Answer
Financial accounting system essentially takes input from all other application in the form of journal vouchers. At the end of payroll processing, the payroll register is sent to the financial accounting system. The inventory system sends the stock consumption report to the financial accounting system. The production planning and control system sends a production expenses statement to financial accounting. These statements include details of maintenance cost of machines, power, water, electricity consumed etc. Fig 1 show typical financial accounting system flow diagram
Financial Accounting system using PCs gives the ability of applying the tools to review the financial records to the professional accountant, thus reducing the time spent by the accountant in collecting basic documents and allows him/her to spend more time to do more sophisticated analysis. A strong and comprehensive financial accounting system is the basis for strong management.
The main advantage of computerized accounting system is that it saves time for the company. It also Provide accuracy and timely availability of financial information.
Financial reporting refers to general purpose, external financial reporting by business enterprise. As such financial reporting includes not only financial statements but also other means of communicating information that relates directly or indirectly to the information provided by the accounting system i.e. information about organization resources, obligations, earning etc.
Financial reporting is not an end in itself but is intended to provide information that is useful in making business and economic decisions.
The objectives of financial reporting are as follows
• To provide information useful for investment decisions
• To provide information useful in assessing cash flow prospects
• To provide information about economic resources, obligations and owner‘s equity to identify
organizations financial strength and weakness
• To provide information about enterprise performance and earning
• To provide information about liquidity, solvency and funds flow
• To provide information about management performance
• To include management explanation and interpretations