“It deals with the ascertainment of the cost of goods produced. It has linkages with other accounting sub-systems for obtaining the necessary information about cost of material, labour, and other expenses. This system generates information about changes in the cost that takes place during the period under review.”
Identify the subsystem of AIS being highlighted in the above information
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → COSTING SUB-SYSTEM
An accounting information system is made up of sub-systems, each handling one area. The one that works out the cost of goods produced, drawing on the cost of material, labour and other expenses, is the costing sub-system.
Why the other options are incorrect
Option (1) BUDGET SUB-SYSTEM — Incorrect. It deals with budgets, the plans of expected income and spending, not with the cost of goods produced.
Option (3) PAYROLL ACCOUNTING SUB-SYSTEM — Incorrect. It deals with the pay of employees: wages, salaries and deductions.
Option (4) EXPENSE ACCOUNTING SUB-SYSTEM — Incorrect. It records the expenses of the business, not the cost of production.
NCERT (2026-27 edition):
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