Accounting Basics

ACCOUNTING  PROCESS

Book-keeping

              “Book-keeping is an art of  recording business transactions in a set of books.”

                       Financial Accounting

“an art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character, and interpreting  the results thereof.”

                            Cost Accounting

“application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and the ascertainment of proitability as well as the presentation of information for the purpose of managerial decision-making.”

(a)    Management Accounting

Management Accounting is concerned with the use of Financial and Cost Accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions.

1.2.1 Difference between Book-keeping and Accountancy

The Signiicant difference between Book-keeping and Accountancy are : -

Sl No.	Points of difference	Book Keeping	Accountancy
1.	Meaning	Book-keeping is considered as end.	Accountancy               is        considered             as beginning.
2.	Functions	The       primary     stage       of      accounting function is called Book-keeping.	The  overall  accounting  functions  are guided by accountancy.
3	Depends	Book-keeping can provide the base of Accounting.	Accountancy             depends          on       Book- keeping for its complete functions.
4.	Data	The necessary data about inancial performances and inancial positions are taken from Book-keeping.	Accountancy can take its decisions, prepare reports  and statements from the data taken from Book-keeping.
5.	Recording of Transactions	Financial transactions  are  recorded on the basis of accounting principles, concepts and conventions.	Accountancy does not take any principles, concepts and conventions from Book-keeping.

   Difference between Management Accounting and Financial Accounting

The significant difference between Management Accounting and Financial Accounting are :

Management Accounting	Financial Accounting
1.      Management Accounting is primarily based on the data available from Financial Accounting.	1.      Financial   Accounting   is     based        on      the monetary transactions of the enterprise.
2. It provides necessary information to the management to assist them in the process of planning, controlling, performance evaluation and decision making.	2. Its main focus is on recording and classifying monetary transactions in the books of accounts and  preparation of  inancial statements at the end of every accounting period.
3. Reports prepared in Management Accounting are meant for management and as per management requirement.	3. Reports as per Financial Accounting are meant for the management as well as for shareholders and creditors of the concern.
4.      Reports may contain both subjective and objective igures.	4. Reports should always be supported by relevant igures and it emphasizes on the objectivity of data.
5.      Reports are not subject to statutory audit.	5.      Reports are always subject to statutory audit.
6.      It evaluates the sectional as well as the entire performance of the business.	6.     It  ascertains  ,  evaluates  and  exhibits  the inancial strength of the whole business.