TOP 10 BRANCHES OF ACCOUNTING - CULTURE VOCABULARY - 2025

The main branches of accounting include financial accounting, management accounting, cost accounting, auditing, forensic accounting, and public accounting, among others.

Accounting is the practice and knowledge that has to do with the methods of recording transactions, maintaining financial records, conducting internal audits, and reporting and analyzing financial or management-relevant information.

Basically it is the systematic process of identifying, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It also provides information on the resources available and the results achieved with those resources.

This area of ​​study is a dynamic and broad branch that is constantly adapting to the specific and varied needs of its users.

In recent decades, different branches of accounting have been created that respond to the diversity of companies in the modern world.

The main branches of accounting

1- Financial accounting

This type of accounting involves the recording and classification of financial transactions; it also prepares and submits account statements or financial statements for use by internal and external users.

Transactions are summarized in balance sheets, income and liquidity statements that encapsulate the behavior of a company over a specific period of time.

The idea of ​​this branch is to distribute the set of financial information for external users of this information (such as investors or lenders of the company).

Financial accounting has several policies and procedures that provide a structure for recording transactions in accounts.

2- Administrative accounting

This accounting focuses on providing financial information for the internal use of the company, more specifically for administration; manages the income and expenses of a business.

This category has to do with the needs of management rather than with accepted principles of accounting.

Management accounting involves financial analysis, budgeting, forecasting, cost analysis, evaluating business decisions, and other similar areas. Its purpose is to take action to improve the financial performance of a business.

The information that is handled includes: the amount of liquidity, analysis of capital budgets, analysis of cost transfers and profitability of the projects, among others.

3- Cost accounting

It refers to the registration, presentation and analysis of manufacturing costs. Cost accounting is very useful in production businesses as they have the most complicated cost processes.

Current costs and standards are also analyzed to help future accountants determine the best responses for company operations. It is sometimes thought of as a subset of management accounting.

4- Audit

External auditing refers to the independent analysis (by a third party) of a company's account statements for the purpose of expressing an opinion regarding the presentation of its financial affairs.

Each year companies must produce an annual report that includes a statement of all their accounts. Auditors are external accountants who verify that these reports are true and that the company's financial practices are correct.

People working in this field must not only have skills in accounting, but they must also have social skills. This is because they have to ask many questions with a great deal of tact to individuals in the company.

5- Internal audit

Internal audit focuses on evaluating the company's internal control structure by separating the duties, policies, procedures, degrees of authorization, and other controls implemented by management.

This process monitors the effectiveness of the processes and controls that the company has; The idea is that systems and transactions are examined for weaknesses, fraud, or wasted resources so that these findings can be reported to management.

The main objective is for this department to also act as an internal consulting department that adds value to the company's operations.

It is especially needed in larger organizations with high levels of complexity, as it is easier for process failures to occur in larger locations.

The internal audit team is responsible for detecting fraud, ensuring compliance with legal regulations, analyzing risks, etc.

6- Forensic accounting

Forensic accounting involves litigation, fraud investigation, dispute resolution, and other areas involving legal matters. They examine the financial records that will lead to or result from the litigation.

The results of these investigations can be used as evidence in court and are therefore highly documented. Some of the areas in which this accounting can be used include: fraud detection, calculation of economic damages, calculation of the value of a business, insolvency of legal support, requests for negligence, etc.

Those who work in this field must have considerable knowledge of accounting and auditing as they must reconstruct or investigate the accounting records of an organization.

7- Tax Accounting

Refers to the rules used to generate tax assets and liabilities in the financial records of an individual or a company. This branch helps clients to follow the rules imposed by the relevant authorities.

Includes tax planning and tax return preparation. It also involves the calculation of all company taxes and advice to reduce them in a legal way.

8- Fiduciary accounting

It involves the management of accounts managed by a person in charge of the custody of a property of or for the benefit of another person.

Examples of this include trust accounts, bankruptcies, and asset management.

9- Public accounting

This field investigates the financial statements and accounting systems of client companies in order to ensure that the account statements collected by clients represent their results and financial position in a realistic way.

Public accounting requires a great knowledge of the relevant rules of accounting.

10- Government accounting

This branch uses specific accounting rules to create and manage funds, from which money is taken to pay for the different expenses and services offered by a government entity.

This area requires that its professionals have a fairly specific specialization.

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