Final answer:
The correct answer is option c. The distinction between Accounting Information System and Management Information System is typically based on the end users of the reports, with the correct option being (c).
Step-by-step explanation:
The distinction between the Accounting Information System (AIS) and the Management Information System (MIS) is often based on the type of information they process and the purpose for which the information is used. While AIS typically focuses on financial transactions and reporting for statutory compliance and organizational needs, MIS is broader, encompassing both financial and nonfinancial information used for guiding management decisions.
In identifying the primary differentiators between AIS and MIS, the author is most likely to distinguish based on c. the end users of the reports.
This is because the end users of AIS are typically internal and external stakeholders who require financial reports, such as tax authorities, investors, and management, whereas MIS reports are predominantly for internal decision-makers, aimed at improving efficiency and strategic planning within the organization.
Understanding the requirements of various stakeholders allows businesses to develop their reporting structure to suit those needs appropriately.
With the advancement of a company's status and growth, less reliance is placed on personal relationships, and more on the extensive dissemination of information about the company's financial health, which is vital for decision-making by outside investors like bondholders and shareholders. This dynamic is fueled by patterns of imperfect information in markets, where there is a disparity in the knowledge held by firm insiders versus external capital providers.