The cost data collected through the cost accounting system is used by management in exercising its planning and control functions. Standard reports like balance sheets, profit and loss statements, and cash flow statements are key. They are generated in a way to help managers analyze past decisions and plan for the future. Profit and loss statement is a financial document that summarises revenues, expenses, and costs of an organisation in a certain period, i.e. a quarter or a financial year. This statement’s significance is that it provides an overview of a company’s ability to generate profit by various methods or its inability to do the same.

  1. Various accounting techniques are used by accounting branches to track and report on economic activity and business health.
  2. The syllabus includes three parts, A, B, and C, with Part B offering a choice between two subjects.
  3. Public accounting refers to the practice of providing accounting and auditing services to other entities.
  4. They will make sure that any funds that are taken in are handled correctly and accurately.
  5. Businesses need to balance the practices of compliance and tax savings.

Guardians or custodians frequently use the branch to track and report account receipts and expenditures to ensure proper fund allocation. I hope you understand what the 9 major types or branches of accounting are at the end of this post. If you have any confusion or would like to learn more, please leave a comment.

Moreover, it is a crucial part of an organisation’s business plan as it displays how a company manages its funds and how it can produce a turnover. The NCERT Accountancy syllabus for Class 12 focuses on developing a strong understanding of the nature and significance of accounting information in business operations. It aims to enhance logical reasoning, analytical skills, and judgment among students. The syllabus includes three parts, A, B, and C, with Part B offering a choice between two subjects. It is essential for Class 12 students to dedicate themselves to thorough preparation for this crucial subject. Various accounting techniques are used by accounting branches to track and report on economic activity and business health.

These methods cater to the specific regulations and reporting requirements governing public and restricted funds in the non-profit sector. Another key aspect of financial accounting is to generate financial statements of a business. These statements include balance sheets, income statements, cash flow statements, and equity statements. Though there are 12 branches of accounting in total, there are 3 main types of accounting. These types are tax accounting, financial accounting, and management accounting.

Cost Accounting

The ever-evolving regulatory framework necessitates accountants to remain well-versed in compliance requirements. Accountants are increasingly becoming experts in navigating complex regulatory frameworks to ensure organizations operate within legal bounds and meet reporting obligations. Accounting information systems leverage technology to facilitate the processing and dissemination of financial data within an organization. These systems automate routine accounting tasks and provide a data analysis and reporting framework. Consider a non-profit organization that receives donations earmarked for different programs. Fund accounting would involve creating separate funds for each program.

Fiduciary accounting

In class 12 CBSE, you learn the basics of accountancy that makes you understand; how an organisation financially works. Government and non-profit accounting differ in their focus on accountability and compliance with specific public fund regulations. These branches emphasize fund accounting and reporting branches of accounting to meet the requirements of government entities and non-profit organizations. For example, financial accounting focuses on external reporting for stakeholders, while managerial accounting caters to internal decision-making. It does so while strategically managing an organization’s tax liabilities.

The 12 Branches of Accounting: Their Uses and How They Work

Technology is transforming accounting through automation, artificial intelligence, and cloud computing. These advancements enhance data accuracy and allow accountants to focus on strategic tasks. Technology also facilitates real-time collaboration and provides more robust security measures for financial data.

Financial accounting is ideal for external reporting, while managerial accounting focuses on providing internal reports for management decision-making. Auditing provides stakeholders, like investors and regulatory bodies, with an unbiased evaluation of an entity’s financial health. Independent auditors review financial statements and internal controls to ascertain accuracy and adherence to established bookkeeping principles. Consider a multinational corporation operating in multiple jurisdictions. Tax accountants would navigate the varied international tax laws to optimize the company’s structure to minimize tax liability legally. They would also be involved in calculating and filing taxes in each jurisdiction where the company operates.

Another easy to use option that’s perfect for self-employed entrepreneurs who need an affordable accounting solution is Neat. It measures the impact of commercial activities, policies, and projects businesses and corporations undertake. External auditing is performed through independent auditors appointed by a government entity or regulatory authorities. They also provide feedback on their findings to auditors and management for planning purposes.

They are charged with making sure the accounting records are IRS-compliant. In this type of accounting, all records and reports are made according to regulations established by the tax authorities. Legal accounting, also referred to as forensic accounting, deals with cases involving bankruptcy, fraud, or mismanagement. This branch manages dispute resolution, calculates damages, and conducts investigations for court and litigation cases.

Managerial Accounting

Financial accounting follows principles defined by accounting governing bodies like the IFRS foundation and FASB. Commonly followed accounting practices are defined as Generally Accepted Accounting Practices (GAAP). But it does follow standard accounting practices taught in accounting school. That said, small businesses usually aren’t required to use GAAP and its accrual method.