AIS Chapter Two

An agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization.

For example, selling goods, buying inventory...

The process that begins with capturing transaction data and ends with an informational output such as the financial statements.

Five Basic Kinds:

Revenue cycle
Expenditure cycle
Production cycle
Human resources/payroll cycle
Financing cycle

Where goods and services are sold for cash or a future promise to receive cash

Give Cash/Get Cash

Where companies purchase inventory for resale or raw materials to use in producing products in exchange for cash or a future promise to pay cash

Give cash/Get Labor

Where raw materials are transformed into finished goods

Give labor/Give raw materials-Get finished goods

Where employees are hired, trained, compensated, evaluated, promoted, and terminated

Give cash/Get labor

Where companies sell shares in the company to investors and borrow money and where investors are paid dividends and interest is paid on loans

Give Cash/Get Cash

The operations performed on data to generate meaningful and relevant information.

Four steps:
1-Data input
2-Data storage
3-Data processing
4-Information output

Three facets of each business activity:

1-Each activity of interest
2-The resources affected by each activity
3-The people who participate in each activity

Sales order, delivery ticket or bill of lading, remittance advice or remittance list, deposit slip, Purchase requisition, purchase order, receiving report, w4 form, time cards

Now the data entry screen is more common

Records of company data sent to an external party and then returned to the system as input. Prepared in machine-readable form to facilitate their subsequent processing as input records.

Example: Utility Bill

These devices capture transaction data in machine-readable form at the time and place of their origin.

Examples include ATMs used by banks, point-of-sale (POS) scanners used in retail stores and bar code scanners used in warehouses.

Prenumbering, prompts about what data to collect, grouping of related information, checkoff boxes or pull down menus to present available options, appropriate shading and borders to separate data items.

Contains summary level data for every asset, liability, equity, revenue, and expense account of the organization.

Records all of the detailed data for any general ledger account that has many individual sub accounts.

The general ledger account corresponding to the subsidiary ledger.

The systematic assignment of numbers or letters to items to classify and organize them.

Items are numbered consecutively to ensure that there will be no gaps in the sequence.