If you ask an expert accountant, they will tell you that accounting is really really wide. In all its broadness, it has four distinct general areas of specialization that accountants can choose from. It is not to say that not all accountants can be one or the other but it depends on your personal likes and dislikes. Furthermore, specialization in the world of today is essential to survive – another fact that only this or another well-established can tell you from experience. Pay attention as I take you through the five branches of accounting and what they are concerned with.
This branch of accounting deals with the collection and processing of financial information related to an organization for all interested parties in and out of the firm. These include all stakeholder and potential investors and authorities. Statements are usually annual or monthly and indicate the performance of the firm with time.
Management accounting is in many ways similar to financial accounting except for the way the information obtained is used. While financial account generates annual statements and what have you for investors and basically everyone, Management accounting or managerial accounting deals with the generation of accounting information for use by the directorate for everyday decision making. These may be more frequent and will be presented daily, weekly, monthly or as requested by the administration.
Cost accounting refers to the form of accounting that will help a business manage costs and make all decisions related to costing. The costs calculated by the accountant here are the costs of production which need to be kept low to improve profit margins and reduce the market price making goods and services more affordable to customers. Here, money is a factor of production rather than an indication of company performance as in financial accounting.
This branch of accounts is concerned with the vouching and verification of all transactions recorded by other accountants in a firm to ensure that they are indeed the true records and that all the math adds up. They also verify that the accountants followed the correct procedures in arriving at results and that the information is given about the company I indeed the actual record of the firm’s financial past. The auditor is obviously not from the same team that did the financial accounts for the enterprise in question.
Last but not least is the tax branch of accounting which is vital to the compliance of the firm with its tax obligations. The accountants serve to determine all the tax liabilities of their client taxes and inform them appropriately. The taxes that a business may be liable for paying include but are not limited to; PAYE, corporation tax, customs duty, value added tax among many several others. It is vital to ensuring the business is not breaking the law by not paying or filing taxes for itself and its employees as is required. Tax accounting will help avoid conflict with the state and expensive fines.
Until next time goodbye and best of wishes from me your favorite accountant Rudy El Gabsi J