Accounting Information Systems

Before understanding Accounting Information Systems, we must understand about Accounting information which means the information describes in the form of accounting data that is meaningful to all of the Users of Financial Statements such as owners or shareholders, internal management, employees, customers, government agencies, etc. For example, Net Income for the year, Balances of Assets, Liabilities and Equity, Cash Inflow and Outflows, etc. are calculated that provides reliable financial information about company's financial positions and Cash flows during the accounting period.

Accounting Information must be provided economically, All the costs utilized for producing it must be cost effective. For example, the company installed technology like Quickbooks, then the cost of installation should be less than the output i.e., Prevention of Errors and Frauds, maximization of Net Income at minimum cost.

Types of Accounting Information

There are three types of Accounting Information

Financial Accounting Information

When information is provided to external users of financial statements. These users are Investors, Government, Accounts Payable, Account Receivable, Banks, Financial Institutions and others interested parties.

Managerial Accounting Information

When accounting information is provided to internal management for decision making purposes. For Example, information about Business Finances of the company is provided with the help of Cash Flows Statement to management for making decision about the Liquidity position of the company. Online Business Financing is used for getting small business loan in case of small company businesses.

Accounting Information System

Accounting Information system is such system in which accounting information is recorded and prepared with help of technology (Peachtree, QuickBooks) and personnel (Accountant).

So, Accounting is called the language of business as it describes all of the business activities. We know about Sales, Net Income, Financial Position (Balance Sheet), Cash Inflows and Outflows (Statement Of Cash Flows), Statement of Changes in Equity, etc.