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Five Basic Principle of Ais | PDF | Accounting | Information System
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Five Basic Principle of Ais

The document discusses 5 basic principles of accounting information systems: 1) Control principle - there should be proper internal controls like monthly bank reconciliations and secure passwords to protect accounting information. 2) Relevance principle - information must be produced in a timely manner to be useful to management for decision making. Reports like dashboards provide summarized and relevant data. 3) Compatibility principle - the accounting system must match the company's structure, activities, and available resources. For example, banking software suitable for ATM transactions. 4) Flexibility - the system should adapt to changing needs, technologies, regulations and competition over time. 5) Cost-benefit principle - the cost of the accounting information system should not

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Korrine Angeli Caliguiran
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564 views1 page

Five Basic Principle of Ais

The document discusses 5 basic principles of accounting information systems: 1) Control principle - there should be proper internal controls like monthly bank reconciliations and secure passwords to protect accounting information. 2) Relevance principle - information must be produced in a timely manner to be useful to management for decision making. Reports like dashboards provide summarized and relevant data. 3) Compatibility principle - the accounting system must match the company's structure, activities, and available resources. For example, banking software suitable for ATM transactions. 4) Flexibility - the system should adapt to changing needs, technologies, regulations and competition over time. 5) Cost-benefit principle - the cost of the accounting information system should not

Uploaded by

Korrine Angeli Caliguiran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Control Principles:

From the five basic principles of accounting details system, the first one is
control principle. There should be proper internal control in all the accounting
information systems. These controls are procedures and practices which are used to
control and monitor the activities of the business. The procedures used in it are
bank reconciliations of accounts on monthly basis, controlling passwords on
software and computers and to secure the confidential and secret information. This
internal control protects the information that is being input and processed by the
information system.

Relevance:

This is the second basic principle of accounting information system and the motive
of this principle is to produce the information at the right time and in the right
manner. If the accounting information produces the financial information late after
the month or the quarter closing, then that information becomes useless to the
higher authorities and management. For the relevant details, nowadays the financial
details should be done and produce immediately. The faster it will be available the
more useful it will be. If the management needs to see the selected data from the
reports then they can check these summarize reports. The most common example of
such reports is dashboards and flash reports.

Compatibility Principle:

This is the principle that requires the accounting system to match with the
company's activities, internal structure and the personnel. The reports which are
being generated by the system should match with the company organization structure.
This principle tells that the accounting system that is being designed must work
with the available resources. The accounting software must be efficient enough for
proper functioning. Like for example, if a bank is looking for some software, it
will purchase the one which is efficient enough to handle the banking transactions
such as the ATM transactions.

Flexibility:

An accounting information system that is flexible enough to adapt with the changes
in the company, its needs and the operations of the company. This principle means
that a system should be such flexible that it can deal easily with the changing
technologies and taste and regulation of the consumers and it should be flexible
enough to handle the competition pressure. The system should be such that it can
adapt to changes that will happen in the future

Cost Benefit:

The fifth and the last basic principle is cost benefit. It is looking at cost
benefit allowances in terms of decisions within the accounting information system.
The accounting information should be cost effective. If it is cost effective then
it will give the necessary output. Basically this principle describes that the cost
giving the financial information should not outweigh to the profit users get from
that details. As companies spend many dollars to organize and gather such reports
and to generate the financial statements. So these must be cost effective.

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