Chapter 2: Branches of Accounting 2.

Tax preparation- This involves

providing help to clients in
The Accountancy Profession complying with their tax
Accountancy as a profession is relatively obligations.
new. In the past few years, it has achieved a status 3. Management consultancy- This
equal to that of engineering, medicine, and law. involves extending guidance to
Accounting as a profession has the following business organizations to help
characteristics: improve their management
 Mastery of a specific intellectual skill procedures, address problems,
through training and education- In order to and plan for the improvement of
practice accounting profession, one must their business operations.
finish a degree in Bachelor of Science in  Commerce and Industry
Accountancy. An accountancy graduate is Accountants can be employed in
also required to pass a rigorous executive positions in companies.
examination, which is managed and They can assume the position of
facilitated by the Board of Accountancy, so vice president for finance or chief
that he/she can use the title “Certified Public accountant (controller). They can
Accountant” or CPA. also work as internal auditors or
 Compliance and adherence of CPAs to a budget officers. Accountants from
common code of values and conduct this sector are directly involved in
established by the Board of Accountancy- the management of the company’s
CPAs follow a strict code of ethics. This operation.
serves as a “mental handbook” that will  Education
guide them in considering and doing what is Accountants can also be employed
right whenever they are faced with critical as instructors in colleges and
situations. universities that offer accounting
 Acceptance of duty to society as a whole- courses. They educate aspiring
Whether they are private institutions, accountants and equip them with
government agencies, small businesses, knowledge and skills for their future
and other sectors, CPAs are heavily relied profession.
upon for their expertise in financial  Government
accounting and reporting, their capability to CPAs can be hired in many
provide advice on varied concerns on accounting and accounting-related
business and taxation procedures, and their positions in government agencies
inefficiency in financial management. and units such as the Bureau of
Internal Revenue, Department of
Sectors of Accounting Practice Budget and Management,
Department of Finance, and
 Public Practice Commission on Audit.
In this sector, accountants provide
different business and accounting Major Branches of Accounting
services to their clients. They do
public practice either as individual  Financial Accounting
practitioners or as part of accounting Financial accounting is primarily
firms. concerned with the recording,
Example: preparation, and presentation of
1. External Auditing- Most common business transactions in the form of
service offered by CPAs. In financial statements to provide
auditing, financial statements are business owners a picture of the
carefully examined and validated operation results and the financial
by accountants. position of the business in a certain
period of time.
  Cost Accounting  Fiduciary Accounting
Cost Accounting deals with the Fiduciary accounting involves the
measurement and recording of all evaluation and handling of accounts
costs incurred in a business to help that are managed by an individual
the management in controlling the who has been entrusted with the
business organization’s expenses. guardianship and custody of a
 Management Accounting business, procession, or property
The objective of management owned by another individual.
accounting is to provide reports and Kinds of Fiduciary Accounting:
information about business 1. Receivership- refers to
transactions to the internal users. removal of control of the
Accounting data gathered from business or property from
financial and cost accounting are its owners. The control
utilized on management accounting and administration of the
to help managers and/or owners business is placed under
make decisions for the betterment of a receiver—independent
the business. party appointed by a
court to receive,
Other Fields or Areas of Accounting administer, and preserve
a business which is the
 Tax Accounting subject of a court case.
Tax accounting is a special type of 2. Trust Accounting-
accounting that focuses on taxes administration and
rather than on financial statements. management of funds by
It has two objectives: to ensure that a trustee (a bank or a
the business complies with the tax trust company) for the
laws and to minimize the business’s benefit of individuals
tax liabilities through legal means. called the beneficiaries.
 Government Accounting 3. Estate Accounting- refers
Government accounting is to the preparation and
concerned with the systematic management of financial
collecting, recording, summarizing, accounts by a person
analysing, and interpreting of administering the
financial transactions related to the properties of an n
expenditures and revenues of individual who has
government institutions. passed away.
 Auditing  Forensic Accounting
Auditing is the field of accounting in Forensic accounting involves the
which many CPAs offer their investigation and analysis of
services. In Auditing, financial numbers and financial data and
records are carefully examined to records that are usually presented in
determine the accuracy and fairness court discussions. Forensic
of these records. accounting cases usually involve
 Accounting Education some type of mishandling money
Accounting education employs (e.g. bankruptcy, tax fraud, money
accountants as educators and laundering) that lead to a criminal or
researchers. Accountants in this field civil investigation.
improve and develop accounting  Accounting Research
curriculum for colleges, universities, Accounting research is a type of
and other educational institutions to academic research which focuses
prepare students for the current and on the study of the effects of
future challenges in the profession. economic events on accounting
 processes and how information
gathered in this research affects
economic events in return. Its
objective is to examine and address
possible issues in the different areas
of the accounting profession using
the scientific method.

Integration of Information Technology in

Accounting
The development of information technology
over the decades revolutionized accounting in so
many ways. Accounting became more efficient.
Accounting processes that used to take a lot of time
can now be performed by computers which are
faster and much more accurate. Accounting
software and applications have been created to
address the varying needs of business
organizations.
Advantages of Computerized Accounting:
 Speed
 Accuracy
 Efficiency
 Accounting document production
 Up-to-date information
 Availability of information
 Staff motivation
 Reduced frustration