Accounting information system (AIS)

Definition

An Accounting Information System (AIS) is a structured mechanism for collecting, storing, and processing financial and accounting data used by decision-makers. It combines traditional accounting practices with modern information technology to ensure accuracy and efficiency in financial reporting.

5 Must Know Facts For Your Next Test

1. AIS integrates software, hardware, and network components to facilitate the management of accounting activities.
2. Key components include people, procedures, data, software, IT infrastructure, and internal controls.
3. AIS helps in generating reports that comply with regulatory standards such as GAAP or IFRS.
4. Security measures in AIS are critical to protect sensitive financial information from unauthorized access.
5. The system assists in automating tasks like payroll processing, invoicing, and inventory management.

Review Questions

• What are the key components of an Accounting Information System?
• How does an AIS contribute to regulatory compliance?
• Why is security important in an Accounting Information System?

Related terms

General Ledger:

A complete record of all financial transactions over the life of a company.

Enterprise Resource Planning (ERP):

Integrated systems used by organizations to manage business processes across functions including finance.

Internal Controls:

Procedures and mechanisms implemented within an organization to safeguard its assets and ensure accurate financial reporting.