Account 6 Marks Question

An accounting information system is a transaction based information system. It caters to the accounting applications of an organisation.The main characteristics of AIS are as follows:

1. AIS helps in handling and manipulating accounting and financial transactions of an organisation.
2. AIS is helpful in producing futuristic data in the form of budget forecasts etc.
3. AIS is helpful in maintaining accounting information as per the guidelines of the law.
4. AIS is highly crucial for the organisation and thus can easily be harmfully manipulated. Thus, it is required to keep a highly safe and secure environment to ensure its safety.

An accounting information system gathers data describing the organisation's activities, maintains a detailed financial record of the organisations operations, transforms the data into information and makes the information available to users both inside and outside the organisation.
Features of a good Accounting Information System: An accounting information system is a transaction based information system. It caters to the accounting applications of an organisation.
The main characteristics of AIS are as follows:

1. AIS helps in handling and manipulating accounting and financial transactions of an organisation.
2. AIS is helpful in producing futuristic data in the form of budget forecasts etc.
3. AIS is helpful in maintaining accounting information as per the guidelines of the law.
4. AIS is highly crucial for the organisation and thus can easily be harmfully manipulated. Thus, it is required to keep a highly safe and secure environment to ensure its safety.

Purposes of Accounting Information Systems serve six important purposes which are:

1. Sales order Processing: It is an important transaction processing system which processes customer orders and produces invoices for customers and data required for sales analysis and inventory control.
2. Inventory Control: These systems keep a track of the various levels of inventory and the various changes occuring in them.
3. Accounts Receivable: These systems keep records of amounts owed by the customers with the help of the data generated by customer purchases and payments.
4. Account Payable: These systems keep records of the data related to the purchases from the suppliers and the payments made to them.
5. Payroll: The payroll systems record the data from the employee time cards. They are responsible for producing the pay checks and other documents like earning statements, payroll reports, labour analysis reports etc.
6. General Ledger: The general ledger systems consolidate the data received from accounts receivable, accounts payable, payroll and other accounting information systems.

Relationship between Accounting Information System, Manufacturing Information System and Human Resource System. The above diagram depicts how the three functional departments are mutually related. The human resource department sends a list of number of workers, their category their level of skill etc. to the manufacturing department and to the accounts department. The manufacturing department on receiving such list sends a report of level of production achieved by each worker and other deductions to be made from their wages on various Accounts. This report is send by the manufacturing department to both Accounts department as well as the HR department. The accounts department on receiving such reports make its own calculations of the various statutory payments and dues of the workers and make the final payments and send the report of the same to both HR Department as well as the manufacturing department to monitor the performance of the workers.

A management information system is an information system that generates, accurate, timely and organised information to help managers make decisions, control process, solve problems, supervise activities and track progress. Accounting information system identifies, collects, processes and communicates economic information of an organisation to a wide variety of users. Every accounting systern is a part of the Accounting Information System which in turn is a part of the broader system i.e. the management information system.
Relationship between accounting system, accounting information system and management information system.
Accounting Information System is one of the function information systerns and management information system has a link with all the function information systems of an organisation.

Initially MIS was considered to be a financial accounting system and was a tool to maintain the financial record keeping activities. But gradually it developed into a broader concept and accounting system has now become one of its sub components. An accounting information system on the other hand performs the accounting applications of an organisation. Accounting information systems contribute to problem solving by producing standard management reports that summarise the firm's financial conditions and by providing the data base that is used by other information systems.

AIS and Marketing Information System.The business process in the marketing and sales department involve the following activities:

1. Inquiry process.
2. Creating contacts and establishing personal relations.
3. Order taking.
4. Dispatching goods.
5. Bills generation.

The accounting sub-system transaction cycle therefore includes:

1. Processing sales order.
2. Authorising the credit limits.
3. Keeping custody of the goods.
4. Stock status.
5. Dispatch Details.
6. Accounts Receivables.

The system also keeps track of the customer status.

Transaction Processing System (TPS): They are the computerised systems that perform and record the daily routine transactions which are necessary to conduct the business. TPS serve the organisation at the operational level.Process of Transaction Procesing System: As the name suggests the Transaction Processing System (TPS) processes the transactions affecting the activities of the organisation. TPS follows the six steps given below:

1. Data Collection: It gathers all data needed to complete one or more transactions either manually or using devices like scanners and point-of-sale equipment
2. Data Editing: It is the process of checking the data for validity and completeness.
3. Data Validation: It is the process of validating the data for correctness and then correcting the same if errors are found.
4. Data Munipulation: it. It is the process of performing calculations.
5. Data Storage: It is the process of placing transaction data into one or more databases.
6. Output Generation 6: It is the process of creating reports and outputting records.
7. Query Support: It is the process of making available the mechanism that empowers the users of TPS to query upon the stored data and extract the required information in required format.