Chapter 1: Introduction Discussion Questions 1.1 Describe some inputs, processes and outputs of an accounting information system. (LO1, LO2, LO3) Inputs: Sales order (record purchase requests from customers), purchase data (data about purchases initiated with our vendors), Receiving data (data about arriving goods), shipping data (data about goods sent to customers), invoices (received from vendors) Processes: Check data is valid, sort data, manipulate data Outputs: Invoice (sent to customer), cheque (sent to vendor), profit and loss report, accounts receivable report 1.2 What is the difference between data and information? (LO2) Data are the raw facts relating to or describing an event. For example, data relating to a sale could include the customer’s name, address, salesperson ID, the sale number, sale date, items purchased, quantity purchased and so on. On its own this data is not all that useful. However, through the application of rules and knowledge the data can be made meaningful, thus converting it to information. For example, the collection of data relating to sales may be summarised into sales by customer or sales by product, to provide information about high spending customers or slow moving products. 1.3 What is information overload? What are its consequences? (LO2) Information overload refers to the situation where an individual has more information than required and can’t meaningfully process this information when making a decision. The potential consequences of information overload include the production of reports and information that serves no purpose and deleterious decision making by employees who are unable to synthesise the volume of information that they are exposed to. 1.4 Briefly summarise the changing relationship between accounting and information systems. (LO4) This question can be answered with reference to Figure 1.5, which depicts the changing nature of and interaction between accounting and information systems. Regarding the role of accounting we see that initially accounting was the primary source of information for an organisation. In the original manual accounting environment, the people who did the accounting also represented the technology of the system – the accountant kept records and stored data and synthesised it into reports. In essence, the accounting function and the information technology function were one. The advent of computing technology and other processing technologies described in the chapter were based around ways of making the accounting task easier. When the information technology first hit organisations it was predominantly seen as a way of helping the accountant – thus information systems were the domain of the accountant. This is represented in the top part of figure 1.5. The domain of information technology soon expanded, encompassing more than just