What is an accounting system?


An accounting information system (AIS) can be defined as an arrangement of records that businesses employ for maintaining their system of accounting. The idea of having AIS is to collect data that the decision makers like investors, mangers and creditors can access for getting the desired information. The records can pertain to sales, purchase and finance.

Though all these records were maintained on paper for generations, with the coming of computers and a variety of software, now most businesses have started using computers for the purpose. When maintaining financial records on electronic medium, the steps required for accounting system are system based. For instance, using certain systems you can make direct journal entries in different ledgers, but many other systems may not offer this facility.

 “Don’t rest until debits equal credits”

Accounting has been in practice since ages. Earliest records of accounting, believed to be over seven thousand years, were discovered in Middle East.  Since generations, rulers, individuals and businesses have realized the significance of keeping an account of income and expenses. The reasons could be to know how profitable a business activity had been or to decide the rate of taxation.

The accounting systems employed during pre-historic times were very crude and devised just to keep an account of animals and crops. As businesses developed, so did the systems of accounting.

The modern system of bookkeeping follows the principle of double entry. It is of interest to know that the modern system was illustrated by an Italian, named Friar Luca, who is often referred to as the “Father of Accounting.” In fact, Friar Luca was not responsible for creating the system. He just explained the technique employed by Italian merchants while Italy was passing through Renaissance. Most of the accounting practices that we follow today were included in his system of accounting. The quote as noted above was also coined by Friar Luca.

The earliest accounting systems

It was in 1880 that machines and cash books were introduced to facilitate accounting work. The credit for inventing and selling one of the initial counting machines, m.punch cards, goes to Allegedly Hollerith, also considered as another father of accounting. Eventually, he founded a company, now known as IBM.

Modern accounting systems

Technological developments, particularly in the field of computers, leading to present day PCs, have made it feasible for ordinary folks to have access to specific systems. Yes, these days you can access accounting system which would perform all accounting procedures for you. PcPlus was the first accounting system based on DOS. These days you get highly advanced systems like e-conomic, which is Internet based to SaaS that makes use of cloud computing.


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