There are several branches of accounting, each focusing on specific aspects of accounting. There are five important branches of accounting viz Financial Accounting, Managerial Accounting, Tax Accounting, Forensic Accounting, Social and Environmental Accounting.
Branches of Accounting
The main branches of accounting are:
- Financial Accounting: Financial accounting is a branch of accounting that deals with the recording, summarizing, and reporting of financial transactions related to a business. This involves the preparation of financial statements such as balance sheet, income statement, cash flow statement. The main purpose of financial accounting is to provide information about a company’s financial performance and position to external stakeholders, such as investors, creditors, and government agencies.
- Managerial Accounting: Managerial Accounting is also known as Cost Accounting, This branch is concerned with providing internal information to the management of an organization. It involves analyzing financial data to aid in decision-making, planning, budgeting, and performance evaluation. Managerial accountants help managers make informed business decisions to improve efficiency and profitability.
- Tax Accounting: Tax accounting is a branch of accounting that focuses on the preparation of tax returns and tax payments. It is used by individuals, businesses, corporations, and other entities. Some of the key areas of tax accounting include: Tax planning, Tax compliance, Tax preparation and Tax research.
- Forensic Accounting: Forensic accounting is a specialized area of accounting that focuses on investigating financial crimes and fraud. Forensic accountants use their knowledge of accounting, auditing, and investigative techniques to gather evidence and identify financial irregularities.
- Social and Environmental Accounting: Social and environmental accounting (SEA) is a type of accounting that measures the social and environmental impacts of an organization. It is used to track the organization’s performance in areas such as sustainability, ethics, and social responsibility. It can help organizations to identify and manage their social and environmental risks, and to improve their overall performance.
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