Definition of the accounting system
The accounting system is known as a set of manual and computer processes that aim to create accounting records, and then set controls and methods that help analyze and summarize them; So that it is easy to deal with it and benefit from it in making decisions within the environment of the institution.The accounting system is also known as the accounting activities used with the records and reports that the facility needs; In order to obtain financial information that helps in evaluating its own business in a correct manner, by relying on a set of methods that help in creating, preserving, and retrieving this information, whether by storing it on paper or on a computer.
Another definition of the accounting system is The processes that include recording and classifying accounting documents and books, and then specifying the procedures to be followed in collecting information related to administrative and financial transactions in order to choose the appropriate means to present their results.
Accounting System Features
The accounting system in most administrative, industrial and commercial establishments is characterized by the following features:
Flexibility of financial operations: It is one of the best special features in the accounting system; It depends on providing a set of means that help the administration in carrying out financial operations without any complications during work; Especially when using the computer-based accounting system, which contributes to obtaining financial results in a quick manner.
Business statistics: It is a set of numerical results of the accounting and financial processes, which are provided by the accounting system within the work environment, which helps managers and those responsible for work in the institution to take appropriate decisions and apply the procedures that help you in the event that they occur, and work to correct them.
Data structure: It is one of the modern means and methods that are used to collect similar data together according to their names, numbers, or any other classifications used by the accounting system in the institution, and the data structure helps in easy access to accounting information.
Accounting System Tools
The accounting system in any work environment uses a set of tools that help it implement its own functions, the most important of which are:
Accounting restrictions: It is a set of accounting operations that the accountant writes in order to balance its parties, and help him to record the special financial activities in the institution, and these restrictions are divided into two types, namely:
Single entries: They are those that consist of only two parties to the accounting entry, namely the debtor and the creditor.
Double entries: are those that consist of more than one party to the accounting entry, for example: from debtors / fund, purchases to creditors / obligations.
The foundations of accounting evaluation: They are the means used in evaluating the special financial operations of the institution, and they are divided into two types, namely:
Cash basis: It is the basis that depends on the idea of recording daily financial transactions or related to a short and specific period of time.
Accrual basis: It is the basis on which financial transactions are recorded in accounting when they are recorded, whether they have been collected or are still being collected at a later date called the due date.
Reports: These are all paper and electronic forms issued by the accounting department within the accounting system, which help to transfer the results of operations, perceptions, and conclusions about the nature of the financial work of the institution to the management, which contributes to making appropriate decisions in the appropriate financial situation in accordance with the special institution.
Accounting System Elements
The accounting system in institutions and companies consists of a group of elements, namely:
Assets: are the institution’s possessions, whether tangible things, or securities that include cash and bonds, which the accounting system monitors, and ensures the suitability of the material ones for use in institutional work, while the financial ones are evaluated and their value is verified on a daily basis.
Obligations: They are all that the institution owes to others, whether they are individuals or other institutions, and they include financial obligations, and delivery of the goods purchased by customers; Especially in commercial establishments that work to transport goods to their customers.
Capital: It is the main financial value on which the foundation is established, and it includes all the money deposited in the bank or the foundation’s fund, which is used to purchase all the tools, machines, and building, and the basic things for establishing the foundation, before working on announcing it in the business market.
Income: It is the value of the financial profits that the institution achieves as a result of its work, and it includes income on money related to purchases, or the provision of services to customers and consumers, which results in a positive impact on the institution’s capital, which leads to its increase and to cover the employee’s financial expenses and public salaries.
Expenses: are the sums of money that the institution pays for the purchase of basic things, such as office supplies, computers, transportation allowance, and the payment of public bills such as electricity, water, and telephone, and any other expenses that were not within the accounts of the institution, but must be recognized by the system Financial records and reports.
Conclusion
The accounting system is one of the most important financial systems in institutions and companies of all kinds. It contributes to providing a clear analysis of the nature of its work and its financial activities. It also works to issue a summary on the general financial situation based on sending accounting reports to the management; So that you can view it, take appropriate decisions, and follow up on the special economic situation in the institution.
The ease of dealing with the accounting system is one of its features, as it provides flexibility to follow up on the cash flows of the institution, and also contributes to providing numerical results on its work by distributing them according to a specific graphical structure, as well as formulating and evaluating a set of accounting tools. It is applied in the institution, and each accounting system includes basic elements that contribute to writing the accounting entries for the institution, in addition to any other restrictions that affect its financial condition.