Branches of The result of the examinations is embodied in the

Accounting independent auditor’s report. Once the required

financial statements have been prepared by
management, they have to be evaluated in order to
The varied branches and areas of accounting are: ensure that they do not present a distorted picture.

 Financial Accounting

 Management Accounting Tax Accounting

 Government Accounting Tax accounting includes the preparation of tax returns

and the consideration of the tax consequences of
 Auditing proposed business transaction or alternative courses of
 Tax Accounting action.

 Cost Accounting As typically known, accountants involved in tax work are

responsible for computing the amount of tax payable by
 Accounting Education both business entities and individual but their work is
 Accounting Research really more complex.

Accountants with this specialization aim to comply with

existing tax statutes but are also in constant legal search
Financial Accounting for ways to minimize tax payments.
Financial accounting is focused on the recording of It is not necessary for either companies or individuals to
business transactions and the periodic preparation of pay more tax than is lawfully due. If tax experts attempt
reports on financial position and results of operations. to reduce their clients’ tax liabilities strictly in
accordance with the law, this is known as ‘tax
Financial accountants accord importance to generally
avoidance’. Tax avoidance is a perfectly legitimate
accepted accounting principles. Financial accounting is
exercise.
the more specific term applied to the preparation and
subsequent publication of highly summerized financial
information.
Cost Accounting
The information supplied is usually for the benefit of
the owners of an entity, but it can alo be used by It is the process that involves the recording of cost data
management for planning and control purposes. in books of accounts. It is, therefore, similar to
bookkeepinng except that data are recorded in very
much greater detail.
Management Accounting Cost accounting makes use of those data once they
have been extracted from the cost books in providing
Management accounting incorporates cost accounting
information for managerial planning and control.
data and adapts them for specific decisions which
management may be called upon to make. Accountants are now discouraged from using the term
‘costing’ unless it is qualified in some way, i.e. by
A management accounting system incorporates all
referring to some branch of costing (such as standard
types of financial and non-financial information from a
costing), but even so you will still find the term ‘costing’
wide range of sources
in general use.

Government Accounting
Accounting Education
Government accounting is concerned with the
is a branch of Accounting that is responsible for training
identification of the sources and uses of resources
FUTURE ACCOUNTANTS. Educates students in the field
consistent with the provisions of city, municipal,
of Accountancy.
provincial or national laws.

The government collects and spends huge amount of

public funds annually so it is necessary that there is Accounting Research
proper custody and disposition of these funds.
continuous improvement of the accountancy field
through researches and studies. Adds to the knowledge
of accountancy.
Auditing

Auditing is the accountancy profession’s most

significant service to the public. An external audit is the
independent examination that ensures the fairness and
reliability of the reports that management submits to
users outside the business entity.
USERS OF ACCOUNTING INFORMATION EXTERNAL USERS

Internal and External Users External users are individuals and organizations outside
a company who want financial information about the
company. These users are not directly involved in
“Who uses accounting data or information?” managing and operating the business.

1. INTERNAL USER External users includes;

2. EXTERNAL USER
• Investors

• Creditors
INTERNAL USERS
• Customers
Internal users of accounting information are those
• Suppliers
individuals inside a company who plan, organize, and
run the business. These users are directly involved in • BIR
managing and operating the business
• DOLE
Internal users includes:

• Managers

• Employees

• Management
USERS OF ACCOUNTING INFORMATION
• Owners
Internal and External Users
What information will internal user need that can
be answered by accounting?

“Who uses accounting data or information?”

MANAGEMENT
1. INTERNAL USER
Information need: income/earnings for the period,
sales, available cash, production cost Decisions 2. EXTERNAL USER
supported: analyze the organization's performance and
position and take appropriate measures to improve the
company results. sufficiency of cash to pay dividends to INTERNAL USERS
stockholders; pricing decisions
Internal users of accounting information are those
individuals inside a company who plan, organize, and
OWNERS run the business. These users are directly involved in
managing and operating the business
Information need: profit or income for the period,
resources or assets of the business, liabilities of the Internal users includes:
business Decisions supported : considerations regarding • Managers
additional investment, expanding the business,
borrowing funds to support any expansion plans. • Employees

• Management

EMPLOYEES • Owners

Information need: profit for the period, salaries paid to Accounting information is presented to internal users
employees Decisions supported: job security, consider usually in the form of management accounts, budgets,
staying in the employ of the company or look for other forecasts and financial statements. This information
employment opportunities will support whatever decision of the internal users.

What information will internal user need that can be

answered by accounting?

1. MANAGEMENT

Information need: income/earnings for the period,

sales, available cash, production cost Decisions
supported: analyze the organization's performance and
position and take appropriate measures to improve the
company results. sufficiency of cash to pay dividends to
stockholders; pricing decisions
2. OWNERS 4. TAX AUTHORITIES (BIR): for determining the
credibility of the tax returns filed on behalf of a
Information need: profit or income for the period,
company.
resources or assets of the business, liabilities of the
business Decisions supported : considerations regarding
additional investment, expanding the business,
5. REGULATORY AUTHORITIES (SEC, DOLE): for ensuring
borrowing funds to support any expansion plans.
that a company's disclosure of accounting information is
in accordance with the rules and regulations set in order
to protect the interests of the stakeholders who rely on
3. EMPLOYEES
such information in forming their decisions.
Information need: profit for the period, salaries paid to
employees Decisions supported: job security, consider
staying in the employ of the company or look for other
employment opportunities
develops standard ---acc research

policy of company---auditing

compliance---tax acc
EXTERNAL USERS
conducting lecture--acc educ
External users are individuals and organizations outside
a company who want financial information about the
company. These users are not directly involved in Accoutning
managing and operating the business.
process of
External users includes;
1. Identifying
• Investors
2. Recording
• Creditors
in pesos
• Customers
3.Communicating
• Suppliers
economic events
• BIR

• DOLE
-summarize into
Also included as external users are government
regulatory agencies such as Securities and Exchange -decision will come up
Commission (SEC), Bureau of Internal Revenue (BIR),
Department of Labor and Employment (DOLE),
Sales of bread IRECORD
Social Security System (SSS), and Local Government
Units (LGUs). because it ivolves financial

1. INVESTORS: for analyzing the feasibility of investing

in a company. Investors want to make sure they can DIARY-journal
earn a reasonable return on their

investment before they commit any financial resources

to a company. Nature of Accounting

1. Acc is a service activity

2. CREDITORS: for determining the credit worthiness of assisting decision makers

an organization. Terms of credit are set by creditors
2. Acc is both an art and a discipline
according to the assessment of their
3. Acc is an information system
customers' financial health. Creditors include suppliers
as well as lenders of finance such as banks. 4. Acc is a process

5. Acc deals with financial information and transactions

3. CUSTOMERS: for assessing the financial position of its

suppliers which is necessary for them to maintain a
stable source of supply in the long term.
Acc is a language of business
provides financial info for managers and owners make in the company. To be able to make sure that the
sound decisions company is worth putting

their money in, they check its financial statements and

make decisions based

on the accounting information gathered.

Users of Accounting Information

2. Creditors and Potential Creditors - They are
individuals, institutions or banks
Accounting information is communicated to different
who have lent or are planning to lend money to the
stakeholders who use
company. They need to
such accounting information in making decisions. Users
check the company’s financial statements in order to
of accounting
assess its credit
information are classified into internal and external
worthiness and the capability of the business to pay its
users.
obligations including

related interests on maturity date.

Internal users are those who make decisions on behalf
of the organization.
3. Customers - They refer to people who buy goods or
They are the following:
acquire services from the

company at a price. They check the financial statements

1. Managers/Management - They are people employed of their suppliers in
by the company to
order to determine if they are a stable source of supply
perform management functions such as planning, over a long period.
organizing and running the

business affairs.
4. Suppliers - They are businesses that provide supplies
to other businesses.

2. Employees/Labor Unions - They are ordinary They check the financial statements of their customers
company employees who assess in order to determine if

the company’s profitability and stability, and their debts owed to them will be paid when due.
consequence on future salary

and job security.

5. Government - The government is concerned about
regulating businesses and

3. Owners/Stockholders - They provide capital to the their effects to the economy. They also want to check if
business. They need businesses are paying

accounting information to check if the business is well. their taxes honestly. Thus, they check the financial
Accounting information statements of businesses.

also helps them in deciding whether to withdraw or Examples are the Bureau of Internal Revenue, which is a
increase their investments. tax authority, and the

Overall, they are interested to know if the business is Securities and Exchange Commission which is a
profiting and how much. regulatory body.

6. Academe - Educational institutions use accounting

information from the
External users are those who are not part of the
company but need to use financial statement of a company for academic
purposes.
accounting information to be able to make decisions.
They are the following:
7. Public - The general public is composed to individuals
who are not related to
1. Potential Investors - They are individuals or other
business planning to invest the company. However, they use the financial
statements of a company to
determine how it affects the economy, and pinpoint
possible prospects for

employment.