Acct 316 Acct 316 Accounting Acct 316 UAA

Acct 316 Acct 316 Accounting Acct 316 UAA – ACCT 316 Information Systems Barbee Information Systems Accounting Dr. Fred

Acct 316 Acct 316 Information Acct 316 What is it?

Information as a Resource In the past, organizations were said to have five major resources. . . Acct 316 Men The 5 Ms

Oops. . . that isn’t politically correct Sorry about that!!!

Information as a Resource Once more, organizations have five major resources: Acct 316 1. Men (i. e. , people) 2. Machines 3. Money 4. Materials 5. Management The 5 Ms

Information as a Resource Acct 316 Information is now regarded as the sixth resource.

Acct 316 Acct 316 Consider this scenario. . . Acct 316 It isn’t all that far -fetched!

Quick Give me all your ideas!

Functions of Management Planning Controlling Decision Making Directing Organizing

Information. . . After the human element. . . Acct 316 Quality, and Timely business information is an executive’s most important resource.

Acct 316 Acct 316 Information Anxiety Acct 316 Source: Information Anxiety Richard S. Wurman New York, Doubleday, 1989

A weekend edition of the NY Times contains more information than the average person was likely to come across in a lifetime in seventeenthcentury England.

More new information has been produced in the last 30 years than in the previous 5, 000.

About 1, 000 books are published internationally every day, and the total of all printed knowledge doubles every eight years.

In a single year the average America will. . . Read or complete 3, 000 notices and forms; Read 100 newspapers and 36 magazines; Watch 2, 463 hours of television;

In a single year the average America will. . . Listen to 730 hours of radio; Talk on the phone for 61 hours; and Read 3 books

Acct 316 Acct 316 Information Overload Acct 316 Is it real?

Acct 316 Acct 316 How Much Information? Acct 316 http: //www. sims. berkeley. edu/research/projects/how-muchinfo/summary. html

The world produces between 1 and 2 exabytes of unique information per year, which is roughly 250 megabytes for every man, woman, and child on earth.

Data Powers of Ten Byte - 8 bits Kilobyte – 1, 000 bytes or 103 bytes Megabyte – 1, 000 bytes or 106 bytes Gigabyte – 1, 000, 000 bytes Terabyte – 1, 000, 000 bytes Petabyte – 1, 000, 000 bytes Exabyte – 1, 000, 000 bytes

Data Powers of Ten Zettabyte – 1, 000, 000, 000 bytes Yottabyte – 1, 000, 000, 000 bytes

Yearly Production of Published Information Item Books Titles Terabytes 968, 735 8 Newspapers 22, 643 25 Journals 40, 000 2 Magazines 80, 000 10 Newsletters 40, 000 . 2

Yearly Production of Published Information Item Office Documents Titles Terabytes 7, 500, 000 195 4, 000 16 90, 000 6 Data CDs 1, 000 3 DVD-Video 5, 000 22 Cinema Music CDs Total 285

S YE Acct 316 Acct 316 Information Overload Acct 316 Is it real?

Information Overload. . . The theory of bounded rationality (Simon, 1955). Acct 316 Humans are organisms of limited knowledge and computational capacity. Thus, simplifications (heuristics) are deliberately introduced into the choice mechanism.

The Challenge of Information `http: //wip. monroecc. edu/wipdepts/library/lib 100/lim 0 p 3. htm

Information Storage Date Method Characters/Cubic Inch 3, 000 BC Clay Tablets 1 cci 1450 A. D. Printed Page 500 cci 1990 s Optical Disk 125, 000, 000 cci

Computation Speed. . . Date Method Speed in ips* 5, 000 BC Abacus 2 -4 ips 1945 A. D. Computer 100 ips 1960 s Computer 100, 000 ips 1970 s Computer 1, 000 ips 1980 s Computer 10, 000 ips 1990 s Computer 1, 000, 000 ips *Instructions per second.

Transmission Speed. . . Date Medium Speed in wpm* 4, 000 BC Messenger . 01 wpm 1844 A. D. Telegraph 50 - 60 wpm 1980 s Cable/Fibre 1, 000, 000 wpm 1990 s Fibre 100, 000, 000 wpm *Words per minute

Human Processing Speed. . . Date Medium Speed in wpm* 4, 000 BC Written 300 wpm Today Written 300 wpm 4, 000 BC Visual 100, 000 bpg** Today Visual 100, 000 bpg 4, 000 BC Spoken 120 wpm Today Spoken 120 wpm *Words per minute **Bits per glance

Acct 316 Dealing With Information Overload.

Information Processing People are consistency seekers; Acct 316 People are Information Processors; and People are Cognitive Misers

People as Consistency Seekers Strive for consistency when processing information. Acct 316 Find support for our beliefs.

People as Information Processors Actively seek out information, Observe facts, and Acct 316 Reason

People as Cognitive Misers Minimize cognitive efforts, and Acct 316 Take shortcuts.

Managers as Cognitive Misers Acct 316 Managers must be selective in the kinds of information they request. The key to limiting the flow of data is to request only relevant information.

Stop and look at st Ackoff’s 1 Assumption.

Assumption 1: Management needs more information. `-

Stop and look at nd Ackoff’s 2 Assumption.

Assumption 2: Managers need the information they want `-

What kind of information do managers need?

To be information literate, a person must be able to recognize when information is needed and have the ability to locate, evaluate, and use effectively the needed information. Source: Presidential Committee on Information Literacy http: //www. ala. org/acrl/nili/ilit 1 st. html January 10, 1989

To be information literate, a person must be able to recognize when information is needed and have the ability to locate, evaluate, and use effectively the needed information. Source: Presidential Committee on Information Literacy http: //www. ala. org/acrl/nili/ilit 1 st. html January 10, 1989

To be information literate, a person must be able to recognize when information is needed and have the ability to locate, evaluate, and use effectively the needed information. Source: Presidential Committee on Information Literacy http: //www. ala. org/acrl/nili/ilit 1 st. html January 10, 1989

To be information literate, a person must be able to recognize when information is needed and have the ability to locate, evaluate, and use effectively the needed information. Source: Presidential Committee on Information Literacy http: //www. ala. org/acrl/nili/ilit 1 st. html January 10, 1989

Stop and look at rd Ackoff’s 3 Assumption.

Assumption 3: Giving managers the information they need improves their decision making. `-

Information. . . What is it?

What is information? Let’s define the term. Acct 316 Don’t worry about stating it in formal terms. Just tell what it means to you. Write a one sentence definition. Then. . . we will compare.

What is Information

Information. . . The most generic definition comes from philosophy. . . Acct 316 . . . Information is knowledge for the purpose of taking effective action.

Information. . . Webster says information is. . . Acct 316 . . . the communication of news, knowledge, etc. , a fact or facts told or communicated.

Information. . . The American Library Association: Acct 316 Information is all ideas, facts, and imaginative works of the mind which have been communicated, recorded, published and/or distributed formally or informally in any format

Information. . . John Mc. Chesney, National Public Radio Reporter: Acct 316 Data becomes information only when it’s put into a context.

Information. . . Gregory Bateson, 1984 Acct 316 Information is any difference that makes a difference.

Information. . . Zeroing in a bit more, information can be defined as. . . Acct 316 . . . Valuable processed data What makes information valuable?

Information = Valuable Processed Data. . . Information has value because it is the basis for: Acct 316 Making decisions, Taking actions, and Fulfilling legal actions

So. . . We could say: Acct 316 Information is useful data, organized such that correct decisions can be based on it.

Information Derived From Data (Inputs) Raw Facts, Figures, Symbols, Etc. Processing Steps Within Information Systems Transform Information (Outputs) Data that have been transformed and made useful (valuable)

Information Vs. Data. . . Acct 316 Data are facts and figures not currently being used in a decision process. In contrast. . . Information refers to the classified or integrated data being used for decision making.

Information Vs. Data. . . Information affects behavior Acct 316 Data does not Either because of their format or location relative to a potential user at a particular time.

System

What is a System? The word system is well used in our society. We have. . . Acct 316 Stereo systems Computer systems School systems Transportation systems.

Let’s Define System. . . Again, don’t worry about stating your definition in formal terms. Acct 316 Simply tell what “system” means to you. Write a one-sentence definition of “system. ” Then we will compare.

What is System? a

Webster Defines A System as. . . Acct 316 . . . An orderly, interconnected, complex arrangement of parts.

In the Abstract, A System is: Acct 316 A set of interacting components that operate within a boundary for some purpose.

First-Order Feedback System Environment Boundary Process (Transformation) Inputs Outputs Feedback Loop Control Sensor

Information System. . . Now. . . We know what information is. Acct 316 We know what a system is.

Information System. . . Let’s put them together into an information system. Acct 316 If we did - what would be the objectives?

Information System Objectives To provide information that supports decision making Acct 316 internal, and external users

Information System Objectives To provide information that supports day-to-day operations Acct 316 Internal, and External Users

Information System Objectives To provide information that pertains to stewardship Acct 316 External Users

An AIS. . . Collects and stores data about activities and transactions. Acct 316 Processes data into information that is useful for making decisions. Provides adequate controls to safeguard the organization’s assets, including its data.

Information System Functions Information System S o u r c e s Data Control 1 4 3 2 Data Collection Data Processing 5 6 Data Management Data Security Information Generation U s e r s

Any Questions?

Acct 316 Acct 316 Acct 316 Accounting Information System

First-Order Feedback System Environment Boundary Process (Transformation) Inputs Outputs Feedback Loop Control Sensor

Environment Boundary A transaction (event) is “a happening with Process economic consequences Outputs (Transforfor mation) the firm. Inputs The event must be: Control Feedback Loop in nature • Reliable Sensordollars • Measurable in

Environment Boundary An AIS provides Process Information. . . Inputs Outputs (Transformation) • Scorekeeping • Attention-Directing • Decision Making Feedback Loop Control Sensor

Acct 316 Acct 316 Acct 316 Overview of AIS

Overview of Accounting Information System AIS Manual Computer Information Financial Managerial Tax Govt & NFP Decision Makers Stockholders Creditors Government Owners Managers Banks IRS Contributors Taxpayers

Acct 316 Acct 316 Accounting Processing Acct 316

Accounting Processing Scorekeeping Information Non-Trans. Data Inputs Transactions or Events Process Trans. Processed by Standard Methods Attn-Directing Information GAAP Dec. Making Information Anything Goes!

Any Questions?

Acct 316 Acct 316 Accounting Models Acct 316

Accounting Models. . . Acct 316 A model is a representation of reality. An accounting information system employs two types of models: The Financial Accounting model Managerial Accounting models

Financial Accounting Model The financial accounting model Assets = Liabilities + Owners’ Equity Acct 316 Its major purpose is to generate scorekeeping information for use by external parties.

Financial Accounting Model Outputs from the financial accounting model include. . . Acct 316 Balance Sheet Income statement Statement of Cash Flows Statement of Retained Earnings

Accounting Processing Scorekeeping Information External Trans. Fin. Acct. Model AIS Non-Trns Data Outputs Attn-Directing Information Dec. Making Information External Fin Stmts Bal Sheet Inc. Stmt SCF GAAP

Managerial Accounting Models Managerial accounting provides financial information to the internal users of a firm. Acct 316 A wide variety of models are used: Cost-Volume-Profit models, Cost-Variance Analysis models, and Cash-Flow Forecasting models

Accounting Processing Scorekeeping Information External Trans. Fin. Acct. Model AIS Outputs Attn-Directing Information Mgr. Acct. Model Non-Trns Data Dec. Making Information External Fin Stmts Bal Sheet Inc. Stmt SCF GAAP Internal Mgmt Rpt Variance Budget No GAAP

Stop and look at th Ackoff’s 5 Assumption.

Assumption 5: Managers need only to understand how to use an information system. `-