Accounting Information Systems:

Basic Concepts and Current

Issues
4th edition
Robert L. Hurt

Copyright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Text structure and content

PART 1 AIS fundamentals
Items

Name

Chapter 1

Role and purpose of accounting information system

Chapter 2

Transaction processing in AIS

Chapter 3

Internal controls

Chapter 4

Management concepts

Chapter 5

Information system concepts

PART 2 Document techniques and database design

Items

Name

Chapter 6

Flowcharting

Chapter 7

Data flow diagramming

Chapter 8

REA modeling
1-2

Text structure and content

PART 3 Information technology in the AIS
Items

Name

Chapter 9

XBRL

Chapter 10 E-business and enterprise resource planning systems

Chapter 11 Computer crime and information technology security
PART 4 Business processes
Items

Name

Chapter 12 Sales/collection process

Chapter 13 Acquisition/payment process
Chapter 14 Other business processes

1-3

Text structure and content

PART 5 Other tropics in AIS
Items

Name

Chapter 15 Decision-making models and knowledge management

Chapter 16 Professionalism, ethics, and career planning
Chapter 17 Auditing and evaluating the AIS

1-4

1-5

Chapter 1
Role and Purpose of Accounting
Information Systems

Copyright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Outline
Learning objectives
Definition of AIS
AIS importance
AIS generic structure
Information literacy

1-7

Learning objectives
1. Define accounting information systems.
2. Discuss why AIS is an important area of
study for future accountants.
3. Compare and contrast AIS with other
areas of accounting.
4. Explain the structure of most AIS.
5. Locate and evaluate information sources
on AIS.
1-8

Example-Starbucks
More than 18000 stores in 62
countries.
Publicly traded under the symbol
SBUX.
Typical activities in a Starbuck
retail store are

Purchasing capital equipment

Buying inventory
Making beverages
Selling those beverages
Paying employees
Reporting financial results
1-9

Definition of AIS
An accounting information system is:
A set of interrelated activities, documents and
technologies
Designed to collect data, process it and report
information
To a diverse group of internal and external
decision makers in organizations

1-10

Definition of AIS
Activities
Business processes

Sales / collection
Acquisition / payment
Conversion
Financing
Human resource

Accounting cycle steps

Documents
Purchase orders
Remittance advices

Technologies
General ledger
software
ERP systems

Which steps in the accounting

cycle do you recall from
previous study?
1-11

Definition of AIS
Data
Stacks of sales
invoices
Receipts for the
payment of rent

Information
General purpose
financial statements
Cost variance analysis

Decision makers
Management (internal)
Shareholders
(external)

Organizations
For profit (Microsoft)
Not for profit (Red
Cross)
Governmental (State
of California)

1-12

Accounting cycle

1-13

Accounting cycle

1-14

AIS importance
Developing a strong AIS helps achieve some
of the components of the FASB Conceptual
Framework of Accounting

Figure 1.1

1-15

AIS importance
Broad business perspective
competencies

Studying AIS helps

students develop many
of the core
competencies suggested
by the American Institute

Functional
competencies

Personal
competencies

of Certified Public
Accountants

1-16

AIS importance
AICPA Core Competences
competences
Board business
perspectives

Contents
Strategic/critical thinking
Resource management

Functional competence

Risk analysis
Research

Personal competences

Problem solving and decision

making
communication

1-17

AIS importance
Acquiring knowledge about AIS helps
students learn more about common
business processes
Sales / collection process
Acquisition / payment process
Conversion process
Human resource process
Financing process

1-18

AIS importance
Which business process is associated with each of the
following activities?
a. Collecting cash from clients:
sales / collection
b. Issuing capital stock:
financing
c. Manufacturing automobiles:
conversion
d. Paying employees:
human resource
e. Purchasing inventory on account:
acquisition / payment
1-19

AIS generic structure

Internal control

Input

Process

Output

Storage

1-20

AIS generic structure

Inputs: source documents
What kinds of source documents will system
users need?
Should the source documents be paperbased, electronic, or both?
How many copies of each source document
will required?
What information should the document
contain?
1-21

AIS generic structure

Processes: steps in the accounting
cycle
Which processing tools should the AIS use?
Should the tools be manual, computer-based,
or both?
If computer-based tools are used in the AIS,
which software and hardware packages
should be implemented?

1-22

AIS generic structure

Outputs: general purpose financial
statements
Beyond the general-purpose financial
statements, what other reports will managers
and system users need?
How should the AIS be designed to facilitate
their porduction?

1-23

AIS generic structure

Storage: customer master file
How should data be stored? On paper?
Electronically? Both?
Where should data be stored? Local?
Remotely? Both?
How long should data be stored?
Under what conditions can/should data be
destroyed?

1-24

AIS generic structure

Internal controls: separation of duties
What controls are necessary to promote
information integrity in the AIS?
What behavioral effects are controls likely to
have?
Are the control cost-effective?

1-25

Information literacy
Sometimes called information
competence
The ability to confirm, find, evaluate, use
and communicate information in all of its
various formats
1-26

Information literacy
UMUC criteria for evaluating information
Authority: Who created it? Why?
Accuracy: Is the source identified? Is the
information accurate?

1-27

Information literacy
UMUC criteria for evaluating information
Objectivity: Does it include advertising? Is it
available freely?
Currency: How old is the information?
Coverage: Does the information have
sufficient depth?

1-28

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