In this article, we will discuss what are the different types of Accounting Information System.
Accounting Information System can be classified into three categories-
1. Financial Accounting Information System:
Financial accounting information refers to such information describing the financial resources, obligations and activities of an economic entity which may be a organisation or an individual. Accountants use the term “financial position” to describe an entity’s financial resources and obligations at a particular point of time and the term “financial result” to describe its financial activities during the financial year.
These financial accounting information are designed primarily to assist investors and creditors in deciding where to place their surplus scarce investment resources.
2. Management Accounting Information System:
Management accounting information involves the development and interpretation of accounting information and it is intended specifically to assist management in operating the business. Managers use these information in setting the Company’s overall goal, evaluating the performance of the departments and individuals, deciding whether to introduce a new line of products and such other managerial decisions. This accounting is constantly required to the top level management for the purpose of running their administration smoothly.
3. Tax Accounting Information System:
Preparation of income tax return is a specialised field within accounting. To a great extent tax returns are based on financial accounting information. However they are often adjusted or reorganised on the basis of income tax reporting requirement.
Tax accounting information is important for company’s successful operation and is related to financial and management accounting information. Its most challenging aspect is tax planning, which means anticipating the tax effects of business transactions and structuring these transactions in a manner that will minimise the income tax burden.
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