Accounting Information System Report: Adam & Co. Analysis

This report presents a detailed analysis of the accounting information system (AIS) used by Adam & Co. It begins with an executive summary and introduction, defining the role and importance of an AIS in maintaining financial records. The report then explores different categories of information systems, including manual, legacy, and IT-oriented systems, highlighting their characteristics and applications. Key principles of an effective AIS are discussed, such as control, relevance, compatibility, flexibility, and safety. The report further outlines the implementation procedures for an AIS, encompassing requirement analysis, system design, documentation, testing, training, and data conversion. The expenditure cycle of the AIS at Adam & Co. is examined, particularly focusing on the purchasing system and its impact on the company's financial operations. The analysis includes the roles of purchasing clerks, store ledger books, and inventory management. Finally, the report concludes by summarizing the key findings and implications of the AIS analysis.

Running head:ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Name of student:
Name of the University
Authors’ note

1ACCOUNTING INFORMATION SYSTEM
EXECUTIVE SUMMARY:
This report is presenting the details of accounting information system of Adam & Co. In the
first part of the report is presenting the different categories of information system. Next to
such details, this report is providing the main principles of implementing such system. After
such principles this report is providing the details of implementation procedures that need to
be follow by an organization in case of implementing an effective information system.

2ACCOUNTING INFORMATION SYSTEM
Table of Contents
Introduction:...............................................................................................................................3
Principles of Accounting Information System:..........................................................................4
Implementation of accounting information system:..................................................................6
Expenditure cycle of Accounting Information system:.............................................................9
Conclusion:..............................................................................................................................14
References:...............................................................................................................................15

3ACCOUNTING INFORMATION SYSTEM
Introduction:
Generally information system is used to present any information relating to a
particular topic. In the other words, through the using of an information system an
organization can able to record all the relevant data as per organizations’ requirement. Such
information systems are, accounting information system, management information system,
cost information system and others (Abdulle 2019).
An accounting information system is one type of information system which is
generally used by the organization in case to maintain its financial transactions properly and
in efficient manner. Through an effective accounting information system, an organization is
able to evaluate its financial position during a particular time (Ahmad 2019). Generally, an
accounting information system is starting it performance through the bookkeeping system.
Bookkeeping is normally the procedure of recording each and individual transactions relating
to accounting in efficient and chronological order. In case to maintain the overall revenues
and expenses, an organization is normally use to prepare income statement (Bataineh and
Bataineh 2018). Through the preparation of income statement an accounting information
system is generally providing the snapshot of company’s profit or loss positions during a
particular time. In case to maintain and evaluating the overall assets and liabilities of the
organization, the information system is generally used to through the balance sheet during a
particular time period. Along with those an accounting information system is also provides
the necessary financial details of an organization in case to maintain every individual
financial transaction efficiently, so that the overall organizational goal can be completed
(Amanamah, Morrison and Asiedu 2016). Three different categories accounting information
system is available on behalf of organizations’ structures. Those are as follows;

4ACCOUNTING INFORMATION SYSTEM
Manually information system: such system is normally used by small and old organization
in case to maintain their financial information. In such system normally an organization is
used to record its financial transactions without any technical helps and completely with the
help of man power.
Legacy information system: Those are the system, which is generally used by old and
medium scale business organizations. This system is customized on behalf of organizations’
capacity. Such system is found difficult in case to implement for new organizations because
of its unique structures.
IT oriented system: Due to implementation of new technology in case of accounting
information system, this new form of information system was commenced. In this system the
integrated form of technology was used that influenced the overall organizational
performance. Such system is applicable for every type of organizations due to its flexible
nature. In this system normally used the Windows operating system, which is consist low
budget and more convenient comparing with other systems.
Principles of Accounting Information System:
The primary purpose of implementing an effective accounting information system is
to collect data from individual transactions, prepare such relevant data and produce a useful
information report in case to provide proper helps to the managerial department for decision
making purpose (Andrei Gâlmeanu and Radu 2018). Though the primary objective is to
present the relevant accounting information accurately, however, the company have some
other goals in the case to maintain such a system. Such principles are as follows;
Principle relating to control:

5ACCOUNTING INFORMATION SYSTEM
In an information system normally five different principles are exists. One of the
important principles of information system is the controlling. Generally all the accounting
information systems having some effective control process, which is used to maintain
organizations’ financial objectives. In an information system internal controls are normally
the procedure, which is used to monitoring the overall performance of the company during a
particular period (Bai Koveos and Liu 2018).
Principles relating to relevance:
In case of information system the organization is need to maintain proper relevance
while recording individual financial transactions. Such information are need to be useful and
relevant for overall organizations objectives. Through the using of relevant accounting
information system an organization is able to presenting individual financial transactions in
an efficient manner
Principle relating to Compatibility:
Such principles is representing that the system is need to be accurate and effective as
per management requirement. An Accounting software system is needed to perform and
maintain its capabilities according to the expectations of the management. With the using of
such principle in an accounting information system an organization’s mirror image is
normally reflected in the managerial report (Dooley 2018).
Principle of Flexibility:
Normally an information system needs to be flexible according to the requirement of
an organization. With the continuous changing in financial conditions, an organization needs
to implement some flexible information system. In the case of maintaining an effective

6ACCOUNTING INFORMATION SYSTEM
accounting information system, every document needs to be securely recorded in the
financial statements (Jing 2015).
Principle of Safety:
For an accounting information system safety is one of the important principles that
influenced the overall performance of an organization. Generally, for every organization, it is
vital to maintain some proper security while recording individual transactions. With the
appropriate security structure, an organization can maintain the safety of an organization's
records.
Implementation of accounting information system:
An accounting information system plays an important role in case of evaluating the
overall performance of an organization. Such information system can be implemented
through some different procedures. With the help of such procedures the organizations select
an effective information system through which an organization can complete its overall
organizational objectives (Kothari 2019). Such implementation procedures of a useful
accounting information system are as follows;
Requirement analysis:
Before implementation of any solution, need to understand the various problems. In
case of an organization before implementing the accounting information system the
organization needs to know the requirement of such particular system. An organization
should select the information process through the detail analysis of organizations’ structure,
its transactions and many other things that probably influenced in case of implementing an
accounting information system (Muda et al. 2017).

7ACCOUNTING INFORMATION SYSTEM
Design of selected system:
After the analysis of each and individual factors that probably influenced in case of
implementation of accounting software system an organization need to select the design of
such system so that it can able to complete the overall managerial requirement. Such design is
consist with software, which is generally helps to maintain the track of records relating to
financial transactions.
Once the designing procedure is implemented, the organization is needs to create
detailing the requirement and fundamental design. After completion of such fundamental
requirements the organization is need to start the procedure of using accounting information
system through the way of documentations (Nguyen 2016).
Proceeds Documentations:
After the implementation of designing process the next of using such process is the
documentations. This is generally the process of recording or detailed instructions of
handling such information system. Most of documentations are online and it is quite helpful
for an organization if the organization used the help instructions in such software. The
documentation process is generally tested during the training process so that the organization
can be run smoothly (Prasetya and Utama 2019).
Testing:
Like other programmes, every system is needed to test properly before implementing
in an organization. All the input and output device of an information system are thoroughly
tested with the using of documentation process. On behalf of testing the reports are reviewed
and verified, so there are no chances of implementing ineffective accounting information
system can be occurred. Most of organizations are implemented the information system

8ACCOUNTING INFORMATION SYSTEM
without any single testing and for such they even face many different problems. The
documentations and methods that need to follow can be modified by an organization during
the period of its processing. All the necessary steps of using such information system are
normally need to test in such process and also need to provide a verified report for such.
Process of Training:
Before launching an accounting information system the organization needs to provide
proper training session for the users’ of such system. That means the organization is needed
to appoint a trainer who will provide proper guidance for using such system in an efficient
and co-ordinated manner. The procedures of such system are needed to be updated during
such training sessions. With the proper training process the user of such information system
can easily used such system as per the organizations requirement for the purpose of
completion the overall organizational objectives (Rikhardsson 2017).
Conversions of Data:
After the completion of training session an before launched the accounting
information system, an organization is needed to developed the tools relating to accounting
system. Through the development of system tools, the present data processing systems are
upgraded with the new system, so that the organization can be able to perform its functions
properly.
System Launch:
After the completion of above mentioned procedures the accounting information
system is generally implemented in an organization. The entire organization is aware about
the implementation of such system and also about the process of performance such system.

9ACCOUNTING INFORMATION SYSTEM
System tools:
In an accounting information system generally the tool is representing the elements
through which an information system conducts its performance. In the present situation due
to the implementation of online information system all the procedures of maintenance such
systems are conduct through the online access. Such tools are normally used to document all
the relevant transactions in an efficient manner, so that the overall organizational objectives
can be fulfilled (Taiwo 2016).
Support system:
An accounting information system is generally implemented for the purpose of
managerial decisions. Through the using of such system an organization is able to track all
the relevant financial transactions in a chronological manner, which is influenced the overall
performance and decisions of an organization. In the other words as an ultimate benefit of
using an accounting information system is to provide proper managerial help to make
effective business decisions.
Expenditure cycle of Accounting Information system:
In an accounting information system the expenditure cycle is generally presenting the
cash outflows during a particular period. In the other words such system is presenting the
individual details of every small transactions for which organizations’ liquidity conditions is
going to reduced and organization’s overall expenses amounts are increased. In case of Adam
& Co. the company used centralized accounting information system, in such system a single
or small transaction can be affecting the overall performance of the organization. In case of
expenditure cycle that probably can influenced the overall expenses structure of Adam & Co.
are as follows;

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Expenditure cycle system relating to Purchase:
A purchasing system normally used to present the purchase structure of an
organization. Normally this system is used to provide the details of purchasing condition and
purchasing system in an efficient manner. This system is started with the purchasing
requisition order and ends with the completion of purchasing goods. Through the using of
such system an organization is purchased its required amount of goods from its vendors and
concluded with payment of relevant amount to individual vendors (Rikhardsson 2017).
The information system of Adam & Co. is normally the centralized processing system
and one single transaction can affect the whole system in a certain. In case of use the
purchasing system, the organization is mainly used the chain system to perform individual
performances in an efficient manner. At the first a purchasing clerk will check the store
ledger book along with the physical cheek of inventories. If he found any stocks shortage in
inventories, he will informed to the vendors along with a purchase requisition orders. He will
issue two different hard copies of purchase requisition orders, one for the vendors and the
other one for the purchasing department. After receiving the goods from vendors the purchase
department will cheek every goods as per their requirements and transfers such goods to the
store department later. After the completion of inspection procedures the invoiced were send
to the payment department for the purpose of clearing the due amount for payments.

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Figure 1 : Flow chart of Purchasing System.
Expenditure cycle system relating to cash disbursement:
A cash disbursement system is normally used to present the payment structure of an
organization. Normally this system is used to provide the details of payment condition and
the financial position of the company during a particular time. In such process this system is
The budget should
be check and
prepare should be
specification
A requisition for
purchase has to be
prepare
Requisition of
check and
authorization
Obtain
quotations
Panel of purchasing
(selection of supplier)
Purchase order
issued
Goods received Check receive
invoice
Preparation and
authorization of
payment voucher
Payment of
suppler invoicePayment entered in cash
book

12ACCOUNTING INFORMATION SYSTEM
keep maintain the individual details of every required payment details that an organization is
needed to maintain properly (Prasetya and Utama 2019).
The information system of Adam & Co. is normally the centralized processing system
and one single transaction can affect the whole system in a certain. In case of use the cash
disbursement process in interlinked with other processing system, such as the purchasing
system. Adam & Co. generally after receiving the individual payment details from each
departments, the cash disbursement clerk is generally recording such details in a
chronological ordered based on their payment due dates. On the due dates the clerk issued
individual cheques with relevant amount for individual creditors. After issued the cheques the
clerk sends them to the payment department for clearance. This is the procedure that was
generally followed by the cash disbursement department.
Figure 2 : Flow chart of Cash Disbursement System.

13ACCOUNTING INFORMATION SYSTEM
Expenditure cycle system relating to payroll system:
A payroll system is normally used to present the individual payment structure of an
organization. Normally this system is used to provide the details of payment condition and
the financial position of the company during a particular time. With the using of such system
an organization is able make an idea about the individual payment details that company have
to pay their creditors and others (Rikhardsson 2017).
The information system of Adam & Co. is normally the centralized processing system
and one single transaction can affect the whole system in a certain. In case of use the payment
to employees the organization is normally used the time card system, to measure the payment
details. The supervisors are normally used to review those time cards and submit them to the
payroll department at the end of individual week. After the completion individual working
hours the payment department generally paid their due amounts to individual employees.
This is the procedure that was generally followed by the payroll department.
Figure 3: Flow chart of payroll system.

14ACCOUNTING INFORMATION SYSTEM
Conclusion:
It can be concluded that this report is presenting the details of accounting information
system of Adam & Co. in the first part of the report is presenting the different categories of
information system. Next to such details, this report is providing the main principles of
implementing such system, so that an organization can achieve its overall organizational
goals and objectives. After such principles this report is providing the details of
implementation procedures that need to be follow by an organization in case of implementing
an effective information system. At the ending part this report is providing the impact of
centralized accounting information system over its expenditure cycle.

15ACCOUNTING INFORMATION SYSTEM
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