Assignment: Financial Accounting

Accounting Individual Assignment

Ma Jingwen

Financial accounting is the process of recording and analyzing quantitative and financial information of business operations, which essentially are transactions between the company and external partners, in a certain period of time for the purpose of making better business decisions. Financial accounting is a key process of business management, some experts even believe that, without financial accounting, the business activities are temporary.

In regard to the opinion that “Financial accounting is primarily about reporting on the history of a company. It has nothing to tell us of the future.”, I believe that financial accounting tells us about the history of a company, but it also tells us about

CIMA (Chartered Institute of Management Accountants) defines Management accounting as “the process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of information that used by management to plan, evaluate, and control within an entity and to assure appropriate use of an accountability for its resources”. It is not based on the past, but only on the forecast of market current and future trends, and no exact numbers allowed. With this partition, management accounting focuses on offering information and financial suggestions to the people inside of the company, especially the corporate executives, to make business decisions while financial accounting only provides financial statements to external users, such as investors, stockholders, creditors, suppliers, competitors and customers. Management accounting is manager oriented, while financial accounting provides the record of a company’s past performance.

In some company, these two field are divided to two different department. In Christian Dior, accounting and consolidation department is in charge of preparing and producing the individual company accounts the consolidated financial statements and financial reports. Management control department is responsible for coordinating the budget process, the year and the five-year strategic plan and the financial risk management system. In the other word, accounting and consolidation department is doing financial accounting while the management control department is doing management