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.
More from this Section
- Current liabilities
Current liabilities are obligations that a company expects to pay from existing current ... - Average collection period
Average collection period means the average amount of time that a receivable is outstanding; ... - Accrued expenses
Expenses incurred but not yet paid or recorded at the statement date are accrued expenses. ... - Par value stock
Par value stock is capital stock to which the charter has assigned a value per share. ... - Margin of safety ratio
The margin of safety ratio is the margin of safety in dollars divided by actual (or expected) ...