Objectives of Accounting Information System, Internal and External Essay

Objectives of Accounting Information System, Internal and External Transactions, Peachtree Exercise - Essay Example In the same manner, changes and improvement in accounting too, are continually being made, in the process of business information. "A systematic record of the daily (and hourly) events of a business leading to the presentation of a complete financial picture is known as accounting, in its elementary stage, as BOOK KEEPING." ----- M.C. Shukla. "Book-Keeping is the science of recording transactions in money or money's worth in such a manner that at any subsequent date, the nature and effect of each transaction, and the combined effect of all the transactions may be clearly understood, so that the accounts prepared at any time from the records thus kept, may show the owner of the books his true financial position"----- L.C. Cropper. Those who invest their capital and devote their efforts in business expect that they will receive a return in the form of profit. Moreover, they employ managers in the business it is the duty of the managers to maximize profit and to minimize losses. In order to maximize profits and to minimize losses there must be proper record of all events and transactions of the business so that at the end of a period, the owner of the business can have knowledge about:- Each and every transaction affects the basic of accounting equation. ... 2. To keep an eye on each and every tangible and intangible asset. 3. To ascertain the working results from the written records of transactions, i.e., whether profit or loss has incurred after a prescribed reasonable period. 4. To ascertain the financial position of the business on the last date or at the end of a period in terms of assets and liabilities. 5. The help and guide the management of the business enterprises to make decisions from the historical data of accounting of the past. 6. To help and guide the management of the business to determine their policies for the current period and for future, in short and long terms. NEED OF BUSINESS RECORDS Those who invest their capital and devote their efforts in business expect that they will receive a return in the form of profit. Moreover, they employ managers in the business it is the duty of the managers to maximize profit and to minimize losses. In order to maximize profits and to minimize losses there must be proper record of all events and transactions of the business so that at the end of a period, the owner of the business can have knowledge about:- 1. The gross profits on purchases and sales of merchandise. 2. The net profit or loss after checking of all paid or accrued expenses, usage of different assets. 3. The cost of assets in detail and total of all assets. 4. The liability of business including accrued. 5. The amount of investment at the end of the period. In a nut-shell the owner can see the report of his business after a certain period at a glance and can judge progress of his business. WHAT IS TRANSACTION Any exchange of values is called "transaction" such as a) Purchase of Merchandise, Land, Building, and Furniture on cash. b) Purchase of Merchandise, Plant, Furniture