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Accounting Information Systems
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Question 1
I will never produce information if the anticipated expenses outweigh the anticipated
benefits. The cost-benefit principle states that the expense of delivering information through
financial statements should not outweigh its usefulness to consumers. The first important
thing to remember is that certain financial information is just too costly to get. To make sure
that the organization doesn't have to do too much work, standard-setting bodies need to figure
out how much information they need from accounting records. This means that information is
data that has been put together and processed in a way that makes sense and makes it easier to
make decisions. As more and better information is available, consumers tend to make better
judgments. Nevertheless, the human mind is limited in its capacity to collect and process
information. Gailly & Geerts (2014) notes that whenever these thresholds are breached, the
quality of decision-making is lowered, and the cost of supplying that information rises as a
consequence. Designers of information systems employ IT to assist decision-makers in more
efficient filtering and condensing of information. When it comes to Walmart's data
warehouse, for instance, there are over 500 terabytes (trillion bytes) of data. This is the same
as 2,000 miles of bookcases or 100 million digital photographs. It's no secret that Walmart
has been heavily into IT to gather, store, analyze, and manage information easily.
Information's worth is equal to the benefit it provides minus the expense of obtaining it. The
benefits of information include a decreased level of ambiguity and increased decision-making
abilities (Gailly & Geerts, 2014). The time and resources required to create and disseminate
the information are included in the costs. To establish the worth of information before it is
created and exploited, it is necessary to calculate the costs and benefits of information. But
the anticipated value of information should be evaluated accurately and efficiently so that the
expenses of generating the information do not surpass the advantages it brings.
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Another factor to consider is that giving extra information would increase the amount
of time it takes to create the accounting information. It is fair to assert that the significance of
the resultant financial information is lessened for consumers if an excessive amount of time
passes due to the necessity to produce more information. The majority of businesses only
create information when the benefits outweigh the costs. Nevertheless, there are two
scenarios in which information may be created even if the expense of doing so exceeds the
value of the information. First is the fact that it can be hard to figure out how much
information is valuable and how much it costs to produce it. As a result, businesses may
provide information that they anticipate may result in benefits in the future only to be let
down because it was too costly. There are two types of agencies that may order information
to be produced: the government and commercial private companies. Examples of this include
IRS-mandated tax returns and public disclosures of financial information.
An information system collects, records, stores, and processes data. Organizations
need to gather a variety of information, including material on the...