions, organizations need to understand what type of information they need and how to gather and process the data. Most importantly, they need to understand for what decision they need which
  data. This data gathering and processing is often tied to the basic business processes in an organization.

• What are the five major business processes or transaction cycles?

  1. Revenue cycle
  2. Expenditure cycle
  3. Production or conversion cycle
  4. Human resources/payroll cycle
  5. Financing cycle

• Production or conversion cycle

  Activities associated with hiring, training, compensating, evaluating, promoting, and terminating employees.

• Under the financing cycle, why do we give cash and get cash at the same time?

  It means that a business organization can get cash in the form of a bank loan but will need to give that cash back over time in the form of monthly payments to the bank.