Branches of accounting is simply means the classification of departments. Management of business is very complex when information needed is highly more. Effective management requires to providing the information according to needs of functions and user groups. In this page we describe in detail the branches of accounting. To satisfy the demand of management, several new branches has been developed in modern business world. Branch accounting is more popular now a days because of easy management. Every branch account helps you to easily analysis your transactions and other accounting issues. In common term branches of accounting is different meaning.
The Three Branches of Accounting are –
This is also called Three Branches of Finance. You can manage transactions through some top level tools. Managing accounts through software is not a tough one, they are developed easy to use technology.
1. Financial Accounting
If your business is small or big that does not matter. You need different areas of accounting for management. For example home office and branch accounting. It classifieds three major parts. You can see more details on below. Financial accounting is major part and this one is first branch in branches of accounting. This branch of accounting is generally concerned with to record the transaction in books of accounts in such a way that profit of the business operations at a particular period and financial position of the business firm can be known. Accounting for revenues, expenses, assets, liabilities and other financial information are commonly carried in the general office of business is called financial accounting.
The financial accounting information is expressed in two types of financial statements, i.e,
– Income and expenditure account, receipts and payments account, profit and Loss account (to match the income/profit with expenses of the accounting period to know the profit or loss)
– Statement of affairs/ Balance sheet of the business for year (showing assets and liabilities, revealing financial position as on the date).
The financial accounting is guided by various rules and regulations, some of which are mandatory. The system cannot normally deviate from the generally accepted accounting practices/ principles.
Financial accounting information is used by interested groups – internal/ external users.
The object of financial accounting is to provide information to outsiders such as shareholders, government authorities, financial institutions, creditors, etc
2. Cost Accounting
Cost accounting is that branches of accounting are essential for fixing a price for product and services. Cost Accounting is second branch in branches of accounting. It deals with recording, classification, allocation, summarize of current and prospective cost. It calculates cost of production and distribution by units/ departments, functions, activities, products, services etc. cost accounting are mostly relates to identifying, recording, collection, classification, analyzing and ascertainment of the cost of production/ services or job work undertaken by the firm. Cost accounting is essential for pricing of product and services and for cost reduction and cost control, decision making purposes i.e to make a product or replace the machine, hire or leasing a service for business. Cost accounting is application costing principles, methods and techniques, in the ascertainment of cost and analysis of saving or excess as compare with previous experience. The objective of cost accounting is to provide information about costs to internal management for a better planning and control of operations and taking timely decisions and completion of job works.. Cost accounting data is mainly useful to the management of the business.
3. Management Accounting
In branches of accounting this one is third branch. It is that branch of accounting which is meant exclusively for managerial decision making. It provides all necessary information to the management for discharging its various functions. Management accounting is largely concerned with providing economic information to management for achieving organizational goals. Management accounting focuses on internal planning, control activities and decision making. Management accounting mostly used by internal management for effective discharging of its functions.
Conclusion of Branch Accounting
In view of the above branches of accounting, it is mostly used by all business firms generally and it is differ from business to business, a business concern can classify the accounting system according to its business requirement.
Useful Link related to this topic on Wikipedia: http://en.wikipedia.org/wiki/Positive_accounting
Originally posted 2013-09-25 06:32:40.