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.

Into to Accounting

#3

Welcome to the introductory post on Accounting.

In this section, I hope start out with the basics, an Accounting 101, if you will, and move on to advanced topics as and when I study them.

Here’s a gist of Accounting 101 topics:

• History of accounting
• Ten Principles
• Accounting terms
• Accounting cycle
• Assets, Liabilities and Owners' Equity
• Financial Reports
• • Income statement
  • Balance sheet
  • Cash flow statement
• Credits, Debits, Balance Sheet, Double Entry Accounting
• COGS, Inventory, Cash flow
• Accounting Ratios: Liquidity, Solvency and Profitability
• Auditing

Here's accounting in six words:

Record, analyze, summarize, report - financial transactions

What all does an accountant do?

• Financial information for organizations
• Collect
• Organize
• Track

• Prepare financial reports
• Revenues
• Expenses
• Assets
• Liabilities

• Conduct audits
• Check if legal practices followed
• Check if company policies followed
• Prepare reports
• Recommend remedies
• Reduce risk of lawsuits

• Prepare tax returns
• • Minimize tax liabilities
  • Ensure income reported according to IRS

Designations:

• Chartered Accountant (CA)
• Certified Public Accountant (CPA)
• Certified Management Accountant (CMA)
• Certified General Accountant (CGA)

Now, let's throw some jargon around before getting into detailed concepts:

That's enough overview for a first post. Check out the subsequent ones for detailed dive-deep!