The specified study is based on the understanding of the concepts and importance of Accounting Information System within the Manufacturing Companies. Moreover, the functions as well as the role of the Accounting Information System within the firm have also been discussed here. It is composed of information technology, people, software, data and procedures. It has been found that the AIS perform many important functions, especially in the contemporary firm of manufacturing (Du, Huddart & Xue, 2015). It also includes gathering and storage of data about the activities and transactions of the company for the objective of future analysis. Thus, it can be said that the data processing is considered as a useful factor that helps in making decision and also renders sufficient controls for safeguarding the properties of the firm.
Function of Accounting Information System within Manufacturing Firm’s Value Chain
The aim of the manufacturing companies is to serve value to the potential clients of the firm. Dillard & Yuthas (2013) states that the organization of the particular sector is considered as profitable only if the firm creates value more than the produced expense of the products and / or services have noted it.
Value Chain and Supply Chain Model
According to Belfo & Trigo (2013), the value is added by the accounting information systems in the process of rendering proper and accurate information. This process of gathering accurate information is done by using five major activities of value chain. Thus, this assists to develop the quality and also to reduce the products’ expenses in the contemporary firm of the manufacturing. The function of the AIS within the value chain is to improve the capabilities of making decision, efficiency and increase the knowledge sharing capacity. Thus, it has been found that a well-made accounting system of information is an essential factor for the contemporary company of manufacturing and this enhances the efficiency of the supply chain of the firm.
Accounting Information System Helps in Making Decision in a Contemporary Manufacturing Company
It has been found that there are three main roles that are done by the AIS (Accounting Information Systems). This helps in enhancing the process of making decision in a contemporary company of manufacturing. These includes as follows:
At first, it has been noted that the accounting information system performs efficient processing of data about the transactions of the companies, especially the manufacturing firm. It makes the procedure of data capturing enable on the basis of the source documents. AIS consider all the records of transactions in the journals and have been represented in a chronological order (Sutton & Arnold, 2012). Therefore, the previous data has been recorded from the journals to the ledgers and the sorted information based on the types of accounts.
At second, according to Vanhoof & Aerts (2014), the accounting information system gives the company’s management with various data that are considered as useful in the process of making decision. Opined to the manual system, the significant information is mentioned in every kind of reports and is majorly classified under two sections – Financial Statements and Managerial Reports. It has been found that these two kinds of broad sections are found only in the contemporary company of manufacturing.
Finally, accounting information system assists to serve sufficient internal controls. This system helps in making sure regarding the information of the business activities and performances that these are reliable in nature and align with the objectives of the management of the contemporary company of manufacturing. Thus, the accounting information system puts step forward regarding the safeguarding of the assets of the firm in a successful way.
Procedure by which value chain is used for rendering competitive advantage in the contemporary manufacturing company
It is important to understand the fact that Accounting Information Systems enables in rendering values and act as a major part of value chain attributes. In other words, it means adding value that needs to be faster as well as reliable in way of providing excellent services and advice. This actually reveals limited supply and providing enhanced features of customization. Value means performing a series of activities termed as Value Chain (Anandarajan, Anandarajan & Srinivasan, 2012). It includes primary activities and support activities. Therefore, Information Technology takes into consideration efficiency and effectiveness for future preceding activities in given form. In that case, manufacturing organization value chain means connecting with creation of value chain concerned with potential targeted customers as well as suppliers and distributors.
In case of manufacturing organization, competitive advantage takes into consideration cost or differentiation aspects. Cost for a particular company reflects majorly upon collective cost by including all the value activities after comparing it with rivalry firms (Bai, Nunez & Kalagnanam, 2012). Individual value key drivers remain connected after determination of potential sources of cost advantage. Thus, manufacturing organization has the capacity in contributing single value activity as well as act as competitive advantage.
Companies should be competitively advantageous who aims at providing differed products as well as services. Major competitive scope comes under major four segments like segmented, industrial as well as vertical and geographical scope (Worrell, Di Gangi & Bush, 2013). Companies require gaining competitive advantage whereby they implement innovative strategies by lowering the cost or opting premium pricing policies.
Therefore, it can be concluded that the accounting information system is very beneficial for the manufacturing firm. The essential aims of this accounting system of information are to serve various data and information that will be helpful for the process of making any decision. Moreover, it can also be said that the accounting is considered as the communication process and the information identification procedure that helps to develop the activities of the firm. Therefore, it can be said that the above detailed discussion has resulted into successful analysis of the function of Accounting Information Systems within the contemporary manufacturing firm’s value chain. The particular system of accounting helps in making activities related to decision making within the contemporary organization of manufacturing. Thus, it can be said that the value chain helps the particular firm to gain various competitive advantages.
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Dillard, J., & Yuthas, K. (2013). Critical dialogics, agonistic pluralism, and accounting information systems. International Journal of Accounting Information Systems, 14(2), 113-119.
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