most organizations or business firms has their own accounting system to prepare financial statement, income statement, reports to financial analysts, bills of customers and other type of accounting information. An acounting system consist of entities, personal, devices, and network of softwars. Which are used to make the accounting records and developing accounting information and communicating this accounting information to decision makers. Accounting system often make used in the form of computer, other electronic devices and hand written form, business organizations has their own accounting system and includes all of these components.
There are specific acounting system to record the economic activities of the organizations, the recorded data are classified and subtotal the activities within the system, at the end the economic data are summerized in the reports to provide the information about the over all economic activities to make decisions about business. Economic reports are helpful for decision makers, investors, managers, board of directors and government agencies.
In economic record the acountant focus upon completed transactions and event occurs to cause an immediate change in the financial resources or obligations of the business secondly mesured objectively in monetory terms eg a transaction is when buying and selling of goods occurs and receiving cash and making cash payments. The recording of transactions in an accounting system may be performed in many ways, writing with pencil or pen, using cash register or through use software.
The strength in transactions approach lies in the relibility of the information that are recorded. Recorded information is based upon past events. For which the financial effects upon the business can be measured with a reasonable degree of objectivity.acoountant focuse on the lessens of the usefulness of the accounting reports. in transaction some important events are not recoded in the accounting record because they do not meet the definition of the transaction. E.g the technological break down, the introduction of a new product by a competitor are not transactions.the preceding event are important nonfinancial information,these events are disclosed by the persons outside of the business organization through press conferences.notes to the financial statements or the news media.
