Meaning of Accounting
Accounting may be defined as the process of collecting, recording, summarising and communicating financial information. Accounting is an art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are , in part at least, of a financial character, and interpreting the results thereof.
In short, accounting is the basic tool for recording and reporting economic transactions that affect business enterprises.
Branches of accounting
1. Financial Accounting :- It is that part of accounting which is mainly concerned with the historical, custodial and stewardship aspects of external reporting to shareholders, government and other users of accounting information outside the business entity. It is the recording and processing of financial data affecting the business unit, which relates to the past and generally for one year.
2. Cost Accounting :- It is mainly concerned with the cost to produce goods and services. Cost accounting applies the principles of accounting in such a manner that it is possible to have a detailed recording and analysis of expenditure incurred in connection with the operation of any business, for example, manufacturing, administration or selling, or the production of an article so that it is able to measure performance and control activities.
3. Management Accounting :- Any form of accounting which enables a business unit to be conducted more efficiently can be regarded as management accounting. Management accounting is that part of accounting which is concerned mainly with internal reporting to the managers of a business unit. It refers to planning, control and decision - making which is useful to the management in the discharge of its functions.
Note:- This blog will mainly deal with financial accounting and its various applications.
Accounting may be defined as the process of collecting, recording, summarising and communicating financial information. Accounting is an art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are , in part at least, of a financial character, and interpreting the results thereof.
In short, accounting is the basic tool for recording and reporting economic transactions that affect business enterprises.
Branches of accounting
1. Financial Accounting :- It is that part of accounting which is mainly concerned with the historical, custodial and stewardship aspects of external reporting to shareholders, government and other users of accounting information outside the business entity. It is the recording and processing of financial data affecting the business unit, which relates to the past and generally for one year.
2. Cost Accounting :- It is mainly concerned with the cost to produce goods and services. Cost accounting applies the principles of accounting in such a manner that it is possible to have a detailed recording and analysis of expenditure incurred in connection with the operation of any business, for example, manufacturing, administration or selling, or the production of an article so that it is able to measure performance and control activities.
3. Management Accounting :- Any form of accounting which enables a business unit to be conducted more efficiently can be regarded as management accounting. Management accounting is that part of accounting which is concerned mainly with internal reporting to the managers of a business unit. It refers to planning, control and decision - making which is useful to the management in the discharge of its functions.
Note:- This blog will mainly deal with financial accounting and its various applications.
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