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.
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.
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.
For internal control, the accountant has a responsibility to monitor finances of a company. Other responsibilities include keeping track of liabilities, duties and taxes. Furthermore, analyses of measurement data on creditors or stockholders are also provided by an accountant. This essay will seek to prove that through principles of financial accounting, cost accounting and cost management, accountants can control the cost of business rather than change demands of customers. In research, there are three main form of management accounting to control the cost in an organization effectively and efficiently.
Accounting is the compilation of financial information for use in making economic decisions. BOOKKEEPING provides the basic accounting data, by systematically recording such day-to-day financial information as revenue from the sale of products or services; expenses of business operations such as the cost of merchandise sold; and overhead expenses such as rent, wages, and so forth. Accounting principles determine which financial events and transactions should be recorded in the bookkeeper's ledgers, journals, and computer printouts. The analysis and interpretation of these records is the primary function of accounting. The various financial statements produced by accountants then furnish business and other types of organizations with the basis for their financial planning and control, and provide other interested parties (investors, the government) with information they can use to make decisions about these organizations.
They interpret the financial information that corporate executives need in order to make sound business decisions. They also prepare the reports for creditors, regulatory agencies, and tax authorities (“Accountants and Auditors”). Some public accountants specialize in forensic accounting, which is investigating and interpreting... ... middle of paper ... ... public firms. They help companies run efficiently by keeping track of assets and liabilities of the company. Works Cited “Accountants and Auditors."
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.
Accounting is the process of identifying, recording, and communicating the economic events of an organization to interested users to make sound decisions. In accounting identifying economic events involves selecting the economic activities related to a particular organization such as paying out salaries to employees of a particular entity. In turn, once these economic activities have been identified they are recorded in the books daily into a systematic system measured in dollars. These economic events are then classified and summarized by an accounting system. The data gathered from the economic events are then translated into financial statements and communicated to internal and external users interested in the economic health of the company.
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.
Business always requires a number of logical and sequential tasks and one of the most important process is accounting. In the last lecture, Professor Chen introduced us about Accounting, which is an integral system of every organization. By that lecture, I can generally understand the basic steps included in accounting system, procedures as well as the method to evaluate the financial statements of an organization. The first and the most basic concept is accounting. It is an sequential process including collecting business transaction documents, recording in journals, classifying information, summarizing data, reporting, and the last step, analyzing the reports about financial activities of the company.