Ams

ACCOUNTING
MANAGEMENT SYSTEM
Presented By:
Rabbia Saeed 2014-ag-5792
Inaam.ul.haq 2014-ag-5795

LEARNING OBJECTIVES
• What is Accounting management system(AMS)?
• What is AIS?
• Objectives of AIS
• Components of AIS
• Functions of AIS
• Information provided by AIS
• AIS SubSystem
• Benefits of AIS
• AIS Software

WHAT IS AMS?
• One simple definition of management accounting is the
provision of financial and non-financial decision-making
information to managers.
• Accounting Management is the practical application of
management techniques to control and report on the financial
health of the organization. This involves the analysis, planning,
implementation, and control of programs designed to provide
financial data reporting for managerial decision making. This
includes the maintenance of bank accounts,
developing financial statements, cash flow and financial
performance analysis.

WHAT IS AIS?
The Definition of Accounting Information System
Accounting is a system to record the financial events of
the organization in order to report these financial
activities to stakeholders. According to ASOBAT and
GAAP, accounting system should provide information to
assist management in planning and decision making.
Therefore, accounting is as an information system which
has two domains; external financial reporting and
management reporting.

ACCOUNTING INFORMATION
SYSTEM(AIS)
• Collection of data and processing procedures.
• Creates needed information for users.
• AIS don’t just support accounting and finance business processes. They often
create information that is useful to non-Accountants
• Finance: cash forecasts and actual payment and receipt information.
• Marketing: Sales, summary analysis, cost information, and sales forecasts.
• Human Resources: payroll analysis( including employee benefit information) and
projections of future personnel costs.
• Production: inventory summaries and product cost analysis

OBJECTIVE OF AIS
• To provide reliable accounting information to different users.
• Supporting routine activities
• To meet statutory reporting needs of an enterprise.
• To protect the enterprise from the possible risk of misuse of accounting data.

MAIN COMPONENTS OF AIS
Accounting information systems are composed of six main components:
• People: users who operate on the systems
• Procedures and instructions: processes involved in collecting, managing and
storing the data
• Data: data that is related to the organization and its business processes
• Software: application that processes and analyze the data
• Information technology infrastructure: the actual physical devices and systems
that allows the AIS to operate and perform its functions
• Internal controls and security measures: what is implemented to safeguard the
data

RESPONSIBILITIES OF AIS
1. Data Collection
It collects and stores data about
activities and transactions.
Receiving and keeping data about
the activities and transactions, so
that the organization is able to
assess what happened.

2. Data Processing
It processes data into information
that is useful for making decisions.
Converting data into information that
is useful for decision making and helps
management for planning,
implementation and monitoring of
activities.

3. Provide Control
It provides adequate controls to safeguard
the organization’s assets.
 Ensure that the information produced by
the system is reliable.
 Ensure that business activities are
performed efficiently and in accordance
with management’s objectives.
These controls ensure that data are
available when they are needed and they
are correct.

INFORMATION PROVIDED BY AIS
AIS provide management with information useful for decision making.
1. FINANCIAL STATEMENTS
The preparation of financial statements consists of a sequence of activities.
Different Financial statements are:
Income statement
Balance sheet
Statement of changes in equity
Cash Flow statement

INCOME STATEMENT
• Also called statement of revenue & expense
• Also called profit and loss report

BALANCE SHEET
• Also called statement of financial position

2. MANAGERIAL REPORTS
• The AIS must also be able to provide managers with detailed operational
information about the organization’s performance.
• What reports does management need?
 Inventory status
 Budgets
 Performance reports

3. OTHER OUTPUT DOUCUMENTS
 Customer invoice
 Material purchase order
 Pay cheques

AIS SUBSYSTEMS
• In order to explain how accounting information system could achieve the
mentioned goals, it is needed to classify organizations’ activities into five main
cycles which are the subsystems of AIS:
• 1. Expenditure cycle which consists of activities that involve the buying and paying
for goods and services used by the organization.
• 2. Production cycle which includes activities which convert raw materials and labors
to the finished products.
• 3. Human resources cycle which consists of activities that are involved in
employing and paying staff salaries.
• 4. Revenue cycle which includes sales of goods or services or receiving the cash.
• 5. Financing cycle which includes activity that provides the funds needed for
operations.

BENEFITS OF AIS
• Businesses use accounting information systems to make their
accounting activities easier, quicker, and more accurate.
• Allows to safe time of employees and avoid mistakes
• Implementation of such system requires investment and time
to be spent on the implementation, however future benefits are
much higher that the expenses incurred.
• Helps the company forecast sales, profits, loss.
• Make it easier to compile financial data for use in taxes,
payroll, and other bookkeeping requirements.

BENEFITS OF AIS
• It helps in having complete record of business transactions.
• It gives information about the profit or loss made by the business
at the close of a year and its financial conditions. The basic function
of accounting is to supply meaningful information about the
financial activities of the business to the owners and the managers,
that help making economic decisions.

SOFTWARE FOR AIS
Software Vendor
Oracle Financial Oracle
Microsoft Dynamics Microsoft
AccountingXpert Micronetics
Accounting By Wave Wave Apps
QuickBooks Intuit
Sage 50c Sage Software
SAP Financial SAP

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