Question

Please complete the following five questions.

1. Define data, information, and how the value of information is determined.

2. Discuss the seven characteristics of useful information.

3. Identify the components of an accounting information system.

4. How can an AIS add value to the organization?

5. How can a well-designed AIS improve the efficiency and effectiveness of a company's value chain?

Answer 1

1) Data is a raw and unorganized fact that required to be processed to make it meaningful. Data can be simple at the same time unorganized unless it is organized. Generally, data comprises facts, observations, perceptions numbers, characters, symbols, image, etc.

Information is a set of data which is processed in a meaningful way according to the given requirement. Information is processed, structured, or presented in a given context to make it meaningful and useful. It is processed data which includes data that possess context, relevance, and purpose. It also involves the manipulation of raw data.

The value of information is determined by its importance to the decision-maker or to the outcome of the decision being made. The value of information is Its value to the related person who uses it when he uses it and for what he uses it. Any assessment of the value of information is therefore related to the value of the decision-making supported by such information.

2)

The seven characteristics of useful information are: relevant, reliable, complete, timely, understandable, verifiable and accessible. These characteristics are qualities that information should possess to be useful in a business environment. Briefly stated, in order for information to be useful it must be:

1) relevant, meaning that it reduces uncertainty and adds to the decision-making process

2) reliable information is information that is free from error and is accurate in its nature

3) complete information is information that does not omit any important data, facts, or aspects about events or activities

4) information is timely when it is fully available to enable the decision-making process to proceed

5) understandable information must be both in an intelligible and useful format

6) information is considered verifiable if two people, acting independently of each other, produce the same information or the same results.

7) Information is accessible if it is available to users when they need it and in a format, they can use.

3)

Component of AIS

People: people are the main component of any system. Systems cannot operate itself, not even the most automated system.

Procedures and Instructions: The procedure and instructions of an AIS are the methods it uses for collecting, storing, retrieving, and processing data. These methods are both manual and automated. The data can Come from both internal sources (e.g., employees) and external sources (e.g., customers' online orders).

Data: this is in the form of an information asset. The accounting information system will not be complete without having data that runs through the system.

Software: The software component of an AIS is the computer programs used to store, retrieve, process, and analyze the company's financial data. Before there were computers, an AIS was a manual, paper-based system, but today, most companies are using computer software as the basis of the AIS.

IT infrastructure: these are the hardware platform that acts as a medium through which other components of the accounting information system (AIS)  operates. Things like; computers, servers, networking devices (hubs, bridges, routers, and switches), printers, scanners, copier, etc all fall under this category of components.

4)

An AIS can increase the efficiency and effectiveness of the value chain by improving -

• quality and lowering costs of products or services
• efficiency of operations
• decision making
• sharing of knowledge,
• efficiency and effectiveness of its supply chain and
• internal control structure

5)

The AIS can be designed to allow customers direct access to a company's inventory and sales order entry systems. This allows the customer to do more of the work that traditionally has been done by sales, marketing, and administration personnel. This allows for faster ordering and cuts the company's labour costs. It may also have the effect of allowing the customer more control in a purchase transaction that may bring more satisfaction and value to the customer.

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