It looks at a company’s fixed (unchanging and constant costs, like rent) and variable costs (changing costs, like shipping charges). Then it looks at how they affect a business, and how these costs can be better managed, according to Accounting Tools. Each branch has come about thanks to technological, economic or industrial developments. Government entities and non-profit organizations undertake social accounting. They aim to protect the community by measuring the impact of commercial projects, activities, and development projects.

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Management accounting is a branch of accounting that focuses on providing information to managers to help them make informed business decisions. This branch of accounting focuses on reporting and analyzing a company’s financial statements. It includes preparing income statements, balance sheets, cash flow statements, and other reports that provide an overview of a business’s overall financial performance. It provides the necessary information to make important decisions about a company’s financial health and plans. Accounting has twelve branches, each focusing on different aspects of the overall financial picture. In addition to maintaining accurate financial records, accountants also prepare financial statements, such as balance sheets, income statements, and cash flow statements.

Internal auditors work closely with management to identify areas where improvements can be made to increase efficiency and effectiveness. They also provide recommendations for improving internal controls to prevent fraud and ensure financial accuracy. Cost accounting is concerned with the determination and control of costs incurred in the production of goods and services. It involves analyzing the cost of raw materials, labor, and overheads to determine the cost of production and pricing of products. Using AIS allows accountants to customize the platform to meet their needs and provide more accurate and secure financial information.

Tax accounting

Not-for-profit accounting fulfills the accounting needs of not-for-profit organizations (also known as non-trading concerns). The basic accounting principles and concepts used while applying not-for-profit accounting are the same as those used in regular or general-purpose financial accounting. Suppose DBC Company is a holding company with subsidiaries in more than 10 countries across the world.

They have to plan expenditures and sales and make projections for the future to make sure that resources are properly allocated through budgeting. Accountants in this area use their knowledge, skills, and techniques to deal with legal matters such as dispute resolution, claim settlement, fraud investigation, court and litigation cases, etc. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting. The field of accounting has grown to include numerous branches that each concentrate on a different area of business or law. Those who love numbers and have an eye for detail may enjoy a career in accounting.

Moreover, the owners at the completion of the year are keen in finding out about the net profits or losses, the financial strength of the company, and solvency position of the firm. The information is provided to them in the form of accounting information, which is prepared by the expertise accountants with care and accuracy. Business enterprise works to earn maximum possible profits, at the least possible cost. Incurring minimum costs in the aim of every enterprise, and they work to control the costs and this necessitated the emergence of cost accounting as one of the special branch of accounting.

Legal and Regulatory Aspects in Accounting

  • Certified Public Accountants (CPAs) are a specialized group of accountants who have met specific education and experience requirements and have passed a rigorous exam.
  • 11 Financial may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.
  • Fiduciary accountants represent the beneficiary and provide information on expenditures, income, assets, and liabilities for that estate or trust.
  • These activities help to ensure that a business is financially stable and can achieve its goals.
  • With this, an accountant must maintain and provide the data to stakeholders and owners to monitor cost analysis elements and administrative decisions.
  • It is an accounting branch dealing with tax returns and tax payments and operating distinctly at business and individual levels.

With financial accounting, businesses can use both accrual and cash accounting methods to determine net income. It also uses a standard set of rules, called the Generally Accepted Accounting Principles (GAAP), to make reporting consistent across periods and encourage transparency. The act of recording, classifying and communicating the information to the owners of the business is termed as accounting. There are many users of accounting information and it is used up for many different purposes as well. And these set of accounting information serves as a base for the decision making concerning the business.

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  • Companies divide accounting duties according to how a business conducts internal audits, the procedures and policies in place, and who is authorised to perform what accounting task.
  • Non-profit organizations (NPO) and fund accounting collaborate to ensure the accurate and proper allocation of funds.
  • ▪   Financial Accounting is concerned with keeping a record of all the financial transactions of the business and finding out the profit earned and loss incurred, during an accounting year.
  • Each component of the total cost then helps management to determine the right selling prices.
  • It focuses on the internal operations of a business and provides detailed information about costs, budgets, performance measurements, and other aspects of company finances.

It helps managers to budget and forecast financial resources and to control costs and improve profitability. Financial accounting provides important financial information that is used by investors, creditors, and other external users to make informed decisions about an organization. Financial reports prepared under financial accounting also help in assessing the financial health and financial position of an organization. Political campaign accounting involves the management of financial transactions related to political campaigns. It involves ensuring compliance with election laws and regulations and maintaining transparency in campaign finance.

What are Accounting Branches?

Forensic accounting is concerned with legal matters such as fraud investigations, legal lawsuits, and the resolution of disputes and claims. In most countries, those who certify the accounts are the statutory auditors of the company. And with the company, these auditors must keep an arm’s length relationship.

Year-End Accounting: A Streamlined Checklist for Accountants for Faster Fiscal Closure

Internal auditing involves deciding how accounting duties are divided up by the company, who is authorized to do what accounting task, and what processes and policies are in impact. Tax accounting assists clients in adhering to the regulations established by tax authorities. Managers also require information on their accounting to plan and make control decisions regarding their respective divisions.

5) Accounting is classified into financial accounting, cost accounting and management accounting. Accounting is a process requiring skill and expertise, divided into various branches, having benefits to the business and affected by some of the limitations as well. There is an old misconception 12 branches of accounting that accounting is a very boring subject, but it is wrong. The reality is that it offers students a lot of job opportunities and better career options. Certified public accountants (CPAs) usually provide financial and tax-related services to individuals and organizations.