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The classification of accounting is financial accounting, management accounting, cost accounting, tax accounting, auditing, accounting systems, financial statement analysis, governmental accounting and particular field accounting. But financial accounting and management accounting perform important roles in the measurement of performance within an organization. This article will talk about financial and management accounting's fundamental function in an enterprise and their limitations.
The first part is financial accounting. First is the function of financial accounting. Funds are the lifeblood of a company's normally operation, while the fund management becomes the core content of corporate governance. Financial accounting is through certain technical means and some methods for accounting funds exclusively and specifically supplied for corporate governance, decision-making accounting information in a discipline. And with the continuous development of the economy, financial accounting in the management and decision-making perform an increasingly important role. So the quality of financial accounting, directly impact on the managers, operators, investors and the public interest, and also affect the economic, social image and social credibility of a company. Therefore financial accounting performs a fundamental role in the process of socio-economic operations.
Enterprise Management is designed to achieve maximum benefits in the enterprise, that is a great honor to bring to the enterprise, and the various enterprises will realize the healthy and sustainable development. Business operations and financial condition is through the balance sheet, income statement, and cash flow statement and reflected. The accounting department directly through the corporate accounting, business conditions and results for effective financial analysis, not only to promote enterprise managers can quickly understand how much of the current corporate profits and the level of debt capacity, but also can be found Enterprise The size of the risks, pros and cons of corporate capital structure, so that the operators use many aspects of the enterprise to make the right decisions, with minimal risk, the most healthy financial position to achieve the maximum profit the best. At the same time, you can also find some essential issues, in order to improve management to provide the basis of some relevant Financial accounting is a modern enterprise is an important basis for work, through a series of accounting procedures, providing decision-useful information, and actively participates in management decision-making; improve the economic efficiency of enterprises and service in the healthy and orderly development of market economy. The function of financial accounting is 3 tips:
Financial accounting help provide decision-useful information to enhance corporate transparency, standardize enterprise behavior.
The financial and accounting will help enterprises to strengthen management, improve economic efficiency and promote sustainable development of enterprises.
Corporate management, financial accounting help to assess the fulfillment of economic responsibility.
Second is financial accounting's disadvantages. And the disadvantages of financial accounting are 4 items.
Following the cost benefit principle.
The limitation of the commercial secrets.
The content of financial accounting report is based on financial information.
The Information disclosure's scope, quantity and quality must follow some accounting standard.
After talking about financial accounting, second part is about management accounting. First is the definition of management accounting. Management accounting also known as accounting for internal reporting: for the object of enterprises funds movement in current and future. For the goal of increasing economic effectiveness. it is the operating management activity which is for the goal of offering operating management decision-making for the enterprise's internal manager. Management accounting consists of cost accounting and administrative control system. The necessity of management accounting be embodied in two parts: the importance of the management costs and the function of management accounting in cost down and boost profits.
Secondly, the functions of management accounting are generally classified as 2 functions:
Informative functions, the management accounting is required to present the necessary facts and information in quantitative form for the use of management in decision-making. It performs the following informative functions, in consideration of final accomplishment of this objective,
? Measurement of Performance.
? Modification of data.
? Analysis and interpretation of data.
Supportive functions. The crucial managerial functions are planning, organizing, staffing, directing and controlling, which are the functions of management accounting in order to present the managers with accurate information at diverse levels so that management can perform these functions effectively and appropriately.
Help in planning.
Help in Organizing.
Help in staffing.
Help in directing.
Help in communication and co-ordination.
Help in controlling.
Third is the boundedness of management accounting. The appearance of management accounting solved some problems in enterprise management objectively. Management accounting is used widely. But through the long-term practice of enterprises and compare with the cost accounting, enterprises are not pay attention to management accounting and the effect is not well. Because the boundedness of management accounting. The indispensable boundedness of management accounting is classified as 3 items:
field of vision is narrow.
The reasons in detail are:
The scope of object of study of management accounting: management accounting pays attention to the internal decision-making, plan, control performance of the enterprise. so the information offered by management accounting have less relevance with the strategy of the enterprise.
The main body and goals of management accounting: management accounting pays attention to the control of Working Capital. it evaluates the investment priorities just in financial benefits. And the business performance of the enterprise just show in the current period. Just devote exclusive attention to the maximization of profit of the current period.
The object of study of management accounting: the object of study of management accounting is financial information and it ignores the effect of non-financial information to an enterprise.
The application methods of management accounting: the application methods of management accounting pay attention to calculate of financial index. It is limited.
In summary, financial accounting and management accounting play a very important role in a company. They have various functions in an organization. Financial and management accounting have a profound effect on the measurement of performance within an organization, albeit limitations are inevitable.