Accounting Data Processing Methods

Date: 2015-10-07; view: 486.

Influence of Purpose on

One of the more important uses of accounting data is to prepare past and projected income statements and balance sheets. Accounting data are also used to provide management with specific information useful in planning and controlling company activities. Depending upon the purpose for which the information is to be used, accounting may process data on future, present, or past activities. In addition, for differ­ent purposes accounting may provide precise or general descriptions of each type of activity. Different processing of data on past activities is provided by:

1. Changing the names of the accounts into which data are recorded.

2. Changing the number of the accounts kept.

Thus, once the manual processing of recorded past transactions is fully understood it may be used to disclose a variety of information by classifying items in different ways. To illustrate, it the EAB Com­pany purchased $500 of merchandise to be used in DepartmentX, the acquisition could be recorded under the manual double-entry system in the following manner:

Merchandise....................................... $500

Accounts Payable.......................... $500

This information would be useful but it might not be enough for all management purposes. If departmental responsibility is to be disclosed, accounts could be set up for each department and the entry to record the merchandise for which Department X is responsible would be:

Department X..................................... $500

Accounts Payable.......................... $500

If more precise information were desired, the merchandise might be subclassified by types and recorded in even greater degrees of detail.

Although the evidence is not conclusive, the development of the ac­counting recording mechanism seems to have evolved from crude classi­fications under manual recording to extensions of the manual recording mechanism, and on to the use of mechanical devices for further expan­sion of the double-entry mechanism. Electronic data processing can be viewed as a still further expansion of the double-entry mechanism. In fact, electronic data processing may have so advanced the accounting function that multiple-entry rather than double-entry will become a more appropriate description of the accounting recording mechanism. That is, the basic principle of electronic collection and processing of data is to record the data once but then make these data available for use again and again. This ability to collect the data in a variety of categories or accounts provides the same results as would be obtained by multiple entries of the data in a manual system. Thus, accounting may be per­formed manually, mechanically, and electronically, and at the current stage of development, the accountant must be competent in all three methods of accounting data processing.

Notes:

Answer the following questions:

1. What can be said about one of the most important uses of accounting data?

2. What do accounting data provide management with?

3. Why is accounting information to be used on future, past and present activities?

4. What is different processing of data provided by?

5. Describe and illustrate disclosing a variety of information with manual processing?

6. What has the development of the accounting recording mechanism evolved from?

7. How can be viewed electronic data processing?

8. What do you think of multiple-entry function of electronic data processing?

9. What must the accountant be competent in at the current stage of development?

VII. Round-table discussion:

1. Prove that profession of an accountant is very important at any enterprise.

2. Prove that each manager must use accounting information while designing the future activity of his business.

3. The role of education in the profession of an accountant.

4. Why study accounting?