Accounting Information System

Topics: Information systems, Accounting software, Decision making Pages: 6 (1798 words) Published: September 16, 2012
I. I. Accounting information system is a combination of collecting, recording, storing, and processing data of a business. The advancement of technology initiates business firms to seek for new innovations that would greatly help in business functions. As what Dillon and Kruck (2004) had explained, “at the start of the 21st century, business organizations are facing an explosion of global competition and innovation and facilitating this explosion is the increasing ability of organizations to make good business decisions based on the large amounts of information their enterprise produces”. In this environment, it is necessary for a successful business to integrate information technology into its basic process. And with this, AIS technology uses the modern information technology resources to aid in business functions.

In order to understand AIS well, knowing the meaning of the system is important as stated by Gangolly (n.d.) and Gelinas and Sutton (2002) “a system is a set of interdependent components which collectively accomplish specific objectives”. They also added that AIS is an information system; but not all information system are accounting information system and example of this is human resource information system. Also Gelinas and Sutton (2002) defines information system as “a man-made system that generally consists of an integrated set of computer-based and manual components established to collect, store, and manage data as well as provide output information to users”. While as described by Herrera (n.d.) “information system is a set of formal procedures by which data are collected, processed into information, and distributed to users”.

According to Henson (2006), “AIS combines the study and practice of accounting with the decision, implementation and monitoring of information system”. Hence Orwell (n.d.) noted, “it is a system of records usually computer based which combines accounting principles and concepts with the benefits of an information and which it is used to analyze and record business transactions for the purpose to prepare financial statements and provide accounting data to its users”. While Vitez (2011) stated, “the accounting cycle is a driving force in most companies accounting information system and this is the basic step that help companies develop their accounting information systems” and Herrera (n.d.) defines AIS as subsystems that process financial transactions that directly affect the processing of financial attributes of the company. The accounting information system from the website of accounting-information-systems.html is described as a “computerized financial accounting system that takes input and runs the information through the steps in the accounting cycle” and with the system used the accounting process is dependent upon the information system.

But for simpler definition, VanBaren (n.d.) explain that “AIS is a typically computerized accounting program that keeps records for a company”. The main objective of AIS is to collect, process, and record information related to the financial transactions of a business (Gelinas& Sutton, 2002; K.T. Smith & M.L. Smith, 2002).

There are six components in the AIS that enable it to achieve the business functions according toK.T. Smith and M.L. Smith (2002) and Hinchcliffe (2011) are: first, people who are system users and run the system includes the accountants, consultants, business analysts, etc.; second, the procedures and instructions which is both manual and automated that deals methods for retrieving and processing data; third the data all about the financial information pertinent to the organization’s financial business practices such as all data that has an effect on a business should be stored; fourth is the software that includes the computer programs used to process data; fifth, is the information technology infrastructure composed of hardware used to operate the...
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