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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



                ƒ 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.

                ƒ Management Accounting: Grouping information and preparation of reports are required
                by the managers to discharge the fuctions of planning, control and decision making.

                ƒ 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.
                ƒ Social  Responsibility  Accounting: It is concerned about accounting for the social
                cost incurred by the entity and social benefits earned.

                ƒ 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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