Importance of Accounting Information

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are the some examples of the managerial accounting information:

a. Monitoring cost of the product.

b. Setting Budgeting

c. Variances analysis

d. Allocation and Apportionment of Over heads

3. Tax Accounting Information:

This is the information which purely related to tax returns, tax filling and tax regulations, companies hire tax consultants for tax planning and to reduce tax burden on the company in the future.

Types of Accounting Information System (AIS):

We can categorized the accounting information system in to three different types.

1. Manual System

2. Legacy System

3. Modern IT System

1. Manual System:

Manual accounting information system is normally used the business based on a very small scale or you can say home based business or small medium size entities. This system is entirely manual, therefore it requires a lot of paper work to maintain the record of business accounting records, for example, general journal, general ledger, subsidiary ledger etc..

2. Legacy System:

Legacy accounting information system is batter then the manual accounting information system, it has some advantages as well as some disadvantages. It is usually a customized system, means it is been made specifically according to the needs and requirements of different organization.

And its disadvantage is that, as it is an out dated system therefore it is very difficult to finds its hardware parts and software.

3. Modern IT System:

Modern IT accounting information system, is the most expensive in three of them, this system shows the data on your computer screen by translating the data in readable language. It is very important to use updated accounting information system in the modern and fast changing world, if we want keep our business record save and compete the world.

Characteristics of an effective and efficient accounting information system:

Following are some of the characteristics of a good accounting information system.

1. Reliable

2. Relevance

3. Easy to understand

4. Comparable

5. Accessible

1. Reliable:

Reliability means, who much a user can depend on the system or who much a user can be assure of the system. A good accounting information system is always verifiable and reasonably free from errors.

2. Relevance:

A good system must have relevant information, data and various comparisons available for the business to take an effective and efficient decision.

3. Easy to understand:

It should be easily understandable and user friendly to effect the business activities in a positive manner.

4. Comparable:

A good AIS must have the ability to compare the various report of the business on the basis of period and units of measurement to identify the business trend.

5. Accessible:

It is very to have easy and quick access to the data/information for the business to take quick, effective and efficient decisions and to plan for the future.

Conclusion:

From the above mentioned detail we can clearly analyze that how much a good accounting information is important to the business, how it is important for internal user and external users.

I came to the conclusion that accounting information is vital for decision making, Monitoring and controlling the organization and its activities, also the information is necessary tool for external users of organization to take well informed decision about the organization, accounting information reflects the picture of the organization to the external world, it should be clear concise and Accurate.

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