What Is the Difference Between Business Accounting and Financial Accounting?
Businesses of many kinds have used accounting techniques to manage their finances for centuries. Even in the days of the local blacksmith when clients brought their horses in for new shoes, there was some system by which the smithy kept track of his profits and losses using simple methods. Since then, however, the science of accounting has become much more sophisticated and complex. With the development of government regulations and global markets, it’s a lot tougher for a modern business manager to keep track of the flow of money.
There are two major types of accounting, which are business accounting and financial accounting, and the two are different from one another. The focus of business accounting is to meet the unique internal financial needs of a business. This involves the daily operation and its efficiency as well as more imprecise issues like using trends to estimate a future growth projection. Business accounting deals with possibilities and projections, not exact figures. However, it is often the basis of sound business decision making.
On the other hand, financial accounting involves exact numbers and precise use of data. Financial accounting is the type of accounting that is used to meet the compliance standards of government financial regulations. It also involves meeting various standards and accounting principles, like the GAAP, or Generally Accepted Accounting Principles. These standards provide a comparison tool that regulatory personnel can use to review the financial records of a business. In financial accounting, the data used is historical, whereas in business accounting, it often deals with the future instead.
Call to Schedule a Free Consultation With an Oregon Certified Public Accountant Today
If you are a business owner who wants to learn more about the difference between business and financial accounting, call to schedule a free consultation with an Oregon certified public accountant today. The experienced professionals at the digital accounting firm Perpetual CPA can help you with both your business and financial accounting needs. Whether you’re making future business plans or are preparing for the tax season, we are here for you. Visit our web site at perpetualcpa.com or give us a call at (503) 217-4114 and speak with our expert staff to set up your consultation. You’ll be happy to learn about all the benefits that modern accounting services can offer you.