There are 10 branches of accounting which cater to different operations in a business. Whether analyzing cash flow, financial position, business operation health, or observing the competence of the competitors, the different branches of accounting cover them all.
Startups or medium-sized businesses employ one experienced accountant with specialization and knowledge in multiple accounting branches. On the other hand, big enterprises or governments assign accounting firms to manage all the areas of accounting.
The accounting branches note every business event and transaction, making it presentable to the managers and stakeholders. These lintels assist the managers and stakeholders in making decisions and growing the business.
What are the 10 different branches of accounting, and what do they do?
Different areas of accounting serve different benefits in the management and operations of a Business.
Financial accounting is responsible for turning the records of all transactions into information. The particular accountancy branch abides by GAAP principles and focuses on historical data.
The accountants need to present the data to the following:
- Tax professionals
- Banks or financial institutions
Unlike financial accountants, management accountants provide data based on the use of money instead of the amount. A managerial accountant sets a strategy to improve administration by developing an effective budget plan.
Cost accounting evaluates costs and prices. The particular branch focuses on presenting a report which clarifies the entire manufacturing cost. The report is passed to the decision-maker so they can devise a strategy to cut down on the expense.
Auditing is mainly based on internal auditing and external auditing.
Exterior auditors, also known as state or federal auditors, examine the company’s internal efficiency and report how competent its duties, policies, and management are for growth. It also oversees the finances of an organization.
Interior auditing monitors and prevents tax issues and prepares the business for a smoother external audit.
The branch operates as per the tax rules proposed by the state and federal while planning out the tax requirement and payment. Tax accounting is important so that every slightest tax impact on a business is recorded and come up with strategies to save money while paying taxes.
Trustee accounting manages the accounts which are given to the responsible person for managing the property.
Huge companies like engineering and construction require project accountants to handle their vast and complex projects. Project accountants monitor the finances and present the financial reports of the project.
Forensic accountants handle matters associated with mismanagement, fraud, or bankruptcy and require lawful actions. They calculate the amount of damage and conduct investigations for the court.
The job of a fund accountant is to make sure that the funds reach where they are supposed to go, according to the policies of the companies.
Governmental accountants vigilantes the distribution of federal funds. They monitor the usage of money and ensure that the budget line is meeting its requirement.