Page 94 -

76 CHAPTER 3 Introduction to Accounting

Demo 3.12: Generate fi nancial statements

Recall from our discussion of asset accounting earlier in this chapter
that in fi nancial accounting an enterprise maintains a variety of deprecia-
tion areas simultaneously. As a consequence, the enterprise requires different
types of fi nancial statements—for example, one type for external reporting
and another type for fi ling taxes. For this reason it maintains different fi nan-
cial statement versions, each of which includes the appropriate depreciation-
related accounts. Figure 3-27 shows a company that uses two depreciation
areas to provide data to different fi nancial statements intended for different
audiences. Specifi cally, the company includes book depreciation data in the
fi nancial statements presented to shareholders and tax depreciation data in
the statements intended for tax authorities.

Figure 3-27: Financial statements based on depreciation areas

CHAPTER SUMMARY

In this chapter, we explored various ways in which a fi rm can use accounting
processes to refl ect the impact of the other business processes (e.g., procure-
ment and fulfi llment) on its fi nancial status. We also considered how the fi rm
can utilize accounting information to better plan and manage its operations.
The two basic categories of accounting processes are fi nancial account-
ing (FI) and management accounting. Financial accounting is concerned with
calculating the impacts of business operations for external reporting, typically
to regulatory bodies and shareholders. In contrast, management accounting, or
controlling (CO), consolidates process data the fi rm utilizes for internal manage-
ment and planning. Both fi nancial and management accounting leverage the
same data from an ERP system, but they do so from different perspectives and
for different goals.

31/01/11 1:09 PM
CH003.indd 76
CH003.indd 76 31/01/11 1:09 PM