Principles of Accounting Information System
The scope of Accounting is extensive and develop in Business, Trade, Government, Financial institutions, particulars and families and every other field . Accounting principle is used in each step .
Many think the Accounting scope is only limited to financial transactions of a business interest but in fact, it is not true.
Accounting is necessary for all types of business organizations, even for particulars and families. Financial transactions appear all along in business organizations with a government office, non-trading involvement , and professionals .
Principles of Accounting Information System
- Flexibility.
- Cost-effectiveness,
- Useful Output/ Necessity,
Cost Effectiveness
Accounting instruction must be cost-effective.
It must exceed instruction cost. If the accounting instructions system is cost-effective, it can afford choose output and if extensible , it can devote much in accomplish the equatable of a person or an organization.
Useful Output / Necessity
Accounting instruction system must be capable to afford a fundamental result.
Working instruction must be understandable, significant , reliable, timely and correct. The designer of instruction system will always take the essential and awareness of accounting instruction users into attention .
Flexibility
In accounting instruction system there must be foundation for involvement of changed instruction desired by various users . This system must be appropriately extensible so that it can meet alternated demand.
Difference between Event and Transaction
The Main difference between transaction and event is when an event import change to account balances, it is classified as a transaction and recorded in the books .
Transactions are the subject element of Accounting
Accounting means control of accounts of transactions regularly .Transactions are very essential elements in Accounting .
Events :
treated as transactions are listed in the books of accounting.
Events other than transactions are not listed in the books of accounts. The dictionary essence of transaction is to afford and proceeds .
Difference between Event and Transaction
Event
(1) All events are not transactions.
(2) An event may or may not import change in the financial condition of a person, family, or organization.
(3) Financial changes create by events may or may not be significant in terms of money.
For example, the death of a skilled candidate may import heavy loss to a business, but this loss is not quantitative in terms of money.
(4) Events are utilized in a wider sense.
It may or may not need two parties for the existence of an event.
(5) alternation of goods or services may or may not appear for an event.
(6) It is. not fundamental that each event will be listed in the books of accounts.
It is excessive to record any event in the books of accounts if it is not quantitative in terms of money.
(7) Transaction describe event is settled for cash.
(8) As per accounting principle of events—
(a) Cash statement.
(b) isolated assurance for receipts and cash head wise and,
(c) Final assurance of receipts and cash are made.
(9) The scope of the event is very expanded .
(10) Transactions related to events are not always supported by confirmation .
Transaction :
(1) All transactions are events.
(2) An event must import financial change .
(3) The financial changes generate by transactions must be quantitative in terms of money.
(4) Transactions are used approximately in a definite sense.
In the case of transaction two group are must .
(5) As a effect of transactions alternation of goods or service is a must.
Of course, in some cases, there is an rejection . For example, searching of goods, fixed asset reduction etc.
(6) Each transaction must be listed in the books of accounts; otherwise correct results cannot be determined from the books of accounts.
(7) Financial transactions may be established in Cash or are made on credit .
(8) In the accounting procedure of the transaction in the first phase communizing , in the second phase insertion in the ledger and in the third phase financial statement is arranged .
(9) The scope of the transaction is bounded.
(10) Business transactions must be promoted by evidence .
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