Chapter 1 - Accounting Information Systems: An Overview
A system is a set of two or more interrelated components that interact to achieve a goal. Most systems are composed of smaller subsystems that support the larger system. For example, a college of business is a system composed of various departments, each of which is a subsystem. Moreover, the college itself is a subsystem of the university.
Each subsystem is designed to achieve one or more organizational goals. Changes in subsystems cannot be made without considering the effect on other subsystems and on the system as a whole. Goal conflict occurs when a subsystem is inconsistent with the goals of another subsystem or with the system as a whole. Goal congruence occurs when a subsystem achieves its goals while contributing to the organization’s overall goal.
Data are facts that are collected, recorded, stored, and processed by an information system. For example, the business needs to collect data about a sale (date, total amount), the resource sold (good or service, quantity sold, unit price), and the people who participated (customer, salesperson). Information is data that have been organized and processed to provide meaning and improve the decision-making process. However, there are limits to the amount of information the human mind can absorb and process. Information overload occurs when those limits are passed, resulting in a decline in decision-making quality and an increase in the cost of providing that information. Information system designers use information technology (IT) to help decision makers more effectively filter and condense information.
The value of information is the benefit produced by the information minus the cost of producing it. Benefits include reduced uncertainty, improved decisions, and improved ability to plan and schedule activities. The expected value of information should be