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Chapter 1-Accounting Information Systems and Firm Value: Key Terms

This document defines key terms related to accounting information systems and firm value such as relevance, reliability, information overload, and mandatory and discretionary information. It describes an accounting information system as a system that records, processes, and reports transactions to provide financial and non-financial information for decision making and internal controls. The roles of accountants in accounting information systems are discussed, including designer, implementer, user, and evaluator.

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Dante Jr. Dela Cruz
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85 views3 pages

Chapter 1-Accounting Information Systems and Firm Value: Key Terms

This document defines key terms related to accounting information systems and firm value such as relevance, reliability, information overload, and mandatory and discretionary information. It describes an accounting information system as a system that records, processes, and reports transactions to provide financial and non-financial information for decision making and internal controls. The roles of accountants in accounting information systems are discussed, including designer, implementer, user, and evaluator.

Uploaded by

Dante Jr. Dela Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 1- Accounting Information Systems and Firm Value

Key terms:
Relevance- affects a business decision

Reliability- information that is depended on to be free from bias or error

Attributes of relevance- predictive value, feedback value, and timeliness

Attributes of reliability- verifiability, representational, faithfulness, and neutrality

Information overload- the difficulty a person faces in understanding a problem


and making a decision as a consequence of too much information

Discretionary information- information that has no law requiring it to be


provided to management

Mandatory information- information that is required to be generated or provided


by law or regulation

Accounting information system (AIS)- a system that records, processes, and


reports on transactions to provide financial and non-financial information to
make decisions and have appropriate levels of internal controls for those
transactions

Role of accountants in AISs- designer, implementer, user, evaluator, and manager

Designer- person who designs AISs; business system design team, producer of
financial information, systems analyst

Implementer- person who puts the AIS into action

User- person who may input journal entries into the accounting system, using a
financial spreadsheet to calculate the cost of a product, or using anti-virus
software to protect the system
Evaluator- IT auditor, assessor of internal controls, tax advisor, general auditor,
consultant

Inbound logistics- are the activities associated with receiving and storing raw
materials and other partially completed materials, and distributing those
materials to manufacturing when and where they are needed.

Operations- are the activities that transform inputs into finished goods and
services (e.g. turning wood into furniture for a furniture manufacturer; building a
house for a home builder).

Outbound logistics- are the activities that warehouse and distribute the finished
goods to the customers.

Marketing and sales activities- identify the needs and wants of their customers to
help attract them to the firm’s products and buy them.

Service activities- provide the support of customers after the products and
services are sold to them (e.g. warranty repairs, parts, instruction manuals, etc.).

Enterprise systems- a centralized database that collects data from throughout the
company including orders, customers, sales, inventory and employees

Supply chain- refers to the flow of materials, information, payments, and services
from suppliers all the way through the customer

Supply chain management software- software that can be used to optimize


processes within the supply chain

Customer relationship management- the software used to manage and nurture a


firm's interactions with its current and potential clients

Firm infrastructure activities- are all of the activities needed to support the firm,
including the CEO, finance, accounting, and legal.

Human resource management activities- include recruiting, hiring, training and


compensating employees.
Technology activities- include all of the technologies to support value-creating
activities. These technologies also include research and development to develop
new products or research and development to determine ways to produce
products at a cheaper price.

Procurement activities- involve purchasing inputs such as raw materials, supplies,


and equipment.

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