13 branches of accounting with examples

Accounting is a broad subject of study. It has 7 primary branches that are taught in schools and professional institutions. These branches of accounting can be subdivided into 13. The most popular one is financial accounting but on its own, we can extract other types like bankruptcy accounting. Let's begin by explaining with examples.

What are the branches of accounting?

Branches of accounting are the various aspects that can be specialized on by individuals with knowledge of the subject. This implies that, at the training level, an individual will learn all aspects of accounting. But in practice, he/she will decide on branching out. That's choosing an aspect of accounting to deal with.

The main branches of accounting

There are primarily seven (7) branches in accounting. They are explained below with examples.

1. Financial Accounting

Financial accounting is the first and foremost branch of accountancy. Without it, there are no other accounting parts. Other aspects of the subject exist because of financial accounting. This deals with the recording of financial transactions, preparation of financial reports, and analyzing those reports through financial ratios. An example is corporate accounting used by companies around the world.

2. Cost accounting

Cost accounting is a type of accounting that ensures that an organization charges the correct cost price for its products and services. An example is material costing used to cost the materials of an organization that is added to the production cost.

3. Management Accounting

A broader term for costing and very useful knowledge to data analysts and chief financial officials. Also referred to as performance management. It collects data within an organization and uses it to provide useful information to managers and directors. An example is the use of lifecycle accounting to determine the useful life of a product and to make good decisions in that regard.

4. Public sector accounting

An accounting branch that sets the standard for accountability, responsibility, and transparency in the public sector. It is also called government accounting. An example is the budget preparation by the federal and state governments. Accountants are usually involved in the preparation of those budgets.

5. Auditing

Auditing examines the accounting records of businesses as well as public sector entities and provides an opinion about them as to whether they represent truly and fairly what they purported to represent. It is usually done by an auditor. There are internal and external auditors. Internal auditors work within an organization but external auditors are appointed by shareholders to give an opinion on the financial reports prepared by the board of directors. A good example is the audit report found in the financial reports of entities listed in the Nigerian Exchange Group.

6. Taxation

Taxation is an important branch of accounting. This is because all citizens (both individuals and corporations) must pay taxes to the government. It is the tax accountant who prepares tax liabilities payable to the relevant tax authorities.

7. Financial management

Financial management is a branch of accounting that deals with the funding aspect of a business. It includes private equity, venture capital, merger and acquisition, and more. It is another broad branch that individuals can specialize in. For example, you may decide to be an expert on international finance or venture capital.

Other branches of accounting

8. Regulatory Accounting

Regulatory Accounting focuses on the interpretation of international financial reporting standards. IFRS is the standard used in the preparation and presentation of financial statements for the private sector. There are also standards for the public sector referred to as IPSAS (International Public Sector Accounting Standard) and those for auditing referred to as International Standard on Auditing (ISA) as well as other local regulatory standards and laws that must be complied with by companies to avoid sanctions and loss of business.

9. Fiduciary accounting

This deals with accounting for individuals who die and leave some inheritance for their loved ones. It also deals in bankruptcy and liquidation as well as real estate. Accountants in this specialty are either called trustees or receivership. They usually work with lawyers in matters relating to individuals who died testate, businesses that go bankrupt, valuation of properties as well as their sales.

10. International Accounting

An individual may specialize in international accounting. Here, he/she has special knowledge of accounting, finance, and regulation as they impact the international market and those of other countries. Heads of finance at global firms are international accountants. 

11. Project accounting

These accountants use knowledge of cost accounting to monitor project progress and provide financial information to that effect. So that at the end of the project, the total cost of the project can be ascertained as well as the profit earned by the project manager. 

12. Forensic Accounting

A branch of accounting that deals with investigation. They work with lawyers, bankers, insurance companies, and others to handle issues relating to fraud. Their expertise in investigation can help bring to light useful information on fraudulent practices that occur in an entity. You can become a specialist here by taking the Certified Fraud Examiner (CFE) course.

13. Fund accounting

Fund accountants work with non-profit organizations like churches, mosques, charity organizations, and other voluntary organizations in the recording, preparing, and presenting of their financial information. Their activities include handling particular funding for these voluntary organizations that were contributed by donors. You can find fund accountants in the World Bank, and voluntary service organizations (VSO), among others.