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Karnataka Class 12 Commerce Accountancy Meaning of Information

Karnataka Class 12 Commerce Accountancy Meaning of Information

Karnataka Class 12 Commerce Accountancy Meaning of Information

Karnataka Class 12 Commerce Accountancy Meaning of Information : Information is organized or classified data, which has some meaningful values for the receiver. Information is the processed data on which decisions and actions are based.

For the decision to be meaningful, the processed data must qualify for the following characteristics −

  • Timely − Information should be available when required.
  • Accuracy − Information should be accurate.
  • Completeness − Information should be complete.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Computer technology and its usage have registered a significant development during the last three decades. Historically, computers have been used effectively in science and technology to solve the complex computational and logical problems. They have also been used for carrying out economic planning and forecasting processes. Recently, modern day computers have made their presence felt in business and industry.

The most important impact of computers has been on the manner in which data is stored and processed within an organisation. Although manual data processing for Management Information System (MIS) has been quite common in the past, modern MIS would be nearly impossible without the use of computer systems. In this chapter we shall discuss the need for the use of computers in accounting, the nature of accounting information system and the types of accounting related MIS reports.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Evolution of Computerised Accounting:

Manual system of accounting has been traditionally the most popular method of keeping the records of financial transactions of an organisation.

Conventionally, the bookkeeper (or accountant) used to maintain books of accounts such as cash book, journal and ledger so as to prepare a summary of transactions and final accounts manually. The technological innovations led to the development of various machines capable of performing a variety of accounting functions.

For example, the popular billing machine was designed to typewrite description of the transaction along with names, addresses of customers. This machine was capable of computing discounts; adding the net total and posting the requisite data to the relevant accounts. The customer’s bill was generated automatically once the operator has entered the necessary information. These machines combined the features of a typewriter and various kinds of calculators.

With substantial increase in the number of transactions, the technology advanced further. With exponential increase in speed, storage and processing capacity, newer versions of these machines evolved. A computer to which they were connected operated these machines. The success of a growing organisation with complexity of transactions tended to depend on resource optimisation, quick decision-making and control. As a result, the maintenance of accounting data on a real-time (or spontaneous) basis became almost essential. Such a system of maintaining accounting records became convenient with the computerised accounting system

Karnataka Class 12 Commerce Accountancy Meaning of Information

Information and Decisions

An organisation is a collection of interdependent decision-making units that exist to pursue organisational objectives. As a system, every organisation accepts inputs and transforms them into outputs. All organisational systems pursue certain objectives through a process of resource allocation, which is accomplished through the process of managerial decision-making. Information facilitates decisions regarding allocation of resources and thereby assists an organisation in pursuit of its objectives.

Therefore, the information is the most important organisational resource. Every medium sized to large organisation has a well-established information system that is meant to generate the information required for decision-making. With the increasing use of infor mation systems in organisations, Transaction Processing Systems (TPS) have started playing a vital role in supporting business operations.

Every transaction processing system has three components: Input, Processing and Output. Since Information Technology (IT) follows the GIGO principle (Garbage in-Garbage out), it is necessary that input to the IT-based information system is accurate, complete and authorised. This is achieved by automating the input. A large number of devices are now available to automate the input process for a TPS.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Need of Computers in Accounting : The advent of globalisation has resulted in the rise in business operations. Consequently, every medium and large sized organisations require well-established information system in order to generate information required for decision-making and achieving the organisational objectives. This made information technology to play vital role in supporting business operations.

There is a subtle difference between data and information. Data are the facts or details from which information is derived. Individual pieces of data are rarely useful alone. For data to become information, data needs to be put into context.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Data versus Information comparison chart
MeaningData is raw, unorganized facts that need to be processed. Data can be something simple and seemingly random and useless until it is organized.When data is processed, organized, structured or presented in a given context so as to make it useful, it is called information.
ExampleEach student’s test score is one piece of data.The average score of a class or of the entire school is information that can be derived from the given data.
Etymology“Data” comes from a singular Latin word, datum, which originally meant “something given.” Its early usage dates back to the 1600s. Over time “data” has become the plural of datum.“Information” is an older word that dates back to the 1300s and has Old French and Middle English origins. It has always referred to “the act of informing, ” usually in regard to education, instruction, or other knowledge communication.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Data vs. Information – Differences in Meaning

“The numbers have no way of speaking for themselves. We speak for them. We imbue them with meaning.” —Statistician Nate Silver in the book The Signal and the Noise

Data are simply facts or figures — bits of information, but not information itself. When data are processed, interpreted, organized, structured or presented so as to make them meaningful or useful, they are called information. Information provides context for data.

For example, a list of dates — data — is meaningless without the information that makes the dates relevant (dates of holiday).

“Data” and “information” are intricately tied together, whether one is recognizing them as two separate words or using them interchangeably, as is common today. Whether they are used interchangeably depends somewhat on the usage of “data” — its context and grammar.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Examples of Data and Information

  • The history of temperature readings all over the world for the past 100 years is data. If this data is organized and analyzed to find that global temperature is rising, then that is information.
  • The number of visitors to a website by country is an example of data. Finding out that traffic from the U.S. is increasing while that from Australia is decreasing is meaningful information.
  • Often data is required to back up a claim or conclusion (information) derived or deduced from it. For example, before a drug is approved by the FDA, the manufacturer must conduct clinical trials and present a lot of data to demonstrate that the drug is safe.

“Misleading” Data

Because data needs to be interpreted and analyzed, it is quite possible — indeed, very probable — that it will be interpreted incorrectly. When this leads to erroneous conclusions, it is said that the data are misleading. Often this is the result of incomplete data or a lack of context. For example, your investment in a mutual fund may be up by 5% and you may conclude that the fund managers are doing a great job. However, this could be misleading if the major stock market indices are up by 12%. In this case, the fund has underperformed the market significantly.

Karnataka Class 12 Commerce Accountancy Meaning of Information

Information processing refers to the manipulation of digitized information by computers and other digital electronic equipment, known collectively as information technology (IT).

Information processing systems include business software, operating systems, computers, networks and mainframes. Whenever data needs to be transferred or operated upon in some way, this is referred to as information processing.

A computer information processor processes information to produce understandable results. The processing may include the acquisition, recording, assembly, retrieval or dissemination of information. For example, in printing a text file, an information processor works to translate and format the digital information for printed form.

Information processing began decades ago as businesses and governments sought to be able to process large amounts of data, often statistical or calculated from gathered data. The desire to travel into space further fueled the need to process large amounts of data and the information processing revolution gained more momentum. The 21st century has seen an explosion of data and the amount of information processed very day has reached gigantic proportions. Information is processed by billions of devices, hundreds of satellites and millions of software applications. Trillions of bytes are processed every minute.

Information processing is still in a growth phase; larger systems and more prolific ownership has created a steady increase in the amount of information processed globally.

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Karnataka Class 12 Commerce Accountancy Meaning of Information

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  • Class 12 Accountancy Text book
  • Need for Maintaining of Accounts books by Non Profit Organisation

  • Accounting book 1

  • Accounting book 2
  • Accounting book 3

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