Accounting Information System and Manager's Decision Making

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Information System plays an influential role in determining the success of an organisation. The function of the information system is to collect, store and process data into information, through the assistance of a set of interrelated components. The processed information is later distributed to support decision making in an organisation (Oz, 2006). Information system can be decomposed to two main elemental subsystems namely as Accounting Information System (AIS) and Management Information System (MIS). AIS mainly process financial transactions of an organisation. However, it also processes some non-financial transactions that have a direct impact on the financial transactions. Contrastingly, MIS primarily process non-financial transactions which cannot be processed by AIS. Accordingly, AIS is rightly considered to be the subsystem of MIS. The common objectives of both the information system are to support the management’s stewardship function, decision making and day to day functioning of the organisation (Hall, 2008). The functions of AIS are generally processed through three subsystems namely, Financial Reporting System (FRS), Transaction processing System (TPS) and Management Reporting System (MRS). Financial Reporting System holds the responsibility of the preparation of financial reports through the procession of validated transactions to their respective accounts. Management Reporting System predominantly generates reports for internal control purposes. Transaction Processing System supports the day to day business activities. TPS constitutes of three cycles namely conversion, revenue and expenditure cycle. These cycles converts the economic transactions to financial transactions and record them in the accounting records. Eventually, they distribute the financial information to the operations personnel in order to support the operational activities on a day to day basis. Meanwhile, MIS is supported by subsystems such as...
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