Accounting is the process of recording, classifying, and reporting information about financial transactions. It is a set of rules, principles, and standards used to describe the financial activities of an organization so that they can be measured, controlled, and managed. This subject can be a little overwhelming at first, but it is very important in the business world. This article answers the question “what are the 12 branches of accounting?”
What are the 12 Branches of Accounting?
The 12 branches of Accounting are the following:
- Financial Accounting
- Management Accounting
- Cost Accounting
- Tax Accounting
- Project Accounting
- Accounting Information Systems
- International Accounting
- Government Accounting
- Forensic Accounting
- Fund Accounting
- Fiduciary Accounting
- Auditing
What is Accounting?
The word accounting is derived from the French word “compte” which means account. Accounting is a type of bookkeeping that keeps track of all the money and other valuable items that a business has.
An accountant’s job is to make sure that the accounts are accurate and that all the money is accounted for. In order to do this, an accountant needs to know about financial statements, financial ratios, and how to make sense of financial statements.
Accounting is the process of tracking and analyzing financial transactions for the purpose of gaining insight into a company’s operations.
The accounting process is broken down into three parts: asset, liability, and equity. These three parts make up the basic accounting equation, which is A=L+E. This equation can be used to calculate the value of any company.
Accounting is a vital part of business and society. Without accounting, business would be a lot harder to run. Accounting is important for the smooth running of any business, as it allows managers to make informed decisions about how to invest their funds and how to make their company more profitable.
Accountants help businesses create forecasts and budgets, which in turn allows managers to make decisions about the future. Accounting is also important for society because it creates a high standard of living for everyone, as well as keeps track of the economy and how much money is being spent.
The accounting field is a broad field that includes all areas of business. The following are the 12 different branches of accounting with their definitions:
Financial Accounting
Financial accounting is the process of recording, classifying, and reporting on financial transactions, assets, liabilities, and owners’ equity in an enterprise or business.
It is a systematic process for analyzing the past performance of a company’s operations and for planning and forecasting future performance.
Management Accounting
Management accounting is a branch of accounting that is focused on the management of a company, including the analysis of financial statements and the development of financial models to improve business performance.
The job of management accounting is to help managers make decisions to achieve their strategic goals. Management accounting also deals with the budgeting, forecasting, and decision-making process.
Cost Accounting
Cost accounting is a set of methods and systems used to account for, analyze, and control the cost of goods and services in the business. It is a system of recording and analyzing costs in order to make decisions about how to produce, distribute, and sell products.
The goal of cost accounting is to maintain and maximize the profitability of the company.
Tax Accounting
Tax accounting is an accounting method focused on taxes and not on the financial statement. Tax accounting is often used for business entities, but can also be used for individuals.
There are many different types of tax accounting, each of which uses a different method to calculate tax liability. The taxes are then paid at the end of the year and include income, capital gains, and other taxes.
Project Accounting
Project Accounting is the process of creating and maintaining an accounting system for a project. It includes tracking the progress of a project and the associated costs.
This type of accounting is used in both government and private organizations. Project Accounting requires that a project be completed with a clear understanding of the resources required, the costs associated with the project, and the benefits achieved by the project.
Accounting Information Systems
Accounting Information Systems (AIS) is a set of systems that uses computerized accounting data to help organizations maintain their financial records and accounts.
AIS is designed to provide information on the financial status of an organization and its transactions. The AIS can be used for managing an organization’s operations, its finances, or both. AIS is also used to help make decisions about purchases, sales, investments, etc.
International Accounting
International Accounting is a field of study that focuses on how companies and other organizations manage their finances and economic activities in different countries.
The standards are set by the International Accounting Standards Board, which is a group of international accountancy professionals and academics.
International Accounting is typically done by foreign subsidiaries of a U.S. company or by foreign companies that have their headquarters in the United States.
Government Accounting
Government Accounting is the process of accounting for the activities of the government. It is a process that provides an accurate, reliable, and auditable record of the government’s financial activities.
The main purpose of Government Accounting is to provide information on the operation of the government to the public. This is accomplished by providing information about revenues, expenditures, assets, liabilities, and net worth.
Forensic Accounting
Forensic accounting is a specialized field of accounting that uses accounting and investigative techniques to determine the amount of financial loss or gain to an individual, business, or entity.
The goal of forensic accounting is to determine what happened, who did it, and how much it cost. Forensic accounting is usually applied in cases involving fraud, embezzlement, theft, and litigation.
Fund Accounting
Fund accounting is the process of accounting for a group of assets, liabilities, and equity items. The term fund typically refers to a pool of money that is managed for the purpose of generating income for its investors.
Fund accounting can be used for tracking the progress of a business or institution’s financial situation. Fund accounting is also used by individuals to organize their finances.
Fiduciary Accounting
Fiduciary accounting is the accounting of a company’s assets, liabilities, and owners’ equity, in accordance with the fiduciary standards of care.
The fiduciary standards of care govern the duties and obligations owed by a fiduciary (a person who is vested with discretionary control over another’s property) to a beneficiary (the party to whom the fiduciary owes duties of loyalty and care).
Auditing
Auditing is the process of verifying that a company or individual is following the rules and regulations set forth by the law. It is also the process of reviewing a company’s or individual’s financial statements to ensure that they are accurate and that they comply with the law.
Auditors are typically external to the company or individual being audited, but they can also be employees of the company or individual.
Conclusion
Accounting is a process that is used to record, summarize, and analyze financial information. It has become a necessity in the business world because it allows businesses to keep track of their finances and to make sure they are operating efficiently. For example, the business would need to know how much money they have coming in and how much money they have going out. They would also need to know what the profit margin is on their products and if their employees are getting paid on time.
Frequently Asked Questions (FAQs): What are the 12 Branches of Accounting?
What is the oldest known accounting?
The oldest known form of accounting is the clay tablets from Mesopotamia, which were used for trade and taxation. The invention of the abacus around 2000 BC, by the Sumerians, is considered to be the first tool used for accounting.
What is GAAP?
GAAP stands for Generally Accepted Accounting Principles. GAAP is a set of standards that all public companies must follow. These standards are used by accountants and auditors to ensure financial statements are accurate and in compliance with regulations.
What are ledger books?
Ledger books are used for keeping track of money. They are mainly used by accountants and bookkeepers. Ledger books are often bound and have a pen attached to the left side, which is a feature that is also found in journals. The first ledgers were made from animal skins, but today they are usually made from paper.
Reference
Godfrey, J., Hodgson, A., Tarca, A., Hamilton, J., & Holmen, S. (2010). Accounting. John Wiley & Sons, Inc.
West, P. B. (1993). Accounting and society (p. 2). London. Chapman and Hall.
12 Branches of Accounting: What They Are and What They Do . Retrieved from https://www.indeed.com/career-advice/career-development/accounting-branches
The 12 Branches of Accounting: Their Uses and How They Work. Retrieved from https://www.freshbooks.com/hub/accounting/8-branches-of-accounting
