What Are the Main Branches of Accounting?
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What Are the Main Branches of Accounting?

Accounting is a very interesting field. It has many branches – 7 to be exact. After finishing this article, the reader should have acquired an overview of the different branches of accounting, namely – financial accounting, auditing, management advisory services or management accounting, government accounting, tax accounting, fiduciary accounting, and accounting systems installation.
  1. Financial Accounting – this branch of accounting deals with the journalizing of business transactions, preparation of financial statements, and communicating the information about the economic effects of the accounting transactions and events to external users. Financial accounting focuses on the preparation of the five basic financial statements, namely – statement of financial position, statement of comprehensive income, statement of cash flows, statement of changes in equity, and notes to financial statements.
  2. Auditing – it is said that the work of an auditor begins when the work of the accountant ends. Auditing deals with the inspection of the financial statements, which were prepared in financial accounting, by independent certified public accountants. The purpose of auditing is for the independent CPA (called the Auditor) to express an opinion regarding the fairness of the presentation of financial statements.  This lends credibility to the financial statements and thus increases public and investor trust.
  3. Management Accounting/Management Advisory Services – this branch of accounting deals with the gathering and communication of information to be used by internal users (mainly the management). It includes services to clients on matters of accounting, finance, business policies, organizational procedures, product costs, distribution, and many areas regarding business. A management accountant could either be employed by the entity availing of the service (internal) or an independent CPA (external). CPAs in this field are commonly called management accountants, internal auditors, or management consultants.
  4. Government accounting – this branch of accounting deals with the transactions of the national government and its different agencies. Government accounting mainly focuses on the safekeeping of public funds and for the purpose to which such funds are committed or devoted.
  5. Tax accounting – this branch involves the preparation of tax returns and the rendering of tax advice to clients, such as determination and verification of tax consequences, the effect of taxes in the business operations, tax minimization through legal means, and the like. Take note that tax accounting is not the same as government accounting.
  6. Fiduciary accounting – this branch of accounting deals with the handling of different accounts managed by an individual entrusted with the guardianship and management of property and possessions for the benefit of another party.
  7. Accounting systems installation – This deals with the installation of accounting procedures for the gathering of accountable financial data and embraces the designing of accounting forms to be used in the data-gathering process. Accounting systems is closely related to management advisory services. Succeeding in this field nowadays requires technical knowledge and skills in information technology.

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Comments (3)

Thank you for this article on accounting. Voted. Hoping for your friendship.

Thank you for this awesome article on accounting....me glad to have this really informative stuff...cheers mate.....

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