ACCOUNTING AS INFORMATION SYSTEM :

Accounting, being the language of business, is used to communicate financial and other information to individuals, organizations, governments etc. about various aspects of business and non-business entities. For example, when a firm applies for a loan from a bank, it will have to submit details of its business activities in terms of operating results (profit or loss) and the financial position (assets and liabilities). Similarly, the shareholders or prospective investors must have financial information in order to evaluate the performance of the management. Many laws require that extensive financial information be reported to various government departments such as income-tax department, sales tax department, company law board and so on. Accounting is a discipline that collects reports and interprets financial information about the activities of different organizations. Hence, actual accounting is concerned with communicating the results of an organization.