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Accounting had been generally confined to the financial record keeping functions of the accountant. The role of an accountant has gradually changed from that of the mere recorder of transactions to that of the member providing relevant information to the decision-making team.

Accounting is now regarded as an information system and forms integral part of management information system. As an information system, it collects data and communicates economic information about a business enterprise or other entity to a wide variety of persons whose decisions and actions are related to the activity. This chapter, therefore, deals with accounting as an information system.

Accounting is not an end in itself; it is a means to an end. It performs the service activity by providing quantitative financial information that helps the users in making betterbusiness decisions. Accounting also describes and analyses the mass of data of an enterprise through measurement, classification, and summarization, and reduces that data into reports and statements, which show the financial condition and results of operations of that enterprise.

Accounting as an information system collects, processes and communicates information about an enterprise to a wide variety of interested parties. Although some businesss, particularly small ones, still use paper-based accounting systems, an increasing number are now operating computerized accounting systems. Small and medium-sized businesses can buy ‘off-the shelf’ accounting programs from suppliers such as Tally while larger businesses often have custom-designed programs.

The accounting programs carry out functions such as invoicing, dealing with payments, paying wages and providing regular management reports such as trading and profit and loss accounts and balance sheets. Businesses also make considerable use of computer spreadsheets, particularly for budgets. They can also be used for speeding up the processes in manual accounting systems, setting up a trial balance, for example.

The introduction of a computer accounting system can provide major advantages such as speed and accuracy of operation. There are also certain disadvantages, such as proper knowledge is required to run accounts payroll & tax Software which the management of a business must appreciate before taking the decision to convert from a manual to a computerized accounting system.