Question

What do you understand by accounting data? Discuss the stages through which is finally transformed for being presented as information in financial statements.

Answer 1

Accounting information which produces some results and helps the management in taking managerial decision is known as accounting data. The accounting data so collected in the form of vouchers is entered in the storage device of the computer through a pre-designed data entry form in the accounting system.

A database is used for storing a large number of accounting data. Data processing involves a technique of collecting, sorting, relating, interpreting and computing data items in such a manner, to provide meaningful and useful information for decision making.

The data processing cycle in context of accounting requires a series of steps described below
(i) Source documents (ii) Input of data (iii) Data Storage (iv) Manipulation of data