Accounting Information System (AIS)

An Accounting Information System (AIS) is the broader concept of which a computerised accounting system is one practical form. An AIS is the entire combination of people, procedures, hardware, software, data and internal controls that a business uses to collect, record, store and process financial data, and to communicate the resulting information to the people who need it for decision-making — owners, managers, creditors, tax authorities and investors alike.

How data moves through an AIS — the data-processing cycle:

1. Input. Source documents (invoices, bills, vouchers) are collected and the underlying data is captured — either keyed in manually or captured electronically (a bar-code scan, an online payment confirmation).
2. Processing. The captured data is classified, sorted, calculated and posted according to accounting rules — for example, a sales invoice is posted to the customer's account and to the sales account simultaneously.
3. Storage. The processed data is stored in files/databases so that it can be retrieved and reused later — this is what makes it possible to generate a trial balance for any date, not just the day the data was entered.
4. Output. The stored data is converted into reports the end-user actually needs — a trial balance, a profit and loss account, a balance sheet, a stock statement, a GST return. …