Accounting Information

Question: Discuss about the Accounting Information Syatems ? Answer: Accounting Information Systems These are well-structured information systems which deal with the economic events occurring in business. It identifies measures and communicates information to permit judgements and decisions by both internal and external users. It has the following objectives: To meet the constitutional reporting needs of the business. To provide consistent accounting information to appropriate users. To protect the business with a significant risk of data abuse. According toMoghadam and et.al.(2013) components of AIS are input, process, output and control. The processing is done in four steps- classification, comparison, aggregation, and calculation. Role of accounting information systems in the value chain of manufacturing organisations Manufacturing organisations aim at the efficient use of the available resources to cater to the needs of their customers in the best possible way(Rothaermel, 2015). Manufacturing organisations are concerned with procurement, utilisation, and maintenance of the materials. AIS assists the manufacturing organisations in the following way in order to increase value Materials management: This involves activities such as planning, ascertaining, purchasing raw material requirement, production scheduling, allocation and distribution. All these functions require relevant information which is provided by AIS. With advancement in technology, this is becoming a challenging task and innovation is required even in the traditional product line. AIS provides real-time vendor development and just-in-time inventory management (Soudani, 2012). AIS provides direct contact with customers so it is easier to identify their needs and preferences and hence something of their value can be produced and delivered to them. At the same time, vendors can be contacted for the right procurement of raw materials. Production Planning and Control: Once the availability of necessary material has been ensured scheduling of production is done so that manufacturing can take place as per the plan. Production control comprises of the design of the commodity, the process of manufacturing and quality assurance. AIS provide suitable information to carry on these activities. On the one hand there is a pressure to decrease the cost and on the other hand to increase the quality of the product (Hall, 2012). Both these things can be simultaneously achieved by applying artificial intelligence of AIS. In a nutshell, value is added to the following activities Contacting customers and gathering information on promotional activities and sales. A collection of market researches Product planning, evaluation and development. Optimum pricing information. Budgetary control information (Thompson and et.al. 2013). Importance of Accounting Information System in Decision-Making Making decisions is the main function of management. In fact, management is another name of making decisions. They are two sides of the same coin. Decision making comprises of selecting thebest course of action. This is done by evaluating the effectiveness of various options available. According to Dandago and Rufai (2014), accounting Information systems play an important role in providing information which is useful for making various decisions related to organisations. AIS provides various tools which support the decision-making process. These tools vary from one business to another as each business has different information.These systems furnish information to management which helps them to assess the firms performance. AIS assists the manufacturing organisation is the following ways: Formulating future decisions and Selecting from various alternatives- Every organisation has to plan and prepare for future. These decisions are based on historical data, current trends and future forecast (Adenike and Michael 2016). All these information is furnished by AIS. Historical data are the financial and various other statements stored in the AIS of the organisation. Current trends and conditions can also be calculated with the help of these systems in no time. Forecasting tools and applications provided by the system can aid the management greatly. Make or buy decision-This decision is faced by all the manufacturing organisations once in their course of business. The effectiveness of these decisions is very important as such decisions may impact the business to a very large extent. As per the study of Hollensen (2015)making or buying some or all parts of a particular product may depend upon the profitability of each product line. Procurement and production cost of such products are compared, and then the decision is taken. AIS can provide accurate information which forms the basis of these decisions. Competitive advantage of value chain The concept of Value chain was introduced by Michael Porter. The value chain comprises of two parts. Both these parts can offer a competitive advantage if managed appropriately. These activities are carried on differently by different organisations. The organisations which succeed in making these activities unique will win a competitive benefit (Kaplan and Atkinson, 2015).The competitive advantages attained through value chain is as follows: Reducing delivery times: The relationship between organisation and retailers and other clients can be improved by providing delivery at a faster rate. The reason behind it is that the resellers will be able to manage activities of purchasing and selling in efficient manner. Hence, it assists in developing competitive advantage for organisation. Optimisation of Inventory: Value chain assists the retailers to work in efficient manner with suppliers through reducing the time of delivery. It manages the outbound procedures of the organisation with inbound logistic of the retailer. It has been analysed that JIT enables the manufactures to deliver frequent orders for reducing the inventory level Differentiation- providing value to customers which are unique and different from competitors. It is because; products offered to customers are better than what the opponents are providing in terms of additional features or better quality.Products or service is different from others in some or the other form which serves the consumers in a better way.The product comprises of some unique features which are not found in any other alternative (Antrs and Chor, 2013). For this aspect, manufacturing entities can develop newchannels of distribution that will offer qualitative services. By making use of this aspect, management will be able to attract new customers along with retention of existing consumers. Cost leadership This means ruling the market in cost effectiveness and the value supplied to customers is equal or more than the cost paid by them. Also, it may be beneficial to the business as well.The cost of the product is lower than what the opponent firm is offering a quite similar or better product. Cost advantage by manufacturing concern by controlling following drivers of business: Geographical and Institutional factors Better interrelationships and coordination among various activities Implementation of new technologies Optimum utilisation of available resources Policy for cost differentiation Timing of market entry Vertical integration References Adenike, A.T. and Michael A.A.,(2016). Effect of Accounting Information System Adoption on Accounting Activities in Manufacturing Industries in Nigeria. Antrs, P. and Chor, D.(2013). Organising the global value chain.Econometrica, 81(6) Pp.2127-2204. Dandago, K.I. and Rufai, A.S. (2014). Information Technology and Accounting Information System in the Nigerian Banking Industry.Asian Economic and Financial Review, 4(5).Pp.655-670. Hall, J. A.,(2012). Accounting information systems. Cengage Learning. Hollensen, S.,(2015). Marketing management: A relationship approach. Pearson Education. Kaplan, R. S. and Atkinson A. A., (2015). Advanced management accounting. PHI Learning. Moghadam, H.M. and et.al.2013. Effect of investment in information technology system on providing desired services of accounting information system. Elixir International Journal A. 55.Pp.13268-13273. Rothaermel, F.T., (2015). Strategic management. McGraw-Hill. Soudani, S.N.,(2012). The usefulness of an accounting information system for effective organisational performance. International Journal of Economics and Finance. 4(5).P.136. Thompson, A. and et.al. (2013). 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