| Financial accounting | Cost accounting | Tax accounting | |
| The legal or regulatory body | Complies with the company act, income tax act (Rajasekaran and Lalitha, 2010) | Complies with requirements from the management (Rajasekaran and Lalitha, 2010) | It Complies with tax accounting principles. |
| Kind of reports created and the stakeholders interested in each report |
Statement of financial position used by lenders and investors, management, Income statement used by management, investors, lenders, and creditors Statement of cash flow used by investors and lenders (Rajasekaran and Lalitha, 2010) |
Employees, management, and investors use production reports. Cost of goods sold report used by the management and potential investors. Biggest losers report used by management and employees (Rajasekaran and Lalitha, 2010) |
Cash receipts and cash payments used by the government |
| Issues that could land the company in trouble if not addressed | The statements must be carefully prepared and proofread by an expert to avoid errors that can give external stakeholders wrong information. | The management requires reports that show the company's exact position in terms of the cost of production and services. Poorly prepared statements can put the company in trouble. | Companies need to be tax compliant. Failure to pay tax can result in business closure; hence, the company should analyze the reports submitted to the tax agencies and ensure that the amount coincides with the company's tax. |
| The kind of training and education that each employee should have | At least a bachelor's degree in accounting and finance, | At least a bachelor's degree in Accounting, computer skills. | At least a bachelor's degree in accounting and business. Basic knowledge of tax laws. |
It is crucial to consider the needs of stakeholders in financial accounting. They include the owner, manager, investors, creditors, employees, and government. Having invested in the business, the owner needs to access the financial statement to evaluate the return on their investment and future predictions (Nilsson and Stockenstrand, 2015). The management team needs to understand its liquidity, profitability, and cash flows to make financial and operational decisions. The employees can understand the business proceeding well (Nilsson and Stockenstrand, 2015). The government uses financial statements to determine whether the company pays the right amount of tax.
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Cost accountants should consider potential investors' needs when preparing reports. They need the reports to decide to either invest in a business or not (Rajasekaran and Lalitha, 2010). The reports help investors to compare different companies with varying costs of production. After further evaluation, the investors can make sound decisions about which company to invest their money and resources. Government is the primary stakeholder in tax accounting. The government uses the tax accountant's reports to know the amount of tax that different companies pay (Bhattacharyya, 2010). The reports are also necessary to track companies that don't pay taxes to the government. It is crucial to consider the needs of all stakeholders.
Accounting is an integral part of a business. The three segments of accounting have different roles that the employees should understand. The stakeholders in each department of accounting are essential and accurate reports should be given to them. Differentiating the functions of each department enables employees and the management to work efficiently.
References
Bhattacharyya, D. (2010). Management Accounting . Pearson India.
Nilsson, F., & Stockenstrand, A.-K. (2015). Financial accounting and management control: The tensions and conflicts between uniformity and uniqueness . Cham: Springer .
Rajasekaran, V., & Lalitha, R. (2010). Cost accounting . Delhi: Pearson.
