Accounting or Book Keeping is business languages. We can use this language to communicate financial transactions and their results to the owner. Accounting is a comprehensive system to collect, analyze, and communicate financial information to the owner or shareholder of the company.
An accountant is a person who records these all type of business transaction into the accounting system for measuring the result of the decision taken by Owner this is called accounting.
Accounting has a three type of branches as shown in the diagram following and links are provided as below: –
Financial accounting means basic accounting or initial level accounting in which we are recording, summarising and analyzing day to day transactions of the particular business. and at the end, we will get to know about the financial position of a business or an organization by preparing Profit/loss and balance sheet of business in the particular financial year.
2. Cost Accounting: –
It is a process of recording, classifying, analyzing, summarizing allocating and evaluating various alternative courses of action and control of costs. Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting is used to finalize the cost of the product which is manufactured in house.
3. Management Accounting: –
In management accounting or managerial accounting, managers use the provisions of accounting information in order to better inform themselves before they decide matters within their organizations, which aids their management and performance of control functions. With the help of management taking a crucial decision related to the future of the business. Like shown as following
- Capital budgeting
- Capital Structure
- Working capital requirements
- Ratio analysis
- Planning and Organization
- Analysis of the financial data
- Prepare Targets for various departments.
- and take all decision which helps in the growth of the organisation.
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