Types of Accounting: Management Accounting and Financial Accounting

EXECUTIVE SUMMARY
Report is about the accounting and the types of accounting. Report will include the
understanding of management accounting and financial accounting. Function of both the
accounting methods are also discussed in the report. This will also include the concepts and
techniques that are used in management and financial accounting.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
RESEARCH/ FINDINGS / ANALYSIS.........................................................................................1
Question 1....................................................................................................................................1
Question 2....................................................................................................................................3
Question 3....................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Accounting is medium for communicating the results of the business operations for
various parties that are interested or are associated with business. They are owners, investors,
creditors, bank and the financial institutions. This is known as the business language. Accounting
is not limited to business, but extends to everyone that is required to keep record of monetary
transactions. As per Smith and Ashburne Accounting refers to science of recording & classifying
the business events and transactions of financial character (Otley, 2016). It is also art of creating
significant summaries, analysing and interpreting the transactions and communicating results to
judgement and decision makers. The report will provide about the branches of accounting that
are management accounting and the financial accounting. It will also cover the numericals on
capital budgeting and analysis of financial statements using ratio analysis.
RESEARCH/ FINDINGS / ANALYSIS
Question 1
Financial accounting
Financial Accounting refers to specialized accounting branch keeping track of the
financial transactions of company. Companies using standards and guidelines record transaction,
summarize and present the information in financial statements or the financial reports. These
reports include profit or loss statements, balance sheet and cash flow statements.
Financial statement are to be issued by the companies on routine basis. Financial
statements are considered external to the as given outside people of the company. The motive of
financial accounting is not only of reporting value of company. Purpose is of providing
information for assessing value of company and its financial position (Mårtensson and et.al.,
2016). They are prepared mainly for the external users of the company. Use of financial
statements is for assessing financial health before the investments could be made.
Functions of Financial Accounting
Systematic Record
Main Function of financial accounting is of recording the financial transactions of
business. Systematic refers to recording using financial standards and national guidelines for
recording every transaction of business.
Analysing & Summarizing
1