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.
Financial accounting
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
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
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.
Auditing
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.
Tax accounting
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
