Updated at 09/06/2022 - 02:23 pm
All enterprises (DN) must have an accounting information system.
Accounting information system is a data processing system that provides information for users to plan, manage and operate business.
Management is responsible for the formal leadership of the organization in planning, organizing, leading, and controlling its resources.
You will begin to study corporate accounting information systems by looking at the overall structure of the accounting. Please note that the real understanding of accounting is not easily accessible. If you persevere, you will be amazed at how much you discover about the corporate accounting information system. This knowledge is valuable for success in business.
Complete definition of accounting information system #
Let's start with a more formal definition of accounting: Accounting is a set of concepts and techniques used to measure and report financial information about an economic unit. An economic unit is often considered a separate business. Information is reported to a variety of interested parties. These people include business managers, owners, creditors, government, and financial analysts. In one way or another, people who use this accounting information tend to be interested in their own interests in the entity.
Business managers need accounting information to make the right leadership decisions. Owners and investors expect a return that can eventually lead to a distribution from the business (eg “dividends”). Creditors are always interested in the ability to repay the obligations of the unit. Government needs information to tax and regulate. Analysts use accounting data to formulate the opinions in which they make investment recommendations. Employees want to work for successful companies to develop their personal careers, and they often have bonuses or options tied to the company's performance. Entity-specific accounting information helps to satisfy the needs of all these interested parties.
The diversity of interested parties leads to a rational divide in the field of accounting. Financial accounting involves external reporting to outside the business. In contrast, the management accountant is mainly concerned with providing information to internal management. One may have difficulty seeing the distinction; After all, aren't the financial facts reported? The following information provides a deeper insight into the difference.
Financial accountant #
Consider that financial accounting is targeted to many outside users, none of whom control actual reporting or have access to basic details. Their ability to understand and trust the reports directly depends on the standardization of the principles and practices used to prepare them. Without such standardization, the reports of different companies can be confusing and even more difficult to compare.
Standardization stems from a number of well-organized processes and organizations. Efforts to establish consistency in global financial reporting have been driven by an increase in global trade and finance. Just as standardization is needed to allow comparisons between individual companies operating in a single economy, so standardization is also needed to facilitate global business evaluation. .
Financial statements are prepared in accordance with generally accepted accounting principles issued by standards-setting bodies for the general purpose of orientation. This means they are not specially prepared for owners, creditors, or any other particular group of users. Instead, they are intended to be equally useful to all user groups. Therefore, efforts are made to keep them from being biased (neutral). Standards-setting bodies are guided by concepts aimed at producing representationally relevant and truthful reports that are useful in investment and credit decisions.
Management accounting #
Management accounting information aims to serve the specific and diverse needs of management. Business managers are responsible for business planning, control, and decision-making. Consequently, they may wish to have specific reports, budgets, product cost data and other details not normally reported on an external basis. Furthermore, management may specify the parameters for which such information will be accumulated and presented.
Internal reporting is being done properly, but it doesn't need to be subject to any specific set of mandatory guidelines.
Quality information system #
Both financial and managerial accounting depend on strong information systems to reliably capture and aggregate business transaction data. Information technology has completely reshaped this mundane part of accounting for over 50 years. The era of the "blue-eyed" accountant has been entered into the historical chronicle. Now, accounting is a dynamic industry, decision-making rather than a bookkeeping task.
Inherent limitations of accounting information systems #
Accounting data are not absolute or specific. Significant estimates and estimates are needed to build specific accounting metrics reported in a particular month, quarter, or year. For example, what is the real profit when a car is sold under a 3-year warranty? It will take three years before all the final costs of the warranty agreement are known. One approach is to wait three years before reporting any profit or loss on this trade. However, by the time information can be reliably reported, it will be so old that it loses its usefulness. Therefore, for timely presentation of information reasonable estimates are often used in the process of preparing periodic financial statements.
In addition, the accountants have not reached the state where they can value the business. Consequently, many transactions and events reported are based on the original cost (as opposed to fair value) principle. Land, for example, is often recorded and recorded in an accounting book according to the price at which it was purchased. The original price principle is based on the concept that it is best to report certain elements of the financial statements with an amount associated with past transactions that is objective and verifiable.
The alternative is to value (and re-evaluate) an asset based on subjective assessments of present value. Such adjustments are problematic and the subject of much debate. However, the current trend in setting global standards is to increase the acceptance of situations where fair value accounting is considered acceptable for selected financial reporting factors.
The ongoing debate about fair value versus cost often takes place in the context of a balance between the "suitability" of fair value information and the "reliability" of cost information . This debate is likely to continue, and related accounting standards are likely to evolve for many years to come. However, it can be expected that future accountants will increasingly become more skilled in pricing matters.