Accounting Information System Essay Sample

7 July 2017

1. What is data vis-a-vis information? When can information be deemed good and utile? How are these related/ connected to an information system? Datas are facts. which may or may non be processed ( edited. summarized. or refined ) and have no direct consequence on the user. By contrast. information causes the user to take an action that he or she otherwise could non. or would non. hold taken. Information is frequently defined merely as processed information. This is an unequal definition. Information is determined by the consequence it has on the user. non by its physical signifier. We besides say that information is non merely a set of processed facts arranged in a formal study. Information allows user to take action to decide struggles. cut down uncertainness. and do determinations. We should observe that action does non needfully intend a physical act.

The differentiation between informations and information has a permeant deduction for the survey of information systems. If end product from the information system fails to do users to move. the system serves no intent and has failed in its primary aims. 2. Be at that place any general opinion regulating when information is being collected? What are degrees of informations hierarchy? Data beginnings are fiscal minutess that enter the information system from both internal and external beginnings. External fiscal minutess are the most common beginning of informations for most organisations. These are economic exchanges with other concern entities and persons outside the house. Internal fiscal minutess involve the exchange or motion of resources within the organisation.

Data Collection is the first operational phase in the information system. The aim is to guarantee that event informations come ining the system are valid. complete. and free from material mistakes. In many respects. this is the most of import phase in the system. Should the dealing mistakes pass through informations aggregation undetected. the system may treat the mistakes and generate erroneous and undependable end product. This. in bend. could take to incorrect actions and hapless determinations by the users. Two regulations govern the design of informations aggregation processs: relevancy and efficiency. The information system should capture merely relevant informations.

A cardinal undertaking of the system interior decorator is to find what is and what is non relevant. The information aggregation phase should be designed to filtrate irrelevant facts from the system. Efficient informations aggregation processs are designed to roll up informations merely one time. These informations can so be made available to multiple users. Capturing the same informations more than one time leads to data redundancy and incompatibility. Information systems have limited aggregation. processing and informations storage capacity. Data redundancy overloads installations and reduces the overall efficiency of the system. Inconsistency among excess informations elements can ensue in inappropriate actions and bad determinations. Data processing. one time collected. informations normally require treating to bring forth information.

Undertakings in the information processing sage scope from simple to complex. Database direction. the organization’s database is its physical depository for fiscal and nonfinancial informations. We use the term database in the generic sense. It can be registering cabinet or a computing machine disc. Regardless of the database’s physical signifier. we can stand for its contents in a logical hierarchy. In hierarchy there is informations property ; informations property is the most elemental piece of potentially utile in the database. An property is a logical and relevant features of an entity about which the house captures informations. Record is a complete set of properties for a individual happening within an entity category. To happen a peculiar record within the database. we must be able to place it unambiguously.

3. Describe and/ or distinguish the characteristics of bequest system from a level file construction. Flat file attack is most frequently associated with so called bequest systems. Finally. modern database direction systems will replace them. but in the interim comptrollers must go on to cover with bequest system engineerings. Flat file theoretical account describes an environment which single informations files are non related to other files. End users in this environment own their informations files instead than portion them with other users. Therefore. stand-alone applications instead than integrated systems execute informations treating. Flat file and early database systems are called traditional system. Within this context. the term traditional means that the organization’s information systems applications ( its plans ) function independently of each other instead than as an incorporate whole.

True integrating. nevertheless. would non be possible until the reaching of the relational database theoretical account. This flexible database attack permits the design of incorporate systems applications capable of back uping the information demands of multiple users from a common set of incorporate database tablets. Poor systems design can happen under any theoretical account. In fact. most organisations today that employ a relational database run applications that are traditional in design and do non do full usage of relational engineering.

4. There are common ways to section an organisation: describe cleavage in general. the primary grounds for sectioning and distinguish ways to functionally section a concern. There are three most common attacks in cleavage

Geographic Location. many organisations have operations dispersed across the state and around the universe. They do this to derive entree to resources. markets. or lines of distribution. A convenient manner to pull off such operations is to form the direction of the signifier around each geographic section as a quasi-autonomous entity.

Merchandise Line. companies that produce extremely diversified merchandises frequently organize around merchandise lines. making separate divisions for each. Product cleavage allows the organisation to give specialised direction. labour and resources to sections individually. about as if they were separate houses. Business Function. functional cleavage divides the organisation into countries of specialised duty based on undertakings. The functional countries are determined harmonizing to the flow of primary resources through the house.

Functional Cleavage

Cleavage by concern map is the common method of forming. The rubrics of map and even the maps themselves will change greatly among organisations. depending on their size and line of concern. Materials Management

The aim of stuffs direction is to be after and command the stuffs stock list of the company. A fabrication house must hold sufficient stock lists on manus to run into its production demands and yet to avoid inordinate stock list degrees. There are three sub maps: Buying is responsible for telling stock list from sellers when stock list degrees fall to their reorder points. The nature of this undertaking varies among organisations. Receiving is the undertaking of accepting the stock list antecedently ordered by buying. Receiving activities include numbering and look intoing the physical status of these points. besides an chance to observe uncomplete bringings and damaged ware before they move into the production procedure. Stores takes physical detention of the stock list received and releases these resources into the production procedure as needed.

Production activities occur in the transition rhythm in which natural stuffs. labour and works assets are used to make finished merchandises. The specific activities are determined y nature of the merchandises being manufactured. Selling. the market place needs to cognize approximately. and have entree to. a firm’s merchandises. The selling map trades with the strategic jobs of merchandise publicity. advertisement. and market research. Distribution is the activity of acquiring the merchandise to the client after the sale.

This is a critical measure. Much can travel incorrect before the client takes ownership of the merchandise. Personnel. competent and dependable employees are a valuable resource to a concern. The aim of the forces map is to efficaciously pull off this resource. Finance. the map manages the fiscal resources of the houses through banking and exchequer activities. portfolio direction. recognition rating. hard currency expenses and hard currency grosss. 5. In most organisation. the accounting map is the individual largest user of Ais/Mis ; what is it so of import to organizationally divide the accounting map from other maps? What are the functions of comptrollers with respects to information systems?

Accounting information system subsystems process fiscal minutess and non fiscal minutess that straight affect the processing of fiscal minutess. With the aid of AIS. these alterations provide critical information for processing future gross revenues to the client. AIS is composed of three major subsystems ; the dealing processing system. which supports day-to-day concern operations with legion studies. paperss and messages for users throughout the organisation. Second the general ledger/financial coverage system. which produce the traditional fiscal statements. such as the income statement. balance sheet. statement of hard currency flows. revenue enhancement returns. and other studies required by jurisprudence. Third the direction coverage system. which provides internal direction with special-purpose fiscal studies and information needed for determination devising such as budgets. discrepancy studies and duty studies.

Management frequently requires information that goes beyond the capableness of AIS. As organisations grow in size and complexness. specialized functional countries emerge. necessitating extra information for production planning and control. gross revenues calculating. stock list warehouse be aftering. market research and so on. The direction information system processes nonfinancial minutess related to functional countries of a house. SOX statute law requires that direction design and implement internal controls over the full fiscal coverage procedure. This includes the fiscal coverage system. the general leger system. and the dealing treating systems that supply the information for fiscal coverage. SOX farther requires that direction attest these controls and that the external hearers express an sentiment on control effectivity.

6. What are dealing rhythms? Describe briefly the dealing cycles that occur in a typical concern organisation. Transaction procedure is cardinal to the overall map of the information system by change overing economic events into fiscal minutess. entering fiscal minutess in the accounting records ( diaries and legers ) . and administering indispensable fiscal information to operations forces to back up their day-to-day operations. Transaction procedure trades with concern events that occur often. It besides consists of three dealing rhythms: the gross rhythm. the outgo rhythm. and the transition rhythm. Each rhythm gaining controls and procedure different types of fiscal minutess.

7. In computer-based accounting system. there are files that are stand foring informations in manually processed accounting records. Describe the computer-based files that straight form digital audit trail. similar to traditional accounting system. We begin to see how the digital audit trail is illustrated. First we have gross revenues recorded manually on beginning paperss. merely as in the manual system. Following measure in this procedure is to change over the beginning paperss to digital signifier. the significance of digital signifier might be to set the information into the computing machine.

To look into the minutess are edited and a dealing file of gross revenues orders is produced. After the update to the maestro file subordinate and control histories that the dealing affects. the update process. extra redaction of minutess takes topographic point. Some minutess may turn out to be in mistake or invalid for such grounds as wrong history Numberss. deficient measures on manus or client recognition jobs. Like the paper trail. this digital audit trail allows dealing following. Again. an hearer trying to measure the truth of the AR figure published in the balance sheet could make so via the undermentioned stairss ; a. Compare the histories receivable balance in the balance sheet with the maestro file AR control history balance.

B. Reconcile the AR control figure with the AR subordinate history entire. c. Select a sample of update entries made to histories in the AR subordinate leger and hint these to minutess in the gross revenues diary ( archive file ) . d. Form these journal entries. place specific beginning paperss that can be pulled from their files and verified. If necessary. the hearer can corroborate the truth and properness of these beginning paperss by reaching the clients in inquiry. 8. Accountants. particularly hearers ( both external and internal ) in computer-based environment should be able to visualise and document critical information system in relation to their function of attest map and/ or confidence. There are several available in writing papers techniques to accomplish this.

Briefly describe these processs. Data flow diagram uses symbols to stand for the entities. procedures. information flows. and information shops that pertain to a system. DFD’s are used to stand for systems at different degrees of item from really general to extremely detail. At this point. a single-level DFD is sufficient to show its usage as a certification tool. Data shops represent the accounting records used in each procedure. labeled arrows represent the day of the month flows between procedures. information shops and entities. Procedures in the DFD should be labeled with a descriptive verb such as ship goods. update records. or have client order.

Procedure objects should non be represented as nouns like warehouse. AR section or gross revenues section. Systems analyst usage DFD’s extensively to stand for the logical elements of the system. This technique does non nevertheless depict the physical system. Entity relationship diagram. is a certification technique used to stand for the relationship between entities. Entities are physical resources ( cars. hard currency or stock list ) . events ( telling. stock list. having hard currency. transporting goods ) . and agents ( sales representative. client. or seller ) about which the organisation wishes to capture informations.

One common usage of ER diagrams is to pattern an organization’s database. System Flow Charts. is the graphical representation of the physical relationships among cardinal elements of a system. These elements may include organisational sections. manual activities. computing machine plans. difficult transcript accounting records ( paperss. diaries. legers and files ) and digital records ( mention files. dealing files. archive files and maestro files ) . System flow charts besides describe the type of computing machine media being employed in the system. such as magnetic tape. magnetic discs. and terminuss.

Lay out the physical countries of activity. retrieve that a flow chart reflects the physical system. which is represented as a perpendicular columns of events and actions separated by lines of limit. By and large. each of these countries of activity is a separate column with a header. From the written system facts. we see that there are four distinguishable countries of activity: Gross saless section. recognition section. warehouse. and transporting section. 9. There are two informations processing methods for an organisation to treat monolithic informations into utile. relevant and timely information for determination devising. What are these methods and what distinguishes one from the other? Is at that place any distinguishing advantage or disadvantages of both methods? Batch processing. permits the efficient direction of a big volume of minutess. A batch is a group of similar minutess ( such as gross revenues orders ) that are accumulated over clip and so processed together. Batch treating offer two general advantages.

First. organisations improve operational efficiency by grouping together big Numberss of minutess into batches and treating them as a unit of work instead than treating each event individually. Second. batch treating provides control over the dealing procedure. The truth of the procedure is established by sporadically accommodating the batch against the control figure. Both of these advantages have deductions for planing batch systems. The first is that economic systems are derived by doing dealing batches big as possible.

The mean dealing cost is therefore reduced when the processing fixed cost associated with the batch is allocated across a big figure of minutess. The 2nd deduction is that happening an mistake in a really big batch may turn out hard. When a batch is little. mistake designation is much easier. In planing a batch system. the accounting should seek a balance between the economic advantage of big batches and the problem hiting advantages of little batches. Real clip systems. process minutess separately at the minute the event occurs. Because records are non grouped into batches. there are no clip slowdown between happening and recording. More resources are required than batch processing. In existent clip efficiency and effectives can be seen due because in existent clip there is no clip slowdown between the client and the operator.

Real clip processing is good suited to systems that process lower dealing volumes and those that do non portion common records. These systems make extended usage of local country web and broad country web engineering. Terminals at distributed sites through the organisation are used for having. processing. and directing information about current minutess.

10. Why is information roll uping necessary in an information system? Briefly describe all informations coding techniques available. its advantages and disadvantages. if any. If the system is without codification there will be disadvantages. this UN coded entry takes a great trade of entering infinite. is time-consuming to enter. and is evidently prone to many type of mistakes. The negative effects of attack may be seen in many parts of the organisation.

System with codifications. this is non to propose that elaborate information about the stock list and the provider is of no involvement to the organisation. Obviously it is! These facts will be kept in mention files and used for such intents as the readying of parts lists. catalogs. measures of stuff. and get offing information. a. Concisely represent big sums of complex information that would otherwise be unwieldy. B. Supply a agency of answerability over the completeness of the dealing processed. c. Identify alone minutess and histories within a file.

d. Support the audit map by supplying an effectual audit trail. Consecutive cryptography supports the rapprochement of a batch of minutess. such as gross revenues orders. at the terminal of processing. If the dealing processing system detects any spreads in the sequence of dealing Numberss. it alerts direction to the possibility of a losing or misplaced dealing. By following the dealing figure back through the phases in the procedure. direction can finally find the cause and attempt of the mistake. Disadvantages of consecutive coding carry no information content beyond their order in the sequence.

Inserting a new point at some center requires renumbering the subsequent points in the category consequently. In applications where record types must be group together logically and where add-ons and omissions occur on a regular basis. this coding strategy is inappropriate. Block codifications allows for the interpolation of new codifications within a block without holding to reorganise the full cryptography construction. besides called the chart of histories. Disadvantages of block cryptography are. as with the consecutive codifications. the information content codification the block codification is non readily evident. Group Codes. are used to stand for complex points or events affecting two or more pieces of related informations.


a. They facilitate the representation of big sums of diverse informations. B. They allow complex informations constructions to be represented in a hierarchal signifier that is logical and more easy remembered by worlds. c. They permit elaborate analysis and describing both within an point category and across different categories of points. Disadvantages. ironically. the primary disadvantage of group coding consequences from its success as categorization tool. Because group codifications can efficaciously show diverse information. they tend to be overused.

Unrelated informations may be linked merely because it can be done. Alphabetic Codes are used for many of the same intents as numeral codifications. Alphabetic characters may be assigned consecutive ( in alphabetic order ) or may be used in block and group techniques. Advantages. the capacity to stand for big Numberss of points are increased dramatically through the usage of pure alphabetic codifications or alphabetic characters embedded within numeral codifications ( alphameric codifications ) . Disadvantages. the primary drawbacks with alphabetic cryptography are as with numeral codifications. there is trouble apologizing the significance of codifications that have been consecutive assigned. and users tend to hold trouble screening records that are coded alphabetically.

Mnemonic codifications are alphabetic characters in the signifier of acronyms and other combinations that convey significance. Advantages. the mnemotechnic cryptography strategy do non necessitate the user to memorise significance ; the codification itself conveys a high grade of information about the point that is being represented. Disadvantages. although mnemotechnic codifications are utile for stand foring categories of points. they have limited ability to stand for points within a category.

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