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Topic 1 "Overview of AIS and Transaction Processing" (General…
Topic 1
"Overview of AIS and Transaction Processing"
The Role of the AIS
2) The support the management
Decision-Making
3) To support the firm's
Day-to-Day Operations
1) To support the
Stewardship Function
of Management
Information Systems Framework
A set of formal procedures by which data are collected, stored, processed into formation, and distributed to users
Financial Transactions
A financial transaction is an economic event that affects the assets and equities of the organization is reflected in its accounts and is measured in monetary terms
Non-Financial Transactions
Non-Financials are events that do not meet the narrow definition of a financial transaction
Information flow
Horizontal Information Flows
The Horizontal Information Flows supports Operation-level day-to-day activities with highly detailed information
Vertical Information Flows
The Vertical Information Flow distributes information downward from superiors to subordinates which will help in the planning and control functions of an organisation
External Information Flows
The exchanges between the organisation and users in the external environment
Trading Partners
Customer sales and billing information, purchase information for suppliers, and inventory receipt information
Stakeholders
Information exchanges with these groups include financial statements, tax returns, and stock transaction information
Definition of AIS
Accounting Information System is a specialised subset of an information system that processes financial transactions and non-financial transactions that directly affect the processing of financial transaction
The 3 Subsets
General Ledger/Financial Reporting System (GL/FRS)
Balance Sheet, Income Statement, Statement of Comprehensive Income
Management Reporting System (MRS)
Transaction Processing Systems (TPS)
Daily Business Operation Documents for users
Overview of Transaction Processing
A TPS processes financial transactions
Financial transactions are common business events that occur regularly
To deal efficiently with great volumes of transactions of similar nature, businesses group similar types of transactions into transaction cycles
1)
Expenditure Cycle
Includes business activities relating to the acquisition of materials, labour and fixed assets and the related payment transactions
2)
Conversion Cycle
Includes business activities relating to the planning, scheduling and control of products through the manufacturing process and the flow of cost information
3)
Revenue Cycle
INcludes business activities relating to the sale of goods and services to customers and the related recept transactions
General Model for AIS
Database Management
Database management is a physical repository for financial and non-financial data
Distinguish between data attribute, record and file
Database Management tasks include storage, retrieval and deletion
Information Generation
Process of compiling, formatting and presenting information to users
Characteristics of useful information include: Relevant, Timely, Accurate, complete and summarised
Data Processing
Data needs to be processed to produce information
Tasks include the use of algorithm, statistical techniques, posting and summarising procedures
Feedback
A form of output sent back to the system as a source of data
May be internal or external and is used to initiate or alter a process
Data Collection
Data can be from external and internal sources
Data collected must be valid, complete and free from material errors
Consider relevance and efficiency in the design of data collection procedures
Traditional VS Computerised
Manual Accounting Records
Journals
Chronological record of transactions
Ledgers
Summarises the activity of each organisation's accounts from which financial statements are produced
Documents
1) Source Documents
Used to capture data for transaction processing
2) Product Documents
Produced as a result of transaction processing
3) Turnaround Document
Product Documents of one system that becomes source documents for another system
Digital Accounting Records
Transaction File
A temporary file of transaction records used to update data in a master file
Master File
Contains account data which are changed and adjusted through the transaction file
Reference File
Stores data that are used as standards for processing transactions
Archive File
Contains records of past transactions that are retained for future reference and form part of the audit trail
Batch VS Real Time Processing
Batch
Information Time Frame
Time lag between occurrence of economic event and its recording
Resources
2) Generally fewer resources
Operational Efficiency
3) Improves operational efficiency by eliminating unnecessary updates
Real-Time
Information Time Frame
No Time lag, processing takes place when the economic event occurs
Resources
More resources required than for batch processing
Operational Efficiency
Large Volumes of transactions can create inefficiencies due to frequent updates