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1.8 Theoretical Framework Principles and Practices of Accounting Paper 1
Table 1.1 Distinction Between Book Keeping and Accounting (continued)
Book Keeping Accounting
As these are the raw data, it doesn’t The raw data is classified/summarised/
help in managerial decisions making. interpreted and presented in a mean-
ingful and understandable manner which
assists in taking managerial decisions.
No subfield of book keeping. Several sub-field such as Financial
Accounting, Cost Accounting and
Management Accounting, etc.
Financial position cannot be ascertained. Financial position is ascertained on the
basis of accounting reports.
1.7 Sub-fields of Accounting
Financial Accounting:
○ It basically deals with preparation and interpretation of financial statemets.
○ It records the transactions that has already been incurred and hence is historical
in nature.
○ Preparation of statement of profit and loss and the balance sheet is the final step
of financial accounting.
○ It helps in determination of financial results and position of an enterprise.
Management Accounting: Grouping information and preparation of reports are required
by the managers to discharge the fuctions of planning, control and decision making.
Cost Accounting: The process of accounting for cost begins with recording of income
and expenses and ends with the preparation of periodical statements and reports for
ascertaining and controlling of costs.
Social Responsibility Accounting: It is concerned about accounting for the social
cost incurred by the entity and social benefits earned.
Human Resource Accounting: It is concerned with identification, quantification and
reporting of investments made in human resources by an entity.
1.8 Users of Accounting Information
Users are generally classified into —
a) Internal users: They are internal to the organisation like owners, management and
employees who use financial information in detail for managerial decision making.
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