Accounting vs. Book-keeping book-keeping concerns itself with recording (right and a group of books) that transaction resulting in the transfer of money or money’s worth is. But accounting is a comprehensive context. It includes sorting, summarizing, presenting and even analyze accounting information.

Accounting vs. accounting

Body of Knowledge (consisting of principles, comes out, resolutions, conventions, concepts and rules) that apply science recording classifying and analyzing the financial accounting data. But implementation and art science accounting is named as accountancy.To meet the ever increasing demands of accounting with different stakeholders (eg owners, managers, creditors, tax authorities, etc.) the various disciplines have come into existence. Financial AccountingThe financial goal is to make sure (profit or loss) of business operations result in a specific period and specify the financial position (balance sheet) as at the date of the end of the season.

Cost Accounting

objective of cost accounting is to find out the cost of products manufactured or services entities. It also helps companies to control costs by identifying avoidable losses and wastes.Management AccountingThe object of management accounting is to provide relevant information at the appropriate time management to enable it to decide and influence control.In this website primer, we are concerned only with financial accounting. The part of financial accounting as noted above can be reached only by taking finances in a systematic manner the principles. The recorded information to be sorted, analyzed and presented in a way that results and financial position can be confirmed.

Uses Accounting

Accounting plays an important and useful role by developing information, answers to many questions faced by users of accounting information.

(1) How good or bad is the financial position?

(2) Have the activities of profit or loss?

(3) How well the different departments of the company have been in the past?

(4) Any activities or products have been profitable?

(5) Out of the existing products should be discontinued and the production of goods will increase.

(6) Whether to buy things from the market or to produce the same?

(7) Whether the cost of production is reasonable or excessive?

(8) What has been the impact of current policies on the company’s profitability?

(9) What are the likely results of the new monetary policy decisions on the future earning capacity of the company?

(10) In the light of past performance of the business how it should plan for the future to ensure the desired results?

The above mentioned are some examples of the types of questions faced by users of accounting information. This can be adequately answered with the help of relevant and necessary information from accounting

In addition, accounting is also useful in the following items: -.

(1) Increased amount of business results in a large number of business and businessmen do not remember everything. Accounting prevent the need remember various transactions.

(2) Accounting records, prepared on the basis of coordinated action, allows companies to compare results between periods with other periods.

(3) The taxation authorities (both income tax and sales tax) are more likely to believe the facts contained in the set of accounting books if kept under generally accepted accounting principles.

(4) Cocooning files backed up by proper and certified vouchers are good evidence in court.

(5) If a company is selling the operational economic grouping the values ​​of different assets as shown by the balance sheet helps in negotiating the right price for the company.

Restrictions on financial

Advantages accounting discussed in this section do not suggest that accounting is free from restrictions.

Following are limitations

Financial licensed accounting treatment alternative accounting based on the idea and it says “generally accepted principles” but there are more than one principle to treat each object. This allows other treatments in the framework of generally accepted principles. For example, the final stock in trade can be assessed by any of the following methods: FIFO (First-in-First-out), LIFO (Last-in-First-out), average price, Standard price, etc., but the results are not comparable.

Financial accounting does not provide timely information

There is no limitation when high powered software like HITECH Financial accenting used to keep online and interactive accounts where the balance sheet is made available almost immediately. However, manual accounting does have this drawback.

Financial accounting is designed to provide information in the form of statements (balance sheet item) for a period, usually one year. So what is the best of historical interest only “post-mortem” analysis of the past can be carried out. The companies need timely information at frequent intervals to enable management to plan and take corrective action. For example, if a company has plans for the current year sales should be $ 12,00,000 the required information on whether sales in the first months of the year amounted to $ 10,00,000 or less or more?

Traditionally, financial accounting is to provide information on shorter intervals less than a year. With the advent of computerized accounting software now as HITECH financial publishes monthly income statement and balance sheet to overcome this limitation. Financial accounting is influenced by personal judgments’Convention objectivity “is respected in the accounts but to take certain events assessment must do that requires personal judgment. It is very difficult to expect accuracy in future plans and objectivity suffers. For example, in order to determine the amount of depreciation to pay each year for the use of fixed assets if required food and income published accounts are not public but ‘approach.

Financial accounting ignores important non-monetary information

Financial accounting does not consider the transactions of non-monetary in nature. For example, the extent of competition faced by the company, technological innovation possessed by the company, loyalty and efficiency of employees; changes in the value of money, etc. are important issues on which management company is very interested but accounting is not tailored to take account of such matters. Thus all users of financial information is, of course, deprived of vital information which is of a material nature. In modern good accounting software with MIS and CRM can be useful to overcome this limitation part.

Financial Accounting does not provide a detailed analysis

financial information in real variables of financial transactions during the year. Of course it makes researching the overall results of operations The information is required about costs, revenues and profits of each product and financial accounting does not provide such detailed information Product wise. For example, if a company has earned total profit of say $ 5,00,000 for the financial year and it sells three products namely gasoline. diesel oil and mobile and wants to know the profits earned by each product of financial accounting is not likely to help him, but he uses a computerized accounting system capable of handling such complex queries. Many reports in computer accounting software like HITECH financial due with graphs and custom reports that the company must overcome this limitation.

Financial Accounting did not disclose the present value of a company

The financial position of the company as of the specified date is shown by a statement called ‘balance’. In the balance sheet as assets are shown under “Continuing Entity Concept. Thus, it is believed that the company has a relatively long life and will continue to be indefinitely, including the value of assets are ‘going concern values.” The “realized value” of each property, if sold today can not be known by studying balance sheets.