mercoledì 19 ottobre 2011
Accounting Information can be twofold
1) information for education and learning - there is a lot of accounting information aimed for different fields of accounting, including financial, management, cost, intermediate, advanced accounting and other. Such information is used for learning purposes and does not have relation with the accounting information about the business used for financial reporting purposes.
Another understanding of the accounting information is that it covers information used to prepare financial statements which report the results and financial position of a business to the decision makers.
Owners and management use this information to judge about the results of business operations and make decision about their management. External users like creditors, suppliers, tax authorities also use accounting information for their decision making, i.e. judging whether the business will be able to return loans, pay for goods sold, whether taxes are paid correctly, etc.
To be useful and used accounting information must be be compliant with fundamental accounting assumptions and conventions.
It has to be:
fair (correct) - present fairly and correctly results of operations and financial position of the business
consistent - presentation and classification of items in the financial statements must be the same from one accounting period to the next
prudent - accounting for certain items requires making judgments, these must be made with prudence to ensure assets or income are not overstated, liabilities or expenses are not understated
material - material items must be disclosed separately, immaterial items can be aggregated into groups
relevant - accounting information must be useful assisting users in their decision making process
reliable - free from material mistakes and errors
complete - presented without omission of material information
comparable - providing ability to compare information through time and with other entities
understandable - users without specific accounting knowledge must understand the accounting information
To ensure the above characteristics each business must have people, accounting procedures, software to process information and control system to control all the process. All these means are called accounting information system.
Pubblicato da SEO MASTER a 10:21