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Financial Accounting:
Financial Accounting is a
systematical way to get ready the financial statements of a company is order to
get the true and reasonable view profit and loss. These financial statements
are structured to make decisions, stockholders, Bank, Provider, Investors, Got
Organizations, and other stakeholders. The basic need to get ready financial
statements is to analyze and decrease the deceased expenses by calculating the
expenses and earnings position and to confirming the result to interested
users. These statements are structured for strangers who do not take part in
day to day business activities.
Simply we can say,
"Financial accounting is the procedure such as producing, decoding &
reviewing date taken from financial information of a company and bring it out in
a yearly review for the benefit of individuals outside the organization".
In level financial accounting
contains some principles, Concepts & Formula.
Financial accounting firms
arrange financial statements depending on Accounting Principles which are usually
approved by a particular country. Financial statements must be ready according
to the (I FRS) International Financial Reporting Standards.
Accounting Equation: (ASSETS =
LIABILITIES + OWNER'S EQUITY).
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1. Voucher.
2. General Journal.
3. General Ledger.
4. Cash Book.
5. Trail Balance.
6. Trading benefit & Loss Accounting.
7. Balance Piece. Cash Flow Statement.
First of all the deal happens and
described in the type known as Voucher. All dealings are available in Vouchers.
Then one particular type is created known as General Journal. All deal documented in one type. The next step is
Called Posting in which all individual heads/accounting recorded independently
in different form/accounts known as General
Ledger. Cash Book is managed to record the payments and dishes or company.
By the help of General Ledger the Trial Balance ready which provides the items
of Trading, Profit & Loss account and Balance sheet which reveals the
budget and the health of the Organization? And finally Cash Flow Statement is
ready to generate the accumulation influx & output of cash.
Cost Accounting:
Cost accounting determines budget
and actual cost of development, functions, divisions, procedure and the
research of difference. Cost accounting is used to support decision-making to
decrease expense of company and improve its success. Cost accounting does not
require standards as (GAAP) Generally Accepted Accounting Principles; as its
primary use is for inter management, rather than outside individuals. Some of
managing accounting techniques are described as under;
• Managerial
Costing.
• Activity
based Costing.
• Standard
Cost Accounting.
• Resource
Consumption Accounting.
Three Traditional Cost Elements:
• Raw
Material.
• Labor.
• Factory
Over Head/Indirect Expenses.
Cost Accounting is being used to
help the managers to understand & decrease the running expense of an
Organization. Most of Cost different with the rate of development which is
known as "Variable Cost"
like investment property on perform, power to run a manufacturer, direct
material etc. Unlikely variable cost, some costs remain the same even while
active period or during zero development. These costs are calling "Fixed Cost" like Depreciation on Assets,
Lease of building etc.
In cost accounting some statements
are prepare. Degrees are Income Statement, Cost of Goods Sold Statement, and Cost
of Production Report.
Income Statement:
Income Statement is prepared to
generate the net income/profit of the company. In the procedure all direct
Expenses relevant to buy of Goods/material are less from Sale and the managed
quantity is known as Gross Profit.
Then all direct expenses relevant to sales, Administration & Financial
Expenses are taken off from (GP) Gross Profit, managed quantity after reduction
is known as (NP) Net Profit/income.
Cost of Goods Sold Statement (CGS):
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Cost of Goods Sold Statement is prepared
to generate the all inclusive expenses which are invested on the purchasing to
sell the created Products. In the preparation procedure first of all the Closing
Material of last year is included in buy of Martial, which is known as "Total Material Available for Use"
and Material Used is taken off from it. The remaining amount is known as "Cost of Material Consumed". Then
the cost of Labor and (FOH) Factory Overhead included in cost of material
consumed. The total cost is known as "Total
Factory Cost" after that Opening inventory of work in process is
included and closing inventory of work in process is deducted from Total
Factory Cost. The amount which pushes after this is known as "Cost of Goods Manufactured".
Lastly the Opening Stock of Finished Goods is included and Closing Stock of Finished
Goods is deducted from Cost of Goods Manufacture and the answering amount is
Called "(CGS) Cost of Goods Sold"
(Direct Material + Direct Labor=
Primary Cost) (Labor + FOH= Conversion Cost)