Notes for chapter 07

Notes for chapter 07 - Notes - chapter 07 Accounting...

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Notes - chapter 07 Accounting Information Systems 1. An accounting information system involves collecting and processing data and disseminating financial information to decision makers. It includes each step of the accounting cycle. 2. The basic principles of an accounting information system are: a. Cost effectiveness. The system must be cost effective: the benefits of the information disseminated must outweigh the cost of providing it. b. Usefulness. To be useful the information must be understandable, relevant, reliable, timely, and accurate. c. Flexibility. The system should be able to accommodate a variety of users and changing information needs. Computerized Accounting Systems 3. General ledger accounting systems are software programs that integrate the various accounting functions related to sales, purchases, receivables, payables, cash receipts and disbursements, and payroll. They also generate financial statements. 4. Companies with revenues of less than $5 million and up to 20 employees generally use entry-level programs. Quality entry-level packages include easy data access and report preparation, provide an “audit trail,” have internal controls, enable customization, and provide network-compatibility. 5. Enterprise resource planning (ERP) systems are typically used by manufacturing companies with more than 500 employees and $500 million in sales. ERP systems go far beyond the functions of an entry-level general ledger package by integrating all aspects of the organization, including accounting, sales, human resource management, and manufacturing.
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Notes for chapter 07 - Notes - chapter 07 Accounting...

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