Branches of Accounting

The economic development and technological advancements have resulted in an

increase in the scale of operations and the advent of the company form of business

organisation. This has made the management function more and more complex and

increased the importance of accounting information. This gave rise to special branches

of accounting. These are briefly explained below :

Financial accounting : The purpose of this branch of accounting is to keep a

record of all financial transactions so that:

(a) the profit earned or loss sustained by the business during an accounting period

can be worked out,

(b) the financial position of the business as at the end of the accounting period

can be ascertained, and

(c) the financial information required by the management and other interested

parties can be provided.

Cost Accounting : The purpose of cost accounting is to analyse the expenditure so

as to ascertain the cost of various products manufactured by the firm and fix the

prices. It also helps in controlling the costs and providing necessary costing

information to management for decision-making.

Management Accounting : The purpose of management accounting is to assist the

management in taking rational policy decisions and to evaluate the impact of its

decisons and actions.

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