Branches of Accounting

As business grew more complex, accounting split into specialised branches, each answering a different question.

• Financial Accounting — records transactions and prepares the Trading, Profit & Loss Account and Balance Sheet to show overall profit/loss and financial position for a period, mainly for external users. This chapter and this whole course is built on Financial Accounting.
• Cost Accounting — ascertains the cost of a product, process, job or service, and helps control and reduce costs — mainly used internally by management in manufacturing/service costing decisions.
• Management Accounting — uses both financial and cost data, reworked into budgets, forecasts and ratios, exclusively to help management plan, control and make decisions; it is not bound by any statutory format. …