What Does accounting system Mean
A system is an ordered module of components that interact with each other and that are interrelated. The idea of accounting , for its part, refers to what is related to accounting (the method that allows keeping the accounts of an organization).
The notion of an accounting system , in this way, can be understood in different ways. In its broadest sense, it is the set of elements that record financial information and the interrelationships of these data . This structure, due to its characteristics, contributes to decision-making in the field of management.
Specifically, we can establish that the pillars of any accounting system are three, which allow it to shape it:
-Registration of financial activity, which must be up-to-date and which must be included in the document established for it.
-Classification of information into groups and categories so that it can be studied, analyzed and used in the most appropriate way possible.
-Summary of all the accounting information of the company in question, so that it can be taken into account by the people who are in charge of the entity.
Accounting systems are made up of various types of documents and involve the participation of specialists ( accountants ) who are responsible for the accurate recording and analysis of information . Accountants often work in conjunction with company managers or decision makers.
In addition to all the above, it is important to know other relevant data regarding any accounting system that are considered fundamental:
-It must be a well-designed, understandable and exhaustive system.
-If it is carried out in the correct way, it will allow to undertake a complete control of the company's accounting at the same time that it will facilitate the decision-making that is appropriate at all times.
-Many and varied are the objectives that are attempted to be achieved when carrying out an accounting system. However, among them, the following stand out: predicting cash flows, exercising control over the operations of the company in question, supporting administrators in their functions, helping to compile statistics, facilitating decision-making regarding new projects and business directions ...
-To be of great use to those who are in charge of the entity, it is established that it is essential that any accounting system is understandable, useful, neutral, fully verifiable ...
At present, the concept of an accounting system is usually associated with the computer program that allows information to be recorded. The accounting software has different modules so that a company can keep its books and balances digitally and with tools that facilitate calculations.
It is even possible to run a basic accounting system on a spreadsheet . Thus, it is possible to record the income and economic expenses of a family, allocating a sheet for the current month. The movements of the period, in turn, can be automatically reflected on another sheet where the family's savings are increased or decreased . As you can see, the spreadsheet works like an accounting system.