Lesson 2: Branches of Accounting

• 7 Branches of Accounting

  1. Financial Accounting
  2. Management Accounting
  3. Government Accounting
  4. Auditing
  5. Tax Accounting
  6. Cost Accounting
  7. Accounting Education
  8. Accounting Research
• Financial Accounting

  • Branch of accounting that focuses on general purpose financial statements.
  • Keyword: EXTERNAL
  • Financial statements that are submitted to external partners of an organization, leaders, and other creditors.
  • It is also submitted to the Philippine Financial Reporting Standards (government).
  • Information from ChatGPT: Focuses on preparing financial statements to provide information about an organization’s financial performance and position to external parties (e.g., investors, creditors, regulators).
• Management Accounting

  • Branch of accounting that focuses on INTERNAL financial statements and communication.
  • Keyword: INTERNAL
  • Information from ChatGPT: Provides information to internal management to aid in planning, decision-making, and performance evaluation.
• Government Accounting

  • Accounting done by government agencies or local offices to public funds.
  • Ensures funds from people’s taxes are used properly.
• Auditing

  • Inspection of an entity’s financial statements to a certain standard.
  • It is commonly done by accounting firms.
  • A company can hire an external auditor (Financial Accounting) to cross check the company’s own audit (Management Accounting) before submission to external partners and the government.
• Tax Accounting

  • Preparation of tax returns; can lead to penalties and imprisonment if not complied with.
• Cost Accounting

  • Systematic accounting of the cost of making products and services.
  • Recording of expenses in creating products and services.
• Accounting Education

  • Refers to the teaching of accounting and accounting-related subjects in an organized learning environment.
• Accounting Research

  • Pertains to careful analysis before making economic decisions for the company.
  • Process of researching for consequences in decisions of the company.