Meaning of Accounting information
Accounting information means the data provided in the financial statements and reports.
Financial statements include:
- Trading Account
- Profit and Loss Account (P&L)
- Balance Sheet
- Cash Flow Statement
- Fund Flow Statement
Accounting information is used for decision-making purposes.
As per Section 2(40) of the Companies Act, 2013, the financial statement, in relation to a company, includes:
- A Balance Sheet
- A Profit and Loss Account (P&L) or Income/Expenditure Account
- A Cash Flow Statement
- Statement of Changes in Equity (if applicable)
- Any explanatory notes annexed to the above documents
Financial statements of sole proprietorships and partnerships are not published as they are not legally bound to. However, they are required to provide them when applying for finances from a bank.
The Trading Account and profit and loss Account are together called the Revenue Statement or Income Statement. The Balance Sheet is known as the Position Statement.
Companies are not required to publish the Trading Account; they are required to publish the profit and loss account and Balance Sheet as per Schedule III of the Companies Act.
Financial statements provide information on five elements:
- Assets
- Liabilities
- Equities (Capital)
- Income and Gains
- Expenses and Losses
Information regarding these elements is called accounting information.
