Q: no.1. What are the Elements of Accounting Information System?

Answer: Accounting information systems generally consist of six primary components: people,
procedures and instructions, data, software, information technology infrastructure, and internal
controls. Below is a breakdown of each component in detail.
1. AIS People

The people in an AIS are the system users. An AIS helps the different departments within a
company work together. Professionals who may need to use an organization's AIS include:

 Accountants
 Consultants
 Business analysts
 Managers
 Chief financial officers
 Auditors

2. Procedures and Instructions

The procedure and instructions of an AIS are the methods it uses for collecting, storing,
retrieving, and processing data. These methods are both manual and automated. The data can
come from both internal sources (e.g., employees) and external sources (e.g., customers' online
orders). Procedures and instructions will be coded into the AIS software. However, the
procedures and instructions should also be "coded" into employees through documentation and
training. The procedures and instructions must be followed consistently in order to be effective.

3. AIS Data

An AIS must have a database structure to store information, such as structured query language
(SQL), which is a computer language commonly used for databases. SQL allows the data that's
in the AIS to be manipulated and retrieved for reporting purposes. The AIS will also need
various input screens for the different types of system users and data entry, as well as different
output formats to meet the needs of different users and various types of information.

The data contained in an AIS is all of the financial information pertinent to the organization's
business practices. Any business data that impacts the company's finances should go into an AIS.

The type of data included in an AIS depends on the nature of the business, but it may consist of
the following:

 Sales orders
 Customer billing statements
 Sales analysis reports
 Purchase requisitions
 Vendor invoices
  Check registers
 General ledger
 Inventory data
 Payroll information
 Timekeeping
 Tax information

The data can be used to prepare accounting statements and financial reports, including accounts
receivable aging, depreciation or amortization schedules, a trial balance, and a profit and loss
statement. Having all of this data in one place—in the AIS—facilitates a business's record-
keeping, reporting, analysis, auditing, and decision-making activities. For the data to be useful, it
must be complete, accurate, and relevant.

On the other hand, examples of data that would not go into an AIS include memos,
correspondence, presentations, and manuals. These documents might have a tangential
relationship to the company's finances, but, excluding the standard footnotes, they are not really
part of the company's financial record-keeping.

4. AIS Software

The software component of an AIS is the computer programs used to store, retrieve, process, and
analyze the company's financial data. Before there were computers, an AIS was a manual, paper-
based system, but today, most companies are using computer software as the basis of the AIS.
Small businesses might use Intuit's Quickbooks or Sage's Sage 50 Accounting, but there are
others.2  3 Small to mid-sized businesses might use SAP's Business One.4 Mid-sized and large
businesses might use Microsoft's Dynamics GP, Sage Group's MAS 90, or MAS 200, Oracle's
PeopleSoft, or Epicor Financial Management.5  6  7  8

Quality, reliability, and security are key components of effective AIS software. Managers rely on
the information it outputs to make decisions for the company, and they need high-quality
information to make sound decisions.

AIS software programs can be customized to meet the unique needs of different types of
businesses. If an existing program does not meet a company's needs, the software can also be
developed in-house with substantial input from end-users or can be developed by a third-party
company specifically for the organization. The system could even be outsourced to a specialized
company.

For publicly-traded companies, no matter what software program and customization options the
business chooses, Sarbanes-Oxley regulations will dictate the structure of the AIS to some
extent. This is because SOX regulations establish internal controls and auditing procedures with
which public companies must comply.9

5. IT Infrastructure
Information technology infrastructure is just a fancy name for the hardware used to operate the
accounting information system. Most of these hardware items a business would need to have
anyway and can include the following:

 Computers
 Mobile devices
 Servers
 Printers
 Surge protectors
 Routers
 Storage media
 A back-up power supply

In addition to cost, factors to consider in selecting hardware include speed, storage capability,
and whether it can be expanded and upgraded.

Perhaps most importantly, the hardware selected for an AIS must be compatible with the
intended software. Ideally, it would be not just compatible, but optimal—a clunky system will be
much less helpful than a speedy one. One way businesses can easily meet hardware and software
compatibility requirements is by purchasing a turnkey system that includes both the hardware
and the software that the business needs. Purchasing a turnkey system means, theoretically, that
the business will get an optimal combination of hardware and software for its AIS.

A good AIS should also include a plan for maintaining, servicing, replacing, and upgrading
components of the hardware system, as well as a plan for the disposal of broken and outdated
hardware, so that sensitive data is completely destroyed.

6. Internal Controls
The internal controls of an AIS are the security measures it contains to protect sensitive data.
These can be as simple as passwords or as complex as biometric identification. Biometric
security protocols might include storing human characteristics that don't change over time, such
as fingerprints, voice, and facial recognition.

An AIS must have internal controls to protect against unauthorized computer access and to limit
access to authorized users, which includes some users inside the company. It must also prevent
unauthorized file access by individuals who are allowed to access only select parts of the system.

An AIS contains confidential information belonging not just to the company but also to its
employees and customers. This data may include:

 Social Security numbers

 Salary and personnel information
 Credit card numbers
 Customer information
 Company financial data
  Financial information of suppliers and vendors

All of the data in an AIS should be encrypted, and access to the system should be logged and
surveilled. System activity should be traceable as well.

An AIS also needs internal controls that protect it from computer viruses, hackers, and other
internal and external threats to network security. It must also be protected from natural disasters
and power surges that can cause data loss.

Q: no.2. What is difference between AIS and MIS?

AIS stands for Accounting Information System and MIS for Management Information System.
In summary, there is no AIS without MIS. However, there are key differences between AIS and
MIS.
AIS is a subset of MIS. The Accounting Information System is a Subset of the Management of
Information System. This simply means that a firm’s AIS is structured and made available in the
Management Information System. When salaries are to be paid, the employee in charge will
source for staff data in the MIS to pay to post the entry for it.
AIS focuses on Financial transactions. Generally, and also from the definition of AIS, this
term is based on financial transactions and non-financial transactions that are related to the
financial transactions. However, an MIS is totally based on nonfinancial transactions.
AIS provides information to a wide range of users than MIS. AIS information is made
available to a wide range of users. Management, employees, banks, government, (internal and
external users) and so on using the information provided in AIS. However, management is the
major user of MIS information.

AIS relies on the information available in the MIS. AIS is a subset of MIS. Without MIS, it
might be impossible to compute information in the AIS. For example, customer information is
available in the MIS system. To compute transactions in the Transaction processing unit of the
AIS, the employee authorised to carry out such task will source for the customer’s information in
the MIS database.

The AIS provides tax returns data and financial reports for management and other users.
The Management Information System can never provide tax returns information and financial
reports that are made available to tax authority and management, respectively. But, AIS does! In
most digital AIS systems, the data is automatically generated.
Q: no.3. What are the three cycles of transaction processing system?
Three transaction cycles process most of the firm’s economic activity: the expenditure cycle, the
conversion cycle and the revenue cycle. These cycles exist in all types of businesses- both profit
seeking and not-for-profit types. For instance, every business (1) incurs expenditures in exchange
 for resources (expenditure cycle) (2) provides value added through its products or services
(conversion Cycle), and (3) receives revenue from outside sources (revenue cycle).
1. Business activities begin with the acquisition of materials, property, and labor in
exchange for cahs-the expenditure cycle.
2. The conversion cycle is composed of two major subsytems: the production
susyem and the cost accounting system. The production system involves the
planning, scheduling, and control of the physical product through the
manufacturing process and the cost accounting system monitors the flow of cost
information related to production.
Firms sell their finished goods to customers through the revenue cycle, which involves
processing cash sales, credit sales, and the receipt of cash following a credit sale. Revenue cycle
transactions also have a physical and a financial component, which are processed separately.
What are the characteristics of good and useful information?
Accessible: available to users when they need it and in a format they can use
Verifiable: two independent, knowledgeable people produce the same information.
Understandable: presented in a useful and intelligible format.
Timely: provided in time for decision makers to make decisions.
Complete: does not omit important aspects of the events or activities it measures.
Reliable: free from error or bias; accurately represents organization events or activities.
Relevant: reduces uncertainty, improves decision making, or confirms or corrects prior
expectaions.
What are three roles of accountant in information sytem?
What are two types of Ledger and General?
Ledger – Ledger is divided into two types – Nominal Ledger and Private Ledger. Nominal ledger
gives information on expenses, income, depreciation, insurance, etc. And Private ledger gives
private information like salaries, wages, capitals, etc.
There are two types of the journal:
 General Journal: General Journal is one in which a small business entity records all the
day to day business transactions.
 Special Journal: In the case of big business houses, the journal is classified into
different books called as special journals.
What is Audit trail and Digital Audit Trail?
 An audit trail (also called audit log) is a security-relevant chronological record, set of records,
and/or destination and source of records that provide documentary evidence of the sequence of
activities that have affected at any time a specific operation, procedure, event, or device.
A digital audit trail contains the entirety of records that document each step in a business
transaction. It includes essential financial information, such as invoices and receipts. It also
includes associated contracts, payroll records, and all things related to a business and its
transactions.
What is natural and artificial?
An artificial system of classification is based upon one or a few easily observable characteristics
and is devised and used for a limited purpose where convenience and speed are important. ... On
the other hand, the natural system of classification is based on a large number of characters.
What is financial information System?

A financial information system is an organized approach to collecting and interpreting

information, which is usually computerized. A well-run financial information system is
essential to a business, since managers need the resulting information to make decisions
about how to run the organization. This system can be used in many ways, including the
following:

 Ensure that there are sufficient funds on hand to pay for obligations as they come due
for payment

 Put excess funds to use in appropriate and reasonably liquid investments

 Determine which customers , products, product lines and subsidiaries are the most
and least profitable

 Locate the bottleneck areas within the business

 Determine the maximum amount of funds that can safely be distributed to investors
in the form of dividends

 Determine the maximum debt load that the organization can sustain

What is business ethics?

Business ethics is the study of appropriate business policies and practices regarding potentially
controversial subjects including corporate governance, insider trading, bribery, discrimination,
corporate social responsibility, and fiduciary responsibilities. The law often guides business
ethics, but at other times business ethics provide a basic guideline that businesses can choose to
follow to gain public approval.

What is revenue cycle and expenditure cycle and its sub-systems?

Firms sell their finished goods to customers through the revenue cycle, which involves
processing cash sales, credit sales, and the receipt of cash following a credit sale. Revenue cycle
transactions also have a physical and a financial component, which are processed separately.

The two subsystems of the revenue cycle are sales order processing and cash receipts. In the
sales or-derprocessing subsystem, the sales order is processed, credit granted, goods are
shipped, customer is billed,and related files updated (sales, accounts receivable, inventory, etc.).
In the cash receipts sub-system, cash is collected and deposited in the bank and files updated
(cash, accounts receivable, etc.)
Business activities begin with the acquisition of materials, property, and labor in exchange for
cahs-the expenditure cycle.

Expenditure Cycle subsystems: Purchasing/Accounts Payable, Cash disbursements, Payroll, and

Fixed assets.