Module 2: Branches of

Accounting
Objectives:

•demonstrates the branches of accounting

•explain the kind or type of service rendered by each

branch;

•realize the importance of integrating information

technology in the areas and branches of accounting
The Accountancy Profession

Accounting as a profession has the following

characteristics:

1. Mastery of a specific intellectual skill through

training and education
2. Compliance and adherence of CPAs to a common
code of values and conduct established by the
Professional Regulatory Board of Accountancy
3. Acceptance of duty to society as a whole
The Accountancy Profession

1. Mastery of a specific intellectual skill through

training and education

-one must finish a degree in BSA

-required to pass a rigorous examination so that
she can use the title of CPA
The Accountancy Profession

2. Compliance and adherence of CPAs to a common

code of values and conduct established by the
Professional Regulatory Board of Accountancy

-CPAs follow a strict code of ethics

The Accountancy Profession

3. Acceptance of duty to society as a whole

-CPAs play a vital role in the business operations

that run in a society.
Sectors of Accounting Practice

There are 4 sectors to which CPA can apply

their expertise:

1. Public Practices (Auditing, Tax Preparation,

Management Consultancy)
2. Commerce and Industry
3. Education
4. Government
Sectors of Accounting Practice
1. Public Practices
- in rendering their services, accountants
charge fees to their clients
Example of these services are:
1.1 Auditing – FS are carefully examined and
validated by accountants
1.2 Tax Preparation – Prepare tax returns of
individual and/or corporate taxpayers
1.3 Management Consultancy – this involves
extending guidance to business organizations
Sectors of Accounting Practice

2. Commerce and Industry

- Accountants can be employed in executive
position in companies. They can assume the
position of vice president for finance and
chief accountant (controller)
-Accountants in this sector is considered as
private accountants. They are directly
involved in the management of the company’s
operations.
Sectors of Accounting Practice

3. Education
-Accountants can be employed as
instructors in colleges and
universities that offer accounting
subjects.
Sectors of Accounting Practice

4. Government
- CPAs can be hired in many accounting and
accounting related positions in government
agencies and units such as the BIR, Department
of Budget and Management, Department of
Finance, and COA
Major Branches of Accounting

There are 3 major branches of accounting

1. Financial Accounting
2. Cost Accounting
3. Management Accounting
Major Branches of Accounting

1. Financial Accounting
- is primarily concerned with the recording,
preparation, and presentation of business
transactions in the form of financial statements to
provide business owners a picture of the operation
result and the financial position of the business in
a certain period of time.
 Major Branches of Accounting

2. Cost Accounting
- deals with the measurement and recording of all
the costs incurred in a business to help the
management in controlling the business
organization’s expenses.
Major Branches of Accounting

3. Management Accounting
- provide reports and information about business
transactions to the internal users.
Internal Users are the people within the business
organization who have control over the accounting
system
 Accounting

Financial Cost Management

Accounting Accounting Accounting

Results of Costs incurred in Decision making

Business the business for managers and
Operations owners

Financial Reports
Other Fields or Areas of Accounting

1. Tax Accounting
- is a special type of accounting that focuses on
taxes rather than on financial statements
-it has two objectives
a. to ensures that the business complies with
the tax laws
b. to minimize business’s tax liabilities
through legal means
Other Fields or Areas of Accounting

1. Tax Accounting
- is a special type of accounting that focuses on
taxes rather than on financial statements
-it has two objectives
a. to ensures that the business complies with
the tax laws
b. to minimize business’s tax liabilities
through legal means
Other Fields or Areas of Accounting

1. Tax Accounting
- is a special type of accounting that focuses on
taxes rather than on financial statements
-it has two objectives
a. to ensures that the business complies with
the tax laws
b. to minimize business’s tax liabilities
through legal means
Other Fields or Areas of Accounting

2. Government Accounting
- the objective of this field of accounting is to
disclose how public funds are being generated and
spent for the welfare of the general public.
Other Fields or Areas of Accounting

3. Auditing
- in auditing financial records are carefully
examined to determined the accuracy and fairness
of these records.

Two types of auditing

3.1 External Auditing
3.2 Internal Auditing
Two types of auditing
3.1 External Auditing – refers to
examination of financial records and
statements
3.2 Internal Auditing – refers to the
evaluation of the adequacy and efficiency
of the internal control structure of a
company by examining its policies and
procedures, segregation of duties, and
other controls conducted and
implemented by the management
Other Fields or Areas of Accounting

4. Accounting Education
-education employs accountants as educators and
researchers
-accountants in this field improve and develop
accounting curriculum for colleges, universities,
and other educational institutions to prepare
students for the current and future challenges in
the profession
Other Fields or Areas of Accounting

6. Fiduciary Accounting
- involves the evaluation and handling of accounts
that are managed by an individual who has been
entrusted with the guardianship and custody of the
business, possession or property owned by another
individual.
-this field of accounting includes receivership,
trust accounting,
and estate accounting
Other Fields or Areas of Accounting

6.1 Receivership
- refers to removal of control of the business or
property from its owner

6.2 Trust Accounting

- involves the administration and management
of funds by a trustee(a bank or trust company) for
the benefit of individuals called beneficiaries
Other Fields or Areas of Accounting

6. 3 Estate Accounting
-refers to the preparation of financial accounts
by a person administering the properties of an
individual who has passed away.
Other Fields or Areas of Accounting

7. Forensic Accounting
- involves the investigation and analysis of
numbers and financial data and records that are
usually presented in court discussion.
-usually involve some types of mishandling of
money(e.g. bankruptcy, tax fraud, money
laundering)
Other Fields or Areas of Accounting
8. Accounting Research
- it focuses on the study of the effects of
economic events on accounting process
and how information gathered in his
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
Other Fields or Areas of Accounting
Accounting Research includes the following
areas of study:

1. Decision making on the implementation of

new accounting or auditing standards
2. Presentation of unusual economic
operations and transactions in the financial
records
3. Study on how new tax laws can affect
information users such as employers and
clients
Other Fields or Areas of Accounting
Accounting Research includes the following
areas of study:

4. Determination of how the capital market is

affected by the accounting profession
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 software and applications have
been created to address the varying needs
of business organizations
Advantages of Computerized Accounting

1. Speed
2. Accuracy
3. Efficiency
4. Accounting document production
5. Up to date information
6. Availability of information
7. Staff motivation
8. Reduced frustration
Group Discussion

1. Is there a difference between accounting

and auditing? Explain your answer.

2. What are the objectives of accounting

education?
Activity

Write the following on a sheet of Manila paper and ask a learner to

identify what branch of accounting renders this service:

1. Preparation of general-purpose financial statements

2. Evaluation of the performance of a sales department
3. Develop standards to address a new business set up
4. Review tax compliance of the business
5. Evaluate whether a branch of the business complies with the
collection and deposit policy of the company
6. Review whether the financial statements are presented fairly
and in compliance with accounting standards
7. Report on the spending of government funds
8. Report on the total cost of materials and labor used in the
production
9. Conducting lectures on accounting topics
1. Preparation of general-purpose financial statements Answer:
Financial
2. Evaluation of the performance of a sales department Answer :
Managerial
3. Develop standards to address a new business set up Answer:
Accounting Research
4. Review tax compliance of the business Answer: Tax Accounting
5. Evaluate whether a branch of the business complies with the
collection and deposit policy of the company Answer: Auditing
(Internal)
6. Review whether the financial statements are presented fairly
and in compliance with accounting standards Answer: Auditing
(External)
7. Report on the spending of government funds Answer:
Government Accounting
8. Report on the total cost of materials and labor used in the
production Answer: Cost Accounting
9. Conducting lectures on accounting topics Answer: Accounting
Quiz#2
Identify which branch or field of accounting
provides the functions an services stated
below.

_______ 1. Validation of financial statements

_______ 2. Preparation of tax returns
_______ 3. Presentation of costs incurred in business
operations
_______ 4. Accounting for public funds
_______ 5. Recording and presentation
of financial records to external users
_______ 6. Accounting that helps managers and
owners plan and manage their business
_______ 7. Development of accounting curriculum in
educational institution
_______ 8. Provision of guidance for compliance of
tax obligations
_______ 9. Management of the business, possession,
and/or property of another individual party
_______ 10. Branch of accounting
involved in criminal or civil cases
investigations