Accounting Information System and Company Goals
Accounting information systems provide the accounting staff with the tools to monitor a company's financial behavior. These systems compile accounting data and create reports, which the accounting staff uses to manage its information. Senior management creates goals for the company to reach. The accounting staff, through the use of the accounting information system, monitors the company's progress toward meeting its goals.
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Net Income
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Many companies strive toward the goal of increasing net income. Net income represents the amount of money the company earned after considering all the expenses for the period. Accountants typically run income statements using the data compiled in the accounting information system. An income statement reports the company's revenues and expenses for the period and calculates its net income. The accountant can run income statements for multiple periods from the accounting information system and compare the net income for each period to determine if the net income is increasing. If the net income increases, the company is achieving the goal of increasing net income.
Cost Reduction
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In spite of rising expenses, many companies resist increasing prices to their customers. These companies wish to maintain a positive relationship with their customer by keeping prices stable. To increase net income without raising prices, these companies often pursue the goal of reducing costs. Accountants assist this process by running reports from the accounting information system that detail current cost information. The accountant shares this information with other department leaders, such as the purchasing manager or the production manager, and brainstorms methods of reducing their costs. After deciding on certain actions and implementing them, the accountant runs the same report from the accounting information system and compare the costs to the original report. If the costs decreased, the company is achieving its goal of cost reduction.
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Reduced Overtime Labor Hours
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To reduce costs, many companies review their overtime labor hours. Overtime pay requires the company to pay a premium to employees for working additional hours in the work week and increases company labor costs. Many companies strive to reduce the number of overtime hours worked by employees to reduce this cost. The accountant runs labor reports from the accounting information system, which details the number of overtime hours worked by employees. Department managers use this information to review their current needs and evaluate whether the overtime hours are necessary. As each department manager reduces the overtime hours incurred in their departments, the company moves toward its goal of reducing overtime labor hours.
Increased Sales
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Another goal companies pursue in correlation with increasing net income is to increase sales. The more products the company sells, the higher the company's net income will be. The accountant runs a detailed sales report from the accounting information system and shares it with the sales team. The sales team uses this report to identify new opportunities and pursues those opportunities. Several months later, the accountant runs the same reports and compares the results. If the sales show an increase, the company is achieving this goal.
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