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Introduction to branches of Accounting
Accounting is an important concept that its history can be traced back centuries ago. Many businesses, based on numerous transactions made in a day requires accountability and proper records keeping for such in information in order to enhance other activities within a business enterprise such as communication. With the absence of accounting for businesses, this would act as a stabling block for the attainment of organizational objectives such as profit maximization as management of resources requires proper innovative structures for accountability.
According to Dyson (2004) the accounting branches can be segregated into three key areas; financial, cost, tax and managerial accounting (Dyson, 2004, p.12). Accounting plays a significant role in different business enterprises especially on key areas such decision-making, giving information, protection of business from various transactions involved with other business environments and explaining the business position. Financial Accounting is the art of managing business financial recording that stipulates the business position, and it progress in growth through the analysis of profits and losses. According to Babarinde (2003) financial accounting is a system that deals with explaining the situation and the state of affairs for businesses through preparation of financial statements such as the balance sheet and trade and profit loss account (Babarinde, 2003 p. 313). Financial accounting also plays a significant role in running a business enterprise as the system give the estimates of costs on products, functions, activities and the firm progress. Through financial accounting, the management in a business entity can get quality information to plan through budgeting that gives estimates on expected expenditures.
Cost accounting is the system used in controlling activities of production that would regulate expenditures for the business in order to enhance profit maximization. According to Abeygunasekera and Fonseka (2013) every business has its control system that helps in cutting cost either through the production processes such as manufacturing, recruitment, training and development and delivery of services. Through such processes, cost accounting acts a system for the management to control such expenditures incurred through transactions with different business environments as well as in the processes of availing goods and services to consumers (Abeygunasekera & Fonseka, 2013).
Managerial accounting is the process that facilitates the management with information concerning the company’s progress that enhances the management in carrying out their day to day functions. T.............
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