Accounting

Tags

finance

Bookkeeping - Accounting of financial transactions. The common approach is [see page 17, double-entry-accounting system].

Financial Accounting

Financial accounting - meant for those external to the organisations who need to get a view inside (eg. Investors, Creditors, Tax Authorities, Suppliers and Employees). Financial accounting is mostly backward facing, focusing on the past or the very immeadiate future (eg. impending sales).

It provides information about:

• financial position - how much a organisation owns and owes.
• financial performance - profit the organisation is making (revenue - cost).

The function of Financial accounting are:

• Decision Making
• Contracting
• Stewardship

Financial accounting is aggregated into a generalised report (financial statement) following a consistent format (eg. IFRS, US GAAP).

Management Accounting

Management accounting provides reports for those internal to the organisation who need to achieve organisation goals (eg. CEO, General Manager, Department/Division Manage, Functional Staff). It uses historical data to help make decision for the future.

The functions of management accounting are:

• Decision Making
• Control

Management accounting emphasise relevence over reliability with each organisations having their own specific formats for each managers role. They must be able to provide the right information to the right persons at the right time.

See [see page 25, roles & responsibilities] of a management accountant.

[see page 6, Standards]

Accounting standards in the UK are presented by the FRC (Financial Reporting Council) as FRS (Financial Reporting Standards).

International financial reporting standards (IFRS) are issued by the International Accounting Standards Board (IASB). Listed companies in the EU must support IFRS.

Auditors (elected/hired by shareholders) Audit financial statements.

The see page 7, FCA imposes additional rules on companies listed on the stock-exchange.