Must Know about Business Accounting and its Types

According to Ana, a senior consultant at Myassignmenthelp review– “Accounting is a process of tracking the operations of a business. Accounts help make better decisions for the business and analyze the financial structure of a business. Accounts help owners of a business to meet the responsibility. It also helps to make proper decisions with the money”.

Business Accounting is a structuralized way to store account records. It’s include recoding, analyzing, interpreting and presenting financial information. The way of accounting done by one person or by a team in a big organization. Business accounts identify economic events such as transactions and investments and they communicate with these economic events of a company. Business accounts use a technic named bookkeeping to economic events systematically. This type of system accounting financial record describes what a business is owned and owns. The business owns is called “assets”. Owes of business divide into two parts liabilities and stockholder’s equity. Liabilities belongs to credit depts.

Stockholder’s equity belongs to investor debts. At last, Assets is equal to the summation of Liabilities and stockholder’s equity (Assets =Liability + Stockholder’s Equity). The above equation is a basic equation that all accounts use to record and report. The system of business accounting refers to analyzing and interpreting monetary statements and describing the meaning of reported information.

Two types of people mainly use monetary statements external or internal users.

Internal users include:

  • Supervisors,
  • Financial and
  • Marketing officers.

They handle the data and make reports. Outside users mainly handle the accounting details for investment purposes. This group includes creditors, investors, and government sectors. They prepare financial statements it explain the financial condition of the business. An account of a business accounting must understand the services and apply the proper principles to ensure a high quality of reporting standards are maintained. “The business accounting process is done by some crucial element of accounting standers Such as Journal, ledger, Trial balance, Final account, Balance sheet,- says marketers.

Business accounting has three types

1. Financial Accounting

Financial accounting is the process of generating financial statements. The statement can be interim or annual. The result of financial transactions during a period of an accounting period are listed into a balance sheet, income, and cash flow statement.  The financial statements of most companies are audited by an external CA firm. Most companies will have annual audits for one reason or another.

2. Managerial Accounting 

This type of accounting the mainly based on identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the execution of goals of organizations. Basically, in this type of accounting, accountants generate monthly or quarterly reports for the management team that they can use to make a decision about how the business operates. Managerial accounting also encloses other facts of accounting includes budgeting, forecasting, and many financial analysis tools.

3. Cost Accounting

Managerial accounting helps businesses make a decision about management. Cost accounting helps a business make a decision about costing. This type of Accounting includes all types of related to producing a product. Depends on the information owners, managers, accountants determine to choose the cost of the product. In cost accounting, economical factors of production relate to money

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