LESSON 3

Branches of
Accounting

Accounting, Business and Management 1 – Lesson 3

BRANCHES OF
ACCOUNTING
 FINANCIAL ACCOUNTING
Financial accounting deals with the theoretical
framework covering accounting principles and
concepts relative to measurement and
evaluation as applied to assets, liabilities,
stockholder’s equity, retained earnings,
revenue, and expense account in relation to the
preparation and presentation of financial
statement.
MANAGEMENT ACCOUNTING
A profession that involves partnering in
management decision making in management
accounting as a profession that involves
partnering in management systems and
providing expertise in financial reporting and
control to assist management in the formulation
and implementation of an organization’s
strategy.
GOVERNMENT ACCOUNTING
Government accounting encompasses
the process of analyzing, classifying and
communicating all transaction involving
the receipt and disposition of
government fund and property, and
interpreting the results thereof.
Agencies Responsible for Performing
Government Accounting
Commission of Audit (COA)
Department of Budget and
Management (DBM)
Bureau of Treasury(BOT)
 AUDITING
Auditing is the examination and review of
accounting reports in order to ascertain their
fairness, property and reliability. The
independent auditor’s opinion provides
reasonable assurance that the financial
statements under examination fairly present the
company’s financial position and results of
operation.
•Internal auditors are company employees, while external auditors work for an
outside audit firm.
•Internal auditors are hired by the company, while external auditors are
appointed by a shareholder vote.
•Internal auditors do not have to be CPAs, while a CPA must direct the
activities of the external auditors.
•Internal auditors are responsible to management, while external auditors are
responsible to the shareholders.
•Internal auditors can issue their findings in any type of report format, while
external auditors must use specific formats for their audit opinions and
management letters.
•Internal audit reports are used by management, while external audit reports
are used by stakeholders, such as investors, creditors, and lenders.
 TAX ACCOUNTING
Tax services provided by accountants
include the preparation of monthly
value added tax, percentage tax,
expanded withholdings tax returns,
quarterly and annual tax returns and
any other taxes applicable to business.
 TAX ACCOUNTING
Accountants work closely with clients in
order to avoid tax problems with the
Bureau of Internal Revenue (BIR) and
other local agencies through proper tax
compliance while advising clients about
ways and measures to minimize taxes.
 COST ACCOUNTING
Cost accounting includes collection,
determination, allocation,
assessment, interpretation and
control of cost data, particularly
the cost of product in a
manufacturing concern.
 COST ACCOUNTING
The cost of production includes the
raw materials, direct labor, factory
overhead and all other cost
involved incident in each stage of
production of the finished goods.
ACCOUNTING EDUCATION
Accounting education involves planned grading
and formal teaching in an educational
institution. The professional accountant imparts
knowledge to students enrolled in an accounting
subjects either in basic accounting or in higher
accounting subjects. Accountants in the
academe usually take post graduate studies to
achieve the required tenure.
 ACCOUNTING RESEARCH
Accounting research involves conducting a
careful and diligent study aimed at
discovering and interpreting facts, revising
accepted theories in the light of new facts,
or the practical application of such new or
revised theories for the generation of a new
knowledge.
 ACCOUNTING RESEARCH
It includes collecting information about a
particular subject in order to decide and
implement new standards in accounting,
presenting current events that might affect
the profession, or discovering new theories
that will have an impact on existing
accounting knowledge.