What is accounting system?


The accounting system

A system is defined in the Oxford Advanced Learners Dictionary as simply "a set or assemblage of things connected, or interdependent, so as to form a complex unity; a whole composed of parts in orderly arrangement according to some scheme or plan."

An accounting system is, in that context, basically composed of:

       i.          a set of interrelated activities involving the originating, processing and reporting of financial and other data,
     ii.          written records and reports necessary to collect, process, store, and transmit information,
    iii.          equipment and devices used in the system to expedite the work and provide better control, and
    iv.          personnel directly involved in the accounting activities.

The above components link to form an accounting system which is also influenced by variables external to it, for example, professional accountancy organizations' influences, government directives and new developments in the accounting discipline in other countries.

Objectives of an Accounting System

Accounting systems are designed to attain the following objectives:

       i.          To provide a means by which interested parties may be given information on the financial position and results of operations of a business organization.
     ii.          To facilitate management planning, control and decision-making.
    iii.          To comply with various laws and government requirements.
    iv.          To protect the business and safeguard its assets.

Comments

Post a Comment

Popular posts from this blog

What are the Misconceptions about employee motivation?

Image
Misconceptions about employee motivation In order for an employee to be motivated, depends on various factors such as level and status of the respective employee. There is no one principle to motivate all employees. There are some factors that are considered as motivating tolls for employees however in reality these may not be motivational. The followings are some misconceptions about employee motivation; 1.       Financial reward Money alone cannot generally act as a motivational tool for employees. Formal and informal recognition tends to add motivation for some employees rather than money. Money may tend only to motivate some employees in short term where an employee may be in high need for money. At some stage, i.e. senior level an employee may have enough money and therefore money may no longer motivate him/her. 2.       Natural motivation There is no such a natural motivation. No one can be motivated naturall...
Read more

Share capital, Invitation, Application, Allotment, calls and paid-up procedures

Capital of a limited company is divided into shares of a fixed amount . The amount stated in the Memorandum is known as the Authorized Share Capital . For example, this may be shs. 10 million divided into 100,000 shares of shs. 100 per share. This fixed amount per share is called its par or nominal value . A company may not issue share capital in excess of what has been authorized . The actual amount that has been issued to shareholders is termed Issued Share Capital . If in the above example only 80,000 shares have been issued, then the company's issued capital is shs. 8 million. The steps followed when a company issues shares are: Invitation The company invites the public to apply for its shares through a Prospectus which is an offer document that invites the public to subscribe and purchase shares of a company . A Prospectus gives objectives and information on attractiveness of the company. Application The public applies for shares in the company, usually...
Read more

CLASSIFICATION OF MANUFACTURING COSTS

CLASSIFICATION OF MANUFACTURING COSTS The three elements of production costs are materials, labour and expenses.   Each one may be categorized as either direct or indirect cost. Direct costs are those costs which may be identified with the product and therefore can be included directly in the cost of the product. These are costs that can conveniently and easily be traced to a particular product, department or any other object that costs are accumulated.   Examples are: (a) Direct materials - all materials that form an integral part of the finished product, like leather for shoes, wood for furniture, etc. (b) Direct labour - it is labour applied directly on the raw materials, in order to convert these into finished product. Like the wages paid to factory workers or machine operators engaged in the production process are classified under this category. (c) Direct expenses - are those specifically attributed to the product, like the royalty paid to an inve...
Read more