Define Accounting Information System

Define Accounting Information System

Accounting Information System

Accounting is the system used to provide useful financial information. Differently stated, Accounting is an Information system that identifies records and communicates the economic events of an organization to interested users. On the other hand, the system that collects and processes transaction data and disseminates financial information to interested parties is known as the Accounting Information System (AIS). It includes each of the steps in the accounting cycle .It also includes the documents that provide evidence of the transactions and events, and the records, trial balances and financial statements that result. An accounting information system (AIS) consists of:

  • People
  • Procedures
  • Data
  • Software
  • Information technology infrastructure

Basically, an AIS collects and stores data about activities and transactions. It processes data into information that is useful for making decisions. It provides adequate controls to safeguard the organization’s assets

Efficient and effective Accounting information systems(AIS) are based on certain basic principles; like: cost effectiveness ,usefulness and flexibility. If the accounting information system is cost effective, provides useful output and has the flexibility to meet future needs, it can contribute to both individual and organizational goal. However, some phases are also involved in the development of an accounting system like; Planning and identifying information needs; Creating forms, documents, procedures and job descriptions; Implementing the system and making the system wholly operational and finally monitoring effectiveness  of the system. These phases represent the life cycle of an accounting system.

An Accounting Information System may be either manual or electronic (computerized). My organization has been using computerized Accounting system by using Accounting software named ACCPAC, a renowned accounting solution provider. Each of the steps in the Accounting Cycle of my organization is performed almost  automatically (by using  ACCPAC). It enters each accounting transaction automatically in the Journal; each is posted automatically to the ledger.  The Trial Balance and other Financial Statements are generated automatically. In a word, the entity generates all sort of information automatically.