INTRODUCTION The purpose of this document is to describe the nature, purpose and scope of accounting and it deliberately explains the details of each category in accounting. Accounting involves in preparing financial documents of an entity by analyzing, verifying, and reporting this records. It emphasizes its major characteristic role in field of banking and finance, with a mixture of supportive sub topics. Purpose and Scope Main view of this report is to explain how the accounting plays a major role in banking, finance and other sectors of business. To decide this, the following questions are explained as follows: • What is accounting?
Annual report analysis of Kotak Mahindra Bank Limited Financial statements provide an overview of a business' financial condition in both short and long term. They help in understanding the past performance of the company and making future predictions about the company. It thus helps us to look beyond the profit figures. There are 3 basic financial statements. They are:- Income Statement Balance Sheet & Cash Flow Statement Purpose of financial statements "The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.
The information provided in the financial statements under the financial accounting system is used by auditors to analyze the businesses financial position. Maintaining an accounting standard for report for external users is al... ... middle of paper ... ...nancial information and how to analyze the information reported. While each type of accounting is necessary, they are aimed at different audiences and have various standards that are necessary to adequately evaluate the financial position of the company. Financial accounting is primarily the function of putting financial statements together in accordance to GAAP so that the information can be viewed and analyzed for external users, including auditors and shareholders. Managerial accounting is the process of compiling financial statements that will aid the management team in making decisions for the organization.
Accounting information systems can also help us understand what types of inventory we should use. As we discussed basic structures of assets, liabilities, and stock holder’s equity. We will also discussed four basic financial statements and effects of Revenues, expenses and dividends. Finally also discussed difference between net income and cash flow. We learned why business owner should have accounting information systems and what impact it could have on his business.
Trends and other fluctuations can also be assessed by looking at the annual report. This report helps to determine which trends have impacted the results in the financial statements, and aids business leaders to take action to prevent potential financial events that may cause a loss in the future. These reports also come in use when companies have to refer back to their financial statements if they are ever audited. Financial reports can also be used to assess what an organization’s expected future shares will be sold at. When a business accountant puts together a financial report, there are four key elements that are needed to be accurately outlined in order to show the financial standing of the business in the report.
When examining the major differences between financial and managerial accounting, we find that with financial accounting the information is reported in statements. The financial statements objectively and periodically report the results of past operations and the financial condition of the business according to the Generally Accepted Accounting Principles (GAAP) (Vallabhaneni, 2003). Examples include shareholders, creditors, government agencies, and the public. On the other hand, managerial accounting information includes both historical and estimated data used by management in conducting daily operations, planning future operations, and developing overall business strategies (Vallabhaneni, 2003). Managerial accounting also includes information for decision-making, planning, directing, controlling an organization's operations, and appraising its competitive position.
Accounting The nature of work of accountants and auditors is to prepare, analyze, and verify financial reports and taxes, and monitor information systems that furnish this information to managers in business, industry, and government. The major fields of accounting are Public accountants who have their own business or work for public accounting firms. They perform a large range of responsibilities such as doing taxes, numerous accounting and auditing, consulting activities for their clients, who may be corporations, governments, nonprofit organizations, or individuals. Management accountants also called industrial, corporate, or private accountants record and analyze the financial information of the companies for which they work with. Other responsibilities include budgeting, cost management, and asset management.
They can be hired to prepare annual reports that are presented to the stockholders of the corporations. Those reports show the state of a company's finances to the stockholders of the company (“Public Accountant Job Description”). Accountants must be familiar with the tax laws concerning their client's professions or business. They are responsible for budgeting, performance evaluation of the company, cost management, and asset management. They interpret the financial information that corporate executives need in order to make sound business decisions.
QUESTION 1 Financial Accounting is an accounting system that tries to meet the needs of the various user groups especially for external users. It’s overall purpose is to construct financial reports that provide information about a firm's performance to external parties such as investors, creditors, and tax authorities. Types of financial reports used are Statement of Financial Position, Statement of income and Statement of cash flow. Users of the information are stockholders, government, investors and tax authorities. Management Accounting is an accounting system is used for internal decision making.
Definition: According to John N. Myer “the financial statements provide a summary of the accounts of a business enterprise, the balance sheet reflecting the assets and liabilities and the income statement showing the results of operations during a certain period” 1.1.2 Nature of financial statements Financial statements are prepared with the aim of presenting periodical review or report on the progress by the management and subsume the following: (a) Status of the Investments within the Business. (b) Results achieved throughout the amount beneath review. The Data exhibited in these financial statement... ... middle of paper ... ...ht regarding the figures. Then again, if figures are given in items then it will get troublesome to judge the working of the business. 1.1.6 Importance of financial statements The financial statements are a mirror which reflects the financial position and operating strength or shortcoming of the concern.