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1. There are four major branches of accounting: public accounting, private accounting, government accounting, and accounting education. Public accounting involves external auditing, tax services, and managerial advisory services. Private accounting includes financial accounting, internal auditing, tax accounting, cost accounting, and budgeting. Government accounting focuses on proper custody and use of government funds.
2. There are two groups of users of accounting information - internal users (management) and external users (financing and public groups). Internal users need more detailed information for efficient operations while external users use financial reports to assess risk, stability, and ability to pay debts.
3. Financial reports prepared for external users are governed by generally accepted accounting principles (GA
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Branches of Accounting
I DON'T OWN ANY OF THIS. CREDITS GOES TO THE OWNER.
1. There are four major branches of accounting: public accounting, private accounting, government accounting, and accounting education. Public accounting involves external auditing, tax services, and managerial advisory services. Private accounting includes financial accounting, internal auditing, tax accounting, cost accounting, and budgeting. Government accounting focuses on proper custody and use of government funds.
2. There are two groups of users of accounting information - internal users (management) and external users (financing and public groups). Internal users need more detailed information for efficient operations while external users use financial reports to assess risk, stability, and ability to pay debts.
3. Financial reports prepared for external users are governed by generally accepted accounting principles (GA
1. There are four major branches of accounting: public accounting, private accounting, government accounting, and accounting education. Public accounting involves external auditing, tax services, and managerial advisory services. Private accounting includes financial accounting, internal auditing, tax accounting, cost accounting, and budgeting. Government accounting focuses on proper custody and use of government funds.
2. There are two groups of users of accounting information - internal users (management) and external users (financing and public groups). Internal users need more detailed information for efficient operations while external users use financial reports to assess risk, stability, and ability to pay debts.
3. Financial reports prepared for external users are governed by generally accepted accounting principles (GA
1, Public Accounting Engages in public accounting is not an employee of a client company. Examples: Sycip, Gorres, Velayo and Company ( SGV & Co.); Isla Lipan and Company; Punongbayan and Araullo. A. External Auditing- primarily centers on the critical examination of financial statements by an independent CPA to express an opinion regarding the fairness of the contents of the financial statements. B . Tax Services -deals with the accountants preparation of the clients income tax returns, business and transfer taxes. He represents the client in tax assessment and investigations conducted by the BIR. C. Managerial Advisory Services provides assistance to the management. Accountants generally provide industrial advice to their clients regarding accounting, finance, budgeting, business policies, and organization procedures, systems, product costs, distribution and other business activities. As a requirement, an external auditor should be a licensed CPA, but a tax consultant or a management consultant need not be a CPA. 2. Private Accounting Accountants are said to be in private accounting when they are employed in a private enterprise or in a nonprofit organization. Large companies divide their accounting staffs into departments according to specialized accounting functions. A. Financial Accounting is primarily concerned with the recording and classifying of business transactions culminating in the preparation of general-purpose financial statements or reports regarding the business financial position, operating results and cash activities in accordance with the GAAP. B. Internal Auditing deals with determining the operational efficiency of the company regarding protection of the companys assets, accuracy and reliability of the accounting data, and adherence to prescribed managerial policies. This process is known as FINANCIAL INTERNAL AUDITING. C. Tax Accounting embraces the preparation of various tax returns and tax planning necessary to minimize the impact of taxes on the firm. Tax accountants are thus specialists in both tax compliance and tax planning. TAX COMPLIANCE means following the many detailed and specific rules of the taxing authorities in preparing tax returns. TAX PLANNING refers to the study of the possible tax effects of various proposed financial transactions in order to minimize taxes and maximize profits. D. Cost Accounting has something to do with determining the inventory costs and/or product costs of the manufactured goods and assisting in product pricing activities of the company. Cost accounting data are generally used by the management for planning and controlling purposes. E. Budgeting covers the efficient management of cash by anticipating or predicting monetary objectives in the future period. 3. Government Accounting mainly focuses on the proper custody of government funds and their purposes. It is generally used in accounting for the national government and its political instrumentalities provinces, cities, municipalities, and barangays. Many accountants are employed in several government agencies such as the BIR, COA, DOF ( Dept. of Finance), and DBM. 4. Accounting Education (Practice in Education/Academe) Accounting education involves teaching accounting, taxation, and some business subjects. A CPA who intends to teach in college level is required to have masters degree. Faculty members of some universities are encouraged to finish doctorate degree and required to engage in research work. Accounting educators prepare the curriculum for accounting education. Some write several books in accounting, taxation and other related business fields. Many CPAs are also involved in other businesses or other fields of accountancy profession and at the same time working as professors, researchers and reviewers in various universities, colleges, and review centers. USERS OF ACCOUNTING INFORMATION The users of accounting information may be classified based on the extent of their participation in the affairs of the business that is, internal users comprising the management group, and external users comprising the financing and public groups. A. The MANAGEMENT GROUP Internal users are those who own and/or manage and control the business entity. To help them make relevant economic decisions in achieving the goal of the firm, the management group needs more detailed accounting information. Internal financial reports are usually prepared exclusively for the use of internal users for the efficient operation and control of business activities. These reports are not governed by the generally accepted accounting principles. The area of accounting that is concerned with internal reporting is referred to as management accounting. Examples of internal financial reports are variance analysis of cost of production, differential cost report of capital budgeting, etc. B. The FINANCING GROUP AND PUBLIC GROUP External users ( the financing and public group) Do not own and / or manage and control the business entity. They have no direct access to the management of the business, but they use financial reports to satisfy some of their needs for financial information. 1. Investors to assess the risk of investments portfolio, investors need information to help them determine whether they should buy, hold, or sell their investments. They need accounting information to assess their return on investment. 2. Employees- Workers are interested in the financial statement to determine the employers stability and profitability. Moreover, enterprises capability to provide remuneration, retirement benefits, and employees opportunities may be evaluated through financial reports. 3. Lenders Financial statements are used by lenders to determine whether borrowers can pay their loans and interest attached to them when due. 4. Suppliers and other trade creditors Suppliers use the financial statements of their customers to determine the continuity of the latters business. They are interested in the information that enables them to determine whether debts owed to them will be paid when due. 5. Customers Customers use the financial statements of their suppliers to assess the latters continuity in business because some customers are dependent on the existence of their suppliers to insure the availability of supplies that will sustain their business operation. 6. Government and its agencies In allocating the national resources, the government is interested in the financial reports of an enterprise for statistics, income taxes, and other regulatory policies. 7. Public Financial reports may assist the people by providing information about the trends and recent developments in the prosperity of the enterprise and the range of its activities. External financial reports are usually prepared for those who have no direct access to the management of the business. The preparation of these reports is governed by the generally accepted accounting principles. The area of external reports is referred to as FINANCIAL ACCOUNTING. THE GAAP Generally Accepted Accounting Principles The authoritative body of accountancy formulated standard principles, assumptions, and procedures that are called GAAP. These principles are used uniformly by accountants in measuring, recording, and reporting financial activities of an entity. These are developed based on experience, research, and careful study. They become generally accepted by agreement among accounting practitioners. The main objective of GAAP is expressed in the phrase of the standard auditors report which states to fairly present the financial statements in conformity with generally accepted accounting principles.
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"