What is Accountancy?
It is a body
of knowledge prescribing certain rules or principles to be observed while
recording, classifying and summarising transactions.
According to Kohler—
“Accountancy refers to the entire body of
theory and practice of accounting”
It tells us everything from recording our first transactions
to preparing the books of accounts and summarising it.
It also tells us how to communicate it to the interested
parties (stakeholders).
It is the process of creating the
final accounts of an organisation to ascertain the net result and communicate
it to the interested parties.
Analysing and interpreting the result from the final accounts
is a part of accounting.
Different types
of accounting
These days an organisation requires
various kinds of information to perform its functions effectively and efficiently.
Therefore many types of accounting have come in to place.
1.
Financial accounting: - The
main purpose of this type of accounting is to ascertain the profit and loss of
the organisation and also to create the balance sheet to understand the asset
and liabilities of the organisation. It is mostly leaning towards the historical
data and interpreting it.
2.
Cost accounting: - The
most important function of cost accounting is to ascertain the cost of goods and
services produced by the organisation. It also helps to estimate the cost in
advance and take controls if necessary.
3.
Management accounting:- The main
propose of this type of accounting is to take the accounting information and
preset in such a way that it is useful for decision making for the firm with
the help of techniques like cash flow statement, ratio analysis, budgeting
control etc.
4.
Tax accounting: - Accounting
for the purpose to file the tax of the organisation with the respective tax
authorities.
5.
Social
Responsibility accounting: - Since the nature and the
society provide materials (raw materials, man power etc.) for the business to
function, it is the responsibility of the organisation to pay back (in ways
like planting trees, create stability for the employees, keep the environment
clean etc.). The accounting which helps in such activities comes under this
section.
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