WEEK 1: INTRO TO AIS

Learning Objectives

Part 1: Hardware and Software

  • Describe types of computer hardware and software:

    • IT hardware components: processors, input, output, storage & data communication devices

    • Different types of computer software

Part 2: Internet and Accounting

  • Understand basic internet concepts and significance of XBRL in accounting

Part 3: Data and Information

  • Distinguish between data and information and their characteristics

  • Explain how to assess the value of information and decisions made by organizations

Components of Computer Hardware

Categories

  1. Input Devices

    • Devices that can capture data from the source

    • Source documents, data transcription (keyboard, POS devices)

    • Bar code readers, MICR, OCR, plastic cards

    • Examples

      • Keyboard for data entry

      • POS systems for sales transactions

      • Barcode scanners for inventory management

      • MICR for banking data processing

      • OCR for document scanning

  2. Processing Devices

    • Devices that are meant to do calculation & computation

    • Central Processing Unit (CPU), Primary Memory (RAM), Microprocessors

  1. Output Devices

  • Printers, video output, multimedia systems

  1. Storage Devices

    Importance of Secondary Storage

    • Stores data on permanent media that maintains their accuracy & integrity, yet permits access

    • Types include:

      • Hard drives, CD-ROMs, DVDs, and USB drives

      • Secondary storage: Hard disks, CDs, DVDs, Flash memory

  2. Data Communications & Networks

  • Communication technologies:

  • Examples

    • Fibre to the Home (FTTH): High-speed connection for residences and businesses

    • Digital Subscriber Line (DSL): Uses existing phone lines, cheaper but slower than fiber

    • Local Area Network (LAN): Advantages include communication facilitation, equipment sharing, file sharing, cost saving

    • Wide Area Network (WAN): Uses satellites to share data

Client/Server Computing

  • Distributed processing between servers and clients

  • Servers share resources like databases to clients

Wireless Communications

  • Wi-Fi and Wireless application protocol (WAP) for mobile access

  • Radio frequency identification (RFID) for inventory tracking

Software Overview

Types

  1. Operating Systems

    • Programs that allow devices to run itself & run application software

    • Manage hardware & software

    • Support graphical user interfaces (GUIs)

    • Example: Windows 8, Mac OS, Android

  2. Application Software

    • Support specific tasks (e.g., spreadsheets, accounting)

  3. Programming Languages

    • Used to develop application software (e.g., C++, Java)

The Internet and World Wide Web

Concepts

  • Internet: Collection of local & wide-area networks that are connected via the Internet backbone; uses Internet Protocol (IP) addresses for data transmission

  • World Wide Web: Is the system we use to access the Internet

    • Web Browser: used to view graphic files on the Internet

    • Hypertext Markup Language (HTML): an editing language used to create web pages

    • Hypertext Transfer Protocol (HTTP): used to transfer web pages from one device to another

Accounting on the Internet - XBRL

Definition

  • XBRL (eXtensible Business Reporting Language): A subset of XML for business reporting

  • Uses tagged data for standardized reporting, facilitating data exchange and analysis

    • XML (eXtensible Markup Language): similar to HTML but different because the tags are extensible <….> & they describe the data rather than indicating their display

Benefits of XBRL

  • Streamlined financial reporting

  • Reduced data entry & errors via standardized formats

  • Improved efficiency in information exchange

Drawbacks of XBRL

  • Initial transition costs and labor-intensive tagging, which also increases associated costs

  • Learning curve for users to adopt standards

  • In some countries there are no current requirement for XBRL filings (e.g., Malaysia)

AIS and Business Processes

Data & Information

  • Data is facts; information is organized data

  • Value of information = Benefits (e.g. improved decision making) - Cost (e.g. time used to get information)

  • 7 characteristics of useful information:

    • Relevant

    • Reliable

    • Complete

    • Timely: provided in time to make the decision

    • Understandable

    • Verifiable: Two independent people can produce the same conclusion

    • Accessible

Key Concepts

  • Transaction data is used to create financial statements called transaction processing

  • The flow of information between internal and external parties in an AIS involves a give-get exchange grouped into business processes or transaction cycles

  • Identifying transaction types between organizations and external entities:

    • Revenue cycle (e.g. give goods — get cash), Expenditure, Production, Payroll, Financing cycles

Definition of Accounting Information System (AIS)

  • Collects, records, stores, and processes data for decision-making

  • Components include:

    • Users, processes, technology,

    • Controls for data security

How AIS Adds Value

  • Enhances product/service quality while reducing costs

  • Improves operational efficiencies & its supply chain and supports decision-making

  • Improves internal control structure

  • Sharing knowledge

Value Chain in AIS

  • Links activities that add value to the customer:

    • Primary Activities: Directly add value (logistics, operations, marketing, service)

    • Support Activities: Enable primary activities to be effective (HR, technology, infrastructure)

    • Supply chain, an extended system that includes the organizations value chain, suppliers, distributors and customers.

Summary of Learning Outcomes

  • Hardware and software components

  • Basic internet concepts and the role of XBRL in accounting

  • Distinctions between data and information, organizational decision-making, and AIS value addition.