What do you understand by accounting data? Discuss the stages through which it is finally transformed for being presented as information in financial statements.

Accounting data refers to the facts and financial data contained in journals, ledgers, financial statements and other books of accounts. That is, accounting data pertains to the financial data recorded in the books of accounts.

The procedure through which the accounting data is transformed for being presented as information in financial statements is known as data processing. Data processing is a process of collecting, storing, summarising, analysing and interpreting the data and facts in such a manner so as to fetch reliable information for efficient and effective decision making. The following are the various stages that are involved in transformation of data into information so as to present in the financial statements.

1. Collecting Data from the Source Documents- First of all, data is collected from the source documents such as payment slips, receipt slips, etc. for preparing vouchers. The preparation of vouchers is the basis for recording the accounting data in a systematic and chronological (date-wise) manner.

2. Input Data- A suitable database is designed to enter the accounting data contained in the vouchers. This is done with the help of pre-designed Data Entry Form. This form is similar to the physical voucher form.

3. Data Storage- Data storage is created for storing the input of data. It involves structuring the database which is used for recording the accounting data. Following is the format of blank data record.

4. Manipulation of Data- This stage involves transformation of the stored data to generate final reports.

5. Output of Data- It means representing the accounting reports such as Journals, Ledger, Trial Balance, Financial Accounts, etc. as useful information. The accounting users can obtain these reports just by accessing the transformed data. This stage basically implies generation of final reports in a pre-designed format.