Classification of Accounting - Essay Example

Your full full November 12, ification There are mainly three types of accounting, which include financial accounting, cost accounting, and management accounting. In this essay, we will discuss these three classifications in some detail with examples. First Category 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.

Some core examples of this category include preparation of profit and loss account, income statement, and balance sheet. Second Category 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.

Third Category 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 concerned 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. Conclusion Summing it up, 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. Works Cited Not required