Branches of Accounting

-

 To meet the ever increasing demands made on Accounting by different interested parties such as owners, management, creditors etc.the various branches of Accounting have come into existence.



1)  financial Accounting:- The main object of financial Accounting is to find out the profitability and to  provide information about financial position of the concern.

Financial accountants present a general idea of the working of the business and permits management to control in general way the major functions of a business, via finance, administration, production and distribution. But  financial Accounting does not give details regarding the operating efficiency of these divisions.
  In financial Accountancy the information is expressed in two main types of financial statements, via


       a)  The profit and loss account
       b)  The Balance Sheet


2) Cost Accounting:- The main object of cost accounting is to find out the cost of goods produced or services rendered by business, it also helps the management to detect and control all leakages, defective works, and wastage in tools and stores.
    Costing enables the management to compare the price of the product available from outside suppliers in the market with the cost of product manufactured by them and explains whether it is profitable to produce such a product or purchase it in the market. 
  It avoids such activities which results in losses. Cost accounting deals with a group of Accounts constituting the records of production and distribution of activities.

3) management Accounting:- The primary objective of management accounting is to supply relevant information at appropriate time to the management to enable it to take the decisions and affect control. Management accounting provides Accounting information to the management to perform all this functions such as planning, organizing, staffing, directing and controlling.

4) Social Accountancy:- it is concerned with the applications of double Entry System of booking-keeping to socio economic analysis, with the construction, estimation and analysis of National and International incomes, National or International Balance Sheet.

5) Inflation Accounting:- inflation Accounting is a method of recording financial information in the financial statements at values which reflects the actual purchasing power of the monetary unit during time of inflation.




Comments

Post a Comment

Popular posts from this blog

Preference Shares

-
Image
  Preference Shares:-   Preference Shares are those which carry preference over other classes of shares in the payment of dividend and repayment of capital at the time of winding up. Types of preference Shares:-   Preference Shares can be broadly divided into. 1) Redeemable preference Shares. 2)irredeemable preference Shares 3) Cumulative preference Shares 4) Non - Cumulative preference Shares 5) Convertible preference Shares 6) Non - Convertible preference Shares 7) participating preference Shares. 8) Non - participating preference Shares   Redeemable preference Shares:-   These are the shares, the capital of which is refundable after a stipulated period. Irredeemablepreference Shares:- These are the shares, capital of which is not refunded during the life time of the company. Cumulative preference Shares:- These are the shares on which a fixed rat of dividend is paid out of the current or future profits. If in any year, the company doesn't pay the dividend wil...
Read more

Need providing Depreciation

-
Image
  To know the true profits:-     We have seen that depreciation is an expense and becomes an important element of the cost of production.    Though it is not visible like other expenses and never paid to the outside party yet it is desirable to charge depreciation on fixed assets as these are used for earning purposes.   So their depreciation must be deducted out of the income earned from their use in order to calculate true net profit or loss. To show true financial position:-  Financial position can be studied from the balance sheet and for the preparation of the Balance Sheet fixed assets are required to be shown at their true value.    If Assets are shown in the Balance Sheet without any charge made for their use or depreciation, then their value must have been overstated in the Balance Sheet and will not reflect the true financial position of the business.   So for the purpose of reflecting true financial position, it is necessary t...
Read more

Accounting information

-
  Persons interested in Accounting Disclosures:-    Accounting is of primary importance to the proprietors and the managers. However, others person's such as creditors, prospective investors, employees, etc. are also interested in the Accounting information. 1) Proprietors:- A business is done with the objective of making profit. It's profitability and financial soundness are, therefore, matters of prime importance to the proprietors who have invested their money 💰 in the business. 2) Managers:- In a sole proprietary business, usually the proprietor is the manager. In case of a partnership business either some or all the partners participate in the management of the business. They therefore, act both as managers as well as owners. In case of joint stock companies, the relationship between ownership and management becomes all the more remote . In most cases the shareholders act merely as rentiers of capital and the management of the company passes in to the hands of profe...
Read more