Branches of Accounting

From the foregoing, we can say that accounting can be classified into:

Financial Accounting

Cost accounting

Management accounting

Taxation

 Auditing

 Government accounting also called public sector accounting.

Financial Accounting

Financial accounting provides information about a business organization with regard to:

The net worth of the business

The indebtedness (otherwise called liabilities) of the business organization

The amount the business is expected to receive from those to whom it sold goods on credit

The performance (or profit generated) from operating the business.

Financial accounting assumes that the amount spent in running a business in a period be related to or 

matched with the revenue generated for that same period. This will let us know if there is profit from 

operation.

Cost Accounting

This enables us know the cost of producing one unit of a product. This branch of accounting enables business owners to determine how much they are to charge for a service or sell a particular product, when produced.

Management Accounting

This branch of accounting relates to the application of the knowledge and skills learnt in accounting in presenting financial reports or accounting information.

Taxation

This branch of accounting shows how much is due to be paid to government from the profit generated. It also refers to determining how much of income (salaries) of employees should be paid to government in the form of tax.

Auditing

This refers to inspection of the books of account by someone known as the auditor. his work is to check the work of accounting book-keepers to ensure that the reports presented actually reflect what is stated. To be able to do this effectively, the auditor must be independent ie he must not be capable of being influenced by another person or persons in the course of his work as auditor. 

Government Accounting

Government accounting means accounting for the incomes and expenditures of government. to be 

able tyo do this well, the government first prepares a budget that must be approved by the 

legislature. This approved budget now serves as the basis of government expenditure for the period 

stated.