Branches (or) Sub-Fields Of Accounting

Management Accounting

This type of accounting exclusively deals with the internal environment of entity. Management accounting dealt with mainly analyzing and accumulating all the financial data to assist management to take various financial, operational, investment and other important decisions. Cost accounting and target accounting are also part of management accounting.

Financial Accounting

Preparation of financial statements as per required and applicable accounting framework with considering various Generally Accepted Accounting Principles and format (GAAP) or International Financial Reporting Standards (IFRS). Preparation of financial statements in a uniform and standardised format is so important for users to assess the performance of the business.

Internal Auditing

This type of accounting mainly deals with examination and assessing of internal procedures, control, operation and policies of day to day activities. It deals with assessing the effectiveness and efficiency of company’s systems and transaction. It aims at finding weakness, wastage, error, fraud, mismanagement and inefficiency.

Tax Accounting

Tax accounting mainly deals with managing tax provisions and liabilities. It ensures the compliance with various tax laws, regulations, acts, tax payments, tax filings and tax planning which helps the business to run smoothly without having much tax burdens.

Government Accounting

This method of accounting deals with government and their funds. It manages the funds held by the government to be expended without any errors, bias or fraud, in an efficient and effective manner. This fund should be disbursed to pay for a number of expenditures in connection with government services and for the benefit of the public and the development of nation.

Accounting Information Systems

It is the latest phase of technology which gives rise to a proper and systematic procedure of recording and maintaining day to day financial information. Accounting Information System (AIS) deals with the creation of a proper accounting system. It involves various phases such as developing, installing, implementing, managing and monitoring various accounting procedures and systems used throughout the process of accounting.

Fiduciary Accounting

It is the process of accounting where a separate person other than the owner or the proprietor is entrusted to do various activities such as handling and managing of accounts along with the custody and management of the property. Receivership and estate accounting are some kind of fiduciary accounting. Trust accounting is also a common fiduciary accounting.

Forensic Accounting

It is one of the fast growing and popular trend of accounting nowadays. Forensic accounting is sub field of accounting mainly dealing with the various laws, court procedures, litigations, cases, claims, disputes and fraud investigation. All the matters related to any legal affairs are treated under forensic accounting.

Human resource accounting

Human resource accounting is associated with planning and deciding crucial human resource processes, such as recruiting or selection, training, developing and retaining.

Social responsibility accounting

Social responsibility accounting is associated with determining the cost of social contribution made by an organization. It is a process of expressing the welfare made by the organization in quantifiable terms.

BENEFITS OF ACCOUNTING

• Evidence of the past and present financial status
• Helps out in intra and inter firm comparison
• Records and maintains complete financial information
• Assessing the growth of business and efficiency & effectiveness of management
• Helps in ascertaining profit
• Valuation of business and to decide various selling price
• Act as evidence in the eyes of law and ensuring the compliance with various regulations
• Assist the management in taking various decisions
• Facilitating audit and calculation of tax liability
• Better financial representation
• To check whether any fraud or error exist
• Assist in various investing and financing decisions
• To cope with up to date technology
• A proper accounting system results in cost benefit and saves time.

LIMITATIONS OF ACCOUNTING

• Conflict within various accounting principles and policies
• Issues in evaluating and ascertaining various estimates
• Considerations of those items in financial statements which is difficult to be expressed in monetary terms
• Deep laid frauds like the frauds that involve top management frauds
• Incomplete and manipulated financial information results in wrong interpretation and gives out convey wrong messages
• Professional judgement by accounting professional varies based on the various factors in financial statements
• Use of historical cost
• Time value of money
• Cost of preparing or producing relevant and reliable information may result in compromising the quality of accounting information.