Discuss the various branches of accounting.
Discuss the various branches of accounting.
These are briefly explained below:
(i) Financial Accounting: The process of identifying, measuring, recording, classifying, summarising, analyzing, interpreting and communicating the financial transactions and events is known as financial accounting.
The purpose of this branch of accounting is to keep a record of all financial transactions, so that -
(a) The profit earned or loss sustained by the business during an accounting period can be worked out.
(b) The financial position of the business as at the end of the accounting period can be ascertained.
(c) The financial information required by the management and other interested parties can be provided.
(ii) Cost Accounting: It is the process of ascertaining and controlling the cost of a product, operation or function. The purpose of cost accounting is to analyse the expenditure, so as to ascertain the cost of various products manufactured by the firm and fix the prices. It also helps in controlling the costs and providing necessary costing information to management for decision-making.
(iii) Management Accounting: It is the use of accounting techniques for providing information to help all levels of management in planning and controlling the activities of business to enable decision-making. The purpose of management accounting is to assist the management in taking rational policy decisions and to evaluate the impact of its decisions and actions.
These are briefly explained below:
(i) Financial Accounting: The process of identifying, measuring, recording, classifying, summarising, analyzing, interpreting and communicating the financial transactions and events is known as financial accounting.
The purpose of this branch of accounting is to keep a record of all financial transactions, so that -
(a) The profit earned or loss sustained by the business during an accounting period can be worked out.
(b) The financial position of the business as at the end of the accounting period can be ascertained.
(c) The financial information required by the management and other interested parties can be provided.
(ii) Cost Accounting: It is the process of ascertaining and controlling the cost of a product, operation or function. The purpose of cost accounting is to analyse the expenditure, so as to ascertain the cost of various products manufactured by the firm and fix the prices. It also helps in controlling the costs and providing necessary costing information to management for decision-making.
(iii) Management Accounting: It is the use of accounting techniques for providing information to help all levels of management in planning and controlling the activities of business to enable decision-making. The purpose of management accounting is to assist the management in taking rational policy decisions and to evaluate the impact of its decisions and actions.
