Question

1. Explain the primary information flows within the business environment.

2. Discuss the difference between accounting information systems and management information systems.

3. Explain difference between financial transactions and nonfinancial transactions.

4. What are the principal features of a general information system

Answer 1

Answer 1: The flow of information within the business environment plays a very crucial role in the uplift ment of the organization. Proper and smooth flow of information within the business organization is very essential for all the activities that are carried out in the firm. Proper flow of information ensures timely action on the business activities. The primary information flows within the business environment can be summarized as below

1. Upward Flow: Information in this type flows from downward to upward direction. That is the flow of information takes place from the lower level management to the topmost level management. Such type of information flow takes place when information relating to progress of work, progress reports, issues relating to grievances are shared by the lower level to the topmost level
2. Downward Flow: Information flows from the top level management to the lower level managers. The flow of information is from top to bottom. The information that passes is relating to orders relating to performance of a project, summoning up of any employee by the top level management etc.
3. Horizontal Flow: Flow of information is at the same level within the organization. Such type of information flow is also called as peer to peer communication. The information that is shared may be related about a project taken up by the company or inter departmental communication regarding flow of of funds etc.
4. Diagonal Flow: Such type of information flow takes place when there is cross functional sharing of information within the employees and staff of the organization. For instance the Head of the production department may send an email to the head of the packaging department regarding the availability of empty packages available and so on.

Answer 2 :

• Accounting Information System is a standardized system of maintaining and recording the financial transactions in a firm. All the firms have to follow a prescribed accounting system according to which they have to maintain their books of accounts. Management information system pertains to the managers within an organization which is designed to assist the managers in planning, implementing those plans, and controlling of the organization and also decision making
• Management information System has a wider scope as compared to Accounting  Information System.In other words AIS is a subset of MIS because MIS talks about the organization as a whole and AIS is limited to accounting of the books of the firm
• AIS makes use of the books of accounts ie. the financial data of the organization whereas MIS makes use of the non financial data of the firm.
• MIS makes use of the financial information provided by the AIS and hence managers can take managerial decisions wisely.

Answer 3:

1. Financial Transactions involve flow of funds be it inter departmental or at the organizational level. Basically cash is involved in Financial Transactions. Whereas Non Financial Transactions involve mainly flow of information from one level to another.
2. Financial Transactions have a direct impact on the working of the Transactions. The impact is reflected in the books of accounts of the firm. Non Financial Transactions impact the goodwill of the firm.
3. Financial Transactions are reflected in the books of accounts of the firm whereas NFT is not reflected in the books of accounts. It is only absorbed at the levels within a firm.
4. Examples of FT are transfer of cash from one account to another and NFT is sharing of information regarding the performance of employees with the top level management.

Answer 4: Features of a general information system are as follows

1. Accurate flow of information: The flow of information be it in any direction should be accurate and precise. Information should not be tampered.
2. Quick Access to information: The access to information should be quick and proper.
3. Coordination: There should be proper coordination in the managers so that information that flows is accurate and correct.