What are the steps involved in Process of Accounting

ACCOUNTING PROCESS:

 The process of Accounting involves the following steps:

a) Data creation and collection which provide the raw material for Accounting. The data Collected is historic in the sense that it refers to events that have already taken place.

b) Recording of data, this is done in accordance with the laid down concepts and conventions of Accounting.

The processing methods employed for recording may be manual, mechanical or electronic computer are generally taking to the primary method of recording and processing.

c) Data evaluation is regarded as the most important activity in Accounting these days. Evaluation of data includes controlling the hospital activities with the help of budgets and standard costs, analysing the flow of funds and analysing the accounting information for decision making purposes by choosing among alternative courses of action. The analytical and interpretation work of Accounting may be for internal or external use and may range from snap answers to elaborate reports. Data evaluation has another dimension and can be known as auditor work which focuses on verification of transactions as entered in the books of Account and authentication of financial statements.

d) Data reporting consists of two parts-external and internal. External reporting refers to the communication of financial information viz. earnings financial and funds position about the hospital to outside parties i.e. trustees, Government Agencies and regulatory bodies. Internal reporting is concerned with the communication results of financial analysis and evaluation to hospital management committee & decision making purposes.

The  main objectives of financial reporting are as follows:

a) It should provide information that is useful to present and potential investors, creditors, and other users in making national investment credit and similar decision.

b) It should provide information about the economic resources of an enterprise, the claims to those resources and the effects of transactions, events and circumstances that change resources.

c) It should provide information about an enterprise's financial performance during a period.

 d) It should provide information about how an enterprise obtains and spends cash, about Accounting Concepts

its borrowing and repayments, about its capital transactions and about other factors that and Application may affect its liquidity or solvency.

e) It should provide information that is useful to managers and directors in making decision in the interest of the enterprise and the owners. The emphasis of these objectives is on the information needs of external users common to for profit publicly held enterprise or corporate sectors. However, you may substitute the terms hospital for enterprise and community for owners and the objectives are equally applicable.

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