ACCOUNTING INFORMATION SYSTEM CHAPTER 1
Information Environment
Information is a business resource.
Internal and external information flow
Internal Information Flow
Horizontal flow- used at the
operations level to capture
transactional and operations data
Vertical flow
Downward flow – instructions,
data, quotas
Upward flow – aggregated
transactions and operations
External Information Flow
Trading partners- Customer sales
and company purchase information
Stakeholders- Entities with direct or
indirect interest in the firms
Information requirement
All user groups have unique information
requirements
Level of detail and nature of
information
System- group of multiple interrelated
components or subsystems that serve a
common purpose.
Multiple components- contain more
than one part
Relatedness- common purpose
relates the multiple parts of the
system
Purpose- A system must serve at least
one purpose, but may serve several
Subsystem – a system that is viewed in
relation to a larger system which it Is a part
Example:
System decomposition- process of dividing
the system into smaller subsystem parts
System interdependency- all vital parts of a
subsystem must be functioning well or the
entire system will fail.
Information system- set of formal
procedures by which data are collected,
processed into information, and distributed
to users.
Transaction- an event that affects or is of
interest to the organization and is processed
by its information system as a unit of work.
2 Classes of Transaction
Financial transaction- Economic event that
affects the assets and equities of the
organization, is reflected in its accounts, and
is measured in monetary terms.
Non-financial transaction- Events that
meet the residual definition of a financial
transaction
Accounting information system- an event
that affects or is of interest to the
organization and is processed by its
information system as a unit of work
Identifies, collects, processes, and
communicates economic information
2024-2025
