2.1 Accounting Information System Notes
- The accounting information system is the process through which accounting records are created.
- Accounting records are required under US GAAP (Generally Accepted Accounting Principles).
- Public companies are mandated to report their financial information.
Accuracy and Consistency:
- Accounting records should be both accurate and consistent.
- Managers are responsible for ensuring the accuracy of financial reporting.
- Consistency should be maintained year to year within a firm.
- There should be some degree of consistency across different firms.
Importance of Accounting Records
- Accounting records are vital for aiding in decision-making, both internally and externally.
Internal Decision Making:
- Different managers in various departments use accounting records.
- Decision-making occurs at high and low levels within the firm.
External Decision Making:
- Shareholders decide whether to invest based on accounting records.
- Banks and other creditors use accounting records to determine whether to provide loans.
- Government agencies make decisions about the business using this information.
- Suppliers and customers decide whether to engage in transactions (buying or selling goods) with the firm based on these records.
Accounting Cycle
- The course will cover the nine steps of the accounting cycle.