Accounting criterions are trusty statements of how peculiar types of minutess and other events should be treated and released so that the fiscal, statements will give a true and just position of the coverage company ‘s consequences. Generally, observation with accounting criterions narrows significantly the differences in fiscal coverage pattern and makes comparings of consequences more meaningful and realistic.
Are the wide basic premises or general rules applied by comptrollers in fixing periodic histories or fiscal statements.
Traveling Concern Concept: – A concern will go on to transport out its normal activities and operations in the predictable hereafter.
Accumulations or Matching Concept: – Grosss and costs or disbursals are earned and incurred non as hard currency is received or paid but as they are recognized as being applicable to the period under consideration.
Consistency Concepts: – Similar accounting intervention should be given to similar points within each accounting period and organize one period to the following.
Prudence Concepts: – if net incomes are likely to ensue from a certain activity or dealing, no record of it should be made unless and until this is realized either in the signifier of hard currency or some other plus.
Materiality: – The size and nature of an sum should find its accounting intervention.
Money Measurement: – Merely events or minutess that can be expressed in money footings should be recorded in the books of history.
Business Entity: – Separates the persons behind a concern from the concern itself and records minutess in the books of history as they affect the concern and non its proprietors.
Post Balance Sheet Events:
Post balance sheet events: – those events, both favourable and un favorable, which occur between the balance sheet day of the month and the day of the month on which the fiscal statements are approved by the board of managers.
Adjusting events: – station balance sheet events which provide extra grounds associating to conditions bing at the balance sheet day of the month. They require alterations in sums to be included in fiscal statements. Examples:
Non-adjusting events: – arise after the balance sheet day of the month and concern conditions which did non be at the clip. Examples:
Issue of portions
Purchases and gross revenues of fixed assets
Changes in rates of foreign exchange
A material station balance sheet event requires alterations in the sums to be included in fiscal statements where it is an adjusting event, or, it indicates that application of the traveling concern construct to the whole.
Post Net income and Loss A/c:
The net income and loss a/c it is drawn up in order to cipher a bargainer ‘s net net income or loss.
Net net income: – is the surplus of gross net income plus any extra income over the entire concern disbursals and charges incurred in the twelvemonth under consideration.
Net loss: – is the surplus of entire concern disbursals and charges over gross net income and any extra income.
The net income and loss a/c is debited with the gross los if any and all the concern disbursals. It is credited with the gross net income and any extra income, e.g. price reductions received. An extra recognition shows that the bargainer has made net net income ; an extra debit suggests that he has suffered a net loss. The net net income or loss affects the bargainers ‘ capital. The net net income increases the capital in comparing with the net loss that decreases it.
The usage of those two historical accounting information systems, it is really helpful and effectual to demo clearly of the company is deserving maintaining. Those two fiscal statements show the net income or the loss the company had at the terminal of the past twelvemonth. By this the bargainer can take how he wants to take his hazards for the twelvemonth coming.
Those two statements are in my sentiment really dependable to maintain the director of the company informed because all we use to make them are the minutess the bargainer used the past twelvemonth with the disbursals the incomes in sequence.
Accounting Information Systems: – ( AISs ) combine the survey and pattern of accounting with the design, achievement, and detecting of information systems. Such systems use traditional accounting controls and methods to supply users the fiscal information necessary to pull off their organisations. ( http: //www.answers.com/topic/accounting-information-system [ entered 10th of February 2010 ] ) .
Management Information Systems: – ( MIS ) is the term given to the subject focused on the integrating of computing machine systems with the purposes and aims on an organisation. The development and direction of information engineering tools assists executives and the general work force in executing any undertakings related to the processing of information. MIS and concern systems are particularly utile in the spread of concern informations and the production of studies to be used as tools for determination devising. ( http: //www.bestpricecomputers.co.uk/glossary/management-information-system.htm [ entered 10th of February 2010 ] ) .
The chief difference between accounting information systems and the direction information systems is that in accounting information systems we use all the information we have collected from the past minutess and we use them to make a net income and loss a/c and so a balance sheet, as the finals histories, to foretell if our company is traveling to be profitable or non. For illustration, in the FORMUNI LTD, they have done for the past five old ages and we can see that the company does non hold a changeless net income. They have the ups and the downs in footings of the net income.
On the other manus, in the direction information systems they are utilizing all the available informations to make studies that will be utile for them to do a determination or take a hazard. The directors collect the information most of the clip from the comptrollers and the transform them to a study to explicate and foretell what the hereafter of the company will be on the following twelvemonth. For illustration, as we can see from the instance survey, the director of the D.AIR PLC, created a study to do certain if the FORMUNI LTD is the best pick for them to subscribe a contract for 2 old ages.
A company to be successful must work with both systems so to cognize if they will be able to go on into the market and what are the hazards they will come face-to-face as the old ages pass through. The AIS and the MIS are needed for different grounds severally.