Introduction to Accounting

Information System
 Accounting
A systematic and comprehensive recording
of financial transaction pertaining to a
business, and it also refers to a process of
summarizing, analyzing and reporting these
transactions to oversight agencies and tax
collection entities.
 Information
is the result of processing, gathering,
manipulating and organizing data in a way
that adds to the knowledge of the receiver.
 System
The term system is derived from the Greek
word systema, which means an organized set
of principles or procedures.
 Information System
is the coordination and integration of
persons, devices, data records and activities
that process data into information in a given
organization.
ACCOUNTING INFORMATION SYSTEM
Is a system of collecting, storing and
processing financial and accounting data that
are used by decision makers.
It is generally a computer-based method for
tracking accounting activity in conjunction
with information technology resources.
Parts of an Information System
An information system is a collection of
data software, procedures, hardware,
telecommunication and people/peopleware
which works together to provide information
essential to running an organization.
 Data
Is the raw material for data processing.
 Software
Is another name for programs-instructions
that tell the computer how to process data.
System software
is background software that helps a computer
manage its internal resources.
Application software
performs useful work on general-purpose
problems.
 Procedures
Are manuals and guidelines that instruct end
users on how to use the software and
hardware.
 Hardware
Collection of physical components that
constitute a computer system.
Input devices
Allows the user to interact with and control the
computer.
The system unit
Consists of electronic circuitry
Secondary storage
Stores data and programs
Outputs devices
output processed information from the CPU
 Telecommunication
Signs, signals, message, words, writings,
images and sounds or intelligence of any
nature by wire, radio optical or other
electromagnetic systems.
 People/Peopleware
The competent end users working to increase
their productivity. End users use hardware and
software to solve information-related or
decision-making problems.
 Types of information system
Executive support system is designed to help
senior management make strategic decisions.
Transaction processing system is designed to
process routine transactions efficiently and
accurately.
Management information system is mainly
concerned with internal sources of
information.
 Users of accounting information

External users- those who do not own and/or

manage and control the business entity.
stockholders, investors, creditors, government,
customers, supplier, competitors, labor unions,
and the public at-large.
Internal users- those who own and/or manage
and control the business entity.
managers top-level managers, middle level
managers and/or employees.
 Purposes of functions of AIS
To gather data and make financial information
available to decision makers.
To do accounting work and help in the
efficient delivery of accurate economic
information to financial users.
To store not only financial data but also non-
financial data in a single integrated enterprise-
wide repository.
 Coverage of AIS
Financial accounting systems.
Cost accounting systems.
Management accounting systems.
Tax accounting system.
Not-for-profit accounting systems.
 Features of effective AIS
Compatibility and flexibility. The system must be
adaptable and appropriate to the firms
organizational structure and policies.
Efficiency and accuracy. The system should be
able to provide specific, relevant, and accurate
accounting reports on time as needed by
management and other interested parties.
Control. The system should provide adequate
controls to ensure the reliability and accuracy of
financial data, to safeguard assets, and to
minimize errors and fraud.
 Basic elements of AIS
Statement of accounting policies and
standards- defines the goal and quality of
accounting information needed.
Methods and procedures- serve as guides in
the conversion of data into intelligent
accounting information.
Bookkeeping system- provides uniformity in
recording and computing transactions.
 Records and reports- store and serve as
proofs that lend reliability to the financial
information.
Personnel- the brain and workforce that are
directly involved in the accounting work.
Equipment and devices- expedite the work,
provide controls to obtain outputs, and
prevent fraud and errors.
 Assignment
1. Importance of the accounting information
system
2. Methods of Processing Accounting Information
3. Data Processing and its Stages
4. Differentiate Computerized and Manual
Accounting System as to stages of data
processing.
5. Advantage and disadvantage of manual and
computerized accounting systems.
6. Phases of Developing AIS.