Q.

There are 8 branches accounting. Each branch has come about thanks
to technological, economic or industrial developments. And each has its
own specialized use. 

1.Financial accounting

Financial accounting involves recording and classifying business

transactions, and preparing and presenting financial statements to be
used by internal and external users.
In the preparation of financial statements, strict compliance
with generally accepted accounting principles or GAAP is observed.
Financial accounting is primarily concerned in
processing historical data.

2.Managerial Accounting

Managerial or management accounting focuses on providing

information for use by internal users, the management. This branch
deals with the needs of the management rather than strict compliance
with generally accepted accounting principles.
Managerial accounting involves financial analysis, budgeting and
forecasting, cost analysis, evaluation of business decisions, and
similar areas.

3.Costing accounting

Often times considered as a subset of management accounting, cost

accounting refers to the recording, presentation, and analysis
of manufacturing costs. Cost accounting is very useful in
manufacturing businesses since they have the most complicated
costing process.
Cost accountants also analyze actual costs versus budgets or
standards to help determine future courses of action regarding the
company's cost management.

4.Auditing

External auditing refers to the examination of financial statements by

an independent party with the purpose of expressing an opinion as to
fairness of presentation and compliance with GAAP. Internal
auditing focuses on evaluating the adequacy of a company's internal
control structure by testing segregation of duties, policies and
procedures, degrees of authorization, and other controls implemented
by management.

5.Tax Accounting

Tax accounting helps clients follow rules set by tax authorities. It

includes tax planning and preparation of tax returns. It also involves
determination of income tax and other taxes, tax advisory services
such as ways to minimize taxes legally, evaluation of the
consequences of tax decisions, and other tax-related matters.

6.Accounting Information Systems

Accounting information systems (AIS) involves the development,
installation, implementation, and monitoring of accounting procedures
and systems used in the accounting process. It includes the
employment of business forms, accounting personnel direction, and
software management.

7.Fiduciary Accounting
Fiduciary accounting involves handling of accounts managed by a
person entrusted with the custody and management of property of or
for the benefit of another person. Examples of fiduciary accounting
include trust accounting, receivership, and estate accounting.

8.Forensic Accounting
Forensic accounting involves court and litigation cases, fraud
investigation, claims and dispute resolution, and other areas that
involve legal matters. This is one of the popular trends in accounting
today.

Q.2

Concept of Installation of a Costing System:

A costing system is an established set of procedures, rules, cost

records, etc., for the purpose of achieving specified objective at
minimum cost. It forms the basis for future operations.
All types of concerns can adopt no one single system. Each concern
may design and install a system of its own depending upon its
requirements.

It may establish the practice and procedure of making cost records. The
need for installing a costing system should be justified by a cost-benefit
analysis. The benefits expected from the costing system should more
than compensate the expenses of installing and operating the system.

When a decision to install a system is taken, it should be so designed as

to serve the purpose of the particular concern. It should be useful in
accordance with the objectives of costing and be flexible enough to
adapt itself to changing conditions.

Steps Involved in the Installation:

Before installing a costing system all care should be taken to study and
analyze all aspects involved as otherwise, the system will be a misfit and
its full advantage may not be derived. Special attention should be taken
to collect information about the various aspects of the organization.

The size of the firm, the nature of business, the nature, method, and
stages of production, the number of varieties and quantities of each
product and such other technical aspects should be examined carefully.
The analysis of materials and wage payment systems should be done.

Forms and records of original entry should be so designed as to involve

minimum clerical work and cost. There should be facility to exercise
proper control over the system and adopt efficient reporting system. The
management requirements and the policy adopted by them towards cost
control should be kept in view.
Q.3

Methods of reapportionment or redistribution

Introduction

the first expenses of all departments are complied without making a

distinction between production and service departments but, then the
expenses of the service departments are apportioned among the
production departments on a suitable basis.
it is possible that the expenses of one service department may also be
apportioned in part to another service department to arrive at the total
expenses incurred on the latter department, which will then be
distributed among production departments.
following are the methods f re-distribution of service departments costs
to production departments;

1.Direct distribution method

under this method, the cost of the service department is directly

apportioned to production departments, without taking into consideration
any service from one service departments to another service
department.
 

2.step method

under this method, the cost of the service department is directly

apportioned to production departments.
the next service department is taken up and the cost id apportioned and
this process is going on till the cost of the last service department is
apportioned.
the cost of the last service department is apportioned in the production
department only.
 

3.reciprocal service method

this method gives cognizance to the fact that where are two or more
service departments, they may render service to each other and
therefore these may departmental services are to be given due to weight
in disturbing the expenses of the service departments. there are three
methods available for dealing with inter-service department transfer.

 simultaneous equation method

Under this method, the true cost of service departments is ascertained

first with the help of simultaneous equations.
these are then distributed among the production departments on the
basis of given percentages.

 Repeated distribution method

According to this method service department costs are apportioned over

the other departments, production as well as service according to the
agreed percentages, and this process is repeated until the total costs of
the service departments are exhausted or the figures become too small
to be considered for the further apportionment.

 trail and error method

In this method, the cost of one service department is apportioned to

another service department. the cos of another service department plus
the share received from the first service department is again apportioned
to the first service department and the process is continued until the
balancing figure becomes nil.

Q.4
SIGNIFICANCE

1. Information provided by the break even chart can be understood by

the management more easily than contained in the Profit and Loss
Account and the Cost Statements because a break even chart is the
simple presentation of cost, volume and profit structure of the company.
It summarises a great mass of detailed information/in a graph in such a
way that its significance may be grasped even with a cursory glance.
2. A break even chart is useful for studying the relationship of cost,
volume and profit. The chart is very useful for taking managerial
decisions because it shows the effect on profits of changes in fixed
costs, variable costs, selling price and volume of sales.

3. The chart is very useful for forecasting costs and profits at various
volumes of sales.

4. A break even chart is a tool for cost control because it shows the
relative importance of the fixed costs and the variable costs.

5. Profitability of various products can be studied with the help of these

charts and a most profitable product mix can be adopted. Profits at
different levels of activity can also be ascertained.

6. The profit potentialities can be best judged from a study of the position
of the break even point and the angle of incidence in the break even
chart. Low break even point and large angle of incidence in the break
even chart indicate that fixed costs are low and margin of safety is high.
It is a sign of financial stability.

In such a case, some monopolistic conditions prevail and high profits are
earned over a large range of production activity. Low break even point
and small angle of incidence show that fixed costs are low and margin of
safety is high, but rate of profit is not high because of absence of
monopolistic conditions. High break even point and large angle of
incidence show that fixed costs are high and margin of safety is low.

A small fall in volume may put the business into losses and a small
increase in volume may give a high profit because of large angle of
incidence. Last, high break even point and small angle of incidence is
the worst position because it indicates a low margin of safety and a low
rate of profit.

7. It is helpful in the determination of sale price which would give desired

profits or a B.E.P.

8. It is helpful in knowing the effect of increase or reduction in selling

price.

Q.5

Essentials of Budgeting and Budgetary Control

1. Sound forecasting:

The estimates for the future needs of business should be precise and
accurate.

A scientific forecasting system gives adequate and reliable data for

budgeting

2. Goal orientation:

Budgets must directly flow from objectives of the enterprise, and goals of
budgetary control must be clearly defined.

3. Proper recording system:

Sound accounting procedures should be allowed for proper recording of

actual operations. Unless the actual performance is accurately recorded
and quickly reported; the whole structure of budgeting will fall. Budgeting
is greatly helped if there is also the system of standard costing in use.
4. Participation:

All individuals responsible for achieving results should be consulted in

the formulation of budgets. No system of budgetary control can succeed
without the mutual understanding of superiors and subordinates.
Participation assures full co-operation and commitment for making
budgets successful. Participation also makes budgets realistic and
workable.

5. Top Management support:

Since budgeting highlights inefficiencies there is bound to be resistance.

This makes it more necessary that top management should believe in
the importance of budgetary control. Thus the overall budgets must be
set and approved at the chief executive level.

6. Flexibility:

Budgets should be flexible. If actual business conditions differ from what

was expected, it should be possible to recast the budget quickly.

7. Enforce timeliness:

Budgets must be prepared so as to be ready before the period to which

they relate. Moreover sufficient time should be allowed for the budget
programme to develop and reach near perfection.
8. Efficient organization:

A good organisation structure is necessary for success in budgeting.

There should be fixed responsibility centres, budget committee and
budget controller

9. Proper Co-ordination:

The budget plans must be properly co-ordinated in order to eliminate

bottlenecks. Individual budgets should be co-ordinated with one another.

10. Sound administration:

Budgets cannot replace good management. Budgets should be

administered efficiently by responsible executives.

11. Constant Review:

Constant review of the budgets is necessary so as to prevent them from

degenerating into license for spending the full budgeted amount even
though it may not be necessary.

12. Reward and punishment:

The concerned employees should be suitably rewarded for performance

as per the budget. But slack employees should not be allowed to go
unpunished.