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Accounting As a Source of Information

 

Accounting is a definite process of interlinked activities that begins with the identification of transactions and ends with the preparation of financial statements. Each step within the process of accounting generates information. Generation of data isn't an end in itself. It is a means to facilitate the dissemination of knowledge amongst various teams of users. Such data enables the parties those that are interested to take appropriate decisions. Therefore, dissemination of data is among the essential perform of accounting. To be helpful, the accounting information should ensure to:

 

 

• Provide information for making financial choices;

 

• Serve the users who rely on financial statements as their principal source of data;

 

• Provide data helpful for evaluating and predicting the timing, quantity and uncertainty of potential money-flows;

 

• Provide data for judging administration's ability to utilise resources successfully in meeting goals; provide factual and interpretative data by disclosing undermendacity assumptions on matters subject to interpretation, evaluation, prediction, or estimation; and

 

• Provide information on activities affecting the society.

 

 

The function of an accountant in generating accounting information is to screen, observe and recognise transactions and occasions to measure and process them, and thereby compile reports comprising accounting information that are communicated to the users. These are then interpreted, decoded and used by management and different consumer groups. It must be ensured that the information provided is related, adequate and reliable for resolution-making. The apparently divergent needs of inner and external users of accounting info have resulted in the development of sub-disciplines within the accounting self-discipline namely, financial accounting, cost accounting and administration accounting. Monetary accounting assists for keeping a systematic report of monetary transactions the presentation and preparation of economic reports as a way to arrive at a measure of organizational success and monetary soundness.

 

 

It relates to the past period, serves the stewardship perform and is monetary in nature. It is primarily concerned with the provision of economic information to all stakeholders. Price accounting assists in analyzing the earnings and expenditure for ascertaining the cost of various products manufactured or companies provided by the agency and fixation of costs thereof. It also helps to control the prices and providing essential costing information to management for choice-making. Management accounting deals with the provision of required accounting information to people within the organisation to enable them in planning, decision-making, and controlling business operations.

 

 

Management accounting draws the related info primarily from value accounting and financial accounting which helps the management in budgeting, assessing profitability, taking pricing decisions, capital expenditure selections and so on. Besides, it generates other info which relates to the longer term and is relevant for determination-making in the organisation. Such information consists of: cash flows, sales forecast, manpower needs, purchase requirement, environmental data about effects on water, air, land, natural resources, flora, fauna, social responsibilities, human health, etc. Because of this, the scope of accounting has become so vast, that new areas like human resource accounting, social accounting, responsibility accounting have also gained prominence.

 

 

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