Q.What is an Accounting Information System (AIS)? Name its main components.

An Accounting Information System is the complete set-up a business relies on to turn its transactions into usable financial information.

An Accounting Information System (AIS) is the complete set-up a business uses to collect, store, process and report its financial data for the people who rely on it — owners, managers, investors, lenders and tax authorities. The accounting software described elsewhere in this chapter is the technological core of a modern AIS, but the AIS as a whole is broader than the software alone.

An AIS is generally understood to have five main components:

1. People — the accountants, data-entry staff and managers who operate the system and use its reports.
2. Procedures and instructions — the rules a business follows for how data is collected and processed, such as who must approve a transaction before it is entered.
3. Data — the actual financial facts of the business's transactions (sales, purchases, receipts, payments).
4. Software — the accounting package or programs that process this data according to accounting principles.
5. IT infrastructure — the computers, networks and storage devices the software runs on. …