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.

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