What is generative AI?

Generative AI is a type of artificial intelligence that creates new content, such as text, summaries, analyses, or recommendations, based on patterns learned from existing data. Unlike traditional software that follows predefined rules, generative AI can generate responses to new questions and situations.

In accounting, generative AI powers assistants that explain financial information, answer questions, summarize activity, and help users understand their business. To produce reliable results, generative AI should be grounded in accurate financial data rather than relying solely on its training data.

Example: A business owner asks, "Why were expenses higher this month?" and an AI assistant analyzes financial records and provides a plain-language explanation.

Related terms: Agentic AI, Ask Digits, Grounding, MCP (Model Context Protocol), Hallucination