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Accounting refers to keeping a record of the financial transactions of any entity dealing with the outflow and inflow of finances. It facilitates the manipulation of data for an easy representation. It allows the storage, retrieval, sorting, and summarization of information to create a financial report to perform financial analysis of the entity.
The people who record the financial transactions are called accountants. Accounting field is divided into several sub-sections which include:
The financial accounting details are represented in the form of the balance sheet, income statement, and trading accounts. The report created is meant for professionals working outside the organization. It is usually prepared for the investors, key stakeholders and regulators of the organization.
Management Accounting distinguishes from the financial accounting as the management accounting report is developed for the use of organization’s employees or professionals working for the organization. It helps in the management, analysis and reporting of an entity from financial aspects. Keeping a record of the daily financial activities of an entity is called bookkeeping.
Auditing refers to the systematic, structural examination and evaluation of an entity. It is usually done by a third person who is not related with any activity of the organization.
It deals with the tax collection, reports and statements as per the government rules. Every economy imposes certain taxes on commodities. Tax Accounting keeps a record of all the taxes and generates the statement inclusive of all the effective taxes.
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