What is an Information Processor?

//What is an Information Processor?
What is an Information Processor? 2017-10-05T02:57:56+00:00

Definition: An information processor is part of an accounting system that interprets, converts, and summarizes financial data in the form of financial statements and reports. In other words, an information processor is anything that takes data in an accounting system and turns it into usable financial information that can be analyzed.

The raw data is kept in journals, ledgers, and work papers before the processor transforms it. Once the data is processed into financial reports, management can use them to make operational decisions in the business.

What Does Information Processor Mean?

You might automatically think that a processor is some type of computer program or piece of hardware, but it doesn’t necessarily have to be a part of a computer. A bookkeeper or accounting clerk often takes accounting data and assembles it into internal reports for management to analyze.

Example

Computers and accounting programs like Quickbooks have increased in ability and as a result have become more popular for doing tedious and time-consuming processor tasks. Other more technical tasks still require professional judgment.

This is an important realization. Accounting principles are never so strict that professional judgment can be left out of preparing financial statements and analyzing the materiality of reported items and formats. Accounting professionals are still required to do some processing work, but computers do the vast majority of information processing today.

Without having to worry about the actual manual processing work, professionals and managers can focus more on using the information to properly run and manage the business. For instance, a production manager can print out production and manufacturing reports periodically to check the status of the assembly line flow. He doesn’t have to worry about physically generating the report or crunching the numbers. The computerized accounting information processor does that for him. He can focus on using the information to benefit the company.