INTRODUCTION TO ACCOUNTING

Introduction To Accounting Information Systems

An accounting information system is a way of tracking all accounting activity in a business. There are six included elements: people, procedures and instructions, data, hardware, software and internal controls.

The system users are people, such as accountants and business analysts. An AIS provides different departments with easy access to the same information. For example, when sales are made, sales people enter customer orders, accounting invoices customers, the warehouse assembles the order, shipping sends it, and accounting gets a new receivable.

The procedures and instructions are the methods an AIS uses to collect, store, retrieve and process data. The data can come from internal sources, like employees, or external, such as online orders.

The data is all pertinent financial information to an organization’s business practices. That includes sale orders, billing statements and sales analysis. Having it all in one AIS facilitates recordkeeping and other important functions.

Information technology infrastructure is a fancy term for the hardware an AIS uses.

Before computers, AISs were manual, paper-based systems. Today, most companies use software such as Intuit’s Quickbooks or Sage Peachtree. Software can be customized to meet unique needs, but quality and security are crucial.

And internal controls are the security measures that protect sensitive data. These can be as simple as passwords, or as complex as biometric identification.

What is accounting?

What is accounting?

Accounting is the art of recording, summarizing, reporting, and analyzing financial transactions. An accounting system can be a simple, utilitarian check register, or, as with Microsoft Office Accounting, it can be a complete record of all the activities of a business, providing details of every aspect of the business, allowing the analysis of business trends, and providing insight into future prospects. Bookkeeping is the practice of recording transactions. Bookkeepers tend to focus on the details, recording transactions in an efficient and organized manner, and they may or may not see the overall picture. Accountants use the work done by bookkeepers to produce and analyze financial reports. Although accounting follows the same principles and rules as bookkeeping, an accountant can design a system that will capture all of the details necessary to satisfy the needs of the business — managerial, financial reporting, projection, analysis, and tax reporting. A good accountant will create a system of financial reporting that gives a complete picture of a business. By using Office Accounting, you can work with your accountant to set up your accounting system to meet the needs of your business. You can then enter transactions and generate reports — all the bookkeeping tasks and some accounting tasks, such as generating reports that you might previously have relegated to your accountant. Recording, summarizing, reporting, and analyzing Recording transactions includes documenting revenues (by invoices or sales receipts), and entering purchases (in the account payable account) and expenditures (in the check register). Using Office Accounting, the small business owner can move beyond daily recording to higher level accounting tasks, such as recording sales orders, tracking prospective customers, and projecting sales opportunities and cash flow. Calculating and summarizing transactions in a traditional accounting system is a tedious process. Microsoft Office Accounting frees you from these repetitive tasks by calculating and summarizing hundreds or thousands of individual transactions and generating reports to satisfy managerial, governmental, investing, or banking needs. Based on a generally accepted standard, these reports are powerful tools to help the business owner, accountant, banker, or investor analyze the results of their operations.