Learn Relation Between Accounting, Management And Economics On Your Own:

Business Organisation normally depends upon accounting, financial and management decisions and economy.

Simply, economics is the science of business activities that are influenced by the creativity, growth, effectiveness, success, and goal accomplishments of business. And the main objective of business is to earn profit initially for its very survival and the for its growth both horizontal and vertical. This is measured through accounting which aims to ascertain profit or loss of a concern during a specified period, to reflect financial condition of the business on a particular date and to have control over the firm's property. All these requires records to be meticulously maintained so that the income of the business can be assessed correctly and informations may be communicated so that it may be used by managers, owners and other interested parties. Accounting is a discipline which records, classifies, summarizes and interprets financial information about the activities of a concern so that intelligent decisions can be made about the concern.

Accounting primarily deals with the past, it records what has happened. Hence it is relatively more objective and certain. Finance is mainly concerned with the future. It involves decision making under imperfect information and uncertainty. Hence it is characterized by a high degree of subjectivity.

Business and Economics are closely interrelated in the sense that understanding of business environment and economic principles are helpful in taking sound financial decisions and thereafter measuring the performance of the firm assess its financial condition, and determine the basis for tax payment. The role of economics in business is becoming more significant in a highly competitive, ever-changing global economy. The science of Economics focuses primarily on goods and services and their production, distribution and consumption. In other words, economics covers the whole range of subjects that influences the financial activity of the firm. These two are the focus points of macroeconomics and microeconomics.

While, the principal goal of financial management is to create shareholder value by investing in positive net present value projects and minimizing the cost of financing. Of course, financial decision making requires considerable inputs from accounting.