General Ledger/Financial Reporting Systems
The general ledger system (GLS) and the financial reporting system (FRS) are two closely related subsys- tems. However, because of their operational interdependency, they are generally viewed as a single integrated system—the GL/FRS. The bulk of the input to the GL portion of the system comes from the transaction cycles. Summaries of transaction cycle activity are processed by the GLS to update the general ledger control accounts. Other, less frequent, events such as stock transactions, mergers, and lawsuit settlements, for which there may be no formal processing cycle in place, also enter the GLS through alternate sources.
The FRS measures and reports the status of financial resources and the changes in those resources. The FRS communicates this information primarily to external users. This type of reporting is called non- discretionary because the organization has few or no choices in the information it provides. Much of this information consists of traditional financial statements, tax returns, and other legal documents.
Management Reporting System
The MRS provides the internal financial information needed to manage a business. Managers must deal immediately with many day-to-day business problems, as well as plan and control their operations. Man- agers require different information for the various kinds of decisions they must make. Typical reports pro- duced by the MRS include budgets, variance reports, cost-volume-profit analyses, and reports using current (rather than historical) cost data. This type of reporting is called discretionary reporting because the organization can choose what information to report and how to present it.
General Ledger/Financial Reporting Systems
The general ledger system (GLS) and the financial reporting system (FRS) are two closely related subsys- tems. However, because of their operational interdependency, they are generally viewed as a single integrated system—the GL/FRS. The bulk of the input to the GL portion of the system comes from the transaction cycles. Summaries of transaction cycle activity are processed by the GLS to update the general ledger control accounts. Other, less frequent, events such as stock transactions, mergers, and lawsuit settlements, for which there may be no formal processing cycle in place, also enter the GLS through alternate sources.
The FRS measures and reports the status of financial resources and the changes in those resources. The FRS communicates this information primarily to external users. This type of reporting is called non- discretionary because the organization has few or no choices in the information it provides. Much of this information consists of traditional financial statements, tax returns, and other legal documents.
Management Reporting System
The MRS provides the internal financial information needed to manage a business. Managers must deal immediately with many day-to-day business problems, as well as plan and control their operations. Man- agers require different information for the various kinds of decisions they must make. Typical reports pro- duced by the MRS include budgets, variance reports, cost-volume-profit analyses, and reports using current (rather than historical) cost data. This type of reporting is called discretionary reporting because the organization can choose what information to report and how to present it.
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