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Evolution of Computerized Accounting Information Systems - Essay Example

2021-08-25 19:44:56
5 pages
1205 words
University/College: 
Carnegie Mellon University
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Essay
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The Golden age of small and medium-sized businesses that are now able to compete with big business as said by the prominent members of the computer industry means that accounting information system software that businesses of all sizes can use has been introduced into the market. It is, therefore, a stage of evolution computerized accounting information system where an accounting information system is developed that small, medium and large-sized companies can use when preparing the books of accounts (Needles and Powers, 2013). It also means that the development accounting information system has reached the mainstream and is still anticipated to reach its maximum operation where companies use it to minimize production cost and enhance business efficiency and effectiveness. It is a point of development of AIS where it can perform different functions relating to accounting services. Although the development of accounting information system has reached this point, it has not been made in a manner that provides efficient accounting services to small and medium-sized businesses in the USA and other parts of the World.

Small and medium-sized business organizations in the US use AIS to record their financial transactions. It helps the in automation of financial transactions by eliminating the traditional method of accounting which was time-consuming and costly (Sumners and Soileau, 2008). With the increase in efficiency and cost-effectiveness, small and medium-sized businesses in the USA can now produce their products at a lower cost than large business organizations. A reduction in the cost of production as a result of an introduction of AIS, small and medium-sized business organizations can gain competitive advantage through cost leadership.

Small and medium-sized businesses in the USA can produce different products at a lower cost because of the use of efficient and cost-effective accounting information system which reduces the cost of producing their products. They can sell their products at a lower price than large business organizations that incur a high cost to produce the same products. The large business organization has a burden of paying a large number of employees and associated costs which small and medium-sized business organizations do not pay. This makes small and medium-sized business organization an opportunity to offer their products for sale at a lower price than large companies. With AIS small and medium-sized business organizations can utilize accounting services more efficiently than large organizations thus gaining a stronger competitive advantage. Reduction of the cost of accounting services makes small and medium-sized businesses to have Golden age over large business organizations in the USA.

Small and medium-sized business organization were not allowed to use accounting information system and therefore they heavily rely on traditional accounting system where daily transactions was a manual input of business transactions and recording of data. The increase errors such as wrong data entry, inefficient task performance and the use of papers which causes many problems to small and medium-sized business operations. The introduction of AIS in small and medium business organizations improve quality of accounting and decision making because it ensures easy access to information records that are kept properly.

AIS make small and medium-sized business organization to have real-time information that they can use for strategic decision making such strategic alliance which is important in increasing competitive advantage. Small and medium-sized business organizations can also use AIS to differentiate its business operations from competitors. It makes them execute business transactions efficiently and speedily and this makes them different from the competitors. AIS improve services of small and medium business organizations in the USA by increasing the quality of customer services and ensure that they meet their demands at a low cost and efficiency. This, therefore, makes these business organizations to have a golden age making them compete with large business organizations.

AIS in small and medium-sized businesses increase information sharing between the company employee and customers. It makes managers access financial information easily than traditional accounting system (Krolick Debra, 2005). Through information sharing business stakeholders can collaborate with each other easily and share their opinion which is important in the growth and expansion of small and medium business organizations. This increase the motivation and creativity of employees thus enhance their performance.

AIS support managers of small and medium businesses to scrutinize, plan and project with more accuracy and speed than ever before. It also helps managers of these businesses to react hastily to fast shifting business environment which can make them more competitive. With a good plan, business organizations can use financial resources effectively without wastages, embezzlement, and misappropriation. Small business organizations can also make good financial projection which the owners require to make investment decisions.

It helps small and medium-sized business organization to have organized data and financial information it requires (Socea Alexandra-Daniela, 2012). AIS make them more organized and enable them to generate quick solutions and make prompt decisions when under difficult circumstances. The information of these businesses will be kept in databases. The past, present and predicted financial information are provided by accounting information system which is responsible for collecting, recording and presenting financial data of the company.

It plays a significant role in the financial planning of small and medium-sized business organizations in the USA. It helps them manage all their financial information and formulate a way in which they can design a good financial plan. It cannot be done without accurate financial information which these business organizations use to improve their capabilities and compete effectively with the competitors through the use of unique systematic techniques.

Small and medium-sized business organizations can effectively avoid a crisis when they have accounting information system (Droms and Wright, 2010). This helps them examine the market share which is important for decision making. High-quality financial information ensures that these businesses analyze stock and understand past performance to predict the potential crisis. It stores business records such as profit margins which they use to examine and prevent a crisis.

The importance of accounting information system in small and medium-sized business organizations is very many. It increases accounting efficiency and the cost of offering accounting services the organization requires (Maier, 2004). This reduces operation of small and medium-sized businesses hence reduce production cost. These business organizations, therefore, are able to offer their product for sale at a low cost thus making them competitive and different from their competitors. The small and medium-sized organizations also use AIS to create an accurate financial plan and to monitor financial operations. All these benefits make these business organizations have a golden age.

References

Maier, R. (2004). Knowledge management systems: information and communication technologies for knowledge management. Zugl.: Regensburg, Univ., Habil.-Schr., 2001.

Needles, Belverd E.; Powers, Marian (2013).Principles of Financial Accounting. Financial Accounting Series (12 ed.). Cengage Learning.

Droms, William G.; Wright, Jay O. (2010), Finance and Accounting for Nonfinancial Managers: All the Basics you need to Know (6th ed.), Basic Books, 2010

Socea Alexandra-Daniela, (2012) Managerial decision-making and financial accounting information, Procedia-Social and Behavioral Sciences 58, disponibil online la http://www.sciencedirect.com/science/article/pii/S1877042812044394 access la data de 30.09.2013

Krolick Debra L., (2005). The relevance of financial statement information for executive performance evaluation: Evidence from choice of bonus plan accounting performance measures, online la http://www.sciencedirect.com/science/article/pii/S0020706305000294, access la data de 05.10.2013

Sumners, G. E., and Soileau, J. S. (2008) Addressing Internal Audit Staffing Challenges. Information Systems Management, Vol. 25 (2), pp. 3-11.

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