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Information and Decisions

Accounting Information System can be better understood with an understanding of the setup of the organization. An organization comprises of independent units pursuing their path to achieve the organizational objectives. In the process, they take independent decisions on the basis of inputs received from different units. The decisions so taken or the data collected is entered into the computer, which may be used by other units also. Thus, every unit within the organization enters and accepts data and transforms it into information for the purpose of decision- making. The data may be generated from internal transactions or external transactions. The external transactions that form the basis for financial accounting are termed as Accounting Information system.

An organization may have different information systems, depending on the organization setup, i.e., information is generated at different levels for the designated levels of management. Typically, a management has three management levels and the information needs of each level are different. The information system requirement of each management level is described below:

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