Definition

Accounting information system

Accounting information system is a system that collects and process transaction data and communicates financial information to decision makers. It includes each of the steps in the accounting cycle that you studied in earlier chapters. It also includes the documents that provide evidence of the transactions, and the records, trial balances, worksheets, and financial statements that result.

An accounting system may be either manual or computerized. Most businesses these days use sort of computerized accounting system, whether it is an off-the-shelf system for small business, like QuickBooks or Peachtree, or a more complex custom-made system.

Efficient and effective accounting information systems are based on certain basic principles. These principles are (1) cost effectiveness, (2) usefulness, and (3) flexibility. If the accounting system is cost effective, provides useful output, and has the flexibility to meet future needs, it can contribute to both individual and organizational goals.

Share it:  Cite

More from this Section

  • The Benefit of Budgeting
    The primary benefit of budgeting are: It requires all levels of management to a plan ...
  • Operating expenses & net income
    Operating expenses are the expenses incurred in the process of earning sales revenues. Operating ...
  • Production budget
    Production budget is a projection of the units that must be produced to meet anticipated ...
  • Accountant
    Accountant is a person who has the education and experience to evaluate the significance ...
  • Purchases journal
    Purchases journal refers to a journal where companies record all purchases of merchandise ...