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financial accounting - tango_acc - 07-04-2009
hi all,
i would like to seek advice on the term with brief explanation.
may i know what is the difference of financial and accounting?
can i say financial is referring to accounting and costing?
thanks
rgds
- Astute Accountant - 07-09-2009
<b>What Is Accounting?</b>
The accounting field has existed longer than the finance field. Accounting relates to preparation of accounting records, preparation, analysing and interpretation of financial statements.
Generally Accepted Accounting Principles (GAAP) guide the accounting field and its profession. Characteristics of GAAP are
1. Relevance
2. Timeliness
3. Reliability
4. Comparability
5. Consistency
It should be known that each country has its own accounting body, which regulates preparation and publishing of financial statements. In addition to the country rules and regulations there are also international standards, e.g. the International Accounting Standards (IAS), which also need to be followed.
<b>What Is Finance? </b>
The study of finance consists of three interrelated areas (i) money and capital markets which deals with many of the topics covered in macro economics (ii) investments, which focuses on the decisions of individual and financial and other institutions as they choose securities for their investments portfolios, and (iii) managerial finance (business finance) which involves the actual management of the firm. In general the three areas are interrelated.
- Astute Accountant - 07-09-2009
<b>Financial Accounting and Management Accounting</b>
Users of accounting information may be categorized as external users or internal users. This distinction allows classifying accounting into two fieldsâfinancial accounting and management accounting.
Financial accounting focuses on information for people outside the firm. Creditors and outside investors, for example, are not part of the day-to-day management of the company. Government agencies and the general public are external users of a firm's accounting information
Management accounting focuses on information for internal decision makers, such as top executives, department heads, college deans, and hospital administrators, telecommunication managers, ICT operators.