Tag: accounting information system

The basic purpose of the accounting information system of an organization is to provide useful information about an economic entity and to facilitate the decision-making of its different users, such as shareholders, creditors, investors, administrators, or the government authorities themselves. As a result of the fact that the accounting information system of a company serves a set of diverse users, different branches or subsystems originate. The financial information subsystem: financial accounting. The tax information subsystem: tax accounting. The administrative information subsystem: administrative accounting. Financial information subsystem It is made up of a series of elements such as registration standards, accounting criteria, and forms of representation of information from external users. This type of accounting information system is known because it expresses in quantitative and monetary terms the transactions carried out by an entity, as well as certain economic events that affect it, to provide useful and reliable information to different external users. for your decision-making. Users of financial accounting -. Financial information is useful for shareholders, creditors, analysts and financial intermediaries, the investing public, regulatory bodies, and all those external users of accounting information of an economic organization. Tax information subsystem It is designed to comply with the tax obligations of organizations concerning a specific user: the treasury. The government authorities are interested in having the information of the different economic organizations to quantify the amount of profit that they have obtained by the tax laws in force as a product of their activities and thus be able to determine the amount of the tax that corresponds to them. to pay. Users of tax accounting -. The information generated by the tax information subsystem is useful for government authorities. Administrative information subsystem Administrative accounting is an accounting information system at the service of the internal needs of the administration aimed at facilitating the administrative functions of planning and control as well as decision making. Among the applications are the preparation of budgets, the determination of production costs, and the evaluation of the efficiency of the different optional areas of the organization, as well as the performance of the different executives of the same. Users of administrative accounting -. The information generated by this subsystem is useful only for internal users of the organization represented by its directors, especially by general directors, area managers, and department heads, among others. Comparison Procedures The comparison technique consists of determining the existing similarities and differences that the Financial Statements contain and specifically the Balance Sheet, the idea is to examine their importance based on absolute and relative values to diagnose the variations that have occurred. It can be in one year or comparing several consecutive years. To compare an account, the total amount of Assets, Liabilities, or Results can be used as a reference; You can also compare the total of the Equity, the current balances with the previous ones, or compare our balances with those of other companies or reference standards in the sector in which we participate. Through a basic financial statement, such as the statement of changes in the financial situation, this technique will be presented, since it is the most used and convenient approach for companies because it is based on the analysis of variations. The approach for the statement of changes in financial position is to analyze the changes in all other items of the statement of financial position or balance sheet and classify them as operations, investments, and financing. Its elaboration consists of: Two statements of financial position (that is, a comparative statement of financial position) refer to the beginning and end of the period to which the statement of changes in financial position corresponds. An income statement for the same period. Additional information regarding the operations and events recorded in the year (notes). The process consists of analyzing the variations resulting from the comparative statement of financial position to identify the increases and decreases in each of the items of the statement of financial position within the accounting information system, which ends with the net increase or decrease in cash. . To carry out this analysis, it is important to identify the cash flow generated or allocated to the operation, which consists of translating the net profit reflected in the income statement, into cash flow, separating the items included in a said result that does not imply cash disbursement. , such as depreciation expense and amortization. The purpose of the statement of changes in financial position is to represent all relevant information related to cash management; that is, its collection and use by the entity during a given period and, as a consequence, show a summary of the changes that have occurred in the financial situation so that the users of the financial statements can know and evaluate the liquidity of the entity. Limitations of financial information The main characteristic of financial information is to be useful, that is, to serve what it was designed for decision making. Given that the fundamental purpose of accounting is to prepare financial information that supports the decision-making process of the different users, to ensure its quality they must comply with a series of basic characteristics, usefulness, reliability, and provisional nature. The importance of financial statements focuses on the fact that through them external users, whether they are creditors or shareholders, visualize the financial performance of an organization. For example, for some individual who has a shareholding in a public company; The best way to appreciate how good their investment has been being to carefully analyze the basic financial statements that the company has generated, through the accounting information system. In many cases, you will be able to complement your evaluation with the additional comments and graphs that can be added, for the information contained in the financial statements will continue to be the fundamental part. The final product of the accounting process is the financial statements, a necessary element so that the various users can make decisions. The financial information that said user requires focuses primarily on the evaluation of the financial situation, profitability, and liquidity. Based on the information needs of the users, accounting considers that every business must present four basic reports: The statement of financial position or balance sheet, whose purpose is to present a list of resources (assets) of the company as well as the sources of financing (liabilities and capital) of said resources. The income statement reports on the profitability of operations. The statement of changes in stockholders' equity, whose objective is to show the changes in the investment of the owners of the company. The statement of changes in the financial situation, whose objective is to provide information about the liquidity of the business; that is, presenting a list of cash sources and cash disbursements, which provides a basis for estimating future cash needs and their likely sources. The objectives of the Financial Statements are affected by the business environment in which the entity operates, and by the characteristics and limitations of the type of information that the financial statements can provide, for example, we can note some of the limitations of financial information: Internal transformations, transactions, and other events that affect the entity economically may affect its comparability. The financial statements, especially the balance sheet, present the book value of resources and obligations and do not purport to present the fair value of the entity as a whole, such as human resources, intellectual capital, the product, the brand, the market, etc. As they refer to ongoing business, they are based on various aspects of estimates and judgments that are prepared considering the different accounting period cut-offs. For its presentation, it is sometimes necessary to resort to estimates and personal judgments. It presents the financial situation of the company and its results in a "reasonable" way, but it does not show 100% reality. Practical applications using specialized software There are many types of accounting software applications on the market today and the applications are meant to perform accounting functions for large business organizations. While others are intended for personal use, other apps fall somewhere in the middle that performs functions suitable for small businesses as well as those that suit the average person. The software available varies from the simplest to the most complex, with a lot of variation in price as well. We can call accounting software accounting programs or computerized accounting packages based on technological elements or help by them, aimed at systematizing and simplifying accounting tasks with the use of systematized elements. The Accounting Software records and processes the historical transactions that are generated in a company or productive activity: the functions of purchases, sales, accounts receivable, accounts payable, inventory control, balances, production of items, payroll, etc. To do this, you only have to enter the required information, such as accounting policies, income, and expenses, and have the program perform the necessary calculations. These functions can be developed internally by the company or organization that is using them or they can be acquired from a third party, and there is also a combination of both alternatives, that is, a software package developed by a third party with local modifications. Currently, the characteristics of accounting software, required by users, have allowed their attributes to improve in the past in their offer. Thus, today Accounting Software is integrated between the management part and the accounting part, no longer in subsequent processes, but online, that is, in real-time. Its main characteristic is that it serves companies that need to involve several users simultaneously, there are accounting software applications with the option of concurrent multi-users and others that do not, and with processes integrated into the company's accounting. The most complex and expensive business accounting software is the high-end, often part of an extensive software suite. Some companies choose to develop their accounting software, tailoring it completely to their particular needs. Other companies choose to buy ready-made software packages. Many organizations use a combination of the two, purchasing software and applying local modifications to make it more efficient. Bibliography Gerardo Guajaro Cantu. Accounting for non-accountants. Inter-American McGraw-Hill Publishing. 2005. Arturo Elizondo Lopez. Accounting Process 3. International Thomson Editores, SA de CV 2004. Elijah Lara Flores. First accounting course. Editorial Thresholds. 2006. Stephanie Paola. Accounting dictionary. Cantú graphic communication. 2011.

Tag: accounting information system

Accounting information system: procedures, limitations, and applications

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