FINANCIAL MANAGEMENT
❖ Accounting
- process of recording financial transactions pertaining to a business which
includes summarizing, analyzing and reporting these transactions to
oversight agencies, regulators and tax collection entities.
- a service activity that provides quantitative information, primarily financial
in nature, about economic entities that is intended to be useful in making
economic decisions
TYPES OF ACCOUNTING INFORMATION
A. Financial Accounting
- refers to information describing the financial resources obligations and
activities of an economic entity
- designed primarily to assist investors and creditors in deciding where to
place their scarce investment resources
- used by managers in income tax returns
- used for so many different purposes that is often called “general-purpose”
accounting information
B. Management Accounting
- involves the development and interpretation of accounting information
intended specifically to aid management in running business, setting the
company’s overall goals, evaluating the performance of departments and
individuals, deciding to introduce new line of products, and in making all
types of managerial decisions
- also includes evaluations of nonfinancial factors, such as political and
environmental considerations, product quality, customer satisfaction, and
worker productivity
C. Tax Accounting
- the preparation of income tax returns which are based on financial
information
- information often is adjusted or reorganized to conform with income tax
reporting requirements
D. Non-for-Profit Accounting
- use for government agencies, churches, non-government organizations
(NGOS), charitable institutions and schools
- accountants for these organizations do in fact make a profit, however the
profit is kept in the organization and not distributed
USERS OF ACCOUNTING INFORMATION
A. External Decision Makers
, 2. Employees – interested in information about the stability and
profitability of their job
3. Lenders – interested in information that enables them to determine
their loans, and interest attaching to them will be paid when due
4. Suppliers and other trade creditor – interested in information that
enables them to determine whether amounts owing to them will be paid
in due
5. Customers – about the continuance of an enterprise, specially when
they have a long-term involvement with, or dependent on the
enterprise
6. Government and their agencies – are interested in the allocation of
resources
7. Public – enterprise affect members of the public in a variety of ways;
employ the people, patronage of local suppliers
B. Internal Decision Makers
- managers of a business entity, responsible for managing efficiently and
who have the power and authority to obtain whatever economic
information they need
ACCOUNTING AND TECHNOLOGY
❖ Book-keeping
- is an activity concerned with the recording and classifying financial data
related to business operation in order of its occurrence
- a mechanical task which involves the following:
• Collection of basic financial information.
• Identification of events and transactions with financial character i.e.,
economic transactions.
• Measurement of economic transactions in terms of money.
• Recording financial effects of economic transactions in order of its
occurrence.
• Classifying effects of economic transactions.
• Preparing organized statement known as trail balance.
Distinction Between Book-keeping and Accounting
BOOK-KEEPING ACCOUNTING
• Is an input for accounting • informed judegements and
• its purpose is to keep systematic decisions by the user
record of transactions and events of • its purpose is to find results of
financial character in order of its operating activity of business and to
occurrence report financial strength of business
• is a foundation of accounting • considered as a language of
• carried out by junior staff business
• its object is to summarize • done by senior staff with skill of
cumulative effect of all economic analysis and interpretation
❖ Accounting
- process of recording financial transactions pertaining to a business which
includes summarizing, analyzing and reporting these transactions to
oversight agencies, regulators and tax collection entities.
- a service activity that provides quantitative information, primarily financial
in nature, about economic entities that is intended to be useful in making
economic decisions
TYPES OF ACCOUNTING INFORMATION
A. Financial Accounting
- refers to information describing the financial resources obligations and
activities of an economic entity
- designed primarily to assist investors and creditors in deciding where to
place their scarce investment resources
- used by managers in income tax returns
- used for so many different purposes that is often called “general-purpose”
accounting information
B. Management Accounting
- involves the development and interpretation of accounting information
intended specifically to aid management in running business, setting the
company’s overall goals, evaluating the performance of departments and
individuals, deciding to introduce new line of products, and in making all
types of managerial decisions
- also includes evaluations of nonfinancial factors, such as political and
environmental considerations, product quality, customer satisfaction, and
worker productivity
C. Tax Accounting
- the preparation of income tax returns which are based on financial
information
- information often is adjusted or reorganized to conform with income tax
reporting requirements
D. Non-for-Profit Accounting
- use for government agencies, churches, non-government organizations
(NGOS), charitable institutions and schools
- accountants for these organizations do in fact make a profit, however the
profit is kept in the organization and not distributed
USERS OF ACCOUNTING INFORMATION
A. External Decision Makers
, 2. Employees – interested in information about the stability and
profitability of their job
3. Lenders – interested in information that enables them to determine
their loans, and interest attaching to them will be paid when due
4. Suppliers and other trade creditor – interested in information that
enables them to determine whether amounts owing to them will be paid
in due
5. Customers – about the continuance of an enterprise, specially when
they have a long-term involvement with, or dependent on the
enterprise
6. Government and their agencies – are interested in the allocation of
resources
7. Public – enterprise affect members of the public in a variety of ways;
employ the people, patronage of local suppliers
B. Internal Decision Makers
- managers of a business entity, responsible for managing efficiently and
who have the power and authority to obtain whatever economic
information they need
ACCOUNTING AND TECHNOLOGY
❖ Book-keeping
- is an activity concerned with the recording and classifying financial data
related to business operation in order of its occurrence
- a mechanical task which involves the following:
• Collection of basic financial information.
• Identification of events and transactions with financial character i.e.,
economic transactions.
• Measurement of economic transactions in terms of money.
• Recording financial effects of economic transactions in order of its
occurrence.
• Classifying effects of economic transactions.
• Preparing organized statement known as trail balance.
Distinction Between Book-keeping and Accounting
BOOK-KEEPING ACCOUNTING
• Is an input for accounting • informed judegements and
• its purpose is to keep systematic decisions by the user
record of transactions and events of • its purpose is to find results of
financial character in order of its operating activity of business and to
occurrence report financial strength of business
• is a foundation of accounting • considered as a language of
• carried out by junior staff business
• its object is to summarize • done by senior staff with skill of
cumulative effect of all economic analysis and interpretation
