Chapter 1 The Information System: An Accountant’s Perspective Accounting Information Systems, 5 th edition James A. Hall COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license

System Decomposition versus System Interdependency System Decomposition –the process of dividing the system into smaller subsystem parts Subsystem Interdependency –A system’s ability to achieve its goals depend on the effective functioning and harmonious of its subsystems. See Figure (1-2) page 6 & 7

What is an Information System? An information system is the set of formal procedures by which data are collected, processed into information, and distributed to users. A Framework for information system Two broad classes of systems emerge from the decomposition : 1- AIS 2-MIS ** The distinction between AIS and MIS centers on the concept of a transaction.

Transactions A transaction is a business event. Financial transactions –economic events that affect the assets and equities of the organization –Sales of product to customers, purchase inventory. See the definition page 8 Nonfinancial transactions –all other events processed by the organization’s information system –Adding a new supplier of raw materials, changes customer’s address. See the definition page 9

Transactions Financial Transactions Nonfinancial Transactions Information System User Decision Making Information Are relatedAre often processed by the same physical system

AIS versus MIS? IS AIS GLS/FRSTPSMRS MIS FinanceMarketingProductionHRSDistribution See Figure (1-3) page 8

AIS versus MIS The distinction between AIS and MIS centers on the concept of a transaction. Accounting Information Systems (AIS) process –financial transactions; e.g., sale of goods –and nonfinancial transactions that directly affect the processing of financial transactions; e.g., addition of newly approved vendors Management Information Systems (MIS) process –nonfinancial transactions that are not normally processed by traditional AIS; e.g., tracking customer complaints See page 9

What is Accounting Information Systems? Accounting is an information system. –It identifies, collects, processes, and communicates economic information about a firm using a wide diversity of technologies. –It captures and records the financial effects of the firm’s transactions. –It distributes transaction information to operations personnel to coordinate many key tasks.