 Define accounting

-Accounting is the process of IDENTIFYING,

RECORDING and COMMUNICATING economic
events of an organization for interested users.
Give examples of decisions or questions that can be
supported by accounting information.
• Is my business earning? (profitability)
• How much daily or monthly sales do I need in order to
recover my fixed cost? (break-even)
• Do I need to hire additional workers to help me with my
production?
• Can I afford to set up a new store in another place?
Where do I get the funds? (financing decisions)
• Can I afford to pay a bank loan?
BRANCHES OF ACCOUNTING

PRACTICE AREAS OF
ACCOUNTING
WHAT ARE THE EIGHT PRACTICE
AREAS OF ACCOUNTING?
1. FINANCIAL ACCOUNTING
2. MANAGEMENT ACCOUNTING
3. GOVERNMENT ACCOUNTING
4. AUDITING
5. TAX ACCOUNTING
6. COST ACCOUNTING
7. ACADEME/EDUCATION
8. ACCOUNTING RESEARCH
 PRACTICE AREAS OF ACCOUNTING
Accounting, being a diverse field, has the following
general practice areas:
1. Financial Accounting
This area of accounting deals with the recording of business
transactions leading to the preparation of general-purpose
financial statements.
It does not pertain to a specific user group.
 PRACTICE AREAS OF ACCOUNTING
2. Management Accounting
The provision of accounting information for use by
managers in planning and controlling operations.
Reports are not publicly available. They are for internal uses
only.
Does not follow any general financial reporting framework.
It is largely dependent on the information needs of internal
users.
PRACTICE AREAS OF ACCOUNTING

FINANCIAL vs. MANAGEMENT ACCOUNTING

 PRACTICE AREAS OF ACCOUNTING

3. Government Accounting
The practice of accounting within the coffers of government.
Any CPA who holds or is appointed to a position in
government or any GOCC whose civil service eligibility
requires that the holder of the position be a Certified Public
Accountant. (RA 1080 eligibility)
 PRACTICE AREAS OF ACCOUNTING
4. Auditing
The work of an auditor starts when the work of an
accountant ends.
Auditing is the independent verification of financial
transactions and accounting reports to check their fairness
and reliability.
After financial reports are prepared, they have to be
examined to ensure that they do not present a distorted
picture to the general public.
 PRACTICE AREAS OF ACCOUNTING
5. Tax Accounting
It is a specialized field in accounting that involves the
preparation of tax returns for the BIR.
This also includes tax planning to ensure the proper payment
of taxes, while at the same time trying to minimize the
amount of taxes paid.
 PRACTICE AREAS OF ACCOUNTING
6. Cost Accounting
This involves the accumulation of the costs of inputs as well
as other production costs for manufacturing entities in order
to ensure the proper reporting of amounts in the financial
statements.
Relates to product costing.
 PRACTICE AREAS OF ACCOUNTING
7. Academe/Education
This involves CPAs in educational institutions involved in
the teaching of accounting, auditing, management advisory
services, finance, business law, taxation, and other
technically-related subjects.
In HEIs (tertiary), this practice area is regulated by the PRC
– Board of Accountancy.
 PRACTICE AREAS OF ACCOUNTING
8. Accounting Research
This may either refer to practitioners or academicians.
Accounting practitioners take the form of consultants who
are tasked to research on the effects of economic events and
its impacts to the company.
Academicians, on the other hand, research on all aspects
affecting the profession.
QUESTIONS?
WHAT ARE THE EIGHT PRACTICE
AREAS OF ACCOUNTING?
1. FINANCIAL ACCOUTING
2. MANAGEMENT ACCOUNTING
3. GOVERNMENT ACCOUNTING
4. AUDITING
5. TAX ACCOUNTING
6. COST ACCOUNTING
7. ACADEME/EDUCATION
8. ACCOUNTING RESEARCH
Identify what branch of accounting performs the
following functions.
1. Provides reports used by internal users only.
2. Tasked with the creation of new accounting knowledge.
3. Follows the NIRC instead of the PFRS and PAS.
4. Provides information to be used by the other branches of
accounting.
5. Deals with the identifying of economic transactions,
recording such transactions, and communicating the results of
operations.
Identify what branch of accounting performs the
following functions.
5. Deals with the identifying of economic transactions,
recording such transactions, and communicating the
results of operations.
6. Enhances the credibility of the financial statements by
doing an independent examination and evaluation of the
financial statements.
7. Determines the amount payable of each business.
Identify what branch of accounting performs the
following functions.
8. Controls the accountancy profession in the country.
9. Reports generated by this branch of accounting
depend on the requests of management.
10. Is not required to follow all of the pronouncements
of the PFRS and PAS.