What to expect?
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Exam 1 Review
Format
Multiple choice
True/false
l Short answer/essay
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http://www.muskingum.edu
http://www.muskingum.edu//
~plaube/acct420/default.htm
An Information System
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A System is an entity consisting of
interacting parts or components that
are attempt to achieve one or more
goals.
An Information system is a set of
interrelated subsystems that work
together to collect, process, store,
transform, and distribute information
for planning, decision making, and
control.
Firms depend on information
systems in
order to stay competitive.
An Accounting Information
System
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Data versus Information
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Inputs: Data/Information from
Internal/External sources
Processes: Sort, Organize,
Calculate
The objective of financial
accounting
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Outputs: Information for Internal/
External Decision Makers
Data are raw facts about
events that have no
organization or meaning.
Information is data that
have been processed and is
meaningful and useful to
users.
Financial Accounting
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Data
Repository/
Files,
Databases,
Etc.
Bring a pencil
provide relevant information to
individuals and groups outside an
organization’s boundaries.
Users include investors, tax
agencies, and creditors.
Objectives achieved through
preparation of
financial statements.
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The Financial Accounting
Information System
Chapter 16
Information Technology and AISs
Inputs – transactions measured in
monetary units.
Audit trail – enables information
users to follow the flow of data
through the system.
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Parallels the accounting cycle,
cycle,
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which begins with a transaction
ends with producing financial statements
(and closing temporary accounts)
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A good audit trail permits managers to
follow source document data
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from input through processing to the output
report
(and vice versa)
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Documentation of Systems
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Documentation is a vital
part of any AIS.
Accountants use many
different types of diagrams
to trace the flow of
accounting data through an
AIS.
A wide variety of software is
available for documenting
AISs.
Why Documentation Is
Important
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Types of Documentation
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Document Flowcharts
Systems Flowcharts
Data Flow Diagrams
Process Maps
Program flowcharts
Decision tables
Depicting how the system works
Training users
Designing new systems
Controlling system development
and maintenance costs
Standardizing communications
with others
Auditing AISs
Documenting business processes
EndEnd-User Computing
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Introduction
The Importance of Information
Technology to Accountants
Input, Processing and Output
Devices
Secondary Storage Devices
Data Communications and
Networks
Computer Software
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EndEnd-user computing refers
to the ability of nonnoncomputer employees to
create their own computer
applications.
It is important for endendusers to document
applications they
develop.
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Business Process
Fundamentals
The accounting cycle begins when
accounting personnel analyze a
transaction from a source
document.
document.
A source document is a piece of
paper or electronic form that
records a business activity such as
the purchase or sale of goods.
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Business Process
Fundamentals
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Journals
Ledgers
Trial Balances
Financial statements are the primary
output of a financial accounting
system.
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Types of Codes
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Mnemonic Codes give visible clues
concerning the objects they represent.
Sequence Codes assign numbers or
letters in consecutive order.
Block Codes are sequential codes in
which specific blocks of numbers are
reserved for particular uses.
Group Codes reveal two or more
dimensions or facets pertaining to
an object.
Income Statement
Statement of Owners Equity
Balance Sheet
Statement of Cash Flows
Design Considerations in
Coding
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n
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Codes should serve some useful
purpose.
Codes should be consistent.
Codes should be standardized
throughout the organization.
Codes should plan for future
expansion.
Considerations in
Report Design
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Exception reports.
reports.
Useful to managerial decisiondecisionmaking
without creating information
overload.
overload.
Format should be
l convenient,
l contain fundamental
identification,
identification,
l be consistent.
consistent.
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