Additional Information Needed by the Organisation

Apart from the information relating to the various elements (ledger accounts) that an organisation collects, there is other information that is needed by the organisation. In general, in accounting we can identify two important pieces of information that the organisation needs.
The ledger accounts collect information relating to each element. All the elements (account heads) are classified into three types. Personal accounts (relating to persons and organisations), Real accounts (relating to tangible aspects) and Nominal accounts (relating to incomes/gains and expenses/losses).

• Profits made by the organisation

As and when an element is effected by a transaction, the ledger account is posted to with the information. This keeps on happening continuously. The information thus collected in the form of ledger accounts does not say anything about the profits made by the organisation. The organisation periodically would be interested in knowing the amount of profit that it has made over the period.

» Involvement of a Period

When it comes to thinking about profits there is a period involved in the thought. We think of profits made over a period and not at a particular instance. For example, We think of Profits made

• From 1st April to 31st April or
• During April or
• During the 6 months ending 30th June
• For the year from 1st April, 2005 to 31st March 2006.

• Position of the Organisation

The ledger accounts are periodically balanced to obtain the balances in the accounts. The act of balancing is done at such periods as is needed by the organisation. For example, where the organisation needs the information relating to cash balance daily, therefore Cash a/c is balanced daily.

» Assets and Liabilities indicate a persons Position

What is it that comes to our mind when we think of a persons position? It is the value of his/her property and the liabilities he/she has. Even in accounting, in trying to ascertain the position of a business entity, this is what we think of. The position of a business is indicated by the value of its assets and liabilities.
The organisation at times would be interested in knowing its position as at a particular point of time.

» Position at an instance

When it comes to thinking about the position there is an instance involved in the thought. We think of the position as at a point of time and not a period. For example, We think of the position

• As on 24th June or
• As at the end of a period i.e. on the last day of the period