Classification of Accounting Essay Example | Topics and Well Written Essays - 250 words

Classification of Accounting - Essay Example From this paper it is clear that the first category of accounting is financial accounting. The main purpose of this type of accounting is to get an insight into financial matters using financial statements. It involves some core activities related to financial information, which are recording, reordering, and summarizing of the events that have occurred within in a given period. The second category of accounting is cost accounting. Cost accounting deals with analysis of different types of business costs using formulas, approaches, and processes. Cost accounting helps managers identify business costs, as well as expenses required to run business processes using current strategy. Some of the main approaches to do cost accounting include lean accounting, throughput accounting, and activity-based costing.This study highlights that the third category of accounting is management accounting. It deals with the management of the results from both other types of accounting. It is mainly concer ned with the use of financial statements and cost analysis in taking business decisions. Some examples of financial information that managers use in management accounting include current ration, net profit, and equipment depreciation. The three types of accounting include financial accounting, cost accounting, and management accounting. Financial accounting deals with the preparation of financial statements. Cost accounting deals with the analysis of business costs using a suitable cost accounting approach. Management accounting is mainly concerned with the use of financial and non-financial information in taking business decisions.