It has already been established that accounting is an ever evolving profession, and that with every development in the financial world or corporations and world economies, it's beginning to encompass almost all other professions. Many people across different fields are finding themselves increasingly dependent on the services and products rendered by accountants and accounting professionals.
Different users of accounting information will need different information and will use it for different purposes. As such, the field of accounting has the three major fields to answer those needs, Financial Accounting, Management Accounting, and Financial Management. While to non-accountants these terms are frustratingly similar, it is not so for the practitioners of the craft.
Financial accounting is preparing financial statements that summarize past transactions, which are usually as profit and loss accounts and balance sheets. These documents which are historic in nature are mainly to the interest of outside parties such as investors, providers of loans, and suppliers.
The second branch of accounting is Management Accounting, which is much more detailed information about the current and future planned events so that a company's managers can more effectively carry out their roles of planning, controlling, and making important decisions.
For example, under management accounting information, a company maps out how much a particular product costs to produce, as well as other relevant cost data that will be extremely relevant in making a choice to make a product or just buying it. Also included under this subgroup is the preparation and monitoring of a company's budgeted costs that relate to a product, activity, or service. Information produced by accountant managers is mainly used internally in the organization, and are rarely, if ever, disclosed to outside parties.
Finally, financial management is the process of raising finance; and how finance deploys in the various resources needed by a business or organization, and how to do this in the most efficient and effective way possible. Financial managers concern themselves with capital costs, capital structures and analyzing risks that come when companies undertake certain investments.
The three branches of accountancy services are deceptively simple in their descriptions, but as you probably now, there is more to accounting that just that. Under these broad accounting functions, there are further subsets of accounting that relates to one specific activity, or across a whole spectrum. These include the sub-fields of Treasury, Taxation, and Audit.
To summarize, the field of accounting is mainly defined as the classification and recording of monetary transactions, and how these records assess the company performance over a time as well as a company's financial position at a given date; and the monetary projection of future activities that arise from alternative planned courses of action, which managers and organization leaders based on information produced by respective accountants or accounting firms. It is a matter of finding out the many ways accounting can help you and your company prosper.
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