Types of accounting

#4

Let’s look at the three types of accounting in brief: financial, managerial, and cost

Financial Accounting

Objective: 

Generate interim as well as annual financial statements 

Process:

Summarize financial transactions that occur during an accouting period

Outcome:

Balance sheet, income statement, and cash flow statement

Additional task:

Annual audit (legal requirement for some companies)

Managerial Accounting 

Objective: 

Generate reports used by the management team of the business to make decisions about their operations

Process:

Organize and utilize information from financial statements

Outcome:

Monthly report, quarterly report

Additional task:

Budgeting, forecasting

Cost Accounting

Objective: 

Help businesses make decisions about costing

Process:

Organize and utilize information from financial statements

Outcome:

Cost center report, distribution report

Additional task:

Determine what the products of a business should cost

Fun fact

In cost accounting, money is an economic factor in production, whereas in financial accounting, money is a measure of a company's economic performance.