Accounting Information Systems

Accounting System

• Identifies, records, and communicates relevant and reliable information to help users make better decisions.
• Provides reports to stakeholders about the economic activities and condition of a business.

Branches of Accounting

• Auditing
• Taxation
• Forensic Accounting
• Financial Accounting
• Cost and Management Accounting
• Public Sector Accounting

Financial Statements

• Balance Sheet
• Income Statement
• Statement of Cash Flows

Users of Accounting Information

• External Users: Lenders, Consumer Groups, Shareholders, External Auditors, Governments, Customers
• Internal Users: Managers, Sales Staff, Officers, Budget Officers, Internal Auditors, Controllers

Accounting Principles and Rules

• Generally Accepted Accounting Principles (GAAP) govern financial accounting practice.
• Relevant Information: affects the decision of its users.
• Reliable Information: is trusted by users.
• Comparable Information: is helpful in contrasting organizations.
• Malaysian Accounting Standards Board (MASB): sets both broad and specific principles.
• Securities Commission of Bursa Malaysia: establishes reporting requirements for companies that issue shares to the public.

Accounting Principles

• Objectivity Principle: accounting information is supported by independent, unbiased evidence.
• Cost Principle: accounting information is based on actual cost.
• Going-Concern Principle: reflects the assumption that the business will continue operating.
• Monetary Unit Principle: express transactions and events in monetary units.
• Revenue Recognition Principle:
  • Recognize revenue when it is earned.
  • Proceeds need not be in cash.
  • Measure revenue by cash received plus cash value of items received.
• Business Entity Principle: a business is accounted for separately from other business entities, including its owner.

Accounting Equation

• Assets = Liabilities + Equity

Assets

• Current Assets:
  • Cash
  • Accounts Receivable
  • Notes Receivable
  • Store Supplies
• Fixed Assets:
  • Land
  • Buildings
  • Equipment
  • Vehicles

Liabilities and Equity

• Short-term Liabilities: Accounts Payable, Bank Loan, Creditors' claims, Accrued Expenses
• Long-term Liabilities: Bond, Debenture
• Contributed Capital: Owner's claim on assets
• Retained Earnings: Dividends

This quiz covers the basics of accounting information systems, including identifying, recording, and communicating relevant financial information to stakeholders.