Types of Accounting Information:
Financial
is to prepare financial reports that
provide information about a firm's performance to external parties such as
investors, creditors, and tax authorities. Financial accounting, on the
other hand, is performed according to Generally Accepted Accounting Principles
(GAAP) guidelines.
Example of financial statements used in companies:
- Balance Sheet - lists the assets, liabilities and equity of a business.
- Income Statement - lists all the revenue and expenses of a company from operation and investment activities.
- Statement of Cash Flows - lists physical income and expenditures.
- Retained Earning - The statement of retained earnings is not one of the primary financial statements requested by investors or business stakeholders.
Managerial
Managerial accounting is concerned with
providing information to managers to gain a better understanding of the current
financial and operational health of their organization and to those who are
inside an organization and who direct and control its operations.
Managerial accounting information
include:
- Information on the costs of an organization’s products and services.
- Budget Forecasts and Variance Explanations - these forecasts often use a cost accounting or activity-based cost technique. Actual budget results are compared to original plans as well as forecasts. Variance explanations usually accompany revised forecasts.
- Sales and Revenue Forecasts - this includes forecasts of unit volumes (sales), as well as the dollars (revenue) associated with those sales. Variance explanations usually accompany sales and revenue forecasts.
- Performance reports - Other information which assist managers in their planning and control activities.
Managerial accounting contrasts with
financial accounting in that managerial accounting is for internal decision
making and does not have to follow any rules issued by standard-setting bodies.
Tax
Tax accounting is the method of accounting that focuses on the tax issues; this includes all activities related to filling tax return and planning for future tax obligations. This area of Accounting Services compliance with relevant Internal Revenue Service (IRS).
Tax accounting is the method of accounting that focuses on the tax issues; this includes all activities related to filling tax return and planning for future tax obligations. This area of Accounting Services compliance with relevant Internal Revenue Service (IRS).
Some significant parts of tax
accounting include knowing how to formulate tax strategies, understanding tax
deferral, knowing when to expense terms, being able to prepare personal income
tax statements and knowing how to treat acquisitions or mergers.
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