Branches of Accounting
Economic development and technological advancement have resulted in an increase in the scale of operations of business, leading to the advent of the company from of organisation. As management functions become complex, the importance of accounting increases. Special branches of accounting developed which are briefly explained as follows.
Financial Accounting: The purpose of financial accounting is to keep a record of all financial transactions so that:
- The Profit earned or loss sustained by the business during an accounting period can be worked out.
- The financial position of the business at the end of the accounting period can be ascertained.
- The financial information required by the management and other interested parties can be provided.
Cost Accounting: The purpose of cost accounting is to analyse the expenditure to ascertain the cost of various products manufactured by the company and fix the price of the final product. It also helps in controlling the costs and providing necessary costing information to management to enable decision-making.
Management Accounting: The purpose of management accounting is to assist the management in taking rational policy decisions. It also helps to evaluate the impact of past management decisions and actions.