Demystifying sorts of accounting
In the accounting world, many groups combinedly classify activities that involve accounting. Understanding in detail the types of accounting guarantees your knowledge on what steps you should take as an accountant or an aspiring one. Distinguishing them is not rocket science either; that’s why this post tries to demystify the two types of accounting vary depending on the purpose or the procedures that follow in making their financial statements. The two most important type of accounting is financial accounting and management accounting.
Financial accounting is linked with the preparation of financial statements like Balance sheet and income statements, while management accounting usually deals with the interpretation of these financial statements.
Financial accounting in particular when preparing financial statements, their sole purpose is to provide information to interested parties like creditors, bankers, government and also financial institutions. Thus, we conclude that financial accounting is tasked with external communication on financial matters. Therefore, this type of accounting is the foundation of all business information which can be later analyzed and interpreted to aid in decision making.
Management accounting, on the other hand, facilitates management by providing accounting information that will facilitate policy-making in the daily activities of the firm or company. This type of accounting is tailored to suit decision-makers need by presenting information in a detailed and meaningful manner. Reports usually generated by management accountants are typically aimed at one purpose and can serve purposes of long term or short duration.
Cost accounting which is considered a branch of management accounting, deals with costs breakdown of different departments, sectors of a firm so that an effective cost control can be exercised. It can also be used to make revenue decisions.
These types of accounting also have its shortcoming on the other side; for instance, financial accounting is associated with its information lacking the futuristic outlook, and thus predictability based on the report is limited.
Tip: Management accounting usually differs from financial accounting, because it does not necessarily follow defined principles like GAAP since to it’s for a specific goal on decision making, so they can be made on any duration depending on their assigned purpose
Therefore, to truly differentiate financial accounting and management accounting one must recognize the users of information being different, the time frames and also the reports generated also vary. Assignments that require students to explain in detail between the two types of accounting needs one to be familiar with more information that makes them unique adequately. If for instance, you are given assignments that require detailed description between the two types of accounting and you are stuck—wondering who to do my accounting homework look no further but reach out to us for assistance. We will not only distinguish between the two types of accounting but also make your assignment answers explanatory to guarantee you the best out of your grade. Not sure yet, our assignment team have a vast experience in accounting, Visit our website today!!!