As in many other areas of human activity, a number of specialized fields in accounting also have evolved besides financial accounting. Management accounting and cost accounting are the result of rapid technological advances and accelerated economic growth. The most important among them are explained below
Tax
Accounting:
Tax accounting covers the
preparation of tax returns and the consideration of the tax implications of
proposed business transactions or alternative courses of action. Accountants
specializing in this branch of accounting are familiar with the tax laws
affecting their employer or clients and are up to date on administrative
regulations and court decisions on tax cases.
International
Accounting:
This accounting is concerned with
the special problems associated with the international trade of multinational
business organizations. Accountants specializing in this area must be familiar
with the influences that custom, law and taxation of various countries bring to
bear on international operations and accounting principles.
Social
Responsibility Accounting:
This branch is the newest field
of accounting and is the most difficult to describe concisely. It owes its
birth to increasing social awareness which has been particularly noticeable over
the last three decades or so. Social responsibility accounting is so called
because it not only measures the economic effects of business decisions but
also their social effects, which have previously been considered to be
immeasurable. Social responsibilities of business can no longer remain as a
passive chapter in the text books of commerce but are increasingly coming under
greater scrutiny. Social workers and people’s welfare organizations are drawing
the attention of all concerned towards the social effects of business
decisions. The management is being held responsible not only for the efficient
conduct of business as reflected by increased profitability but also for what
it contributes to social well-being and progress.
Inflation
Accounting:
Inflation has now become a world-wide phenomenon. The consequences of
inflation are dire in case of developing and underdeveloped countries. At this
juncture when financial statements or reports are based on historical costs,
they would fail to reflect the effect of changes inurchasing
power or the financial position and profitability of the firm. Thus, the
utility of the accounting records, not taking care of price level changes is
seriously lost. This imposes a demand on the accountants for adjusting financial
accounting for inflation to know the real financial position and profitability
of a concern. Thus emerged a future branch of accounting called inflation
accounting or accounting for price level changes. It is a system of accounting
which regularly records all items in financial statements at their current
values.
Human Resources Accounting:
Human
resources accounting is yet another new field of accounting which seeks to
report and emphasize the importance of human resources in a company’s earning
process and total assets. It is based on the general agreement that the only
real long lasting asset which an organization possesses is the quality and
caliber of the people working in it. This system of accounting is concerned
with, “the process of identifying and measuring
data about human resources and
communicating this information to interested parties”.