What is Accounting Data? Meaning, Features, and More.

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Accounting is used to manage financial transactions and prepare related reports like Trading Account, Profit and Loss Account, Balance Sheet, Cash Flow Statement, etc. which are used to understand the status, performance, etc. of the organization in numbers but to prepare these reports, supporting documents are required which are also known as vouchers and these documents are called accounting data.

What is Accounting Data?

Accounting data is the financial data (Fact) which is used to prepare accounting information and until it is converted into accounting information by processing it through accounting process, it is difficult to understand and use it in various fields because accounting data is in raw form which is processed and converted into finished form. Examples of accounting data include all the supporting documents like bills/invoices/memos, debit notes, credit notes, receipts, pay-in-slips, cheques, etc.

Accounting data is used or managed by internal users or management and various reports are prepared by processing it for self and external users. The more accurate the accounting data is, the more accurate the reports prepared from it can be because all reports are based on data.

Features of Accounting Data

Following are the features of accounting data:

1. Source of Accounting Information:

Accounting data is a source of accounting information as it is through this that accounting information is prepared. Accounting information includes various reports like trading account, profit and loss account, balance sheet, etc. To prepare accounting information, accounting data is processed through the accounting process and this process includes identification, measurement, recording, classification, etc.

2. Primary Data:

Accounting data is primary data as it includes source documents like invoices, bills, debit notes, credit notes, cheques, pay-in-slips, etc. In simple terms, any financial transaction that takes place in an organization comes under it like sales, purchases, payments, receipts, etc. Note: The accounting process starts only when primary data is obtained.

3. Raw Form:

Accounting data is in raw form as it contains financial events occurring in the organization like sales, purchases, returns, payments, etc., and is processed and converted into finished forms like trading account, profit and loss account, balance sheet, etc. which are also called accounting information. Unless it is processed and converted into finished forms, external users face difficulty in understanding it.

4. Financial Data:

Accounting data is a financial data because accounting only records and manages the economic transactions happening in the organization. If any non-economic event occurs in the organization, then it will not be called financial data and will not be recorded in the accounting books. In the first step of accounting, the transactions are identified which tells which transactions are to be recorded and which transactions are not and the transactions which are recorded are called financial data.

5. Managed by Management:

Accounting data is managed by the management of the organization. Management processes the accounting data and prepares various reports for internal and external users which help internal and external users in making relevant decisions. Internal users include person within the organization and external users include person outside the organization.

Read Also:

• What is Accounting? Meaning, Features, and More.
• Process of Accounting
• Advantages and Disadvantages of Accounting
• What is the Accrual Basis of Accounting? Meaning, Features, and more.
• What is the Cash Basis of Accounting? Meaning, Features, and More.
• What is Hybrid Basis of Accounting? Meaning, Features and More.

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