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Accounting is a process of maintaining financial transactions pertaining to a business,
which can be used to take critical financial decisions.
The process of recording, analysing and interpreting the financial transactions of a individual or business on daily basis in a systematic way is Bookkeeping. When these data is produced in reports for the use of individuals or companies, this process is called Financial Accounting.
This information also helps to predict future financial developments, analyse different areas of the business and evaluate business potential.
The Bookkeeper manages the accounting functions, while the advanced accounting is handled by qualified accountants who possess designations such as Chartered Accountant (CA).
Types of Accounting
|Financial Accounting||Financial accounting refers to the processes used to generate interim and annual financial statements. Financial accounting is the process of preparing financial statements that companies use to understand their financial performance and show the growth to people outside the company, Including investors, creditors, suppliers, and customers.|
|Managerial Accounting||Managerial accounting is the process of identifying, measuring, analyzing, interpreting of accounting information so that it can be used to help managers to make necessary decisions to efficiently manage a companys operations. Managerial accounting is focused on companies internal decision-making. Managerial accountants need to analyze various events and operational methods in order to convert data into useful information that can be used for the Management in their decision making process.|
|Cost Accounting||Cost Accounting is a type of managerial accounting that focuses to capture a companiess total cost of production by assessing the variable costs of each step of production as well as fixed costs. Cost Accounting uses all the costs related to producing a product. Business Owners, Analysts and Accountants use this information to determine the cost that can be applied for the product.|
Thus the purpose of accounting is to accumulate and report on financial information about the performance, financial position and cash flow of a business. This information is then used to reach decisions about how to manage the business or invest money in it.
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