What are the different branches or types of accounting?
Accounting is the backbone of any business, as we all know. A company would not be able to thrive or expand without accounting. Accounting unifies all of an organization's financial operations, promoting responsibility and order.
With time, new accounting disciplines and branches emerged, even if the foundations haven't altered for a long time. Thanks to technological advancements, report compilation, and transaction recording have developed, and many other new tasks, such as data input and report creation, have appeared. To get a full picture of a company's financial health, accounting is still used. Diverse accounting specializations and niches have developed as a consequence of the numerous advances in finance, industry, and technology
Branches of Accounting:
- Financial Accounting
- Management Accounting
- Cost Accounting
- Tax Accounting
- Auditing
- Forensic Accounting
- Fiduciary Accounting
- Fund Accounting
- Social Accounting
Financial Accounting:
Financial accounting is a branch of accounting that deals with providing financial information about a business to external stakeholders such as shareholders, financiers/creditors, and the government. A company's financial accounting department prepares periodic financial statements for distribution to the public and stakeholders. The income statement, balance sheet, cash flow statement, and retained earnings are the four fundamental financial statements.
Management Accounting:
Financial accounting provides financial information about a company to investors, lenders/creditors, and government authorities. This position is responsible for preparing periodic financial statements that are then made available to the public and other stakeholders in a company's activities. The four basic financial statements are the income statement, the balance sheet, the cash flow statement, and the statement of retained profits.
Cost Accounting:
Many people mix up management accounting with cost accounting, and although they do share certain responsibilities, they are entirely different areas of accounting. Cost accounting is concerned with producing information to manage operations in order to maximize profits and improve the efficiency of corporate processes; as a result, it is also known as control accounting.
Tax Accounting:
The branch of tax accounting is in charge of ensuring that businesses adhere to the tax laws and compliances required by government authorities. It is in charge of the company's tax affairs, including the computation of taxable income. Tax accountants are required to provide financial and other information to tax authorities when requested.
Auditing:
Auditing is one of the most important areas of accounting, and businesses invest millions of dollars each year to guarantee auditing compliance. It is the process of analyzing, inspecting, confirming, and assessing a company's financial records and internal control system. Auditors, either internal or external, carry out this procedure.
Forensic Accounting:
Forensic accounting is often described as a combination of accounting, auditing, and investigation. It entails analyzing information and records from a company's finances for use in court.
Fiduciary Accounting:
Fiduciary accounting is the procedure by which a fiduciary or trustee of a property or asset communicates to the parties in interest or even the government on regular basis information on the financial management of the associated finances.
Fund Accounting:
Fund accounting is used by non-profit organizations such as governments and not-for-profit organizations. Fund accounting is not a method of generating profits, but rather of fulfilling the parent company's goals.
Social Accounting:
The goal of social accounting is to integrate the reality of social and environmental effect into companies' day-to-day accounting operations. Social accounting is strongly linked to the idea of Corporate Social Responsibility (CSR) in the corporate setting. Social accounting examines and quantifies an organization's effect on society and the environment. It also assesses the societal costs and benefits of an organization's operations. Social accounting, like any other area of accounting, is a way of measuring a company's performance, but in terms of social responsibility.
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