Financial Accounting, Cost Accounting, and Management Accounting - Assignment Example

The paper "Financial Accounting, Cost Accounting, and Management Accounting" is an inspiring example of an assignment on finance and accounting. Financial statements are an essential part of the corporate governance system it defines the accountability of the organization for its activities.
Financial accounting is the recording of the financial transactions of a firm and their summary in the periodic financial statements, for the use of persons both inside and outside the organization who wish to analyze and interpret the firm’s financial position.

Management accounting is the presentation of financial information to management in a suitable format to enable them to control the business, to plan and make decisions

For better day-to-day information, management accounting is used – this incorporates planning and control. Cost accounting is part of management accounting which is concerned with determining the cost of a product or service in order to make pricing decisions.

The basis of financial accounts is the value of what a company owns, owes, and is owed.

Payables (Creditors) -    are people who are owed money by the company

Receivables (debtors) -   are people who owe money to the company

assets -       are things of value to the business

liabilities -   are claims against the business

ASSETS

These are divided into two categories: non-current assets and current assets.

Non- current assets are held for a number of years and are used by the company in the everyday course of business.

Examples of non-current assets include:

Land & Buildings, Plant & Machinery, Equipment, Motor vehicles, Fixtures & fittings, office furniture  

Current assets are easily turned into cash or ‘liquidated’.

Examples of current assets include:

        Unsold inventory                                   Trade receivables (debtors)                              Cash in hand and cash at bank

LIABILITIES

These are split into two categories on the basis of the date when the liability has to be paid.

Current liabilities are short-term: they have to be paid within 12 months of the balance sheet date.