What is accounting information?
The information that is provided by an accounting system. Such information is from a set of data or events. Accounting information is significant because it helps users make informed economic decisions. They are quantitative and partially qualitative in nature. The quantitative aspects are usually in monetary terms, such as the figures in the financial statements. However, the qualitative areas are partly numerical and non-numerical.
The importance of accounting information is to help users make decisions and provide a roadmap on which actions and inactions can be decided.
Types of Accounting
Management Accounting
Management accounting provides information regarding the cost and revenue aspects of an entity. It is mostly used by manufacturing entities, although the principles apply to other kinds of industries. An aspect of management accounting information is costing.
Business advisory
This includes risk, compliance, and governance. Accounting provides information relating to risk and compliance. It also provides data on management processes and strategies.
Auditing information
To ensure fairness in the information provided by the accounting system, audit information is provided. This clarified whether the information provided by accountants is in compliance with extant principles and laws.
Financial Accounting
Financial accounting provides detailed information regarding a business's financial performance, financial position, and cash flows. These are basic financial data required by business managers, shareholders, and investors.
Government Accounting
Through an accounting information system, data can be provided to the government. One popular government accounting data is the national annual budget. This budget gives decision-makers in the public sector a direction for the year under consideration.
Taxation
Tax information is required to ensure that the accurate amount of taxes is filed and paid to the government. It also ensures that taxpayers are in compliance with the tax laws of the country.
Financial management
This provides a wide range of information required by management and investors alike. From financial management information, users can make financial and investing decisions. Areas like projections, capital budgeting, and discounted cash flow techniques are useful in this regard.
