Briefly explain the three branches of accounting.
The management function has become more complex because of the increased scale of business operations. Hence, there are specialised branches in accounting to handle this situation. The main branches of accounting are financial accounting, cost accounting and management accounting.
- Financial accounting: It keeps a systematic record of financial transactions which represents the operating result of the organisation.
- Cost accounting: It relates to collection, classification and ascertainment of the production cost of the firm. It also helps to control the cost and provide the required information to management for making decision.
- Management accounting: It relates to the use of accounting data collected from financial accounting and cost accounting for the purpose of policy formulation, planning, control and decision making by the management.
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