Accounting is the backbone of every business today, and it will always remain in demand as there is the need for an Accountant in every industry. Small companies may hire one specialized accountant for accounting services, whereas bigger companies may use the services of accounting companies with different finance departments for multiple branches of accounting.
What are accounting branches?
Accounting branches measure, process, and transmit financial and non-financial data that has an impact on a company’s economic interests and relationships. Branches of accounting are used by the majority of organizations and enterprises to measure the outcomes of their economic activities. Accounting branches compile and report results to investors, creditors, regulators, management, and tax collectors using a variety of techniques.
There are so many branches of accounting and some of them are the following:
Financial accounting is a systematic method of recording transactions of any business according to the accounting principles. It is the original form of the accounting process. The primary purpose of financial accounting is to calculate the profit or loss of a business during a period and provide an accurate picture of the business’s financial position as on a particular date. The Trial Balances, Profit & Loss Accounts, and Balance Sheets of a company are based on the application of financial accounting principles. These are useful for creditors, banks, and financial institutions to assess the company’s financial status.
Managerial accounting, sometimes known as management accounting, focuses on delivering information to internal users, such as management. Financial analysis, planning and forecasting, cost analysis, business decision assessment, and other topics of managerial accounting are covered.
Cost accounting is considered a type of managerial accounting. Cost accounting is most commonly used in the manufacturing industry, an industry that has a lot of resources and costs to manage. It is a type of accounting used internally to assess a company’s operations.
Cost accounting deals with evaluating the cost of a product or service offered. It calculates the cost by considering all factors, including manufacturing and administrative, that contribute to the output production. The objective of cost accounting is to help the management fix the prices and control the cost of production. It also pinpoints any wastages, leakages, and defects during manufacturing and marketing processes.
There are two types of auditing: external and internal auditing. In external auditing, an independent third party reviews a company’s financial statements to make sure they are presented correctly and comply with GAAP.
Internal auditing involves evaluating how a business divides up accounting duties, who is authorized to do what accounting task and what procedures and policies are in place. Internal auditing helps a business zero in on fraud, mismanagement and waste or identify and control any potential weaknesses in its policies or procedures, according to Accounting Tools.
Tax accounting assists clients in adhering to the regulations established by tax authorities. It entails tax planning as well as tax return preparation. It also includes determining income tax and other taxes, as well as tax advisory services such as methods to lawfully reduce taxes, assessing the effects of tax actions, and other tax-related concerns.
Accounting Information Systems
Known as AIS for short, accounting information systems concerns itself with everything to do with accounting systems and processes and their construction, instalment, application, and observation. This can include accounting software management and the management of bookkeeping and accounting employees.
This specialist accounting service is becoming increasingly popular in the accounting world. Forensic accounting is concerned with legal matters such as fraud investigations, legal lawsuits, and the resolution of disputes and claims.
When financial records are incomplete, forensic accountants must recreate financial data. This might include decoding tampered data or converting a cash accounting system to accrual accounting.
Fiduciary accounting refers to the management of accounts by someone who has been entrusted with the custody and management of property or for another person’s benefit. Trust accounting, receivership accounting, and estate accounting are all examples of fiduciary accounting.
It has to do with keeping track of funds for non-profit organizations. To guarantee effective money use, separate fund accounts are kept for various types of tasks, such as welfare programs. If such an organization has raised “x” funds to assist in the education of children and “y” funds to assist widow women. Fund accounting guarantees that all money allocated to designated causes is used for the same purpose.
HTH & Associates help organizations and business owners with accounting and/or financial consulting services.
If you have questions about bookkeeping, contact us at firstname.lastname@example.org or call us at 909-599-2111.
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The author, Sapna Agnihotri, is an Accounting and Human Resources Intern at Thaddeus Resource Center. Prior to joining Thaddeus Resource Center, she worked as a teacher. A graduate in Family Finance and Consumer Science, she studied Accounting from Waukesha Technical College and lives in Wisconsin.