Accounting Information Systems

An accounting information system is system that keeps record for a business to maintain its accounting system. Accounting information systems combine the study and practice of accounting with the design, implementation and monitoring of information systems. The use of such systems uses modern information technology resources together with traditional accounting methods to provide the users with the necessary information to manage their Organisation. Accounting information systems has its strengths and weaknesses also, but strengths more so than weaknesses in some cases.

Basic accounting information systems include entering customers' records, billing customers, collecting customer payments, keeping track of inventory, purchasing new stock and materials, paying employees' etc. users of this accounting information can include internal and external parties. Internal users of accounting information include managers and owners. They would use special purpose reports which are prepared weekly, monthly, quarterly and are prepared for their specific needs, and what they need to know about business .external users include investors, customers, clients, government agencies and employees. They would use general purpose reports which are prepared half-yearly or annually. It provides general information for general users.

Accounting records

Records other than reports that are kept for accounting systems include purchases, sales and nominal ledgers, and cash books of the business. Whilst all these records would have previously recorded using a paper based process, now information technology has made it more efficient for businesses to prepare all the reports using computerised accounting systems.

Computerised accounting systems - Advantages and Disadvantages

Some computerised software that is available includes: MYOB, QuickBooks, Sybiz, ACCPAC and Attache. Computerised accounting systems apart from the obvious time saving advantage has many more, as well as disadvantages. Some advantages include: a reduction in processing costs by using user friendly programs like MYOB, reducing the amount of errors compared to manual systems and faster response time fro customers checking current balances for example. Some weaknesses may include: failed systems- can be caused by inexperienced staff and if regular back ups aren't made there would be a major loss to the business, internet and computer viruses- if undetected can destroy all files so a security system must be implemented to avoid this from happening, power failure, hackers and fraud also.

Types of accounting information systems

Accounting information systems supports the accounting function. Accounts receivable, accounts payable and general ledgers are usually considered to be accounting information systems. Several other common accounting information systems are: fixed asset accounting- its purpose mainly to account for such assets such as buildings, land and equipment. Budgeting-this system projects revenues and expenses and compares them to the actual figures. Tax accounting- the purpose of this system is to prepare business tax reports to pay taxes.

Accounting cycle

An accounting information system is an important part of the accounting process and accounting cycle. The accounting cycle is "a ten step process, a simple