1. Definition
Accounting is the branch of financial management concerned with the systematic recording, processing, and control of all business transactions within a company. The objective of accounting is to maintain accurate and transparent documentation of the company's financial status. This includes tracking income, expenses, assets, and liabilities, providing a basis for business decisions and external reporting.
2. Application in Industry
In the industrial sector, accounting is vital for monitoring the financial health and efficiency of a company. It plays a central role in production planning, cost control, and resource management. Accounting helps analyze cost centers and monitor budgets. Additionally, it is essential for meeting legal and tax requirements. Industrial companies use accounting to provide transparency on material costs, personnel expenses, and investments in machinery and facilities.
3. Types of Accounting
- Financial Accounting: Focuses on recording all financial transactions and forms the basis for preparing annual financial statements and determining company profit.
- Cost and Management Accounting: Used for internal analysis and control by allocating costs to specific products or services.
- Accounts Receivable and Payable Accounting: Accounts receivable tracks customer payments, while accounts payable manages debts to suppliers.
- Asset Accounting: Records investments in fixed assets like machinery and buildings, considering depreciation.