what are the different fields & branches of Accounting?

 Let us see, as to, what are the branches or fields of Accounting? Here, we will learn the different branches or fields such as Financial Accounting, Cost Accounting, Management Accounting, Social Responsibility Accounting,  Human Resource Accounting as well.

What is Accounting?

It is the art of recording, summarizing, analyzing, and reporting business transactions of the enterprises by Financial Statements. These statements include the income statement, balance sheet, and cash flow statement

In 1966, American Accounting Association defined it as, "the process of identifying, measuring, communicating financial information to permit judgements and decisions by users of accounts."

Thus, Accounting is the art of recording financial transactions in financial statements. This helps depict the profit or loss for the year and assets & liabilities position on a particular date. The main objective is to maintain a systematic record of business transactions, evaluate the profit or loss for the year, and communicate results to the users of financial information.

What are the different Branches and Fields of Accounting?

There are different branches of Accounting. The most prominent among them are listed below. 

1. Financial Accounting

 

It is the art of recording all the financial transactions into the books of accounts. The main objective is to record the business transactions and to evaluate the financial performance & position by preparing financial statements. The financial statements include profit and loss statement, balance sheet, cash flow statement. These results will be communicated to the users of financial information for making decisions.

2.Management Accounting

As per CIMA, Management Accounting is the application of the principles of accounting and financial management to create, preserve, enhance the value of the stakeholders of any organisation. It helps the management for planning, organising, controlling, decision making.

3.Cost Accounting

Costing is defined as, " the technique and process of ascertaining costs." Cost Accounting is the process of recording the costs, ascertaining the costs and controlling the costs of goods manufactured or services rendered. The main objective is to ascertain the costs, cost control, cost reduction, to assist management in decision making

4.Social Responsibility Accounting

It is related to the use of social resources that emphasizes the relationship between the firm and society. In simple terms, it is the application of accounting on social sciences that emphasizes social costs and social benefits. It improves the reputation of the business entity and improves employee motivation and acts as evidence of social commitment as well. It is the measurement and reporting of information concerning the impact of a business entity on its society.

5.Human Resource Accounting

Human resources management is defined as the management of the human resource. Thus it manages several people such as labour, supervisors, managers, departmental heads. It helps to mobilize the human resource to accomplish the goals and objectives as well.

6.Forensic Accounting

It is the blend of accounting and investigation techniques to discover the financial crimes, frauds, embezzlement cases to explain the nature of the financial crime in the court of law.  This is generally used by the insurance industry to ascertain the damages from claims.

7.Fiduciary Accounting

It involves the recording of the transactions associated with a trust or estate entity. It also issues periodic reports on the status of the entity. It is dealt with cash basis where cash is recorded when received and distributions & disbursements are recorded when paid.

8.Auditing

Auditing is an independent examination of financial information contained in the financial statements with a view to ensure that financial statements comply with the accounting standards and relevant rules and statutory regulations. The objective of the audit is to express an opinion on financial statements whether these financial statements comply with accounting standards and to ensure that appropriate accounting policies have been adopted, no frauds and errors exist in financial records. The audit may be an internal audit, statutory audit, government audit.

9.Tax Accounting

Tax accounting is generally derived from Internal Revenue Code (IRC). The idea is to identify. compute the total taxable income which is different from the income shown in the income statement. This helps to compute the total taxable income and pay the taxes and file annual returns as well.

10. Fund Accounting

It is used by non-profit organisations (schools, colleges, clubs) and also government organisations for the accountability of funds and grants received from individuals, governments and other organisations. Here the objective is to provide accountability for the special purpose and general-purpose funds and grants. 

11.Government Accounting

It is the process of recording the financial transactions that are incurred by the government. It helps to record and manage all the expenses and incomes of government entities. It keeps the record of public funds. It is helpful to protect and manage public money as well.

12.Accounting Information System 

It is a system to collect, process, record, store accounting data and financial data that is used by the decision-makers to make decisions. This system is used by accountants, consultants, business analysts, managers, auditors, chief financial officers and regulators. 

13.Public Accounting

Public accounting is an accounting firm that renders accounting, audit, tax services to other business entities. Public accountants provide accounting, audit, tax services to their clients ( other business entities). The services offered by public accounting firms would include preparation of financial statements of clients, auditing the financial statements of clients, handling tax work like filing return of income for clients.

14. Green Accounting

It is a set of rules, techniques, methods used to collect and provide information to the management regarding the relations of business entity with the environment. This is also called environmental accounting. Its objective is to safeguard the environment and accounting for environmental protection. To formulate the reporting standards for environmental protection as well.

 

Conclusion:

Thus, now we can see as to what are the branches or fields of Accounting? This helps to understand the importance and value of Accounting in society at large. To see how wide the scope of Accounting stands out in the community serving a large group of people and helping a lot in knowing the financial performance, financial position, finding the cost of a product or service, and taking many useful decisions.

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