Accounting System - What is an accounting system?

Definition: An accounting information system (AIS) is the system of records a business keeps to maintain its accounting system.

This includes the purchase, sales, and other financial processes of the business. The purpose of an AIS is to accumulate data and provide decision makers (investors, creditors, and managers) with information.

While this was previously a paper-based process, most businesses now use accounting software. In an electronic financial accounting system, the steps in the accounting cycle are dependent upon the system itself.

For example, some systems allow direct journal posting to the various ledgers and others do not.

"Do not go to bed before the debits equals the credits"

Not only today but historically, it has been important for businesses, individuals and rulers to keep track of income and expenditure, whether it was due to a desire to know if an activity is profitable, or to tax or impose customs.

Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in the Middle East.

The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced.

Today bookkeeping is associated with the double entry principle, described by the Italian friar Luca Pacioli. While Friar Luca is often called the "Father of Accounting," he did not invent the system. Instead, he simply described a method used by merchants in Venice during the Italian Renaissance period. His system included most of the accounting cycle as we know it today. The quotation mentioned above refers to Friar Luca.

The first accounting systems

In addition to the cash book, abacus, etc. were introduced around 1880 machines to help with the work. Allegedly Hollerith is one of the fathers, since he invented and sold one of the first counting machine m. punch cards. The same man was also founder of a company that eventually became the IBM account.

Today's accounting systems

Developments in computer technology and especially the introduction of the PC meant that it was possible for "ordinary people" to gain access to a definite system. That is an accounting system that does it all. From the first DOS-based accounting systems such as PcPlus to today's Internet-based accounting systems such as E-conomic using SaaS (or cloud computing) as a model for the distribution of accounting systems.