Q.Explain the three branches of accounting — Financial, Cost and Management Accounting.

As business became more complex, one 'accounting' job split into three specialised branches, each answering a different question about the business.

Financial Accounting records all transactions of the business and prepares the Trading and Profit & Loss Account and Balance Sheet to show the overall result and position for a period. It follows a broadly prescribed format and is aimed mainly at external users such as investors, banks and the tax department.

Cost Accounting focuses on ascertaining the cost of producing a unit, running a process, or completing a job, and on controlling and reducing that cost. It is used internally, mainly in manufacturing and service organisations, to fix selling prices and identify cost overruns. …

Confusing Cost Accounting (which is about the cost of a specific product/job) with Management Accounting (which is a broader pla …