Branches of Accounting

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Accounting is used to manage economic transactions so that proper results of the transactions are obtained. As the use of accounting increased, scholars divided it into different parts like financial accounting, cost accounting, management accounting, tax accounting, etc. for easy and proper use, which are called branches of accounting, although all these are part of accounting. All branches of accounting are based and divided on functions, features, specialties, etc.

Dividing accounting into different branches also makes it easier to divide the work. By doing this the result of the transaction can be obtained quickly and accurately as each branch is expert in its work. For example, the cost branch looks after only cost-related matters, similarly, the tax branch looks after only tax-related matters. In small business, accounting is not divided into different branches, all the work is done under one roof.

Branches of Accounting

Following are the branches of accounting:

1. Financial Accounting:

Preparing financial statements like trading account, profit and loss account, balance sheet, etc. is called financial accounting. Financial accounting involves identifying, measuring, recording, classifying, summarizing, etc. transactions. The main objective of financial accounting is to provide financial statements for internal and external purposes. This branch of accounting is the basis and foundation of accounting as it provides a path to other branches.

2. Cost Accounting:

Calculating costs or the process of calculating costs is called cost accounting. The main objective of cost accounting is to calculate the cost of something because unless the cost of something is known, its proper transaction is not possible. The results obtained from this help the management to take appropriate related decisions. There are various methods available to calculate cost using which management can find out the cost of anything.

3. Management Accounting:

Preparing different reports using different data and taking decisions, planning, etc. through those reports is called management accounting. Management accounting is also known as managerial accounting. Its main objective is to conduct the internal activities of the business properly for which the management analyzes, interprets, and communicates various data, etc. Data for management accounting is obtained from financial accounting, cost accounting, tax accounting, etc.

4. Tax Accounting:

Calculating tax or the process of calculating tax is called tax accounting. The main objective of tax accounting is to calculate the appropriate tax as every eligible person has to pay tax and for this data is taken from other branches like financial accounting etc. Another objective of this branch is, how tax can be legally reduced or saved.

5. Other Branches:

• Government Accounting
• International Accounting
• Fiduciary Accounting
• Project Accounting
• Forensic Accounting
• Fund Accounting
• Political Campaign Accounting
• Auditing
• Public Accounting, etc.

Read Also:

• What is Accounting? Meaning, Features, and More.
• Importance of Accounting
• Process of Accounting
• Advantages and Disadvantages of Accounting
• Source Documents of Accounting

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