Q. Define an accounting system?
Effects from a recent survey of 1400 chief financial officers (CFOs) indicate that tomorrow's accounting professionals will be called upon to bridge the space between technology and business. With the increase of integrated accounting and information systems technical expertise will go hand in hand with general business knowledge. Since we show in Exhibit 25 an accounting system is a set of records and the procedures and equipment used to perform the accounting functions. Manual systems consist of ledgers and journals on paper. Computerized accounting systems consist of computer files, accounting software, computers and related peripheral equipment such as printers.
Anyway of the system the functions of accountants include (a) identifying, observing and measuring economic events (b) recording, classifying and summarizing measurements and (c) reporting economic events and interpreting financial statements. Both external and internal users tell accountants their information needs. The accounting system allows a company's accounting staff to supply relevant accounting information to meet those needs. As external and internal users make decisions that become economic events the cycle of decisions, information and economic events begins again.
The primary focus of the first four chapters has been on how you are able to use an accounting system to prepare financial statements. But we as well discussed how to use that information in making decisions. Later chapters as well show how to prepare information and how that information helps users to make informed decisions. We haven't eliminated the preparation aspects because we believe that the most informed users are ones who as well understand how the information was prepared. These users understand not merely the limitations of the information but also its relevance for decision making.