BRANCHES OF ACCT(ACCT PLUS) Flashcards
(39 cards)
DIFFERENT BRANCHES OF ACCOUNTING
- Financial Accounting
- Management Accounting
- Government Accounting
- Auditing
- Tax Accounting
- Cost Accounting
- Accounting Education
- Accounting Research
Is a branch of accounting primarily handling the recording of financial transactions of a business.
FINANCIAL ACCOUNTING
are later summarized into standardized accounting reports, more popularly known as the financial statements, for the benefit of internal and external users.
Financial transactions
should provide information useful to a wide range users in their economic decisions.
Financial statements
2 Accounting Standards
- Accounting Standards
this two standards supply guidelines on how companies should prepare their financial statements.
(PFRS) – Philippine Financial Report standard
(PAS) – Philippine
are also useful for creditors, besides from enhancing comparability.
Standardized Financial Statements
improved the understandability of the company’s financial statements.
Standardized Financial reports
caters to the end of both internal and external users., However, it is evident that financial accounting’s main goal to provide the information needs of external users that have no capability to request information directly from management.
Financial Accounting
GENERAL PURPOSE OF FS
-investors, creditors, shareholders/stockholders, government agencies, auditors
SPECIAL PURPOSE FS
-top management, departmental managers, other internal parties
GENERAL PURPOSE FINANCIAL STATEMENTS
-Is a branch of accounting which focuses on the preparation of financial reports used by managers in day to day decision making.
- for internal use only
Management Reports can be done daily, weekly, or whenever managers require a specific report. - typically contain information regarding the amount of cash on hand, the level of sales revenue, for a particular period, cost incurred, or even the comparison of accrual results with budgeted amounts.
MANAGEMENT ACCOUNTING
*summarizes financial information gathered within specified period
*provides information that is historical.
Financial accounting
-is forward looking. It contains forecasted information used by managers in planning.
-is used in deciding how the business should act going forward.
Management accounting information
*Accdg. To the Chartered Institute of Management Accountants (CIMA), chartered management accountants perform the ff. roles:
*Advice managers about the financial implications of projects
*Explain the financial consequences of business decision
*Formulate business strategy
*Monitor spending and financial control
*Conduct internal business audits
*Explain the impact of the competitive landscape
*Bring a high level of professionalism and integrity to the business.
ROLES OF MANAGEMENT ACCOUNTANTS
*analysis
*strategy
*risk
*planning
*communication
Management accountant should also posses the ff. strategic business and management skills:
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MANAGEMENT ACCOUNTING SKILL SET
Management accountants should be able to analyze information and use it to make business decisions.
Analysis
Management accountants should be able to formulate business strategies that will increase the company’s wealth and create value for the company’s shareholders
Strategy
management accountants should be able to identify risk that can potentially have detrimental effects to the company. At the same time, management accountants should give recommendations on how to manage such risks.
Risk
Management accountants should be able to identify what information the management needs and also explain the numbers to non-financial managers.
Communication
Management accountants should be able to apply accounting techniques in the planning and budget creation phase of a business.
Planning
Even though Management reports do not allow the requirements imposed by accounting standards like PFRS and PAS, management accountants are still expected to follow CIMA code of ethics.
ETHICAL CODE
One of main features of the NGAS is that it enhances responsibility accounting in all agencies. Simply, stated, responsibility accounting relates financial results to a particular responsibility center. (ex. Agency),
If there’s a problem with the handling of funds by the DPWH, for example, people is that agency will be the ones accountable. This system of placing accountability in each agency discourages misappropriations and misuse of public funds.
NEW GOVERNMENT ACCOUNTING SYSTEM (NGAS)
*Accdg. to Section 109 of Presidential Decree 1445, Government accounting is defined as an accounting system which “encompasses the process of analyzing, recording, classifying, summarizing and communicating all transaction involving the receipt and disposition of government fund and property and interpreting the results thereof”.
*is used by all government agencies ( ex. DepEd, DPWH, and BIR). Due to the specialized nature of government transactions, stricter controls should be put in place to prevent the misuse of the country’s resources.
GOVERNMENT ACCOUNTING
-records some financial transactions in a different manner. It adheres to some guidelines in the PFRS and PAS, but it is not required to implement everything written in such standards.
- follows the pronouncement of National Internal Revenue Code (NIRC).
NIRC – is to tax accounting as the PFRS and PAS are to financial accounting.
TAX ACCOUNTING
– is responsible for the keeping of the government as one big, non-profit organization.
- is task to keep and update the accounting books of the whole organization.
- disseminates accounting rules and regulations to be used by all agencies.
COA (Commission on Audits)
