The Information System: An Accountant’s Perspective

market research. On an operational level, marketing performs such daily activities as sales order entry.

Distribution
Distribution is the activity of getting the product to the customer after the sale. This is a critical step. Much can go wrong before the customer takes possession of

the product. Excessive lags between the taking and filling of orders, incorrect shipments, or damaged merchandise can result in customer dissatisfaction and lost

sales. Ultimately, success depends on filling orders accurately in the warehouse, packaging goods correctly, and shipping them quickly to the customer.

Personnel
Competent and reliable employees are a valuable resource to a business. The objective of the personnel function is to effectively manage this resource. A well-

developed personnel function includes recruiting, training, continuing education, counseling, evaluating, labor relations, and compensation administration.

Finance
The finance function manages the financial resources of the firm through banking and treasury activities, portfolio management, credit evaluation, cash

disbursements, and cash receipts. Because of the cyclical nature of business, many firms swing between positions of excess funds and cash deficits. In response to

these cash flow patterns, financial planners seek lucrative investments in stocks and other assets and low-cost lines of credit from banks. The finance function also

administers the daily flow of cash in and out of the firm.

The Accounting Function
The accounting function manages the financial information resource of the firm. In this regard, it plays two important roles in transaction processing. First,

accounting captures and records the financial effects of the firm’s transactions. These include events such as the movement of raw materials from the warehouse

into production, shipments of the finished products to customers, cash flows into the firm and deposits in the bank, the acquisition of inventory, and the discharge

of financial obligations. Second, the accounting function distributes transaction information to operations personnel to coordinate many of their key tasks.

Accounting activities that contribute directly to business operations include inventory control, cost accounting, payroll, accounts payable, accounts receivable,

billing, fixed asset accounting, and the general ledger. We deal with each of these specifically in later chapters. For the moment, however, we need to maintain a

broad view of accounting to understand its functional role in the organization.

The Value of Information
The value of information to a user is determined by its reliability. We saw earlier that the purpose of information is to lead the user to a desired action. For this to

happen, information must possess certain attributes—relevance, accuracy, completeness, summarization, and timeliness. When these attributes are consistently

present, information has reliability and provides value to the user. Unreliable information has no value. At best, it is a waste of resources; at worst, it can lead to

dysfunctional decisions. Consider the following example: A marketing manager signed a contract with a customer to supply a large quantity of product by a certain

deadline. He made this decision based on information about finished

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