Accounting Information Systems: Value Added

Accounting Information Systems: Value Added

Accounting Information systems add value by maintaining an up to date database of all a company's business transactions. From this database information from sales, purchases, and financial transactions can be retrieved to create daily, weekly, monthly reports. The information from these reports is crucial to a company because it is utilized to make executive investment decisions and forecast future goals for the firm. Without these records companies have no idea where their financial standing is and cannot accurately make decisions about future business plans. A firm would not be able to determine simple things such as if they are meeting industry demand or if they need to expand to run more efficiently.

Also, firms utilize accounting software to maintain these information systems; therefore, the accounting cycle becomes dependent upon these automated systems. A single transaction that needs to be inputted the ledger also affects the data that is inputted to the financial statements, and various account records. Because of the highly connective nature of the accounting information systems companies are dependant on their use in order to operate. Information from purchase orders is transferred to the warehouse where products are prepared for shipping. Because information is shared over a network companies are able to process things quickly and in a timely manner.

These automated systems save firms time and money. By integrating accounting practices with technology firms are able to post transactions to various ledgers with a single click. Information about invoicing, returns, and inventory is simultaneously updated as sales people access the database and input transactions. Previously when these accounting methods were paper based a written log had to maintained and an individual had to go into each separate ledger to log a single transaction. This process could take hours for a company that processes many orders a day. Because these information systems reduce the amount of hours that a firm has to spend documenting the various transactions the employees are free to complete other tasks, therefore reducing the number of employee hours that a company is billed.

The only downfall to utilizing accounting software to automate daily tasks is the initial training required by employees and extensive documentation that is required for future use.

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