All the person associated with the organization are interested in knowing about the status, performance, etc. of the organization and this interest can be direct or indirect, that is why all the related financial transactions occurring in the organization are managed through accounting so that the related accounting reports can be prepared and the person associated with the organization can be informed about the status, performance, etc. of the organization and these accounting reports are called accounting information.
Table of Contents
What is Accounting Information?
Accounting information is financial information that is prepared by processing accounting data through the accounting process. In simple words, accounting reports prepared through the accounting process are called accounting information such as trading account, profit and loss account, balance sheet, cash flow statement, etc. Financial information is in a well-organized and finished form which makes it easy to understand and take decisions related to it.
Accounting information is prepared by the internal management of the organization, and it helps the person associated with the organization to know about the organization like what is the status of the organization, how is the performance, etc. But keep in mind that the data used in preparing the accounting information should be correct and relevant because if wrong data is used then the accounting information will also be wrong.
Features of Accounting Information
Following are the features of accounting information:
1. Financial Information:
Accounting information is a financial information because accounting records and manages only the transactions of financial nature, hence all the reports prepared during the accounting process are also of financial nature. If any transaction is of non-financial nature, then such transaction will not be recorded and managed in the accounting book and will not be found in the accounting information but there may be exceptions.
2. Finished Form:
Accounting information is in a finished form because it is prepared through the accounting process using accounting data and is understandable. In simple words, it is the result of book-keeping or accounting and hence it is in a ready form. Trading account, profit and loss account, balance sheet, etc. are some of its examples.
3. Prepared from Accounting Data:
Accounting information is prepared through accounting data. Talking about accounting data, it includes facts about financial transactions like sales, purchases, returns, payments, receipts, etc. Note that accounting information will be prepared as per the accounting data received, so more attention should be paid to the accuracy and completeness of accounting data.
4. Prepared by Management:
Accounting information is prepared by the internal management of the organization as it is the function of the internal management of the organization. To prepare accounting information the management first identifies the transactions, then measures, then records, then classifies, then summarizes, etc. After that, it acts as required.
5. Helps to Users:
Accounting information helps both internal users and external users of the organization as it helps all users to make decisions accordingly. Internal users include persons inside the organization like management, employees, etc. and external users include persons outside the organization like creditors, investors, etc.
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QNA/FAQ
Q1. What is accounting information?
Ans: Accounting information is financial information that is prepared by processing accounting data through the accounting process.
Q2. Write examples of accounting information.
Ans: Income statement (like trading account, profit and loss account, etc.), balance sheet (like balance sheet, etc.), etc. are the examples of accounting information.
Q3. In what form is accounting information, raw or finished?
Ans: Accounting information is in finished form.
Q4. Is the accounting information well organized or not?
Ans: Accounting information is well organized as it is prepared with the help of the accounting process, and the accounting process is well organised.
Q5. Write the features of accounting information.
Ans: Following are the features of accounting information:
1. It is a financial information.
2. It is a finished form of data.
3. It is prepared from accounting data.
4. It is prepared by the management.
5. It helps the users of the organizations.
