Financial Accounting – Don’t Reinvent the Wheel When Accounting For Your Business’ Future

It has been said that the only thing that’s constant is change, and if you’ve been in business for any length of time, you know how true this is. If there’s one thing that sets companies that have been successful over the long haul-think IBM, General Electric, Wal-Mart or Microsoft, for example-apart from all the others, it’s their positive reaction to change.

Adapting to change impacts a company’s ability to capture and hold onto its market, grow its business and profitably sell its products and services. However, every small business owner or manager must learn to differentiate between those business processes that must evolve and those that should remain stable.

When Change Is Destructive

While evolving in order to meet changing consumer demands and an ever-shifting technological environment is essential, there are some business processes where change and evolution are counter-productive, even destructive. Financial accounting is one of these. Continue reading Financial Accounting – Don’t Reinvent the Wheel When Accounting For Your Business’ Future

Branches of Accounting, Uses of Accounting and Limitations of Financial Accounting

Accounting vs. Book-keepingBook-keeping concerns itself with the recording (correctly and in a set of books) of those transactions that result in the transfer of money or money’s worth. Whereas accounting is comprehensive in perspective. It extends to classifying, summarizing, presenting and even analyzing accounting information .

Accounting vs. Accountancy

Body of knowledge (consisting of principles, postulates, assumptions, conventions, concepts and rules) governing the science of recording classifying and analyzing financial transactions is accounting. Whereas the practice and art of the science of accounting is termed as accountancy.To meet the ever increasing demands made on accounting by different interested parties (such as owners, management, creditors, taxation authorities etc.) the various branches have come into existence. Financial AccountingThe object of financial accounting is to ascertain the result (profit or loss) of business operations during the particular period and to state the financial position (Balance Sheet) as on a date at the end of the period. Continue reading Branches of Accounting, Uses of Accounting and Limitations of Financial Accounting

Differences Between Management and Financial Accounting

Financial and management accounting look at a business using different perspectives. Management accounting, also known as cost accounting, focuses in the internal needs of a company, while financial accounting concentrates on outside users of information. Financial statements compilation is associated with financial accounting. Budgets and cost variances relate to management accounting

Focus of Attention

Management accountants are concerned with planning and controlling operations, focusing on details, such as material costs. The more complex an operation is, the more likely it is to have more accountants dedicated to management needs, such as budgeting, and strategic planning. Continue reading Differences Between Management and Financial Accounting

Report of Foreign Bank and Financial Accounts (FBAR) Questions Answered

Financial Accounting
Financial Accounting

The Bank Secrecy Act demands that anyone with a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, reports to the IRS by filling Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).

Why File FBAR?

Some people use foreign financial accounts to get around United States law, and the FBARs areused to identify such persons for the reason that foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. FBARs are used by investigators to help discover any income maintained or generated abroad that isn’t reported. Continue reading Report of Foreign Bank and Financial Accounts (FBAR) Questions Answered

Management and Financial Accounting

Financial Accounting
Financial Accounting

Accounting is usually seen as having two distinct strands, Management and Financial accounting. Management accounting, which seeks to meet the needs of managers and Financial accounting, which seeks to meet the accounting needs of all of the other users. The differences between the two types of accounting reflect the different user groups that they address. Briefly, the major differences are as follows:

Nature of the reports produced. Financial accounting reports tend to be general purpose. That is, they contain financial information that will be useful for a broad range of users and decisions rather than being specifically designed for the needs of a particular group or set of decisions. Management accounting reports, on the other hand, are often for a specific purpose. They are designed either with a particular decision in mind or for a particular manager. Continue reading Management and Financial Accounting