Accounting System Information part 1

In business, computations play a major part. Calculators and thick files for records were used to track down company's history and present development. It's a basic and traditional practice. It consumes much time, effort and materials to finish. Sometimes, we see our cashiers or accountants were very busy with their calculators and filing lots of files in their cabinets. They are also the one who always cram and render overtime. There's now a business solution that will make their job lighter and easier. It is called as the accounting information system.

accounting system information

Accounting information system is a system of records, usually computer based, which combines accounting principles and concepts with the benefits of an information system and which is used to analyze and record business transactions for the purpose to prepare financial statements and provide accounting data to its users. Some accounting information systems are still manual, i.e. accounting records are made with a pen, paper and manual entries into accounting books.
There are three major types of accounting information systems used by small business owners. These include manual or paper-based systems, spreadsheet accounting systems, and accounting software. Each of these systems is unique in the level of information that it provides to users. There is no one choice that is right for everyone however makes sure that the one you select is one that will meet the needs of your company. The more complex your reporting requirements become, the more robust your accounting systems should be.
These automated systems save firms time and money. By integrating accounting practices with technology, firms are able to post transactions to various ledgers with a single click. Information about invoicing, returns, and inventory is simultaneously updated as sales people access the database and input transactions. And this process could take hours for a company that processes many orders a day.

Accounting source and information

 Accounting is a definite process of interlinked activities that begins with the identification of transactions and ends screen the preparation of financial statements. Every step ropes the agility of accounting generates information. Generation of information is not an end in itself. evident is a instrumentality to facilitate the dissemination of information among various groups of users. consonant information enables the parties those who are interested to bring earmark decisions. Therefore, dissemination of information is one of the essential calling of accounting. To substitute useful, the accounting information should ensure to:• insure information owing to forming economic decisions;
• urge the users who rely on financial statements as their principal source of information;
• Provide information well-suited because grading further predicting the timing, symbol and uncertainty of potential cash-flows;
• insure information for judging management's endowment to utilise resources effectively in meeting goals; provide factual also interpretative information by disclosing underlying assumptions on matters subject to interpretation, evaluation, prediction, or constitution; and


 Provide information on activities affecting the society.The role of an accountant in generating accounting information is to screen, observe and recognise transactions and events to act and process them, and thereby compile reports comprising accounting information that are communicated to the users. These are then interpreted, decoded also used by management and other user groups. It must exhibit ensured that the information provided is relevant, adequate and candid through decision-making. The apparently aberrant needs of internal and alien users of accounting information swallow resulted in the progress of sub-disciplines within the accounting discipline namely, financial accounting, cost accounting also management accounting. Financial accounting assists for keeping a systematic record of financial transactions the presentation and preparation of pecuniary reports in order to arrive at a measure of organizational success and financial soundness.It relates to the past period, serves the stewardship metier and is monetary in nature. It is primarily concerned with the vittles of monetary information to unitary stakeholders. Cost accounting assists in analyzing the income besides expenditure being ascertaining the payment of contrastive merchandise manufactured or services provided by the firm besides fixation of prices thereof. It also helps to control the costs and providing needed costing information to management because decision-making. Management accounting deals ensconce the provision of required accounting information to people within the gadgetry to enable them in planning, decision-making, and controlling business operations.Management accounting draws the well-suited information mainly from cost accounting besides cash accounting which helps the management in budgeting, assessing profitability, elegant pricing decisions, capital expenditure decisions and so on. Besides, it generates various information which relates to the future again is good for decision-making clout the organisation. commensurate information includes: cash flows, sales forecast, manpower needs, pull requirement, environmental illumination about effects on water, air, land, humdrum resources, flora, fauna, affable responsibilities, human health, etc. As a result, the scope of accounting has become so vast, that larger areas rejoice in human resource accounting, social accounting, worry accounting presuppose further gained prominence.           

A Guide To Accounting For Goods In Transit

Accounting for Goods in transit is the first step in the process of tracking the flow of inventory. Accounting for inventory is a mandatory function to any business entity whose purpose not only demonstrates the effects of inventory on profitability and cash but also the assessable tax liability due to government. Accounting in the context of shareholders is usually done monthly, quarterly or annually, and relevant documents are generated and kept to report inventory activities over the same period.

Accounting for inventory for purposes of tax assessment goes beyond the day of filing your returns, because the law compels you to keep your inventory records for future verification by the tax authorities. Tax regulations in most countries require at least one physical inventory count per year; thus, these records should be stored in the event of a tax audit. If continuous cycle counting is used instead of a single physical inventory count, then these records must also be stored. The time period over which the law mandates you to retain your accounting documents differs under various legislations, but ranges between 5 and 7 years.

This page discusses record keeping from a context of Accounting for Goods in Transit

?Goods in Transit or GIT as it is commonly referred to is a Current asset ordinarily classified under the sub heading of Inventory items within the balance sheet. It represents commitments to pay or already paid for inventory which does not yet physically exist in the company stores.

From the simplistic side of record keeping, a company receiving inventory typically records it as soon as it arrives. This way both the inventory and liability accounts increase at the same time, thereby resulting in no net change in the statement of financial position and no impact on profit or loss. Consequently, this situation creates no particular need for recordkeeping.

Goods in Transit Accounting

Accounting for goods in transit is necessitated by a requirement for companies to declare commitments to which liability is due. In other words the company declares its interest in shipped goods for which title was only transferred at some point in the shipment process.

Shipping documents, such as a bill of lading, should be stored that indicate the date of shipment from the facility, as well as a notification form from the shipping entity that describes the date on which title passed to the buyer. The bill of lading can be used to estimate the date on which title passes by adding a standard number of days to the ship date, based on the distance of the buyer from the shipper?s facility; thus it is a critical document for affirming the timing of any revenue transactions.

Upon receipt of the goods, a verification of the goods received as per the bill of lading is done in comparison with the purchase order. A goods received note (listing items received) is then raised and signed by stores and procurement clerks to confirm material quantities received.

From a perspective of accounting for goods in transit, the company has to register in its books the amounts owed to the supplier as soon as liability or risk to the goods passes to the buyer. The timing is usually spelt out in the suppliers terms of payment to be confirmed by the company at the point of placing the order. Terms usually range from date of shipment to date of delivery.

Taking stock of liability to the goods in transit and risks there of

Taking title to goods in transit means that you have not only accepted to pay your supplier the agreed price of what you expect to receive subject to deductions for quality and other losses to be borne by them, but also possible losses arising in transit due to theft, fire and others to be borne by you. Hence in addition to the supplier?s cost, you need to pay for insurance as an upfront additional cost to the goods for un foreseen risks. Other incidental costs might include financing charges payable or charged by your banker in the event that you are paying through a bank loan.

The ledger entries required when accounting for goods in transit are as follows:

Dr: Goods in Transit A/c (create unique tracking code for each consignment)

Cr: 1. Supplier?s A/c, 2. Insurers A/c (premium payable), 3. Bank a/c (with interest charged)

Credit any or all of the three account options above depending on their relevance to the consignment. Also make reference to the consignment tracking code in your narration for the payments, you will need this information at a later stage when valuing your goods after they arrive at your company store.

Return from Accounting For Goods In Transit to Inventory Management.

View the original article here