Financial Accounting Information System as a Decision-Making Tool

This report provides an overview of financial accounting information systems and their role as a decision-making tool. It covers various types of accounting information, including traditional financial statements like the balance sheet, income statement, and cash flow, as well as management information systems, budgets, and variance analysis. The report also highlights the importance of qualitative information such as customer satisfaction and service quality. It elaborates on how management accounting information aids in trend analysis, opportunity targeting, investment decisions, market standing, expansion activities, and cost reduction. Furthermore, it emphasizes the use of financial information for resource allocation, identifying untapped resources, and securing loans. The report concludes that accounting information is crucial for planning, controlling, and managerial decision-making in all types of organizations.

Finance and
Funding

Introduction
There are various forms of accounting information systems few
of them are Financials of the company which include Profit and
loss account and balance sheet. There are many other financial
information systems like MIS, Variance Analyses, budgets,
forecasts. Accounting information consist of three types of
accounting information . They are Traditional Accounting
information, Qualitative and other quantitative.

Types of Financial Accounting Information
Systems
Traditional and Financial and monetary accounting
information
Qualitative information ( non financial information)

Traditional and Financial Information
•Balance sheet:- Reflects financial condition of the company. It is useful for
knowing the net worth, future prospects.
•Income Statement :- helps in tracking revenue and expenditure in order to
know the operating revenue or losses.
•Cash Flow:- It is helpful in estimating the liquidity and solvency of the
organization in long run.
•MIS :- Management Information System
•Budgets:- estimate future expenses and helps in allocation of funds.
•Variance Analysis :- quantitative investigation
•Auditors report & Annual Reports serve as vital source of information.

Qualitative Information
•Customer satisfaction:- It reflects how the service
provided by the company surpasses he expectation the
customer.
•Customer feedbacks:-major source of information in
order to improve the quality of the service and also a
motivation factor in case of positive feedbacks.
•Service quality :- maintain quality check will fill the
gap between the service provided by the organization
and the customer satisfaction.

Users of Accounting information

MANAGEMENT ACCOUNTING
INFORMATION AS A DECISION-MAKING
TOOL
•Helps in trend analysis and comparing data which helps in finding loopholes
in the performance and provide way to mend the same.
•Targeting potential opportunities :- proper information about the revenue will
motivate the company to target the potential investment opportunities.
•Investment decisions:- decision regarding where to invest and how much to
invest can be taken on the basis of fund available and the future requirement
of the company.

•Market Standing :- The financial helps us to know our
market standing in comparison to our competitor. Allow us
to make use of the opportunities that might not be explored
by any one.
•Expansion activity:- analysis of revenue statement can help
us know whether the company has earned enough profits to
expand its activities or the business. Helps adding new
services.
•Decisions to overcome defects in service provided :- based
on the customer feedbacks the organization improves its
quality of service along with adding new and attractive
offers.

•Helps in taking decision to reduce unnecessary cost associated with the
services provided. Cutting down of cost can help the organization to earn
better revenues in future.
•Also helps in transfer of funds from the branches, departments or services
which are overfunded to the departments and branches which are facing
financial crunch.
•Making use of untapped resources available with the organization. That were
not used in past due to lack of funds or awareness.
•The organization with good credit worthiness can avail loan form the financial
institution. management information allows the management decision makers
to decide between debt and equity based on the requirement.

conclusion
The main focus of accounting is decision making. All the
organization whether small or big indulged in any kind of
business operations require accounting information. The main
objective of accounting and accounting information is to
provide useful information to the stakeholders of the company.
This is also very important planning ,controlling and provide
framework for taking all the managerial decision.

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