# Accounting Information System (AIS): Definition and Benefits

![Accounting Information System](https://www.investopedia.com/thmb/Vfr-9P_Q0N0ZM_mJ8EaGs0pPjw4=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Term-a-accounting-information-system-resized-0aadfda7d03a4d179a9ef945da86875a.jpg)

*— Ryan Oakley / Investopedia*

## What Is an Accounting Information System (AIS)?

An accounting information system (AIS) involves the collection, storage, and processing of financial and accounting data used by internal users to report information to [investors](https://www.investopedia.com/terms/i/investor.asp), [creditors](https://www.investopedia.com/terms/c/creditor.asp), and tax authorities. It is generally a computer-based method for tracking accounting activity in conjunction with information technology resources.

An AIS combines traditional [accounting practices](https://www.investopedia.com/terms/a/accounting-practice.asp), such as the use of [generally accepted accounting principles (GAAP)](https://www.investopedia.com/terms/g/gaap.asp), with modern information technology (IT) resources.

### Key Takeaways

*   An accounting information system (AIS) involves the collection, storage, and processing of financial and accounting data used by internal users to report information to investors, creditors, and tax authorities.
*   An AIS contains various elements that are important in the [accounting](https://www.investopedia.com/terms/a/accounting.asp) cycle.
*   An AIS is often a highly secured platform, with preventative measures taken against viruses, hackers, and other external sources attempting to collect information.
*   The benefits of an AIS include interdepartmental interfacing and internal controls.  
    

## How an Accounting Information System (AIS) Is Used

An accounting information system contains various elements that are important in the [accounting cycle](https://www.investopedia.com/terms/a/accounting-cycle.asp). Although the information contained in a system varies among industries and business sizes, a typical AIS includes data relating to [revenue](https://www.investopedia.com/terms/r/revenue.asp), [expenses](https://www.investopedia.com/terms/e/expense.asp), customer information, employee information, and tax information. Specific data includes sales orders and analysis reports, purchase requisitions, invoices, check registers, inventory, payroll, ledger, trial balance, and financial statement information.

An accounting information system must have a database structure to store information. This database structure is typically programmed with query language that allows for table and data manipulation.

An AIS has numerous fields to input data and edit previously stored data. In addition, accounting information systems are often highly secured platforms, with preventative measures taken against viruses, hackers, and other external sources attempting to collect information.

The various outputs of an accounting information system exemplify the versatility of its data manipulation capabilities. An AIS produces reports including [accounts receivable](https://www.investopedia.com/terms/a/accountsreceivable.asp) aging reports based on customer information, [depreciation](https://www.investopedia.com/terms/d/depreciation.asp) schedules for fixed assets, and [trial balances](https://www.investopedia.com/terms/t/trial_balance.asp) for financial reporting. Customer lists, taxation calculations, and inventory levels may also be reproduced.

However, correspondences, memos, or presentations are not included in the AIS because these items are not directly related to a company’s financial reporting or bookkeeping.

## Benefits of an AIS

### Interdepartmental Interfacing

An accounting information system strives to interface across multiple departments. Within the system, the sales department can upload the sales budget, for example. This information is used by the inventory management team to conduct [inventory](https://www.investopedia.com/terms/i/inventory.asp) counts and purchase materials.

Upon the purchase of inventory, the system can notify the [accounts payable](https://www.investopedia.com/terms/a/accountspayable.asp) department of the new invoice. An AIS can also share information about a new order so that the manufacturing, shipping, and customer service departments are aware of the sale.

### Internal Controls

An integral part of accounting information systems relates to [internal controls](https://www.investopedia.com/terms/i/internalcontrols.asp). Policies and procedures can be placed within the system to ensure that sensitive customer, vendor, and business information is maintained within a company. Through the use of physical access approvals, login requirements, access logs, authorizations, and segregation of duties, users can be limited to only the relevant information necessary to perform their business function.

## How Does an Accounting Information System (AIS) Incorporate Technology?

An AIS combines modern information technology (IT) resources with traditional accounting practices, such as the use of generally accepted accounting principles (GAAP).

## Why Is It Important That Accounting Information Systems Are Highly Secured?

[Cybersecurity](https://www.investopedia.com/terms/c/cybersecurity.asp) is increasingly important as more and more companies store their data electronically. Because of this, accounting information systems are often highly secured against viruses, hackers, and other external sources attempting to collect information.

## What Does an Accounting Information System (AIS) Produce?

AIS reports include:

*   Accounts receivable aging reports based on customer information
*   Customer lists
*   Depreciation schedules for fixed assets
*   Inventory levels
*   Taxation calculations
*   Trial balances for financial reporting

## The Bottom Line

An accounting information system (AIS) involves collecting, storing, and processing financial and accounting data used by internal users to report information to investors, creditors, and tax authorities. In general, it is a computer-based method to track accounting activity in conjunction with information technology (IT) resources.