Business Information System


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1.0 General Description of the Information System 3

1.1 General Description (Overall Function and Purpose) 3

1.2 Users (or other information Systems) and Uses 3

2.0 External Description of the Information System 5

2.1 Inputs 5

2.2 Output 7

3.0 External View of the Information System 8

4.0 Internal Description of the Information System 9

4.1 Information Processor 9

4.2 Information Stores 11

4.3 Communication Networks 12

5.0 Internal View of Information System 13

6.0 Works Cited 14

1.0 General Description of the Information System

Xero Accounting Information System

1.1 General Description (Overall Function and Purpose)

This is an online accounting system that conveys its products and services via the internet. The information system targets the Small sized premises. This therefore means that the business’ financial information and data is stored online and thus it can be accessed anywhere, anytime and with any device that has an internet connection. The accounting application is designed to meet the needs of the small businesses and is very easy to use. It has a long run effect of saving a significant amount of time hence transforming the way the business is conducted.

The Xero accounting financial system is accessible in a big geographical area since one can access from United States, Australia, New Zealand and Europe. This gives the managers and users of the software ease since they can access their accounting information from any of the various region. Not only is it in a vast geographical area but the company further improved its operation and is now readily accessible in platforms such as the Android and iOS devices allowing it to be accessible by a wide range of people. This was a perfect initiative since most of the users in the world currently use the android and iOS devices.

1.2 Users (or other information Systems) and Uses

Small Businesses- The main users of the of the Xero Accounting Information system are the small businesses. This is because the amount of financial data stored by the small businesses is not as voluminous like those of big companies such as the Multinationals.

Employees- Any employee can easily log into the online software and key in the relevant data considering the fact that the software interface is user friendly in that one has to follow simple instruction and will be able to operate it effectively.

The Xero online accounting system is very convenient in that individuals can log can log in at the same time and be able to look at the same figures without there being a complication. The cloud based system, runs in real time implying that the data is always up to date. The product further includes a banking integration which also supports multiple currencies. Its use classifies transactions with the ability to directly import the transaction from financial institutions hence making the product extremely attractive for the business users that would like to automate the book keeping process of their company.

Other key features of the Xero accounting financial system include the automatic credit card accounts feeds and bank, expense claims, accounts payable, invoicing, purchase orders, fixed asset depreciation and management reporting. One of its best us is that it allows third party software vendors to be able to integrate the external applications with Xero. This has resulted to over 270 third party software vendors building Xero add on.

The users of the software need not to worry in case of a break down or encounter any problem since there is a help and support platform that involves a team of accountants and the book keepers who are certified advisors thus the users can be readily helped in the occurrence of an issue instantly.

2.0 External Description of the Information System

2.1 Inputs

Accounting Officer

  • Accounts Payable- The accounts payable refers to the amount of money, the business owes its creditors. The accounting officer in charge of the operation of the system inputs all the credit transaction of the company. As a result the value of the figures keyed in automatically adds up the previous values that had already been put in the previous transaction. Whenever the business incurs the credit transaction, the accounting officer or the cashier that oversees the transaction, keys in the figures in the Xero online platform. The interface has both a debit and a credit section and therefore the cashier or the accounts officer has to use his or her accounting knowledge in order so as to put the information correctly. An example of the accounts payable is when a business institutions purchases the stationeries in credit.

  • Accounts Receivable- Accounts receivable refers to the goods and services that the business has sold on credit to the customers. In this type of transaction, the officer in charge records the as accounts receivable since these are cash amounts that are yet to be received by the organization. A good example is when the organization that produces fertilizers, sales some of the fertilizers to the farmers on credit. This type of cost is recorded on the debit side of the online sheet. This is because its income to the business.

  • Sales- This refers to the revenue incurred by the business as a result of the sales goods and services produced by the company. This often involve the recording of the sales incurred in cash. Thus each and every good sold by the company in cash is recorded online.

  • Purchases- Purchases refers to the cost incurred in the purchase of goods and services that are mostly used in the production of goods and services. This purchase costs play a significant role in the determination of the profit made by the company. Therefore the accounts officer should ensure that all the cost of purchases are recorded on the credit side of the online ledger information since that is a cost incurred by the business entity.

  • Depreciation costs- this refers to the decrease in value in the assets that are used by the organization. This is a very crucial figure in accounting since the General Accepted Principles of accounting states that ever asset of the organization should be subjected to depreciation. Since no asset has perpetual life. An example is valuing the depreciation cost of a company asset such as a car or the building. The accounting officer records the depreciation value depending on the depreciation method utilized by the company. The depreciation figure is debited.

  • Miscellaneous expense- this refers to the day expenses and other costs incurred by the businesses. This involve the daily expenses incurred in office maintenance, employee needs among other costs incurred by the business, this include, cleaning equipment and the tea offered in the organization.


Since the Xero accounting information system is system meant for the Small and medium sized business units, the system has a platform that can allow up to 150 employee user capability. This therefore means that the employees can record information such as invoices that are crucial to the company. This decentralizes the activities that was previously carried out by a single person or a single department. All these details play a crucial role in determining the financial health of the organization.

2.2 Output


Up to date sales-The Xero Information system provide she managers with up to date sales of the company. This can be quarterly, annually, or annually depending on when the managers of the business require the information. This is a positive step since the result provided online is up to date and that any increase in the sales value that the business incurs is immediately reflected. This also reduces chances of fraud in the institution. The other financial reporting methods, provide information based on historical information and not the current information.

Financial Position of the Company- The information system provides the managers information about their financial position and that the business’ information regarding its assets and inventory is accurately provided and these are very crucial information to the organization. The managers use this information so as to effectively plan for the future of the organization.

Cash flow- After all the inputs are put, the system produces an overview of the business’ cash flow. The cash flow of the business shows the ability of the business to meet its immediate costs of running the business. This involves the cost incurred in the production process and even the cash to pay its employees.

Net Profit- The value of the net profit refers to the value of profit, after the organization has deducted all the cost of production and other costs such as interest expense and depreciation. This figure shows how viable the organization is. The figure can be positive or negative depending how the business performs. If the figure computed is negative, this shows that the business made a loss, but if the figure provided is positive, this means that the business made a profit.


The output stated above is as crucial to the managers as it is crucial to the employees since they determine the future of the employees in the organization. If most of the figure of the output discussed above is negative, then the future of most of the employees might be in question since they affect productivity. On the other hand if the figure of the output above is positive, then the future of most of the employees is secure considering it is a small business.

The General Public

The general public tend to follow up the output values such as net profit, sales and the cash flow of any business and this greatly influence the perception the public and the potential customers will have for the organization. If the business perform exemplary, this has the effect of attracting more and more customers to the business. This is the reason why most business aim at making their performance known to the public since it improves the trust that the public and potential customers attributes to the organization.

Accounting Information System

The Accounting Information System Data base also receives the information in regards to the performance of the organization and this will help in the further analysis of the performance of the organization. Such information include the expense incurred by the institution.

3.0 External View of the Information System

Accounting Officer Managers

Accounts payable, Receivables, Sales revenue, Financial . position ,cash flow, Net Profit

Business Information SystemBusiness Information System 1 Purchase, Depreciation and Miscellaneous expense

Business Information System 2

Figure 1-External View of the Information System



Business Information System 3Business Information System 4


General Public


Invoice and Bills

4.0 Internal Description of the Information System

4.1 Information Processor

The Internal System of the Information system mainly entails the internal aspects of the Xero Informational System. The information system has a simple interface which is combined with the tools of importing and classifying the transaction automatically, which makes it possible for the expense transactions (incurred) to be imported and coded using the direct data import from the financial institutions.

The dashboard offers a comprehensive graphical view of the business’s financial health. The dashboard has three main phases which are the purchase dashboard, the home screen and the sales dashboard. This is accompanied with an easy to use navigation arrangement that drills down the supporting Data. It is important to understand the system has both single and multiple charts in that the is a chart that shows the position of individual sales, purchases, account receivable among other variables, and there is one that shows the average financial health of the organization after all the other variables are analysed. The user of specific industry needs have the opportunity to modify the listings that is provided on the dashboard.

The process is an exact double entry system and provides support for the form based transaction entry. The existence of integrated accounts receivable and the accounts payable enables the users to approve bills and other transactions and be able to attach other relevant documents for the transaction. The existence of a mobile network, facilitates this further since the users can access it anywhere and anytime form any browser that is available. This application allows the users to be able to even take a picture of the receipt and upload it to the Xero database. This will act as a support document to the transaction. On the other hand the business owner or managers can also create invoices and at the same time see their bank accounts, credit card, accounts payable and accounts receivable from anywhere. This facilitates the 21st century modes of doing business where one can form anywhere and be able to monitors his or her business.

There is no limit to the number of users that are allowed to operate with the information system but rather the user rights are mainly granted by assigning a role to each and every user. The main user roles offered by Xero Business edition include; Invoice only, Read Only, Financial advisor and standard. On the other hand, users of the Partner edition include; Administrator, Cashbook Client, Managed Client, Financial advisor and the Practice Admin. In both versions, Business edition and Partner edition, the permission is assigned to specific role based on the standard templates and thus are not customizable.

To facilitate the effective use of the system via cloud, there exists a comprehensive eco system where the users are able to manage all their businesses via cloud and this is achieved through the existence of add-ons.

4.2 Information Stores

All the information put into the system are automatically saved into the cloud system. This therefore ensures that the data provided is stored safely and is accessible anywhere provided there is an internet connection. The main information store that the system utilizes, is the cloud storage facility.

The information system does not use the traditional audit trail report but rather it lists the notes and history at the bottom of individual transaction, ill, invoice, contact and expense claim. The main purpose of the history and notes is to describe what has been deleted, added, or altered and at the same time indicate the specific user that carried out the changes in the system.

The General ledger section of the system supports the tracking of the different cost centres and the profit centres by the use of the tracking categories that are an added category on all the bills, invoices, receipts and transaction so that the expense and income of each category can be analysed .

One of the most questions that will be widely asked by most businesses before utilizing the services of the Xero Accounting Information system is the issue of Security. It is important to state that the Software has never been breached and that there has never occurred any loss of the customers’ data. This is achieved since the company has invested a lot heavily to ensure the safety of the sensitive financial information of their customers against any unauthorised access or any form of system failures thus ensuring that the data is guarded to the best level. The system security is supported by a world class data, network and physical security environment. Considering the fact that Security is a continuous event, the company continues to evaluate and reinforce their security systems and policies.

The servers have SSL Certificates that is signed by the global leaders so that all the data transferred between the service and the user is encrypted. This is the same encryption that is used in internet banking. No other individual has access to an organization not unless invited by the very owners with the level of user permission, selected by the Management. The management has the authority to remove any invited whenever they wish.

4.3 Communication Networks

Internal Communication Networks

Xero Network

The Xero network enable the main user of the system who are employees, management and the accounting officer access to the company’s database where they are able to see hoe the company performs and also see the average entries made into the database.

External Communication

Direct Communication

Direct communication between employees and their supervisors influences how the employees carry out their daily activities and this has a long run effect of influencing the output in the organization.

This one of the most commonly used mode of communication at the office in the present day. The staff are able to communicate among themselves using email and thus update themselves with the current information.

5.0 Internal View of Information System

Figure 2Internal View of the Information System

Business Information System 5

Dashboard Xero Network Double Entry

Business Information System 6Business Information System 7Business Information System 8Business Information System 9Business Information System 10

6.0 Works Cited

Smith, Heather. Xero for dummies. Milton: Wiley Publishing Australia, 2013.