What Makes Information Useful?

Transactional Information Between Internal and External Parties in an AIS

• Business organizations conduct business transactions between internal and external stakeholders.
• Internal stakeholders are employees in the organization (e.g., employees and managers).
• External stakeholders are trading partners such as customers and vendors as well as other external organizations such as Banks and Government.
• The AIS captures the flow of information between these users for the various business transactions.

Interactions Between AIS and Internal and External Parties

Basic Business Processes

• Transactions between the business organization and external parties fundamentally involve a “give–get” exchange. These basic business processes are:
• Revenue: give goods / give service—get cash
• Expenditure: get goods / get service—give cash
• Production: give labor and give raw materials—get finished goods
• Payroll: give cash—get labor
• Financing: give cash—get cash

What Is an Accounting Information System?

• It can be manual or computerized
• Consists of
• People who use the system
• Processes
• Technology (data, software, and information technology)
• Controls to safeguard information
• Thus, transactional data is collected and stored into meaningful information from which business decisions are made and provides adequate controls to protect and secure the organizational data assets.

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