Question

Identify the basic concepts of an accounting information system and describe the nature and purpose of a subsidiary ledger.

Answer 1

Accounting Information System is popularly known as AIS. It refers to s system or structure where al the financial data can be collected, stored, managed, retrieved, in order to assist accountants, analysts, consultants, managers,Chief Financial officers, auditors to arrive at the exact information they require. Basically there are six primary components in an AIS,which starts with People, followed by Procedures and Instructions, data, software, IT Infrastructure and Interna controls.

The component of People refers to the persons using infomation provided by AIS. AIS has a system which can be configured to provide access to consultants required to analyse the pricing strateegy of te company by looking through the cost data,sales data etc..where as auditors are required to see the compliace with Internal controls and sarbanes-oxley act. AIS provides is a system designed to meet the needs of the people and conect all the persons and use them for the improvement of business ad the organisation.

The component of Procedures and instructions looks after the methods involved in the above said processes such as storing, collecting etc..Instructions refers to how the information comig from both outside and internal resources can be made available to the employees.

Basically the data contained in the AIS belongs to Accounting and the financial aspects of the organisation's business. The data in the databases are stored in Sructured Query Language. The data contained in the data base changes depending on the nature of the business.

Software can be simply explained as computer programs which provides the information such as uickbooks, Tally, SAp and other ERP's. The most important ualities that a well maintaied should consist of are Quality, reliability, Security against tampering of Information.

The keycomponents that a good IT Infrastucture should have are speed, compatability, storage capacity and extendability. Generally IT Infrastructure means the hardware that an organisation should have like backup power supply, storage media,routers, surge protectors, printers etc.

Internal controls in IT Environment reates to internal or External threats from viruses and also controls established to protect the data from the natural disasters, power surges and also protecting the confidential and sensitive data. Controls established to restrict the usage of all the information by all the users in the sense, only the required part of the information should be accessibe by the required person.

Nature and purpose of a Subsidary Ledger:

Subsidary ledger can be described as supporting ledger to a general ledger. For Example, In case of trade payables edger which is a general ledger, Subsidary ledger contains details showing in regard to a particular payables when the goods are ordered, when they are received, Within what period payment has to be made etc.