Branches of Accounting | Readstall

Branches of Accounting

09-12-18 Gudditi Naganjaneyulu 0 comment

Branches of accounting:

Broadly, there are three branches of accounting

  • Financial accounting
  • Cost accounting
  • Management accounting

Financial accounting:

  The purpose of the financial accounting is to prepare the financial statements : trading and profit and loss account & balance sheet .the trading and profit and loss account is also called as an income statement .it will shows the net profot or net loss included by the firm for end of given data .the definition of AICPA(American  Instute of Certified  Public Accounting association ) gives the an idea of financial accounting includes the subsidiary books ,trail balance , ledger accounts and financial statements .

Cost accounting :

  The purpose of accounting is control the costs of product of a department .in the words of wheldon.the cost accounting refers to the application of accounting costing principles ,mthods and techiniques in the cost analysis .it is more used for internal contraol prpose the tools and techiniques of cost accounting include  opportunity cost marginal coting ,break –even analysis etc..,,,

Management accounting :

  The purpose of management accounting is to control  the  management  in the taking  the appropriate decisions .according to Robert N Anthony . management accounting is concerned with accounting information that is very useful to management .it will stands where financial accounting ends . the tools and techiniques of managemenent accounting include ratio analysis ,capital budgeting and so on.

Accounting cycle :

   The accounting cycle cycle covers all the imposrtsnt stages in accounting .they also include the process of preparing journal ,ledger ,trail balance and financial accounts . the transactions take place in business these are recorded in the first book is called journal .the journal entries are posted in to the ledger accounts .the balances are shows by the ledger accounts a to the arthemetic accuracy of the accounts . this statement is called trail balance from the information is avalible in trail balance ,financial accounts are prepares .it will comparamise the trading account ,profit and loss account for the end of the given accounting period and balnce sheet on the given date .the fallowing diagram shows the accounting cycle .

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