ACCOUNTING

BRANCHES OF ACCOUNTING

“Accounting is divided into several branches to better serve the needs of different users with varying information needs. These branches sometimes overlap and they are often closely intertwined.” 
- According to Investopedia

There are 8 Branches of Accounting
Namely, financial accounting, management accounting, government accounting, auditing, tax accounting, cost accounting, accounting education, and accounting research

Let's define each branch:

1. FINANCIAL ACCOUNTING
Is the broadest branch and is focused on the needs of EXTERNAL USERS.

The primarily concerned of this is with the recognition, measurement and communication of economic activities.

This information is communicated in a complete set of financial statements.

∆ Pagsinabi po nating Financial Accounting ang focuses nila ay gumawa ng Financial Statement.

∆ Finance sa tagalog pananalapi.

EXAMPLES OF FINANCIAL REPORTS:
• The Balance Sheet (Statement of Financial Condition).
• Income Statement (The Profit and Loss Statement).
• Statement of Cash Flows.

∆ Sa financial statement dun po nakikita kung may income ba ang business mo.

∆ Ang ginagawa dito sa financial accounting tinitignan kung pantay ba ang cash ganon po

Sabi po primary users are external users.
#QUESTION:
Sino ba ang mga external users?
#ANSWER:
Sila yung mga individuals or organization outside of a company na interesado sa financial information ng business mo.

They use these information for their decision-making needs.

EXAMPLE OF EXTERNAL USERS:

INVESTORS
Who use accounting information to make decision to buy shares of a company.

∆ Pagsinabi nating investor sila yung gustong mag invest sa business mo.

CREDITORS
Evaluate the risks of granting credit or lending money.

∆ Creditors po sila yung mga gustong magpautang sayo

TAX AUTHORITIES
Determine the credibility of tax returns filled on behalf of a company.

∆ Tax authority naman po yung mga nag papataw ng buwis.

2. MANAGEMENT or MANAGERIAL ACCOUNTING
Emphasizes the preparation and analysis of accounting information within the organization.

∆ Dito po sila yung nag aanalyze, nagplaplano kung paano ang budgeting at business decision.

The objective of Managerial Accounting is to provide timely and relevant information for those INTERNAL USERS of accounting information, such as the managers and employees in their decision-making needs.

∆ Ang informations dito ay sensitive dapat ang nakakaalam lang ay ang mga internal users.

#QUESTION:
Bakit po sensitive ang information?

∆ Dahil dito prene-prepare ang mga prices, plans to open up branches, customer list, etc.

∆ Sila din po ang nag e-evaluate ng mga employees sa business nila.

#QUESTION:
Sino ba yung mga internal users?

Those individuals inside the company who plan, organize, and run the business.