List And Definition The Specialized Fields Of Accounting?


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The following are the list and definitions of the specialized fields in accounting:

● Financial Accounting

Financial accounting is said to be the primary form of accounting. It relates to the preparation of financial statements which are based on the individual or business' accounting records. It is made for the benefit of the people other than those in the business like creditors, suppliers, banks, financial institutions and government entities.

Financial accounting computes, estimates and determines the profits or losses made during a particular period. Additionally, it illustrates and explains the individual or a business' financial position.

● Cost Accounting

Cost accounting provides the essential information to managers in ascertaining and controlling the cost of products and operations. This is necessary for the managers in making business decisions. Cost accounting helps the managers in the evaluation and the administration of costs.

Cost accounting approaches vary from one company to the other. The approach may be: Standard cost accounting, activity based costing, resource consumption accounting, marginal costing, cost-volume-profit analysis and lean accounting. Cost elements like: Labour, raw materials and indirect expenses are also considered.

● Managerial Accounting

Managerial accounting is specifically made for the management. It regularly uses management information systems (MIS) for computations. The MIS takes into consideration people, information and technology to determine costing, operations and business strategy.

As such, managerial accounting is geared towards the decision making capacity of the management and it helps management in controlling numerous business activity endeavors. Additionally, information gathered is usually confidential and for the sole use of management.

● Audit

Audits are done to verify the genuineness and reliability of the information in the books of accounts. Its primary objective is to ensure that the financial statements and records are free from miscalculations. Auditors usually employ statistical sampling, and quantitative and qualitative factors in auditing to make sure that the accounting books are without substantial misstatements.

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