Components of Accounting Systems
Components of Accounting Systems
Accounting information systems consist of records, methods, and equipment. These are designed to capture information about a company’s transactions and to provide output including financial, managerial, and tax reports. All accounting information systems have these same goals, and thus share some basic components. These components apply whether or not a system is heavily computerized, yet the components of computerized systems usually provide more accuracy, speed, efficiency, and convenience than those of manual systems. The five basic components of accounting systems are:
• Source documents provide the basic information processed by an accounting system. Examples of source documents include bank statements and checks, invoices from suppliers, billings to customers, cash register files, and employee earnings records. Source documents can be paper, although they increasingly are taking the form of electronic files and Web communications. A growing number of companies are sending documents directly from their systems to their customers’ and suppliers’ systems. The Web is playing a major role in this transformation from paper-based to paperless systems. Accurate source documents are crucial to accounting information systems. Input of faulty or incomplete information seriously impairs the reliability and relevance of the information system.
• Input devices capture information from source documents and enable its transfer to the system’s information processing component. These devices often involve converting data on source documents from written or electronic form to a form usable for the system. Journal entries, both electronic and paper based, are a type of input device. Keyboards, scanners, and modems are some of the most common input devices in practice today. For example, bar code readers capture code numbers and transfer them to the organization’s computer for processing. Moreover, a scanner can capture writing samples and
Accounting information systems consist of records, methods, and equipment. These are designed to capture information about a company’s transactions and to provide output including financial, managerial, and tax reports. All accounting information systems have these same goals, and thus share some basic components. These components apply whether or not a system is heavily computerized, yet the components of computerized systems usually provide more accuracy, speed, efficiency, and convenience than those of manual systems. The five basic components of accounting systems are:
• Source documents provide the basic information processed by an accounting system. Examples of source documents include bank statements and checks, invoices from suppliers, billings to customers, cash register files, and employee earnings records. Source documents can be paper, although they increasingly are taking the form of electronic files and Web communications. A growing number of companies are sending documents directly from their systems to their customers’ and suppliers’ systems. The Web is playing a major role in this transformation from paper-based to paperless systems. Accurate source documents are crucial to accounting information systems. Input of faulty or incomplete information seriously impairs the reliability and relevance of the information system.
• Input devices capture information from source documents and enable its transfer to the system’s information processing component. These devices often involve converting data on source documents from written or electronic form to a form usable for the system. Journal entries, both electronic and paper based, are a type of input device. Keyboards, scanners, and modems are some of the most common input devices in practice today. For example, bar code readers capture code numbers and transfer them to the organization’s computer for processing. Moreover, a scanner can capture writing samples and
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