Accounting information is the base all important decisions which are taken by owners, management, potential investors, creditors, lenders, employees, government , researchers and public. They are the interested parties in accounting information. Different people need different accounting information. So, it is necessary to classify the accounting information in different types.
Following are the main types of accounting information which are generated from accounting records for providing the benefits to interested parties.
1. Accounting Information of Financial Performance and Financial Position
This is the main type and common accounting information. Every user need the information of net profit or net loss of company. At the end of year, what is amount of net profit or net loss of company. If net profit's value is very high, every user will take benefit from this data. Employees can demand more salary. Shareholders may demand more dividend. Investors can invest their money in the company because it is the good chance that they will receive more return on their investment. For getting this information, it is necessary business has to make the profit and loss account. This accounting information is also called the information of financial performance. Next common information is financial position. We can find the financial position by seeing the balance sheet. Balance sheet's understanding is helpful for telling whether financial position is strong or weak. Financial Accounting provides such accounting information.
2. Accounting Information of Total Cost and Per Unit Cost
Second type of accounting information is of value of total cost and per unit cost. If you have to sell your product in the market, you need to know what is your total cost and per unit cost. All cost accounting records will be helpful for providing such accounting information. When businessman gets this information, it will be very easy for him for fixing his estimated sale price by adding profit margin in it. For example, My Cost of per unit is $ 100 as per my cost account records. Now, I want to get 50% profit on my sale. So, I use following simple formula
Profit = Cost X Profit / ( 100 - Profit) = 100 X 50/ (100-50) = 100
Sale Price = Cost + Profit = 100 +100 = $ 200
3. Accounting Information for Planning and Control of Business
There are lots of accounting information which are need for planning and control over the business. Such information is added in the third type. For example, we are interested to paying fastly to our creditor. For this planning, we have to check creditor turnover ratio and average conversion period. Like this, there are lots of ratios which are helpful for different planning. Through budget, we get different accounting information for controlling the business. Cash flow statement is provide the information of source and application of cash. Such information is helpful to control of cash which is used in operation activities, investing activities and financial activities. All these accounting information, we can get from management accounting.
4. Accounting Information for Tax Management
This is the important type of accounting information. In this type, we collected information which are only need for tax management. For example, for calculating income tax on the profit, we need profit before tax and dividend distribution. For VAT Input, we need information of purchase of different products which are bought in day from one party. For VAT Output, we need the information of sale of different product which are sold in a day to one party. For getting this accounting information, it is very need to study tax accounting of business.
5. Accounting Information for Social Responsibility
Through social accounting, we collect the accounting information for social responsibility. In big corporate, a social account is made which provide the information of benefits to society and cost of natural resources which are taken by corporate. Future benefits like product safety, financial support to manpower, customer satisfaction and pollution control can be given on these accounting information.
Following are the main types of accounting information which are generated from accounting records for providing the benefits to interested parties.
1. Accounting Information of Financial Performance and Financial Position
This is the main type and common accounting information. Every user need the information of net profit or net loss of company. At the end of year, what is amount of net profit or net loss of company. If net profit's value is very high, every user will take benefit from this data. Employees can demand more salary. Shareholders may demand more dividend. Investors can invest their money in the company because it is the good chance that they will receive more return on their investment. For getting this information, it is necessary business has to make the profit and loss account. This accounting information is also called the information of financial performance. Next common information is financial position. We can find the financial position by seeing the balance sheet. Balance sheet's understanding is helpful for telling whether financial position is strong or weak. Financial Accounting provides such accounting information.
2. Accounting Information of Total Cost and Per Unit Cost
Second type of accounting information is of value of total cost and per unit cost. If you have to sell your product in the market, you need to know what is your total cost and per unit cost. All cost accounting records will be helpful for providing such accounting information. When businessman gets this information, it will be very easy for him for fixing his estimated sale price by adding profit margin in it. For example, My Cost of per unit is $ 100 as per my cost account records. Now, I want to get 50% profit on my sale. So, I use following simple formula
Profit = Cost X Profit / ( 100 - Profit) = 100 X 50/ (100-50) = 100
Sale Price = Cost + Profit = 100 +100 = $ 200
3. Accounting Information for Planning and Control of Business
There are lots of accounting information which are need for planning and control over the business. Such information is added in the third type. For example, we are interested to paying fastly to our creditor. For this planning, we have to check creditor turnover ratio and average conversion period. Like this, there are lots of ratios which are helpful for different planning. Through budget, we get different accounting information for controlling the business. Cash flow statement is provide the information of source and application of cash. Such information is helpful to control of cash which is used in operation activities, investing activities and financial activities. All these accounting information, we can get from management accounting.
4. Accounting Information for Tax Management
This is the important type of accounting information. In this type, we collected information which are only need for tax management. For example, for calculating income tax on the profit, we need profit before tax and dividend distribution. For VAT Input, we need information of purchase of different products which are bought in day from one party. For VAT Output, we need the information of sale of different product which are sold in a day to one party. For getting this accounting information, it is very need to study tax accounting of business.
5. Accounting Information for Social Responsibility
Through social accounting, we collect the accounting information for social responsibility. In big corporate, a social account is made which provide the information of benefits to society and cost of natural resources which are taken by corporate. Future benefits like product safety, financial support to manpower, customer satisfaction and pollution control can be given on these accounting information.
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