Modern business operates in rapidity changing and highly competitive environment. The recent wind of globalization, liberalization and privatization along with revolution in information technology has further increased the complexities in its operation. To lead business ahead successfully in the present environment, the management of an organization requires to be dynamic, aggressive, intelligent and painstaking.
Efficient management process requires managers to plan, organised, direct, co-ordinate, motivate, control, report and communicate divergent activities pursued by an organization towards the attainment of organizational goal. They are to be based on systematic information. One of the major sources of managerial information in the accounting system maintained bye an organization.
Accounting is regarded as a formal mechanism for gathering, organizing and communicating information about an organization's activities. That is why accounting is often accepted as the language of business or as an information system.
The uses of accounting information can be broadly divided into two categories:
- Internal parties or managers within the organization involved in different levels of management.
- External parties outsides the organization like present and potential investors, customer, employees, trade unions, security analysts, tax authorities, government, agencies etc.
The three major branches of accounting that have been developed so far comprises:
- Cost Accounting
- Financial Accounting
- Management Accounting.
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