Accounting Information Systems: Where Every Number Leaves a Trail
How accounting data is captured, stored, controlled and analyzed: transaction cycles, diagrams, databases, ERP, IT controls, fraud and analytics.
Try 3 questions
1. Can a shoebox of receipts and a handwritten ledger count as an accounting information system?
- Yes, an AIS need not be computerized
- Only if a licensed accountant keeps it
- No, an AIS must run on software
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Answer: Yes, an AIS need not be computerized
An AIS is any system that collects, records, stores and processes accounting data; computers make it faster but are not required.
2. What turns raw data into information in an accounting system?
- Processing it into a form useful for decisions
- Collecting more of it from customers
- Storing it in a larger, faster database
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Answer: Processing it into a form useful for decisions
Data are raw facts; they become information only when organized and processed so that someone can act on them.
3. When is it worth producing an extra piece of management information?
- Whenever it is perfectly accurate
- Whenever a manager asks for it
- When its benefits exceed its cost
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Answer: When its benefits exceed its cost
Information has a cost to gather and process, so it is only valuable when the better decisions it enables are worth more than that cost.
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