Administrative Accounting: What it is, How it Works, Example
What Is Administrative Accounting?
Administrative accounting handles and reports internal factors and figures that influence decision making, operational control, and managerial planning.
An administrative accountant is usually responsible for accomplishing a company's administrative goal. Tasked with managing and tracking incomings and outgoings, the duties of these professionals may extend to assisting companies with internal operational accounting chores such as payroll, taxes, and management of assets.
KEY TAKEAWAYS
- Administrative accounting is the factors and processes in place to handle managerial planning and operations.
- Administrative accountants deal with administrative accounting functions, such as payroll and taxes, and may also be the bookkeeper.
- While financial accounting focuses on the entire business, administrative accounting generally focuses on a certain process within the company.
How Administrative Accounting Works
Administrative accounting, a subset of managerial accounting, involves a formal methodology for gathering, reporting, and evaluating financial data that deals with management planning and control.
Administrative accounting duties are often carried out by an administrative accountant who is an employee of the company. These individuals are usually in charge of things like bookkeeping, payroll, management of company assets, tax preparation and planning, inventory control and corporate budgeting.
Administrative accountants help businesses manage financial tasks and expenditures. They do so by creating reports. These reports are run on a daily basis, assisting management and administrators to evaluate day-to-day activities and maintain and control operations.
While accountants put together financial statements, administrative accountants handle other functions, such as bookkeeping and budgeting. The position falls somewhere between the human resource department and the finance division. Some key functions might include processing payments, reconciling vendor accounts, processing credit applications for vendors, preparing 1099 forms, and assisting auditors.
Administrative Accounting vs. Financial Accounting
Administrative accounting focuses on business transactions. Financial accounting, more broadly, is the aggregation of data into financial statements. Financial accounting tends to cover an entire business, while administrative accounting is more focused on details or more granular levels, such as product lines.
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