Accounting is a powerful tool for managing and analyzing the financials of a company and making good financial plans and productive money management. So, in the different sectors and industries, there are different accounting solutions available for their need and usages or you can say there are different types of accounting available for all different types of businesses.
But the main branches of accounting include inflation accounting, financial accounting, Human resource accounting, managerial accounting, social responsibility accounting, cost accounting, and tax or value-added accounting.
We can discuss it in detail to learn how these different types of accounting formats are helpful for all sectors of businesses.
What are the Branches of Types of Accounting?
Following are the branches or sub-fields of accounting forms:
1. Financial Accounting
Generally, financial accounting is used in accounting work and works to show those accounting figures on a certain date of business.
Financial accounting includes the preparation of financial details to interpret and the communication of information to outsiders. Where the work of bookkeeping ends. There starts the activity of accounting.
Thus, the final step of financial accounting is the preparation of profit and loss accounts and balance sheets.
For every business, financial accounting has become mandatory by law and for other reasons.
2. Cost Accounting
Cost accounting is also a branch of accounting.
The process of determining this cost and technical planning, decision-making, and control is the basic managerial task.
Thus, The main purpose of cost accounting is to determine the cost of the item or service.
Cost accounting includes classification, recording, allocation, and reporting of the current cost.
3. Management Accounting
The area of management accounting is very large, it involves financial accounting, cost accounting, budgeting, tax planning, management information, and other aspects of financial management.
It provides accounting information for management decisions.
Therefore, it includes cost accounting which keeps accounts pertaining to cost and makes available the analysis of various information related to cost.
Management accounting assets are the management in the formation of policies, planning, and control of the operations of the business.
4. Branch Accounting
Branch accounts have for their purpose the recording of the transaction of branches, Whether they relate to dealing with the head office, with outsiders, or to dealing with different branches of the same concern.
Thus, As a general statement, it may be the side where a section of a business is segregated physically from the main section it is a branch, In other words, if the location of activities is separated from the main place of operation, that may be said to be ahead office and a branch.
5. Departmental Accounting
One of the most important aims of accounting is the segregation and recording of activities, whether of buying or selling of production, administration, or distribution.
In order to ascertain the profit or loss made by each department, it will be advisable to prepare separate trading and profit & loss accounts for each department at the end of the accounting year.
Departmental accounting plays a very important role in the supermarket business.
6. Social Responsibility Accounting
It is a new concept but in this part of accounting social costs spent by the organization and accounting of social profits accrued by them.
Its report includes social responsibility accounting includes evaluating the impact of corporate social responsibility measuring social cost and the impact of business on society and social reporting.
7. Inflation Accounting
Inflation accounting information is based on historical cost but due to changes in the price level, the purchasing power of money is declining.
Due to inflation and the declining purchasing power of money, prices of commodities change accounting for price level changes.
8. Human Resources Accounting
Human resource accounting shows the cost and monetary value of people or partners for business organizations.
Thus, it is the process of identifying and measuring data about human resources and communicating this information to interested parties in the organization.
9. Tax or Value Added Accounting
It is a new concept in which a value-added statement shows the value created and the distribution of it to interested groups example: employees, shareholders, promoters of capital, and the government.
Define the concept of value-added as the market price of the output of an enterprise left the price of goods and services acquired by transfer from other forms.
Generally, all employees owners, creditors, and government (through taxation) are recipients of the enterprise income.
This is the total pie circle that can be divided among the various contributors of factor inputs to the Enterprise in the production of goods and services
So, there are different usages of these different types of accounting for all types of businesses and industries.
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