WHAT ARE THE TYPES OF ACCOUNTING INFORMATION | ALSO DESCRIBE | TYPE'S OF ACCOUNTING

TYPES OF ACCOUNTING INFORMATION

Just as there are many types of economic decisions, there are also many types of accounting

information. The terms financial accounting, management accounting. and tax accounting often are used in describing three types of accounting information that are widely used in the

business community.

Information for Decision making

Financial Accounting 

Financial accounting refers to information describing the

financial resources, obligations, and activities of an. economic entity (either an organization or an individual). Accountants use the term financial position to describe an entity's financial resources and obligations at a point I time and the term results of operations describe its financial activities during the year.

TYPES OF ACCOUNTING 

Management Accounting Management (or managerial) accounting

It involves the development and interpretation of accounting information intended specifics' 10 SEENI PECHE

agreement in operating the business. Managers use this information in setting the company several evaluating he performance of departments and individuals. deicing whether

c introduce a new inner of pro gusts, and making virtually all types of managerial decisions.

A company s managers and employees constantly need information to run and controls 

Business operations. 

For example, they need to know the amount of money in them company'

bank accounts; the types, quantities, and dollar amounts of merchandise in the company's ware-house and the amounts owed to specific creditors. Much management accounting information is financial in nature but is organized in a manner relating directly to the decision at hand.

Tax Accounting:

The preparation of income tax returns is a specialized field within

accounting. To a great extent, tax returns are based on financial accounting information. How-

ever, the information often is adjusted or reorganized to conform with income tax reporting requirements. We introduce the idea of tax accounting information to contrast it with financial and management accounting information. Although tax information is important for a company's successful operations and is related to financial and management accounting information, it results from a different system and complies with specialized legal requirements that relate to a company's responsibility to pay an appropriate amount of taxes. Law's and regulation governing taxation are often different from those underlying the preparation of financial and management accounting information, so it should not be a surprise that the resulting figures and reports are different. Because the focus of this text is introductory accounting, and because tax accounting is quite complex, we defer coverage of tax accounting subjects to subsequent accounting course