Scribd
Upload
7K views2 pages

Module 1.b - Branches of Accounting

There are several branches of accounting that have emerged as a result of economic and industrial developments: 1. Financial accounting involves recording transactions and preparing financial statements for internal and external users in compliance with GAAP. 2. Managerial accounting focuses on providing information to internal management and deals with areas like financial analysis, budgeting, and cost analysis. 3. Cost accounting refers to recording, presenting, and analyzing manufacturing costs, which is important for businesses with complicated costing processes.

Uploaded by

MJ San Pedro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
7K views2 pages

Module 1.b - Branches of Accounting

There are several branches of accounting that have emerged as a result of economic and industrial developments: 1. Financial accounting involves recording transactions and preparing financial statements for internal and external users in compliance with GAAP. 2. Managerial accounting focuses on providing information to internal management and deals with areas like financial analysis, budgeting, and cost analysis. 3. Cost accounting refers to recording, presenting, and analyzing manufacturing costs, which is important for businesses with complicated costing processes.

Uploaded by

MJ San Pedro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Accounting Basics: Branches of Accounting

As a result of economic, industrial, and technological developments, a number of


specialized fields in accounting have emerged.

1. Financial Accounting
Financial accounting involves recording and classifying business transactions, and
preparing and presenting financial statements to be used by internal and external
users.
In the preparation of financial statements, strict compliance with generally
accepted accounting principles or GAAP is observed. Financial accounting is
primarily concerned in processing historical data.

2. Managerial Accounting
Managerial or management accounting focuses on providing information for use by
internal users, the management. This branch deals with the needs of the
management rather than strict compliance with generally accepted accounting
principles.
Managerial accounting involves financial analysis, budgeting and forecasting, cost
analysis, evaluation of business decisions, and similar areas.

3. Cost Accounting
Sometimes considered as a subset of management accounting, cost accounting refers
to the recording, presentation, and analysis of manufacturing costs. Cost accounting
is very useful in manufacturing businesses since they have the most complicated
costing process.
Cost accountants also analyze actual and standard costs to help managers
determine future courses of action regarding the company's operations.

4. Auditing
External auditing refers to the examination of financial statements by an
independent party with the purpose of expressing an opinion as to fairness of
presentation and compliance with GAAP. Internal auditing focuses on evaluating
the adequacy of a company's internal control structure by testing segregation of
duties, policies and procedures, degrees of authorization, and other controls
implemented by management.

5. Tax Accounting
Tax accounting helps clients follow rules set by tax authorities. It includes tax
planning and preparation of tax returns. It also involves determination of income
tax and other taxes, tax advisory services such as ways to minimize taxes legally,
evaluation of the consequences of tax decisions, and other tax-related matters.
6. Accounting Systems
Accounting systems involves the development, installation, implementation, and
monitoring of accounting procedures and systems used in the accounting process. It
includes the employment of business forms, accounting personnel direction, and
software management.

7. Bookkeeping
Primary recording of the day-to-day transactions of any business unit and their
subsequent posting into the Ledger Accounts are the functions of this part of
accounting. As this part of the job of the accountant is only keeping the proper
records, it is therefore termed as Book-Keeping.

8. Government Accounting
Government Accounting is quite different from Commercial Accounting. This is
because in Welfare States is present day World, any Government has to collect
taxes, compute National Income, fix the Gross National Product Target, ascertain
the Balance of Payments position etc. Governments, therefore have their own
system of accounting which is called Government Accounting.

Focusing on Specializations
If you want to focus on a specialization, you may want to consider obtaining an
accounting certification in your chosen field. It will give you an edge over those who
are uncertified. Due to the increasing population and demand for competitive
professionals, you need to step it up a little to get recognized.

You might also like