Types of Accounting

Question 1

Two types of accounting

Answer 1

Accounting can be divided into financial accounting and management accounting.

Question 2

Describe Financial Accounting

Answer 2

Financial Accounting is concerned with the preparation of reports, such as, an income statement or a balance sheet.
In stage 3 we analyse and prepare reports for a company which includes a Statement of Comprehensive Income , Balance Sheet and Cash Flow Statement.
Financial accounting is directed towards external users of accounting information such as banks and investors.

FA is not optional they have to undertake financial accounting by law. It must disclose this information

Measuring past events, what where our past sales.

Question 3

Describe Management Accounting

Answer 3

Management accounting is concerned with providing information to business managers.
In Stage 3 the information we create for managers focuses on the cost of manufacturing a product and or providing a service.
Is not required to be completed by law, it does not have to follow a particular standard.
It does not have to disclose information to external users.
It is future orientated, that is what will it cost us to do something it helps us to plan for the future. (Budgeted figures used in exams)