Definition: Information storage is the part of the accounting system that keeps data accessible to the information processors. In other words, an accounting system’s information storage unit is either a hard drive or server that usually contains a database.
What Does Information Storage Mean?
After the input devices enter data into an accounting system, the information processors take the raw data a convert it into a usable form. This information is then stored, often in the form of a database, on the information storage component of the accounting system.
These databases must be accessible frequently, so managers, accountants, and auditors can retrieve the information and analyze the financial state of the company. Most businesses that keep electronic database storage systems also keep physical sources documents in their file cabinets.
There has been a push in the modern accounting world to get rid of paper documents altogether. Most CPA firms now are mostly paperless if not completely paperless. They rely 100 percent on electronic information storage systems to keep the records of their clients and supporting work papers for engagements.
Another trend in business systems is the use of cloud-based storage. More and more businesses are switching to cloud computing and online information storage or backup services. This has two main advantages. First, the sensitive data is never stored on site. Therefore, it can’t be physically stolen. Second, the data is accessible from anywhere with an Internet connection. You can login and have access to your virtual desktop whether you are in the office or on location.
Keep in mind; any cloud-based platform doesn’t come without its security issues. Data stored online must be secured effectively to make sure accounting information isn’t compromised.