Accounting Information System

The essentials

An Accounting Information System (AIS) collects, stores and processes financial and accounting data and produces information useful to decision-makers such as managers, investors and creditors. It is a part of the wider Management Information System (MIS), which supplies information to managers for planning and control. Input is transaction data; processing includes recording, classifying and summarising; output is reports.

Key points

• Components: people who use it, procedures and instructions, data, software, and the information technology infrastructure.
• Common subsystems: cash and bank, sales and accounts receivable, purchases and accounts payable, inventory, payroll, fixed assets, and expenses.
• Role: provides timely and accurate information, supports internal control, helps in planning, budgeting and performance evaluation, and meets legal reporting needs.
• Qualities of useful information: relevance, reliability, timeliness, understandability and comparability.

Exam tips

Link each type of report to its subsystem, for example a list of amounts due from customers comes from the accounts receivable subsystem.

Common mistakes

• Treating MIS and AIS as the same. AIS is a subsystem of MIS.
• Thinking AIS deals only with computers. It also includes people and procedures.