Difference between accounting and financial accounting
accounting vs financial accounting:
While accounting is a very wide arena which consists of many sides and angles, the study of accounting itself has become a rather formidable field which is in high demand. Yet accounting consists of many facades of which one facade of specialization is attributed to financial accounting.
What is accounting?
While accounting is a rather large field, it can generally be described as the precise and methodical recording, assessment and reporting of a company’s financial deals. This includes providing data, measuring the performance of the firm, interpretation of financial statements, assessing its financial position and also, paying taxes, etc. these financial records are maintained through a method called bookkeeping which presents all the day to day financial activity of the company in detail. Accounting is also best described as the voice and the heart of business as it is these financial documents prepared by the accountant which circulates through out the company hierarchy and it is according to these documents that the public views the performance of the company and the authorities make the key decisions. These reports which come in the form of financial declarations such as balance sheets, income declarations which is also comprised of the profit and loss accounts, and the declaration of changes in financial position aid the financial directors to analyze the previous performances and also to perform certain legal responsibilities such as paying taxes, etc.
An accountant is responsible for planning the budget of a company as well as offering financial advise on favorable investment opportunities for a company. They also prepare tax returns, financial documents, documents regarding bills, profits and all other financial interactions of the company as required and at the same time, keeping an organized track records of all financial transactions of the company up to date which is also known as bookkeeping.
An accountant in charge of such a range of duties are required to possess qualifications such as Chartered Accountants (ACA), Chartered Certified Accountants (ACCA), Chartered Institute of Management Accountants (CIMA) or Associate of Accounting Technicians (AAT) which in turn proves that he or she has obtained a minimum standard required for accountancy. It also means that these individuals hold professional indemnity insurance and that their work is being monitored for its quality by the professional body to which they belong which in turn ensures a safe and a reliable service on their part.
What is financial accounting?
Out of the many areas of specialization within the study of accounting itself, financial accounting refers to the reporting of the financial position and performance of a company through financial statements which are issued to external users on a periodic basis. These records or reports in turn help those concerned with the company to recognize the financial situation of the company as well as its progression or downfall.
What is the difference between financial accounting and accounting?
while it is no secret that accounting is an essential factor in the corporate world that is constantly expanding, the need for accountancy and accountants also grows by leaps and bounds. With this need grows the awareness of the people regarding the importance of accountancy and thenceforth while more and more people showed an interest in pursuing studies in accountancy, many others recognized and chose to specialize in certain fields of accountancy of which financial accountancy is one.
While the term accountancy is more of a broader definition which deals with the preparing and presenting financial statements to both the inner management as well as the general public, financial accounting specializes in preparing financial statements which aimed to be distributed among the people outside the company such as stockholders, lenders, financial analysts, and other outsiders who are interested in the company. Financial accounting deals with reporting the results of a corporation’s past transactions on its balance sheet, income statement, statement of cash flows, and statement of changes in stockholders’ equity which will prove to be useful for these outside entities who show an interest in the company.