Accountants tend to specialize in various types of accounting work and this has resulted in the development of different branches of accounting. Some of these divisions of accounting are given as:
(i) Financial Accounting : Accounting designed for outsiders (persons other than owners and managers) is known as financial accounting. It is concerned with the recording of business transactions and periodic preparation of balance sheets and income statement from such records. In this manner, the financial accounting is useful for the ascertaining profit or loss made during a given period and financial position at the end of the period.
(ii) Management Accounting : It is concerned with the interpretation of accounting information to guide the management for future planning. decision-making control, etc. Managment Accounting, therefore, serves the information needs of the insiders, e.g. owners, managers and employees.
(iii) Cost Accounting: It has been developed to ascertain the cost incurred for carrying out various business activities and to help the management to exercise strict cost control. (iv) Tax Accounting: This branch of accounting has grown in response to the difficult tax laws such as relating to income tax, sales tax, excise duties, custom duties, etc. An accountant is re-quired to be fully aware of various tax legislations.
(v) Social Accounting : This branch of accounting is also known as social reporting or social responsibility accounting. It discloses the social benefits created and the costs incurred by the enterprise. Social benefits include such facilities as medical, housing, education, canteen, provident fund, so on while the social costs may include such matters as extra hours worked by employees without payment, environment pollution, unreasonable terminations, etc.
(vi) Human Resource Accounting : It is concerned with the human resources of an enterprise. Accounting methods are applied to identify human resources and its evolution is done in money terms so that the society might judge the total work of the business enterprises including its non-human net assets. It is, therefore, an accounting for the people of the organization. Unfortunately no objectively verifiable measure has been developed for universal application.
(vii) National Accounting means the accounting for the nation as a whole. It is generally not concerned with the accounting of individual business entities and is not based on generally accepted accounting principles. It has been developed by the economists and the statisticians.