Fundamentals of

Accountancy, Business
and Management 1
First Quarter
Module 2:
Branches of Accounting

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 What I Need to Know

Different branches of accounting came into existence keeping in

view various types of accounting information needed by a different
class of people like business owners, shareholders, management,
suppliers, creditors, taxation authorities and various government
agencies. Remember, you are to work on this module independently.
It is expected that you will make the most of this module and perform
the activities/tasks given wholeheartedly.

At the end of this lesson, I will be able to:

 differentiate the branches of accounting (ABM_FABM11-
IIIa-5)
 explain the kind/type of services rendered in each of these
branches (ABM_FABM11- IIIa-6)

What I Know
To find out what you already know about the topic to be
discussed in this module, answer the Pre-test first before you proceed
with the module. Write your answers in your notebook.
IDENTIFICATION: Identify which branch of accounting is being
referred to in the following statements:

1. The intended users are primarily the members of the academe.

2. What branch of accounting that trained students of the course are
to create and understand computerized accounting systems to cope
with the rapidly changing technology?
3. What branch of accounting that concerns with the continuous
improvement of the accountancy field through researches and
studies?
4. What branch of accounting that controls the accountancy
profession in the country?
5. What branch of accounting focuses on creating value for the
business by providing information used in the financial accounting
and management accounting fields?
6. What branch of accounting that produces information aiming to
educate students in the field of accountancy?

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7. What branch of accounting provides reports used by internal users
only?
8. What branch of accounting that is tasked with the creation of new
accounting knowledge?
9. Which branch of accounting follows the NIRC instead of the PFRS
and PAS?
10. What branch of accounting provides information to be used by
the other branches of accounting?
11. What branch of accounting that that is concern with keeping
and updating the accounting books of the government?
12. What branch of accounting that enhances the credibility of the
financial statements by doing an independent examination and
evaluation of the financial statements?

What’s In
Directions: Explain the visual representation of the accounting
process or cycle. Determine what process is being referred to in each
stage. Write your answers in your notebook.

Rubrics for rating your explanation/answers:

*Respond to the question in a well-organized paragraph with a
clear topic sentence, sufficient relevant evidence, and an
explanation.
Acceptable Good (80 Excellent

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 (60 pts) pts) (100 pts)
Topic Unclear or Basic topic Clear topic
Sentence lacking topic sentence, sentence
sentences doesn’t fully introducing
introduce
response
Evidence Minimal or One to two Three or more
irrelevant relevant relevant
evidence supporting supporting
details details
Explanation No explanation Minimal Complete
explanation explanation

What’s New
Directions: Determine what each branch of accounting listed in
the first column specializes in the accounting field. Write your
answers in your notebook.
BRANCHES AND AREAS OF SPECIALIZATION OR FOCUS OF
ACCOUNTING THIS BRANCH IN THE ACCOUNTING
FIELD
1. Financial Accounting
2. Management Accounting
3. Government Accounting
4. Auditing
5. Tax Accounting
6. Cost Accounting
7. Accounting Education
8. Accounting Research

Rubrics for rating your explanation/answers:

*Respond to the question in a well-organized paragraph with a clear
topic sentence, sufficient relevant evidence, and an explanation.
Acceptable Good (80 Excellent (100
(60 pts) pts) pts)
Topic Sentence Unclear or Basic topic Clear topic
lacking topic sentence, sentence
sentences doesn’t fully introducing
introduce
response
Evidence Minimal or One to two Three or more

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 irrelevant relevant relevant
evidence supporting supporting
details details
Explanation No explanation Minimal Complete
explanation explanation

What Is It
DISCUSSION: Read the discussion that follows in order to
understand and gain more knowledge about the lesson.
Branches of Accounting
TAX ACCOUNTING
Taxes are the lifeblood of the government. Without the taxes the
citizens pay, the government cannot perform its functions. Thus, it is
imperative that the collection of taxes be unhindered.
Records some financial transactions in a different manner. It
follows the pronouncements of the National Internal Revenue Code
(NIRC). It also adheres to some guidelines in the PFRS and PAS, but it
is not required to implement everything written in such standard.

COST ACCOUNTING
The branch of accounting that provides information for
management accounting and financial accounting

ACCOUNTING EDUCATION
The Bachelor of Science in Accountancy (BSA) in the Philippines
is normally a 5-year program composed of subjects in accounting,
audit, administration, and business laws and taxation

ACCOUNTING RESEARCH
The branch of accounting that deals with the creation of new
knowledge.
Researches in the accounting field also apply the scientific
method like their counterparts in the sciences. With the constantly
evolving field of accountancy, it is expected that accounting research
will continue to play a vital role in the future.

Philippine Institute of certified Public Accountants (PICPA)

An association of Certified Public Accountants engaged in the

various fields of accounting. PICPA classifies theses field or branches
of accounting into 4 main sectors namely:

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  Public Accounting
 Private Accounting (commerce and industry)
 Government Accounting
 Accounting Education

Public accounting can be viewed as firms of accountants that

serve clients such as businesses (retailers, manufacturers, service
companies, etc.), individuals, nonprofit organizations, and
governmental organizations.

Public accounting firms range in size from sole practitioners to a

few huge international firms that employ hundreds of thousands of
CPAs throughout the world. In between are local and regional firms as
well as very large national and international firms.

The people employed in public accounting are often certified

public accountants or CPAs. Many accountants leave the larger public
accounting firms after several years of experience and become an
employee at a business or other organization. In their new position
they are referred to as a private accountant, corporate accountant or
internal accountant.

Examples of Public Accounting Services

The services provided by public accounting firms vary by the
size and the expertise of the firm. Here are some of the public
accounting services:
 Preparation, review, and auditing of the clients' financial
statements
 Tax work including the preparation of income tax returns,
estate and tax planning, etc.
 Consulting and advice involving accounting systems,
mergers and acquisitions, and much more.

External Auditing
External audit is an independent examination of the financial
statements prepared by the organisation. It is usually conducted for
statutory purposes (because the law requires it).
An audit results in an audit opinion about whether the financial
statements give a ‘true and fair’ view of the:

 state of affairs of the organisation and

 operations for the period
The purpose of external audit is to verify that the annual
accounts provide a true and fair picture of the organisation’s finances;
and that the use of funds is in accordance with the aims and objects
as outlined in the constitution.

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 It is not the prime role of the audit to detect fraud, although this
may of course come to light during the checks that take place.
Auditors have thus been described as ‘watchdogs not bloodhounds’.

Tax Preparation and Planning Services

Tax preparation and tax planning are two sides of the same
coin. Having your taxes thoroughly and carefully planned will ensure
that your business continues to thrive.
Some practical strategies for tax planning may include the
following services:
• Establishing legal ownership of assets
• Advice on using life insurance, annuities, and long-term
care insurance
• Asset protection techniques
• Increasing IRAs and retirement plan values
• Tax, estate, and business succession planning

Management Advisory Services

Management advisory services are consulting services
performed by a specialist organization for its clients. These services
are intended to provide advice regarding the operations and finances
of clients. The services may address any of the following areas:
• Asset valuation
• Business strategy
• Computer systems
• Support
• Mergers and acquisitions
• Organizational structure
• Process analysis
• Risk management
A CPA firm may provide management advisory services if this
group is separated from the auditing and tax functions.

Private Accounting
 Financial Accounting
 Cost Accounting
 Budgeting
 Accounting Information System
 Tax Accounting
 Internal Auditing

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 What`s More
 Independent Activity 1

Which is which?
Directions: Read and analyze each sentence and decide
whether the sentence illustrates government accounting or
accounting education. Write your answers in your notebook.
1. It reveals how public funds have been generated and utilized.
2. This branch is responsible for training future accountants.
3. This branch ensures that Certified Public Accountants (CPAs)
possess all attributes that are essential for the conduct of a
professional accounting program.
4. They could be professors, deans or researchers.
5. This concerns with recording and reporting financial
transactions in government offices.
6. This branch includes the provincial accountant, Commission
on Audit (COA) auditor, and Bureau of Internal Revenue (BIR)
examiner of local and national businesses.
7. It is concerned in the teaching of accounting, financial
management, taxation, and other related business courses.
8. This branch provides systematic process of the financial
transactions relating to the revenues and expenditures of
government offices.

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 Independent Activity 2
Directions: In your notebook, complete the target list below by
giving at least three characteristics of each target:

PUBLIC ACCOUNTING
CHARACTERISTICS

External Auditing

Tax Preparation and

Planning Services

Management
Advisory Services

What I Have Learned

I learned that:

 The Branches of Accounting are as follows: Financial

Accounting; Management Accounting;
Government Accounting; Auditing; Tax Accounting; Cost
Accounting; Accounting Education and Accounting
Research.

 The type of report generated by the respective branches are

as follows: Financial Statements; Management reports;
Periodic financial reports; Auditor’s report; tax returns to be
used by taxing authorities; cost of production report and
research results.

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  The purpose of the information generated by each branches
is to guide external and internal users in their economic
decisions, helps management in decision making; shows
stewardship by the government of public funds; gives
credibility to the financial statements; finds the cost of a
particular object, educate students in the field of
accountancy and adds to the knowledge of accountancy.

What I Can Do
Directions: Complete the statement in each item below.
Do it in your notebook.

1. I am a financial accountant. My role/s is/are _____________________.

2. I am a cost accountant. My role/s is/are _________________________.
3. I am a budget accountant. My role/s is/are_______________________.
4. I am a tax accountant. My role/s is/are___________________________.
5. I am an internal auditor. My role/s is/are ________________________.

Rubrics for rating your answers:

5- If the paragraph consists of 5 or more sentences with correct and
complete information.
4- If the paragraph consists of 3 to 4 sentences with correct information.
3- If the paragraph consists of 2 to 3 sentences with correct information. 2-
If the paragraph consists of 2 sentences with correct information
1- If the paragraph consists of only one sentence with correct information.

Assessment

Directions: Identify which branch of accounting performs the

following functions. Write your answers in your notebook.
1. It lays down the different treatments of the taxing authorities
regarding financial transactions.
2. The purpose of information of this accounting branch is to guide
external and internal users in their economic decisions.
3. It helps the management in decision-making.

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4. The intended users for this particularly branch of accounting are
the taxing authorities.
5. The frequency of report is every after audit of a set of financial
statements.
6. The type of report generated are the cost of production report;
other cost reports.
7. The purpose of information gives credibility to the financial
statements of a company.
8. The purpose of information shoes the stewardship by the
government of public funds.
9. It is an accounting for the receipt and disposition of government
funds.
10. The recording financial transactions follows a specific guidelines
provided by the PFRS and PAS.
11. It primarily focuses on the preparation of general-purpose
financial statements.
12. It does the recording daily transactions and preparing financial
statements and related information.
13. It is the Accounting System employed in national and local
government.
14. It does review tax compliance of the business.
15. This branch of accounting provides reports used by internal users
only.
16. It is the unbiased examination and evaluation of the financial
statements of an organization.

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