Using Accounting Information

Accounting is not an end in itself. You collect accounting information to use it for some purpose. You shouldn't spend more effort on collecting the information than the results warrant. This is the cost/benefit principle, which is based on the principle that the benefits of using accounting information should exceed the costs of collecting it.

It is not unusual to find, particularly in very bureaucratic organisations, that enormous effort is spent collecting data that has very little information value. Computers tend to make this problem worse because computers are very good at manipulating data. It is important that you don't fall into the trap of confusing data with information, i.e. if a report doesn't tell you anything meaningful that will help you in the management of your business, it is simply data with no real value.

This section briefly describes several of the benefits that well-chosen accounting information can provide..