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Accounting Information System

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Introduction

The objective of financial accounting is to provide decision-making stakeholders useful information, including business operating results, cash flows and changes in equity. Financial accounting reflects the business transactions, the formation of the past economic activities and the results of historical images. (Zhao, 2002) 'There are four main qualitative characteristics that information should have in order to be selected as the subject matter of general-purpose financial reports: relevance, reliability, comparability and understandability.' (Hoggelt et al. 2006, p448) 'The relevant information in the conceptual framework must have predictive value, and/or feedback value in the sense that it confirms or denies past assessments by the user.' (Hoggelt et al. 2006, p448) In other words, timeliness is an important factor to the relevance. Relevance is the information associated with the user's decision-making and economic decision has an impact on the capacity of users. The relevance information, for decision-making role, is into the prediction process in time, thus increasing the capacity of policy makers to help these makers confirm or correct past evaluations. ...read more.

Middle

At the same time, the subject judgment also affects the depreciation, impairment and other items of projections and estimates. (Zhao, 2002) Relevance judgments on different standards leads the results of the same accounting information processing will be different. In a rapidly changing economic environment, timely getting the information and responding quickly become one of the most important things to win the competition. The value of relevant information will reduce if they lose the timeliness. However, in order to capture timely information, companies can easily get in without an objective, verifiable data prior to the accounting treatment, which forecasts an estimated component will inevitably damage the reliability of accounting information. Too precise information not only leads to surge in transaction costs, but also the possibility of error. (Zhao, 2002) Since the 70s of the 20th century, relevance constraints slowed down, because the information processing means was improved and cultural quality of the entire nation was gradually improving. ...read more.

Conclusion

(Hoggelt et al. 2006) Timeliness is an important factor to the relevance. Relevance is the information associated with the user's decision-making and economic decision has an impact on the capacity of users. The reliability of information in the conceptual framework means that information must no bias and significant errors which must be reflected in the transactions. (Hoggelt et al. 2006, p449) In general, relevance and reliability are unified. However, in some other areas there may be still some contradiction and confrontation. (Wang, 2010) Relevance and reliability judgments on different standards leads the results of the same accounting information processing will be different. (Zhao, 2002) How to make the right choose on the important levels between relevance and reliability becomes a popular topic in the world. Different countries have different attitudes according to their national conditions. However, it should be noted that regardless of the different government policies, it would not deviate from the reliability, relevance, understandability and comparability in the basic direction. (Zhao, 2002) ?? ?? ?? ?? 1 ...read more.

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