Financial accounting is concerned with providing financial information about the company’s performance. Management accounting is concerned with generating necessary information for decision making purposes in the organization and these data are not available for the general public or stakeholders.

This tutorial is going to explain you all about how the balance sheet elements are formed and formula to calculate capital is formed. Story is named is “The story of capital” and explains the concept of assets, liabilities and capital. Imagine.. A man wanted to start up a business on his own. Lets say he decided to set up a book shop. This how he financed his start up expenses. He had some savings of [...]

Accounting information helps every department in an organization and use of accounting information can be summarized as follows: Marketing/Sales Department Assessing the credit worthiness of the customers before approving credit This task can be done by assessing the past records of the customer which can be found in financial accounting system. Reviewing the effectiveness of the advertising strategy- This task can be done by finding the relationship between sales and advertising expenses. Necessary cost and sales information [...]

There are many objectives of maintaining a financial accounting system in an organization and they can be explained as follow: Help in Management Decision Making. Financial accounting system records all the transactions happening in the organization on a day to day basis. To make decisions managers need information.  Necessary information can be generated through financial accounting system as it record actual transactions happening in the company. Provide Information to Potential and Present Investors to Make [...]

There are 04 types of costing methods that can be identified namely Job Costing Batch Costing Contract Costing Process Costing These types of costing methods are based on the production method that is used and when the production method differs there was a need for customization in the costing method used. These costing methods and respective production method are explained below: Job Costing Job costing was originated through production method “job production” and since job production had [...]