Economical Accounting Versus Expense Accounting

Right before click here check out differentiate Monetary & Expense Accounting we must have knowledge what these both terms really are. As we define both terms these would automatically be differentiated.

Financial Accounting:

Fiscal Accounting is a systematical way to prepare the money statements of an organization is order to get the true and fair view profit or loss. These economical statements are organized for decision making, stockholders, Banker, Supplier, Shareholders, Government Agencies, and other stakeholders. The basic requirement to prepare economic statement is to examine and reduce the dead expenses by measuring the expenses and income status and to reporting the result to interested users. These statements are organized for outsiders who do not take part in day to day organizational activities.

Simply we can say, "Financial accounting is the process which includes recording, interpreting & summarizing date taken from economical records of an organization and bring it out in an annual report for the benefit of people outside the organization".

In depth financial accounting contains some principles, Concepts & Equation.

Economic accountants organize economic statements based on Accounting Principles which are generally accepted by a specific country. Monetary statements must be prepared according to the (I FRS) International Economical Reporting Standards.

Accounting Equation: (ASSETS = LIABILITIES + OWNER'S EQUITY).

Accounting Cycle:

1. Voucher. 2. General Journal. 3. General Ledger. 4. Cash Book. 5. Trail Balance. 6. Trading profit & Loss Account. 7. Balance Sheet. Cash Flow Statement.

First of all the transaction occurs and noted in the form called Voucher. All transactions are available in vouchers. Then one specific form is created called General Journal. All transaction recorded in one form. The next step is Called Posting in which all separate heads/accounting recorded separately in different form/accounts called General Ledger. Cash Book is maintained to record the payments and recipes or organization. By the help of General Ledger the Trail Balance prepared which provides the items of Trading, profit & Loss account and Balance Sheet which shows the financial position and the health of the Organization. And lastly Cash Flow Statement is prepared to drive the accrual inflow & outflow of cash.