Types of Accounting Information
Since times immemorial, accounting has been the primary source of generating information about the day to day working and future planning of the organization. The accountant has performed this role. Much of the recording function in today's organization is computerized. This has been possible due to the advances in the field of information technology, which has made accounting activities possible just in time.
From the definition of accounting, it is clear that the social role of accountant is that of information scientist. Insofar as business entities are concerned, a distinction is normally made between financial accounting and management accounting. Financial accounting deals with recording and analysis of financial results of transactions as a means of arriving at a measure of organization's success and financial soundness. Financial accounting information relates to the past period and is essentially monetary in nature. However, its decision-usefulness is limited. Management accounting is concerned with the activity of providing information (financial and non-financial) to enable management to take decisions about operations of business. Management accounting draws all financial information from financial accounting. Besides, it develops other information (quantitative and qualitative, financial and non-financial), which is futuristic in character and relevant for decision-making in the organization. Thus, it includes estimates, forecasts of sales, cash flows, purchase requirements, manpower needs, pollution data, health and safety data about employees, product and plants. Further, financial accounting information serves the stewardship function while management accounting aids in internal decision-making by management. Therefore, financial accounting is a sub-system of accounting information system (AIS), which in turn is part of management information system.
Information is the processed data, fact or any observation that adds to the knowledge. A singular datum such as 1000 is no information, but 1000 units of finished goods is information because it indicates the position of stock at hand.
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