Analysis of Adam & Co.'s Accounting Information System: A Case Study

This case study analyzes the accounting information system of Adam & Co., focusing on its centralized nature. The report details the components of the system, including data, related persons, procedures, IT, software, and internal controls. It outlines the objectives of the system, such as tracking income and expenses, providing accurate reporting, maintaining workflow, and providing tax details. The study examines Adam & Co.'s expenditure cycles, specifically the purchasing system, and how it influences payment records. The assignment aims to understand the system's role in the organizational structure and operating practices, identify and analyze different types of accounting information systems, and evaluate various accounting information systems using different methodologies.

Running head: ACCOUTING INFORMATION SYSTEM
Accounting Information System
Name of student:
Name of the University
Author’s note

1
ACCOUTING INFORMATION SYSTEM
EXECUTIVE SUMMARY:
This report is providing the complete details of Adam & Co.’s accounting information
system. The company is mainly conducted its performance through the using of centralized
accounting information system. In the first part of this report is presenting the components of
the accounting information system. Next, to such details, this report is providing the details of
objectives of such information system. Next to such objectives this report is pointing the
various expenditure cycle of Adam & Co., including the flow charts of each period.

2
ACCOUTING INFORMATION SYSTEM
Table of Contents
Introduction:...................................................................................................................4
Elements of Accounting Information system:................................................................5
Objectives of Accounting Information system:.............................................................8
Expenditure Cycles of Adam & Co:..............................................................................9
Conclusion:..................................................................................................................14
References:...................................................................................................................15

3
ACCOUTING INFORMATION SYSTEM
Introduction:
Financial statement is considered as one of the important financial component for an
organization. In case to maintain the overall financial record of an organization, it is required
to prepare a proper financial statement. In previous days the financial transactions are
maintained manually, however in the present situation due to up gradation in technology,
financial transactions can be automatically maintained (Al-Hawari 2017)
An accounting information system is generally the system, through which an
organization keep track of records in all its financial transactions properly. In the present
scenario every organization is required to maintain an effective accounting information
system so that the organization can record its each and every transaction in a proper and
chronological ordered. An information system relating to accounting is mainly represented
the financial statements of an organizations. Such accounting system is mainly conducted
through the using of bookkeeping system. In case to maintain the revenues and expenses of
an organization, such system is used to prepare income statement and for the purpose of
evaluating the assets and liabilities it’s prepare the balance sheet during the particular period
(Ali, Bakar and Omar 2016). Through the preparation of the above financial statements the
accounting information system provides proper guidance to maintain every financial
transaction and also to make an effective managerial business decisions.
An accounting information system generally divided into three categories on behalf of
accounting transactions (Nekoee, Zadeh and Moradi 2017). Those are;
Manual system: Normally the business, which is small and older, is using such system in
case to maintain company’s overall financial transactions. In such system an organization
normally keeps its records manually.

4
ACCOUTING INFORMATION SYSTEM
Legacy system: Such systems are generally customized as per the requirement of an
organization. This system is found useful for old and medium to large scale companies. This
system is normally found as difficult in case of integrating to new business due to its unique
structure (Budiarto et al. 2018). Normally this system is used the older computer languages
like DOS.
Integrated IT system: In the present scenario, due to up gradation in the financial system, a
new and innovative system is created, which is commonly known as Integrated IT system.
This system is useful for every type of organizations and it also provides some proper
structure in case to maintain overall financial transactions of an organization. In this system
normally used the Windows operating software system, which is more convenient and consist
lower cost comparing with other systems (Esmeray 2016).
Elements of Accounting Information system:
An accounting information system is generally consisting with six individual
components. Those components are used to function properly, while an organization is
maintaining its financial transactions in case to complete organization’s overall objectives
and goals. In general those components are; Data, related persons, methods, relevant
software, information technology and the internal controlling system. Those six individual
elements are influenced in case of performing and using accounting information system.
Accounting Data:
In case of performing the accounting information system, one of the important
component is the relevant accounting data, which is influenced the performance of an
organization. Today every organizations having their individual database structure system
that is normally computerized and using advanced technology while recording individual
accounting data. In case to perform efficiently an accounting system is required to used

5
ACCOUTING INFORMATION SYSTEM
various inputs and some different outputs, so that the accounting information system can be
run its function properly in case to complete overall organizational objectives (Hla and Teru
2015). The accounting data is normally representing the details of company’s revenues,
expenses, assets, liabilities, details of account payables, receivables etc. Those details are
needed to maintain by every organizations in case to evaluate overall performance during a
particular period.
Related persons:
In an accounting information system generally the related persons are representing the
users of such system. Normally an accounting information system of an organization is
generally present the overall organizations performance during a particular period. Through
the using of such system an individual person can be evaluate overall organization’s financial
condition. The related persons, who are normally using such accounting system are; the
accountant, managerial persons, consultant, business analysts, chief financial persons,
auditors and also the individual stake holders (Huerta and Jensen 2017). For each and
individual persons, an accounting information system is played an important role in case of
reflecting a proper image of the organization.
Procedures and Instructions:
Generally, an information system relating to accounting is used to present the overall
accounting information of an organization during a particular period. This system is generally
consisted the methods and procedures of collecting relevant accounting data and also the
presentations of such data. In the present scenario this system is using the online accounting
system to record all the relevant accounting data.

6
ACCOUTING INFORMATION SYSTEM
Information Technology:
An accounting information system is generally used to provide information relating to
organization’s financial conditions and overall performance. This system is mainly used for
information. In such case to provide proper and relevant data, such system is needed to use
proper technology, which is relevant and accurate as per the organizations requirement
(Khairi and Baridwan 2015). While using such technology, every organization is need to
maintain some backup plan in their information technology, so that it can be able to avoid the
problems relating to network failure, hardware crash, power failure etc.
Software System:
In the case of designing the accounting information system, the designers are
normally used different software. Through the using of proper software, the designers create
an innovative information system, which can complete overall organizational objectives.
With the using of appropriate software, an information system can efficiently and
sequentially record all the financial details. An effective accounting information system,
using such software can provide all the financial information on individual transactions.
Internal control:
Internal system plays an important role in an accounting information system.
Generally in case of an organization internal controlling system is appointed to maintain
controlling programme in overall performance of the organization. Such system is needs to be
well secured and properly maintained by the adequate persons, in case to avoid any internal
failure. Through the using of effective internal controlling system an organization can
securely performed its financial and other managerial functions efficiently (Sagala and Purba
2016).

7
ACCOUTING INFORMATION SYSTEM
Objectives of Accounting Information system:
An information system relating to accounting plays an important role, in case to
completion overall objectives of an organization. Through the using of proper accounting
information system an organization can be able to take proper managerial and other relative
decisions more efficiently. Such objectives of maintain an accounting information system are
as follows;
Use to track incomes and expense:
One of the vital objectives of maintains an accounting information system is to
provide proper details of accounting. Through the using of an effective information system an
organization is able to track all the relevant details of its accounting incomes and expenses
during a particular period. With the using of such accounting system an organization is able
to provide a snapshot of overall profit and loss statement of the organization in a particular
time period. Along with such this system is also used to provide complete details of
organizations’ assets and liabilities during a particular time (Kwarteng and Aveh 2018).
Using the tracking system an organization can properly maintain the record of individual
transactions and simultaneously it is also able to recognize the overall performance of an
organization.
Used to provide accurate reporting:
Through the using of accurate accounting report, the overall performance of an
organization can be evaluated. One of the primary roles of accounting information is to
provide the faithful representation of accounting information. With the using of proper
accounting information system an organization system is normally present the accurate data
relating to income and expenses, assets and liabilities etc. This is normally used to present the
current financial positions of the organization (Mancini 2016). In case overall profit and loss
statement shows a profit, but any one of the department is continuously presenting the loss

8
ACCOUTING INFORMATION SYSTEM
statements, that simply represent that the company may not performing well in maintain its
overall financial statements. In such case company is needed to rectify their used information
system and implement some effective and proper system in case to maintain accurate
information relating to company’s performance.
Maintain proper work flow:
Through the using of centralised accounting information system an organization is
able to maintain the proper work flow condition in an organization. With the centralized
information system every members of an organization is able to access all the relevant and
informative data easily. Such data is relating to purchase order, invoices, details of expenses
and revenues etc. during a particular time. Using such system the managerial persons are able
to understand the present financial conditions of an organization including the probable
business situation in future also (Nurhayati and Mulyani 2015). This centralized accounting
system is generally presenting a snapshot of the currency that is expected to come in and also
money that probable to going out. Moreover using the centralized accounting information
system an organization is able to maintain the proper workflow in its financial condition.
Provide tax details:
Using the centralized accounting information system an organization is able to record
all the relevant accounting information properly that normally helps in completion the overall
tax requirements of the organization. With such system the company is able to provide
maintain details accounting records, which are mandatory in case of payment, the tax
obligations of an organization.

9
ACCOUTING INFORMATION SYSTEM
Expenditure Cycles of Adam & Co:
Expenditure cycle usually is representing the overall payment details or cash outflows
details during a particular time. Through the using of the proper accounting information
system, an organization can maintain the payment or cash outflows details properly. The
company Adam & Co. normally using the centralized accounting information system for the
purpose record all the financial information. Different expenditure cycle of Adam & Co. that
influenced the overall payment records of the organization are as follows;
Purchasing system:
Purchase system is one type of process, which is used by an organization in case to
make an order and purchase of its required goods or services. In case of a manufacturing
organization it plays an important role. Through the using of such process generally an
organization order its required amount of raw materials to the supplier. In case of such
ordering process generally an organization is used many other sub-process in case to generate
a particular order (Rikhardsson 2017).
In case of Adam & co. the purchasing system is running through a long chain of
process. In the first the purchasing clerk check the inventories through the ledger account and
if he found any shortage he was used to select particular vender and issued two hard copies,
one for the vender and the other one is for the purchasing department. After the requisites
goods are arrived in the receiving department the clerk used to inspects those goods as per the
requirement. After the inspections the goods are normally send to the inventory ware housed
and the invoices are send to the payable department for clearance of payments. Through the
using of such process generally the Adam & CO. are performing its purchasing system. Such
system is presenting used a flow chart format;

10
ACCOUTING INFORMATION SYSTEM
Figure 1 : Flow chart of Purchasing System.
Cash disbursement system:
Such system is generally used to present the cash outflow system of an organization
during a particular time period. Normally the outflow is representing the payment that made
by an organization for the purpose of payment of loan, payment to the suppliers, employees’
salaries and many other reasons (Ruggeri and Rizza 2017).
In case of Adam & Co. the company is used the centralized accounting information
system that helps to provide accurate financial details in a particular time. The company is
generally after receiving the documents from the payable departments transfer the documents
to the cash disbursement clerk for filing such details in organization’s financial statements.
On the due date of payment the clerk prepares a cheque for the payment to the vendors and
sent to the treasurer for clearing the payment within a particular time. After that the cash
disbursement updates the amount of such cheque to the accounts payable account as the

11
ACCOUTING INFORMATION SYSTEM
payment is made with in a proper time. Through the using of such process generally the
Adam & CO. are performing its Cash disbursement process. Such system is presenting used a
flow chart format;
Figure 2 : Flow chart of Cash Disbursement System.

12
ACCOUTING INFORMATION SYSTEM
Payroll System:
Payment system is generally representing the details of individual payments that the
company have to make within a particular time period. Through the using of such system an
organization is normally able to make an idea about the payment structure and also the
probable payments in future (Maskell, Baggaley and Grasso 2017).
In case of Adam & Co. every employee is generally record their Woking hours with
the using of time card. The supervisors are normally used to review those time cards and
submit them to the payroll department at the end of individual week. Using the centralized
accounting information system the company is control its payroll system. After recording
such details the company make the relevant payments to each employee as per their
attendance. Through the using of such process generally the Adam & CO. are performing its
Payroll System process. Such system is presenting used a flow chart format;
Figure 3 : Flow chart of Payment System.

13
ACCOUTING INFORMATION SYSTEM
Conclusion:
An accounting information system generally plays an important role while evaluating
the overall financial position of an organization. In case to maintain the overall financial
record of an organization, it is required to prepare a proper financial statement. Through an
effective information system, such financial records can be maintained properly. In this report
presenting an overview about the accounting information systems of Adam & Co. the
company is mainly used centralised accounting information system in case to conduct its
financial operations. This report is providing the details of company’s information system
and the six different elements, which is normally used to conduct company’s financial
operation. After such elements this report is generally providing a brief idea about the overall
objectives of accounting information system. Next to such details this report is providing an
idea about the expenses cycle of Adam & co., which is normally representing the cash
outflow details of such organization.

14
ACCOUTING INFORMATION SYSTEM
References:
Al-Hawari, F., 2017. Analysis and design of an accounting information system. International
Research Journal of Electronics and Computer Engineering, 2, pp.16-21.
Ali, B.J., Bakar, R. and Omar, W.A.W., 2016. The critical success factors of accounting
information system (AIS) and it’s impact on organisational performance of Jordanian
commercial banks. Int. J. Econ. Commer. Manage, 4, pp.658-677.
Arabmazar Yazdi, M., Nasseri, A., Nekoee Zadeh, M. and Moradi, A., 2017. The Impact of
Accounting Information System Flexibility on Firm Performance with Dynamic Capabilities
Approach. Journal of Accounting and Auditing Review, 24(2), pp.221-242.
Budiarto, D.S., Prabowo, M.A., Djajanto, L., Widodo, K.P. and Herawan, T., 2018, May.
Accounting information system (ais) alignment and non-financial performance in small firm:
a contingency perspective. In International Conference on Computational Science and Its
Applications (pp. 382-394). Springer, Cham.
Esmeray, A., 2016. The Impact of Accounting Information Systems (AIS) on Firm
Performance: Empirical Evidence in Turkish Small and Medium Sized Enterprises.
International Review of Management and Marketing, 6(2), pp.233-236.
Hla, D. and Teru, S.P., 2015. Efficiency of Accounting Information System and Performance
Measures–. Int. J. of Multidisciplinary and Current research, 3.
Huerta, E. and Jensen, S., 2017. An accounting information systems perspective on data
analytics and Big Data. Journal of Information Systems, 31(3), pp.101-114.
Khairi, M.S. and Baridwan, Z., 2015. An empirical study on organizational acceptance
accounting information systems in Sharia banking. The international journal of accounting
and business society, 23(1), pp.97-122.

15
ACCOUTING INFORMATION SYSTEM
Kwarteng, A. and Aveh, F., 2018. Empirical examination of organizational culture on
accounting information system and corporate performance: Evidence from a developing
country perspective. Meditari Accountancy Research, 26(4), pp.675-698.
Mancini, D., 2016. Accounting information systems in an open society. Emerging Trends and
Issues. Management Control.
Mancini, D., 2016. Accounting information systems in an open society. Emerging Trends and
Issues. Management Control.
Nurhayati, N. and Mulyani, S., 2015. User participation on system development, user
competence and top management commitment and their effect on the success of the
implementation of accounting information systems. European Journal of Business and
Innovation Research, 3(2), pp.22-35.
Quinn, M. and Strauss, E. eds., 2017. The Routledge Companion to Accounting Information
Systems. Routledge.
Rikhardsson, P.M., 2017. Information systems for corporate environmental management
accounting and performance measurement. In Sustainable Measures (pp. 132-150).
Routledge.
Ruggeri, D. and Rizza, C., 2017. Accounting information system innovation in interfirm
relationships. Journal of Management Control, 28(2), pp.203-225.
Sagala, S.W.R. and Purba, H., 2016, October. ANALYSIS OF PURCHASE ACCOUNTING
INFORMATION SYSTEM BY USING THE COBIT FRAMEWORK 4.1 AT PT.
TELEKOMUNIKASI INDONESIA, TBK BANDUNG. In Abstract Proceedings
International Scholars Conference (Vol. 4, No. 1, pp. 30-30).