Ch 01Summary - CHAPTER 1 SUMMARY NOTES I A SYSTEMS...

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CHAPTER 1 – S UMMARY N OTES I. A SYSTEMS FRAMEWORK A system is a set of interrelated parts that performs one or more processes to accomplish specific objectives. An example of a system is the air conditioning system for a home. Exhibit 1-1 illustrates the operational model of an air conditioning system. An accounting information system consists of: objectives, interrelated parts, processes, and outputs. Inputs are generally economic events and the operational model of an accounting system is critically involved with the user of information. Exhibit 1-2 presents an operational model of an accounting information system. There are two basic accounting information systems: the financial accounting information system and the cost management information system. Each system is designed to satisfy different purposes. The financial accounting information system is an accounting information subsystem that is primarily concerned with producing outputs for external users. The cost management information system is an accounting information subsystem that is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy management objectives. The cost management information system provides information for (1) determining the cost of products, services, and other objects of interest to management, (2) planning and control, and (3) decision making. Because managers in many different areas of a business require cost information, a high-quality cost management system should have an organization-wide perspective and be able to interact with other information systems within the organization. 1
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Exhibit 1-3 illustrates an integrated cost management system. Integration of a company’s cost management system with operational systems will reduce redundant storage and use of data, improve the timeliness of information, and increase the efficiency of producing reliable and accurate information. Enterprise resource planning (ERP) systems strive to input data once into a single database and make it available instantaneously to people across the company for multiple purposes. The data is available for preparing financial statements as well as generating any type of management report. Cost Accounting System Cost accounting attempts to satisfy three broad objectives for both financial and management accounting: 1. Costing of products, services and other objects of interest to management; 2. Planning and control: and 3. Decision making. The first objective depends on the nature of the object being costed and the reason management wants to know the cost. Product costs include the cost of materials, labor and overhead. Managers want to know costs associated with products associated with products for tactical and
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This note was uploaded on 02/08/2010 for the course ACTG 3000 taught by Professor C during the Spring '10 term at Oregon State.

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Ch 01Summary - CHAPTER 1 SUMMARY NOTES I A SYSTEMS...

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