Which accounting information system (AIS) component provides information to external users?

• A. General ledger system (GLS)
• B. Financial reporting system (FRS)
• C. Management information system (MIS)
• D. Transaction processing system (TPS)

Answer: (B)

Providing information to external users is the function of the financial reporting system. This component gathers and consolidates data from the general ledger and other subsystems, then formats it into standardized financial statements and reports that external stakeholders—such as investors, creditors, and regulators—use to assess the entity’s financial position, performance, and cash flows. It also helps ensure compliance with external reporting standards like GAAP or IFRS.

The general ledger system records and summarizes transactions, but it isn’t primarily about producing external reports. The management information system concentrates on internal decision-making and performance monitoring, not on communicating with external parties. The transaction processing system handles the day-to-day capture and processing of transactions, which provides the raw data but doesn’t by itself produce external financial statements.