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Home Introduction to Accounting Branches of Accounting
 
 

Branches of Accounting:

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In order to meet the ever increasing demands made on accounting by different interested parties (such as owners, management, creditors, taxation authorities and other govt. agencies etc.) the various branches of accounting have come into existence.

These branches are as follows:

  1. Financial accounting
  2. Cost accounting
  3. Managerial accounting

The above three branches of accounting are briefly discussed below:

1. Financial Accounting:

The main purpose of financial accounting is to ascertain the true result (profit or loss) of the business operations during a particular period of time and to state the financial position of the business on a particular point of time.

Financial accounting produces general purpose reports for the use by the great variety of people who are interested in the organization but who are not actively engaged in its day-to-day operation.

2. Cost Accounting:

The main object of cost accounting is to determine the cost of goods manufactured or produced by the business. It also helps the management of the business in controlling the costs by indicating avoidable losses and wastes.

In order to set prices of the products of the companies, correct calculation of all manufacturing as well as non-manufacturing costs is necessary. Cost accounting is also helpful to accomplish this task.

3. Managerial Accounting:

The object of managerial accounting is to communicate the relevant information periodically to the management of the business to enable it to take suitable decisions.

Financial accounting is the oldest and the other branches have developed from it according to the need of different parties. The objects of financial accounting can only be achieved by recording business transactions in a systematic manner according to a set of principles.

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More study material from this topic:

Need and importance of accounting
Accounting as a business language
Bookkeeping versus accounting
Branches of accounting
Objects of accounting
Important accounting terms and concepts
Accounting principles
Accounting concepts
Accounting conventions
Questions and answers

 

 
 

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Financial Accounting Topics


  Introduction to Accounting
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  Transactions and Accounting Equation
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  Analysis of Business Transactions
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  Journal, Ledger and Trial Balance
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  Accounting for Bills of Exchange
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  Special Journals
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  Cash Book
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Bank Reconciliation Statement
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  Final Accounts
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  Work Sheet
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  Capital and Revenue Items
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  Valuation of Inventories
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  Accounts of Non-profit Making Organizations
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  Statement of Cash Flows
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  Accounting Ratios Analysis
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  Depreciation, Provisions and Reserves
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  Accounting Dictionary
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  Financial Calculators
 
 
 
Managerial Accounting Topics

  Financial Statements
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  Cost Volume Profit Relationship
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  Variable Costing System
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  Materials and Inventory Cost Control
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  Activity Based Costing System
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  Standard Costing and Variance Analysis
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  Balanced Scorecard
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  Capital Investment Analysis/Capital Budgeting
 
 

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