AFIS Assignment 2

Safwan ali

2147266

Q1

Accounting information system has a major role in an organization as within an organization it collects,
process, and disseminate financial and accounting information . AIS uses accounting principles with the
latest technology to provide accurate and on-time information with the help of this company can make
quick decisions as per the required situation at various levels of the organization. Below are the
following important roles AIS plays :

AIS combines with other systems in an organization such as Customer relationship management (CRM),
enterprise recourse planning and supply management in order to exchange information and help the
organization to make decisions moreover this integrations helps with efficient data flow and improves
efficiency.

AIS help with auditing of an organization both internal and external auditing process.AIS helps in
generating all the detailed financial statements and all the transations performed by the company. Also
ensure all the correct accounting standards are used.

AIS helps the organization with the decisions making process as it generates authentic reports which can
help with decisions ( reports like budgeting, cost and variance analysis) also help company to set long
term goals and target

AIS helps company to have knowledge about where they are lacking , which individual is not performing
well by doing performance indicators . This helps company to decide which area they have to focus on
more and who they have to fire.

Q2

Accounting information system has several components that are connected with each other and work
together to collect , process , store and distribute financial information:

Input devices: With help of these devices we enter data on AIS system example: keyboard through
which we manually enter data , bar code reader for scanning barcodes on products in inventory.

Data storage: AIS requires a place where it can store and secure finanicial data of a company and
manage that data. Examples include: Data bases are the software applications that helps with
organizing and storing of the structured data .

Data processing: After storing the data AIS performs various type of processing on the data to transform
that data in readable form. Examples include: General ledger collects data and then it converts it into
financial statements like income statements and Statement of financial position ,Account payable
system makes invoices and tracks payement. Etc

Internal information control: AIS has a mechanism to ensure data privacy, security of companys financial
information. For example: Assigning different duties to each individual to make sure and prevent from
frauds and errors, Using usernames and personal passwords to access data at each level so only
authorized person can access it.

Output and reporting: AIS after processing data generates reports which are readable and it provides
relevant and trusted financial statements to user. These reports also help manager to make decisions.
Example financial statements like income statement, balance sheet and cash flow statements.

External interfaces: AIS often interact and compare financial information’s of one company with other
external companies also interface with banking systems in order to do fund transfer or importing bank
statements.

Q3.

Cloud base accounting information systems is when AIS is hosted on online and remote serves over the
internet. This has several advantages and disadvantages :

Advantages:
1. AIS lets users to have access to their accounting data and software from anywhere with an
internet connection. This helps them to connect to all team member from all around the world.
2. Cloud-based AIS eliminates the need to purchase and maintain expensive hardware and
infrastructure. Instead, the user pays a subscription fee for his cloud service. This often includes
software updates, maintenance, and data security. This can lead to cost savings for businesses.
3. Cloud-based AIS offers scalability, allowing organizations to easily expand resources and storage
capacity to meet their needs. You have the flexibility to add or remove users, increase or decrease
storage capacity, and upgrade or downgrade software packages as needed
Disadvantages:
1: Cloud-based AIS relies on a stable and reliable internet connection. Dropped or slow
connections can affect user accessibility and productivity. This can be a problem for businesses
operating in areas with unstable Internet infrastructure.
2: If financial data is stored in the cloud, it should be outsourced to a third party. Some
organizations have concerns about the privacy and control of sensitive financial information. It is
important to carefully consider the security measures and data handling practices of your cloud
service provider before making a decision.
3: Cloud-based AIS may have customization limits. Most vendors offer configurable options, but
some businesses with unique accounting needs find it difficult to customize the system to their
specific needs. This can lead to compromises and additional workarounds.

Example of cloud-based AIS: QuickBooks Online: QuickBooks Online is a popular cloud-based

Q4) The concept ofBig data is that it means large and complex amounts of data that exceed the
possibilities of traditional data processing methods. This is a large amount of structured and
unstructured data that cannot be effectively managed, processed and analyzed by traditional data
processing tools. Big data is becoming increasingly important in accounting and financial
 information systems due to the increasing availability of digital data sources such as transactional
data, customer interactions, social media data, and sensor data. These big data sets provide
valuable insights and help businesses make data-driven decisions.
Benefits of big data analytics:
1. Big data analytics can identify inefficiencies in processes, supply chains, and resource
allocation. By optimizing these areas based on data insights, organizations can improve
operational efficiency and reduce costs.
2. Big data analytics enables businesses to make data-driven decisions and respond quickly to
market changes, giving them a competitive advantage. It helps identify new market
opportunities, optimize pricing strategies, and develop innovative products and services.
3. Big data analytics can help organizations identify and mitigate risk by providing early
warnings, detecting anomalies, and predicting potential threats. This helps minimize financial
loss and reputational damage.
Q5 ) The process of analyzing financial statements involves examining a company's financial statements
to assess its financial performance, position and potential risks. At first we prepare financial statements
such as balance sheets, income statements, and cash flow statements. These statements provide important
information about our financial activities. Secondly we study each financial statement carefully to
understand the company's financial performance over time. Look for trends and important events and
deals that can impact your finances. Lastly, we do Financial ratios that are mathematical calculations
that compare different numbers in financial statements Common ratios are:
Liquidity Ratios: These ratios measure a company's ability to meet its short-term obligations.
Solvency Ratios: These ratios measure a company's long-term financial stability and ability to service
long-term debt.
Profitability Indicators: These indicators measure a company's ability to generate profit from its business
and are measured by gross profit.
Efficiency Indicators: These indicators assess how efficiently a company uses its assets and resources.
Market Indicators: These indicators measure a company's market value and include price-to-earnings
ratio (share price divided by earnings per share) and dividend yield (dividend per share divided by share
price).
Analysis of financial reports and interpretation of key figures provide insight into a company's liquidity,
solvency, profitability, efficiency and market perception. They help stakeholders such as investors,
creditors and management to make informed decisions about the company's financial health, investment
potential and overall performance.