Information about Accounting and Financial Accounting is useful for internal (owners, managers, employees) and external users (Customers, creditors, regular authority) to identify the position of business. Internal users can changes in their strategies for the growth of business and info is useful for external also. Users invest their money in that company which is having highly liquidity.
Introduction of Accounting: Accounting is a systematic and comprehensive recording of financial transactions pertaining to a business. It refers to recording summarizing, analysing and reporting of transactions.
Types of accounting
- Tax Accounting: Tax accounting refers to accounting of tax data. Tax accounting is governed by the Internal Revenue Code which dictates the specific rules that companies and individuals must follow when preparing methods their tax returns.
Financial Accounting: It refers to manage all the assets and liabilities of companies. It gives accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
Social Accounting: It also known as corporate social responsibility. It is the process of communicating the social and environmental effects of organizations’ economic actions to particular interest groups within society and to society at large.
Introduction of Financial accounting:Finance is a life blood of every company. Without it survive of company cannot possible. Financial accounting is accounting concern with summary, analysis and reporting of financial transactions pertaining to a business. This involves the preparation of financial statements available for public consumption.
Components of Financial accounting
Cash Flow statement: It shows the cash inflow and out flow of company to external and internal users.
Profit and loss Account: It shows P and L Accounts to external users. Investment depends of the external user upon its P and L accounts.
Balance Sheet: A statement of the assets, liabilities, and capital of a business at a particular point in time, detailing the balance of income and expenditure over the preceding period.
Accounting and financial information helps the users to take a better financial decision for their investment. Investors invest their money in that company which is highly liquidity. Through Accounting and Financial accounting shows the financial position of the company.