The Significance And Application Of Accounting Information Systems Accounting Essay

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Information is considered as a resource in an organization as well as other applications such as human capital economic organization of resources depends on the information system in order to remain competitive. Productivity, which is very important, can be increased through better information

Accounting Information System is a collection of resources designed to provide information on a variety of decision makers according to their needs and rights. AIS can be very simple paper and pen-based manual system or a highly complex system that uses the latest in information technology. 

 An information system AIS accounting data processing and trade provides users with information needed to plan and control the operation of their businesses. The AIS must perform the following tasks to meet the information needs of decision makers

Collect transaction and other data and enter it into the AIS.

Process the data.

Store the data for future use.

Provide users with the information they need by producing a report or allow users to query the data.

Control the whole process so that the information produced is accreted and reliable.

The accounting reports, prepared on the basis of historically consists of the following key activities, be it a business of manufacturing or service or for profit or non-profit organization:


1. Recording and transmission of data, including classification, summarizing, communication, and interpretation of cost data to interested parties, internal or external. 

2. measured or estimated costs to specific products, services or subunits of the organization. 

3. Financial management, acquisition of accurate product-costing data and management to help managers in major decisions such as pricing, product mix, process and technology. 

4. Cost analysis of cost data, their transformation into useful information for managerial planning and control, and both short and long term decisions. 

5. This is the collection of data for the valuation of stocks. Costing more than accounting management, when it expands the scope to provide information for decision making. Draws management accounting information on both financial accounting and cost accounting records.Using non-financial performance information reporting and human activities. 

6. The long-term decisions, which provide the broad parameters for other types of programming, which is called strategic planning and external environment has been termed as states of nature. Costing system collects and analyzes data to assist strategic planning. Apart from the strategic decisions that managers make decisions that have long-term effects. Some examples are

Pricing of new products and existing products;

Developing new products for sale in existing markets;

Developing new products for new markets;

Developing new markets for existing products;

Abandoning existing products; and

Abandoning existing markets.

These decisions are taken to implement the business strategy. The accounting system provides information on the costs to facilitate the decision making process. Accounting system provides information for assessing the economics of each alternative. It should be noted that the "economy" of an alternative is just one of many factors that affect the final choice. Cost and economic issues are objective and known as quantitative factors and estimates which are subjective in nature, called qualitative factors. 

The role of accounting concepts in preparing the financial statement is very important. It not only facilitate the production of the economic situation but also ensures that the statements are correct and a standard format. n for the preparation of accounting statements, whether foreign "accounts" or internally focused "management accounts", a clear objective should be that the accounts fairly reflect the true "essence" of the business and results of operations. The theory of accounting, therefore, developed the concept of the "real picture". The true and fair view is applied to ensure and assess whether the book does reflect the business activities accurately

To support the application of the "true and fair view", accounting has adopted certain concepts and conventions which help to ensure that accounting information is presented accurately and consistently.

Accounting Conventions: 

Most commonly encountered convention is the "historical cost". This requires that transactions are recorded in the decision of the price at the time, and assets should be valued at the original price. Under the "historic cost", therefore, not taken into account price changes in the economy.

Monetary Measurement: 

Accountants do not account for the data if they can not be quantified in monetary terms. Items not accounted for (unless someone is willing to pay something for them) include things like workforce skills, morale, a leading market position, brand recognition, quality management etc. 

Separate entity: 

The Convention seeks to ensure that private transactions and matters relating to the owners of the company are separate from the transactions associated with the company. For example, an owner and the company are two separate entities and businesses should be considered as another entity. 


With this contract, the accounts recognize transactions (and any profits derived from them) point of sale or transfer of legal ownership - and not only when cash really changed hands. For example, a company making a sale to a customer can recognize that the sale when the transaction is legal - at the convention. The actual payment from the client, it can occur up to several weeks (or months) later - if the purchaser is granted a credit terms


We can see from the application of accounting standards and accounting policies, preparation of accounts involves a high degree of appreciation. Where necessary decisions about the appropriateness of this decision the book, the "importance" contract that should only be an issue if it is "important" or "material" to a user's accounts. The concept of "materiality" is an important issue for auditors of financial statements. 

Accounting Concepts: 

Four significant accounting policies supporting the preparation of any set of accounts: 

Going Concern: 

Accountants assume, unless there is evidence to the contrary, that the company is broke. This has important implications for the valuation of assets and liabilities. 


Transactions and valuation methods are treated the same way from year to year or season to season. Users of accounts can, therefore, make more meaningful comparisons of economic performance from year to year. When changing accounting policies, companies are required to disclose this fact and explain the impact of any change. 

Economic course of business accounting process that produces accounting information system used by the decision in making economic decisions and specific actions that lead to economic activities and so forth

The accounting process

Economic activities

Accounting information

Action (decisions)

Decision makers