Overview of an accounting information system

DEFINITIONS of Accounting Information System 

• It consist all the functions and procedures for recognizing transactions and recording, processing, and reporting the data representing them. 

• It is the method a business uses to process its data through the accounting cycle. 

• It is the most significant aspect for providing and communicating financial accounting information.

• It is an orderly, efficient scheme for providing accurate financial information and controls.

KINDS

• Manual Accounting System  – The processing of data that are handwritten in journals, ledgers, and financial statements.

• Mechanical Accounting System  – The processing of data performed manually with the use of office machines and labor saving devices. 

• EDP Accounting System – The processing of data with the use of accounting program or software and electronic computers.

COMPONENTS

• Forms – are the source documents on which the data is recorded. Examples: invoices, checks, journals, etc.

• Equipment – are the devices, furnitures, fixtures and machines used in accounting.

• Procedures and Flowcharts – series of operations or steps that must be performed to complete tasks.

• People – the people who are involved in accounting.

SYSTEMS DESIGN 

When designing an accounting system, the following must be considered:

• Accounting Policies – the SME Financial Reporting Standards, policies and procedures adopted by the company.

• Chart Of Accounts – the systematic arrangement and codification of accounts.

• Source Documents – the forms in which the data originated.

• Books Of Accounts (Journals and Ledgers) – the books where the business transactions are recorded.

• Flowcharts – the diagram illustration of processes and work flows involved in accounting. 

• Financial Statements – the financial reports which are the finish or end-product of Financial Accounting and Reporting.

• Schedules – the supporting computations of a particular reporting requirement.