Financial Accounting

Muhammad Sikander Iqbal

 Financial &
Managerial
Accounting:
The Basis for Business
Decisions

17th or 18th edition

Williams
Bettner
Carcello
What is Accounting?

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Accounting can be defined as:

The process of identifying,

measuring and communicating
economic information to permit
informed judgements and decisions
by users of that information.
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 Language of Business
• Assets
• Liabilities
• Costs
• Prices
• Sales volumes
• Profits
• ROI
• ROE etc.
are all accounting measurements.
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 Transaction
Transfer of
money or money’s
worth (goods or
services) from one
person to another Payment

person (natural or
legal). Car

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 The
accounting
process

Accounting
“links” decision
makers with Accounting
Economic
economic
activities information
activities ⎯ and
with the results of
their decisions.

Actions
(decisions) Decision
makers
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 Types of Accounting Information

Financial
Tax
Cost

Managerial

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 Types of Accounting Information
• Financial accounting is a specialized
branch of accounting that keeps track
of a company's financial transactions.
• The transactions are recorded,
summarized, and then presented in
a financial report or financial
statement.

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 Types of Accounting Information
• Cost accounting is the process that
aims to capture a company's costs
of production by assessing the input
costs at each step of production as
well as fixed costs such as
depreciation of capital equipment.

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 Types of Accounting Information
• Managerial accounting relates to use
of financial and cost accounting data
for managerial decision making.
• Tax accounting refers to preparation
of accounting information in
accordance with Tax Laws of the
country. It is a specialized field within
accounting.
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