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Financial accounting[edit]

Main article: Financial accounting

Financial accounting focuses on the reporting of an organization's financial inf
ormation to external users of the information, such as investors, regulators and
suppliers. It calculates and records business transactions and prepares financi
al statements for the external users in accordance with generally accepted accou
nting principles (GAAP).[7] GAAP, in turn, arises from the wide agreement betwee
n accounting theory and practice, and change over time to meet the needs of deci
Financial accounting produces past-oriented reports for example the financial stat
ements prepared in 2006 reports on performance in 2005 on an annual or quarterly b
asis, generally about the organization as a whole.[7]
This branch of accounting is also studied as part of the board exams for qualify
ing as an actuary. It is interesting to note that these two professionals, accou
ntants and actuaries, have created a culture of being archrivals.
Management accounting[edit]
Main article: Management accounting
Management accounting focuses on the measurement, analysis and reporting of info
rmation that can help managers in making decisions to fulfil the goals of an org
anization. In management accounting, internal measures and reports are based on
cost-benefit analysis, and are not required to follow the generally accepted acc
ounting principle (GAAP).[7] In 2014 CIMA created the Global Management Accounti
ng Principles (GMAPs). The result of research from across 20 countries in five c
ontinents, the principles aim to guide best practice in the discipline.[30]
Management accounting produces future-oriented reports for example the budget for
2006 is prepared in 2005 and the time span of reports varies widely. Such reports
may include both financial and non financial information, and may, for example,
focus on specific products and departments.[7]Auditing[edit]
Main articles: Financial audit and Internal audit
Auditing is the verification of assertions made by others regarding a payoff,[31
] and in the context of accounting it is the "unbiased examination and evaluatio
n of the financial statements of an organization".[32]
An audit of financial statements aims to express or disclaim an opinion on the f
inancial statements. The auditor expresses an opinion on the fairness with which
the financial statements presents the financial position, results of operations
, and cash flows of an entity, in accordance with the generally acceptable accou
nting principle (GAAP) and "in all material respects". An auditor is also requir
ed to identify circumstances in which the generally acceptable accounting princi
ples (GAAP) has not been consistently observed.[33]
Accounting information systems[edit]
Main article: Accounting information system
An accounting information system is a part of an organisation's information syst
em that focuses on processing accounting data.[34]
Tax accounting[edit]
Main article: Tax accounting
Tax accounting in the United States concentrates on the preparation, analysis an
d presentation of tax payments and tax returns. The U.S. tax system requires the
use of specialised accounting principles for tax purposes which can differ from
the generally accepted accounting principles (GAAP) for financial reporting.[35
] U.S. tax law covers four basic forms of business ownership: sole proprietorshi
p, partnership, corporation, and limited liability company. Corporate and person
al income are taxed at different rates, both varying according to income levels
and including varying marginal rates (taxed on each additional dollar of income)

and average rates (set as a percentage of overall income).[35]