Scope of Accounting

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Scope of Accounting:

By Divya Bagaria 11HP1E0003 1 st M.B.A Scope of Accounting

Accounting Scope is of 2 types:

Accounting Scope is of 2 types Branches of Accounting. Accounting as Art and Science .

Branches of Accounting:

Branches of Accounting Financial Accounting: It is the original form of accounting, It refers to recording of daily business financial transaction. Recording of the transaction is done in a way that the profit of the business may be ascertained after a definite period and the financial position of the business presented. 2. Cost Accounting: This is related with the ascertainment of cost of the product in a period. Under this system record of raw materials used in production, wages and labor paid and other expenses incurred on production are kept to control the costs.

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3 . Management Accounting: The accounting which provides the necessary information to the management is called management accounting. Under this the analysis and interpretation of the accounts, prepared by financial accounting, are done in a manner so that the managers may forecast, plan for future and frame the policy . 4. Tax Accounting: Under tax accounting, the accountants prepare the accounts as per the provisions of taxation. The accounts prepared as per taxation provisions may differ from the accounts prepared as per financial accounting.

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5. Inflation Accounting: T he financial statements are prepared on the basis of historical cost which do not present the true picture of the financial position and correct P&L of the business due to inflation. Thus the fresh financial statements are prepared keeping in mind the price level changes under inflation accounting. 6. Human Resource Accounting: H RA means the accounting for human being as now in an organization humans are treated as an asset. It is recorded in the books like other assets. HRA deals with the measurement of costs on recruiting, selecting, hiring, training, placing and development of the employees on one side and on the other side it with the present economic value of the employees. For the determination of the value of human being different methods are used under HRA .

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8. Responsibility Accounting: It is a special technique of management under which accountability is established according to the responsibility delegated to the various levels of management. Management information and reporting system is instituted to give adequate feedback in terms of the delegated responsibility. Under this system, units of an organization, under a specified authority in a person, are developed as responsibility center and evaluated individually for their performance.

Accounting as Science & Art:

Accounting as Science & Art Accounting is both the science and art. Art is the creation of practical applications and rules for the completion of any work. On the basis of it, accounting is an art as we do not only study principles of accounting but also we learn to apply these principles in practice to record the business transaction. Thus accounting is both science and art.

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Study of science is based on some principles and it is systemized. It is a science because the business transactions are recorded on the basis of some principles and journal of transaction ledger posting, trial balance and preparation of final statements are done in a sequence.