May 20, 2022

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FINANCIAL AND NON FINANCIAL INFORMATION

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FINANCIAL AND NON FINANCIAL INFORMATION

So far, the word accounting information and financial information has been used regularly by this author. What is it? and how can you differentiate it with non financial information?

To understand the meaning of financial information, let us go though various terms that are related to fiinancial information.

John Hall the writer of Accounting Information System ezplained them in this way.

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TRANSACTIONS

”A transaction is an event that affects or is of interest to the organization and is processed by its information system as a unit of work.”

An example of a transaction in a trading business is the sale of goods for N10,000 from a supplier whose name will be called Mr. Bones.

”This definition” above ”encompasses both financial and nonfinancial events. Because financial transactions are of particular importance to the accountant’s understanding of information systems.” Therefore, there is a need for a  precise definition for this class of transaction.”

FINANCIAL TRANSACTION

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”A financial transaction is an economic event that affects the assets and equities of the organization, is reflected in its accounts, and is measured in monetary terms.”

A financial transaction is recorded in monetary terms. From the above transaction, the N10,000 reppresents a financial transaction. A financial transaction can be refer to as a financial datum. Several financial datum consistute financial data.

NON FINANCIAL TRANSACTION

”Nonfinancial transactions are events that do not meet the narrow definition of a financial transaction. For example, adding a new supplier of raw materials to the list of valid suppliers is an event that may be processed by the enterprise’s information system as a transaction.” A set of non financial transactions or data constitute non financial information.

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WHAT THEN IS FINANCIAL INFORMATION

A financial transaction is a set of financial transactions measured in monetary terms that has been processed and are used to make economic decision by users.

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For example, a set of financial statement is a financial or accounting information used to make certain economic decision.

WHAT IS NON FINACIAL INFORMATION

A non financial information is a set of non financial transactions processed and used by users to make economic decisions.

For example, a set of non financial data concerning a names of suppliers of an entity may constitute a financial information for the Procurement manager, if he/she used it to make certain economic decisions like chosing who to purchase raw materials from.

For example, a set of non financial dataconcerning the corporate social  responsibility which are used by interested users to make economic decisions constitute a non financial information.

DIFFERENCES BETWEEN A FINANCIAL INFORMATION AND A NON FINANCIAL INFORMATION

(1) MEASUREMENT

Financial information is measures in monetary terms while non financial information do not measure in monetary terms.

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(2) USERS

Users of financial information is not broad like users of non financial information. This users of non financial information includes voluntary service organisations and non profit making organisations. They are also required by a other departments in the organisations like human resource department and production department.

(3) INFORMATION SYSTEM

Financial information falls under accounting information system and non financial information falls under management information system. However, the accounting information system also generate non financial data.

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