The information system that identifies, record, and communicates the economic evens of an organization to interest users.
1. Identifying economic events involves selecting the economic activities relevant to a particular organization. The sale of goods by Lands' End, the providing of service by Sprint, the payment of wages by Ford Motor Company, and the collection of ticket and broadcast money and the payment of expenses by major league sport teams are examples of economic evens.
2. Once identified, economic evens are recorded to provide a history of the organization's financial activities. Recording consist of keeping a systematic, chronological diary of evens, measured in dollar and cents. In recording, economic evens are also classified and summarized.
3. The identifying and recording activities are of little use unless the information is communicated to interested users. Financial information is communicated through accounting reports, the most common of which are called financial statements. To make the reported financial information meaningful, accountants report the recorded data in a standardized way. Information resulting from similar transactions is accumulated and totaled. For example, all sales transactions of Land's End are accumulated over a certain period of time and reported as one amount in the company's financial statement.