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Branches of Accounting

   Techniques have improved vastly so as it effects in accounting, new methods, concepts, etc., have been introduced to accounting. Because of such improvement in techniques, accounting has created many branches to its field. Some examples of such branches are financial accounting, cost accounting, management accounting, social responsible accounting, human resources accounting. Financial accounting, cost accounting, management accountings are the standard branches of accounting.
Financial Accounting
     The process of identifying, recording, classifying, summersing, the transactions and events and analyzing, interpreting, the results of recorded transactions is called as financial accounting. It communicates the finalized and processed date of all financial transactions and events of business to the end users.
     In journal and subsidiary books, transactions are recorded. In ledger, recorded transactions are classified and grouped under appropriate accounts. In final accounts profit and loss a/c and balance sheet are prepared to ascertain the final results and financial position of business. Ratio analysis, fund flow statement, etc., are used to analysed and interpret the summersied transactions. Financial reports, statements are prepared to communicate the interpreted information to end users.
Cost Accounting
     Cost accounting is a subdivision of financial accounting. Cost accounting is the accounting for costs. Cos accounting is the ascertainment of cost and controlling of cost to maximize the profit.
     Financial accounting is dealing with the post mortem data. It just prepares statements and accounts for past date. Cost accounting estimates cost for future use also. It is called as cost estimation. It also ascertains the cost for past and present times. It is called as cost ascertainment.
     Three terms are used in cost accounting. They are (a) Cost (b) costing (c) cost accounting.
      Cost means “an expense incurred to acquire something in business for business use”. CIMA says that cost is an expense incurred or attributable to a given thing. ICWA, INDIA says that cost is the monetary measurement of resources used in production of goods and rendering the services. Finally cost means an expense incurred to acquire something which is used in production of goods or rendering services.
     Costing means ascertaining cost by using techniques and methods used in costing. CIMA says that the techniques and process of ascertaining cost is costing. Methods used in costing are 1) job costing, 2) batch costing 3) contract costing 4) operation costing 5) process costing 6) operating costing 7) unit costing or output costing. Techniques used in costing are 1) standard costing 2) marginal costing 3) absorption costing 4) uniform costing 5) budgetary control.
    Cost accounting means the accounting for costs by which ascertainment of cost and controlling of cost is done. It is an application of accounting principles in costing to establish control over cost and ascertain the cost.

Management Accounting

     Management accounting designs information, by extracting the data from financial accounting, which are helpful for management in planning and controlling business activities and in decision making. It gives all information to management to frame its policies in business and plan day to day activities. It covers cost accounting and some other techniques beyond cost accounting. It assists management to perform it job. Management accounting designs such information in meaningful and understandable formats for management.

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