In all companies, the work is done by groups of people. During daily activity of companies, we purchased or sell materials, equipments, building and labor cost. These expanses or profit need to financed then Accounting is the best way that provides all information.
Accounting mainaly consists of four parts
- Operating information
- Financial accounting
- Management Accounting
- Tax Accounting
Operating Information
Operating information means daily activities of organization to be recorded.
Example: In car show room, the owner should be know that how much cars are available for sales and its cost and selling price. When car sold then record must be record. In organizations, Employees worked and they paid on last day of month and this record should be in written proof for tax purpose.
In other words we can say that operating information provides the exact data of financial, management and tax accounting.
Financial Accounting
Financial Accounting means providing financial information of company to other organizations, banks, share holders and government tax agencies. This one is very important part of company like if customer wants to buy sell then he/she will see the financial information of company. Also, If company need the loan then bank first sees the company financial information and if financial information is good then the very good chance of repaid loan.
Management Accounting
Management accounting is used for providing company information to company owner or managers to help for management for company Growth, Planning, Implementation, Control and Decisions. Companies Managers analysis these data very carefully and take the decision accordingly for company profit.
Tax Accounting
Tax accounting related to tax filling to the government tax authorities and planning for tax profit. The main advantages of tax accounting are record keeping and accurate budget. Tax accounting reduce the unnecessary recorded keeping data this is not useful for company owners or managers. Due to accurate budget with the help of tax accounting, the company owners or managers get the good idea about profit and loss of any particular product.
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