Accounting Accounting vs. keepingBook deals with the recording (correctly and in a certain number of pounds) for transactions which are transfers of money or property valued in money. While the accounting is complete in view. It covers the classification, synthesis, presentation and analysis of accounting information.
Accounting Accounting vs.
Body of Knowledge (consisting of principles, postulates, assumptions, conventions, concepts and rules) forScientific classification of the recording and analysis of financial accounting operations. While the practice of science and art of accounting is increasingly called accountancy.To requirements on the accounting treatment of various stakeholders (eg owners, management, creditors, tax authorities, etc.) of different sectors have launched. Financial AccountingThe object of financial accounting is the result (profit or loss) to determine the business operations during thethe respective period and the financial position (balance sheet), rather than a period of time, at the end of the state.
Management Accounting
The object of cost accounting is to determine the cost of goods produced or services delivered by a company. It also helps control the fiscal cost of avoidable losses, and specifying the subject AccountingThe wastes.Management cost accounting is to provide relevant information at the right time to provide the management, soThe decision and action control.In this short web are only concerned with financial accounting. The objects of financial accounting as described above can only be recording the financial transactions in a systematic way to achieve a set of principles. Recorded information should be classified, analyzed and presented in a way, the economy and financial situation can be determined.
Uses of Accounting
Ledger plays an important and usefulDevelopment of the Information Society to provide answers to many questions from users of accounting information in the face.
(1) is good or bad, as the company's financial situation?
(2) the company has resulted in a gain or loss?
(3) How well the various departments of the company performed in the past?
(4) What are the activities or products are profitable?
(5) For existing products that must be stopped and their productionCommodities should be increased.
(6) If a member to purchase from the market or to be the same?
(7) If the cost of production is appropriate or excessive?
(8) What is the impact of existing policies on the profitability of the industry?
(9) What are the possible outcomes of policy decisions on the future profitability of the new society?
(10) In light of past performance of the company, as should be expected in the future to ensure the desired results?
The above are just some examples of the types of questions that confront the users of accounting information. This may be a satisfactory answer with the help of appropriate and necessary information from the accounts provided.
Accounting is also useful in the following points: -
(1) increased turnover leads to a large number of transactions and not a business man can remember everything. To eliminate the need to remember different accountingTransactions.
Records (2) Accounting, developed on the basis of common methods, there is a store to compare the results of one period to another.
(3) The tax authorities (income taxes and sales taxes) are probably the events of the series of books contain, if conducted in accordance with accounting principles generally accepted to be believed.
(4) cocooning records in order and properly authenticated vouchers are assured a good evidence in any court.
(5) If aBusiness is to be sold as a going concern then the values of various activities, according to the amounts recognized in the budget helps in negotiating reasonable price for the business.
Limitations of Financial Accounting
The advantages of accounting discussed in this section is not recommended that the accounts are free from restrictions.
The following restrictions apply:
Financial Accounting provides an alternative treatmentsAccounting based on concepts and follows "generally accepted principles," butthere is more than one rule for the handling of a point. This provides an alternative therapy in the framework of generally accepted principles. For example, closing stocks are valued in the business of one of the following methods: FIFO (first in, first out), LIFO (Last In First Out), price, standard price, etc., but the results are comparable.
Financial accounting information is not timely
It is not a constraint, if high performance softwareApplication like HiTech Financial and accents are used for online accounts and competitor where you keep the balance available almost instantly. However, the manual does not have this defect accounts.
Financial accounting is designed to provide information in the form of statements (balance sheet and income statement) for a period of usually one year. Thus, information of historical interest at best and only analyzes the "post mortem" of the past can be made. TheBusiness requires timely information at regular intervals, so that the management plan and take appropriate action. For example, if a company has budgeted for sales in the current year should be $ 12,00,000 then requires information on whether the sales in the first month of the year to $ 10,00,000 or more or less equal to?
Traditionally, financial accounting is not suppose to provide information at short intervals of less than one year. With the advent of electronic invoicingNow a software like HiTech Financial Accounting displays monthly profit and loss account and balance sheet in order to overcome this limitation. Financial Accounting by judgments'Convention personal objectivity is affected "is maintained in the accounts, but the inclusion of some events to make an estimate, which opinion may be necessary. It 'very difficult to expect accuracy and objectivity suffers from future estimates. For example, thus the level of depreciation is chargedeach year for the use of assets, you must estimate and the profit is not exposed to authoritative accounts, but "convergence".
Financial accounting ignores important non-monetary information
Financial accounting, these transactions do not take into account non-monetary in nature. For example, the degree of competition across the economy, the economy had technical innovation, efficiency and loyalty of employees, changes in the value of money, etc. areimportant issues in the management of the company is very interested, but accounting is not designed to observe, to refrain from these things. So every user of financial information is of course devoid of important information, the non-monetary. In modern times a good accounting software MIS and CRM can be very useful to overcome this limitation in part.
Financial accounting provides a detailed analysis
The information is provided by the Financial Accountingaggregates in terms of financial transactions during the year. Of course it is possible for the overall result of the company the necessary information on the costs of turnover, and profit of each product but financial accounting does not provide detailed information on these products as they are studying. For example, if the transaction has a total profit of say, earns $ 5,00,000 during the year and sells three products, namely gasoline. Diesel and mobile and wants to knowThe profits of each product Financial accounting is unable to earn to help him, if it is an accounting system used with such complex queries. Many reports in an accounting software like HiTech Financial Accounting, with custom graphics and reports, as required by the company explains to circumvent this limitation.
Financial accounting does not disclose the present value of the business
In financial accounting to the company's position asa certain date by a declaration of "balance sheet" shows known. Activities in the budget are "shown Continuing Concept entities. This has been suggested that companies have relatively long life and will continue to exist indefinitely, hence the asset values are 'going concern values." Based on the 'realized value' of each asset class, if not sold today by studying the balance to be known.
