“Discussion on any three specialized branches of accounting, their importance, limitations, and effect in decision making process”

Topics: Management accounting, Cost accounting, Costs Pages: 17 (5307 words) Published: January 19, 2014
1.1 Introduction:
Accounting is a very interesting field. Accountancy is the science of recording classifying and summarizing transactions so that relation with outsiders is exactly determined and result of operation during a particular period can be calculated and the financial position as the end of the period may be shown. There are many specialized branches of accounting. In our assignment we discuss only three specialized branches of accounting. They are cost accounting, managerial accounting and human resource accounting. In the case of cost accounting cost calculations are done keeping historical and estimated costs cost accounting and the process calculating costs vary accounting to nature of business manufacturing activity or operating activities. Managerial accounting applies to all types of businesses–service, merchandising and manufacturing. Managerial accounting deals with the needs of the management rather than strict compliance with generally accepted accounting principles. It involves budgeting and forecasting, financial analysis, cost analysis, evaluation of business decisions, and similar areas. Human resource accounting is an extension of the Accounting principles of matching the costs and revenues and of organizing data to communicate relevant information. The Quantification of the value of Human resources helps the management to cope up with the changes in its quantum and quality so that equilibrium can be achieved in between the required resources and the prove. Human Resource Accounting provides useful information to the management.

1.2 Objectives:
(1) To know about the three specialized braches of accounting. (2) To know about their importance.
(3) To know about their limitations.
(4) To know about their effect in decision making.

1.3 Limitations:
(1) Lack of accounting knowledge.
(2) Lack of information
(3) Shortage of time

2.1.1Cost Accounting:
Cost accounting is the accounting of the cost. It is made of two words- Cost and Accounting. The term cost denotes the total of all expenditures involved in the process of production. Thus, it covers the costs involved in the production and the cost involved while receiving it. Accounting, on the other hand, collects and maintains financial records of each income and expenditure and make avail of such information to the concerned officials. Thus, cost accounting is a practice and process of cost which determines the profitability of a business concern by controlling the cost with the application of accounting principle, process and rules. Cost accounting includes the presentation of the information derived there from for purposes of managerial decision making. Thus, cost accounting is an arts as well as science. It is science because it is a body of systematic knowledge having certain principles. It is an art as it requires the ability and skill with which a cost accountant is able to apply the principles of cost accounting in various managerial problems. According to W. W. Bigg - “Cost accounting is the provision of such analysis and classification of expenditure as will enable the total cost of any particular unit of production to be ascertained with reasonable degree of accuracy and at the same time to disclose exactly how such total cost is constituted.” According to R.N. Carter, “Cost accounting is a system of recording in accounts the materials used and labor employed in the manufacture of a certain commodity or on a particular job.” Thus, cost accounting is considered as an art as well as science. It is also a prime part of accounting system which records systematically the cost involved in raw materials and labor used in the process of production and the same time determines the total cost and unit cost of product, the process of recording classifying and analyzing of cost is the cost accounting. 2.1.2 Importance of Cost Accounting:

Management of business concerns expects from Cost Accounting detailed cost information in respect...
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