Accounting Information System Report: Decision Making and Funding

This report analyzes an accounting information system for a 3D scanning application startup. It addresses key entrepreneurial decisions, identifies external parties and the information exchanged, and explores various external funding sources like equity financing, debt financing, term loans, preferred stock, and venture capital. The report also discusses legal, ethical, and security issues related to software development and usage. The report is based on a case study where a group of entrepreneurs won a software competition, needing additional funding to develop their application. The assignment covers topics essential for understanding the financial and operational aspects of starting and running a business, including decision-making processes, stakeholder communication, and legal and ethical considerations.

Accounting Information
System

INTRODUCTION...........................................................................................................................3
c. Identifying external sources of the funding and the manner in which they would be
approaching such sources............................................................................................................3
d. Explaining legal, ethical and security issues with regards to development and the use of
software application.....................................................................................................................4
Recommendations........................................................................................................................4
CONCLUSION................................................................................................................................5

INTRODUCTION
Accounting information system is a system through which a business can keep a record
and track of its financial information. It is widely used by companies for the purpose of
collection, storage and processing of data which is used to create and maintain reports, file taxes,
and thus complying with the government rules and regulations. There are several types of
accounting information systems used like Batch processing systems, online batch systems and
real-time systems. The current study will emphasize on external sources of funding from where a
business can obtain capital and also on some ethical, legal and security issues that arise while
developing and using software application.
a. Identification of key decision need to make a successful entrepreneur
Being an entrepreneur is a very tough and big task for getting success with the
entrepreneurial venture (B Romney, 2018). This is majorly due to the fact that the venture is
being set up in the highly competitive environment and it is very essential for the entrepreneur to
take the effective decision so that the business start up gets successful. Hence, in the present case
of the idea of new entrepreneur of the 3D scanning application also, the entrepreneur has to take
a wide variety of the decision. This is majorly because of the reason that when the person set up
a new business then they have to take a wide range of decision for its success. Hence, the success
of the new business idea will depend on the decision taken by the entrepreneurs only. These
varieties of decision are as follows-
The first and foremost important decision to be taken by entrepreneur in developing the
business idea of 3D scanning application is that whether they will be able to turn their idea into
reality or not. This is majorly because of the reason that if the entrepreneurs are not having
proper resources related to the business then they will not be able to work in effective manner.
Thus, this will help the entrepreneur in managing the idea of the business in effective manner.
Thus, if the entrepreneur will be able to effectively decide for the success of the company in
successful manner. The resources are very essential for the running and operations of the
company in successful manner. Also, the resources are very less and limited and need to use in
very effective manner and for this the entrepreneur need to decide in very rational and logical
manner.
Another major decision to be taken by the entrepreneur is related to the finance as
without money no work can be accomplished. In the process of setting up a business the finance
requirement are very high and the entrepreneur need to decide that from where they will arrange
for the money. This is essential because $10000 which is the prize money will not be sufficient
and entrepreneur will have to decide for other sources as well (Ibrahim, Ali and Besar, 2020).

There are many different sources from which the finance can be arranged and the entrepreneur
has to decide for the source from which these entrepreneurs can arrange for the money for
starting the business.
Another major decision which the entrepreneur needs to take is the decision relating to
the technology which the business will be using. This is essential because of the reason that in
this highly competitive world there are many different types of technology being used within the
business world (Hall, 2018). Thus, the entrepreneur needs to decide that which type of
technology they will be using in order to manage their new business of 3D scanning application.
Hence, here the entrepreneur need to take the decision that which technology will they use and at
what cost it will be implanted within business and how it will be operated.
In addition to this business decision there are also some of the business process which the
company need to follow in order to establish the business in proper manner. There are different
types of business process which need to be followed by the business at time of establishing the
business which are as follows-
The first one is the primary process which includes the fact that the company need to
deliver the quality services to the consumer. This is necessary because of the reason that if the
consumer will not be satisfied then the company will not earn a good amount of profit and this
will affect the working of the company to a great extent.
Another major process is the support process which includes the activities which are
necessary for the sustaining of the primary activities of the business and the management of all
the different types of activities and department of the company.
Another major important process to be used by the company 3D scanning application is
the use of the management process as this will assist the company in managing the business in
accordance with the latest changes taking place in the environment and then adapting it in the
business. This is essential as this will encourage the employees to work in more better and
attractive manner.
b. Identification of the external parties and specification of the information received and sent to
them
At time of initiating or establishing any of the business it is very essential for the
company to have interaction with the different types of external parties. This is very essential as
the company exist in the environment which is very dynamic and company cannot work in
isolation or without communicating with them (Granlund and Teittinen, 2017). Thus, for this the
company has it interact and communicate with other different parties which are as follows-
Financiers- this is the most important external party which is essential for the working of
the company. This is majorly because of the reason that without finance no business can work
and for this the entrepreneur also not has enough personal capital thus, for this the entrepreneur

has to take finance from the other parties and other financial institution. Thus, the information
shared among these two is about the amount of finance required by the entrepreneur and what
interest they will charge from the entrepreneur.
Suppliers- this is another major important external party with which the entrepreneur
need to work with in order to get the working of the company done. This is majorly because of
the reason that if the supplier will not work in according with the supplier then the company will
not be able to produce the goods and services in proper condition. The major information being
exchanged between the entrepreneur and the supplier is that the supplier will not give the
information to the company then the company will not be able to know about the rates being
charged by the supplier. Also, on the other side if the supplier will not come to know about the
approved rates and charges of the company then they will not be able to supply the goods and
services (Trigo, Belfo and Estébanez, 2016).
Government- this is also a major important party with whom the company has to
communicate and transact in order to work in proper and effective manner. This is majorly
because of the reason that the company has to operate in the world where the competition is very
high and intense. Thus, for this the government has levied some of the laws and legislations
which the company has to follow- thus, for this the interaction or information passed between
both the parties is that the government will outline and acknowledge all the employees and the
company in order that they know what rules and regulations they have to follow. This is majorly
because of the reason that if these will not be followed then the company will not be able to
manage the working in the company. Also, the company passes on the report to the government
that all the different rules and regulations levied on the company are being followed in the same
and prescribed manner.
Hence, the communication with all these parties is very essential as if the communication
will not be clear and concise then they will not be able to manage the business in proper and
effective manner.
c. Identifying external sources of the funding and the manner in which they would be
approaching such sources
Most of the business starts with higher hope and along with investors’ confidence but few
of the conditions could either mar or make for start-up of any business. External sources of
finance referred as those sources which comes from outside. There are different external funding
sources which could be adopted by the entrepreneur that are as follows-
Equity financing- It is the most common source of the finance and is governed by various
legislations. It is the process of raising the capital by selling the shares through which a start up

business can raise money for investing the funds into business. With selling the shares, they also
sell the ownership of their business in exchange of the funds (Chit, 2019). The main feature or
characteristics of equity share reflects sharing of the ownership rights and due to this dilution of
ownership takes place. It involves sales of the common equity but also sale of the other equity or
the quasi equity like preferred stock, convertible preferred stock and the equity units which
include common warrants and the shares.
Debt financing- In this they could raise funds for capital expenditures and the working
capital by selling the bonds, notes and bills to institutional investors. Against lending money,
institutions and individuals become as creditors & receive the promise for repaying the interest
and principal on debt (Belanová, 2018). It is counted as cheapest mode of the finance in
comparison to equity and does not involve sharing of the control with the investors. The interest
paid to the debenture holder is considered as tax deductible and is offered to the common public.
Term loan- It means the loan or particular amount borrowed from the bank that contains
specified schedule of repayment and either the floating or fixed interest rate. It seems as the most
appropriate funding source for the entrepreneurs in order to start their business without any
shortage of financial resources.
Preferred stock- It is seen as one of special type of the share capital that is been issued by
the corporations at a fixed rate or amount of the dividend and carries some preferential rights
over the ordinary shares in terms of profit sharing and claiming assets of company at the time of
winding up (Campbell, 2017). It is seen as the long run source and is neither entirely same as
equity not equates to the debt. They are been called as preferred because they got preference over
the equity in context of making payment of the dividend & capital at time of the liquidation.
Venture capital- This source is stated as the form of the private equity and the kind of
financing that the investors facilitate for the startup business which are believed to attain growth
and success in the long run. It mainly comes from the well-off investors, financial institutions
and the investment banks. It provides for committed share capital in order to help the unquoted
company so that it could grow and achieves success in the future periods (Knack and Xu, 2017).
As in this case, entrepreneurs are looking for the start-up, venture capital is the best and suitable
funding source for them. Obtaining the venture capital is seen as different from raising the debt

or the loan amount from a lender. VC is been invested against exchange for an equity stake
within the business and as the shareholder, return for the venture capitalists majorly depends on
profitability & growth of business.
d. Explaining legal, ethical and security issues with regards to development and the use of
software application
Legal issues can be defined as the question of law which is raised based on the facts of a case.
There are various legal issues that be raised in case of software application violation like:
Software related crimes: Most of the fines are related to copyright issues which means
illegal downloading of software applications or making an exact software without taking consent
from the original makers can lead up to a fine of $250,000 in countries like USA, Canada and
New Zealand.
Software Infractions: Many individuals get sued for using software illegally which means
illegal downloading of software and video games can also cause legal trouble (Yaman and et.al.,
2017). The software industry with the help of IP address, hack down its users and then charge
them a heavy fine or a lawsuit. It is a common legal issue raised by tech companies and with the
increasing use of internet and artificial intelligence rolling in, there has been an increase in the
number of cases and lawsuits relating to people getting sued for software infractions.
Hard – time for Infringements: This is a serious legal issue as in this scenario a person
can be looking up to facing imprisonment for 2-3 years. Many people make illegal use of
software and use it illegally and unethically to hack the stock exchange or perform insiders
trading, forgery and other relating crimes which leads to imprisonment along with a million-
dollar penalty.
Thus, these are the major legal issues faced by individual if they try imitating or
performing some illegal activity with the help of software application.
Ethics can be defined as a set of moral principle governing an individual or a group of
people. Moral ethics tell the difference between rights and wrong which means that it depicts the
difference between what should and should not be done (Logan, 2020). With the increasing use
of internet technology there has been an incessant rise in the number of crimes thus it has
become important to develop some code of ethics to ensure smooth flow of information without

any problems and barriers. There are certain ethics developed by ACM’s code which are
imperative for every individual or group of people to follow:
Using of someone else’s computer system, software or web account without their
permission is not permissible. One must ask for permission and if they must use the system only
when there is consent and approval given by the owner of the system.
Creating or developing content, software applications or systems that deliberately
demean individuals or groups of people is ethically unacceptable.
Ethical issues that arise with the use of software application are as follows:
The ethical problems are not only faced by consumers of the data but also by the
developers like software engineer and website developers. Ethical challenges faced by them
consist of: the end product, the process of developing that product, and the human interactions in
the development of the product. Computer ethics, according to the mass media, seems to include
every conceivable misuse of computers.
Some other ethical issues include:
How much protection is enough: It means up to what levels the website developers must
provide safety and security to their website and also protect the personal information of its users.
Another ethical aspect is that whether the web developers should track the necessary information
about their users which is imperative for the growth of the company or not (Tse, Xie and Song,
2017). It all depends on the level of encryption that developers are willing to do.
How free should the content be: There are several websites and creators that copy or use
other developer’s content and earn add revenue from it. This is morally and ethically unfair as
the original creators fail to get the recognition and monetary benefits as they are supposed to get.
Thus, the search engine platforms must develop strict restrictions in regards to copying and fair
use of original creator’s data and content.
Plagiarism is another major issue and although there is certain software that provide for
the plagiarised content but still many users copy the content and make some minor changes and
upload it on the internet thus escaping the plagiarism. It is both morally and ethically wrong.

Recommendations
For successfully starting the business, Entrepreneurs shouts take necessary measures that
are as follows-
Testing the idea consistently- They should prepare for a requisite for making
environmental analysis such as SWOT for the investors. Prior to start the business they should
validate their ideas with the people who will be buying the product or the service.
Keeping eye on market- It is very essential to keep a track on the market for knowing the
demand of the customers and the changing trends or technology in the market so that they could
remain updated and could be able to run the business with latest technology.
Choosing the right source for raising funds- They should select an appropriate source for
raising the large funds to invest like venture capitalist which would help them in staying free
from any kind of financial burden and the legal complexities.
Hiring right people- They must hire talent pool for growing their business with fast pace
and generating greater earnings by developing suitable strategies. This would also help them in
attaining their goals effectively and efficiently.
Stay focused- They needs to focus on providing the value to customers and giving them
with a great software keeping in mind their need and preference. This helps them in the attaining
growing success in the market and also enables in creating a well known brand image across the
globe.
CONCLUSION
The above report concludes that accounting information system helps in processing,
storing and collecting the accounting and financial data for producing an informational reports
which the managers or the other interested users could use for making the business decisions.
There are several external sources which help the entrepreneurs in accumulating large funds for
investing into their start-up for gaining success in an entire market. The security and the legal
issues are also attached in development of the software which needs to be considered by the
entrepreneurs so that they could develop software in compliance with the ethical standards, legal
rules and with proper security features so that no one can misuse or faces any type of fraud.

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