Accounting Information System
Accounting Information System
The technique and system of keeping and updating of business accounts and transactions with the help of computers and accounting software is called Accounting Information System. There are several types of business transactions such as sales, purchases, debts, tax and expenses. Due to laws and standards of accounting, it is compulsory for all kinds of businesses to maintain their accounts throughout their accounting year to produce accounting statements. Balance Sheet, Income Statement and Cash Flow statements are few examples of accounting statements. (Gangolly, 2000)
Few years before most of the companies and businesses were hiring accountants to maintain their accounting system but now in small and mid-size businesses the need of accountants had to decrease. The introduction of computers and several types of accounting software in small and mid-size businesses reduced the importance of accountants in maintenance of accounts. Today everyone knows the use of computers. Therefore, owners of small and mid-size business invest some amount of money on the installation of computer technology and accounting software in their business and eliminate the expenses of paper work and extra staff for accounting.
Today most of the businesses are using computers and accounting software. This new technique of maintaining business record is very economical and secure. According to some well-known members of computer industry this time period is the best period for small and mid-size business because small and mid-size businesses cannot afford to spend a huge amount of money to save and maintain their business records. The development of different computers such as mini, mainframe and desktop computer reduces the expense of business. It is in the view that all businesses pay huge amount of money to their accountants to maintain their accounts. However, implementation of computers in small and mid-size business allows owners of business to reduce their expense and use their money in other investments. It is not compulsory to have the knowledge to programming languages to work on the computers in business. Different accounting software such as MYOB and UBS provide very friendly and easy user interface as compare to programming languages like C++, JAVA and SQL. Therefore, the Accounting Information System is useful for those small and mid-size businesses who want to keep an accounting system simple, fast and secure within their financial limits. (Henson, 2006)
One disadvantage of Accounting Information System is that this system cannot identify any future loss or wrong transaction entry. As we know that computer is a machine, and it cannot do any activity itself. Therefore, computer cannot give any advice or warning. However, accountants in business are capable to estimate any future loss on the basis of their knowledge and experience. Due to this disadvantage it is important and wise for small and mid-size businesses to have some accountants in their business on permanent basis to avoid future losses.