Table of Contents
Types of accounting – Field of Accounting and its users
Today we will discuss various types of accounting, fields of accounting and its users. for the students of class 11- 12th, concept has been explained in easy language.
Types of Accounting include:-
Financial Accounting
It covers the preparation and interpretation of financial statements. It is historical in nature as it records transactions. The final step of financial accounting is the preparation of Profit and Loss Account and the Balance Sheet.
Management Accounting
It is concerned with internal reporting of a business unit. To focus more on financial planning, control and decision-making, by providing variety of information to management. Important aspect of management accounting is cost control which deals with cost ascertainment which will help to bring in efficiency.
Cost Accounting –
Cost Accounting begins with the recording of income and expenditure or the bases on which they are calculated and ends with the preparation of periodical statements for ascertaining and controlling costs.”
Social Responsibility Accounting
Social Responsibility Accounting (SRA) is an approach that focuses on measuring and reporting an impact on society and the environment . It involves accounting for social, ethical, and environmental performance, reflecting responsibility of businesses toward shareholder.
Human Resource Accounting
Human Resource Accounting (HRA) is the process of identifying, measuring, cost and value of an human resources. It treats human as capital and their skills, knowledge, and abilities—as an asset that contributes to the company.
Users of Accounting
Investors
They provide capital to the business. They need information whether to buy, hold or sell their investment. They are interested to know the ability of the business pay dividend
Employees
Employees are interested to know the stability, continuity and growth of the business and ability to provide salary, retirement and other benefits .
Lenders
They are interested to know whether their loan-principal and interest will be paid on time.
Suppliers and Creditors
They are interested to know the ability of the enterprise to pay their dues on time. Small units supply their products to a big enterprise, if the big enterprise fails to pay on time , the small will close down hence they are interested in financial information.
Government agencies
They regulate business for public good, allocate resources, control prices, charge duties and taxes, and so they are also interested in financial information of business enterprise.
Public
Public at large is interested in functioning of big companies because it make a substantial contribution to economy like:- number of people employed and their local suppliers. Hence financial information is useful for public as well.
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