Accounting information systems is called the language of business and without proper accounting systems, no business can be organized. Accounting information is an integral part of the business environment and an understanding of accounting information is an essential tool in the process of making business decisions. For a merchandising company there are many types of accounting information are required by the company in order to maintain daily business activities.
Accounting Information Needed by Merchandising Company
- Information for Financial Reporting: The Company needs accounting information that will meet its financial reporting requirements and serve the needs of company personal in conducting daily business operations, and also meet any special reporting requirements, such as information required by income tax authorities.
- Information for Recording Transaction: To meet the company’s financial reporting requirements, a merchandising company must measure and record its revenue from sales transactions, as well as the cost of goods sold. In addition, the accounting system must provide a complete record of the company’s assets and liabilities. The information appearing in financial statements is very condensed. For example, the amount shown as accounts receivable in balance sheet represents the total accounts receivable at the balance sheet date. Managers and other employees need much more detailed accounting information that provided in other financial statements. In billing customers, for example, the company’s employees need to know the amount receivable from each credit customer. In addition, the accounting system must provide the dates and amounts of all charges and payments affecting each customer’s account.
- Information for Tax Purpose: In most respects, the information needed for income tax purposes parallels that used in the financial statements differences between income tax rules and financial reporting requirements.