AIS Handout

AIS Handout - 1 Introduction to Accounting Information...

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Introduction to Accounting Information Systems (AIS) GB112 – Tools and Concepts in Accounting and Finance I. Introduction The objective of financial reporting is to provide useful information for making decisions. Stakeholders (or users of information), both external and internal to the organization, all have a common need for information. External stakeholders such as stockholders, creditors, governments, suppliers, vendors, and customers do not see the day-to-day activities of managing the business. As a result, they instead must rely on the information the business provides to communicate important events. As you already know, businesses provide information to external users in a variety of ways. For example, stockholders and creditors receive financial statements; government authorities receive corporate tax returns; employees receive tax information; and government regulatory agencies, such as the Securities and Exchange Commission (SEC), receive required business information, including financial statements on Form 10K. Stockholders and creditors need information to assess the safety and growth of their investments and claims and to determine whether management is taking undue risks or operating efficiently. Internal stakeholders, such as managers and employees, need information to help plan the business activities required to meet the business goals and to evaluate whether the goals are being met. II. Information Usefulness All stakeholders need relevant information, which is information capable of making a difference in a decision. While the needs of various users determine what information they deem useful, relevant information has a logical connection to the ideas or decisions under consideration. For example, there are many specific uses of information available to managers in an organization. Management can use information as a means of recording the activities of the organization and as the basis for determining whether desired results have occurred. Management can also use information to set directions for the organization or to make a choice among alternatives such as buying or leasing equipment. Information is a key resource that must be protected and managed. Information improves communication and understanding between people and functions. Business processes rely on timely and accurate information exchange in selling, order fulfillment, product design and supply management. If information is managed poorly, it can lead to incorrect or inefficient decision- making. Information is different from data. Information implies “usefulness” in decision-making. Data are the facts. They are the “pieces of information” that on their own do not have meaning . Information Characteristics
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This note was uploaded on 02/24/2010 for the course GB 112 taught by Professor Osterheld during the Spring '10 term at Bentley.

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AIS Handout - 1 Introduction to Accounting Information...

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