BRANCHES OF ACCOUNTING
There are seven branches of accounting:-
a) Financial Accounting: This is called original accounting, which is mainly confined to the preparation of financial statement for the various concern parties and financial institutions. b) Cost Accounting: The process of accounting for cost which begins with the recording of income and expenditure or the bases on which they are calculated and ends with the preparation of periodicals statements and reports for ascertaining and controlling cost. c) Management Accounting: Management accounting is a distinctive form of resource management which facilitates management’s ‘decision making’ by producing information for managers within organization. d) Inflation Accounting: This accounting system does not consider the cost constant at every time because the price of a commodity changes with time to inflation and decline purchasing power of money. e) Social Accounting:
Social accounting may be defined as identification and recording of business activities regarding social responsibility. Social responsibility concept is the one of the important concepts of management. It is the duty of an enterprise to do some social activities for completing their social responsibility. Social accounting is very important tool to measure the performance of any company in view of social responsibility. Company has to make social responsibility income statement and balance sheet. But it is not compulsory to make these statements.
Social responsibility income statement
Amount in $
Social benefits given by co. to society
Opening of park expenses
health free services
water free facility
Net balance (Cr . ) transfer from employees
Amount ( in $ )
Social benefits given by society to co.
Natural losses due to pollution
Net balance (Dr. ) transfer from employees
other losses due to co. operations
Net benefits given by co. to society
credit - debit
f) Value –Added Accounting: In this system income is measured by the value added by a firm in a particular period. It is the difference between the value of the product and the cost of raw material, stores and any brought out component used for production. g) Human Resource Accounting: Human Resource accounting is the measurement of the cost and value of people for the organization or it is the process of identifying and measuring data about human resources and communicating this information to interested parties. COST ACCOUNTING
Cost accountancy is a comprehensive term. It is used to describe the principles, conventions, techniques and systems that are employed in a business to plan and control the utilization of its resources. Cost accountancy has been referred to as science, art and practice of a cost accountant. It is a science because it is constantly determining the relationship of reasons and consequences of different factors. How a cost c accountant uses the knowledge is an art. Use of cost accountancy knowledge requires skill, ability, imagination and innovation. A continuous effort is made by a cost accountant to analyze and evaluate the various alternatives to arrive at the decision, which promises optimum results. Cost accounting is the process of accounting for cost. This process begins with the recording of income and expenditure and ends with preparation of statistical data. Cost accounting is a formal mechanism by means of which cost of products or services are ascertained and controlled. It is also referred to as the art of determining cost. Primary objectives of cost accounting:
Stimulating cost consciousness
Ascertaining product unit cost...
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