Accounting may be split into Financial Accounting and Management Accounting.
Financial Accounting
Financial accounting comprises two stages:
book-keeping, which is the recording of day-to-day business transactions; and preparation of accounts, which is the preparation of statements from the book- keeping records; these statements summarise the performance of the business – usually over the period of one year.
Management Accounting
Management accounting is defined by the Chartered Institute of Management Accountants (CIMA) as follows: "The application of professional knowledge and skill in the preparation and
presentation of accounting information in such a way as to assist management in the formulation of policies and in the planning and control of the operations of the undertaking".
Management accounting, therefore, seeks to provide information which will be used for decision-making purposes (e.g. pricing, investment), for planning and control.
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