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Accounting is a formal means of gathering and collecting data to aid and coordinate collective decisions. It supports tracking the overall goals or objectives of the organization.
The term “accounting” can further be broken into the various reporting structures in the organizations. This structure presents relevant information to key business area of the company.
This relevance broadly divides Accounting into 3 major sections – Management Accounting, Financial Accounting, and Cost Accounting.
| Point of Distinction | Financial Accounting | Management Accounting | Cost Accounting |
| 1.Party to be served | External Stakeholders | Internal Management | Budget Keeps and Monitors |
| 2.Frequency of Reports | After completion of the accounting year | At regular intervals depending upon the purpose and prevailing situation for quick decision making | Monthly/Quarterly/Annually |
| 3.Contents of the Report | Specified by the Companies Act | Areas highlighted by the Internal Management | Cost Accounting Rules and Guidelines specified by ICWAI |
| 4.Unit of Study | Cover the overall performance of the company | Concentrate on detailed study of a segment, division, product and activity | Lays emphasis on the cost data. Limited scope |
| 5.Audit Requirements | Subject to Statutory Audits | Subject to Internal Audits | Subject to Cost Audits |
| 6.Statements Published | Balance Sheets, P&L and Cashflow | Internal Reports | Cost Budgets and Forecast Statements |
| 7.Importance | Extremely mandated and important | Optional | Important |
These three types of accounting are crucial to ensuring clear visibility into business performance. The Enterprise Resource Planning (ERP) system incorporates functions and formulas to ensure precise and accurate results.
Oracle NetSuite has overcome this challenge and has all the 3 varieties of accounts extraction in NetSuite as follows;
Financial Accounting in NetSuite:
- Built in Balance Sheets, Income Statements and Cash Flow reports. These show an accounting trail of the financial accounts in their accounting hierarchy. Furthermore, they can be filtered to include specific locations, projects or classification.
- Double Entries System that captures the correct debits and credits. This helps ensure correct accounting GL impacts to the assigned subsidiaries in the Journal Entries
- Follows Auto-Balancing in Journal Entries. Thus, NetSuite does not save Journals which do not have equal debits to credits.
- Has its Chart of Accounts with a Parent-Child Relationship and having number sequencing to group accounts under one Header.
Management Accounting in Oracle NetSuite:
- NetSuite includes Statistical Accounts which do not impact Financial Reporting of the company. These accounts help the management to keep track on non-financial aspects of the organization. Eg. Employee Head Count
- NetSuite also has a list of custom Saved Searches used to derive information across organization. It provides the ability to restrict results to a group of people to adhere to security and confidentiality of information.
- NetSuite features customizable dashboards with KPIs, trend graphs and portlets. These help communicate effectiviely important organizational information at a go without pulling reports for the same. Eg. Weekly Sales analysis
These dashboards again can be published for employees with a particular role and can be made secured.
Cost Accounting:
- NetSuite has a Budgeting feature which can be utilized to gain an insight on the expenditures. Furthermore, these budgeted expenses can be divided into monthly periods for a clearer sight on the monthly budget cap.
- NetSuite provide out of the box various Cost Accounting reports. These are segment using classification elements such as division, class and departments. These reports also display Budgeted v/s Actual variances.
- NetSuite also provides for Bundles for enhanced Cost Analysis and further helping in SOX reporting of the organization.
NetSuite covers all the 3 levels of accounting with great precision.
