Table of Contents

    Branches of Accounting

    Rumman Ansari September 24, 2025 208 views

    🔹 Branches of Accounting

    Accounting has several branches, but they can broadly be grouped into External and Internal branches depending on who uses the information.

    ✅ 1. External Branches of Accounting

    These are mainly for outsiders like investors, creditors, government, regulators, etc.

    • Financial Accounting

      • Records all transactions and prepares financial statements (Balance Sheet, P&L, Cash Flow).

      • Provides information about the overall financial position and performance.

    • Cost Accounting (partly internal, but also external for pricing/valuation)

      • Deals with cost calculation of products/services.

      • Helps in inventory valuation and pricing decisions.

    ✅ 2. Internal Branches of Accounting

    These are mainly for internal management to plan, control, and make decisions.

    • Management Accounting

      • Provides reports, budgets, forecasts for managers.

      • Helps in decision-making, performance evaluation, and strategy.

    • Cost Accounting (also used internally)

      • Breaks down costs to control efficiency and reduce waste.

    🔹 Summary Table

    Type Branch Users Purpose
    External Financial Accounting Investors, Creditors, Govt. To show financial position and results
    Cost Accounting (part) Regulators, Pricing bodies To determine cost and inventory valuation
    Internal Management Accounting Managers, Executives For decision making and control
    Cost Accounting (part) Internal departments For efficiency, cost control

    ✅ So, in short:

    • External Accounting → Financial Accounting (focus on outsiders).

    • Internal Accounting → Management Accounting (focus on managers).

    • Cost Accounting → Supports both (internal + sometimes external).