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There are lots of people around us in our daily life that do not have a clear opinion about the accounting. During the data collection for this article I talked to many people who are working in organizations with accounting department. Surprisingly, I figured out that the major divisions and critical sections of accounting known as financial and management accounting are left in the dark shadow of ignorant. Most of the people I talked to used to consider these to as one unit. The point of this article is to clarify the definition of accounting in general and also to briefly define financial accounting and management accounting.






What is accounting?

“Accountancy or accounting is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocation decision” (According to the wikipedia.com )
In my opinion accounting is the process of gathering and preparing of financial information about a business or other organization, in a form that provides accurate and useful records and enables decisions to be made. It is the systematic recordkeeping and reporting of an organization’s performance in monetary terms. Accounting provides a summary of the economic results of organizational decisions for internal use and transmits them to external stakeholders such as volunteers, donors, creditors and regulatory agencies.




What is Financial Accounting?

Financial accounting involves the preparation of a business's financial statements, mainly for users outside the business. These reports are used by owners, potential owners of a business, and by people who have loaned company money. Some government agencies that regulate business and the stock market require companies to submit financial statements to them. Additionally,...