It is a system that collects, records, stores and processes data to produce information for decision makers. It includes people, procedures and instructions data, software, information technology infrastructure, and internal controls and security measures

it supports daily business operations with numerous reports, documents, and messages for users throughout the organization.

produces the financial statements such as income statement, balance sheet, statement of cash flows, etc.

provides internal management with special purpose financial reports and information needed for decision-making such as budgets, variance reports, and responsibility reports.

processes non-financial transactions that are not normally processed by traditional AIS

fall into two general groups: external and internal

include creditors, stockholders, potential investors, regulatory agencies, tax authorities, suppliers and customers.

include management at every level of the organization, as well as operations personne

are facts, which may or may not be processed (edited, summarized, or refined) and have no direct effect on the user.

is a processed data.

▪ These are financial transactions that enter the information system from both internal and external sources. ▪ External financial transactions are the most common source of data for most organizations. ▪ These are economic exchanges with other business entities and individuals outside the firm.

These are exchange or movement of resources within the organization.

▪ It is the first operational stage in the information system. ▪ The objective is to ensure that event data entering the system are valid, complete, and free from material errors. ▪ The information system should capture only relevant data and there must be efficient data collection procedures.

▪ Once collected, data usually require processing to produce information. ▪ Tasks in data processing stage range from simple to complex.

▪ The organization’s database is its physical repository for financial and nonfinancial data. ▪ Its content can be represented in logical hierarchy.

▪ It is the most elemental piece of potentially useful data in the database. ▪ An attribute is a logical and relevant characteristic of an entity about which the firm captures data.

It is the complete set of attributes for a single occurrence within an entity class. To find a record within a database, we must be able to identify it uniquely.

▪ It is a complete set of records of an identical class. For example, all the AR records of the organization constitute the AR file. ▪ Similarly, files are constructed for other class of records such as inventory, accounts payable, and payroll. ▪ The organization’s database is the entire collection of such files.

assigns keys to new records and stores them in proper location in database.

the tasks of locating and extracting an existing record from the database for processing

task of permanently removing obsolete or redundant records from the database.

It is the process of compiling, arranging, formatting, and presenting information to users.

▪ It is a form of output that is sent back to the system as a source of data. ▪ It could be internal or external to initiate or alter a process.

manages the financial information resource of the firm. In this regard, it plays to important roles in transaction processing: 1. Accounting captures and records the financial effects of the firm’s transactions. 2. The accounting function distributes transaction information to operations personnel to coordinate many of their tasks.

to a user is determined by its reliability. ▪ Information must possess attributes like relevance, accuracy, completeness, summarization and timeliness. ▪ Unreliable information has no value – it can waste resources or can lead to dysfunctional decisions. ▪ Effective decisions require information that has a high degree of reliability.