Application of Computers in Accounting — Account STD 11 Commerce — Question

An Accounting Information System (AIS) is a system that identifies, collects, processes, summarises, generates and presents information about a business organisation to a wide variety of users. It provides relevant information by processing voluminous accounting data, which is beyond the human capabilities. It provides a glimpse of various organisational activities and maintains a detailed financial record. It acts as a common pool of information from which different departments such as, production department, sales and marketing department, HR department, etc. can fetch useful and relevant information. The information thus provided, helps the users to take their decisions rationally and accordingly formulate their plans and policies. Thus, it can be said that an efficient AIS enhances the effectiveness and efficacy of an organisation as a whole.
The below mentioned points highlight the important characteristics of AIS.

1. It helps in handling the huge volume of accounting and financial transactions of an organisation.
2. It helps in drafting future plans and accordingly setting the future objectives.
3. It acts as a common pool for providing information to different departments besides accounts and finance departments.
4. It helps in maintaining the accounting information as per the guidelines laid down by the Law.
5. It helps in meeting the informational needs by generating reports for both external accounting users (investors, creditors, etc.) as well as for the internal accounting users (management, shareholders, etc.).