BRANCHES OF ACCOUNTING
The advancements and continuous evolution of the commerce, trade and industry in the world has lead to the increased scope of the accounting. As a result, the different Branches of Accounting come into existence which is as follows:
FINANCIAL ACCOUNTING
Financial Accounting involves preparation of accounting records for a particular period of time. The main purpose of this accounting is to ascertain the true profit and loss of the business as well as financial position of the firm. Its aim is to provide the financial information regarding the business to the different users on time.
It is also known as “General purpose Accounting” because the information generated is published for the use of everyone connected with the business enterprise.
MANAGEMENT ACCOUNTING
Management Accounting comprises of two words= ‘Management’ + ‘Accounting’. It is the study of managerial aspect of accounting. It is the presentation of accounting information in such a ways as to assist management in the creation of policy and the day-to-day operation of an undertaking. Its system uses historical as well as estimated data to generate useful reports and information to be used by internal management for decision making process. The tools and techniques of management accounting involves:
- Analysis of financial statements
- Ratio Analysis
- Budgetary Control
- Standard Costing
- Marginal Costing
- Decision Accounting
- Management Information System
COST ACCOUNTING
Cost Accounting is the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and the ascertainment of profitability. Costing is the classifying, recording and appropriate allocation of expenditure for the determination of the cost of products or services; and for the presentation of suitably arranged data for the purposes of control and guidance of the management. Its tools and techniques involves:
- Material Costing
- Overhead Costing
- Activity Based Costing
- Standard Costing and Variance Analysis
- Process Costing
- Job Costing
- Unit Costing
- Contract Costing
INTERNATIONAL ACCOUNTING
International Accounting may be defined as the branch of accounting which involves different accounting practices all over the world. It deals with particularly with technical problems in global operations faced by domestic and foreign operations. It is a discipline to develop a universal system of accounting which would be accepted by whole world that is harmonization and convergence of accounting standards. International Accounting involves:
- International Financial Analysis
- International Transfer Pricing
- International Taxation
- International Harmonization of Financial Reporting
- Foreign Currency Transaction and Translation
HUMAN RESOURCE ACCOUNTING
Human resource Accounting is that branch of accounting that attempt to identify and report investments made in human resources of an organisation that are presently not accounted for in conventional accounting practice, basically it is an information system that tells the management what changes over time are occurring to the human resources of the business. It is the identification, measurement, recording and reporting of costs and values associated with human resources of an enterprise.
SOCIAL ACCOUNTING
One of the Branches of Accounting is Social Accounting. Social Accounting is also known as Social Responsibility Accounting, Socio-economic Accounting, Social Reporting and Social Audit. It aims to measure and inform the general public about the welfare activities undertaken by the enterprise and their effects on the society. It is featured as:
- An expression of a company’s social responsibilities.
- Related to the use of social resources.
- Emphasize on relationship between firm and society.
- Determines desirability of the firm in the society.
- Emphasizes on social costs as well as social benefits.
FORENSIC ACCOUNTING
Forensic means ‘suitable for use in the court of law.’ So forensic accounting means an application of a specialized knowledge and specific skills to stumble upon the evidence of economic transactions. It is specially a practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. Forensic Accounting:
- Emphasizes on suitability for use of evidence in the court of law.
- Is an application of a special knowledge and skill to find out the evidence of economic transaction.
- Is focused on reporting which is contained within an accounting system and legal framework.
- Emphasizes on establishing accountability of the guilty for misstatement or mismanagement of corporate affairs.
TAX ACCOUNTING
One of the Branches of Accounting is Tax Accounting. Tax Accounting deals with the tax related matters of a business firm. It includes computation of taxable income and presentation of financial or other information to tax authorities required by tax laws and regulation of a country. Tax accounting is also important for managers because taxes usually have a significant impact on the expected outcomes of the proposed decisions.
PROJECT ACCOUNTING
One of the Branches of Accounting is Project Accounting. Project Accounting is a component of overall project management. It is a specially designed accounting system that prepares financial reports at appropriate time intervals to track the financial progress of a project. These reports provide vital information to project managers in performing their project management function. The use of project accounting is very common among companies involved in construction contracts.
GOVERNMENT ACCOUNTING
Government Accounting is concerned with the allocation and utilization of government budgets. It ensures that the central and state government funds released for various purposes are being utilized efficiently. The proper record keeping makes the audit of completed projects possible.