SOUTH WESTERN

CAREER COLLEGE, INC.

P-3, Simpak, Lala, Lnao del Norte

405106
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FUNDAMENTALS OF ACCOUNTANCY,

11
BUSINESS AND MANAGEMENT 1

1ST Quarter- Module 2

BRANCHES OF ACCOUNTING
 BULLLSEYE

1. Differentiate the Branches of Accounting

2. Explain the kind/ type of services rendered in each of these branches.

SIZE UP
Direction: Multiple Choices. Choose the letter only. Write your answer in your notebook.

1. The branch of accounting that is primarily involved in the preparation of financial statements, is
___________________
a. Cost accounting
b. Tax accounting
c. Management advisory services
d. Financial accounting
2. Which branch of accounting is most concerned on expressing an opinion as to the fairness of preparation and
presentation of financial statements?
a. External auditing
b. Internal auditing
c. Financial accounting
d. Accounting in Education
3. The following are the main branches of accounting, except __________________
a. Public accounting
b. Private accounting
c. International accounting
d. Government accounting
4. The following are fields of public accounting, Except______________.
a. External auditing
b. Accounting information system
c. Management advisory services
d. Tax planning
5. This field of accounting that deals with the comparisons of accounting principles and harmonisation of accounting
standards that are being practised in different countries.
a. Accounting education
b. Financial reporting
c. Global auditing
d. International accounting
6. Financial accounting is the area of accounting that emphasises reporting to_________________
a. Management
b. Regulatory bodies
c. Internal auditors
d. Creditors and investors
7. Management accounting is the area of accounting that emphasises______________
a. Reporting financial information to external users
b. Reporting to the SEC
c. Combining accounting knowledge with an expertise in data processing.
d. Developing accounting information for use within a company.

Lesson  Branches of Accounting

1
 GOVERNMENT
ACCOUNTING

PUBLIC PRIVATE
ACCOUNTING ACCOUNTING ACCOUNTING

ACCOUNTING
EDUCATION

 External Auditing
 Tax Preparation And Planning Service
 Management Advisory Services
 Financial Accounting
 Cost Accounting
 Budgeting
 Accounting Information
Systems
 Tax Accounting

MOBILIZE AND FIRM UP

Branches of Accounting
1. Financial Accounting

The process of identifying, measuring, recording, classifying, summarising, analysing, interpreting and communicating the
financial transactions and events is known as financial accounting.

The purpose of this branch of accounting is to keep a record of all financial transactions, so that

 The profit earned or loss sustained by the business during an accounting period can be worked out.
 The financial position of the business as at the end of the accounting period can be ascertained .
 The financial information required by the management ’ and other interested parties can be provided.

2. Cost Accounting
It is the process of ascertaining and controlling the cost of a product, operation or function.
The purpose of cost accounting is to analyse the expenditure, so as to ascertain the cost of various products
manufactured by the firm and fix the prices. It also helps in controlling the costs and providing necessary costing
information to management for decision-making.

3. Management Accounting
It is the use of accounting techniques for providing information to help all levels of management in planning and controlling
the activities of business to enable decision-making.
The purpose of management accounting is to assist the management in taking rational policy decisions and to evaluate
the impact of its decisions and actions. Management accounting not only includes cost accounting but also covers other
areas such as capital expenditure decisions, capital structure decisions, dividend decisions.

4. Tax Accounting

Tax accounting involves planning for tax time and the preparation of tax returns. This branch of accounting aides
businesses be compliant with regulations set up by the IRS.

Tax accounting also helps businesses figure out their income tax and other taxes and how to legally reduce their amount
of tax owing. Tax accounting also analyses tax-related business decisions and any other issues related to taxes.

5. Auditing

There are two types of auditing: external and internal auditing. In external auditing, an independent third party reviews a
company’s financial statements to make sure they are presented correctly and comply with GAAP.

Internal auditing involves evaluating how a business divides up accounting duties, who is authorized to do what
accounting task and what procedures and policies are in place. Internal auditing helps a business zero in on fraud,
mismanagement and waste or identify and control any potential weaknesses in its policies or procedures, according
to Accounting Tools.

6. Accounting Information Systems

Known as AIS for short, accounting information systems concerns itself with everything to do with accounting systems and
processes and their construction, instalment, application and observation. This can include accounting software
management and the management of bookkeeping and accounting employees.

7. Forensic Accounting

This specialized accounting service is trending in accounting and is becoming increasingly popular. Forensic accounting
focuses on legal affairs such as inquiry into fraud, legal cases and dispute and claims resolution.

Forensic accountants need to reconstruct financial data when the records aren’t complete. This could be to decode
fraudulent data or convert a cash accounting system to accrual accounting. Forensic accountants are usually consultants
who work on a project basis, according to accounting tools

8. Fiduciary Accounting

This branch of accounting centers around the management of property for another person or business. The fiduciary
accountant manages any account and activities related to the administration and guardianship of property.

Fiduciary accounting covers estate accounting, trust accounting and receivership (the appointing of a custodian of a
business’s assets during events such as bankruptcy).

Sample Accounting Services:

 Accounts Payable

- is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from
notes payable liabilities, which are debts created by formal legal instrument documents. 

 Accounts Receivable

- abbreviated as AR or A/R, are legally enforceable claims for payment held by a business for goods supplied or
services rendered that customers have ordered but not paid for. 

 Payroll

- a list of a company's employees and the amount of money they are to be paid.
"there are just three employees on the payroll"
-the total amount of wages and salaries paid by a company to its employees.
-Payroll formula, calculated differently from country to country, states a process through which the net emolument of the
employee or worker is being calculated by deducting federal charges (such as income taxes), and all and other
expenses( such as social security, Medicare, etc.) from the gross earnings.

Example #1. Companies Sample Accounting Service is Payroll:

Let’s Try To Calculate the Payroll.
Formula

Net Amount Payable to Employee = Gross Pay – Total Withholdings

Payroll Calculation

Example #1

Calculate the Net amount payable to John a factory worker, if his Gross pay is $350 per week and Total
withholdings are $280.

Solution
Below is the given information –

Particulars Amount

Gross Pay 350

Total Withholdings 280

Calculation of net amount payable to the employee can be done as follows,

 Particulars Amount
Net amount payable
Gross Pay 350 to employee=Gross

Total Withholdings 280

net amount payable to

employee
=B3-B4

=B3-B4

 =$350 – $280
Net Amount Payable to the Employee will be –
A B
Particulars Amount

Gross Pay 350

Total Withholdings 280

net amount payable to employee 70

 =$70

So, the Net pay available to John is $70 per week.

ASPIRE AND AQUIRE

Sample Accounting Services Offered By the Given Businesses:

Example 1

Solving Exercises: The first exercise is done for you!

Coke, Inc. reports the following assets and liabilities. Compute the totals that would appear in the corporation’s basic
accounting equation (Assets = Liabilities + Stockholders’ Equity (Capital Stock)).
Cash………………………….45, 000
Accounts Payable……………24,000
Office Supplies………………. 1, 700
Loan Payable…………………..6,000
Accounts Receivable………….11, 000
Answer:

= Liabilities Liabilities Assets

Assets=
A/P=24,000 24,000 45,000
C=45,000
L/P=6,000 6000 11,000
A/R=11,000
O/S=1,700 1,700
31,700 56,000

Equity=24,300

Assets= Liabilities+ Equity

= 31,700+ 24,300 =56,000

Note:Total assets will equal the sum of liabilities and total equity.

Activity1: Let’s Solve

A). Accounting Exercises:
Exercise 1. Applying Basic Accounting Equation
Royals Palm, Inc. reports the following assets and liabilities. Compute the totals that would appear in the corporation’s
basic accounting equation (Assets = Liabilities + Stockholders’ Equity (Capital Stock)).
 
Cash…………………………. 55, 000
Accounts Payable……………25,000
Office Supplies………………. 1, 500
Loan Payable…………………..7,000
Accounts Receivable………….10, 000
Answer:

Assets = Liabilities + Stockholders’ Equity

Exercise 2. Applying Basic Accounting Equation

Dan and Den, Inc. report the following assets and liabilities. Compute the totals that would appear in the corporation’s
basic accounting equation (Assets = Liabilities + Stockholders’ Equity (Capital Stock)).
 
Cash………………………….37, 000
Accounts Payable……………15,000
Supplies……………………….1, 800
Loan Payable…………………..9,000
Inventory……………………….12, 000
Answer:

Assets = Liabilities + Stockholders’ Equity

Activity#1: Solve

Tony is employed in a grocery store in the U.S and gets a salary of $10.50 per hour. Calculate the total amount to be
deducted and withheld under the payroll formula. The health insurance rate is on a weekly basis. Calculate the Net
amount receivable to Tony, we need to make certain adjustments for taxes and other deductions.

Solution

Below is the given information –

Particulars Rate

Pay Rate 10.50

Hours 38

Social security 8.50%

Medicare 3.60%

State Tax 9.50%

Federal Tax 19.80%

Health Insurance 110

Complete the table below

Calculate the Gross Pay Per Week –
A B C

Particulars Rate Amount

Pay Rate 10.50 -

Hours 38 -

Social security 8.50% 33.92

Medicare 3.60% 14.36

State Tax 9.50% 37.91

Federal Tax 19.80% 79.00

Health Insurance 110 110

Gross pay per week - 399

Formula: =B3*B4
=
 ARTICULATE AND APPRECIATE

I. Direction: Matching type. Match items .Write the letter only in your notebook.
A. Public accounting F. Tax accounting
B. Private accounting G. Cost accounting
C. Financial Accounting Budgeting
D. Auditing I. Government Accounting
E. Management advisory services J. Forensic Accounting

1. It is the preparation of the overall plan by evaluating the cost of services and the types of company operations
earning the most profits
2. Recording daily transactions and preparing financial statements and related information.
3. Preparing tax returns and tax planning for the business.
4. Determining the cost of producing specific products.
5. The examination of financial statements in order to express an opinion as to the fairness of presentation.
6. It utilises accounting, auditing, and investigative skills to conduct an examination into a company’s financial
statements.
7. The performance or offering to perform any engagement that will result in the issuance of an attest report that is in
accordance with professional standards.
8. It involves processing of company’s day- to- day accounting needs.
9. Consulting services performed by CPA firms to improve client efficiency and effectiveness.
10. It is the accounting system employed in national and local government

II. Make a list of Businesses Within your community on the types of accounting services they require. Write your answer
on a separate sheet.

First example will done for you! Add 4 businesses/companies.

1. LANECO  Accounts Payable

 Accounts
Receivable
 Payroll
 Billing
 Bank
Reconciliations
 Periodic Taxes
 Common Ledger
Entries

2.

3.

4.

5.