Accounting As a Supply of Info
Accounting is a definite process of interlinked activities that begins with the identification of transactions and ends with the preparation of monetary statements. Every step in the process of accounting generates information. Generation of data is not an end in itself. It is a means to facilitate the dissemination of knowledge amongst various teams of users. Such info enables the parties those who are interested to take appropriate decisions. Therefore, dissemination of data is among the essential function of accounting. To be useful, the accounting info ought to guarantee to:
• Provide data for making financial choices;
• Serve the customers who depend on financial statements as their principal supply of information;
• Provide information useful for evaluating and predicting the timing, amount and uncertainty of potential cash-flows;
• Provide data for judging administration's ability to utilise resources effectively in meeting goals; provide factual and interpretative information by disclosing undermendacity assumptions on issues subject to interpretation, analysis, prediction, or estimation; and
• Provide info on activities affecting the society.
The position of an accountant in producing accounting data is to screen, observe and recognise transactions and events to measure and process them, and thereby compile reports comprising accounting info which can be communicated to the users. These are then interpreted, decoded and utilized by administration and different consumer groups. It have to be ensured that the data provided is relevant, adequate and reliable for choice-making. The apparently divergent wants of inside and external users of accounting information have resulted in the development of sub-disciplines within the accounting self-discipline namely, financial accounting, cost accounting and administration accounting. Monetary accounting assists for keeping a scientific record of monetary transactions the presentation and preparation of financial reports in order to arrive at a measure of organizational success and financial soundness.
It relates to the past interval, serves the stewardship function and is monetary in nature. It is primarily involved with the provision of economic information to all stakeholders. Price accounting assists in analyzing the earnings and expenditure for ascertaining the cost of various products manufactured or services provided by the agency and fixation of costs thereof. It also helps to manage the costs and providing needed costing info to management for resolution-making. Management accounting offers with the provision of required accounting info to people within the organisation to enable them in planning, decision-making, and controlling business operations.
Management accounting draws the relevant data primarily from cost accounting and monetary accounting which helps the management in budgeting, assessing profitability, taking pricing decisions, capital expenditure selections and so on. Besides, it generates other information which relates to the longer term and is relevant for resolution-making in the organisation. Such information includes: cash flows, sales forecast, manpower needs, purchase requirement, environmental data about effects on water, air, land, natural resources, flora, fauna, social responsibilities, human health, etc. Because of this, the scope of accounting has turn into so vast, that new areas like human resource accounting, social accounting, responsibility accounting have also gained prominence.
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