Branches of Accounting
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Accounting for money
Branches of Accounting: Financial accounting is a systematic way of documenting company transactions in accordance with accounting principles. It is the first version of the accounting system. The primary goal of financial accounting is to quantify a company’s profit or loss over time and to present an accurate picture of the company’s financial situation as of a certain date. Financial accounting is used to create a company’s Trial Balances, Profit & Loss Accounts, and Balance Sheets. Creditors, banks, and financial organisations use these to analyse a company’s financial situation. Furthermore, taxing authorities might compute the tax based only on these documents.
- Accounting for costs (Branches of Accounting)
Cost accounting is concerned with determining the price of a product or service. It evaluates the cost by taking into account all of the elements that go into producing the output, including both manufacturing and administrative costs. The goal of cost accounting is to assist management in setting pricing and reducing production costs. During the production and marketing operations, it also pinpoints any wastages, leakages, or flaws.
- Accounting for management (Branches of Accounting)
This field of accounting gives information to management in order to improve corporate administration. It aids in the making of critical choices and the management of diverse company operations. Budgets, Projected Cash Flow and Fund Flow Statements, Variance Analysis reports, Cost-Volume-Profit Analysis reports, Break-Even-Point computation, and other Management Information Systems assist management make informed choices.
The terms management accounting and financial accounting are not interchangeable. Both are distinct. Management accounting meets the demands of management in making decisions about cost savings and profit maximisation. Shareholders, creditors, and financial institutions rely on financial accounting to determine the company’s financial status. Management accounting records are kept confidential and only used by management. They aren’t made available to the general population.
- Performing an audit (Branches of Accounting)
Auditing is a field of accounting in which an outside certified public accountant, known as an Auditor, inspects and verifies a company’s financial statements for correctness and consistency. Internal auditing is a technique in which a corporate employee checks the accounts on a regular basis and assists management in maintaining correct records for audit purposes.
- Accounting for taxes (Branches of Accounting)
Tax accounting is concerned with taxes. Its responsibilities include preparing and submitting numerous tax returns as well as dealing with the legal ramifications of such returns. Tax accountants help financial accountants prepare financials for tax reporting to different authorities while also assisting tax accountants in avoiding tax payments. Tax accounting include advising on the impact of taxes on various elements of business, avoiding taxes via legal means, and checking the tax due on business implications.
- Accountancy of funds (Branches of Accounting)
It has to do with keeping track of cash for non-profit organisations. To guarantee effective resource use, separate fund accounts are kept for diverse tasks such as welfare initiatives of various types.
- Accounting in the public sector (Branches of Accounting)
It is done for budget allocations and use in the Central Government (National Government) and State Governments. The correct and effective use of different budget allocations, as well as the protection of public monies, are ensured by keeping records.
8. Accounting in forensic sector (Branches of Accounting)
In legal proceedings, forensic accounting, also known as legal accounting, allows for the calculation of damages and the resolution of disputes. To appropriately assess the damages, investigations and computations are carried out.
- Accounting in a fiduciary capacity (Branches of Accounting)
It is the accounting and appraisal of a third party’s company and property that is kept under another person’s guardianship
Branches of Accounting |
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| Financial Accounting | Systematic method of recording transactions, P/L, B/S, useful to creditors, bank, financial institutions etc. Accurate picture of financial position |
| Cost Accounting | Evaluating cost, cost calculation by considering all factors of both manufacturing and administration, goal-price fixation, cost control, pin point wastages, leakages |
| Management Accounting | Better administration, efficient decision making via MIS, CVP & BEP analysis etc., profit enhancement, secrecy of records, useful to creditors, shareholders |
| Auditing | Auditor inspects & certifies the A/C for accuracy, internal audit by the company employee also performed |
| Tax Accounting | Preparation & filling of tax returns, Compliance of laws, tax report preparation, reduction of tax in legal way, verification, considering different aspects of Tax |
| Fund Accounting | Keeping record of fund of NPOs, separate fund maintained for separate work for assurance of usage |
| Govt. Accounting | Keeping record of central & state government for allocations and utilization of various budget to ensure proper usage |
| Forensic Accounting | Calculate damages or settling disputes in legal matters, investigations carried out, also called legal accounting |
| Fiduciary Accounting | Accounting & evaluation of third party business & properly maintained under the care of another person |